<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 31, 1996.
REGISTRATION NO. 33- .
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
AMF GROUP INC.*
---------------------
<TABLE>
<S> <C> <C>
DELAWARE 7933, 3949 13-3873272
(State or other jurisdiction of (Primary standard industrial (I.R.S. employer
incorporation or organization) Classification Code Number) identification number)
</TABLE>
7313 BELL CREEK ROAD
MECHANICSVILLE, VIRGINIA 23111
(804) 559-8600
(Address, including zip code, and telephone number, including
area code, of the Company's principal executive offices)
---------------------
<TABLE>
<S> <C>
DOUGLAS J. STANARD Copy to:
CHIEF OPERATING OFFICER ELLIOTT V. STEIN, ESQ.
AMF GROUP INC. WACHTELL, LIPTON, ROSEN & KATZ
7313 BELL CREEK ROAD 51 WEST 52ND STREET
MECHANICSVILLE, VIRGINIA 23111 NEW YORK, NEW YORK 10019
(804) 559-8600 (212) 403-1000
(Name, address, including zip code and telephone
number,
including area code, of agent for service)
</TABLE>
---------------------
Approximate date of commencement of proposed sale to public: Upon
consummation of the Exchange Offer referred to herein.
---------------------
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. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
PROPOSED
TITLE OF EACH CLASS AMOUNT PROPOSED MAXIMUM AMOUNT OF
OF SECURITIES TO TO BE OFFERING PRICE AGGREGATE REGISTRATION
BE REGISTERED REGISTERED PER NOTE(1) OFFERING PRICE FEE
- --------------------------------------------------------------------------------------------------
10 7/8% Senior
Subordinated Notes due
2006.................... $250,000,000 100% $250,000,000 $86,206.90
12 1/4% Senior
Subordinated Discount
Notes due 2006.......... $452,000,000 54.6875% $247,187,500 $85,237.07
Guarantees for the Senior
Subordinated Notes due
2006.................... $0 0% $0 $0
Guarantees for the Senior
Subordinated Discount
Notes due 2006.......... $0 0% $0 $0
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for purposes of calculating registration fee pursuant to
Rule 457, based upon the average of the bid and asked prices for the Notes
on May 24, 1966.
---------------------
The Registrant hereby amends the 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 the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
*TABLE OF ADDITIONAL REGISTRANTS
<TABLE>
<CAPTION>
STATE OR OTHER PRIMARY STANDARD
JURISDICTION OF INDUSTRY I.R.S. EMPLOYER
NAME, ADDRESS AND INCORPORATION OR CLASSIFICATION IDENTIFICATION
TELEPHONE NUMBER ORGANIZATION NUMBER NUMBER
- -------------------------- ---------------- ---------------- ----------------
<S> <C> <C> <C>
AMF Group Holdings Inc.(1).............. Delaware 6719 13-3873270
AMF Bowling Holdings Inc.(2)............ Delaware 6719 54-1790126
AMF Bowling Centers Holdings Inc.(1).... Delaware 6719 54-1789642
AMF Bowling, Inc.(2).................... Virginia 3949 54-1390740
AMF Worldwide Bowling Centers Holdings
Inc.(1)............................... Delaware 6719 54-1789643
AMF Bowling Centers, Inc.(1)............ Virginia 7933 54-1221662
Bush River Corporation(1)............... South Carolina 6719 57-0707033
AMF Beverage Company of Oregon,
Inc.(1)............................... Oregon 6719 54-1634960
King Louie Lenexa, Inc.(1).............. Kansas 6719 54-1540814
AMF Beverage Company of W. Va.,
Inc.(1)............................... West Virginia 6719 54-1800461
AMF Bowling Centers Switzerland
Inc.(1)............................... Delaware 7933 54-1792353
AMF Bowling Centers (Aust) International
Inc.(1)............................... Virginia 7933 54-1492964
AMF Bowling Centers (Canada)
International Inc.(1)................. Virginia 7933 54-1492976
AMF Bowling Centers (Hong Kong)
International Inc.(1)................. Virginia 7933 54-1493834
AMF Bowling Centers International
Inc.(1)............................... Virginia 7933 54-1493442
AMF BCO-UK One, Inc.(1)................. Virginia 6719 54-1511045
AMF BCO-UK Two, Inc.(1)................. Virginia 6719 54-1511040
AMF BCO-France One, Inc.(1)............. Virginia 6719 54-1513230
AMF BCO-France Two, Inc.(1)............. Virginia 6719 54-1513758
AMF Bowling Centers Spain Inc.(1)....... Delaware 7933 54-1792351
AMF Bowling Mexico Holding, Inc.(1)..... Delaware 6719 54-1467931
Boliches AMF, Inc.(1)................... Virginia 6719 54-1529631
AMF BCO-China, Inc.(1).................. Virginia 6719 54-1768882
AMF Bowling Centers China, Inc.(1)...... Virginia 6719 54-1768871
</TABLE>
- ---------------
(1) The address of these additional registrants is 7313 Bell Creek Road,
Mechanicsville, Virginia 23111. Their telephone number is (804) 559-8600.
(2) The address of these additional registrants is 8100 AMF Drive,
Mechanicsville, Virginia 23111. Their telephone number is (804) 730-4000.
<PAGE> 3
CROSS-REFERENCE SHEET
PURSUANT TO ITEM 501 OF REGULATION S-K
SHOWING THE LOCATION IN THE PROSPECTUS OF THE
INFORMATION REQUIRED BY PART I OF FORM S-4
<TABLE>
<CAPTION>
LOCATION
ITEM NUMBER AND CAPTION IN PROSPECTUS
------------------------------------------ ---------------------------------------------
<C> <S> <C>
A. Information About the Transaction
1. Forepart of Registration Statement and
Outside Front Cover Page of
Prospectus............................. Front Cover Page of the Registration
Statement; Outside Front Cover Page of the
Prospectus
2. Inside Front and Outside Back Cover
Pages of Prospectus.................... Inside Front Cover Page of the Prospectus;
Outside Back Cover Page of Prospectus
3. Risk Factors, Ratio of Earnings to
Fixed Charges and Other Information.... Prospectus Summary; Risk Factors; The
Company; Selected Financial Data; Pro Forma
Financial Data
4. Terms of the Transaction............... Prospectus Summary; Risk Factors; The
Exchange Offer; Certain Federal Income Tax
Consequences of The Exchange Offer;
Description of Exchange Notes
5. Pro Forma Financial Information........ Prospectus Summary; Pro Forma Consolidated
Financial Statements
6. Material Contacts with the Company
Being Acquired......................... *
7. Additional Information Required for
Reoffering by Persons and Parties
Deemed to be Underwriters.............. *
8. Interest of Named Experts and Counsel.. *
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities............................ *
B. Information About the Registrant
10. Information with Respect to S-3
Registrants........................... *
11. Incorporation of Certain Information
by Reference.......................... *
12. Information With Respect to S-2 or S-3
Registrants........................... *
13. Incorporation by Certain Information
by Reference.......................... *
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
LOCATION
ITEM NUMBER AND CAPTION IN PROSPECTUS
------------------------------------------ ---------------------------------------------
<C> <S> <C>
14. Information With Respect to
Registrants Other than S-3 or S-2
Registrants........................... Prospectus Summary; Risk Factors; The
Company; The Acquisition; Capitalization;
Selected Financial Data; Pro Forma Financial
Data; Management's Discussion and Analysis of
Financial Condition and Results of
Operations; Business; Management; Certain
Transactions
C. Information About the Company Being
Acquired
15. Information With Respect to S-3
Companies............................. *
16. Information with Respect to S-2 or S-3
Companies............................. *
17. Information With Respect to Companies
Other Than S-3 or S-2 Companies....... *
D. Voting and Management Information
18. Information if Proxies, Consents or
Authorizations are to be Solicited.... *
19. Information if Proxies, Consents or
Authorizations are not to be
Solicited, or in an Exchange Offer.... Management; Certain Transactions
</TABLE>
- ---------------
* Item is omitted because response is negative or item is inapplicable.
<PAGE> 5
EXPLANATORY NOTE
THIS REGISTRATION STATEMENT COVERS THE REGISTRATION OF AN AGGREGATE
PRINCIPAL AMOUNT OF $250,000,000 OF 10 7/8% SERIES B SENIOR SUBORDINATED NOTES
DUE 2006 (THE "EXCHANGE SENIOR SUBORDINATED NOTES") AND $452,000,000 OF 12 1/4%
SERIES B SENIOR SUBORDINATED DISCOUNT NOTES DUE 2006 (THE "EXCHANGE SENIOR
SUBORDINATED DISCOUNT NOTES" AND, COLLECTIVELY WITH THE EXCHANGE SENIOR
SUBORDINATED NOTES, THE "EXCHANGE NOTES") OF AMF GROUP INC. (THE "COMPANY") THAT
MAY BE EXCHANGED FOR EQUAL PRINCIPAL AMOUNTS OF THE COMPANY'S OUTSTANDING
10 7/8% SERIES A SENIOR SUBORDINATED NOTES DUE 2006 (THE "SENIOR SUBORDINATED
NOTES") AND THE COMPANY'S OUTSTANDING 12 1/4% SERIES A SENIOR SUBORDINATED
DISCOUNT NOTES DUE 2006 (THE "SENIOR SUBORDINATED DISCOUNT NOTES" AND,
COLLECTIVELY WITH THE SENIOR SUBORDINATED NOTES, THE "NOTES"), RESPECTIVELY (THE
"EXCHANGE OFFER"). THIS REGISTRATION STATEMENT ALSO COVERS THE REGISTRATION OF
THE EXCHANGE NOTES FOR RESALE BY GOLDMAN, SACHS & CO. IN MARKET-MAKING
TRANSACTIONS. THE COMPLETE PROSPECTUS RELATING TO THE EXCHANGE OFFER (THE
"EXCHANGE OFFER PROSPECTUS") FOLLOWS IMMEDIATELY AFTER THIS EXPLANATORY NOTE.
FOLLOWING THE EXCHANGE OFFER PROSPECTUS ARE CERTAIN PAGES OF THE PROSPECTUS
RELATING SOLELY TO SUCH MARKET-MAKING TRANSACTIONS (THE "MARKET-MAKING
PROSPECTUS"), INCLUDING ALTERNATE FRONT AND BACK COVER PAGES, A SECTION ENTITLED
"RISK FACTORS -- TRADING MARKET FOR THE EXCHANGE NOTES" TO BE USED IN LIEU OF
THE SECTION ENTITLED "RISK FACTORS -- LACK OF PUBLIC MARKET FOR THE EXCHANGE
NOTES," A NEW SECTION ENTITLED "USE OF PROCEEDS" AND AN ALTERNATE SECTION
ENTITLED "PLAN OF DISTRIBUTION." IN ADDITION, THE MARKET-MAKING PROSPECTUS WILL
NOT INCLUDE THE FOLLOWING CAPTIONS (OR THE INFORMATION SET FORTH UNDER SUCH
CAPTIONS) IN THE EXCHANGE OFFER PROSPECTUS: "PROSPECTUS SUMMARY -- THE NOTE
OFFERING" AND "-- THE EXCHANGE OFFER", "RISK FACTORS -- EXCHANGE OFFER
PROCEDURES" AND "-- RESTRICTIONS ON TRANSFER," "THE EXCHANGE OFFER" AND "CERTAIN
FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OFFER". ALL OTHER SECTIONS OF
THE EXCHANGE OFFER PROSPECTUS WILL BE INCLUDED IN THE MARKET-MAKING PROSPECTUS.
<PAGE> 6
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.
LOGO
SUBJECT TO COMPLETION, DATED MAY 31, 1996
OFFER TO EXCHANGE
ALL OUTSTANDING
10 7/8% SERIES A SENIOR SUBORDINATED NOTES DUE 2006
($250,000,000 PRINCIPAL AMOUNT OUTSTANDING)
FOR
10 7/8% SERIES B SENIOR SUBORDINATED NOTES DUE 2006
($250,000,000 PRINCIPAL AMOUNT)
AND
12 1/4% SERIES A SENIOR SUBORDINATED DISCOUNT NOTES DUE 2006
($452,000,000 PRINCIPAL AMOUNT OUTSTANDING)
FOR
12 1/4% SERIES B SENIOR SUBORDINATED DISCOUNT NOTES DUE 2006
($452,000,000 PRINCIPAL AMOUNT)
OF
AMF GROUP INC.
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON , 1996, UNLESS EXTENDED.
- --------------------------------------------------------------------------------
AMF Group Inc., a Delaware corporation (the "Company"), hereby offers (the
"Exchange Offer"), upon the terms and subject to the conditions set forth in
this Prospectus and the accompanying Letters of Transmittal (the "Letters of
Transmittal"), to exchange up to an aggregate principal amount of $250,000,000
of its 10 7/8% Series B Senior Subordinated Notes due 2006 (the "Exchange Senior
Subordinated Notes") and $452,000,000 of its 12 1/4% Series B Senior
Subordinated Discount Notes due 2006 (the "Exchange Senior Subordinated Discount
Notes" and, collectively with the Exchange Senior Subordinated Notes, the
"Exchange Notes") for an equal principal amount of its outstanding 10 7/8%
Series A Senior Subordinated Notes due 2006 (the "Senior Subordinated Notes")
and 12 1/4% Series A Senior Subordinated Discount Notes due 2006 (the "Senior
Subordinated Discount Notes" and, collectively with the Senior Subordinated
Notes, the "Notes"), in integral multiples of $1,000. The Exchange Notes will be
guaranteed on a senior subordinated basis by AMF Group Holdings Inc., a Delaware
corporation of which the Company is a wholly owned subsidiary, and by each of
the Company's direct and indirect domestic subsidiaries (the "Guarantors"). The
Exchange Notes will be senior subordinated unsecured obligations of the Company
and are substantially identical (including principal amount, interest rate,
maturity and redemption rights) to the Notes for which they may be exchanged
pursuant to this offer, except that (i) the offering and sale of the Exchange
Notes will have been registered under the Securities Act of 1933, as amended
(the "Securities Act"), and (ii) holders of Exchange Notes will not be entitled
to certain rights of holders under a Registration Rights Agreement of the
Company dated as of March 21, 1996 (the "Registration Rights Agreement"). The
Senior Subordinated Notes have been, and the Exchange Senior Subordinated Notes
will be, issued under an Indenture dated as of March 21, 1996 (the "Senior
Subordinated Note Indenture"), among the Company, the Guarantors and IBJ
Schroder Bank & Trust Company, as trustee (the "Senior Subordinated Note
Trustee"). The Senior Subordinated Discount Notes have been, and the Exchange
Senior Subordinated Discount Notes will be, issued under an Indenture dated as
of March 21, 1996 (the "Senior Subordinated Discount Note Indenture" and,
collectively with the Senior Subordinated Note Indenture, the "Indentures"),
among the Company, the Guarantors, and American Bank National Association, as
trustee (the "Senior Subordinated Discount Note Trustee" and, collectively with
the Senior Subordinated Note Trustee, the "Trustees"). See "Description of
Exchange Notes." There will be no proceeds to the Company from this offering;
however, pursuant to the Registration Rights Agreement, the Company will bear
certain offering expenses.
------------------------
SEE "RISK FACTORS," COMMENCING ON PAGE 22, FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY HOLDERS WHO TENDER NOTES IN THE EXCHANGE
OFFER.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is , 1996.
<PAGE> 7
The Company will accept for exchange any and all validly tendered Notes on or
prior to 5:00 p.m. New York City time, on , 1996, unless the
Exchange Offer is extended (the "Expiration Date"). Tenders of Notes may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the Expiration
Date; otherwise such tenders are irrevocable. IBJ Schroder Bank & Trust Company
will act as Exchange Agent with respect to the Senior Subordinated Notes and
American Bank National Association will act as Exchange Agent with respect to
the Senior Subordinated Discount Notes (in such capacities, the "Exchange
Agents") in connection with the Exchange Offer. The Exchange Offer is not
conditioned upon any minimum principal amount of Notes being tendered for
exchange, but is otherwise subject to certain customary conditions.
The Notes were sold by the Company on March 21, 1996 in transactions not
registered under the Securities Act in reliance upon the exemption provided in
Section 4(2) of the Securities Act. A portion of the Notes were subsequently
resold to qualified institutional buyers in reliance upon Rule 144A under the
Securities Act and to a limited number of institutional accredited investors in
a manner exempt from registration under the Securities Act. The remainder of the
Notes were resold outside the United States in reliance on Regulation S under
the Securities Act. Accordingly, the Notes may not be reoffered, resold or
otherwise transferred in the United States unless registered under the
Securities Act or unless an applicable exemption from the registration
requirements of the Securities Act is available. The Exchange Notes are being
offered hereunder in order to satisfy certain obligations of the Company under
the Registration Rights Agreement. See "The Exchange Offer."
The Exchange Senior Subordinated Notes will bear interest from March 21,
1996, the date of issuance of the Senior Subordinated Notes that are tendered in
exchange for the Exchange Senior Subordinated Notes (or the most recent Interest
Payment Date (as defined herein) to which interest on such Notes has been paid),
at a rate equal to 10 7/8% per annum. Interest on the Exchange Senior
Subordinated Notes will be payable semiannually on March 15 and September 15 of
each year, commencing September 15, 1996. The Exchange Senior Subordinated
Discount Notes will not bear interest until March 15, 2001, and thereafter will
bear interest at a rate equal to 12 1/4% per annum. Interest on the Exchange
Senior Subordinated Discount Notes will be payable semiannually on March 15 and
September 15 of each year commencing September 15, 2001. The Exchange Notes are
redeemable at the option of the Company, in whole or in part, at any time on or
after March 15, 2001, at the redemption prices set forth herein, plus accrued
and unpaid interest to the date of redemption. See "Prospectus
Summary -- Summary of Terms of Exchange Notes."
Prior to March 15, 1999, up to $100 million in aggregate principal amount of
Exchange Senior Subordinated Notes will be redeemable at the option of the
Company, on one or more occasions, from the net proceeds of public or private
sales of common stock of, or contributions to the common equity capital of, the
Company, at a price of 110.875% of the principal amount of the Exchange Senior
Subordinated Notes, together with accrued and unpaid interest, if any, to the
date of redemption; provided that at least $150 million in aggregate principal
amount of Exchange Senior Subordinated Notes remains outstanding immediately
after such redemption. In addition, prior to March 15, 1999, the Exchange Senior
Subordinated Discount Notes will be redeemable at the option of the Company, on
one or more occasions, from the net proceeds of public or private sales of
common stock of, or contributions to the common equity capital of, the Company,
at a price of 112.250% of the Accreted Value (as defined herein) of the Exchange
Senior Subordinated Discount Notes; provided that at least $150 million in
Accreted Value of Exchange Senior Subordinated Discount Notes remains
outstanding immediately after such redemption. Upon the occurrence of a Change
of Control, each Holder of Exchange Notes may require the Company to repurchase
all or a portion of such Holder's Exchange Notes at 101% of the aggregate
principal amount of the Exchange Senior Subordinated Notes and 101% of the
Accreted Value of the Exchange Senior Subordinated Discount Notes, as
applicable, together with accrued and unpaid interest, if any, to the date of
repurchase. See "Risk Factors -- Payment Upon a Change of Control" and
"Description of Exchange Notes."
The Exchange Notes will be general, unsecured obligations of the Company,
will be subordinated to all Senior Debt of the Company and will rank pari passu
with all senior subordinated debt of the Company and will be senior in right of
payment to all existing and future subordinated indebtedness of the Company. The
claims of holders of the Exchange Notes will be effectively subordinated to the
Senior Debt, which, as of March 31, 1996, on a pro forma basis giving effect to
the Acquisition and the related financing transactions, would have been
approximately $517 million, $515 million of which would have been fully secured
borrowings under the New Bank Credit Agreement, and will be effectively
subordinated to all indebtedness and other liabilities (including trade payables
and capital lease obligations) of the Company's subsidiaries that are not
Guarantors. Such indebtedness and other liabilities on a pro forma basis
aggregated approximately $7.8 million at March 31, 1996. See "The Acquisition"
and "Capitalization."
The Company does not intend to list the Exchange Notes on any national
securities exchange or to seek admission thereof to trading in the National
Association of Securities Dealers Automated Quotation System. Goldman, Sachs &
Co. ("Goldman Sachs") has advised the Company that it intends to make a market
in the Exchange Notes; however, it is not obligated to do so and any
market-making may be discontinued at any time. As a result, the Company cannot
determine whether an active public market will develop for the Exchange Notes.
ANY NOTES NOT TENDERED AND ACCEPTED IN THE EXCHANGE OFFER WILL REMAIN
OUTSTANDING. TO THE EXTENT ANY NOTES ARE TENDERED AND ACCEPTED IN THE EXCHANGE
OFFER, A HOLDER'S ABILITY TO SELL UNTENDERED NOTES COULD BE ADVERSELY AFFECTED.
FOLLOWING CONSUMMATION OF THE EXCHANGE OFFER, THE HOLDERS OF NOTES WILL CONTINUE
TO BE SUBJECT TO THE EXISTING RESTRICTIONS UPON TRANSFER THEREOF AND THE COMPANY
WILL HAVE FULFILLED ONE OF ITS OBLIGATIONS UNDER THE REGISTRATION RIGHTS
AGREEMENT. HOLDERS OF NOTES WHO DO NOT TENDER THEIR NOTES GENERALLY WILL NOT
HAVE ANY FURTHER REGISTRATION RIGHTS UNDER THE REGISTRATION RIGHTS AGREEMENT OR
OTHERWISE. SEE "THE EXCHANGE OFFER -- CONSEQUENCES OF FAILURE TO EXCHANGE."
The Exchange Notes issued pursuant to this Exchange Offer generally will be
issued in the form of Global Exchange Notes (as defined herein), which will be
deposited with, or on behalf of, The Depository Trust Company (the "Depository"
or "DTC") and registered in its name or in the name of Cede & Co., its nominee.
Beneficial interests in the Global Exchange Notes representing the Exchange
Notes will be shown on, and transfers thereof will be effected through, records
maintained by the Depository and its participants. Notwithstanding the
foregoing, Notes held in certificated form will be exchanged solely for Exchange
Notes in certificated form. After the initial issuance of the Global Exchange
(Cover text continued on next page)
<PAGE> 8
Notes, Exchange Notes in certificated form will be issued in exchange for the
Global Exchange Notes only on the terms set forth in the Indentures. See
"Description of Exchange Notes -- Book-Entry, Delivery and Form."
------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITY
OTHER THAN THE EXCHANGE NOTES OFFERED HEREBY, NOR DOES IT CONSTITUTE AN OFFER TO
SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY OF THE EXCHANGE NOTES TO ANY
PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR
SOLICITATION TO SUCH PERSON. 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 DATE SUBSEQUENT TO THE
DATE HEREOF.
UNTIL , 1996 (90 DAYS AFTER COMMENCEMENT OF THIS OFFERING), ALL
DEALERS EFFECTING TRANSACTIONS IN THE EXCHANGE NOTES, WHETHER OR NOT
PARTICIPATING IN THE EXCHANGE OFFER, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
<PAGE> 9
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"SEC") a Registration Statement on Form S-4 under the Securities Act for the
registration of the Exchange Notes offered hereby (the "Registration
Statement"). This Prospectus, which constitutes a part of the Registration
Statement, does not contain all of the information set forth in the Registration
Statement, certain items of which are contained in exhibits and schedules to the
Registration Statement as permitted by the rules and regulations of the SEC. For
further information with respect to the Company or the Exchange Notes offered
hereby, reference is made to the Registration Statement, including the exhibits
and financial statement schedules thereto, which may be inspected without charge
at the public reference facility maintained by the SEC at 450 Fifth Street,
N.W., Washington, D.C. 20549, and copies of which may be obtained from the SEC
at prescribed rates. Statements made in this Prospectus concerning the contents
of any document referred to herein are not necessarily complete. With respect to
each such document filed with the SEC as an exhibit to the Registration
Statement, reference is made to the exhibit for a more complete description of
the matter involved, and each such statement shall be deemed qualified in its
entirety by such reference.
Such documents and other information filed by the Company can be inspected
and copied at the public reference facilities of the SEC at 450 Fifth Street,
N.W., Washington, D.C. 20549 and the regional offices of the SEC located at 7
World Trade Center, New York, New York 10048 and 500 West Madison Street, 14th
Floor, Chicago, Illinois 60661. Copies of such materials may be obtained from
the Public Reference Section of the SEC, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549 and at its public reference facilities in New York,
New York and Chicago, Illinois at prescribed rates.
The Company and the Guarantors are not currently subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). As a result of the offering of the Exchange Notes, each of
the Company and the Guarantors will become subject to the informational
requirements of the Exchange Act. The Company will fulfill its obligations with
respect to such requirements by filing periodic reports with the Commission on
its own behalf or, in the case of the Guarantors, by including information
regarding the Guarantors in the Company's periodic reports. In addition, the
Company will send to each holder of Exchange Notes copies of annual reports and
quarterly reports containing the information required to be filed under the
Exchange Act.
So long as the Company is subject to the periodic reporting requirements of
the Exchange Act, it is required to furnish the information required to be filed
with the SEC to the Trustees and the holders of the Notes and the Exchange
Notes. The Company has agreed that, even if it is not required under the
Exchange Act to furnish such information to the SEC, it will nonetheless
continue to furnish information that would be required to be furnished by the
Company by Section 13 of the Exchange Act to the Trustees and the holders of the
Notes or Exchange Notes as if it were subject to such periodic reporting
requirements.
In addition, the Company has agreed that, for so long as any of the Notes
remain outstanding, it will 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, until such
time as the Company has either exchanged the Notes for the Exchange Notes or
until such time as the holders thereof have disposed of such Notes pursuant to
an effective registration statement filed by the Company.
2
<PAGE> 10
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by, and should be read
in connection with, the more detailed information and financial statements and
notes thereto appearing elsewhere in this Prospectus. As used in this
Prospectus, the "Company" refers to AMF Group Inc. Unless the context requires
otherwise, references to "AMF" or "AMF Bowling Group" include the AMF worldwide
bowling businesses, including AMF Bowling, Inc., AMF Bowling Centers, Inc., the
AMF worldwide bowling centers and their subsidiaries. Unless otherwise noted,
the historical AMF financial data presented in this section include two European
bowling centers that were retained by the Sellers. For the effect on AMF of
excluding these two bowling centers, see "Notes to the Pro Forma Consolidated
Statements of Income" and "Notes to the Pro Forma Consolidated Balance Sheet,"
included elsewhere herein.
THE COMPANY
AMF
AMF is the largest owner and operator of commercial bowling centers in the
United States and worldwide. In addition, AMF is one of the world's leading
manufacturers of bowling center equipment, accounting for, management believes,
approximately 41% of the world's installed base of such equipment. With over 50
years of industry leadership, AMF is among the oldest and most established names
in bowling. AMF is principally engaged in two businesses which, historically,
have been operated independently: (i) the ownership and operation of 205
domestic bowling centers and 80 international bowling centers as of April 30,
1996; and (ii) the design, manufacture and sale of bowling center equipment,
including automatic pinspotters, automatic scoring equipment, bowling pins,
lanes, ball returns and certain spare and replacement parts, and the resale of
allied products such as bowling balls, bags, shoes and certain other spare and
replacement parts. For the year ended December 31, 1995, on a consolidated
basis, AMF had pro forma revenue and Adjusted Pro Forma EBITDA (as defined
herein; see page 13) of $562.6 million and $167.7 million, respectively, for a
margin of 29.8%. AMF's large-scale bowling center operations, its low-cost
manufacturing operations, and its management incentive compensation system,
which encourages revenue growth and aggressive cost management, all contribute
to AMF's operating results.
AMF Group Holdings Inc. ("Holdings") and its wholly owned subsidiary, AMF
Group Inc. (the "Company"), are newly formed Delaware corporations which were
organized by GS Capital Partners II, L.P. and other investment funds
(collectively, "GSCP") affiliated with Goldman, Sachs & Co. ("Goldman Sachs") to
effect the acquisition of AMF (the "Acquisition"). The Acquisition was completed
on May 1, 1996.
Bowling is the largest indoor participation sport in the U.S. today, with
over 75 million people (approximately 28% of the U.S. population) bowling at
least once each year. Bowlers represent a broad cross-section of the population,
and according to an industry source, nine out of 10 Americans have bowled at
least once in their lives. Bowling is both a competitive sport and a
recreational activity, resulting in two distinct groups of bowlers: league
bowlers and open play bowlers. League bowling is offered to bowlers who register
in leagues and commit to participate on a scheduled basis -- generally once a
week for a period of 30 to 40 weeks. This base of league bowlers provides a
recurring predictable revenue and earnings stream. Open play bowling is designed
for the casual bowler who bowls on an unscheduled basis subject to lane
availability. Open play bowlers and league bowlers differ in terms of customer
profiles. Open play bowlers are often families and/or social groups and tend to
be more discerning than league bowlers with respect to the appearance and
breadth of amenities offered by a particular bowling center.
3
<PAGE> 11
BOWLING CENTER OPERATIONS
AMF is the largest owner and operator of commercial bowling centers in the
United States and worldwide, with (as of April 30, 1996) 205 domestic centers in
35 states, and 80 international centers (78 of which were included in the
Acquisition), in Australia, Europe (United Kingdom, France, Spain, and
Switzerland), Asia (Hong Kong, Japan and China), Mexico and Canada. Both the
domestic and international bowling center industries are highly fragmented.
According to an industry source, there were approximately 6,400 commercial
bowling centers in the U.S. as of January 1996, with the top six operators
(including AMF) accounting for less than 8% of the total number of commercial
centers. The United States bowling center industry consists of two relatively
large bowling center operators, AMF and Brunswick Corporation ("Brunswick")
(which has approximately 115 bowling centers in the U.S.), four medium-sized
chains, which together account for approximately 144 bowling centers, and over
5,900 bowling centers owned by single-center operators or small-chain operators,
the vast majority of which are owned by single-center operators. Small-chain
operators typically own four or fewer centers. In other countries, management
estimates that there are typically a small number of operators with more than a
few centers and a large number of operators with only a single center.
For the year ended December 31, 1995, AMF's bowling center operations had
revenue and EBITDA of $292.3 million and $91.3 million, respectively, for an
EBITDA margin of 31.2% (before certain non-recurring costs of $2.3 million
relating to the acquisition of Fair Lanes, Inc. ("Fair Lanes"), a bowling center
owner/operator). AMF's bowling center operations accounted for 51.7% and 54.4%
of AMF's combined revenue and EBITDA, respectively, for 1995. For the quarter
ended March 31, 1996, AMF's bowling center operations had revenue and EBITDA of
$83.1 million and $31.8 million, respectively, for an EBITDA margin of 38.3%.
AMF's large number of centers, their geographic clustering and their size
advantage (an average of 35 lanes per AMF domestic center versus an industry
average of 20 lanes) provide it with both additional revenue opportunities and
economies of scale which allow it significant cost savings. These revenue
opportunities include: (i) scheduling flexibility which improves lane
utilization; (ii) the ability to support an expanded food and beverage
operation; and (iii) increased concourse space for amusement games, billiards
and pro shops. Cost savings resulting from the economies of scale include: (i)
the ability to spread operating and corporate overhead costs over a larger
revenue base; and (ii) attractive pricing terms from certain of AMF's suppliers.
Internationally, AMF is also the largest owner and operator of commercial
bowling centers, and management believes that AMF's centers are, on average,
larger than those of its competitors. As with its domestic operations, this
greater number of centers, their geographic clustering, and their size advantage
result in additional revenue opportunities and economies of scale.
In contrast to the single-center and small-chain operators who, in
management's view, are generally less willing to invest in capital improvements,
AMF conducts an ongoing modernization and maintenance program that results in
its centers having upgraded physical plants and generally new and attractive
appearances. Management believes that its historical spending level of 3.7% of
bowling center revenue is adequate to cover all modernization and maintenance
capital expenditures. Management estimates that only 2.0% of bowling center
revenue is required for maintenance capital expenditures alone. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Capital Expenditures."
The Fair Lanes Acquisition
On January 10, 1995, AMF assumed operational control of Fair Lanes. Several
key factors led AMF to purchase the Fair Lanes bowling centers. These bowling
centers were generally well-located and grouped in areas where AMF had little
market presence. AMF also believed that it could make meaningful operating
improvements in these centers and that this acquisition would allow AMF to take
further advantage of its significant economies of scale. Within 70 days of
assuming
4
<PAGE> 12
operational control, AMF integrated 99 of Fair Lanes' 106 bowling centers into
AMF's then existing base of 107 domestic bowling centers. The other seven Fair
Lanes centers were ultimately closed.
The opportunity for AMF to acquire Fair Lanes was precipitated by a period
of deteriorating operating results for Fair Lanes beginning in late 1992. AMF's
management believes that Fair Lanes' financial distress was caused by poor
corporate decisions that resulted in lower revenue and higher operating costs.
Fair Lanes filed for protection under Chapter 11 of the Bankruptcy Code in June
1994. A plan of reorganization was approved by the creditors and confirmed by
the Bankruptcy Court in September 1994. In September 1994, the stockholders of
AMF at that time (the "Sellers") acquired a majority of the common stock of Fair
Lanes as part of Fair Lanes' plan of reorganization, and acquired the remaining
common stock by February 1995.
Upon assuming operational control, AMF implemented a number of cost-saving
measures, organizational changes, and revenue enhancement initiatives, resulting
in significant improvements in the operating performance of the Fair Lanes
centers. AMF closed the Fair Lanes corporate offices, thereby eliminating 41
management and staff positions, and added only 14 employees to the existing AMF
corporate headquarters. AMF also reduced employee headcount and wage scales at
all levels of the Fair Lanes organization. In addition, the Fair Lanes centers
were folded into AMF's cluster/region organizational structure, and all managers
were included in AMF's incentive compensation system.
Management also decentralized marketing for the Fair Lanes centers, moving
it to the bowling center level, and significantly reduced advertising and
promotion expenses. Marketing was improved through sales calls, bowling parties
and tournaments. Depending on the needs of each specific center, AMF invested in
modernization and maintenance at approximately 90% of the Fair Lanes centers by
adding bumpers (bumper guards, often used by children, which prevent gutter
balls), synthetic lanes, new bowling equipment, carpet, signage and/or other
facility improvements. Open play pricing at the Fair Lanes centers was
subsequently increased to be more in line with AMF levels. However, AMF did not
increase Fair Lanes' league pricing for the 1995 to 1996 season as the leagues
were already committed. AMF has since raised league prices by an average of
6.0%, which will take effect in June 1996.
The initiatives described above resulted in significant profit improvements
at Fair Lanes centers. For the year ended December 31, 1994 (before AMF assumed
control), Fair Lanes had revenue of $98.3 million and EBITDA of $4.9 million
from its 106 centers. For the year ended December 31, 1995 (after AMF assumed
control), the 99 continuing Fair Lanes centers had revenue of $90.7 million and
EBITDA of $28.0 million (before certain non-recurring costs of $2.3 million).
The key drivers of this improvement were decreases in corporate, payroll and
marketing expenses as well as price increases and improved marketing. The
purchase price of approximately $105.0 million (including stock and notes
acquired) represents a multiple of 3.8 times Fair Lanes 1995 EBITDA of $28.0
million (before certain non-recurring costs of $2.3 million). See Note (c) to
the Pro Forma Consolidated Statements of Income.
COMPETITIVE STRENGTHS (BOWLING CENTER OPERATIONS)
AMF attributes its leading position in worldwide bowling center operations
to the following factors:
- - SIGNIFICANT ECONOMIES OF SCALE. AMF's large number of centers, their
geographic clustering and their size advantage provide it with both additional
revenue opportunities and economies of scale which allow it significant cost
savings.
- - UPGRADED, MODERN FACILITIES. AMF's bowling centers have upgraded physical
plants and generally new and attractive appearances, which aid AMF in
retaining its existing league bowlers and in attracting open play bowlers as
well as new league bowlers.
5
<PAGE> 13
- - ABILITY TO ACQUIRE AND INTEGRATE NEW BOWLING CENTERS. AMF has a track record
of acquiring bowling centers at attractive prices and integrating and
enhancing these acquired operations within a short period of time after the
purchase.
- - GEOGRAPHICALLY DIVERSE PORTFOLIO OF CENTERS. AMF benefits from a
geographically diverse portfolio of bowling centers both throughout the United
States and across many countries, which has historically stabilized AMF's
operating results and has partially mitigated the effect of economic,
political and weather-related events, which may be either seasonal, regional
or country-specific.
- - EXPERIENCED, MOTIVATED, INFORMED MANAGEMENT TEAM. AMF's bowling center,
cluster and regional managers are experienced, are motivated by an attractive
incentive compensation program to increase bowler participation and to produce
strong revenue and EBITDA performance, and benefit from the use of detailed
management information systems.
STRATEGIES (BOWLING CENTER OPERATIONS)
AMF intends to pursue the following strategies to further strengthen its
position and increase sales and profits in its bowling center operations:
- - PURSUE FURTHER DOMESTIC ACQUISITIONS. AMF will seek to acquire some of the
approximately 5,900 domestic bowling centers owned by single-center and
small-chain operators, capitalizing on AMF's proven ability to integrate and
enhance acquired operations. The Company will have the ability to borrow,
under certain conditions, up to $100.0 million, and, subject to satisfying a
financial test, up to an additional $50.0 million, for acquisitions.
- - MAINTAIN AND GROW LEAGUE PARTICIPATION. AMF intends to continue to conduct
marketing and promotional programs directed at maintaining existing league
participation and attracting new league bowlers.
- - ATTRACT OPEN PLAY BOWLERS. Through its bright, clean, attractive facilities
with expanded amenities, AMF will continue to seek to attract additional open
play bowlers, including families and social groups.
- - EXPAND INTERNATIONAL BOWLING CENTER OPERATIONS. AMF expects to focus on
growing its portfolio of bowling centers in potential high-growth
international markets, including China and selected markets in Europe, as well
as in certain more mature markets, such as Australia.
- - IMPROVE ANCILLARY REVENUE. Management believes that better layout and active
management and maintenance of amusement games, and the addition of billiards
in selected centers, can increase ancillary revenue.
There can be no assurance that AMF will be able to maintain these
competitive strengths or implement these strategies successfully. See "Risk
Factors."
MANUFACTURING
AMF is one of the world's leading manufacturers of bowling center
equipment, and management believes that AMF, together with Brunswick, accounts
for approximately 89% of the world's installed base of bowling center equipment.
Management believes that AMF alone accounts for approximately 41% of the world's
installed base of bowling center equipment and is a supplier to an estimated
10,000 bowling centers in over 50 countries. AMF designs, manufactures and sells
bowling center equipment, including automatic pinspotters, automatic scoring
equipment, bowling pins, lanes, ball returns, and certain spare and replacement
parts, and resells allied products such as bowling balls, bags, shoes and
certain other spare and replacement parts.
AMF's manufacturing business had revenue of $272.6 million and EBITDA of
$74.5 million for a 27.3% EBITDA margin for the year ended December 31, 1995.
AMF's manufacturing business
6
<PAGE> 14
accounted for 48.3% and 45.6% of AMF's combined revenue and EBITDA,
respectively, for 1995. For the quarter ended March 31, 1996, AMF's
manufacturing business had revenue and EBITDA of $40.2 million and $7.1 million,
respectively, for an EBITDA margin of 17.6%, a significant decline from the
first quarter of 1995 due primarily to reduced sales of New Center Packages (as
defined below). See "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Manufacturing -- First Quarter 1995 to First
Quarter 1996."
AMF's manufacturing business consists of two categories: (i) replacement
and spare parts and supplies, resale products, and major modernization equipment
(collectively, "Replacement and Modernization" products); and (ii) equipment
necessary to outfit a new bowling center or expand an existing bowling center
("New Center Packages" or "NCPs"). Each New Center Package includes a
pinspotter, and the vast majority also include all of the other equipment needed
to outfit one new bowling lane.
The large installed base of AMF equipment, along with AMF's direct sales
force and extensive distributor network, has historically generated a stable
base of recurring revenue from sales of Replacement and Modernization products.
For the year ended December 31, 1995, Replacement and Modernization products
accounted for 21.2% and 16.5% of AMF's combined revenue and EBITDA,
respectively.
AMF targets the sale of Replacement and Modernization products to mechanics
and operators of existing bowling centers worldwide. These products include both
proprietary and more standard spare and replacement parts for existing AMF
equipment, supplies such as pins and shoes, resale items such as balls, and
major modernization equipment, such as automatic scoring. Some of these
products, such as bowling pins, should be replaced on approximately an annual
basis to maintain a center, while certain less frequent investments in other
equipment are necessary to modernize a center and are often required to maintain
the customer base.
Sales of New Center Packages are made primarily to local market developers
and entrepreneurs who are constructing bowling centers in emerging market
countries. In such emerging markets, the bowling industry tends to develop
concurrently with the increase of disposable income and the growth of a middle
class, which together create a greater demand for leisure activities such as
bowling. At such times, the economics of constructing and operating bowling
centers can become very attractive, with investment pay-back periods of less
than 24 months. For the year ended December 31, 1995, sales of New Center
Packages generated 27.0% and 29.0% of AMF's combined revenue and EBITDA,
respectively.
Recent New Center Package revenue growth has resulted primarily from
increased orders from Taiwan, Korea and China, where the construction of new
bowling centers has increased dramatically in recent years. Most recently, NCP
sales to Taiwan and Korea have declined as the bowling industry has matured in
these markets. Over the next several years, AMF expects to benefit from
increases in demand from selected international markets, including continued
growth in China and growth in Indonesia, India, Malaysia, Poland, and other
selected markets in Asia, Europe and South America. However, there can be no
assurance that such growth will materialize.
AMF and Brunswick are the only full-line manufacturers of Replacement and
Modernization products that compete on a global basis. AMF's primary competitors
for Replacement and Modernization sales (other than Brunswick) are much smaller
companies that tend to offer a narrower range of products and are often
regionally focused. AMF's primary competitor for worldwide sales of NCPs
historically has been Brunswick. More recently, however, AMF has also competed,
primarily in China and Korea, with DACOS Bowling International ("DACOS"), a
Korea-based manufacturer.
7
<PAGE> 15
COMPETITIVE STRENGTHS (MANUFACTURING)
AMF attributes its position as a leading bowling equipment manufacturer to
the following factors:
- - LARGE SHARE OF THE INSTALLED BASE OF BOWLING CENTER EQUIPMENT. AMF's large
share of the installed base of bowling center equipment helps establish AMF's
industry reputation, supports AMF's sales efforts through its large number of
existing customer relationships and aids AMF with regard to continued sales of
Replacement and Modernization products.
- - STRONG DIRECT SALES FORCE AND EXTENSIVE DISTRIBUTOR NETWORK. AMF's direct
sales network provides AMF greater control over the sale of its products.
Through this network, AMF develops long-term sales relationships with bowling
center operators and mechanics both domestically and internationally. AMF's
extensive distributor network complements the direct sales effort by providing
sales coverage in selected international markets.
- - LOW-COST MANUFACTURER. Management believes that AMF is generally a low-cost
producer of equipment for both the Replacement and Modernization and New
Center Package categories.
- - SUPERIOR PRODUCTS. AMF positions its products as the highest quality, most
technologically advanced products in the industry, allowing AMF generally to
charge premium prices.
- - MOTIVATED AND EXPERIENCED MANAGEMENT TEAM. AMF's manufacturing management team
is experienced and is motivated by an attractive incentive compensation
program to produce strong revenue and EBITDA performance.
STRATEGIES (MANUFACTURING)
AMF intends to pursue the following strategies to further enhance its
position and increase sales and profits in manufacturing:
- - EXPAND LEADING POSITION IN REPLACEMENT AND MODERNIZATION SALES. As the
worldwide base of bowling equipment grows, management believes that AMF's
strong direct sales force, its extensive distributor network and its high
quality products will allow AMF to increase its sales of Replacement and
Modernization products.
- - GROW NEW CENTER PACKAGE SALES. AMF's recognized brand name, its
technologically advanced products and its strong sales force should continue
to position AMF to take advantage of increasing international New Center
Package demand in parts of Asia and other possible high-growth regions.
- - MAINTAIN LOW-COST MANUFACTURING POSITION. AMF expects to continue to maintain
its low-cost manufacturing position through taking further advantage of
manufacturing efficiencies, continuous improvement programs and its low-cost
non-union work force.
- - MAINTAIN PRODUCT SUPERIORITY. AMF expects to continue to maintain its
technological lead through its research efforts and continued development of
new, more advanced products.
There can be no assurance that AMF will be able to maintain these
competitive strengths or implement these strategies successfully. See "Risk
Factors."
Management's Growth Strategies
Management plans to pursue a variety of potential growth opportunities that
AMF's prior owners elected not to pursue to any significant degree. These
opportunities include (i) acquiring selected domestic single-center and small
chain bowling center operations, (ii) constructing new bowling centers in
high-growth markets and (iii) more aggressively expanding New Center Package
sales efforts in developing markets. Management believes that the Acquisition
Facility (as defined herein) of up to $100.0 million, and, subject to the
Company's satisfying a financial test, up to an
8
<PAGE> 16
additional $50.0 million, contemplated by the New Bank Credit Agreement (as
defined herein), will allow the Company to finance future acquisitions of
bowling centers over the next several years.
In addition, the bowling center and manufacturing businesses have
historically been operated completely independently. Management believes that it
can achieve improved operating results through greater communication and
coordination between the bowling center and manufacturing operations.
THE ACQUISITION
Pursuant to a Stock Purchase Agreement dated February 16, 1996 (as amended,
the "Stock Purchase Agreement") between Holdings and the Sellers, on May 1,
1996, Holdings acquired AMF through a stock purchase by the Company's
subsidiaries of all the outstanding stock of the separate domestic and foreign
corporations that constitute substantially all of AMF and through the purchase
of the assets of AMF's bowling center operations in Spain and Switzerland. The
Company did not acquire the assets of two bowling centers located in Madrid,
Spain and Geneva, Switzerland (both of which were retained by the Sellers).
Accordingly, as a result of the Acquisition, the Company owns or operates all
205 of AMF's domestic bowling centers and 78 of AMF's 80 international bowling
centers. The purchase price for the Acquisition was $1.325 billion, subject to
certain post-closing adjustments, less approximately $2.0 million representing
debt of AMF which remained in place following the closing of the Acquisition
(the "Closing").
On April 11, 1996, Holdings and the Sellers entered into a letter agreement
(the "Letter Agreement") amending the Stock Purchase Agreement. Under the terms
of the Letter Agreement, certain of the Sellers (the "Covenantors") have agreed
to make certain payments to Holdings if the net income before interest, taxes,
depreciation, amortization, and certain non-cash, extraordinary, non-recurring
and non-operating items ("Cash Flow") of AMF Bowling, Inc., the entity that
principally operates AMF's bowling manufacturing business, does not achieve
certain agreed upon Cash Flow objectives during the period from May 1, 1996
through June 30, 1997. See "The Acquisition -- Purchase Price; Adjustments."
The following table sets forth the sources and uses of funds related to the
Acquisition:
<TABLE>
<CAPTION>
(IN MILLIONS)
-------------
<S> <C>
SOURCES OF FUNDS
Senior Debt(a)................................................ $ 517.0
10 7/8% Senior Subordinated Notes............................. 250.0
12 1/4% Senior Subordinated Discount Notes.................... 250.0
--------
Total Debt............................................... 1,017.0
Equity(b)..................................................... 391.0
Cash.......................................................... 1.7
--------
Total............................................... $ 1,409.7
========
USES OF FUNDS
Purchase Price(a)............................................. $ 1,325.0
Purchase Price Adjustments(c)................................. 14.1
Transaction Costs(b).......................................... 70.6
--------
Total............................................... $ 1,409.7
========
</TABLE>
- ---------------
(a) Includes an existing mortgage payable by AMF in the amount of approximately
$2.0 million as of April 30, 1996. All other debt of AMF was extinguished at
or prior to the completion of the Acquisition.
9
<PAGE> 17
(b) Includes warrants to purchase approximately 2.2% of the fully diluted common
stock of Holdings' parent company issued upon the closing of the Acquisition
to the Sellers' financial advisor in lieu of a cash fee. Such warrants have
been valued for accounting purposes at approximately $8.7 million.
(c) Includes assumed purchase price adjustments resulting in a payment to
Sellers of $14.1 million based on AMF's March 31, 1996 balance sheet. The
actual purchase price adjustments may differ. See "Notes to the Pro Forma
Consolidated Balance Sheet."
The senior debt portion of the financing for the Acquisition was provided
pursuant to a credit agreement (the "New Bank Credit Agreement") with a group of
lenders. In connection with such financing, Goldman Sachs acted as Syndication
Agent, Goldman Sachs and Citicorp Securities, Inc. acted as Arrangers, and
Citibank, N.A. is acting as administrative agent. See "Description of Senior
Debt."
RISK FACTORS
The Exchange Notes offered hereby involve a high degree of risk. See "Risk
Factors" commencing on page 22.
10
<PAGE> 18
SUMMARY COMBINED FINANCIAL DATA
(DOLLARS IN MILLIONS, EXCEPT AVERAGE PRICE PER GAME)
The following data, insofar as it relates to each of the years 1993, 1994
and 1995, have been derived from audited financial statements, including the
combined balance sheets at December 31, 1994 and 1995 and the related combined
statements of income and of cash flows for the years ended December 31, 1993,
1994 and 1995 and notes thereto appearing elsewhere herein.
The combined financial data for the years ended December 31, 1991 and 1992
and for the three-month periods ended March 31, 1995 and 1996 have been derived
from unaudited combined financial statements.
The historical combined financial data of AMF presented below should be
read in conjunction with the combined financial statements and notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this Prospectus. The summary pro forma data
below should be read in conjunction with the unaudited pro forma consolidated
financial statements of the Company and notes thereto included elsewhere in this
Prospectus.
11
<PAGE> 19
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------------------------- ---------------------------
1995 1996
1991 1992 1993 1994(A) 1995 PRO FORMA 1995 1996 PRO FORMA
------ ------ ------ ------- ------ --------- ------ ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total operating revenue........ $355.9 $391.2 $427.6 $517.8 $564.9 $ 562.6 $156.9 $123.3 $ 122.7
Cost of sales.................. 114.2 132.1 153.2 196.0 183.9 183.6 48.2 30.7 30.6
----- ----- ----- ----- ----- ----- ----- ----- -----
Gross profit................... 241.7 259.1 274.4 321.8 381.0 379.0 108.7 92.6 92.1
Bowling center operations
expenses...................... 103.1 103.1 108.5 120.9 170.6 169.1 44.1 42.0 41.7
Selling, general and admin.
expenses...................... 38.1 43.2 41.9 51.4 46.9 44.3 13.7 11.7 11.4
Depreciation and
amortization.................. 28.3 25.5 21.4 24.8 39.1 67.0 9.2 11.0 16.4
----- ----- ----- ----- ----- ----- ----- ----- -----
Operating income............... 72.2 87.3 102.6 124.7 124.4 98.6 41.7 27.9 22.6
Interest expense, net.......... 9.9 6.4 4.1 6.9 13.5 102.1 3.3 3.4 23.8
Other income (expense), net.... 0.2 (1.4) (1.0) (2.0 ) (2.0) (2.0 ) (0.9) (0.2) (0.2)
----- ----- ----- ----- ----- ----- ----- ----- -----
Income (loss) before income
taxes......................... 62.5 79.5 97.5 115.8 108.9 (5.5 ) 37.5 24.3 (1.4)
Provision for income taxes..... 13.4 15.4 15.1 16.5 12.1 10.8 3.3 2.7 2.4
----- ----- ----- ----- ----- ----- ----- ----- -----
Net income (loss).............. $ 49.1 $ 64.1 $ 82.4 $ 99.3 $ 96.8 $ (16.3 ) $ 34.2 $ 21.6 $ (3.8)
===== ===== ===== ===== ===== ===== ===== ===== =====
Ratio of earnings to fixed
charges (b)................... 4.7x 7.1x 11.0x 10.3 x 6.1x -- 8.1x 5.5x --
BALANCE SHEET DATA (AT END OF
PERIOD):
Total assets................... $244.1 $231.1 $228.2 $410.2 $400.4 $1,480.4 $413.9 $400.9 $1,502.2
Total debt..................... 112.4 98.0 75.7 186.1 167.4 1,017.0 176.1 161.1 1,017.8
Stockholders' equity........... 76.9 75.8 88.6 132.4 161.5 383.7 158.9 173.5 390.4
Net working capital
("NWC")(c).................... 20.6 15.6 18.9 16.9 29.4 29.4 26.2 31.1 31.4
OTHER DATA:
BOWLING CENTER OPERATIONS:
Number of centers (at end of
period)....................... 196 197 190 293 285 283 -- -- --
Number of lanes (at end of
period)....................... 5,981 5,988 5,896 9,586 9,471 9,443 -- -- --
Lineage(d)..................... 26.4 26.6 25.9 26.0 (i) 24.2(j) 24.2 (j) -- -- --
Average price per game
("APPG")...................... $ 2.21 $ 2.21 $ 2.17 $ 2.20 (i) $ 2.19(j) $ 2.19 (j) -- -- --
Fixed exch. rate APPG(e)....... 2.09 2.11 2.15 2.19 (i) 2.19(j) 2.19 (j) -- -- --
Bowling revenue................ $127.1 $128.5 $120.8 $140.3 $182.9 $ 181.4 $ 54.2 $ 52.2 $ 51.8
Food and beverage revenue...... 42.6 43.3 40.8 49.8 69.4 68.8 20.6 20.1 20.0
Ancillary revenue.............. 30.5 32.7 31.0 35.3 40.0 39.8 11.0 10.8 10.7
----- ----- ----- ----- ----- ----- ----- ----- -----
Total revenue.................. $200.2 $204.5 $192.6 $225.4 $292.3 $ 290.0 $ 85.8 $ 83.1 $ 82.5
EBITDA(f)...................... 66.9 68.3 56.9 68.9 89.0 90.8 30.2 31.8 31.6
EBITDA margin.................. 33.4% 33.4% 29.5% 30.6% 30.4% 31.3% 35.2% 38.3% 38.3%
MANUFACTURING:
Total NCPs sold................ 1,896 2,210 3,577 4,941 4,437 4,437 1,485 415 415
NCP revenue.................... N/A N/A $122.6 $170.5 $152.6 $ 152.6 $ 45.1 $ 16.8 $ 16.8
Replacement and Modernization
rev........................... N/A N/A 112.4 121.9 120.0 120.0 26.0 23.4 23.4
----- ----- ----- ----- ----- ----- -----
Total revenue.................. $155.7 $186.7 $235.0 $292.4 $272.6 $ 272.6 $ 71.1 $ 40.2 $ 40.2
EBITDA......................... 33.6 44.5 67.1 80.6 74.5 74.8 20.6 7.1 7.4
EBITDA margin.................. 21.6% 23.8% 28.6% 27.6% 27.3% 27.4% 29.0% 17.6% 18.4%
COMBINED:
EBITDA......................... $100.5 $112.8 $124.0 $149.5 $163.5 $ 165.6 $ 50.8 $ 38.9 $ 39.0
EBITDA margin.................. 28.2% 28.8% 29.0% 28.9% 28.9% 29.4% 32.4% 31.6% 31.8%
Adjusted Pro Forma EBITDA(g)... -- -- -- -- -- $ 167.7 -- -- --
Cash interest exp.............. $ 13.3 $ 7.4 $ 4.0 $ 4.3 $ 5.9 67.0 0.9 0.5 $ 16.7
Total interest exp............. 12.0 7.9 5.0 7.4 15.7 102.9 3.7 3.8 25.5
Pro forma cash taxes paid...... -- -- -- -- -- 12.5 -- -- 2.7
Modern. and Maintenance Cap.
Ex. ("MMCapEx")(h)............ 8.6 8.3 9.0 11.4 13.2 13.2 3.2 3.0 3.0
Expansion capital
expenditures.................. 7.0 3.8 5.7 6.4 16.9 16.9 1.1 1.4 1.4
----- ----- ----- ----- ----- ----- ----- ----- -----
Total capital expenditures..... $ 15.6 $ 12.1 $ 14.7 $ 17.8 $ 30.1 $ 30.1 $ 4.3 $ 4.4 $ 4.4
===== ===== ===== ===== ===== ===== ===== ===== =====
Incr. (Decr.) in NWC ("Chg.
NWC")......................... N/A (5.0) 3.3 (2.0 ) 12.5 12.5 N/A 1.7 2.0
PRO FORMA RATIO DATA:
EBITDA/cash interest exp................................................... 2.47 x 2.33x
(EBITDA -- MMCapEx)/cash interest exp. .................................... 2.27 2.16
(EBITDA -- MMCapEx -- Chg. NWC)/cash interest exp. ........................ 2.09 2.04
EBITDA/total interest exp. ................................................ 1.61 x 1.53x
(EBITDA -- MMCapEx)/total interest exp. ................................... 1.48 1.41
(EBITDA -- MMCapEx -- Chg. NWC)/total interest exp. ....................... 1.36 1.33
Total debt/EBITDA.......................................................... 6.14 x 6.52x
</TABLE>
12
<PAGE> 20
- ---------------
(a) Includes results of Fair Lanes, acquired on September 29, 1994.
(b) The ratios of earnings to fixed charges are computed by dividing earnings by
the fixed charges. Earnings consist of net income to which has been added
fixed charges and income taxes. Fixed charges consist of interest expense,
amortization of debt issuance costs, and the portion of rent expense
considered to represent interest. Earnings were inadequate to cover fixed
charges on a pro forma basis for the year ended December 31, 1995 and the
three months ended March 31, 1996 by $5.5 million and $1.4 million,
respectively.
(c) Defined as accounts and notes receivable (excluding affiliated receivables),
net of allowance for doubtful accounts, inventories and prepaid expenses and
other current assets less accounts payable, excluding book overdrafts and
affiliated payables, and accrued expenses, excluding league deposits.
(d) Defined as worldwide average number of games bowled per lane per day.
(e) Defined as the result of dividing worldwide bowling revenue for each period
presented (as translated into U.S. dollars by using weighted average foreign
currency exchange rates used to translate 1995 revenue) by the total number
of games bowled worldwide. The effect is to fix the exchange rates at the
1995 levels for purposes of comparability in examining changes in average
price per game without the effect of changes in foreign currency exchange
rates.
(f) EBITDA represents net income before net interest expense, income taxes,
depreciation and amortization, and other income (expense), net. EBITDA is
not intended to represent and should not be considered more meaningful than,
or an alternative to, net income, cash flow or other measures of performance
in accordance with generally accepted accounting principles. EBITDA data is
included because the Company understands that such information is used by
certain investors as one measure of an issuer's historical ability to
service debt.
(g) The following adjustments have been made to EBITDA as reflected in the Pro
Forma Statement of Income for the year ended December 31, 1995 as presented
in the Pro Forma Financial Statements appearing elsewhere in this
Prospectus:
During 1995, AMF management prepared a formal strategic assessment of its
global operations, resulting in changes in management personnel, the
development of a new bowling centers identity program and the consolidation
of European offices. In connection therewith, AMF incurred certain
non-recurring, incremental costs as follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1995
-----------------
<S> <C>
Recruitment fees for new international management................................... $ 0.069
Costs relating to bowling centers identity program.................................. 0.026
Incremental costs of temporary country manager in Australia......................... 0.135
Redundancy and relocation costs of $0.035 and legal costs of $0.023 incurred to
restructure Australian operations................................................. 0.058
Severance and legal costs incurred in Spain of $0.043 and Switzerland of $0.015..... 0.058
Salaries and benefits for a product licensing position which was eliminated......... 0.098
Severance and recruitment costs incurred in connection with consolidating three
European offices into one central office in London................................ 0.280
-------
$ 0.724
-------
During 1995, AMF incurred certain non-recurring costs in connection with the
following:
Non-compete and consulting agreement in connection with the replacement of
management of manufacturing....................................................... $ 1.400
Costs associated with AMF agreeing to share in cost of settling a supplier's
warranty obligation............................................................... 0.210
Legal expenses for settled National Labor Relations Board matter.................... 0.071
Incremental costs, including legal and other costs, incurred by AMF to establish a
direct sales office due to the termination of AMF's Korean distributor............ 0.814
Reversals of legal reserves after favorable settlement of National Labor Relations
Board matter...................................................................... (1.103)
-------
$ 1.392
-------
Total Adjustments to Pro Forma EBITDA............................................... $ 2.116
=======
</TABLE>
(h) Defined as capital expenditures for existing product lines and existing
businesses for manufacturing, and capital expenditures for modernizing and
maintaining bowling centers for bowling center operations.
(i) Includes results of Fair Lanes, acquired on September 29, 1994. The figures
for lineage, average price per game and fixed exchange rate average price
per game for AMF, excluding Fair Lanes, are 26.3, $2.25 and $2.23,
respectively.
(j) Includes results of Fair Lanes, acquired on September 29, 1994. The figures
for lineage, average price per game and fixed exchange rate average price
per game for AMF, excluding Fair Lanes, are 25.5, $2.33 and $2.33,
respectively.
13
<PAGE> 21
THE NOTE OFFERING
THE NOTES..................... The Notes were sold by the Company on March 21,
1996, and were subsequently resold to qualified
institutional buyers pursuant to Rule 144A
under the Securities Act, to institutional
investors that are accredited investors in a
manner exempt from registration under the
Securities Act and to certain persons in
transactions outside the United States in
reliance on Regulation S under the Securities
Act (the "Note Offering").
REGISTRATION RIGHTS
AGREEMENT................... In connection with the Note Offering, the
Company entered into the Registration Rights
Agreement, which grants holders ("Holders") of
the Notes certain exchange and registration
rights. The Exchange Offer is intended to
satisfy such exchange and registration rights,
which generally terminate upon the consummation
of the Exchange Offer.
THE EXCHANGE OFFER
SECURITIES OFFERED............ $250,000,000 aggregate principal amount of
10 7/8% Series B Senior Subordinated Notes due
March 15, 2006.
$452,000,000 aggregate principal amount of
12 1/4% Series B Senior Subordinated Discount
Notes due March 15, 2006.
THE EXCHANGE OFFER............ $1,000 principal amount of the Exchange
Senior Subordinated Notes in exchange for
each $1,000 principal amount of Senior
Subordinated Notes and $1,000 principal amount
of the Exchange Senior Subordinated Discount
Notes in exchange for each $1,000 principal
amount of Senior Subordinated Discount Notes.
As of the date hereof, $250,000,000 aggregate
principal amount of Senior Subordinated Notes
and $452,000,000 aggregate principal amount of
Senior Subordinated Discount Notes are
outstanding. The Company will issue the
Exchange Notes to holders on or promptly after
the Expiration Date.
Based on an interpretation by the staff of the
SEC set forth in no-action letters issued to
third parties, the Company believes that
Exchange Notes issued pursuant to the Exchange
Offer in exchange for Notes may be offered for
resale, resold and otherwise transferred by any
Holder 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 provisions of the
Securities Act, provided that such Exchange
Notes are acquired in the ordinary course of
such holder's business and that such holder
does not intend to participate and has no
arrangement or understanding with any person to
participate in the distribution of such
Exchange Notes.
Each broker-dealer that receives Exchange Notes
for its own account pursuant to the Exchange
Offer must acknowledge
14
<PAGE> 22
that it will deliver a prospectus in connection
with any resale of such Exchange Notes. The
Letters of Transmittal state 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 Exchange Notes received in
exchange for Notes where such 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 180 days after the Expiration Date,
it will make this Prospectus available to any
broker-dealer for use in connection with any
such resale.
Any Holder who tenders in the Exchange Offer
with the intention to participate, or for the
purpose of participating, in a distribution of
the Exchange Notes could not rely on the
position of the staff of the SEC enunciated in
Exxon Capital Holdings Corporation (available
April 13, 1989), Morgan Stanley & Co., Inc.
(available June 5, 1991) or similar no-action
letters and, in the absence of an exemption
therefrom, must comply with the registration
and prospectus delivery requirements of the
Securities Act in connection with the resale of
the Exchange Notes. Failure to comply with such
requirements in such instance may result in
such Holder incurring liability under the
Securities Act for which the Holder is not
indemnified by the Company.
EXPIRATION DATE............... 5:00 p.m., New York City time, on ,
1996, unless the Exchange Offer is extended, in
which case the term "Expiration Date" means the
latest date and time to which the Exchange
Offer is extended.
INTEREST ON THE EXCHANGE NOTES
AND THE NOTES............... The Exchange Senior Subordinated Notes will
bear interest from March 21, 1996, the date of
issuance of the Notes that are tendered in
exchange for the Exchange Notes (or the most
recent Interest Payment Date (as defined below
in the Summary of Terms of Exchange Notes) to
which interest on such Notes has been paid).
Accordingly, Holders of Senior Subordinated
Notes that are accepted for exchange will not
receive interest on the Senior Subordinated
Notes that is accrued but unpaid at the time of
tender, but such interest will be payable on
the first Interest Payment Date after the
Expiration Date.
The Exchange Senior Subordinated Discount Notes
will not bear interest prior to March 15, 2001.
Thereafter, interest will be payable in cash
semi-annually on March 15 and September 15 of
each year, commencing on September 15, 2001.
15
<PAGE> 23
CONDITIONS TO THE
EXCHANGE OFFER.............. The Exchange Offer is subject to certain
customary conditions, which may be waived by
the Company. See "The Exchange
Offer -- Conditions."
PROCEDURES FOR
TENDERING NOTES............. Each Holder of Notes wishing to accept the
Exchange Offer must complete, sign and date the
relevant accompanying Letter of Transmittal, or
a facsimile thereof, in accordance with the
instructions contained herein and therein, and
mail or otherwise deliver such Letter of
Transmittal, or such facsimile, together with
the Notes and any other required documentation
to the relevant Exchange Agent at the address
set forth in the Letter of Transmittal. The
[blue] Letter of Transmittal should be used to
tender Senior Subordinated Notes and the
[yellow] Letter of Transmittal should be used
to tender Senior Subordinated Discount Notes.
By executing the Letter of Transmittal, each
Holder will represent to the Company that,
among other things, the Holder or the person
receiving such Exchange Notes, whether or not
such person is the Holder, is acquiring the
Exchange Notes in the ordinary course of
business and that neither the Holder nor any
such other person has any arrangement or
understanding with any person to participate in
the distribution of such Exchange Notes. In
lieu of physical delivery of the certificates
representing Notes, tendering Holders may
transfer Notes pursuant to the procedure for
book-entry transfer as set forth under "The
Exchange Offer -- Procedures for Tendering."
SPECIAL PROCEDURES FOR
BENEFICIAL OWNERS........... Any beneficial owner whose Notes are registered
in the name of a broker, dealer, commercial
bank, trust company or other nominee and who
wishes to tender should contact such registered
Holder promptly and instruct such registered
Holder to tender on such beneficial owner's
behalf. If such beneficial owner wishes to
tender on such owner's own behalf, such owner
must, prior to completing and executing the
Letter of Transmittal and delivering its Notes,
either make appropriate arrangements to
register ownership of the Notes in such owner's
name or obtain a properly completed bond power
from the registered holder. The transfer of
registered ownership may take considerable
time.
GUARANTEED DELIVERY
PROCEDURES.................. Holders of Notes who wish to tender their Notes
and whose Notes are not immediately available
or who cannot deliver their Notes, the Letter
of Transmittal or any other documents required
by the Letter of Transmittal to the Exchange
Agent (or comply with the procedures for
book-entry transfer) prior to the Expiration
Date must tender their Notes according to the
guaranteed delivery procedures set forth in
"The "Exchange Offer -- Guaranteed Delivery
Procedures."
16
<PAGE> 24
WITHDRAWAL RIGHTS............. Tenders may be withdrawn at any time prior to
5:00 p.m., New York City time, on the
Expiration Date pursuant to the procedures
described under "The Exchange
Offer -- Withdrawals of Tenders."
ACCEPTANCE OF NOTES AND
DELIVERY OF EXCHANGE NOTES.... The Company will accept for exchange any and
all Notes that are properly tendered in the
Exchange Offer prior to 5:00 p.m., New York
City time, on the Expiration Date. The Exchange
Notes issued pursuant to the Exchange Offer
will be delivered promptly following the
Expiration Date. See "The Exchange
Offer -- Terms of the Exchange Offer."
FEDERAL INCOME TAX
CONSEQUENCES................ The issuance of the Exchange Notes to Holders
of the Notes pursuant to the terms set forth in
this Prospectus will not constitute an exchange
for federal income tax purposes. Consequently,
no gain or loss would be recognized by Holders
of the Notes upon receipt of the Exchange
Notes. See "Certain Federal Income Tax
Consequences of the Exchange Offer."
EFFECT ON HOLDERS OF NOTES.... As a result of the making of this Exchange
Offer, the Company will have fulfilled certain
of its obligations under the Registration
Rights Agreement, and Holders of Notes who do
not tender their Notes will generally not have
any further registration rights under the
Registration Rights Agreement or otherwise.
Such Holders will continue to hold the
untendered Notes and will be entitled to all
the rights and subject to all the limitations
applicable thereto under the Indentures, except
to the extent such rights or limitations, by
their terms, terminate or cease to have further
effectiveness as a result of the Exchange
Offer. All untendered Notes will continue to be
subject to certain restrictions on transfer.
Accordingly, if any Notes are tendered and
accepted in the Exchange Offer, the trading
market for the untendered Notes could be
adversely affected.
EXCHANGE AGENTS............... IBJ Schroder Bank & Trust Company (with respect
to the Senior Subordinated Notes) and American
Bank National Association (with respect to the
Senior Subordinated Discount Notes).
17
<PAGE> 25
SUMMARY OF TERMS OF EXCHANGE NOTES
The form and terms of the Exchange Notes are the same as the form and terms
of the Notes (which they replace) except that (i) the Exchange Notes have been
registered under the Securities Act of 1933, as amended (the "Securities Act")
and, therefore, will not bear legends restricting the transfer thereof and (ii)
the Holders of Exchange Notes generally will not be entitled to further
registration rights under the Registration Rights Agreement of the Company dated
as of March 21, 1996 (the "Registration Rights Agreement"), which rights
generally will be satisfied when the Exchange Offer is consummated. The Exchange
Notes will evidence the same debt as the Notes and will be entitled to the
benefits of the Indentures. See "Description of Exchange Notes."
THE COMPANY................... AMF Group Inc.
SECURITIES OFFERED............ $250.0 million principal amount of 10 7/8%
Series B Senior Subordinated Notes due 2006
(the "Exchange Senior Subordinated Notes") and
$452.0 million principal amount of 12 1/4%
Series B Senior Subordinated Discount Notes due
2006 (the "Exchange Senior Subordinated
Discount Notes" and, collectively with the
Exchange Senior Subordinated Notes, the
"Exchange Notes").
YIELD TO MATURITY............. 10 7/8%, in the case of the Exchange Senior
Subordinated Notes, and 12 1/4%, in the case of
the Exchange Senior Subordinated Discount
Notes, calculated on a semiannual
bond-equivalent basis from March 21, 1996.
INTEREST PAYMENT DATES........ Cash interest will accrue on the Exchange
Senior Subordinated Notes from March 21, 1996
and will be payable on each March 15 and
September 15, commencing September 15, 1996. No
interest will accrue on the Exchange Senior
Subordinated Discount Notes prior to March 15,
2001. Thereafter, interest will be payable on
each March 15 and September 15, commencing
September 15, 2001. The Exchange Senior
Subordinated Discount Notes will bear original
issue discount, and the Holders of the Exchange
Senior Subordinated Discount Notes (including
cash basis holders) will be required to include
such original issue discount in gross income
for federal income tax purposes, as interest,
on a constant yield to maturity basis in
advance of the receipt of cash payments of such
interest.
MATURITY DATE................. March 15, 2006.
OPTIONAL REDEMPTION........... The Exchange Notes will be redeemable, at the
option of the Company, on one or more
occasions, at any time on or after March 15,
2001, at the redemption prices set forth
herein, together with accrued interest, if any,
to the redemption date. Prior to March 15,
1999, up to $100 million in aggregate principal
amount of Exchange Senior Subordinated Notes
will be redeemable at the option of the
Company, on one or more occasions, from the net
proceeds of public or private sales of common
stock of, or contributions to the common equity
capital of, the Company, at a price of 110.875%
of the principal amount of the Exchange Senior
Subordinated Notes, together with accrued and
unpaid interest, if any, to the date of
redemption; provided that at least $150 million
in aggregate principal amount of Exchange
Senior Subordi-
18
<PAGE> 26
nated Notes remains outstanding immediately
after such redemption. In addition, prior to
March 15, 1999, the Exchange Senior
Subordinated Discount Notes will be redeemable
at the option of the Company, on one or more
occasions, from the net proceeds of public or
private sales of common stock of, or
contributions to the common equity capital of,
the Company, at a price of 112.250% of the
Accreted Value of the Senior Subordinated
Discount Notes; provided that at least $150
million in Accreted Value of Exchange Senior
Subordinated Discount Notes remains outstanding
immediately after such redemption. Upon the
occurrence of a Change of Control, each Holder
of Exchange Notes may require the Company to
repurchase all or a portion of such Holder's
Exchange Notes at 101% of the aggregate
principal amount of the Exchange Senior
Subordinated Notes and 101% of the Accreted
Value of the Exchange Senior Subordinated
Discount Notes, as applicable, together with
accrued and unpaid interest, if any, to the
date of repurchase. See "Description of
Exchange Notes."
MANDATORY SINKING FUND........ None.
GUARANTEES.................... The Company's payment obligations under the
Exchange Notes will be jointly and severally
guaranteed on a senior subordinated basis (the
"Senior Subordinated Guarantees") by Holdings,
by each of the Company's direct and indirect
domestic subsidiaries and by any other
Subsidiaries of the Company that act as
guarantors under the New Bank Credit Agreement
(collectively, the "Guarantors"). The Senior
Subordinated Guarantees will be subordinated to
the guarantees of Senior Debt issued by the
Guarantors under the New Bank Credit Agreement.
See "Description of Exchange Notes -- Senior
Subordinated Guarantees."
RANKING....................... The Exchange Notes will be general, unsecured
obligations of the Company, will be
subordinated in right of payment to all Senior
Debt (as defined herein) of the Company, will
rank pari passu with all senior subordinated
debt of the Company and will be senior in right
of payment to all existing and future
subordinated debt of the Company. The claims of
the Holders of the Exchange Notes will be
subordinated to the Senior Debt, which, as of
May 1, 1996, was approximately $517.0 million,
$515.0 million of which consisted of fully
secured borrowings under the New Bank Credit
Agreement. In addition, the Exchange Notes will
be effectively subordinated to all indebtedness
and other liabilities (including trade payables
and capital lease obligations) of the Company's
subsidiaries that are not Guarantors and
through which the Company will conduct a
portion of its operations. See "Capitalization"
and "Description of Exchange Notes --
Subordination."
FORM AND DENOMINATION......... The Exchange Notes will be fully registered as
to principal and interest in minimum
denominations of $1,000 and integral multiples
thereof. The Exchange Notes will be initially
19
<PAGE> 27
issued in the form of one or more global notes
and deposited with a custodian for and
registered in the name of a nominee of The
Depository Trust Company. Exchange Notes will
not be issued in certificated, fully registered
form, except in the circumstances provided for
in the Indentures. See "Description of Exchange
Notes -- Book-Entry, Delivery and Form."
CERTAIN COVENANTS............. The Indenture governing the Exchange Senior
Subordinated Notes (the "Senior Subordinated
Note Indenture") and the Indenture governing
the Exchange Senior Subordinated Discount Notes
(the "Senior Subordinated Discount Exchange
Note Indenture" and, together with the Senior
Subordinated Note Indenture, the "Indentures")
contain certain covenants that, among other
things, limit the ability of the Company and
its Restricted Subsidiaries (as defined herein)
to incur additional indebtedness and issue
Disqualified Stock (as defined herein), pay
dividends or distributions or make investments
or make certain other Restricted Payments (as
defined herein), enter into certain
transactions with affiliates, dispose of
certain assets, incur liens securing pari passu
and subordinated indebtedness of the Company
and engage in mergers and consolidations. See
"Description of Exchange Notes."
ORIGINAL ISSUE DISCOUNT....... For federal income tax purposes, each Exchange
Senior Subordinated Discount Note will be
considered to have been issued with "original
issue discount" equal to the difference between
the issue price of the Senior Subordinated
Discount Note for which it is exchanged and the
sum of all cash payments (whether denominated
as principal or interest) to be made on such
Senior Subordinated Discount Note. Each Holder
of an Exchange Senior Subordinated Discount
Note must include in gross income for federal
income tax purposes the sum of the daily
portions of such original issue discount for
each day during each taxable year in which the
Exchange Senior Subordinated Discount Note is
held, even though no interest payments will be
received prior to September 15, 2001. See
"Description of Certain Federal Income Tax
Consequences of an Investment in the Exchange
Notes."
EXCHANGE OFFER;
REGISTRATION RIGHTS......... If the Holders of an aggregate of at least $1.0
million in principal amount or Accreted Value
of Transfer Restricted Securities (as defined
herein) notify the Company within the specified
time period that (A) they are prohibited by law
or SEC policy from participating in the
Exchange Offer, (B) they may not resell
Exchange Notes acquired 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) they are
broker-dealers and hold Notes acquired directly
from the Company or an affiliate of the
Company, then the Company and the Guarantors
will be required to provide a shelf
registration statement (the "Shelf
20
<PAGE> 28
Registration Statement") to cover resales of
the Notes by the Holders thereof.
Notwithstanding the foregoing, at any time
after consummation of the Exchange Offer, the
Company and the Guarantors may allow the Shelf
Registration Statement to cease to be effective
and usable if (i) the Board of Directors of the
Company determines in good faith that such
action is in the best interests of the Company,
and the Company notifies the Holders within a
certain period of time after the Board of
Directors makes such determination or (ii) the
prospectus contained in the Shelf Registration
Statement contains an untrue statement of a
material fact or omits 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;
provided that the period referred to in the
Registration Rights Agreement during which the
Shelf Registration Statement is required to be
effective and usable will be extended by the
number of days during which such registration
statement was not effective or usable pursuant
to the foregoing provisions.
If (i) the Company and the Guarantors fail to
cause the Exchange Offer Registration Statement
to become effective within 90 days after the
date of its initial filing with the SEC, or
(ii) the Company and the Guarantors are
obligated to provide a Shelf Registration
Statement and such Shelf Registration Statement
is not filed within 30 days, or declared
effective within 90 days, of the date on which
the Company became so obligated, or (iii) the
Company and the Guarantors fail to consummate
the Exchange Offer within 30 days of the date
on which the Exchange Offer Registration
Statement was required to be declared effective
by the SEC or (iv) subject to the last sentence
of the preceding paragraph, the Shelf
Registration Statement or the Exchange Offer
Registration Statement is declared effective
but shall thereafter cease to be effective or
usable in connection with resales of the Notes
for the periods specified in the Registration
Rights Agreement (each such event referred to
in clauses (i) through (iv) above a
"Registration Default"), then the Company shall
pay to each Holder of Transfer Restricted
Securities, with respect to the first 90-day
period following such Registration Default,
liquidated damages ("Liquidated Damages") in an
amount equal to $0.05 per week per $1,000 in
principal amount or Accreted Value, as
applicable, of Transfer Restricted Securities
held by such Holder. The amount of such
Liquidated Damages will increase by an
additional $0.05 per week per $1,000 in
principal amount or Accreted Value, as
applicable, of Transfer Restricted Securities
held by such Holders for each subsequent 90-day
period until such Registration Default has been
cured, up to a maximum of $0.50 per week.
Following the cure of all Registration
Defaults, the accrual of all Liquidated Damages
will cease.
21
<PAGE> 29
RISK FACTORS
SUBSTANTIAL LEVERAGE; ABILITY TO SERVICE INDEBTEDNESS
The Company is, and will continue to be, highly leveraged as a result of
the substantial indebtedness it has incurred in connection with the Acquisition,
and intends to incur to finance acquisitions and expand its operations. As of
March 31, 1996, after giving pro forma effect to the Acquisition and the related
financing transactions, including the Note Offering, the Company would have had
total indebtedness of $1.017 billion and stockholders' equity of $390.4 million.
After giving pro forma effect to such transactions, earnings would not have been
sufficient to cover fixed charges by $5.5 million for the year ended December
31, 1995. Pro forma interest expense for fiscal 1995 would have been $102.9
million. The Company may incur additional indebtedness in the future, subject to
limitations imposed by the Indentures and the New Bank Credit Agreement. See
"Capitalization" and "Pro Forma Consolidated Financial Statements."
The Company's ability to make scheduled payments of principal of, or to pay
interest on, or to refinance its indebtedness (including the Exchange Notes)
depends on its future performance, which, to a certain extent, is subject to
general economic, financial, competitive, legislative, regulatory and other
factors beyond its control. Based upon the current level of operations and
anticipated growth, management of the Company believes that available cash flow,
together with available borrowings under the New Bank Credit Agreement and other
sources of liquidity, will be adequate to meet the Company's anticipated future
requirements for working capital, capital expenditures and scheduled payments of
principal of and interest on its Senior Debt, and interest on the Exchange
Notes. However, a portion of the principal payments at maturity on the Exchange
Notes may require refinancing. There can be no assurance that the Company's
business will generate sufficient cash flow from operations or that future
borrowings will be available in an amount sufficient to enable the Company to
service its indebtedness, including the Exchange Notes, or make necessary
capital expenditures, or that any refinancing would be available on commercially
reasonable terms or at all. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources."
The degree to which the Company is now leveraged could have important
consequences to holders of the Exchange Notes, including, but not limited to,
the following: (i) a substantial portion of the Company's cash flow from
operations will be required to be dedicated to debt service and will not be
available for other purposes; (ii) the Company's ability to obtain additional
financing in the future could be limited; (iii) certain of the Company's
borrowings are at variable rates of interest, which could result in higher
interest expense in the event of increases in interest rates; and (iv) the
Indentures and the New Bank Credit Agreement contain financial and restrictive
covenants that limit the ability of the Company to, among other things, borrow
additional funds, dispose of assets or pay cash dividends. Failure by the
Company to comply with such covenants could result in an event of default which,
if not cured or waived, could have a material adverse effect on the Company. In
addition, the degree to which the Company is leveraged could prevent it from
repurchasing all Exchange Notes tendered to it upon the occurrence of a Change
of Control. See "Description of Exchange Notes" and "Description of Senior
Debt."
SUBORDINATION; ASSET ENCUMBRANCES
The Exchange Notes will be subordinated in right of payment to all existing
and future Senior Debt, including the principal of (and premium, if any) and
interest on and all other amounts due on or payable in connection with Senior
Debt. At March 31, 1996, on a pro forma basis after giving effect to the
Acquisition and the related financing transactions, there would have been
outstanding approximately $517.0 million of Senior Debt, $515.0 million of which
would have been fully secured borrowings under the New Bank Credit Agreement. In
addition, the Exchange Notes will be effectively subordinated to all
indebtedness and other liabilities (including trade payables and capital lease
obligations) of the Company's subsidiaries that are not Guarantors, which as of
March 31,
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1996 aggregated $7.8 million on a pro forma basis. By reason of such
subordination, in the event of the insolvency, liquidation, reorganization,
dissolution or other winding-up of the Company or upon a default in payment with
respect to, or the acceleration of, any Senior Debt, the holders of such Senior
Debt and any other creditors who are holders of Senior Debt and creditors of
subsidiaries that are not Guarantors must be paid in full before the Holders of
the Exchange Notes may be paid. If the Company incurs any additional pari passu
debt, the holders of such debt would be entitled to share ratably with the
Holders of the Exchange Notes in any proceeds distributed in connection with any
insolvency, liquidation, reorganization, dissolution or other winding-up of the
Company. This may have the effect of reducing the amount of proceeds paid to
Holders of the Exchange Notes. In addition, no payments may be made with respect
to the principal of (and premium, if any) or interest or Liquidated Damages, if
any, on the Exchange Notes if a payment default exists with respect to Senior
Debt and, under certain circumstances, no payments may be made with respect to
the principal of (and premium, if any) or interest or Liquidated Damages, if
any, on the Exchange Notes for a period of up to 179 days if a non-payment
default exists with respect to Senior Debt. In addition, the Indentures permit
subsidiaries of the Company to incur debt provided certain conditions are met.
Any debt incurred by a subsidiary of the Company that is not a Guarantor will be
structurally senior to the Exchange Notes. See "Description of Exchange Notes."
Holdings and the Company have granted to the lenders under the New Bank
Credit Agreement security interests in all of the capital stock of the Company
and substantially all of the current and future assets of the Company, including
a pledge of all of the issued and outstanding shares of capital stock of certain
of the Company's subsidiaries. In addition, the Guarantors have granted to such
lenders security interests in all of the current and future assets of the
Guarantors (other than 35% of the outstanding capital stock of any foreign
subsidiary of any Guarantor). In the event of a default on secured indebtedness,
including the guarantees with respect to the New Bank Credit Agreement (whether
as a result of the failure to comply with a payment or other covenant, a cross-
default, or otherwise), the parties granted such security interests will have a
prior secured claim on the capital stock of the Company and the assets of the
Company and the Guarantors. If such parties should attempt to foreclose on their
collateral, the Company's financial condition and the value of the Exchange
Notes will be materially adversely affected. See "Description of Senior Debt."
HOLDING COMPANY STRUCTURE
The Company conducts all of its business through subsidiaries and has no
operations of its own. The Company is dependent on the cash flow of its
subsidiaries and distributions thereof from its subsidiaries to the Company in
order to meet its debt service obligations. It is not expected that Holdings
will have any assets other than the common stock of the Company.
As a result of the holding company structure of the Company, the Holders of
the Exchange Notes are structurally junior to all creditors of the subsidiaries
that are not Guarantors, except to the extent that the Company or a Guarantor is
itself recognized as a creditor of such subsidiary, in which case the claims of
the Company or such Guarantor would still be subordinate to any security in the
assets of such subsidiary and any indebtedness of such subsidiary senior to that
held by the Company or a Guarantor. In the event of the insolvency, liquidation,
reorganization, dissolution or other winding-up of the subsidiaries that are not
Guarantors, the Company will not receive funds available to pay to the Holders
of the Exchange Notes in respect of the Exchange Notes until after the payment
in full of the claims of the creditors of the subsidiaries. As of March 31,
1996, on a pro forma basis after giving effect to the Acquisition and related
financing transactions, the aggregate amount of indebtedness and other
obligations of the subsidiaries that are not Guarantors (including trade
payables and capital lease obligations) would have been approximately $7.8
million. See Note 6 to the Consolidated Financial Statements of AMF Group
Holdings Inc.
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<PAGE> 31
DEPENDENCE ON KEY PERSONNEL
AMF's business has been managed by a small number of key executive
officers. The loss of the services of certain of these executives could have an
adverse impact on AMF. There can be no assurance that the services of such
personnel will continue to be made available to the Company.
CERTAIN INTERESTS OF GOLDMAN, SACHS & CO.
Goldman, Sachs & Co. ("Goldman Sachs") and its affiliates have certain
interests in the Acquisition and in the Company. Richard A. Friedman and Terence
M. O'Toole, each of whom is a general partner of Goldman Sachs, and Peter M.
Sacerdote, who is a limited partner of Goldman Sachs, are directors of the
Company. GSCP and The Goldman Sachs Group, L.P. ("The Goldman Sachs Group"),
which has a 99% interest in Goldman Sachs, together beneficially own a majority
of the outstanding voting equity of Holdings' parent company; thus Goldman Sachs
will be deemed to be an "affiliate" of the Company. See "Ownership of Capital
Stock." Goldman Sachs received an underwriting discount of approximately $19.0
million in connection with its purchase and resale of the Notes. Goldman Sachs
also served as financial advisor to the sellers of AMF in connection with the
Acquisition and received certain fees and had expenses reimbursed in connection
therewith as described herein. Moreover, Goldman Sachs acted as co-arranger and
underwriter in connection with the New Bank Credit Agreement and received
certain fees and had expenses reimbursed in connection therewith. Goldman Sachs
also received certain cash fees from the Company in connection with the
Acquisition. See "Certain Transactions."
As a result of its ownership of a majority of the outstanding voting equity
of Holdings' parent company, GSCP controls Holdings and the Company and has the
ability to elect all of their directors, appoint new management and approve any
action requiring the approval of Holdings' or the Company's stockholders,
including adopting amendments to the Company's Certificate of Incorporation and
approving mergers or sales of substantially all of the Company's assets, in each
case subject to the restrictions contained in the stockholders' agreement among
GSCP and the other stockholders of Holdings' parent company (see "Ownership of
Capital Stock -- Stockholders Agreement") and subject to whatever contractual
restrictions apply to the Company. There can be no assurance that the interests
of GSCP will not conflict with the interests of the Holders of the Exchange
Notes. See "Management," "Ownership of Capital Stock" and "Certain
Transactions."
PAYMENT UPON A CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each Holder of Exchange Notes
may require the Company to repurchase all or a portion of such Holder's Exchange
Notes at 101% of the principal amount of the Exchange Senior Subordinated Notes
and 101% of the Accreted Value of the Exchange Senior Subordinated Discount
Notes, as applicable, together with accrued and unpaid interest, if any, and
Liquidated Damages, if any, to the date of repurchase. The Indentures require
that prior to such a repurchase, the Company must either repay all outstanding
indebtedness under the New Bank Credit Agreement or obtain any required consent
to such repurchase. If a Change of Control were to occur, the Company may not
have the financial resources to repay all of its obligations under the New Bank
Credit Agreement, the Indentures and the other indebtedness that would become
payable upon the occurrence of such Change of Control. See "Description of
Exchange Notes -- Repurchase at the Option of Holders."
BOWLING INDUSTRY CHARACTERISTICS
Bowling Center Operations. In the United States, the operation of bowling
centers is a mature industry characterized by slightly declining lineage offset
by increasing average price per game. According to an industry source, average
industry lineage has declined by approximately 2.0% annually from 1988 to 1995.
Total lineage, according to an industry source, has declined despite an average
annual increase of 1.3% in the total number of people bowling since 1987. This
trend is
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largely a result of a shift in the customer base from league participants to
more open play bowlers, resulting in more people bowling, but bowling less
frequently. Bowling center operators have offset the decrease in overall lineage
by increasing prices and creating additional sources of ancillary income.
Contrary to the overall lineage trend in the industry, AMF's domestic lineage
has remained relatively stable in recent years due to AMF's ability to better
maintain existing league bowlers and attract new open play bowlers, while
increasing prices. Internationally, although trends vary by country, certain of
the international markets in which AMF operates have experienced increasing
competition as they have transitioned from newly developed to more mature
markets, resulting in declining lineage. AMF has offset these lineage declines
through higher prices. There can be no assurance that AMF will be able to
maintain lineage or increase prices in the future.
In addition, bowling faces competition from alternative sport and
recreational activities. The continued success of AMF's bowling operations is
subject to consumers' continued interest in recreational bowling, the
availability and cost of other recreational and entertainment alternatives and
the amount of leisure time as well as various other social and economic factors
over which AMF has no control. There can be no assurance that bowling will
continue its current popularity or that AMF will continue to compete effectively
in the industry. See "Business -- Industry Overview."
Bowling Equipment Manufacturing. The bowling equipment industry has been
characterized by relatively stable sales of Replacement and Modernization
products to the installed base of equipment operators, and more varied results
in sales of New Center Packages for newly constructed bowling centers. Periods
of rapid growth in New Center Package sales for newly constructed bowling
centers have occurred as the sport has become popular in particular countries
and the economics of constructing and operating a bowling center have become
attractive to local developers and entrepreneurs. Continued growth in AMF's sale
of New Center Packages depends on similar bowling growth patterns developing in
other, emerging markets, such as China, India and Indonesia, and on AMF's
ability to successfully predict the timing and location of such future
international expansion and to successfully exploit new demand. There can be no
assurance that such future international expansion will occur or that, if it
does occur, AMF will be able to successfully compete in such emerging markets.
Sales of New Center Packages for the first quarter of 1996 declined
substantially from the corresponding period in 1995, reflecting the maturing
bowling markets in Taiwan and Korea. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Backlog; Recent NCP Sales."
FOREIGN OPERATIONS
The Company's foreign operations are subject to the usual risks inherent in
operating abroad, including, but not limited to, risks with respect to currency
exchange rates, economic and political destabilization, other disruption of
markets, restrictive laws and actions by foreign governments (such as
restrictions on transfer of funds, export duties and quotas, foreign customs and
tariffs and unexpected changes in regulatory environments), difficulty in
obtaining distribution and support, nationalization, the laws and policies of
the United States affecting trade, foreign investment and loans, and foreign tax
laws. There can be no assurance that these factors will not have a material
adverse impact on the Company's ability to increase or maintain its foreign
sales or on its results of operations. For the year ended December 31, 1995, a
substantial portion of AMF's revenue and EBITDA, including substantially all of
the revenue and EBITDA derived from sales of New Center Packages, were from
foreign operations. See "Summary Combined Financial Data" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- International Operations" and "-- Backlog; Recent NCP Sales."
The Company's ability to service its indebtedness will be dependent, in
part, on its ability to utilize the cash flow generated by its foreign
operations. In general, U.S. federal and international tax laws provide that
income of international subsidiaries is subject to tax only in the local
jurisdiction and is not subject to U.S. federal income tax unless, and only to
the extent that, such income is distributed as a dividend to the U.S. parent
company. The Company has not determined
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whether to cause its international subsidiaries to pay dividends to the Company
or to cause the net income of such subsidiaries to be retained abroad. The
Company may make loans to its foreign subsidiaries, and, in that event, payments
by the Company's foreign subsidiaries to the Company on such intercompany loans
may result in the repatriation of a substantial portion of the cash flow of such
subsidiaries without the payment of taxes abroad. In addition, certain of the
Company's subsidiaries may make royalty payments to the Company. There can be no
assurance, however, that the interest payments on such intercompany loans or
such royalty payments will not be recharacterized as dividends, which could have
adverse tax consequences to the Company.
On December 28, 1995, the State Council of China announced the reform and
adjustment of import duty policy in China. With effect from April 1, 1996,
importers of most capital equipment, including bowling equipment, are required
to pay customs duty and Value Added Tax ("VAT") on such equipment, though
certain grandfather rule exemptions will apply. For bowling equipment, the
current customs duty rate is 80%, while the VAT rate is 17%. Prior to the change
in import duty policy, foreign investment entities were exempt from customs duty
and VAT on most imported capital equipment, including bowling equipment. As a
grandfather concession, foreign investment enterprises approved to set up prior
to April 1, 1996, with a total investment of less than US$30 million, may have
until December 31, 1996 to import capital equipment duty free. Accordingly,
there is a risk that the change in import duty policy in China may adversely
affect the sale of NCP units to China.
LACK OF PUBLIC MARKET FOR THE EXCHANGE NOTES
The Notes are currently owned by a relatively small number of beneficial
owners. The Notes have not been registered under the Securities Act and will be
subject to restrictions on transferability to the extent that they are not
exchanged for the Exchange Notes. The Exchange Notes will constitute a new issue
of securities with no established trading market. Although the Exchange Notes
will generally be permitted to be resold or otherwise transferred by Holders who
are not affiliates of the Company without compliance with the registration
requirements under the Securities Act, the Company does not intend to list the
Exchange Notes on any national securities exchange or to seek the admission
thereof to trading in the National Association of Securities Dealers Automated
Quotation System. The Company has been advised by Goldman Sachs that it
presently intends to make a market in the Exchange Notes. However, Goldman Sachs
is not obligated to do so and any market-making activity with respect to the
Exchange Notes may be discontinued at any time without notice. In addition, such
market-making activity will be subject to the limits imposed by the Securities
Act and the Exchange Act. Accordingly, no assurance can be given that an active
public or other market will develop for the Exchange Notes or as to the
liquidity of or the trading market for the Exchange Notes.
If such a market were to develop, the Exchange Notes could trade at prices
that may be higher or lower than the initial offering price of the Notes
depending on many factors, including prevailing interest rates, the Company's
operating results and the market for similar securities.
Goldman Sachs may be deemed to be an affiliate of the Company and, as such,
may be required to deliver a "market-maker" prospectus in connection with its
market-making activities in the Exchange Notes. Pursuant to the Registration
Rights Agreement, the Company agreed to file and maintain a registration
statement that would allow Goldman Sachs to engage in market-making transactions
in the Exchange Notes. The registration statement will remain effective for as
long as Goldman Sachs may be required to deliver a prospectus in connection with
secondary transactions in the Exchange Notes.
Notwithstanding the foregoing, at any time after consummation of the
Exchange Offer, the Company and the Guarantors may allow such market-maker
prospectus to cease to be effective and usable if (i) the Board of Directors of
the Company determines in good faith that such action is in the best interests
of the Company, and the Company notifies the Holders within a certain period of
time after the Board of Directors makes such determination or (ii) such
prospectus contains an untrue statement of a material fact or omits to state a
material fact necessary in order to make the
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statements therein, in the light of the circumstances under which they were
made, not misleading. The Company has agreed to bear substantially all the costs
and expenses related to such registration statement.
ORIGINAL ISSUE DISCOUNT CONSEQUENCES
The Senior Subordinated Discount Notes were, and the Exchange Senior
Subordinated Discount Notes will be, issued at a substantial discount from their
principal amount. Consequently, the purchasers of the Senior Subordinated
Discount Notes and, subsequently, the Exchange Senior Subordinated Discount
Notes generally will be required to include amounts in gross income for federal
income tax purposes in advance of receipt of the cash payments to which the
income is attributable. See "Description of Certain Federal Income Tax
Consequences of an Investment in the Exchange Notes" for a more detailed
discussion of the federal income tax consequences to the holders of the Exchange
Senior Subordinated Discount Notes of the purchase, ownership and disposition of
the Exchange Senior Subordinated Discount Notes.
If a bankruptcy case is commenced by or against the Company under the
United States Bankruptcy Code after the issuance of the Exchange Senior
Subordinated Discount Notes, the claim of a Holder of Exchange Senior
Subordinated Discount Notes with respect to the principal amount thereof may be
limited to an amount equal to the sum of (i) the issue price and (ii) that
portion of the original issue discount which is not deemed to constitute
"unmatured interest" for purposes of the United States Bankruptcy Code. Any
original issue discount that was not amortized as of any such bankruptcy filing
would constitute "unmatured interest."
FRAUDULENT CONVEYANCE
Management of the Company believes that the indebtedness represented by the
Exchange Notes and the Guarantees is being incurred for proper purposes and in
good faith, and that, based on present forecasts, asset valuations and other
financial information, after the issuance of the Exchange Notes, the Company
will be solvent, will have sufficient capital for carrying on its business and
will be able to pay its debts as they mature. See "-- Substantial Leverage;
Ability to Service Indebtedness." Notwithstanding management's belief, however,
if a court of competent jurisdiction in a suit by an unpaid creditor or a
representative of creditors (such as a trustee in bankruptcy or a
debtor-in-possession) were to find that, at the time of the incurrence of such
indebtedness, the Company or the Guarantors were insolvent, were rendered
insolvent by reason of such incurrence, were engaged in a business or
transaction for which its remaining assets constituted unreasonably small
capital, intended to incur, or believed that they would incur, debts beyond
their ability to pay such debts as they matured, or intended to hinder, delay or
defraud their creditors, and that the indebtedness was incurred for less than
reasonably equivalent value, then such court could, among other things, (a) void
all or a portion of the Company's or the Guarantors' obligations to the Holders
of the Exchange Notes, the effect of which would be that the Holders of the
Exchange Notes may not be repaid in full and/or (b) subordinate the Company's or
the Guarantors' obligations to the Holders of the Exchange Notes to other
existing and future indebtedness of the Company to a greater extent than would
otherwise be the case, the effect of which would be to entitle such other
creditors to be paid in full before any payment could be made on the Exchange
Notes or the Guarantees.
EXCHANGE OFFER PROCEDURES
Issuance of the Exchange Notes in exchange for Notes pursuant to the
Exchange Offer will be made only after a timely receipt by the Exchange Agents
of such Notes, a properly completed and duly executed Letter of Transmittal and
all other required documents. Therefore, holders of the Notes desiring to tender
such Notes in exchange for Exchange Notes should allow sufficient time to ensure
timely delivery. The Company is under no duty to give notification of defects or
irregularities with respect to the tenders of Notes for exchange. Notes that are
not tendered or are tendered but
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<PAGE> 35
not accepted will, following the consummation of the Exchange Offer, continue to
be subject to the existing restrictions upon transfer thereof and, upon
consummation of the Exchange Offer, the registration rights under the
Registration Rights Agreement generally will terminate. In addition, any holder
of Notes who tenders in the Exchange Offer for the purpose of participating in a
distribution of the Exchange Notes may be deemed to have received restricted
securities and, if so, will be required to comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
resale. Each broker-dealer that receives Exchange Notes for its own account in
exchange for Notes, where such 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 Exchange
Notes. To the extent that Notes are tendered and accepted in the Exchange Offer,
the trading market for untendered and tendered but unaccepted Notes could be
adversely affected. See "The Exchange Offer."
RESTRICTIONS ON TRANSFER
The Notes were offered and sold by the Company in a private offering exempt
from registration pursuant to the Securities Act and have been resold pursuant
to Rule 144A and Regulation S under the Securities Act. As a result, the Notes
may not be reoffered or resold by purchasers except pursuant to an effective
registration statement under the Securities Act, or pursuant to an applicable
exemption from such registration, and the Notes are legended to restrict
transfer as aforesaid. Each Holder (other than any Holder who is an affiliate or
promoter of the Company) who duly exchanges Notes for Exchange Notes in the
Exchange Offer will receive Exchange Notes that are freely transferable under
the Securities Act. Holders of Notes who participate in the Exchange Offer
should be aware, however, that if they accept the Exchange Offer for the purpose
of engaging in a distribution, the Exchange Notes may not be publicly reoffered
or resold without complying with the registration and prospectus delivery
requirements of the Securities Act. As a result, each Holder of Notes accepting
the Exchange Offer will be deemed to have represented, by its acceptance of the
Exchange Offer, that it acquired the Exchange Notes in the ordinary course of
business and that it is not engaged in, and does not intend to engage in, a
distribution of the Exchange Notes. If existing SEC interpretations permitting
free transferability of the Exchange Notes following the Exchange Offer are
changed prior to consummation of the Exchange Offer, the Company will use its
best efforts to register the Notes for resale under the Securities Act. See
"Prospectus Summary -- The Exchange Offer" and "Description of Exchange
Notes -- Registration Rights."
The Notes currently may be sold pursuant to the restrictions set forth in
Rule 144A or Regulation S, or pursuant to another available exemption under the
Securities Act, without registration under the Securities Act. To the extent
that Notes are tendered and accepted in the Exchange Offer, the trading market
for the untendered and tendered but unaccepted Notes could be adversely
affected.
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THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Notes were sold by the Company on March 21, 1996, and were subsequently
resold to qualified institutional buyers pursuant to Rule 144A under the
Securities Act, to institutional investors that are accredited investors in a
manner exempt from registration under the Securities Act and to certain persons
in transactions outside the United States in reliance on Regulation S under the
Securities Act. In connection with the Note Offering, the Company entered into
the Registration Rights Agreement, which requires, among other things, that
promptly following the completion of the Acquisition, the Company and the
Guarantors (i) file with the SEC a registration statement under the Securities
Act with respect to an issue of new notes of the Company identical in all
material respects to the Notes, (ii) use their best efforts to cause such
registration statement to become effective under the Securities Act and (iii)
upon the effectiveness of that registration statement, offer to the Holders of
the Notes the opportunity to exchange their Notes for a like principal amount of
Exchange Notes, which would be issued without a restrictive legend and may be
reoffered and resold by the holder without restrictions or limitations under the
Securities Act (other than any such holder that is an "affiliate" of the Company
within the meaning of Rule 405 under the Securities Act). A copy of the
Registration Rights Agreement has been filed as an exhibit to the Registration
Statement of which this Prospectus is a part. The term "Holder" with respect to
the Exchange Offer means any person in whose name the Notes are registered on
the books of the Company or any other person who has obtained a properly
completed bond power from the registered holder.
Because the Exchange Offer is for any and all Notes, the number of Notes
tendered and exchanged in the Exchange Offer will reduce the principal amount of
Notes outstanding. Following the consummation of the Exchange Offer, Holders of
the Notes who did not tender their Notes generally will not have any further
registration rights under the Registration Rights Agreement, and such Notes will
continue to be subject to certain restrictions on transfer. Accordingly, the
liquidity of the market for such Notes could be adversely affected. The Notes
are currently eligible for sale pursuant to Rule 144A through the PORTAL System
of the National Association of Securities Dealers, Inc. Because the Company
anticipates that most holders of Notes will elect to exchange such Notes for
Exchange Notes due to the absence of restrictions on the resale of Exchange
Notes under the Securities Act, the Company anticipates that the liquidity of
the market for any Notes remaining after the consummation of the Exchange Offer
may be substantially limited.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company will accept any and all Notes
validly tendered and not withdrawn prior to 5:00 p.m. New York City time, on the
Expiration Date. The Company will issue $1,000 principal amount of Exchange
Senior Subordinated Notes in exchange for each $1,000 principal amount of
outstanding Senior Subordinated Notes accepted in the Exchange Offer, and $1,000
principal amount of Exchange Senior Subordinated Discount Notes in exchange for
each $1,000 principal amount of outstanding Senior Subordinated Discount Notes
accepted in the Exchange Offer. Holders may tender some or all of their Notes
pursuant to the Exchange Offer. However, Notes may be tendered only in integral
multiples of $1,000.
The form and terms of the Exchange Notes are the same as the form and terms
of the Notes except that (i) the Exchange Notes have been registered under the
Securities Act and hence will not bear legends restricting the transfer thereof
and (ii) the holders of the Exchange Notes generally will not be entitled to
certain rights under the Registration Rights Agreement, which rights generally
will terminate upon consummation of the Exchange Offer. The Exchange Notes will
evidence the same debt as the Notes and will be entitled to the benefits of the
Indentures.
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Holders of Notes do not have any appraisal or dissenters' rights under the
General Corporation Law of Delaware or the Indentures in connection with the
Exchange Offer. The Company intends to conduct the Exchange Offer in accordance
with the applicable requirements of the Exchange Act and the rules and
regulations of the SEC thereunder, including Rule 14e-1 thereunder.
The Company shall be deemed to have accepted validly tendered Notes when,
as and if the Company has given oral or written notice thereof to the Exchange
Agents. The Exchange Agents will act as agents for the tendering Holders for the
purpose of receiving the Exchange Notes from the Company.
If any tendered Notes are not accepted for exchange because of an invalid
tender, the occurrence of certain other events set forth herein or otherwise,
the certificates for any such unaccepted Notes will be returned, without
expense, to the tendering Holder thereof as promptly as practicable after the
Expiration Date.
Holders who tender Notes in the Exchange Offer will not be required to pay
brokerage commissions or fees or, subject to the instructions in the Letter of
Transmittal, transfer taxes with respect to the exchange of Notes pursuant to
the Exchange Offer. The Company will pay all charges and expenses, other than
transfer taxes in certain circumstances, in connection with the Exchange Offer.
See "-- Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
, 1996, unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended.
To extend the Exchange Offer, the Company will notify the Exchange Agents
of any extension by oral or written notice, followed by a public announcement
thereof no later than 9:00 a.m., New York City time, on the next business day
after the previously scheduled expiration date.
The Company reserves the right, in its reasonable judgment, (i) to delay
accepting any Notes, to extend the Exchange Offer or to terminate the Exchange
Offer if any of the conditions set forth below under "-- Conditions" shall not
have been satisfied, by giving oral or written notice of such delay, extension
or termination to the Exchange Agents or (ii) to amend the terms of the Exchange
Offer in any manner. Any such delay in acceptance, extension, termination or
amendment will be followed as promptly as practicable by a public announcement
thereof. If the Exchange Offer is amended in a manner determined by the Company
to constitute a material change, the Company will promptly disclose such
amendment by means of a prospectus supplement that will be distributed to the
registered Holders, and, depending upon the significance of the amendment and
the manner of disclosure to the registered Holders, the Company will extend the
Exchange Offer for a period of five to ten business days if the Exchange Offer
would otherwise expire during such five to ten business-day period.
If the Company does not consummate the Exchange Offer, or, in lieu thereof,
the Company does not file and cause to become effective a resale shelf
registration for the Notes within the time periods set forth herein, liquidated
damages will accrue and be payable on the Notes either temporarily or
permanently. See "Description of Exchange Notes -- Registration Rights;
Liquidated Damages."
Without limiting the manner in which the Company may choose to make public
announcement of any delay, extension, amendment or termination of the Exchange
Offer, the Company shall have no obligation to publish, advertise or otherwise
communicate any such public announcement, other than by making a timely release
to the Dow Jones News Service.
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INTEREST ON EXCHANGE NOTES
The Exchange Senior Subordinated Notes will bear interest from March 21,
1996, the date of issuance of the Notes that are tendered in exchange for the
Exchange Notes (or the most recent Interest Payment Date to which interest on
such Notes has been paid). Accordingly, holders of Senior Subordinated Notes
that are accepted for exchange will not receive interest that is accrued but
unpaid on the Senior Subordinated Notes at the time of tender, but such interest
will be payable on the first Interest Payment Date after the Expiration Date.
Interest on the Exchange Senior Subordinated Notes will be payable semiannually
on each March 15 and September 15, commencing on September 15, 1996.
The Exchange Senior Subordinated Discount Notes will not bear interest
prior to March 15, 2001. Thereafter, interest will be payable in cash
semi-annually on March 15 and September 15 of each year, commencing on September
15, 2001.
PROCEDURES FOR TENDERING
Only a Holder of Notes may tender such Notes in the Exchange Offer. To
tender in the Exchange Offer, a Holder must complete, sign and date the relevant
Letter of Transmittal, or a facsimile thereof, have the signatures thereon
guaranteed if required by the Letter of Transmittal and mail or otherwise
deliver such Letter of Transmittal or such facsimile, together with the Notes
and any other required documents, to the Exchange Agent so as to be received by
the Exchange Agent at the address set forth below prior to 5:00 p.m., New York
City time, on the Expiration Date. The [blue] Letter of Transmittal must be used
to tender Senior Subordinated Notes and the [yellow] Letter of Transmittal must
be used to tender Senior Subordinated Discount Notes. Delivery of the Notes may
be made by book-entry transfer in accordance with the procedures described
below. Confirmation of such book-entry transfer must be received by the relevant
Exchange Agent prior to the Expiration Date.
By executing the Letter of Transmittal, each Holder will make to the
Company the representation set forth below in the second paragraph under the
heading "-- Resale of Exchange Notes."
The tender by a Holder and the acceptance thereof by the Company will
constitute an agreement between such Holder and the Company in accordance with
the terms and subject to the conditions set forth herein and in the Letter of
Transmittal.
THE METHOD OF DELIVERY OF NOTES AND THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE
HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN
OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO
LETTER OF TRANSMITTAL OR NOTES SHOULD BE SENT TO THE COMPANY. HOLDERS MAY
REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES OR
NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner whose Notes are registered in the name of a broker,
dealer, commercial bank, trust company or other nominee and who wishes to tender
should contact the registered Holder promptly and instruct such registered
Holder to tender on such beneficial owner's behalf.
Signatures on the Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution (as defined below)
unless the Notes tendered pursuant thereto are tendered (i) by a registered
Holder who has not completed the box entitled "Special Registration
Instructions" or "Special Delivery Instructions" on the Letter of Transmittal or
(ii) for the account of an Eligible Institution. In the event that signatures on
a Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantee must be by
31
<PAGE> 39
a member firm of a registered national securities exchange or of the National
Association of Securities Dealers, Inc., a commercial bank or trust company
having an office or correspondent in the United States or an "eligible guarantor
institution" within the meaning of Rule 17Ad-15 under the Exchange Act (an
"Eligible Institution").
If the Letter of Transmittal is signed by a person other than the
registered Holder of any Notes listed therein, such Notes must be endorsed or
accompanied by a properly completed bond power, signed by such registered Holder
as such registered Holder's name appears on such Notes with the signature
thereon guaranteed by an Eligible Institution.
If the Letter of Transmittal or any Notes 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,
evidence satisfactory to the Company of their authority to so act must be
submitted with the Letter of Transmittal.
The Company understands that each Exchange Agent will make a request
promptly after the date of this Prospectus to establish accounts with respect to
the Notes at the Depository for the purpose of facilitating the Exchange Offer,
and subject to the establishment thereof, any financial institution that is a
participant in the Depository's system may make book-entry delivery of the Notes
by causing the Depository to transfer such Notes into the relevant Exchange
Agent's account with respect to the Notes in accordance with the Depository's
procedures for such transfer. Although delivery of the Notes may be effected
through book-entry transfer into the Exchange Agent's account at the Depository,
an appropriate Letter of Transmittal properly completed and duly executed with
any required signature guarantee and all other required documents must in each
case be transmitted to and received or confirmed by the Exchange Agent at its
address set forth below on or prior to the Expiration Date, or, if the
guaranteed delivery procedures described below are complied with, within the
time period provided under such procedures. Delivery of documents to the
Depository does not constitute delivery to the Exchange Agent.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Notes and withdrawal of tendered Notes will be
determined by the Company in its sole discretion, which determination will be
final and binding. The Company reserves the absolute right to reject any and all
Notes not properly tendered or any Notes the Company's acceptance of which
would, in the opinion of counsel for the Company, be unlawful. The Company also
reserves the right to waive any defects, irregularities or conditions of tender
as to particular Notes. The Company's interpretation of the terms and conditions
of the Exchange Offer (including the instructions in the Letter of Transmittal)
will be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Notes must be cured within such
time as the Company shall determine. Although the Company intends to notify
Holders of defects or irregularities with respect to tenders of Notes, none of
the Company, the Exchange Agents or any other person shall incur any liability
for failure to give such notification. Tenders of Notes will not be deemed to
have been made until such defects or irregularities have been cured or waived.
Any Notes received by the Exchange Agents that are not properly tendered and as
to which the defects or irregularities have not been cured or waived will be
returned by the Exchange Agents to the tendering Holders, unless otherwise
provided in the Letter of Transmittal, as soon as practicable following the
Expiration Date.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Notes and (i) whose Notes are not
immediately available, (ii) who cannot deliver their Notes, the Letter of
Transmittal or any other required documents to the
32
<PAGE> 40
relevant Exchange Agent or (iii) who cannot complete the procedures for
book-entry transfer, prior to the Expiration Date, may effect a tender if:
(a) the tender is made through an Eligible Institution;
(b) prior to the Expiration Date, the relevant Exchange Agent receives
from such Eligible Institution a properly completed and duly executed
Notice of Guaranteed Delivery (by facsimile transmission, mail or hand
delivery) setting forth the name and address of the Holder, the certificate
number(s) of such Notes and the principal amount of Notes tendered, stating
that the tender is being made thereby and guaranteeing that, within three
New York Stock Exchange trading days after the Expiration Date, the Letter
of Transmittal (or facsimile thereof), together with the certificates(s)
representing the Notes (or a confirmation of book-entry transfer of such
Notes into the Exchange Agent's account at the Depository) and any other
documents required by the Letter of Transmittal, will be deposited by the
Eligible Institution with the Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as the certificate(s) representing all tendered
Notes in proper form for transfer (or a confirmation of book-entry transfer
of such Notes into the Exchange Agent's account at the Depository) and all
other documents required by the Letter of Transmittal, are received by the
relevant Exchange Agent within three New York Stock Exchange trading days
after the Expiration Date.
Upon request to the relevant Exchange Agent, a Notice of Guaranteed
Delivery will be sent to Holders who wish to tender their Notes according to the
guaranteed delivery procedures set forth above.
WITHDRAWALS OF TENDERS
Except as otherwise provided herein, tenders of Notes may be withdrawn at
any time prior to 5:00 p.m., New York City time, on the Expiration Date.
To withdraw a tender of Notes in the Exchange Offer, a written or facsimile
transmission notice of withdrawal must be received by the relevant Exchange
Agent at its address set forth herein 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 deposited the Notes to be withdrawn (the "Depositor"), (ii)
identify the Notes to be withdrawn (including the certificate number(s) and
principal amount of such Notes, or, in the case of notes transferred by
book-entry transfer, the name and number of the account at the Depository to be
credited), (iii) be signed by the Holder in the same manner as the original
signature on the Letter of Transmittal by which such Notes were tendered
(including any required signature guarantees) or be accompanied by documents of
transfer sufficient to have the Trustee with respect to the Notes register the
transfer of such Notes into the name of the person withdrawing the tender and
(iv) specify the name in which any such Notes are to be registered, if different
from that of the Depositor. All questions as to the validity, form and
eligibility (including time or receipt) of such notices will be determined by
the Company, whose determination shall be final and binding on all parties. Any
Notes so withdrawn will be deemed not to have been validly tendered for purposes
of the Exchange Offer and no Exchange Notes will be issued with respect thereto
unless the Notes so withdrawn are validly retendered. Any Notes which have been
tendered but which are not accepted for exchange will be returned to the Holder
thereof without cost to such Holder as soon as practicable after withdrawal,
rejection of tender or termination of the Exchange Offer. Properly withdrawn
Notes may be retendered by following one of the procedures described above under
"-- Procedures for Tendering" at any time prior to the Expiration Date.
33
<PAGE> 41
CONDITIONS
Notwithstanding any other term of the Exchange Offer, the Company shall not
be required to accept for exchange, or to exchange Exchange Notes for, any
Notes, and may terminate or amend the Exchange Offer as provided herein before
the acceptance of such Notes, if:
(a) any law, statute, rule, regulation or interpretation by the staff
of the SEC is proposed, adopted or enacted, which, in the reasonable
judgment of the Company, might materially impair the ability of the Company
to proceed with the Exchange Offer or materially impair the contemplated
benefits of the Exchange Offer to the Company; or
(b) any governmental approval has not been obtained, which approval
the Company shall, in its reasonable judgment, deem necessary for the
consummation of the Exchange Offer as contemplated hereby.
If the Company determines in its reasonable judgment that any of the
conditions are not satisfied, the Company may (i) refuse to accept any Notes and
return all tendered Notes to the tendering Holders, (ii) extend the Exchange
Offer and retain all Notes tendered prior to the expiration of the Exchange
Offer, subject, however, to the rights of Holders to withdraw such Notes (see
"-- Withdrawals of Tenders") or (iii) waive such unsatisfied conditions with
respect to the Exchange Offer and accept all properly tendered Notes which have
not been withdrawn. If such waiver constitutes a material change to the Exchange
Offer, the Company will promptly disclose such waiver by means of a prospectus
supplement that will be distributed to the registered Holders, and, depending
upon the significance of the waiver and the manner of disclosure to the
registered Holders, the Company will extend the Exchange Offer for a period of
five to ten business days if the Exchange Offer would otherwise expire during
such five to ten business-day period.
EXCHANGE AGENTS
IBJ Schroder Bank & Trust Company will act as Exchange Agent for the
Exchange Offer with respect to the Senior Subordinated Notes (the "Senior
Subordinated Note Exchange Agent"). American Bank National Association will act
as Exchange Agent for the Exchange Offer with respect to the Senior Subordinated
Discount Notes (the "Senior Subordinated Discount Note Exchange Agent" and
collectively with the Senior Subordinated Note Exchange Agent, the "Exchange
Agents").
Questions and requests for assistance, requests for additional copies of
this Prospectus or of the Letter of Transmittal for the Senior Subordinated
Notes and requests for copies of Notice of Guaranteed Delivery should be
directed to the Senior Subordinated Note Exchange Agent, addressed as follows:
By Registered or Certified Mail, Overnight Mail or Courier Service or in
Person by Hand:
IBJ Schroder Bank & Trust Company
One State Street, Level SC-1
New York, NY 10004
Attention: Corporate Trust Administration
By Facsimile:
(212) 858-2156
Questions and requests for assistance, requests for additional copies of
this Prospectus as of the Letter of Transmittal for the Senior Subordinated
Discount Notes and requests for copies of the
34
<PAGE> 42
Notice of Guaranteed Delivery should be directed to the Senior Subordinated
Discount Note Exchange Agent, addressed as follows:
By Registered or Certified Mail, Overnight Mail or Courier Service or in
Person by Hand:
American Bank National Association
101 E. Fifth Avenue
St. Paul, MN 51101-1860
Attention: Corporate Trust Administration
By Facsimile:
(612) 229-6415
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telephone, facsimile or in person by officers and
regular employees of the Company and its affiliates.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers or other persons
soliciting acceptances of the Exchange Offer. The Company, however, will pay the
Exchange Agents reasonable and customary fees for their services and will
reimburse them for their reasonable out-of-pocket expenses in connection
therewith and pay other registration expenses, including fees and expenses of
the Trustees, filing fees, blue sky fees and printing and distribution expenses.
The Company will pay all transfer taxes, if any, applicable to the exchange
of the Notes pursuant to the Exchange Offer. If, however, certificates
representing the Exchange Notes or the Notes for principal amounts not tendered
or accepted for exchange are to be delivered to, or are to be issued in the name
of, any person other than the registered Holder of the Notes tendered, or if
tendered Notes are registered in the name of any person other than the person
signing the Letter of Transmittal, or if a transfer tax is imposed for any
reason other than the exchange of the Notes pursuant to the Exchange Offer, then
the amount of any such transfer taxes (whether imposed on the registered Holder
or any other person) will be payable by the tendering Holder.
ACCOUNTING TREATMENT
The Exchange Notes will be recorded at the same carrying value as the
Notes, which is the aggregate principal amount in the case of the Senior
Subordinated Notes and is the aggregate Accreted Value (which increases daily)
in the case of the Senior Subordinated Discount Notes, as reflected in the
Company's accounting records on the date of exchange. Accordingly, no gain or
loss for accounting purposes will be recognized in connection with the Exchange
Offer. The expenses of the Exchange Offer will be amortized over the term of the
Exchange Notes.
RESALE OF EXCHANGE NOTES
Based on an interpretation by the staff of the SEC set forth in no-action
letters issued to third parties, the Company believes that Exchange Notes issued
pursuant to the Exchange Offer in exchange for Notes may be offered for resale,
resold and otherwise transferred by any Holder of such Exchange Notes (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 provisions of the Securities Act, provided that such
Exchange Notes are acquired in the ordinary course of such Holder's business and
such Holder does not intend to participate, and has no arrangement or
understanding with any person to participate, in the distribution of such
Exchange Notes. Any Holder who tenders in the Exchange Offer with the intention
to participate, or for the purpose of participating, in a distribution of the
Exchange Notes
35
<PAGE> 43
may not rely on the position of the staff of the SEC enunciated in Exxon Capital
Holdings Corporation (available April 13, 1989) and Morgan Stanley & Co.,
Incorporated (available June 5, 1991), or similar no-action letters, but rather
must comply with the registration and prospectus delivery requirements of the
Securities Act in connection with any resale transaction. In addition, any such
resale transaction should be covered by an effective registration statement
containing the selling security holders information required by Item 507 of
Regulation S-K of the Securities Act. Each broker-dealer that receives Exchange
Notes for its own account in exchange for Notes, where such Notes were acquired
by such broker-dealer as a result of market-making activities or other trading
activities, may be a statutory underwriter and must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Notes.
By tendering in the Exchange Offer, each Holder will represent to the
Company that, among other things, (i) the Exchange Notes acquired pursuant to
the Exchange Offer are being obtained in the ordinary course of business of the
person receiving such Exchange Notes, whether or not such person is a Holder,
(ii) neither the Holder nor any such other person has an arrangement or
understanding with any person to participate in the distribution of such
Exchange Notes and (iii) the Holder and such other person acknowledge that if
they participate in the Exchange Offer for the purpose of distributing the
Exchange Notes (a) they must, in the absence of an exemption therefrom, comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with any resale of the Exchange Notes and cannot rely on the
no-action letters referenced above and (b) failure to comply with such
requirements in such instance could result in such Holder incurring liability
under the Securities Act for which such Holder is not indemnified by the
Company. Further, by tendering in the Exchange Offer, each Holder that may be
deemed an "affiliate" (as defined under Rule 405 of the Securities Act) of the
Company will represent to the Company that such Holder understands and
acknowledges that the Exchange Notes may not be offered for resale, resold or
otherwise transferred by that Holder without registration under the Securities
Act or an exemption therefrom.
As set forth above, affiliates of the Company are not entitled to rely on
the foregoing interpretations of the staff of the SEC with respect to resales of
the Exchange Notes without compliance with the registration and prospectus
delivery requirements of the Securities Act. In connection with the Note
Offering, the Company entered into the Registration Rights Agreement pursuant to
which the Company agreed to file and maintain, subject to certain limitations, a
registration statement that would allow Goldman Sachs to engage in market-making
transactions with respect to the Notes or the Exchange Notes. The Company has
agreed to bear all registration expenses incurred under such agreement,
including printing and distribution expenses, reasonable fees of counsel, blue
sky fees and expenses, reasonable fees of independent accountants in connection
with the preparation of comfort letters, and SEC and the National Association of
Securities Dealers, Inc. filing fees and expenses.
CONSEQUENCES OF FAILURE TO EXCHANGE
As a result of the making of this Exchange Offer, the Company will have
fulfilled one of its obligations under the Registration Rights Agreement, and
Holders of Notes who do not tender their Notes generally will not have any
further registration rights under the Registration Rights Agreement or
otherwise. Accordingly, any Holder of Notes that does not exchange that Holder's
Notes for Exchange Notes will continue to hold the untendered Notes and will be
entitled to all the rights and limitations applicable thereto under the
Indentures, except to the extent that such rights or limitations, by their
terms, terminate or cease to have further effectiveness as a result of the
Exchange Offer.
The Notes that are not exchanged for Exchange Notes pursuant to the
Exchange Offer will remain restricted securities. Accordingly, such Notes may be
resold only (i) to the Company (upon redemption thereof or otherwise), (ii)
pursuant to an effective registration statement under the Securities Act, (iii)
so long as the Notes are eligible for resale pursuant to Rule 144A, to a
qualified
36
<PAGE> 44
institutional buyer within the meaning of Rule 144A under the Securities Act in
a transaction meeting the requirements of Rule 144A, (iv) outside the United
States to a foreign person pursuant to the exemption from the registration
requirements of the Securities Act provided by Regulation S thereunder, (v)
pursuant to an exemption from registration under the Securities Act provided by
Rule 144 thereunder (if available) or (vi) to an institutional accredited
investor in a transaction exempt from the registration requirements of the
Securities Act, in each case in accordance with any applicable securities laws
of any state of the United States. See "Risk Factors -- Restrictions on
Transfer."
OTHER
Participation in the Exchange Offer is voluntary and holders should
carefully consider whether to accept. Holders of the Notes are urged to consult
their financial and tax advisors in making their own decision on what action to
take.
The Company may in the future seek to acquire untendered Notes in open
market or privately negotiated transactions, through subsequent exchange offers
or otherwise. The Company has no present plans to acquire any Notes that are not
tendered in the Exchange Offer or to file a registration statement to permit
resales of any untendered Notes.
37
<PAGE> 45
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
OF THE EXCHANGE OFFER
The following discussion is based upon current provisions of the Internal
Revenue Code of 1986, as amended, applicable Treasury regulations, judicial
authority and administrative rulings and practice. There can be no assurance
that the Internal Revenue Service (the "IRS") will not take a contrary view, and
no ruling from the IRS has been or will be sought. Legislative, judicial or
administrative changes or interpretations may be forthcoming that could alter or
modify the statements and conditions set forth herein. Any such changes or
interpretations may or may not be retroactive and could affect the tax
consequences to Holders. Certain Holders of the Notes (including insurance
companies, tax-exempt organizations, financial institutions, broker-dealers,
foreign corporations and persons who are not citizens or residents of the United
States) may be subject to special rules not discussed below. Each Holder of a
Note should consult his, her or its own tax advisor as to the particular tax
consequences of exchanging such Holder's Notes for Exchange Notes, including the
applicability and effect of any state, local or foreign tax laws.
The issuance of the Exchange Notes to Holders of the Notes pursuant to the
terms set forth in this Prospectus will not constitute an exchange for federal
income tax purposes. Consequently, no gain or loss would be recognized by
Holders of the Notes upon receipt of the Exchange Notes, and ownership of the
Exchange Notes will be considered a continuation of ownership of the Notes. For
purposes of determining gain or loss upon the subsequent sale or exchange of the
Exchange Notes, a Holder's basis in the Exchange Notes should be the same as
such Holder's basis in the Notes exchanged therefor. A Holder's holding period
for the Exchange Notes should include the Holder's holding period for the Notes
exchanged therefor. The issue price, original issue discount inclusion and other
tax characteristics of the Exchange Notes should be identical to the issue
price, original issue discount inclusion and other tax characteristics of the
Notes exchanged therefor.
See also "Description of Certain Federal Income Tax Consequences of an
Investment in the Exchange Notes."
38
<PAGE> 46
THE ACQUISITION
The Acquisition occurred on May 1, 1996, pursuant to a Stock Purchase
Agreement dated February 16, 1996 (the "Stock Purchase Agreement") between
Holdings and the then current stockholders of AMF (the "Sellers"), which
provided for the acquisition of AMF through a stock purchase by the Company's
subsidiaries of all the outstanding stock (the "Stock") of the separate domestic
and foreign corporations that constitute substantially all of AMF and through
the purchase of the assets (the "Purchased Assets") of AMF's bowling center
operations in Spain and Switzerland. The Company did not acquire the assets of
two bowling centers located, respectively, in Madrid, Spain and Geneva,
Switzerland (both of which were retained by the Sellers). Accordingly, as a
result of the Acquisition, the Company owns or operates all 205 of AMF's
domestic bowling centers and 78 of AMF's 80 international bowling centers.
PURCHASE PRICE; ADJUSTMENTS
The Company's subsidiaries purchased the Stock and Purchased Assets for a
cash purchase price of $1.325 billion less approximately $2.0 million
representing debt of AMF which remained in place following the Closing. In
addition, the purchase price is subject to certain post-Closing adjustments as
follows: (i) the purchase price will be increased dollar-for-dollar by the
amount by which AMF's working capital (as defined in the Stock Purchase
Agreement; see Note (f) to the Pro Forma Consolidated Balance Sheet) as of the
Closing (the "Closing Working Capital") is greater than approximately $28.3
million, and will be decreased dollar-for-dollar by the amount, if any, by which
the Closing Working Capital is less than $28.3 million (the "Closing Working
Capital Adjustment"); (ii) the purchase price will be increased
dollar-for-dollar by the amount by which $5.0 million exceeds the principal
amount of the outstanding obligations as of the Closing (giving effect to the
Acquisition) under AMF's Stock Performance Plans, and will be decreased
dollar-for-dollar by the amount, if any, by which the principal amount of such
outstanding obligations as of the Closing (giving effect to the Acquisition)
exceeds $5.0 million (the "Stock Performance Plan Adjustment"); and (iii) the
purchase price was increased by $5.4 million based upon the Closing Date
Adjustment (as defined in the Stock Purchase Agreement). The Company believes
that as of the Closing all obligations under all of AMF's Stock Performance
Plans were cancelled and, assuming there are no such obligations, there will be
a purchase price adjustment of $10.4 million in favor of the Sellers, subject to
any further adjustment resulting from the Closing Working Capital Adjustment.
Amounts due with respect to post-closing adjustments bear interest from and
including the Closing Date through the day prior to payment.
On April 11, 1996, Holdings and the Sellers entered into a letter agreement
(the "Letter Agreement") amending the Stock Purchase Agreement. Under the terms
of the Letter Agreement, certain of the Sellers (the "Covenantors") have agreed
to make certain payments to Holdings if the net income before interest, taxes,
depreciation, amortization, and certain non-cash, extraordinary, non-recurring
and non-operating items ("Cash Flow") of AMF Bowling, Inc., the entity that
principally operates AMF's bowling manufacturing business, does not achieve a
minimum level during the period from May 1, 1996 through June 30, 1997. The
Covenantors will pay to Holdings the excess, if any, of (i) $95 million (reduced
(or increased) by any positive (or negative) Cash Flow between April 1, 1996 and
April 30, 1996) (as adjusted, the "Maximum Shortfall") over (ii) the Cash Flow
from the operation of AMF Bowling, Inc. during the period commencing on May 1,
1996 and ending June 30, 1997. To the extent that the Cash Flow shortfall
exceeds one-third of the Maximum Shortfall, the amount the Covenantors will be
required to pay to Holdings will be limited to one-third of the Maximum
Shortfall, plus 50% of any additional shortfall but, in any case, not in excess
of 50% of the Maximum Shortfall. The shortfall is also tested as of December 31,
1996, when audited financial statements are available, based on an interim
objective, and any shortfall at that time is to be paid by the Covenantors to
Holdings, subject to adjustment following calculation of the Cash Flow for the
full period from May 1, 1996 through June 30, 1997, if such earlier payment is
not equal to the aggregate amount that would have been due with respect to the
full period. The Letter Agreement further provides that, following the end of
the full period, any disputes over any amounts paid pursuant to the terms
described above will be subject to binding arbitration. For purposes of
39
<PAGE> 47
determining Cash Flow under the Letter Agreement, selling, general and
administrative expenses are to be assumed to be fixed at a projected level
regardless of whether the actual amount is greater or lower than such fixed
level, and Cash Flow does not include revenues recognized or expenses incurred
other than in the ordinary course of the operation of AMF Bowling, Inc. Under
the Letter Agreement, Cash Flow is to be adjusted to exclude intercompany
transfers and transactions and the effect of divestitures or acquisitions of
operating businesses.
The following table sets forth the sources and uses of funds related to the
Acquisition:
<TABLE>
<CAPTION>
(IN MILLIONS)
-------------
<S> <C>
SOURCES OF FUNDS
Senior Debt(a).................................................. $ 517.0
10 7/8% Senior Subordinated Notes............................... 250.0
12 1/4% Senior Subordinated Discount Notes...................... 250.0
--------
Total Debt.................................................... 1,017.0
Equity(b)....................................................... 391.0
Cash............................................................ 1.7
--------
Total...................................................... $ 1,409.7
========
USES OF FUNDS
Purchase Price(a)............................................... $ 1,325.0
Purchase Price Adjustments(c)................................... 14.1
Transaction Costs(b)............................................ 70.6
--------
Total...................................................... $ 1,409.7
========
</TABLE>
- ---------------
(a) Includes an existing mortgage payable by AMF in the amount of approximately
$2.0 million as of April 30, 1996. All other debt of AMF was extinguished at
or prior to the completion of the Acquisition.
(b) Includes warrants to purchase approximately 2.2% of the fully diluted common
stock of Holdings' parent company issued upon the closing of the Acquisition
to the Sellers' financial advisor in lieu of a cash fee. Such warrants have
been valued for accounting purposes at approximately $8.7 million.
(c) Includes assumed purchase price adjustments resulting in a payment to
Sellers of $14.1 million based on AMF's March 31, 1996 balance sheet. The
actual purchase price adjustments may differ. See "Notes to the Pro Forma
Consolidated Balance Sheet."
REPRESENTATIONS AND WARRANTIES; INDEMNITY
Generally, the Sellers did not provide indemnities to Holdings in
connection with the Acquisition. However, representations and warranties of
Sellers that survived the Closing are that (i) the Sellers will deliver to
Holdings good title to the Stock and the Purchased Assets free and clear of any
liens, claims, charges, security interests, options or other legal or equitable
encumbrances or restrictions, and all of the outstanding stock of the
corporations that constitute AMF is owned beneficially and of record by the
Sellers, and is validly issued, fully-paid and non-assessable; and (ii) each of
the corporations that constitute AMF was at the time of the Acquisition and has
been historically an "S corporation" (within the meaning of Section 1361(a) of
the Code) for each of such corporation's entire existence, and no action has
been or will be taken to terminate, and no condition exists which could result
in the termination of, such election prior to the Closing. The representations
and warranties in clause (i) above survive the Closing indefinitely, and the
representations and warranties in clause (ii) above survive the Closing until
the expiration of the relevant statute of limitations (including any extensions
thereof) or, if later, until the resolution of any disputes arising during such
period, in each case applicable to the income tax return (the "Applicable
Return") of each AMF entity for the period ending on the date of the Closing.
If any of the corporations that constitute AMF are found to have failed to
make a valid election to become an S corporation, or to have otherwise lost its
status as an S corporation, such corporation could be liable for taxes on income
for the periods in which S corporation status was not in effect. In addition,
loss of S corporation status could invalidate the step-up in the tax basis of
certain of AMF's assets that would otherwise result from the Acquisition,
causing the Company (or Holdings) to pay higher taxes on future income than
would be the case if the step-up in basis were allowed.
40
<PAGE> 48
The Sellers agreed to indemnify Holdings and its affiliates against any
liabilities incurred in connection with any breach of the representations and
warranties that survive the Closing, including but not limited to the tax
liabilities referred to in the preceding paragraph. The Sellers also agreed to
indemnify Holdings and its affiliates against any liability arising from (i) the
ownership, conduct, condition or transfer at any time of any of the businesses
or other tangible or intangible assets or operations (a) transferred to the
Sellers or their affiliates prior to the Closing or (b) owned, operated or
conducted by the Sellers or certain affiliates on or prior to the Closing and
which were not owned, operated or conducted as part of AMF's bowling center or
manufacturing businesses; and (ii) certain litigation brought against AMF by its
former Korean distributor (see "Business -- Legal Proceedings"). The
indemnification excludes claims for incidental or consequential damages or
damages for lost profits. Each of the Sellers is liable for indemnified losses
only based on their percentage stock ownership of AMF prior to the Acquisition;
provided, however, that five irrevocable trusts (the "Trusts"), which as the
owners of a controlling interest of the Stock are together the principal selling
stockholder, will be jointly and severally liable for the aggregate
indemnification obligations of the Trusts. The Trusts are required to maintain,
collectively, a $500.0 million minimum net worth (based upon fair market value)
at all times from the Closing through the date that is the fourth anniversary of
the last filed Applicable Return and a $250.0 million minimum net worth (based
upon fair market value) at all times thereafter through the date that is the
sixth anniversary of the last filed Applicable Return, subject to extension
under certain circumstances. The beneficiaries of the Trusts separately agreed
to indemnify Holdings if the minimum net worth requirements are not satisfied
and if certain other circumstances occur.
OTHER AGREEMENTS
In connection with the Acquisition, AMF entered into Trademark License
Agreements, dated February 16, 1996 (the "License Agreements"), licensing the
AMF name and related trademark rights to certain corporations owned by the
Sellers (the "Licensees"), for use in connection with the sale by Licensees of
sewing equipment, baking equipment and golf equipment. Certain of these products
currently are being marketed under the AMF name. No consideration separate from
the Acquisition was paid by the Licensees in connection with the License
Agreements, and the license is royalty-free. The term of the licenses continues
indefinitely. The Licensees have expressly assumed and indemnified AMF against
all liabilities resulting from Licensees' use of the licensed trademarks.
In addition, Holdings entered into a Non-Competition Agreement, dated
February 16, 1996 (the "Non-Competition Agreement"), with an individual
affiliated with the Sellers (the "Affiliated Party"), restricting the Affiliated
Party and certain affiliates from participating in the same or similar business
as AMF anywhere in the world for a period of five years from the Closing. The
Affiliated Party has also agreed that, during a period of three years from the
Closing, the Affiliated Party and certain affiliates will not, without the prior
written approval of Holdings, solicit any person who is a management or other
key employee of Holdings, the Company, AMF or any of their subsidiaries or
affiliates as of the date of the Non-Competition Agreement to terminate his or
her employment. In consideration of the Non-Competition Agreement, Holdings has
agreed to pay the Affiliated Party $50,000 per year during the term of the
Non-Competition Agreement.
Holdings also entered into a Consulting and Non-Competition Agreement,
dated February 16, 1996 (the "Consulting and Non-Competition Agreement") with
one of the Sellers. This Seller has agreed to provide, for a period of two years
from the Closing, such consulting services to Holdings as may be requested from
time to time by the Board of Directors and/or the Chief Executive Officer of
Holdings. The Consulting and Non-Competition Agreement also restricts this
Seller and certain affiliates from participating in the same or similar business
as AMF anywhere in the world for a period of four years from the Closing. This
Seller also agreed that, during a period of three years from the Closing, the
Seller and certain affiliates will not, without the prior written approval of
Holdings, solicit any person who is a management or other key employee of
Holdings, the Company, AMF or any of their subsidiaries or affiliates as of the
date of the Consulting and Non-Competition Agreement to terminate his or her
employment. Holdings has agreed to pay this Seller $100,000 per year during the
two-year period that the Seller will provide consulting services.
41
<PAGE> 49
CAPITALIZATION
The following table sets forth the capitalization, as of March 31, 1996, of
AMF on a historical basis and of the Company on a pro forma basis to reflect the
sale of the Notes, the initial borrowings under the New Bank Credit Agreement
and the Acquisition. See "Pro Forma Consolidated Financial Statements."
<TABLE>
<CAPTION>
AS OF MARCH 31, 1996
------------------------------------------
PRO FORMA
HISTORICAL ADJUSTMENTS AS ADJUSTED
---------- ----------- -----------
<S> <C> <C> <C>
(IN MILLIONS)
Cash and cash equivalents............................... $ 12.8 $ 16.0 $ 28.8
====== ======== ========
Debt:
Working Capital Facility(a)........................... $ -- $ -- $ --
Acquisition Facility(a)............................... -- -- --
Term Loans............................................ -- 515.0 515.0
10 7/8% Senior Subordinated Notes..................... -- 250.0 250.0
12 1/4% Senior Subordinated Discount Notes............ -- 250.8 250.8
Other debt(b)......................................... 161.2 (159.2) 2.0
------ -------- --------
Total debt......................................... 161.2 856.6 1,017.8
Total stockholders' equity.............................. 173.5 216.9 390.4
------ -------- --------
Total capitalization.................................... $334.7 $ 1,173.5 $ 1,408.2
====== ======== ========
</TABLE>
- ---------------
(a) The Company has the ability to borrow an additional $50.0 million for
general corporate purposes pursuant to a working capital facility and up to
$100.0 million, and, upon the Company's satisfying a financial test, up to
an additional $50.0 million for acquisitions pursuant to an acquisition
facility under the New Bank Credit Agreement, subject to the Company meeting
certain pro forma financial covenants and limitations imposed on the amount
borrowed for proposed acquisitions, including that the amount borrowed under
the acquisition facility shall not exceed 3.5 times the deemed EBITDA of the
business to be acquired. See "Description of Senior Debt."
(b) A mortgage having a principal amount of approximately $2.0 million as of
April 30, 1996 will remain outstanding as an obligation of AMF. All other
debt of AMF was extinguished at or prior to the completion of the
Acquisition. See "Description of Senior Debt."
42
<PAGE> 50
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The following pro forma consolidated financial statements (the "Pro Forma
Financial Statements") of Holdings, which includes the Company, include the
unaudited pro forma consolidated statements of income for the year ended
December 31, 1995 and the three months ended March 31, 1996 (the "Pro Forma
Consolidated Statements of Income") and the unaudited pro forma consolidated
balance sheet as of March 31, 1996 (the "Pro Forma Consolidated Balance Sheet").
The Pro Forma Consolidated Statements of Income are based on the audited
AMF combined statement of income for the year ended December 31, 1995 and the
unaudited AMF combined statement of income for the three months ended March 31,
1996 (including pro forma income tax provisions which would have been recorded
if AMF had consisted of taxable C corporations rather than S corporations -- see
Note 8 to the Combined Financial Statements of AMF Bowling Group) and are
adjusted to give effect to the Acquisition as though it had occurred as of the
first day of the period presented. The Pro Forma Consolidated Statements of
Income reflect pro forma adjustments to (a) eliminate the effect of certain
transactions contemplated in the Stock Purchase Agreement, and (b) give effect
to (i) the acquisition of AMF by Holdings and the related financing transactions
and (ii) costs incurred by AMF and included in the historical audited combined
statement of income for the year ended December 31, 1995, associated with the
acquisition of Fair Lanes, including duplicate corporate facilities and
administrative expenses. Certain pro forma adjustments result from management's
preliminary determination of purchase accounting adjustments and are based upon
the results of a formal appraisal of certain assets and other available
information and certain assumptions that Holdings considers reasonable under the
circumstances. Consequently, the amounts reflected in the Pro Forma Consolidated
Statements of Income are subject to change.
The Pro Forma Consolidated Balance Sheet is based on the unaudited AMF
combined balance sheet at March 31, 1996 and is adjusted to (a) eliminate the
effect of certain transactions contemplated in the Stock Purchase Agreement, and
(b) give effect to the acquisition of AMF by Holdings and the related financing
transactions, including the application of the estimated net proceeds therefrom
as though they had occurred as of March 31, 1996. The Acquisition will be
accounted for by the purchase method of accounting, pursuant to which the
purchase price is allocated among the acquired assets and liabilities in
accordance with estimates of fair market value on the date of acquisition. The
pro forma adjustments represent Holdings' management's preliminary determination
of purchase accounting adjustments and are based upon the results of a formal
appraisal of certain assets and other available information and certain
assumptions that Holdings considers reasonable under the circumstances.
Consequently, the amounts reflected in the Pro Forma Consolidated Balance Sheet
are subject to change. A substantial portion of the excess purchase price has
been allocated to goodwill. Holdings' management believes that the net benefit
of leases in which current lease payments are below fair market value
approximates the amount reflected in the historical balance sheet as of March
31, 1996 of approximately $10.7 million. No other specific intangibles have been
identified.
The Pro Forma Financial Statements and the accompanying notes should be
read in conjunction with AMF's historical Combined Financial Statements and
related notes thereto, and Holdings' consolidated balance sheet and notes
thereto, appearing elsewhere in this Prospectus.
The Pro Forma Financial Statements do not purport to be indicative of the
Company's financial condition or the results that would have actually been
obtained had such transactions been consummated as of the assumed dates and for
the periods presented, nor are they indicative of Holdings' results of operation
or financial condition for any future period or date.
43
<PAGE> 51
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
STOCK PURCHASE
AMF AGREEMENT PRO FORMA PRO FORMA
HISTORICAL ADJUSTMENTS ADJUSTMENTS HOLDINGS
------------- -------------- ----------- ---------
<S> <C> <C> <C> <C>
Total operating revenue...................... $ 564.9 $ (2.3)(a) $ -- $ 562.6
Cost of sales................................ 183.9 (0.3)(a) -- 183.6
Bowling center operations.................... 170.6 (1.5)(a) -- 169.1
Selling, general and administrative.......... 46.9 -- (0.3)(b) 44.3
(2.3)(c)
Depreciation and amortization................ 39.1 (0.1)(a) 7.7(d) 67.0
20.3(e)
------ ----- ------ ------
Total operating expenses..................... 440.5 (1.9) 25.4 464.0
------ ----- ------ ------
Operating income............................. 124.4 (0.4) (25.4) 98.6
Interest expense, net........................ (13.5) (1.4)(a) (87.2)(f) (102.1)
Other expenses, net.......................... (2.0) -- -- (2.0)
------ ----- ------ ------
Income (loss) before income taxes............ 108.9 (1.8) (112.6) (5.5)
Pro forma income tax expense (benefit)....... 40.6(g) (0.6)(h) (29.2)(h) 10.8
------ ----- ------ ------
Pro forma net income (loss).................. $ 68.3 $ (1.2) $ (83.4) $ (16.3)
====== ===== ====== ======
Ratio of earnings to fixed charges........... 6.1x --+
====== ======
OTHER DATA
CONSOLIDATED:
EBITDA..................................... $ 163.5 $ 165.6
EBITDA margin.............................. 28.9% 29.4%
Adjusted Pro Forma EBITDA*.................................................................. $ 167.7
Cash interest exp. ......................................................................... 67.0
Total interest exp. ........................................................................ 102.9
Pro forma cash taxes paid................................................................... 12.5
Modernization and Maintenance Cap. Ex. ("MMCapEx").......................................... 13.2
Expansion capital expenditures.............................................................. 16.9
------
Total capital expenditures.................................................................. $ 30.1
======
Incr. in Net Working Capital ("Chg. NWC")................................................... 12.5
PRO FORMA RATIO DATA:
EBITDA/cash interest exp. .................................................................. 2.47x
(EBITDA - MMCapEx)/cash interest exp. ...................................................... 2.27
(EBITDA - MMCapEx - Chg. NWC)/cash interest exp. ........................................... 2.09
EBITDA/total interest exp. ................................................................. 1.61x
(EBITDA - MMCapEx)/total interest exp. ..................................................... 1.48
(EBITDA - MMCapEx - Chg. NWC)/total interest exp. .......................................... 1.36
Total debt/EBITDA........................................................................... 6.14x
</TABLE>
- ---------------
* For total adjustments to pro forma EBITDA, see Note (g) to Selected Combined
Financial Data on page 54.
+ Earnings were inadequate to cover fixed charges on a pro forma basis by $5.5
million.
44
<PAGE> 52
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1996
(UNAUDITED)
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
AMF GROUP STOCK PURCHASE
AMF HOLDINGS INC. AGREEMENT PRO FORMA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS ADJUSTMENTS HOLDINGS
------------- -------------- -------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Total operating revenue....... $ 123.3 $ -- $ (0.6)(a) $ -- $ 122.7
Cost of sales................. 30.7 -- (0.1)(a) -- 30.6
Bowling center operations..... 42.0 -- (0.3)(a) -- 41.7
Selling, general and
administrative.............. 11.7 -- (0.2)(a) (0.1)(b) 11.4
Depreciation and
amortization................ 11.0 -- -- 0.3(d) 16.4
5.1(e)
------ ----- ------ ------ -------
Total operating expenses...... 95.4 -- (0.6) 5.3 100.1
------ ----- ------ ------ -------
Operating income.............. 27.9 -- -- (5.3) 22.6
Interest expense, net......... (3.4) (0.6) (0.3)(a) (20.1)(f) (23.8)
Other expenses, net........... (0.2) -- -- -- (0.2)
------ ----- ------ ------ -------
Income (loss) before income
taxes....................... 24.3 (0.6) (0.3) (25.4) (1.4)
Pro forma income tax expense
(benefit)................... 9.2(g) -- (0.1)(h) (6.7)(h) 2.4
------ ----- ------ ------ -------
Pro forma net income (loss)... $ 15.1 $ (0.6) $ (0.2) $ (18.7) $ (3.8)
====== ===== ====== ====== =======
Ratio of earnings to fixed
charges..................... 5.5x --*
====== =======
OTHER DATA
CONSOLIDATED:
EBITDA...................... $ 38.9 $ 39.0
EBITDA margin............... 31.6% 31.8%
Cash interest exp. ............................................................................. 16.7
Total interest exp. ............................................................................ 25.5
Pro forma cash taxes paid....................................................................... 2.7
Modernization and Maintenance Cap. Ex. ("MMCapEx").............................................. 3.0
Expansion capital expenditures.................................................................. 1.4
-------
Total capital expenditures...................................................................... $ 4.4
=======
Incr. in Net Working Capital ("Chg. NWC")....................................................... 2.0
PRO FORMA RATIO DATA:
EBITDA/cash interest exp........................................................................ 2.33x
(EBITDA - MMCapEx)/cash interest exp. .......................................................... 2.16
(EBITDA - MMCapEx - Chg. NWC)/cash interest exp. ............................................... 2.03
EBITDA/total interest exp. ..................................................................... 1.53x
(EBITDA - MMCapEx)/total interest exp. ......................................................... 1.41
(EBITDA - MMCapEx - Chg. NWC)/total interest exp. .............................................. 1.33
Total debt/EBITDA............................................................................... 6.52x
</TABLE>
- ---------------
* Earnings were inadequate to cover fixed charges on a pro forma basis by $1.4
million.
45
<PAGE> 53
NOTES TO THE PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
(DOLLARS IN MILLIONS)
(a) Included in Stock Purchase Agreement Adjustments are the following:
(i) Impact of AMF transferring to Sellers, and therefore Holdings not
acquiring, certain remaining assets previously held by The Reece
Corporation, a company which was merged into AMF Bowling, Inc. in 1994 and
which operated an aircraft. Management of Holdings believes that there will
be no incremental costs offsetting this net expense reduction.
(ii) Impact of Holdings not acquiring the operations of one bowling
center in Switzerland and one bowling center in Spain.
(iii) Concurrently with the acquisition of AMF by Holdings, amounts
due from shareholders were cancelled and amounts payable to shareholders
and other related parties, including those attributable to what was
formerly The Reece Corporation, were repaid or cancelled. If Holdings had
acquired AMF effective January 1, 1995, reported interest income levels
would have been lower.
(b) Reflects management fees charged to AMF by an affiliate of the prior
owners, net of incremental future corporate costs to be incurred by Holdings as
follows:
<TABLE>
<CAPTION>
YEAR THREE MONTHS
ENDED ENDED
DECEMBER 31, MARCH 31,
1995 1996
------------ ------------
<S> <C> <C>
Management fee charged to AMF.......................... $ 2.3 $0.6
Less: Estimate of incremental future corporate costs... (2.0) (0.5)
----- ----
Decrease to selling, general and administrative
expenses............................................. $ 0.3 $0.1
===== ====
</TABLE>
Estimated future corporate costs principally reflect senior management
personnel, corporate staff positions for services provided by the prior owners
and costs associated with public reporting requirements.
(c) In connection with AMF's acquisition of Fair Lanes, AMF formalized a
strategic integration plan to terminate and relocate certain Fair Lanes
employees, close the Fair Lanes corporate offices and close seven bowling
centers. In connection with AMF's accounting for the Fair Lanes acquisition, AMF
accounted for certain severance, relocation and incremental exit costs
associated with the closure of the seven bowling centers as acquisition date
liabilities. Also as part of the acquisition, AMF incurred certain non-recurring
costs associated with the integration of Fair Lanes into AMF. The following
integration costs have been charged to operations in the accompanying historical
AMF statement of income for the year ended December 31, 1995 and have been
excluded
46
<PAGE> 54
from the pro forma operating results. These specifically identifiable,
non-recurring integration costs are as follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1995
------------
<S> <C>
Non-recurring liability of $0.3, workers compensation of $0.2 and other costs
of $0.1.................................................................... $0.6
Costs incurred to convert the liquor licenses held by Fair Lanes to AMF...... 0.1
Real estate assessments of $0.1 and personal property, real estate and sales
tax penalties and interest of $0.2 incurred due to delinquency in payments
by Fair Lanes.............................................................. 0.3
Cost of maintaining duplicate Fair Lanes corporate office facilities, which
were closed pursuant to a formal plan to close down the Fair Lanes
corporate offices (does not include severance and relocation costs recorded
as part of the Fair Lanes purchase price allocation): personnel costs of
$0.3, professional fees of $0.1, travel and meals of $0.1 and office
expenses of $0.1........................................................... 0.6
Costs incurred by AMF relating to the integration of Fair Lanes into AMF,
principally incremental travel of $0.1, consultants of $0.1 and moving of
$0.1....................................................................... 0.3
Exit costs to close down the seven aforementioned facilities in excess of
amounts accrued in connection with AMF's policy of estimating exit costs at
the date of acquisition of $0.1, and the present value of future lease
payments for closed centers of $0.2........................................ 0.3
Other pre-acquisition costs not recorded as purchase date liabilities........ 0.1
------
Total........................................................................ $2.3
======
</TABLE>
Management currently expects that no further integration costs with respect
to Fair Lanes will be incurred.
(d) Reflects an increase in depreciation and amortization expense resulting
from the allocation of the purchase price to fixed assets and a change in the
method of depreciation. The historical carrying amounts of fixed assets of AMF
will be increased by approximately $274.3 to reflect these assets at their fair
value at the date of the Acquisition. The amount of the pro forma adjustment for
increased depreciation expense of fixed assets is $7.7 for the year ended
December 31, 1995 and $0.3 for the three months ended March 31, 1996, and was
determined using the straight-line method over the estimated lives of the assets
acquired. AMF principally used the double declining balance method, which
generated a higher depreciation charge than the straight line method, which will
be used by Holdings.
(e) Reflects amortization of goodwill by Holdings as a result of the
allocation of the excess of the purchase price over identified tangible and
intangible net assets acquired of AMF. The excess purchase price of $812.3 is
being amortized over 40 years.
47
<PAGE> 55
(f) Reflects net incremental interest expense associated with the issuance
of the following securities and transactions:
<TABLE>
<CAPTION>
YEAR THREE MONTHS
ENDED ENDED
DECEMBER 31, MARCH 31,
1995 1996
------------ ------------
<S> <C> <C>
Senior Debt scheduled to be outstanding during the year
at an assumed weighted average interest rate of
7.985%............................................... $ 39.6 $ 9.9
$250 million Senior Subordinated Notes at a rate of
10.875%.............................................. 27.2 6.8
$250 million Accreted Value of Senior Subordinated
Discount Notes at a rate of 12.25%................... 31.6 7.7
Recording of amortization expense for deferred
financing costs related to the issuance of the above
securities........................................... 4.3 1.1
------ -----
Total new interest................................... 102.7 25.5
Less: interest on existing debt to be retired........ (15.5) (5.4)
------ -----
Net increase in interest expense..................... $ 87.2 $ 20.1
====== =====
</TABLE>
If actual interest rates on the Senior Debt are higher or lower by 1/8%
than the rates assumed above, then total annual interest expense would increase
or decrease by $1.2 for the year ended December 31, 1995 and $0.3 for the three
months ended March 31, 1996.
(g) Reflects the pro forma income tax provision that would have been
provided had AMF consisted of taxable C corporations, rather than S
corporations -- see Note 8 to the Combined Financial Statements of AMF Bowling
Group.
(h) Reflects the pro forma income tax provision (benefit) associated with
pro forma adjustments. After giving effect to the Acquisition and the related
financing, the pro forma income tax provision will include the following
components:
<TABLE>
<CAPTION>
YEAR THREE MONTHS
ENDED ENDED
DECEMBER 31, MARCH 31,
1995 1996
------------ ------------
<S> <C> <C>
Pre-tax loss at 35%.................................... $ (1.9) $ (0.7)
Impact of disallowance of a portion of High Yield Debt
Obligation interest.................................. 0.2 0.1
Impact of nondeductibility of goodwill allocated to
foreign operations and states not recognizing
domestic 338(h)(10) elections........................ 1.9 0.5
Loss for which no benefit can be recognized............ -- 0.1
State income taxes (no federal benefit assumed)........ 0.8 0.1
Foreign taxes.......................................... 10.0 2.3
Foreign tax credits.................................... (0.3) --
Other.................................................. 0.1 --
------ -----
Pro forma income tax provision after giving effect to
the Acquisition and Offering......................... $ 10.8 $ 2.4
Pro forma income tax provision applicable to historical
financial statements (see Note (g)).................. (40.6) (9.2)
------ -----
Total adjustment to pro forma income tax provision..... $(29.8) $ (6.8)
====== =====
Adjustment allocated to:
Stock Purchase Agreement Adjustments................. $ (0.6) $ (0.1)
Pro Forma Adjustments................................ (29.2) (6.7)
------ -----
Total adjustment to pro forma income tax provision..... $(29.8) $ (6.8)
====== =====
</TABLE>
48
<PAGE> 56
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1996
(UNAUDITED)
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
AMF GROUP STOCK PURCHASE
AMF HOLDINGS INC. AGREEMENT PRO FORMA PRO FORMA
HISTORICAL HISTORICAL ADJUSTMENTS ADJUSTMENTS HOLDINGS
---------- -------------- -------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents...... $ 12.8 $606.4 $ 1.7(a) $ (1.7)(b) $ 28.8
(600.0)(b)
9.6(b)
Accounts and notes receivable,
net......................... 31.1 -- (0.1)(a) -- 31.0
Accounts
receivable -- affiliates.... 12.0 -- (12.0)(a) -- --
Inventories.................... 44.0 -- (0.2)(a) -- 43.8
Prepaid expenses and other..... 6.0 -- (0.1)(a) -- 5.9
------ ------ -------- -------- --------
Total current assets...... 105.9 606.4 (10.7) (592.1) 109.5
Notes receivable -- affiliates... 23.2 -- (23.2)(a) -- --
Property and equipment, net...... 253.5 -- (2.1)(a) 274.3(b) 525.7
Deferred financing costs......... -- 9.6 -- 26.8(b) 36.4
Goodwill......................... -- -- -- 812.3(b) 812.3
Other assets..................... 18.3 -- -- -- 18.3
------ ------ -------- -------- --------
Total assets.............. $400.9 $616.0 $(36.0) $ 521.3 $1,502.2
====== ====== ======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and book
overdrafts.................. $ 20.4 $ -- $ -- $ -- $ 20.4
Accrued expenses and deposits.. 34.6 15.8 (0.3)(a) -- 50.1
Accounts
payable -- affiliates....... -- -- -- -- --
Long-term debt, current........ 1.0 -- (0.1)(a) 37.5(c) 38.4
Income taxes payable........... 6.0 -- (0.3)(a) -- 5.7
------ ------ -------- -------- --------
Total current
liabilities............ 62.0 15.8 (0.7) 37.5 114.6
Long-term debt................... 27.3 500.8 (0.9)(a) 452.2(c) 979.4
Notes payable -- affiliates...... 132.9 -- -- (132.9)(c) --
Other liabilities................ 4.3 -- -- -- 4.3
Deferred income tax
liabilities.................... 0.9 -- -- 12.6(b) 13.5
------ ------ -------- -------- --------
Total liabilities......... 227.4 516.6 (1.6) 369.4 1,111.8
------ ------ -------- -------- --------
Stockholders' equity:
Common stock................... 1.5 -- -- (1.5)(c) 0.4
0.4(d)
Paid-in capital................ 63.8 100.0 (9.1)(a) (54.7)(d) 390.6
290.6(d)
Retained earnings.............. 113.5 (0.6) (26.7)(a) (86.8)(d) (0.6)
Equity adjustment from foreign
currency translation........ (3.9) -- -- 3.9(d) --
Note receivable stock
subscription................ (1.4) -- 1.4(a) -- --
------ ------ -------- -------- --------
Total stockholders' equity..... 173.5 99.4 (34.4) 151.9 390.4
------ ------ -------- -------- --------
Total liabilities and
stockholders' equity........ $400.9 $616.0 $(36.0) $ 521.3 $1,502.2
====== ====== ======== ======== ========
</TABLE>
49
<PAGE> 57
NOTES TO THE PRO FORMA CONSOLIDATED BALANCE SHEET
(DOLLARS IN MILLIONS)
(a) Assets not acquired pursuant to the Stock Purchase Agreement and cash
adjustments include the following:
(i) Impact of AMF transferring to Sellers, and therefore Holdings not
acquiring, certain remaining assets previously held by The Reece Corporation, a
company which was merged into AMF Bowling, Inc. in 1994 and which operated an
aircraft. Management of Holdings believes that there will be no incremental cost
offsetting this net expense reduction.
(ii) Impact of Holdings not acquiring the operations of one bowling center
in Switzerland and one bowling center in Spain.
(iii) Notes receivable due from affiliates, including those attributable to
what was formerly The Reece Corporation, accounts payable to affiliates and
notes payable to affiliates, together with certain other outstanding debt
obligations are being repaid.
(b) Reflects the impact of the acquisition of AMF by Holdings and the
preliminary allocation of the purchase price to the acquired fixed and
intangible assets at their fair market value. The pro forma adjustments
represent management's preliminary determination of purchase accounting
adjustments and are based upon the results of a formal appraisal of certain
assets and other available information and certain assumptions that Holdings
considers reasonable under the circumstances. Consequently, the amounts
reflected in the Pro Forma Consolidated Balance Sheet are subject to change.
The purchase cost and preliminary allocation to the acquired assets and
liabilities are as follows:
<TABLE>
<S> <C>
Initial purchase price per Stock Purchase Agreement.......................... $1,325.0
Add: Purchase Price Adjustments discussed in Note (e)........................ 14.1
Add: Transaction Costs including the non-cash value of warrants issued by AMF
Holdings Inc. to Seller's financial advisors valued at approximately
$8.7....................................................................... 70.6
--------
Total Acquisition Cost............................................. $1,409.7
========
Funded by:
Cash.............................................................................. $ 1.7
Equity............................................................................ 391.0
Debt (including the proceeds from the sale of the Notes of $500.0 million)........ 1,015.0
Existing indebtedness............................................................. 2.0
--------
Total sources of funds............................................................ $1,409.7
========
Acquisition cost.................................................................. $1,409.7
Less: Repayment of existing indebtedness at Closing............................... 158.2
Less: Assumption of existing indebtedness at Closing.............................. 2.0
Less: Adjusted net assets acquired ($173.5 of AMF historical net assets, less the
impact of Stock Purchase Agreement Adjustments of $34.4)........................ 139.1
--------
Excess of purchase cost over historical net assets acquired....................... $1,110.4
========
Allocated as follows:
Fixed assets...................................................................... $ 274.3
Deferred financing costs.......................................................... 36.4
Deferred tax liabilities*......................................................... (12.6)
Goodwill.......................................................................... 812.3
--------
$1,110.4
========
</TABLE>
- ---------------
* Pursuant to the Stock Purchase Agreement, Holdings and the Sellers have agreed
to jointly elect under Internal Revenue Code Section 338(h)(10) to treat the
stock acquisitions of AMF Bowling, Inc. and AMF Bowling Centers, Inc. as
purchases of assets for U.S. income tax purposes. This tax treatment will
result in substantial conformity in the bases of assets and liabilities for
tax and financial reporting purposes with respect to these two entities. The
purchase price allocated to these two entities represents approximately 80% of
the purchase price for the Acquisition.
50
<PAGE> 58
(c) Reflects the following transactions associated with the borrowing of the
Senior Debt and the following transactions:
<TABLE>
<S> <C>
$515.0 of Senior Debt......................................... $ 515.0
-----
Less: Existing debt to be retired........................ (159.2)
-----
Net increase in outstanding debt.................... $ 355.8
=====
</TABLE>
Of the resulting $515.0 of new debt, $38.2 is current. Approximately $2.0
(including a current portion of $0.2) of long-term debt outstanding prior to
Closing was not repaid. All other existing debt of AMF was extinguished at or
prior to the completion of the Acquisition.
(d) Adjustments to stockholders' equity include the following:
(i) Elimination of AMF historical stockholders' equity less net assets not
acquired pursuant to the Stock Purchase Agreement:
<TABLE>
<CAPTION>
STOCK PURCHASE
AGREEMENT
HISTORICAL ADJUSTMENTS NET
---------- -------------- ------
<S> <C> <C> <C>
Common Stock.................................. $ 1.5 $ -- $ 1.5
Paid-in capital............................... 63.8 (9.1) 54.7
Retained earnings............................. 113.5 (26.7) 86.8
Deferred translation.......................... (3.9) -- (3.9)
Note receivable stock subscription............ (1.4) 1.4 --
---- ---- ----
Historical stockholders' equity............. $173.5 $(34.4) $139.1
==== ==== ====
</TABLE>
(ii) Holdings was capitalized by Holdings' parent, AMF Holdings Inc., with
(a) $382.3 of Common Stock consisting of 38,225,000 shares with a par value of
$0.01 per share and (b) the value of non-cash warrants issued by AMF Holdings
Inc. to the Sellers' financial advisor of $8.7 which is being accounted for as a
contribution to Holdings' equity at Closing.
(e) The Stock Purchase Agreement specifies that the purchase price is subject to
certain post-Closing adjustments, as follows:
(i) the purchase price will be increased dollar-for-dollar by the amount by
which AMF's Closing Working Capital, as defined, as of the Closing is greater
than approximately $28.3, and will be decreased dollar-for-dollar by the amount
by which AMF's Closing Working Capital is less than $28.3; (ii) the purchase
price will be increased dollar-for-dollar by the amount by which $5.0 exceeds
the principal amount of the outstanding obligations as of the Closing (giving
effect to the Acquisition) under AMF's Stock Performance Plans, and will be
decreased dollar-for-dollar by the amount by which such principal amount exceeds
$5.0; and (iii) if the Closing occurred on or before April 8, 1996, the purchase
price would be increased by $10.0, and if the Closing occurred after April 8,
1996, the purchase price would be increased by $10.0, less $0.2 for each day
elapsed between April 8, 1996 and the date of the Closing, resulting in an
increase of $5.0 if the Closing occurred on May 3, 1996. Because the Closing
occurred on May 1, 1996, the adjustment described in clause (iii) will result in
a purchase price increase of $5.4 million. The Company believes that as of the
Closing all obligations under all of AMF's Stock Performance Plans were
cancelled and, assuming there are no such obligations, there will be a purchase
price adjustment of $10.4 million in favor of the Sellers, subject to any
further adjustment based on Closing Working Capital. Amounts due with respect to
post-closing adjustments bear interest from and including the Closing Date
through payment.
51
<PAGE> 59
As of the March 31, 1996 balance sheet, the Closing Working Capital
Adjustment, the Stock Performance Plan Adjustment and the Closing Date
Adjustment would have the effect of increasing the purchase price as
follows:
(i) Closing Working Capital Adjustment:
Closing Working Capital at March 31, 1996:
<TABLE>
<S> <C>
Current assets, less (i) $12.0 of accounts receivable -- affiliates
and (ii) as adjusted for impact of Stock Purchase Agreement
adjustments of $1.3................................................ $ 94.9
Current liabilities, less (i) repayment of the current portion of
long-term debt using Acquisition proceeds; and (ii) as adjusted for
impact of Stock Purchase Agreement adjustments of $0.7............. (60.4)
Payments to be made under a consulting contract with a former employee
which was terminated concurrent with the Closing................... (0.3)
Long-term portion of non-compete...................................... (2.2)
------
Net Closing Working Capital per balance sheet......................... 32.0
------
Less Minimum Closing Working Capital.................................. (28.3)
------
Increase in purchase price for excess Closing Working Capital........... $ 3.7
======
(ii) Stock Performance Plan Adjustment:
Negotiated balance...................................................... $ 5.0
Less: principal amount of Stock Performance Plan obligations accrued
immediately prior to Closing.......................................... --
------
Increase in purchase price for Stock Performance Plan Adjustment........ $ 5.0
======
(iii) Closing Date Adjustment........................................... $ 5.4
======
Total increase in purchase price........................................ $ 14.1
======
</TABLE>
The Closing Working Capital adjustment has been determined based upon the
AMF historical combined balance sheet as of March 31, 1996. The above
components of the Closing Working Capital adjustment will change to the
extent that the components of Closing Working Capital have changed at
Closing, which is subject to the results of the audit of the Company's
balance sheet as of the Closing Date. The Stock Performance Plan Adjustment
is based on the actual principal amount of outstanding obligations of the
Stock Performance Plans at Closing. The Closing Date Adjustment is based
upon the actual Closing Date of May 1, 1996.
52
<PAGE> 60
SELECTED COMBINED FINANCIAL DATA
(DOLLARS IN MILLIONS, EXCEPT AVERAGE PRICE PER GAME DATA)
The following data, insofar as it relates to each of the years 1993, 1994
and 1995 have been derived from audited financial statements, including the
combined balance sheets at December 31, 1994 and 1995 and the related combined
statements of income and of cash flows for the years ended December 31, 1993,
1994 and 1995 and notes thereto appearing elsewhere herein.
The combined financial data for the years ended 1991 and 1992 and the
three-month periods ended March 31, 1995 and 1996 have been derived from
unaudited combined financial statements.
The historical combined financial data of AMF presented below should be
read in conjunction with the combined financial statements and notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this Prospectus. The summary pro forma data
below should be read in conjunction with the unaudited pro forma consolidated
financial statements of the Company and notes thereto included elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
---------------------------------------------------- -------------------------
1995 1996
1991 1992 1993 1994(A) 1995 PRO FORMA 1995 1996 PRO FORMA
------ ------ ------ ------ ------ --------- ------ ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total operating revenue... $355.9 $391.2 $427.6 $517.8 $564.9 $ 562.6 $156.9 $123.3 $ 122.7
Cost of sales............. 114.2 132.1 153.2 196.0 183.9 183.6 48.2 30.7 30.6
------ ------ ------ ------ ------ -------- ------ ------ --------
Gross profit.............. 241.7 259.1 274.4 321.8 381.0 379.0 108.7 92.6 92.1
Bowling center operations 103.1 103.1 108.5 120.9 170.6 169.1 44.1 42.0 41.7
expenses................
Selling, general and 38.1 43.2 41.9 51.4 46.9 44.3 13.7 11.7 11.4
administrative
expenses................
Depreciation and 28.3 25.5 21.4 24.8 39.1 67.0 9.2 11.0 16.4
amortization............
------ ------ ------ ------ ------ -------- ------ ------ --------
Operating income.......... 72.2 87.3 102.6 124.7 124.4 98.6 41.7 27.9 22.6
Interest expense, net..... 9.9 6.4 4.1 6.9 13.5 102.1 3.3 3.4 23.8
Other income (expense), 0.2 (1.4) (1.0) (2.0) (2.0) (2.0) (0.9) (0.2) (0.2)
net.....................
Income (loss) before 62.5 79.5 97.5 115.8 108.9 (5.5) 37.5 24.3 (1.4)
income taxes............
Provision for income 13.4 15.4 15.1 16.5 12.1 10.8 3.3 2.7 2.4
taxes...................
------ ------ ------ ------ ------ -------- ------ ------ --------
Net income (loss)......... $ 49.1 $ 64.1 $ 82.4 $ 99.3 $ 96.8 $ (16.3) $ 34.2 $ 21.6 $ (3.8)
====== ====== ====== ====== ====== ======== ====== ====== ========
Ratio of earnings to fixed 4.7x 7.1x 11.0x 10.3x 6.1x -- 8.1x 5.5x --
charges(b)..............
BALANCE SHEET DATA
(AT END OF PERIOD):
Total assets.............. $244.1 $231.1 $228.2 $410.2 $400.4 $1,480.4 $413.9 $400.9 $1,502.2
Total debt................ 112.4 98.0 75.7 186.1 167.4 1,017.0 176.1 161.1 1,017.8
Stockholders' equity...... 76.9 75.8 88.6 132.4 161.5 383.7 158.9 173.5 390.4
Net working capital 20.6 15.6 18.9 16.9 29.4 29.4 26.2 31.1 31.4
("NWC")(c)..............
OTHER DATA:
BOWLING CENTER
OPERATIONS:
Number of centers 196 197 190 293 285 283 -- -- --
(at end of period)......
Number of lanes 5,981 5,988 5,896 9,586 9,471 9,443 -- -- --
(at end of period)......
Lineage(d)................ 26.4 26.6 25.9 26.0(i) 24.2(j) 24.2(j) -- -- --
</TABLE>
53
<PAGE> 61
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
---------------------------------------------------- -------------------------
1995 1996
1991 1992 1993 1994(a) 1995 PRO FORMA 1995 1996 PRO FORMA
------ ------ ------ ------ ------ --------- ------ ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Average price per game $ 2.21 $ 2.21 $ 2.17 $ 2.20(i) $ 2.19(j) $ 2.19(j) -- -- --
("APPG")................
Fixed exchange rate 2.09 2.11 2.15 2.19(i) 2.19(j) 2.19(j) -- -- --
APPG(e).................
Bowling revenue........... $127.1 $128.5 $120.8 $140.3 $182.9 $181.4 $ 54.2 $ 52.2 $51.8
Food and beverage 42.6 43.3 40.8 49.8 69.4 68.8 20.6 20.1 20.0
revenue.................
Anciliary revenue......... 30.5 32.7 31.0 35.3 40.0 39.8 11.0 10.8 10.7
------ ------ ------ ------ ------ -------- ------ ------ --------
Total revenue............. $200.2 $204.5 $192.6 $225.4 $292.3 $290.0 $ 85.8 $ 83.1 $82.5
EBITDA(f)................. 66.9 68.3 56.9 68.9 89.0 90.8 30.2 31.8 31.6
EBITDA margin............. 33.4% 33.4% 29.5% 30.6% 30.4% 31.3% 35.2% 38.3% 38.3%
MANUFACTURING:
Total NCPs sold........... 1,896 2,210 3,577 4,941 4,437 4,437 1,485 415 415
NCP revenue............... N/A N/A $122.6 $170.5 $152.6 $152.6 $ 45.1 $ 16.8 $16.8
Replacement and N/A N/A 112.4 121.9 120.0 120.0 26.0 23.4 23.4
Modernization revenue...
------ ------ ------ ------ ------ -------- ------ ------ --------
Total revenue............. $155.7 $186.7 $235.0 $292.4 $272.6 $272.6 $ 71.1 $ 40.2 $40.2
EBITDA.................... 33.6 44.5 67.1 80.6 74.5 74.8 20.6 7.1 7.4
EBITDA margin............. 21.6% 23.8% 28.6% 27.6% 27.3% 27.4% 29.0% 17.6% 18.4%
COMBINED:
EBITDA.................... $100.5 $112.8 $124.0 $149.5 $163.5 $165.6 $ 50.8 $ 38.9 $39.0
EBITDA margin............. 28.2% 28.8% 29.0% 28.9% 28.9% 29.4% 32.4% 31.6% 31.8%
Adjusted Pro Forma -- -- -- -- -- $167.7 -- -- --
EBITDA(g)...............
Cash interest exp......... $ 13.3 $ 7.4 $ 4.0 $ 4.3 $ 5.9 67.0 0.9 0.5 $16.7
Total interest exp........ 12.0 7.9 5.0 7.4 15.7 102.9 3.7 3.8 25.5
Pro forma cash taxes -- -- -- -- -- 12.5 -- -- 2.7
paid....................
Modern. and Maintenance 8.6 8.3 9.0 11.4 13.2 13.2 3.2 3.0 3.0
Cap. Ex.
("MMCapEx")(h)..........
Expansion capital 7.0 3.8 5.7 6.4 16.9 16.9 1.1 1.4 1.4
expenditures............
------ ------ ------ ------ ------ -------- ------ ------ --------
Total capital $ 15.6 $ 12.1 $ 14.7 $ 17.8 $ 30.1 $ 30.1 $ 4.3 $ 4.4 $ 4.4
expenditures............
====== ====== ====== ====== ====== ======== ====== ====== ========
Incr. (Decr.) in NWC N/A (5.0) 33 (2.0) 12.5 12.5 N/A 1.7 2.0
("Chg. NWC")............
PRO FORMA RATIO DATA:
EBITDA/cash interest exp........................................... 2.47x 2.33x
(EBITDA -- MMCapEx)/cash interest exp.............................. 2.27 2.16
(EBITDA -- MMCapEx -- Chg. NWC)/cash interest exp.................. 2.09 2.04
EBITDA/total interest exp.......................................... 1.61x 1.53x
(EBITDA -- MMCapEx)/total interest exp............................. 1.48 1.41
(EBITDA -- MMCapEx -- Chg. NWC)/total interest exp................. 1.36 1.33
Total debt/EBITDA(m)............................................... 6.14x 6.52x
</TABLE>
- ---------------
(a) Includes results of Fair Lanes, acquired on September 29, 1994.
(b) The ratios of earnings to fixed charges are computed by dividing earnings by
the fixed charges. Earnings consist of net income to which has been added
fixed charges and income taxes. Fixed charges consist of interest expense,
amortization of debt issuance costs, and the portion of rent expense
considered to represent interest. Earnings were inadequate to cover fixed
charges on a pro forma basis for the year ended December 31, 1995 and the
three months ended March 31, 1996 by $5.5 million and $1.4 million,
respectively.
54
<PAGE> 62
(c) Defined as accounts and notes receivable (excluding affiliated receivables),
net of allowance for doubtful accounts, inventories and prepaid expenses
and other current assets less accounts payable, excluding book overdrafts
and affiliated payables, and accrued expenses, excluding league deposits.
(d) Defined as worldwide average number of games bowled per lane per day.
(e) Defined as the result of dividing worldwide bowling revenue for each period
presented (as translated into U.S. dollars by using weighted average
foreign currency exchange rates used to translate 1995 revenue) by the
total number of games bowled worldwide. The effect is to fix the exchange
rates at the 1995 levels for purposes of comparability in examining changes
in average price per game without the effect of changes in foreign currency
exchange rates.
(f) EBITDA represents net income before net interest expense, income taxes,
depreciation and amortization, and other income (expense), net. EBITDA is
not intended to represent and should not be considered more meaningful
than, or an alternative to, net income, cash flow or other measures of
performance in accordance with generally accepted accounting principles.
EBITDA data is included because the Company understands that such
information is used by certain investors as one measure of an issuer's
historical ability to service debt.
(g) The following adjustments have been made to EBITDA as reflected in the Pro
Forma Statement of Income for the year ended December 31, 1995 as presented
in the Pro Forma Financial Statements appearing elsewhere in this
Prospectus:
During 1995, AMF management prepared a formal strategic assessment of its
global operations, resulting in changes in management personnel, the development
of a new bowling centers identity program and the consolidation of European
offices. In connection therewith, AMF incurred certain non-recurring,
incremental costs as follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1995
-----------------
<S> <C>
Recruitment fees for new international management....................................... $ 0.069
Costs relating to bowling centers identity program...................................... 0.026
Incremental costs of temporary country manager in Australia............................. 0.135
Redundancy and relocation costs of $0.035 and legal costs of $0.023 incurred to
restructure Australian operations..................................................... 0.058
Severance and legal costs incurred in Spain of $0.043 and in Switzerland of $0.015...... 0.058
Salaries and benefits for a product licensing position which was eliminated............. 0.098
Severance and recruitment costs incurred in connection with consolidating three European
offices into one central office in London............................................. 0.280
------
$ 0.724
------
</TABLE>
During 1995, AMF incurred certain non-recurring costs in connection with the
following:
<TABLE>
<S> <C>
Non-compete and consulting agreement in connection with the replacement of management of
manufacturing......................................................................... $ 1.400
Costs associated with AMF agreeing to share in cost of settling a supplier's warranty
obligation............................................................................ 0.210
Legal expenses for settled National Labor Relations Board matter........................ 0.071
Incremental costs, including legal and other costs, incurred by AMF to establish a
direct sales office due to the termination of AMF's Korean distributor................ 0.814
Reversals of legal reserves after favorable settlement on National Labor Relations Board
matter................................................................................ (1.103)
------
1.392
------
Total adjustments to pro forma EBITDA................................................... $ 2.116
======
</TABLE>
(h) Defined as capital expenditures for existing product lines and existing
businesses for manufacturing and capital expenditures for modernizing and
maintaining bowling centers for bowling center operations.
(i) Includes results of Fair Lanes, acquired on September 29, 1994. The figures
for lineage, average price per game and fixed exchange rate average price
per game for AMF, excluding Fair Lanes, are 26.3, $2.25 and $2.23,
respectively.
(j) Includes results of Fair Lanes, acquired on September 29, 1994. The figures
for lineage, average price per game and fixed exchange rate average price
per game for AMF, excluding Fair Lanes, are 25.5, $2.33 and $2.33,
respectively.
55
<PAGE> 63
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
AMF
This discussion should be read in conjunction with the information
contained in the combined financial statements and notes thereto included
elsewhere within this Prospectus. See "Prospectus Summary."
The historical AMF financial data presented in this section include the two
European bowling centers that were retained by the Sellers. For the effect on
AMF of excluding these two bowling centers, see "Notes to the Pro Forma
Consolidated Statements of Income" and "Notes to the Pro Forma Consolidated
Balance Sheet."
GENERAL
AMF is principally engaged in two businesses which, historically, have been
operated independently: (i) the ownership and operation of 205 domestic bowling
centers and 80 international bowling centers (bowling center operations) as of
April 30, 1996; and (ii) the design, manufacture and sale of bowling center
equipment, including automatic pinspotters, automatic scoring equipment, bowling
pins, lanes, ball returns, and certain spare and replacement parts, and the
resale of allied products such as bowling balls, bags, shoes and certain other
spare and replacement parts (manufacturing).
To facilitate a meaningful comparison, this Management's Discussion and
Analysis of Financial Condition and Results of Operations separately discusses
results of AMF's bowling center operations and manufacturing.
The results of bowling center operations, manufacturing and the combined
group are set forth below.
AMF WORLDWIDE BOWLING CENTER OPERATIONS AND MANUFACTURING
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------------------ -------------------------------
1993 % 1994(a) % 1995(a) % 1995 % 1996 %
------ --- ------- --- ------- --- ------ --- ------ ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Bowling center operations(b)... $192.6 45% $225.4 44% $292.3 52% $ 85.8 55% $ 83.1 67%
Manufacturing(c)............... 235.0 55 292.4 56 272.6 48 71.1 45 40.2 33
------ --- ------ --- ------ --- ------ --- ------ ---
Combined....................... $427.6 100% $517.8 100% $564.9 100% $156.9 100% $123.3 100%
====== === ====== === ====== === ====== === ====== ===
EBITDA:
Bowling center operations(b)... $ 56.9 46% $ 68.9 46% $ 89.0 (d) 54% $ 30.2(d) 59% $ 31.8 82%
Manufacturing(c)............... 67.1 54 80.6 54 74.5 46 20.6 41 7.1 18
------ --- ------ --- ------ --- ------ --- ------ ---
Combined....................... $124.0 100% $149.5 100% $163.5 (d) 100% $ 50.8(d) 100% $ 38.9 100%
====== === ====== === ====== === ====== === ====== ===
</TABLE>
- ---------------
(a) Includes results of Fair Lanes, acquired on September 29, 1994.
(b) The historical AMF financial data presented in this table include the two
European bowling centers that were retained by the Sellers. For the effect
on AMF of excluding these two bowling centers, see "Notes to the Pro Forma
Consolidated Statements of Income" and "Notes to the Pro Forma Consolidated
Balance Sheet."
(c) Not included in the above revenue is revenue generated by manufacturing
through sales to AMF's bowling center operations. This revenue, which was
eliminated in the combined results, was $13.9 million, $9.3 million and $8.6
million for the years ended December 31, 1995, 1994 and 1993, respectively,
and $4.3 million and $2.8 million for the three months ended March 31, 1995
and 1996, respectively. The EBITDA eliminated on these revenues were $4.8
million, $4.1 million and $4.0 million for the years ended December 31,
1995, 1994 and 1993, respectively, and $1.5 million and $1.0 million for the
three months ended March 31, 1995 and 1996, respectively.
(d) After $2.3 million and $1.2 million of certain non-recurring costs relating
to the Fair Lanes acquisition for the year ended December 31, 1995 and the
three months ended March 31, 1995, respectively. See "Pro Forma Consolidated
Financial Statements."
For 1995, bowling center operations adopted a calendar month-end;
accordingly, the bowling center operations results of operations for the year
ended December 31, 1995 include the results of domestic operations for the
period from December 26, 1994 through December 31, 1995. Total
56
<PAGE> 64
revenue for the period from December 26, 1994 through December 31, 1994 was
approximately $2.0 million.
BOWLING CENTER OPERATIONS
The combined results shown below reflect both the domestic and
international bowling center operations. The tables set forth below also present
the average price per game and lineage (average number of games bowled per lane
per day) data for AMF's combined worldwide bowling center operations. Average
price per game and lineage are key components of bowling revenue.
AMF WORLDWIDE BOWLING CENTER OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------
1994 1995
--------------------- --------------------------------
1993 AMF(b) COMBINED(c) AMF(b) FAIR LANES COMBINED
----- ------ ----------- ------ ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Average price per game............. $2.17 $2.25 $2.20 $2.33 $1.93 $2.19
Percentage change................ -- 3.7% 1.4% 3.6% -- --
Fixed exchange rate average price
per game(a)...................... $2.15 $2.23 $2.19 $2.33 $1.93 $2.19
Percentage change................ -- 3.7% 1.9% 4.5% -- --
Lineage............................ 25.9 26.3 26.0 25.5 22.2 24.2
Percentage change................ -- 1.5% 1.2% (3.0)% -- --
</TABLE>
- ---------------
(a) Defined as the result of dividing worldwide bowling revenue for each period
presented (as translated into U.S. dollars by using the weighted average
foreign currency exchange rates used to translate 1995 revenue), by the
total number of games bowled worldwide. The effect is to fix the exchange
rates at the 1995 levels for purposes of comparability in examining changes
in average price per game without the effect of changes in foreign currency
exchange rates.
(b) Excludes Fair Lanes.
(c) Includes the results of Fair Lanes, acquired on September 29, 1994.
AMF's worldwide lineage has remained relatively constant over the periods
presented. Worldwide average price per game increased from $2.17 for the year
ended December 31, 1993 to $2.19 for the year ended December 31, 1995. After new
management was installed in early 1993, domestic prices were increased by 3.2%
in 1994 and 2.1% in 1995 (excluding Fair Lanes), resulting in similar increases
in revenue and little to no change in lineage. The acquisition of Fair Lanes
centers, all of which are located in the U.S. and which acquisition is included
for the fourth quarter of 1994 and for 1995, had the effect of decreasing the
average price per game, as the domestic average price per game is lower than the
international price per game.
Domestically, slight declines in league lineage have been offset by
increases in open play and tournament lineage. Lineage from league bowlers has
slowly declined over the years, as traditional night league activity has
declined, but has been partially offset by increases in day leagues, junior
leagues and senior leagues. Open play lineage has risen due to AMF's ability to
attract additional open play bowlers.
57
<PAGE> 65
AMF DOMESTIC BOWLING CENTERS
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------
1994 1995(d)
--------------------- --------------------------------
1993 AMF(a) COMBINED(b) AMF(a) FAIR LANES COMBINED
----- ------ ----------- ------ ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Total revenue..................... $94.6 $96.2 $ 121.6 $99.8 $ 92.6 $192.4
EBITDA............................ 27.4 30.3 33.4 31.2 25.7(c) 56.9(c)
EBITDA margin..................... 29.0% 31.5% 27.5% 31.3% 27.8% 29.6
</TABLE>
- ---------------
(a) Excludes Fair Lanes operations.
(b) Includes the results of Fair Lanes, acquired on September 29, 1994.
(c) After $2.3 million of certain non-recurring costs relating to the Fair Lanes
acquisition. See "Pro Forma Consolidated Financial Statements."
(d) For 1995, domestic bowling center operations adopted a calendar month-end;
accordingly, the results of operations for the year ended December 31, 1995
include the results of operations for the period from December 26, 1994
through December 31, 1995. Total revenue for the period from December 26,
1994 through December 31, 1994 was approximately $2.0 million.
AMF INTERNATIONAL BOWLING CENTERS(a)
(U.S. DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1993 1994 1995
----- ------ -----
<S> <C> <C> <C>
Total revenue................................................... $98.0 $103.8 $99.9
EBITDA.......................................................... 29.5 35.5 32.1
EBITDA margin................................................... 30.1% 34.2% 32.1%
</TABLE>
- ---------------
(a) The historical AMF financial data presented in this table include the two
European bowling centers that were retained by the Sellers. For the effect
on AMF of excluding these two bowling centers, see "Notes to the Pro Forma
Consolidated Statements of Income" and "Notes to the Pro Forma Consolidated
Balance Sheet."
FIRST QUARTER 1995 TO FIRST QUARTER 1996
For the three months ended March 31, 1996, bowling center operations
revenue decreased by $2.7 million, or 3.1%, from $85.8 million for the three
months ended March 31, 1995 to $83.1 for the three months ended March 31, 1996.
For the domestic centers, total revenue decreased by $2.6 million, representing
a 4.3% decrease over first quarter 1995 revenue of $60.7 million. Of this
decrease, $1.4 million is attributable to seven Fair Lanes centers, which were
closed subsequent to March 1995. Severe weather conditions in the United States
during the first quarter of 1996 accounted for the remaining decrease. The
overall decrease in international revenue of $0.1 million was a result of
decreased lineage.
Bowling center operations worldwide gross profit decreased by $1.9 million,
or 2.4%, to $76.3 million for the three months ended March 31, 1996 from $78.2
million for the three months ended March 31, 1995. This decrease is primarily
attributable to lower revenue, partially offset by increased gross profit on
domestic food and beverage revenue as a result of cost control measures. For the
international centers, gross profit was unchanged.
Bowling center operations costs decreased by $2.1 million, or 4.8%, from
$44.1 million for the three months ended March 31, 1995 to $42.0 million for the
three months ended March 31, 1996. For the domestic centers, bowling center
operations costs decreased by $2.6 million, of which $1.0 million was related to
seven Fair Lanes centers, which were closed subsequent to March 1995. The
remaining reductions were a result of management's efforts to decrease operating
costs after weather conditions had a negative impact on revenues in 1996.
Internationally, bowling center operations costs increased by $0.5 million,
primarily due to new center operations in Japan and China.
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<PAGE> 66
Bowling center operations selling, general and administrative costs
decreased by $1.1 million, or 31.4%, from $3.5 million for the three months
ended March 31, 1995 to $2.4 million for the three months ended March 31, 1996.
For the domestic centers, selling, general and administrative expenses decreased
by $1.2 million, primarily due to non-recurring expenses incurred during the
three months ended March 31, 1995 resulting from the existence and subsequent
closing of the Fair Lanes corporate offices, the reduction of general liability
and workers compensation expenses and other nonrecurring costs as a result of
integrating the Fair Lanes centers into the AMF risk management program and the
closing of seven bowling centers. See "Pro Forma Consolidated Financial
Statements." This decrease was partially offset by an increase of $0.1 million
for the international centers.
Bowling center operations EBITDA increased by $1.6 million, or 5.3%, from
$30.2 million for the three months ended March 31, 1995 to $31.8 million for the
three months ended March 31, 1996 (after certain non-recurring costs of $1.2
million). (See "Pro Forma Consolidated Financial Statements.") Domestic EBITDA
and the EBITDA margin increased from $21.8 million and 35.9% in the first
quarter of 1995, to $24.1 million and 41.5 % in the first quarter of 1996. This
increase is primarily attributable to the decreases in bowling center operations
costs and selling, general and administrative costs. Internationally, bowling
center operations EBITDA and EBITDA margin decreased from $8.4 million and 33.5%
in the first quarter of 1995, to $7.7 million and 30.8% in the first quarter of
1996. This EBITDA decrease of $0.7 million and the related margin decrease were
direct results of the decrease in revenue and the increase in operating and
selling, general and administrative costs for the new centers in Japan and
China. The opening of the China center was delayed until January 1996, which
resulted in additional pre-opening costs of $0.2 million.
1994 TO 1995
For the year ended December 31, 1995, bowling center operations revenue
increased by $66.9 million, or 29.7%, from $225.4 million for the year ended
December 31, 1994 to $292.3 million for the year ended December 31, 1995. Of
this increase, $3.6 million is attributable to AMF domestic centers (excluding
Fair Lanes) and $67.2 million is attributable to the addition of the Fair Lanes
centers, offset by a decrease in international revenue of $3.9 million. For the
domestic centers (excluding Fair Lanes), the total revenue increase of $3.6
million, representing a 3.7% increase over 1994 revenue of $96.2 million, was
throughout all revenue categories. The increase in bowling revenue was a result
of an increase in both the domestic centers' (excluding Fair Lanes) average
price per game and lineage. Additionally, in December 1995, management increased
domestic shoe rental prices and domestic food and beverage prices by 10.0% and
3.0%, respectively. For 1996, management plans to increase bowling prices in the
U.S. by an average of 3.4%. Unseasonably dry, hot weather in several countries
and several unusual events including the Kobe earthquake and subway gas attacks
in Japan, the economic crisis in Mexico and general strikes in France resulted
in a decline in international bowling center revenue. In particular, AMF's
centers in Mexico had a revenue decline from U.S. $15.3 million for 1994 to U.S.
$7.8 million for 1995, due to weakening of the local currency. The overall
decrease in international revenue was a result of an increase in the
international average price per game, expressed in U.S. dollars (despite the
devaluation of the Mexican peso), which was more than offset by a decrease in
international lineage. For 1996, management plans to increase bowling prices
outside the U.S. by an average of 8.4%.
Bowling center operations worldwide gross profit increased by $62.9
million, or 31.0% to $266.0 million for the year ended December 31, 1995 from
$203.1 million for the year ended December 31, 1994. Of this increase, $61.9
million, or 98.4% was attributable to the addition of acquired Fair Lanes
centers. Fair Lanes centers' cost of sales as a percentage of revenues declined
from 10.5% for the year ended December 31, 1994 to 8.5% for the year ended
December 31, 1995. This decrease in cost of sales is primarily attributable to
the immediate effects of implementing AMF cost control procedures in food and
beverage operations at the Fair Lanes centers. The remaining gross profit
increase of $1.0 million is attributable to higher prices at AMF centers
(excluding Fair
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<PAGE> 67
Lanes) and general reductions to cost of goods sold. During the year ended
December 31, 1995, management reviewed the domestic food and beverage operations
and established more standardized menus which, management believes, resulted in
an overall lower cost of goods sold for food and beverage.
Bowling center operations costs increased by $49.5 million, or 42.3%, from
$117.0 million for 1994 to $166.5 million for 1995, of which $44.0 million, or
88.9%, was related to the inclusion of Fair Lanes. As a percentage of total
revenue, bowling center operations costs increased from 51.9% to 56.9% from 1994
to 1995, respectively. The increase was also attributable to $2.3 million of
non-recurring expenses in 1995 resulting from the existence and subsequent
closing of the Fair Lanes corporate offices, the reduction of general liability
and workers compensation expenses and other nonrecurring costs as a result of
integrating the Fair Lanes centers into the AMF risk management program and the
closing of seven bowling centers (see "Pro Forma Consolidated Financial
Statements"). Internationally, the increase in the percentage of selling,
general and administrative costs to revenue was due to the following factors.
During 1995, management assessed the international bowling center operations and
implemented changes in management personnel in Australia, France, Spain and
Switzerland. Management believes that these changes will improve the operating
results of the international centers in the future. In addition, AMF closed one
center in the United Kingdom, which was damaged by fire, and one center in
Australia. As a result, AMF incurred redundancy, relocation, severance and other
costs aggregating $0.3 million, which management has identified as non-recurring
(see "Selected Combined Financial Data").
Selling, general and administrative costs decreased by $6.5 million, or
38.2%, from $17.0 million for 1994 to $10.5 million for 1995, of which $4.6
million, or 70.7%, was related to Fair Lanes. Fair Lanes incurred $5.8 million
of selling, general and administrative costs during the three months ended
December 31, 1994 (and before management assumed operational control) compared
with costs of $1.2 million during 1995. This decrease is attributable to high
salaries, professional fees and travel costs incurred during 1994 by Fair Lanes.
The remaining decrease represents a decrease in selling, general and
administrative costs for international centers of $2.1 million and an increase
for domestic centers (excluding Fair Lanes) of $0.2 million.
EBITDA increased by $20.1 million, or 29.2%, from $68.9 million for 1994 to
$89.0 million for 1995 (after certain non-recurring costs of $2.3 million). Of
this increase, the addition of the Fair Lanes centers contributed $22.6 million
in EBITDA for 1995, after certain non-recurring costs of $2.3 million (see "Pro
Forma Consolidated Financial Statements"). Domestic EBITDA and the EBITDA margin
increased from $33.4 million and 27.5% in 1994, to $56.9 million and 29.6% in
1995. This increase is primarily attributable to the inclusion of Fair Lanes in
the fourth quarter of 1994, which experienced an EBITDA margin of 12.6% for that
quarter, compared to 27.8% for the year ended December 31, 1995. AMF did not
assume operational control of Fair Lanes until January 1995. Thus, the combined
results for AMF for 1994 are depressed due to the lower EBITDA that Fair Lanes
had historically experienced under prior management. Internationally, EBITDA and
EBITDA margin decreased from $35.5 million and 34.2% in 1994, to $32.1 million
and 32.1% in 1995. This EBITDA decrease of $3.4 million and the related margin
decline were direct results of the impact on international revenue of the
unusual events referred to above occurring in countries with historically high
margins and the increase in selling, general and administrative costs discussed
above. Additionally, AMF centers in Mexico had an EBITDA decline from U.S. $4.7
million for 1994 to U.S. $3.4 million for 1995, primarily due to the weakening
of the local currency.
1993 TO 1994
AMF's worldwide revenue from bowling center operations increased by $32.8
million, or 17.0%, to $225.4 million in fiscal 1994 from $192.6 million in
fiscal 1993. Of this increase, $25.4 million, or 77.4%, resulted from the
inclusion of the Fair Lanes centers' results for the fourth quarter of 1994.
Total revenue for AMF domestic centers (excluding Fair Lanes) increased by $1.6
million, or 1.7%. Total revenue for AMF's international centers increased by
$5.8 million. Domestic AMF bowling
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<PAGE> 68
revenue (excluding Fair Lanes) increased from $58.1 million to $58.5 million
from 1993 to 1994. This increase resulted from an increase in both the average
price per game and lineage. International bowling revenue increased by $3.0
million, which is attributable to increases in average price per game and
lineage. Total food and beverage revenue (excluding Fair Lanes) increased by
$2.0 million following the hiring of a new food and beverage manager in the U.S.
and an emphasis by international managers to set prices and update menus to
maximize revenue. The remaining increase in worldwide revenue (excluding Fair
Lanes) of $2.0 million is attributable to increases in ancillary revenue, which
includes shoe rental and amusement game revenue.
AMF's worldwide gross profit from bowling center operations increased $29.0
million, or 16.7% to $203.1 million in fiscal 1994 from $174.1 million in fiscal
1993. Of this increase, $22.8 million, or 78.6%, is attributable to the
inclusion of the Fair Lanes centers for the fourth quarter. This increase is
also due to the above mentioned increase in bowling revenue. As there is no
direct cost of sales for bowling revenue, the increase in revenue resulted in a
corresponding increase in gross profit. The remaining increase is attributable
to food and beverage, resulting from the above mentioned increase in food and
beverage revenue.
Bowling center operations expenses increased by $11.2 million, or 10.6%,
from $105.8 million for 1993 to $117.0 million for 1994, of which $14.0 million
was related to the inclusion of Fair Lanes. As a percentage of total revenue,
bowling center operations costs decreased from 54.9% to 51.9% from 1993 to 1994,
respectively. The full year effect of cost reduction measures implemented in
1993 and of bowling centers which were closed in 1993 was realized in 1994.
Selling, general and administrative costs increased by $5.7 million, or
50.4%, from $11.3 million for 1993 to $17.0 million for 1994. The increase of
$5.7 million is a result of the inclusion of Fair Lanes.
AMF's worldwide EBITDA increased by $12.0 million, or 21.1%, to $68.9
million in fiscal 1994 from $56.9 million in fiscal 1993. Of this increase,
acquired Fair Lanes centers contributed $3.1 million, or 25.8%. Although
domestic EBITDA increased from $27.4 million to $33.4 million from 1993 to 1994,
or $6.0 million, as a percentage of domestic revenue the EBITDA margin decreased
from 29.0% for 1993 to 27.5% for 1994. This decrease is primarily a result of
the inclusion of Fair Lanes during the fourth quarter of 1994, which generated
an EBITDA margin of 12.6% compared to AMF's domestic centers (excluding Fair
Lanes) which generated an EBITDA margin of 31.5%. AMF did not assume operational
control of Fair Lanes until January 1995. Thus, results for the fourth quarter
of 1994 are reflective of the lower EBITDA which Fair Lanes had historically
experienced under prior management. Internationally, EBITDA increased by $6.0
million, from $29.5 million during 1993 to $35.5 million during 1994. The EBITDA
margin increased from 30.1% during 1993 to 34.2% during 1994. This increase was
a direct result of the increase in revenue and the decrease in selling, general
and administrative expenses as a percentage of revenue discussed above.
MANUFACTURING
The two categories of AMF's manufacturing operations are (i) recurring
sales of replacement and spare parts and supplies, resale products, and major
modernization equipment ("Replacement and Modernization" products) to
established bowling centers in both mature and developing markets; and (ii)
sales of bowling equipment necessary to outfit new bowling centers or expand an
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<PAGE> 69
existing bowling center ("New Center Packages" or "NCPs"). Revenue and EBITDA
for Manufacturing and for the two categories are presented below.
AMF MANUFACTURING(a)
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
---------------------------- -------------------
1993 1994 1995 1995 1996
------ ------ ------ ----- -----
<S> <C> <C> <C> <C> <C>
Total Manufacturing Combined
Total revenue...................... $235.0 $292.4 $272.6 $71.1 $40.2
EBITDA............................. 67.1 80.6 74.5 20.6 7.1
EBITDA margin...................... 28.6% 27.6% 27.3% 29.0% 17.6%
Replacement and Modernization
Products
Revenue............................ $112.4 $121.9 $120.0 $26.0 $23.4
EBITDA............................. 29.7 30.5 27.1 5.0 3.8
EBITDA margin...................... 26.4% 25.0% 22.6% 19.2% 16.2%
New Center Packages
Total NCPs sold.................... 3,577 4,941 4,437 1,485 415
Revenue............................ $122.6 $170.5 $152.6 $45.1 $16.8
EBITDA............................. 37.4 50.1 47.4 15.6 3.3
EBITDA margin...................... 30.5% 29.4% 31.1% 34.6% 19.6%
</TABLE>
- ---------------
(a) Excludes sales to AMF bowling centers of $8.6 million, $9.3 million and
$13.9 million for the years ended December 31, 1993, 1994 and 1995,
respectively, and $4.3 million and $2.8 million for the three months ended
March 31, 1995 and 1996, respectively. The EBITDA associated with this
revenue were $4.0 million, $4.1 million and $4.8 million for the years ended
December 31, 1993, 1994 and 1995, respectively, and $1.5 million and $1.0
million for the three months ended March 31, 1995 and 1996, respectively.
Manufacturing's long-standing customer relationships, bowling centers'
predictable demand for Replacement and Modernization products, a steadily
increasing installed base and Manufacturing's ability to supply a full product
line have historically made the Replacement and Modernization category a stable
and recurring base of revenue and EBITDA. Revenue growth from 1991 to 1994 for
the NCP segment resulted primarily from increased unit sales to Taiwan and Korea
and recently to China, where the popularity of bowling and consequent demand for
new bowling centers has increased dramatically.
FIRST QUARTER 1995 TO FIRST QUARTER 1996
Revenue decreased by $30.9 million, or 43.3%, from $71.1 million for the
three months ended March 31, 1995 to $40.2 million for the three months ended
March 31, 1996. This figure represents a decrease of $28.3 million or a 62.7%
decline in NCP revenue and a decrease of $2.6 million or a 10.0% decline in
Replacement and Modernization revenue. The drop in NCP revenue is due to an
overall decrease in NCP unit sales, particularly for Korea and Taiwan, partially
offset by an increase in NCP sales to China. NCP sales to Korea and Taiwan
decreased from 1,267 units for the three months ended March 31, 1995 to 76 units
for the three months ended March 31, 1996, representing a decrease of 94.0%.
This decrease was partially offset by an increase in NCP sales to China from 92
units for the three months ended March 31, 1995 to 185 units for the three
months ended March 31, 1996, representing a 101.1% increase. As a result of the
maturing state of the markets in Korea and Taiwan, management does not expect
NCP sales to these markets to return to the levels realized in 1995. NCP sales
to China are expected to continue to increase over 1995 levels. See "Backlog;
Recent NCP Sales."
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<PAGE> 70
The Replacement and Modernization revenue decrease was primarily a result
of a decrease in bowling ball for resale sales of $3.6 million, partially offset
by increased revenue from the sale of bumpers ($0.4 million), synthetic lanes
($0.3 million) and automatic scoring ($0.3 million). The decrease in bowling
ball for resale sales results from a new product launch, which occurred in March
during 1995, and in April during 1996.
Total gross profit decreased by $14.1 million, or 47.2%, from a gross
profit of $29.9 million for the three months ended March 31, 1995 to a gross
profit of $15.8 million for the three months ended March 31, 1996. This
represents a gross profit margin of 42.1% and 39.2% for the three months ended
March 31, 1995 and the three months ended March 31, 1996, respectively. This
decrease was primarily due to the lower level of sales. This decrease in
revenues was offset by an increased mix of NCP sales through affiliates (which
generate higher gross profit margins than sales through distributors) and
reduced engineering costs due to product releases in 1995 that were not repeated
in 1996.
Selling, general and administrative expenses decreased by $0.6 million,
from $10.2 million for the three months ended March 31, 1995 to $9.6 million for
the three months ended March 31, 1996. This decrease of $0.6 million is
primarily attributable to lower variable costs associated with a lower volume of
sales, offset in part by an increase of $0.7 million of costs associated with
international sales efforts.
EBITDA and EBITDA margin decreased from $20.6 million and 29.0%,
respectively, for the three months ended March 31, 1995 to $7.1 million and
17.5%, respectively, for the three months ended March 31, 1996, primarily due to
the substantial reduction in NCP sales. Replacement and Modernization EBITDA
decreased from $5.0 million for the three months ended March 31, 1995 to $3.8
million for the three months ended March 31, 1996. NCP EBITDA also declined from
$15.6 million for the three months ended March 31, 1995 to $3.3 million for the
three months ended March 31, 1996.
1994 TO 1995
Revenue decreased by $19.8 million, or 6.8%, from $292.4 million for 1994
to $272.6 million for 1995. This figure represents a decrease of $17.9 million
or a 10.5% decline in NCP revenue and a decrease of $1.9 million or a 1.6%
decline in Replacement and Modernization revenue. The drop in NCP revenue is due
to an overall decrease in NCP sales, particularly for Korea and Taiwan, offset
by an increase in NCP sales to China. From 1994 to 1995, total NCP sales to
Korea decreased by 757 units and to Taiwan decreased by 519 units, while total
NCP sales to China increased by 662 units. Additionally, there was a moderate
increase in NCP units sold to India, Thailand and Egypt of 86 units,
collectively, from 12 units during 1994 to 98 units during 1995. A significant
portion of the decrease occurred in sales to Taiwan and Korea during November
and December 1995, which had significantly lower sales than the comparable
period in 1994. Management believes that the expansion period in Taiwan and
Korea peaked during 1994. In Korea, the Company discontinued operations with its
former distributor and opened a direct sales office during 1995. Management
believes that the decreased sales to Taiwan and Korea are primarily attributable
to the result of NCP sales to Taiwan and Korea having peaked in 1994.
NCP sales in Japan were significantly affected by uncertain economic
conditions following the Kobe earthquake and the subway gas attacks, which
resulted in delayed investments in recreational activities. However, the Japan
branch increased its Replacement and Modernization revenue during the year ended
December 31, 1995 by approximately $2.4 million over the preceding year.
A net decrease in Replacement and Modernization revenue of $0.6 million was
realized by the German branch. Continued unprofitability of this branch and the
French branch prompted management to reorganize European operations. During the
year ended December 31, 1995, the general manager and controller positions in
Germany and France were consolidated into the central sales office in the United
Kingdom.
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Total gross profit decreased by $3.4 million, from a gross profit of $118.4
million for 1994 to a gross profit of $115.0 million for 1995. This represents a
gross profit margin of 40.5% and 42.2% for 1994 and 1995, respectively. This
increase was partially due to the increase in margins of New Center Packages.
Additionally, total warranty costs, which aggregated approximately $2.7 million
for 1995 decreased from $5.0 million for 1994, primarily resulting from
increased quality control procedures and improved training programs for center
mechanics in the international markets. Offsetting the overall gross profit
margin increase, were $0.4 million in start-up expenses incurred at the pool cue
manufacturing plant, a $0.3 million charge relating to the acquisition of
manufacturing rights for one of the AMF's bumper bowling products and an
approximate $1.0 million increase in engineering expenses associated with AMF's
new automatic scoring products.
Selling, general and administrative expenses increased by $2.6 million from
$37.9 million for 1994 to $40.5 million for 1995. This increase of $2.6 million
is primarily attributable to non-recurring costs of $2.9 million in 1995, offset
in part by net reversals of reserves of $0.9 million. See "Selected Combined
Financial Data."
EBITDA and EBITDA margin decreased from $80.6 million and 27.6%,
respectively, for 1994 to $74.5 million and 27.3%, respectively, for 1995,
primarily due to the decreased revenue and increased selling, general and
administrative expenses discussed above. The 1995 EBITDA of $74.5 million was
depressed by the charges of $2.9 million described above, which management
believes are non-recurring. Replacement and Modernization EBITDA decreased from
$30.5 million for 1994 to $27.1 million for 1995. NCP EBITDA also declined from
$50.1 million for 1994 to $47.4 million for 1995, although the EBITDA margin
increased from 29.4% for 1994 to 31.1% for 1995.
1993 TO 1994
Total revenue increased by $57.4 million, or 24.4%, to $292.4 million
during 1994, from $235.0 million during 1993. Of this increase, approximately
$47.9 million, or 83.4%, was attributable to an increase in NCP units sold, with
units sold increasing by 1,364 from 3,577 units in 1993 to 4,941 units in 1994.
This increase is primarily attributable to an increase in units sold to Korea
and Taiwan, from 2,075 and 835 for 1993, respectively, to 2,202 and 1,882 for
1994, respectively. The remaining $9.5 million increase was attributable to an
increase in Replacement and Modernization sales.
The gross profit margin fell from 42.6% in 1993 to 40.3% in 1994, due to a
higher level of costs absorbed in cost of sales. Product development costs were
higher in 1994 than in 1993 due to new products under design. In 1994, total
research and development expenditures more than doubled to $3.1 million from
$1.3 million in 1993. Warranty costs were also higher in 1994 than in 1993, due
to charges associated with introducing a new pinspotter product. Total warranty
costs increased by $1.5 million to $5.0 million in 1994 from $3.5 million in
1993.
Total selling, general and administrative expenses increased by $4.9
million, or 14.8% to $37.9 million for 1994 from $33.0 million for 1993. This
represents a decrease of 1.1% in the percentage of selling, general and
administrative costs of revenue from 14.1% of revenue for 1993 to 13.0% of
revenue for 1994. Of this increase, $1.4 million was attributable to legal
reserves established for potential legal settlements, and $0.9 million was
attributable to the inclusion of a full year of expenses for PlayMaster
billiards. In addition, $1.0 million was incurred in 1994 as service, sales and
administrative personnel were hired in the Hong Kong branch in order to meet the
growing demand for bowling products.
Additional increases in costs were attributable to $0.3 million of costs
through the sponsorship of a Professional Bowling Association tournament (the
Dick Weber Classic), a $0.3 million increase in general promotional activities,
start-up expenses of $0.2 million associated with the Legendary acquisition,
increased accruals of $0.2 million for the executive incentive plans and
increased reserves of $0.4 million for bad debts at the France and Hong Kong
branches.
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Total EBITDA increased by $13.5 million, or 20.1%, to $80.6 million for
1994 from $67.1 million for 1993. Of this increase, $18.3 million was primarily
attributable to the increase in gross profit, which was driven by higher sales
volumes and which was offset by the $4.9 million in additional selling, general
and administrative costs. EBITDA margin decreased from 28.6% of revenue for 1993
to 27.6% of revenue for 1994, as a result of the decrease in the gross profit
margin. NCP EBITDA increased from $37.4 million in 1993 to $50.1 million in
1994. Replacement and Modernization EBITDA remained relatively stable at $29.7
million and $30.5 million for 1993 and 1994, respectively.
INCOME TAXES
Under the prior owners, certain of the companies within AMF elected S
corporation status under the Internal Revenue Code. As S corporations, the
companies have historically been liable for U.S. federal income taxes under
certain circumstances and liable for state income taxes in certain
jurisdictions; all other domestic income taxes were the responsibility of the
stockholders. The international branches of the S corporations and other
international entities have historically filed income tax returns and paid taxes
in their respective countries. The prior owners have historically received a tax
credit, subject to certain limitations, in their U.S. federal income tax returns
for international taxes paid by the international branches of the S corporations
and certain other international entities.
Upon consummation of the Acquisition, the domestic subsidiaries of Holdings
became taxable corporations under the Internal Revenue Code. The historical
audited financial statements (see "Index to Financial Statements") include a pro
forma tax provision for income taxes which would have been recorded if the AMF
companies had not been S corporations, based on tax laws in effect during these
periods, to give effect to the conversion of certain entities from S corporation
status to taxable corporation status.
For a discussion of representations and warranties provided by the Seller
in connection with the Acquisition relating to the tax status of the S
corporations, see "The Acquisition -- Representations and Warranties;
Indemnity."
LIQUIDITY AND CAPITAL RESOURCES
If the Acquisition had been completed as of March 31, 1996, the Company
would have had an estimated balance of cash and cash equivalents of $23.2
million. The Company's primary source of liquidity is cash provided by
operations. Working capital on December 31, 1995 was $29.4 million, and on
December 31, 1994 was $16.9 million, compared to $18.9 million at December 31,
1993.
As a result of the Acquisition, the Company's total indebtedness has
increased substantially. See "Risk Factors -- Substantial Leverage; Ability to
Service Indebtedness." Immediately following the consummation of the
Acquisition, the Company's debt structure consisted of Senior Debt of $517.0
million, Senior Subordinated Notes of $250.0 million and Senior Subordinated
Discount Notes of $250.0 million. The Company was also capitalized with equity
of $391.0 million. The Company also has the ability to borrow an additional
$50.0 million for general corporate purposes pursuant to the working capital
facility and up to $100.0 million and, subject to satisfying a financial test,
up to an additional $50.0 million for acquisitions pursuant to an acquisition
facility under the New Bank Credit Agreement, subject to certain conditions. See
"Description of Senior Debt."
The Company is funding its cash needs through cash flow from operations,
existing cash balances and the working capital facility and acquisition facility
under the New Bank Credit Agreement. See "Description of Senior Debt." A
substantial portion of the Company's available cash will be applied to service
the indebtedness incurred to finance the Acquisition.
The Indentures and the New Bank Credit Agreement of the Company contain
financial and operating covenants and significant restrictions on the ability of
the Company to pay dividends, incur
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<PAGE> 73
indebtedness, make investments and take certain other corporate actions. See
"Description of Senior Debt" and "Description of Notes."
The Company's ability to make scheduled payments of principal of, or to pay
interest on, or to refinance its indebtedness (including the Exchange Notes)
depends on its future performance, which, to a certain extent, is subject to
general economic, financial, competitive, legislative, regulatory and other
factors beyond its control. Based upon the current level of operations and
anticipated growth, management of the Company believes that available cash flow,
together with available borrowings under the New Bank Credit Agreement and other
sources of liquidity, will be adequate to meet the Company's anticipated future
requirements for working capital, capital expenditures and scheduled payments of
principal of, and interest on, its Senior Debt, and interest on the Exchange
Notes. However, a portion of the principal payments at maturity on the Exchange
Notes may require refinancing. There can be no assurance that the Company's
business will generate sufficient cash flow from operations or that future
borrowings will be available in an amount sufficient to enable the Company to
service its indebtedness, including the Exchange Notes, or to make necessary
capital expenditures, or that any refinancing would be available on commercially
reasonable terms or at all. See "Risk Factors."
SEASONALITY AND CYCLICALITY
On a combined basis, revenue and EBITDA of the combined businesses are
neither highly seasonal nor highly cyclical. The geographic diversity of AMF's
bowling center operations across different regions of the U.S. and across 10
different countries, along with the bowling industry's historic resistance to
recessions, has provided stability to AMF's annual cash flows. Although
financial performance is still seasonal in nature, with cash flows typically
peaking in the winter months and reaching their lows in the summer months, the
geographic diversity of AMF's bowling center operations has helped reduce this
seasonality. In Australia, where AMF has its largest number of international
centers, the reversal of seasons relative to the U.S. helps mitigate the
seasonality in worldwide operations. AMF's cash flows are further stabilized by
the location of many centers in markets where the climates have high average
temperatures and high humidity. In the United States, during the summer months
when league bowling is generally less active, AMF's bowling centers in the
southern U.S. continue to show strong performance. The same applies
internationally in countries with warm summer climates such as Hong Kong and
Mexico, where bowling in air-conditioned centers may be more attractive than
outdoor activities. Given this predictable revenue pattern, the Company is able
to adjust its payroll and other expenses to match the revenue stream.
Replacement and Modernization sales display significant seasonality. The
U.S. market, which is the largest market for Replacement and Modernization
products, is driven by the beginning of leagues in the Fall. Operators typically
sign buying agreements, particularly for replacement equipment, during the first
four months of the year after they receive winter league revenue indications.
Equipment is shipped and installed during the summer months, when leagues are
generally less active. Sales of modernization equipment, such as automatic
scoring and synthetic lane overlays, is less predictable and fluctuates more
than the replacement equipment because of the extended life cycles of these
major products, which range from four to 10 years.
The NCP segment of the manufacturing business experiences significant
fluctuations due to changes in demand for NCPs as certain markets experience
high growth followed by market maturity. Market cycles for individual countries
have, in the past, spanned several years with periods of high demand for small
and medium sized markets (e.g., Japan, Korea, Taiwan) lasting from three to five
years. These growth patterns do not seem to be closely tied to general economic
cycles.
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INTERNATIONAL OPERATIONS
For the year ended December 31, 1995, 34.2% of AMF's bowling center
operations revenue was generated by its international centers. Historically, AMF
has not engaged in any significant hedging activities.
For the year ended December 31, 1995, approximately two-thirds of AMF's
manufacturing sales were made through international affiliates and distributors.
To minimize credit and international exchange risk, equipment is sold primarily
on Free on Board (F.O.B.)-U.S. plant using letters of credit denominated in U.S.
dollars. Letters of credit are usually collected before shipments leave U.S.
ports. Affiliate offices sell some products in local currency, but adjust
pricing, to the extent that market conditions permit, with changes in exchange
rates. This policy has enabled AMF's manufacturing operations generally to avoid
any material adverse effect from exchange rate fluctuations, except during
severe international exchange rate volatility. See "Risk Factors."
BACKLOG; RECENT NCP SALES
The total NCP backlog as of December 31, 1995 was approximately 940 units.
This figure represents a decrease of 1,138 units from the backlog of 2,078 units
at December 31, 1994. This decrease is primarily composed of decreases in the
backlogs in Korea and Taiwan, which decreased by 528 units and 700 units,
respectively. Management believes that the decrease in the backlog of orders for
these countries is primarily the result of NCP sales to Taiwan and Korea having
peaked in 1994. The decrease in the Korea backlog is also partially due to the
cancellation of orders for 184 lanes previously placed by the now-terminated
Korean distributor. The total NCP backlog increased by approximately 548 units
in the first three months of 1996, to 1,488 units at March 31, 1996, a backlog
level higher than that at March 31, 1993, which was 1,206 units, higher than
that at March 31, 1994, which was 1,062 units, and lower than the backlog at
March 31, 1995, which was 1,773 units.
Reflecting the decline in orders in the fourth quarter of 1995,
manufacturing revenue from NCP sales declined very substantially during the
first three months of 1996, reflecting a decrease of over 60.0% compared with
NCP sales during the first three months of 1995. The drop in NCP revenue is due
to a decrease in NCP unit sales, particularly in Korea and Taiwan. For the full
year 1995, total NCP sales to Korea decreased by 757 units and to Taiwan
decreased by 519 units compared to the full year 1994. A significant portion of
this decrease occurred during November and December 1995, which had
significantly lower NCP sales than the comparable months in 1994. For the first
quarter of 1996, total NCP sales to Korea decreased by 468 units and total NCP
sales to Taiwan decreased by 723 units compared to the first quarter of 1995.
Management believes that the initial expansion period in both Korea and Taiwan
peaked during 1994. Management believes that the decreased sales to Korea were
also partially attributable to the effect of AMF's decreased presence in Korea
while it was in the process of establishing a direct sales office to replace its
former distributor. As a result of the maturing state of the markets in Korea
and Taiwan, management does not expect NCP sales to these markets to return to
the levels realized in 1995. Management expects overall NCP sales in the second
half of 1996 to exceed NCP sales for the first half of 1996, reflecting
continued progress in establishing a direct sales presence in China, although
there can be no assurance that the decline in NCP sales will be reversed. Total
NCP orders during the first three months of 1996 declined to 1,154 units from
total NCP orders of 1,334 units for the first three months of 1995, but improved
compared to 584 units for the last three months of 1995.
As a result of the decrease in NCP sales described above, EBITDA
attributable to NCP sales for the first three months of 1996 declined very
substantially, from $15.6 million for the first quarter of 1995 to $3.3 million
for the first quarter of 1996.
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IMPACT OF INFLATION
AMF has historically offset the impact of inflation through price increases
and expense reductions. Periods of high inflation could have an adverse effect
on the Company to the extent that increased borrowing costs for floating rate
debt may not be offset by increases in revenue.
ENVIRONMENTAL MATTERS
AMF's operations are subject to federal, state, local, foreign and
international environmental laws and regulations that impose limitations on the
discharge of and establish standards for the handling, generation, emission,
release, discharge, treatment, storage and disposal of certain materials,
substances and wastes. AMF believes that its operations are in material
compliance with the terms of all applicable environmental laws and regulations
as currently interpreted. See "Business -- Environmental Regulation."
CAPITAL EXPENDITURES (HISTORICAL AND BUDGETED)
For the year ended December 31, 1995, AMF's actual capital expenditures
were $30.1 million. In 1994, AMF's actual capital expenditures were $17.8
million, compared to the budgeted amount of $15.7 million. In 1993, AMF's actual
capital expenditures were $14.7 million, compared to the budgeted amount of
$14.3 million. The projected capital expenditures for 1996 and 1997 are $17.7
million and $18.3 million, respectively, including the amounts discussed in the
following two paragraphs, but not including the acquisition or construction of
new centers.
AMF conducts an ongoing modernization and maintenance program that results
in its centers having upgraded physical plants and generally new and attractive
appearances. Management believes that its historical spending level of 3.7% of
bowling center revenue is fully adequate to cover all modernization and
maintenance capital expenditures. Management estimates that approximately 2.0%
of bowling center revenue is required for maintenance capital expenditures
alone. The revenue of new centers, such as Hanover Lanes in Richmond, Virginia,
the Garden Hotel center in China and Okegawa in Japan, is excluded from the
revenue figure used to calculate the budget for modernization and maintenance
capital expenditures. In addition to the 3.7% budgeted amount, AMF is budgeted
to spend $1.6 million for the major modernization of a 60-lane center located in
Milford, Connecticut, and for the installation of automatic scoring in a 64-lane
center in Akron, Ohio, both of which are former Fair Lanes centers. AMF is
scheduled to spend a total of $1.6 million on the installation of the new
point-of-sale information system in its domestic centers in 1996. In 1995, $0.2
million was spent on the system. A final amount of $1.6 million will be spent in
1997 to complete the installation.
Commencing in 1995, AMF's bowling center operations undertook a program to
replace in certain centers wood lanes having little or no remaining useful life
with new synthetic lanes, manufactured by AMF's manufacturing business. In 1994,
AMF bowling centers identified about 964 (approximately 16.9%) of its lanes
worldwide that had reached the end of their useful lives (generally, 30 to 35
years), or would reach such end in the next two to three years. In 1995, 316
lanes of the 964 lanes were replaced at a total cost of $1.5 million, at
approximately $4,750 per lane. An additional 316 lanes are scheduled to be
replaced in 1996 for approximately $1.5 million and 332 in 1997 for
approximately $1.6 million. This capital spending is in addition to the 3.7% of
revenue spent annually on the maintenance and modernization capital expenditure
program. Upon the acquisition of the Fair Lanes centers, AMF identified a total
of 448 lanes in Fair Lanes centers, or about 12.4% of total Fair Lanes lanes,
also in need of replacement. In 1995, 154 of those lanes were replaced at a
total cost of $0.6 million. In 1996, 150 lanes are scheduled to be replaced for
$0.6 million and an additional 144 lanes are scheduled to be replaced in 1997
for $0.6 million, for a total cost of $1.2 million. Management believes that, on
completion of this lane replacement program, future lane replacements will be
covered by the modernization and maintenance capital expenditure program.
AMF's manufacturing business has relatively modest capital investment
requirements, and AMF has followed a relatively conservative approach to capital
investment. Maintenance and replacement investments have been made when clearly
needed but as close to the end of the useful lives of
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assets as possible. Investment in production machinery and equipment has
received the highest investment priority and has focused on projects with
projected payback periods of one to three years. Management is not planning
significant changes in the policy for non-strategic projects.
The Company has the potential opportunity to acquire and build additional
bowling centers, both domestically and internationally. Management preliminarily
plans to acquire centers to the maximum extent possible under the acquisition
facility. Under the acquisition facility, the Company has the ability to borrow
up to $100.0 million and, subject to satisfying a financial test, up to an
additional $50.0 million for acquisitions, subject to certain conditions.
Management also preliminarily plans to build up to six bowling centers per year
at an estimated cost of approximately $3.5 million to $4.0 million per center.
Management's plans to expand the bowling center operations are subject to the
continuation of favorable economic and financial conditions, which are generally
not within the Company's control. See "Risk Factors."
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BUSINESS
AMF is the largest owner and operator of commercial bowling centers in the
United States and worldwide. In addition, AMF is one of the world's leading
manufacturers of bowling center equipment, accounting for, management believes,
approximately 41% of the world's installed base of such equipment. With over 50
years of industry leadership, AMF is among the oldest and most established names
in bowling. AMF is principally engaged in two businesses which, historically,
have been operated independently: (i) the ownership and operation of 205
domestic bowling centers and 80 international bowling centers as of April 30,
1996; and (ii) the design, manufacture and sale of bowling equipment, including
automatic pinspotters, automatic scoring equipment, bowling pins, lanes, ball
returns, and certain spare and replacement parts, and the resale of allied
products such as bowling balls, bags, shoes and certain other spare and
replacement parts. For the year ended December 31, 1995, AMF, on a consolidated
basis, had pro forma revenue and Adjusted Pro Forma EBITDA (as defined herein;
see page 13) of $562.6 million and $167.7 million, respectively, for a margin of
29.8%. AMF's large-scale bowling center operations, its low-cost manufacturing
operations, and its management incentive compensation system, which encourages
revenue growth and aggressive cost management, all contribute to AMF's operating
results.
The historical AMF financial data presented in this section include the two
European bowling centers that have been retained by the Sellers. For the effect
on AMF of excluding these two bowling centers, see "Notes to the Pro Forma
Consolidated Statements of Income" and "Notes to the Pro Forma Consolidated
Balance Sheet."
INDUSTRY OVERVIEW
Bowling -- Sport and Recreation
Bowling is the largest indoor participation sport in the U.S. today, with
over 75 million people (approximately 28% of the U.S. population) bowling each
year. Bowlers represent a broad cross-section of the population and, according
to an industry source, nine out of 10 Americans have bowled at least once in
their lives. Several key reasons for bowling's popularity are that it is: (i) an
indoor, all-weather sport with year-round appeal, (ii) a lifetime sport suitable
for all age groups, and (iii) low in cost relative to other forms of
entertainment, requiring minimal expenditure on equipment to participate.
Bowling enjoys a favorable demographic profile, in that bowlers, in general, are
younger, more affluent, better educated, and more likely to be home-owners and
married than the U.S. population in general, as is shown in the table below.
DEMOGRAPHIC PROFILE OF BOWLERS VS. THE U.S. POPULATION
<TABLE>
<CAPTION>
BOWLERS U.S. POPULATION
-------- ----------------
<S> <C> <C>
Median age 27.6 36.0
Median income $38,400 $35,939
College educated 60.5% 43.4%
Married 76.5% 69.1%
Home-owners 75.8% 64.1%
</TABLE>
- ---------------
Sources: Market Facts, Inc., 1993; U.S. Dept. of Commerce, Bureau of the Census;
Statistical Abstract of the U.S. 1993.
Bowling is both a competitive sport and a recreational activity, resulting
in two distinct groups of bowlers: league bowlers and open play bowlers. League
bowling is offered to bowlers who register in leagues and commit to participate
on a scheduled basis -- generally once a week for a period of 30 to 40 weeks.
League bowlers are also the primary participants in bowling tournaments. This
base of league bowlers provides a recurring, predictable revenue and EBITDA
stream. Open play bowling is designed for the casual bowler who bowls on an
unscheduled basis subject to lane availability.
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As demographics have shifted, for example, towards increasing numbers of
working women, particularly in the U.S., there has been a gradual decrease in
league participation. This decrease has been partially offset by an increase in
open play bowling. Today, in the U.S., bowling revenue is split approximately
equally between league and open play bowlers. Outside the U.S., the relative
contribution to revenue by open play customers varies by country and accounts
for, management estimates, approximately 40% to 50% (in Mexico and Australia) to
approximately 95% (in Hong Kong and Spain) of bowling revenue.
Open play bowlers and league bowlers differ in terms of customer profiles.
Open play bowlers are often families and/or social groups and tend to be more
discerning than league bowlers with respect to the location, appearance and
breadth of amenities offered by a particular center. Centers that appeal to open
play bowlers are generally clean and bright facilities with increased amenities,
including amusement games, billiards, expanded food service, supervised
children's playrooms, and facilities to accommodate children's birthday parties.
In addition, the most appealing centers attract open play bowlers by taking
advantage of improvements in technology, including computerized automatic
scoring systems and optional bumper bowling systems (bumper guards, often used
by children, which prevent gutter balls).
The Federation Internationale des Quilleurs, bowling's international
rules-making body, estimates that more than 100 million people participate in
all forms of the game worldwide. Over the past several years, the bowling
industry has experienced a strong rate of expansion internationally, fueled by
the growth of bowling in the emerging markets of several countries, particularly
Taiwan and Korea, where, on a combined basis, the number of bowling centers grew
from 708 in 1992 to 1,638 in 1995. China has begun to show signs of growth in
the number of bowling centers. As a result, AMF's sales of New Center Packages
to China have rapidly accelerated, illustrating the recent growth in China. For
1992 through 1995, NCP sales in units to China were 0, 66, 133 and 795,
respectively. Bowling's global growth has been driven by the emergence and
establishment of the sport in developing countries. AMF's experience suggests
that, as the economy of a developing country becomes industrialized, a middle
class emerges and disposable income increases creating an increased demand for
leisure activities. In many emerging markets characterized by these factors,
bowling has developed and grown as a form of sport and recreation.
Bowling Center Operations
The U.S. bowling center industry is highly fragmented. According to an
industry source, there were approximately 6,400 commercial bowling centers in
the U.S. as of January 1996, with the top six operators (including AMF)
accounting for less than 8% of the total number of centers. The domestic bowling
center industry consists of two relatively large bowling center operators, AMF
(which has 205 domestic centers) and Brunswick (which has approximately 115
domestic centers), four medium-sized chains, which together account for
approximately 144 bowling centers, and over 5,900 bowling centers owned by
single-center and small-chain operators, the vast majority of which are owned by
single-center operators. See "-- Competition."
Single-center and small-chain operators generally do not share in the
economies of scale enjoyed by AMF due to AMF's centers' size advantage, AMF's
larger number of centers and their geographic clustering. For example, these
single-center and small-chain operators typically have smaller centers with an
average of only 20 lanes (compared to an average of 35 lanes for AMF).
Management has found that these single-center and small-chain operators are
frequently less willing to invest the capital necessary to modernize and/or
upgrade their bowling centers. Therefore, these centers frequently suffer from a
lack of modernization, and as bowling participants, particularly open play
bowlers, have become increasingly particular in their desire for clean, well-
lighted, modern facilities with complete amenities, many of these operators have
become poorly positioned competitively.
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The international bowling center industry is also highly fragmented.
Typically, only a small number of operators own more than a few centers in any
given country and a large number of operators own single centers.
Internationally, as bowling becomes popular in developing countries, bowling
centers can enjoy high levels of utilization and relatively high prices for
games. Typically, local developers and entrepreneurs respond to this situation
by building additional bowling centers. In some markets, the investment returns
that can be achieved by the new bowling centers are very attractive, despite the
other new entrants. Management believes that some bowling centers in these
high-demand markets can achieve an investment payback period of less than 24
months.
The bowling center business derives its revenue and profits from three
principal sources: (i) bowling; (ii) food and beverage sales; and (iii)
ancillary sources, such as shoe rental, amusement games, billiards and pro
shops.
Bowling revenue, generally the largest portion of a bowling center's
revenue and profitability, is derived from league play, tournament play and open
play. A center's annual bowling revenue is determined by the product of its
average price per game, lineage, the number of lanes in the center, and the
number of days of operation (typically 365 days per year).
The sale of food and beverages generally accounts for the next largest
portion of a bowling center's revenue and profitability. Most bowling centers
offer food service to bowlers through snack bars. The offerings generally
include hamburgers, pizza, french fries and soft drinks, among other items. Many
bowling centers also serve beer, wine and other alcoholic beverages to
customers.
The last component of a bowling center's revenue consists of revenue from
ancillary sources, such as shoe rental and the operation of amusement games,
billiards and pro shops. The shoe rental business is driven primarily by open
play bowlers who usually do not own a pair of bowling shoes. Open play customers
are also the primary users of amusement games and billiards tables as they are
more likely to have to wait for a lane to become available.
The operation of bowling centers has historically been a profitable, stable
business. Incremental bowling revenue can be particularly profitable due to the
low variable cost per game. In addition, the sale of food and beverages and shoe
rentals can be very profitable due to the ability to charge premium prices to a
captive audience. Overall, bowling centers typically enjoy relatively stable
revenue and EBITDA streams, in part due to league bowling which domestically
accounted for 59% of domestic bowling revenue for 1995.
Bowling Equipment Manufacturing
Historically, the worldwide market for new bowling center equipment has
been characterized by two competitors, AMF and Brunswick, which together account
for, in management's estimate, approximately 89% of the worldwide installed base
of bowling equipment. Management believes that AMF's worldwide market share of
the installed base is approximately 41%.
The bowling equipment manufacturing business consists of two categories:
(i) Replacement and Modernization products (which includes replacement and spare
parts, modernization equipment and allied products); and (ii) New Center
Packages (all of the equipment necessary to outfit a new bowling center or
expand an existing bowling center). AMF and Brunswick are the only full-line
manufacturers of Replacement and Modernization products that compete on a global
basis. AMF's primary competitors for Replacement and Modernization sales (other
than Brunswick) are much smaller companies that tend to offer a narrower range
of products and are often regionally focused. AMF's primary competitor for
worldwide sales of NCPs historically has been Brunswick. More recently, however,
AMF has also competed, primarily in China and Korea, with DACOS, a relatively
recent Korea-based entrant.
Sales of Replacement and Modernization products to bowling center operators
who manage the growing installed base of bowling equipment provide a stable base
of recurring revenue. These products include both proprietary and more standard
spare and replacement parts for existing
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equipment and other products including pins, shoes, supplies and modernization
equipment. Some of these products, such as bowling pins, should be replaced on
approximately an annual basis to maintain a center, while certain less frequent
investments in other equipment are necessary to modernize a center and are often
required to maintain the customer base.
New Center Package sales follow the trends in the growth of bowling. As
bowling becomes popular in new markets, the economics of constructing and
operating bowling centers become attractive to local market developers and
entrepreneurs. Consequently, they build new bowling centers, which need to be
outfitted with equipment, driving demand for NCPs. For at least the last 15
years, the vast majority of NCP sales have been to international markets. This
international trend has been fueled by the growth of bowling in the emerging
markets of several countries, particularly Taiwan and Korea, and recently in
China. NCP sales in the maturing Taiwan and Korea markets have recently declined
substantially (see "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Backlog; Recent NCP Sales").
INDUSTRY STATISTICS
The fragmented nature of the bowling centers business makes it difficult to
compile accurate industrywide statistics, even in the United States.
Accordingly, industry statistics provided in this Prospectus should be regarded
as approximations with a significant margin of error.
AMF BOWLING CENTER OPERATIONS
In the United States, AMF is the largest owner and operator of commercial
bowling centers, with (as of April 30, 1996) 205 bowling centers in 35 states.
Outside the United States, AMF owns and operates (as of April 30, 1996) 80
bowling centers in 10 countries: Australia (36), the United Kingdom (15), Mexico
(9), Japan (5), Hong Kong (5), France (3), Spain (3), Switzerland (2), Canada
(1), and China (1). Pursuant to the Stock Purchase Agreement, the Company
acquired 78 of these 80 centers and the Sellers retained one center in Spain and
one center in Switzerland.
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AMF's bowling center operations have enjoyed strong profitability and
stable results, as is shown in the table below.
AMF WORLDWIDE BOWLING CENTERS(a)
(DOLLARS IN MILLIONS, EXCEPT AVERAGE PRICE PER GAME)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, THREE MONTHS ENDED
------------------------------------------------------------------------
1995(d) MARCH 31,
-------------------------------- -------------------
1991 1992 1993 1994(b) AMF(b) FAIR LANES COMBINED 1995 1996
------ ------ ------ ------ ------ ---------- -------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Number of centers....... 196 197 190 187 186 99 285 -- --
Number of lanes......... 5,981 5,988 5,896 5,750 5,756 3,715 9,471 -- --
Average price per game
("APPG").............. $ 2.21 $ 2.21 $ 2.17 $ 2.25 $ 2.33 $ 1.93 $ 2.19 -- --
Percentage change..... -- 0.0% (1.8)% 3.7% 3.6% -- -- -- --
Fixed exchange rate
APPG(c)............... $ 2.09 $ 2.11 $ 2.15 $ 2.23 $ 2.33 $ 1.93 $ 2.19 -- --
Percentage change..... -- 1.0% 1.9% 3.7% 4.5% -- -- -- --
Lineage(e).............. 26.4 26.6 25.9 26.3 25.5 22.2 24.2 -- --
Percentage change..... -- 0.8% (2.6)% 1.5% (3.0)% -- -- -- --
REVENUE:
Bowling................. $127.1 $128.5 $120.8 $124.2 $124.7 $ 58.2 $182.9 $ 54.2 $ 52.2
Food and beverage....... 42.6 43.3 40.8 42.8 44.6 24.8 69.4 20.6 20.1
Ancillary............... 30.5 32.7 31.0 33.0 30.4 9.6 40.0 11.0 10.8
------ ------ ------ ------ ------ ------ ------ ------ ------
Total revenue........... $200.2 $204.5 $192.6 $200.0 $199.7 $ 92.6 $292.3 $ 85.8 $ 83.1
EBITDA.................. 66.9 68.3 56.9 65.8 63.3 25.7(f) 89.0(f) 30.2(f) 31.8
EBITDA margin........... 33.4% 33.4% 29.5% 32.9% 31.7% 27.8% 30.4% 35.2% 38.3%
PERCENTAGE OF TOTAL
REVENUE
Bowling................. 63.5% 62.8% 62.7% 62.1% 62.5% 62.8% 62.6% 63.2% 62.8%
Food and beverage....... 21.3 21.2 21.2 21.4 22.3 26.8 23.7 24.0 24.2
Ancillary............... 15.2 16.0 16.1 16.5 15.2 10.4 13.7 12.8 13.0
Total............... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
====== ====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
- ---------------
(a) The historical AMF financial data presented in this table include the two
European bowling centers that have been retained by the Sellers. For the
effect on AMF of excluding these two bowling centers, see "Notes to the Pro
Forma Consolidated Statements of Income" and "Notes to the Pro Forma
Consolidated Balance Sheet."
(b) Excludes Fair Lanes operations.
(c) Defined as the result of dividing worldwide bowling revenue for each period
presented (as translated into U.S. dollars by using weighted average foreign
currency exchange rates used to translate 1995 revenue) by the total number
of games bowled worldwide. The effect is to fix the exchange rates at the
1995 levels for purposes of comparability in examining changes in average
price per game without the effect of changes in foreign currency exchange
rates.
(d) For 1995, domestic bowling center operations adopted a calendar month-end;
accordingly, the bowling center operations results of operations for the
year ended December 31, 1995 include the results of operations for the
period from December 26, 1994 through December 31, 1995. Total revenue for
the period from December 26, 1994 through December 31, 1994 was
approximately $2.0 million.
(e) Defined as worldwide average number of games bowled per lane per day.
(f) After $2.3 million and $1.2 million of certain non-recurring costs relating
to the Fair Lanes acquisition for the year ended December 31, 1995 and the
three months ended March 31, 1995, respectively. See "Pro Forma Consolidated
Financial Statements."
The geographic diversity of AMF's bowling center operations across
different regions of the U.S. and across 10 different countries, along with the
bowling industry's historic resistance to recessions, has provided stability to
AMF's annual cash flows. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Seasonality and Cyclicality."
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<PAGE> 82
AMF's bowling center business derives its revenue and profits from three
principal sources: (i) bowling, (ii) food and beverage sales and (iii) ancillary
sources, such as shoe rental, amusement games, billiards and pro shops. Bowling
revenue (approximately 62.6% of revenue), the largest portion of a bowling
center's revenue and profitability, is derived from league play, tournament play
and open play. A center's annual bowling revenue is determined by the product of
its average price per game, lineage, the number of lanes in the center, and the
number of days of operation (typically 365 days per year). A bowling center's
average price per game and lineage are the key factors in generating incremental
bowling revenue as a center's number of lanes and days of operation usually
remain relatively constant.
Management believes that bowling activity is relatively insensitive, over
longer periods of time, to moderate changes in prices for games. That is, modest
increases in prices do not lead to a prolonged fall in lineage, and conversely,
decreases in prices do not generally lead to sustained increases in lineage.
Consequently, management pursues an aggressive pricing strategy, local
conditions permitting, and generally has been successful at increasing prices
over time. AMF's worldwide average price per game and lineage for the last five
years is shown in the graph below.
A graph with two sets of points plotted, representing fixed exchange rate
average price per game and lineage for the years 1991, 1992, 1993, 1994 and
1995, respectively. The coordinates plotted are as follows:
<TABLE>
<CAPTION>
Fixed exchange rate
Year average price per game(b) Lineage(c)
--- ------------------------- ----------
<S> <C> <C>
1991 $2.09 26.4
1992 $2.11 26.6
1993 $2.15 25.9
1994 $2.23 26.3
1995 $2.33 25.5
</TABLE>
WORLDWIDE AVERAGE PRICE PER GAME AND LINEAGE(A)
(EXCLUDES FAIR LANES)
- ---------------
(a) The historical AMF financial data presented in this graph include the two
European bowling centers that have been retained by the Sellers. For the
effect on AMF of excluding these two bowling centers, see "Notes to Pro
Forma Consolidated Statement of Income" and "Notes to Pro Forma Consolidated
Balance Sheet."
(b) Defined as the result of dividing worldwide bowling revenue for each period
presented (as translated into U.S. dollars by using weighted average foreign
currency exchange rates used to translate 1995 revenue) by the total number
of games bowled worldwide. The effect is to fix the exchange rates at the
1995 levels for purposes of comparability in examining changes in average
price per game without the effect of changes in foreign currency exchange
rates.
(c) Defined as worldwide average number of games bowled per lane per day.
The graph above depicts the worldwide fixed exchange rate average price per
game and lineage. The fixed exchange rate average price per game reflects
different pricing in the United States and outside the United States, different
pricing for league and open play as well as different pricing for peak and
off-peak times of the day to reflect different levels of demand. The increases
in average price per game shown above have allowed AMF to increase bowling
revenue as shown in
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<PAGE> 83
the table, even with the slightly declining lineage shown above. The increasing
average price per game reflects management's strategy to increase bowling prices
in its bowling centers worldwide on an annual basis, local conditions
permitting. For 1996, management plans to increase prices in the U.S. by an
average of 3.4% and prices outside the U.S. by an average of 8.4%.
DOMESTIC BOWLING REVENUE MIX
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------
1995(b)
------------------------
1991 1992 1993 1994(a) AMF(a) FAIR LANES(c)
----- ----- ----- ------- ------ -------------
<S> <C> <C> <C> <C> <C> <C>
Bowling Revenue
Open play.................... $19.1 $20.2 $20.1 $20.5 $21.8 $24.2
Tournament play.............. 2.2 2.3 2.1 2.4 2.7 --
League play.................. 36.8 35.9 35.9 35.6 36.1 34.0
----- ----- ----- ----- ----- -----
Total................ $58.1 $58.4 $58.1 $58.5 $60.6 $58.2
===== ===== ===== ===== ===== =====
</TABLE>
- ---------------
(a) Excludes Fair Lanes operations.
(b) For 1995, bowling center operations adopted a calendar month-end;
accordingly, the bowling center operations results of operations for the
year ended December 31, 1995 include the results of operations for the
period from December 26, 1994 through December 31, 1995.
(c) Fair Lanes tournament play bowling revenue is included in open play bowling
revenue because the operations grouped these data together for periods
earlier in 1995.
The table above demonstrates that the slight decreases in domestic bowling
revenue derived from league play have been more than offset by increases in
bowling revenue from both open play and tournament play. Between 1991 and 1995,
total bowling revenue at AMF's domestic centers increased by almost 4.3%. Open
play games have increased during this period due to AMF's ability to attract
additional open play bowlers. Tournament games in AMF centers have increased at
an average annual rate of 10.4% since AMF hired a National Tournament Director
in 1993, and management expects similar growth in 1996.
The sale of food and beverages is the next largest source of AMF's bowling
centers' revenue. Most centers offer food service to bowlers through snack bars.
The offerings generally include hamburgers, pizza, french fries and soft drinks,
among other items. Many centers also serve beer, wine and other alcoholic
beverages. Domestically, management estimates that the sale of alcoholic
beverages typically accounts for approximately 10% of a bowling center's
revenue. Internationally, management estimates that the sale of alcoholic
beverages varies by country and generally constitutes less than 10% of a bowling
center's revenue. AMF enjoys attractive pricing from certain of its food and
beverage suppliers.
The last portion of AMF's bowling centers' revenue consists of ancillary
revenue from shoe rental and the operation of amusement games, billiards and pro
shops. The shoe rental business is driven primarily by open play customers who
usually do not own a pair of bowling shoes. Shoe rental is very profitable as
the payback period for a pair of shoes is typically only seven to eight rentals.
Open play customers are also the primary users of amusement games and billiards
tables as they are more likely to have to wait for a lane to become available.
AMF receives on average 50% of the gross revenue from coin-operated amusement
games, which are generally owned by independent concerns, in exchange for
providing space and electricity for the games.
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<PAGE> 84
The combined results shown above reflect both the domestic and
international bowling center operations, both of which are highly profitable and
relatively stable, as shown in the tables below:
AMF DOMESTIC BOWLING CENTERS
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------
1995(a)
-------------------------------
1991 1992 1993 1994(b) AMF(b) FAIR LANES COMBINED
----- ----- ----- ----- ----- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Total revenue............... $93.0 $94.7 $94.6 $96.2 $99.8 $ 92.6 $192.4
EBITDA...................... 27.9 29.6 27.4 30.3 31.2 25.7(c) 56.9(c)
EBITDA margin............... 30.0% 31.3% 29.0% 31.5% 31.3% 27.8% 29.6%
</TABLE>
- ---------------
(a) For 1995, bowling center operations adopted a calendar month-end;
accordingly, the bowling center operations results of operations for the
year ended December 31, 1995, include the results of operations for the
period from December 26, 1994 through December 31, 1995. Total revenue for
the period from December 26, 1994 through December 31, 1994 was
approximately $2.0 million.
(b) Excludes Fair Lanes operations.
(c) After $2.3 million of certain non-recurring costs relating to the Fair Lanes
acquisition. See "Pro Forma Consolidated Financial Statements."
AMF INTERNATIONAL BOWLING CENTERS(a)
(U.S. DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------
1991 1992 1993 1994 1995
------ ------ ----- ------ -----
<S> <C> <C> <C> <C> <C>
Total revenue................................... $107.2 $109.8 $98.0 $103.8 $99.9
EBITDA.......................................... 39.0 38.7 29.5 35.5 32.1
EBITDA margin................................... 36.4% 35.2% 30.1% 34.2% 32.1%
</TABLE>
- ---------------
(a) The historical AMF financial data presented in this table include the two
European bowling centers that have been retained by the Sellers. For the
effect on AMF of excluding these two bowling centers, see the "Notes to the
Pro Forma Consolidated Statement Of Income" and "Notes to the Pro Forma
Consolidated Balance Sheet."
The foregoing operating results reflect AMF's retention of a strong,
recurring revenue base from its important league bowlers, as well as its success
in attracting increasing numbers of open play bowlers. In December 1995, AMF
raised domestic shoe rental prices by 10% and domestic food and beverage prices
by 3%. For 1996, management expects to raise domestic bowling prices an average
of 3.4% and international bowling prices an average of 8.4%. There can be no
assurance as to the timing or amount of future price increases.
THE FAIR LANES ACQUISITION
On January 10, 1995, AMF assumed operational control of Fair Lanes. Several
key factors led AMF to purchase the Fair Lanes bowling centers. These bowling
centers were generally well-located and grouped in areas where AMF had little
market presence. AMF also believed that it could make meaningful operating
improvements in these centers, and that this acquisition would allow AMF to take
further advantage of its significant economies of scale.
The opportunity for AMF to acquire Fair Lanes was precipitated by a period
of deteriorating operating results at Fair Lanes beginning in late 1992. AMF's
management believes that Fair Lanes' financial distress was caused by poor
corporate decisions that resulted in lower revenue and higher operating costs.
These decisions included lowering open play pricing, eliminating the center
manager position at its bowling centers and shifting league times. Fair Lanes
attempted to create more open play lineage by shifting leagues to off-peak times
and by heavily discounting open play prices. The end result was lower open play
revenue from the open play price discounting, no
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<PAGE> 85
sustained increased lineage in open play bowling, and a substantial drop in
revenue from league bowling, since many league bowlers preferred to switch
centers rather than play in a different time slot. In addition, Fair Lanes
removed all center managers and placed separate people in charge of bowling,
food and beverage, and amusement games at each center. This created numerous
positions with limited total responsibility, resulting in less direct
accountability and higher labor costs. Results consequently deteriorated, with
Fair Lanes generating EBITDA of $33.1 million, $24.7 million and $12.4 million
for its fiscal years ended June 1992, 1993 and 1994, respectively. Fair Lanes
filed for protection under Chapter 11 of the Bankruptcy Code in June 1994. A
plan of reorganization was approved by the creditors and confirmed by the
Bankruptcy Court in September 1994. In September 1994, the Sellers acquired a
majority of the common stock of Fair Lanes, and acquired the remaining common
stock by February 1995.
Within 70 days of assuming operational control, AMF integrated 99 of Fair
Lanes' 106 centers into AMF's then existing base of 107 domestic bowling
centers. The other seven centers were ultimately closed.
As part of the integration, AMF implemented a number of cost-saving
measures, organizational changes and revenue enhancement initiatives, resulting
in significant improvements in the operating performance of the Fair Lanes
centers. AMF closed the Fair Lanes corporate office of 41 people and added only
14 employees to the existing AMF corporate headquarters. AMF also reduced
employee headcount and wage scales at all levels of the organization. Investment
of $4.8 million in total was made to modernize approximately 90% of the
remaining centers by adding bumpers, synthetic lanes, new bowling equipment, new
paint, carpet and signage and other facility improvements, depending on the
needs of each specific center. Pricing was then increased to be more in line
with AMF levels. However, AMF did not increase Fair Lanes' league pricing for
the 1995 to 1996 season as the leagues were already committed. AMF has since
raised league prices by an average of 6.0%, which will take effect in June 1996.
AMF management also decentralized marketing, moving it to the center level, and
significantly reduced advertising and promotion expenses. Marketing was improved
through sales calls, bowling parties and tournaments. In addition, the Fair
Lanes centers were incorporated into AMF's cluster/region organizational
structure, and all managers were included in AMF's incentive compensation
system.
The initiatives described above resulted in significant profit improvements
at Fair Lanes. For the year ended December 31, 1994 (before AMF assumed
control), Fair Lanes had revenue of $98.3 million and EBITDA of $4.9 million
from its 106 centers. For the year ended December 31, 1995 (after AMF assumed
control), the 99 continuing Fair Lanes centers had revenue of $90.7 million and
EBITDA of $28.0 million (before certain non-recurring costs of $2.3 million).
The key drivers of this improvement were decreases in corporate, payroll and
marketing expenses and higher revenue through price increases and improved
marketing. The purchase price of $105.0 million represents a multiple of 3.8
times Fair Lanes' 1995 EBITDA of $28.0 million (before certain non-recurring
costs of $2.3 million).
COMPETITIVE STRENGTHS (BOWLING CENTER OPERATIONS)
AMF attributes its leading position in worldwide bowling center operations
to the following factors:
SIGNIFICANT ECONOMIES OF SCALE. AMF's large number of centers, their
geographic clustering and their size advantage (an average of 35 lanes per AMF
domestic center versus an industry average of 20 lanes) provide it with both
additional revenue opportunities and economies of scale which allow it
significant cost savings. These revenue opportunities include: (i) scheduling
flexibility which improves lane utilization, (ii) the ability to support an
expanded food and beverage operation and (iii) increased concourse space for
amusement games, billiards and pro shops. Cost savings resulting from the
economies of scale include: (i) the ability to spread operating and corporate
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<PAGE> 86
overhead costs over a larger revenue base and (ii) attractive pricing terms from
certain of AMF's suppliers.
UPGRADED, MODERN FACILITIES. AMF's bowling centers have upgraded physical
plants and generally new and attractive appearances, which aid AMF in retaining
its existing league bowlers and in attracting open play bowlers as well as new
league bowlers. AMF conducts an ongoing modernization and maintenance program
which results in AMF's centers having upgraded physical plants, generally
attractive appearances and computerized automatic scoring equipment. All but two
of AMF's centers have computerized automatic scoring (versus the industry
average of approximately 65%), and the two remaining centers will have automatic
scoring installed in the first quarter of 1996. In general, AMF's centers are
either located on major thoroughfares or in high-traffic areas in markets with
favorable demographics, or are well-established and well-known in their
communities. All of AMF's bowling centers have food and beverage operations, and
almost all are air-conditioned and provide customer parking facilities. The
majority of centers also have amusement games, billiards, pro shops, supervised
children's playrooms, and facilities to accommodate birthday parties. Many of
these amenities provide opportunities for ancillary revenue and profits in
addition to the core bowling revenue.
ABILITY TO ACQUIRE AND INTEGRATE NEW BOWLING CENTERS. AMF has a track
record of acquiring bowling centers at attractive prices and integrating and
enhancing acquired operations within a short period of time after the purchase,
as discussed above. See "-- The Fair Lanes Acquisition."
GEOGRAPHICALLY DIVERSE PORTFOLIO OF CENTERS. AMF benefits from a
geographically diverse portfolio of bowling centers both throughout the United
States and across many countries, which has historically stabilized AMF's
operating results and has partially mitigated the effect of economic, political
and weather-related events which may be either seasonal, regional or
country-specific. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Seasonality and Cyclicality."
EXPERIENCED, MOTIVATED, INFORMED MANAGEMENT TEAM. AMF's bowling center
operations benefit from a management team which generally has many years of
bowling center management experience, allowing for a decentralized operating
structure which provides for timely local market decision making. Senior
operating managers, including U.S. region managers and international country
managers, have an average of 12 years experience with AMF and generally more in
the industry. Center and cluster managers have an average of approximately six
to seven years experience with AMF, and generally more in the industry. Managers
are financially motivated, through an attractive incentive compensation program,
to increase bowler participation, increase revenue, and aggressively control
expenses, which has contributed to strong revenue and EBITDA performance. At the
corporate level, management utilizes AMF's detailed management information
systems to effectively and efficiently monitor the business on a timely,
center-by-center basis. See "-- Operations (Bowling Center Operations)."
STRATEGIES (BOWLING CENTER OPERATIONS)
AMF intends to pursue the following strategies to further strengthen its
position and increase sales and profits in its bowling center operations:
PURSUE FURTHER DOMESTIC ACQUISITIONS. AMF will seek to acquire some of the
approximately 5,900 domestic bowling centers owned by single-center and
small-chain operators, capitalizing on AMF's proven ability to integrate and
enhance acquired operations. The Company will have the ability to borrow, under
certain conditions, up to $100.0 million, and, subject to the Company's
satisfying a financial test, up to an additional $50.0 million, for
acquisitions. AMF is regularly approached, and management has recently been
preliminarily approached on an unsolicited basis by other operators with
requests for AMF to purchase their centers. AMF has demonstrated a history of
improving cash flow at acquired centers by taking advantage of AMF's economies
of scale and management expertise.
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<PAGE> 87
MAINTAIN AND GROW LEAGUE PARTICIPATION. AMF intends to continue to conduct
marketing and promotional programs directed at maintaining existing league
participation and attracting new league bowlers. Bowling center and cluster
managers regularly contact local companies and other organizations to offer free
bowling parties, an effective and proven method of creating new leagues and new
league bowlers. AMF recently hired a bowling center operations Sales Training
Manager who is implementing a new sales training program to enhance the
performance of sales personnel. See "-- Sales and Marketing."
ATTRACT OPEN PLAY BOWLERS. AMF will continue to seek to attract, through
its generally bright, clean and attractive facilities with expanded amenities,
additional open play bowlers, including families and social groups. With its
greater number of amenities, such as amusement games, billiards, expanded food
and beverage offerings, supervised children's playrooms and birthday party
facilities, AMF believes that it has a competitive strength in attracting new
open play bowlers and has specific marketing programs designed to attract such
bowlers. See "-- Sales and Marketing."
EXPAND INTERNATIONAL BOWLING CENTER OPERATIONS. AMF expects to focus on
growing its portfolio of bowling centers in potential high-growth international
markets, including China and selected markets in Europe, as well as in certain
more mature markets, such as Australia. AMF recently opened its first center in
China (located in Guangzhou), and plans to construct three or more additional
centers in China per year for the next five years. AMF also believes growth
opportunities exist in Australia, a more developed market where AMF has 36
centers. Management believes that AMF could build as many as five additional
centers to strengthen further its leading position in the Melbourne and Sydney
markets. In selected European markets, AMF believes opportunities exist to build
new or consolidate existing bowling centers.
IMPROVE ANCILLARY REVENUE. AMF plans to focus on improving the amusement
games, billiards, and pro shops in its current centers. Management believes that
better layout and active maintenance of its amusement games and the addition of
billiards in selected centers can increase ancillary revenue. Ancillary revenue
can also be improved by selective price increases. Management recently increased
domestic food and beverage prices by 3% and domestic shoe rental prices by 10%.
There can be no assurance that AMF will be able to maintain these
competitive strengths or to implement these strategies successfully. See "Risk
Factors."
OPERATIONS (BOWLING CENTER OPERATIONS)
AMF's domestic bowling center operations are distributed throughout the
U.S. and organized geographically, for management purposes, into 47 clusters,
with approximately three to five bowling centers per cluster. Cluster managers
report to one of six regional managers, some of whom also have direct
responsibility for one or more individual centers. This management structure
provides close local market management which, when coupled with the management
incentive program, fosters strong revenue and EBITDA performance.
All center, cluster and region managers receive an incentive-based
compensation package tied to achieving budgeted revenue and EBITDA targets for
their respective areas of responsibility. Managers must meet 97% of their
revenue budget in order to qualify for bonuses. If EBITDA budget is met, a
center manager receives a bonus equal to 20% of salary, and cluster and region
managers receive bonuses equal to 50% of salary. To the extent EBITDA budget is
exceeded, center and cluster managers receive 10%, and region managers receive
6%, of any EBITDA above the budgeted amount. The same general approach to
management organization and incentive compensation applies to the international
operations.
Most of AMF's domestic bowling centers are generally open seven days a
week, 16 to 18 hours per day. The total number of personnel per center varies
from 20 to 25. Personnel costs typically represent approximately 30% of a
center's operating costs. A major portion of the centers' staff consists of
hourly employees, the number of which is reduced during periods of slower
business.
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All of AMF's bowling centers have food and beverage operations, and almost
all are air-conditioned and provide customer parking facilities. The majority of
centers also have amusement games, billiards, pro shops, supervised children's
playrooms, and facilities to accommodate birthday parties. In addition, once the
installation of automatic scoring is completed at two centers in the first
quarter of 1996, 100% of AMF's centers will have computerized automatic scoring
versus the industry average of approximately 65%.
Most of AMF's bowling centers have computerized cash receipt control
systems to ensure receipt of funds for all games bowled as well as computer
terminals tied directly to the corporate office computer system to further
enhance these controls. On a daily basis, revenue results from all centers are
tabulated and cash receipts are audited. Cash is deposited in local banks daily
and there is therefore never more than one day's cash receipts in a center at
any time. Over the next two years, AMF is planning to roll-out in the United
States a touch screen technology point-of-sale system, which is currently being
used in AMF's Australian operations. The point-of-sale system is expected to
improve cash control, enhance and speed the flow of data between the centers,
management and the corporate office, and through its touch screen technology, be
more employee user-friendly, thereby enhancing customer service and minimizing
errors.
Overall, AMF's international bowling centers are operated in the same
manner as the domestic centers.
SALES AND MARKETING (BOWLING CENTER OPERATIONS)
Marketing programs are important in creating new leagues, maintaining
existing league participation and attracting new open play bowlers. AMF uses
center-based sales programs, where dedicated sales people make calls on nearby
companies, schools, churches and other institutions to generate league and open
play traffic. Bowling center and cluster managers regularly contact local
companies and other organizations to offer free bowling parties, an effective
and proven method of creating new leagues and new league bowlers. In November
1995, AMF hired a bowling center operations Sales Training Manager, who is
responsible for implementing a new sales training program to enhance the
performance of sales personnel. The Sales Training Manager provides center
managers with a training video, holds seminars with center managers and center
sales personnel, conducts live sales calls with them and tracks the success of
bowling parties throughout AMF. AMF also maintains center databases containing
the names and addresses of all league players, and mailings and phone calls are
made to notify members of league meetings, league start dates and rates.
AMF is also creative in developing flexible leagues to appeal to different
demographic groups. For example, there are new league sales programs directed
specifically at the large and fast growing seniors' market (principally daytime
leagues) and the important children's and juniors' markets. In addition, for
individuals that do not want a standard 35-week commitment, there are short
season leagues that run from 10 to 16 weeks, as well as leagues that bowl twice
per month rather than weekly. As an added benefit for parents, many centers also
offer child care facilities during league play.
AMF believes that it offers the most extensive tournament program in the
United States for the benefit of league bowlers. AMF named a National Tournament
Director in 1993, who is primarily responsible for further raising the profile
of tournaments in AMF's centers. Through the development and sponsorship of
national, regional and cluster tournaments, as well as working with major food
and beverage vendors, tournament lineage in AMF centers has increased 10.4%
annually since hiring the National Tournament Director. Management expects
similar growth in 1996.
Each bowling center is also allocated an advertising and promotion budget
tied to its revenue stream, which it is authorized to spend on center-specific
advertising and promotion programs. Media used include television (primarily
local cable), radio, newspaper, value-pack coupons distributed in each center's
neighborhood, and "bounce back" coupons (given to bowlers as a
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<PAGE> 89
return incentive). Also, each center's operations are covered by local bowling
associations and journals which are extensively used by the centers. AMF's
marketing mix also includes, at the national level, creative league and open
play programs developed with, and funded primarily by, major food and beverage
vendors. These vendors also support AMF's national and regional tournament
programs and an AMF exclusive pro bowler exhibition tour.
AMF's marketing strategy for its international bowling centers is similar
to its domestic strategy, although individual programs and promotions vary
slightly from country to country, based on the local competitive environment.
COMPETITION (BOWLING CENTER OPERATIONS)
Bowling, both as a sport and a recreational activity, faces competition
from numerous alternative activities. In addition, AMF's centers compete with
other bowling centers, although such competition is usually limited to centers
within a certain radius due to convenience and drive-time limitations. In areas
where competing facilities are nearby, AMF typically competes against single-
center and small-chain operators. AMF competes primarily through the quality and
appearance of its facilities and through the range of amenities offered.
The domestic bowling center industry is highly fragmented with the top six
operators (including AMF) accounting for less than 8% of the total number of
centers.
DOMESTIC BOWLING INDUSTRY(a)
<TABLE>
<CAPTION>
OPERATOR NUMBER OF LOCATIONS % OF TOTAL
- -------------------------------------------------------------- ------------------- ----------
<S> <C> <C>
AMF........................................................... 205 3.2%
Brunswick..................................................... 115 1.8
Bowling Corp. of America...................................... 57 0.9
American Recreation Centers................................... 40 0.6
Bowl America.................................................. 25 0.4
ConBow........................................................ 22 0.3
----- -----
Subtotal.................................................... 464 7.2
Single-center and small-chain operators....................... 5,935 92.8
----- -----
Total....................................................... 6,399 100.0%
===== =====
</TABLE>
- ---------------
(a) AMF estimate. Single-center and small-chain operators are operators of 20 or
fewer centers, the vast majority of which are operators of between one and
four centers.
The international bowling center industry is also highly fragmented. There
is typically a small number of operators with more than a few centers in any
given country and a large number of single-center operators. AMF generally
enjoys a relative size advantage (i.e., a larger number of lanes per center),
and is competitively well-positioned in the markets where it has a significant
presence.
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<PAGE> 90
FACILITIES (BOWLING CENTER OPERATIONS)
As of April 30, 1996, AMF owns or leases 205 bowling centers in the United
States. In addition, AMF operates two bowling centers in the United States under
a management agreement with the former owners. A regional listing of these
facilities is set forth below.
DOMESTIC CENTERS
<TABLE>
<CAPTION>
REGION NUMBER OF CLUSTERS NUMBER OF LOCATIONS OWNED/LEASED
- --------------------------------------- ------------------ ------------------- ------------
<S> <C> <C> <C>
Baltimore/Washington................... 5 29 15/14
East................................... 12 48 25/23
South.................................. 12 45 32/13
Midwest................................ 6 29 21/8
Texas.................................. 6 24 18/6
West................................... 6 30 20/10
--
--- ------
Total................................ 47 205 131/74
== === ======
</TABLE>
On May 1, 1996, AMF closed one leased bowling center in the
Baltimore/Washington region.
Immediately prior to the Acquisition, AMF owned or leased 80 bowling
centers outside the United States. Pursuant to the Acquisition, the Sellers
retained one center in Spain and one in Switzerland. A list of the remaining 78
centers included in the Acquisition is set forth below.
INTERNATIONAL CENTERS INCLUDED IN THE ACQUISITION
<TABLE>
<CAPTION>
COUNTRY NUMBER OF LOCATIONS OWNED/LEASED
- ---------------------------------------------------------- ------------------- ------------
<S> <C> <C>
Australia................................................. 36 23/13
United Kingdom............................................ 15 1/14
Mexico.................................................... 9 5/4
Hong Kong................................................. 5 0/5
Japan..................................................... 5 0/5
France.................................................... 3 0/3
Spain..................................................... 2 0/2
Switzerland............................................... 1 0/1
Canada.................................................... 1 1/0
China..................................................... 1 0/1
--
-----
Total................................................... 78 30/48
== =====
</TABLE>
AMF's leases are subject to periodic renewal. Twenty-six of AMF's domestic
centers have leases which expire in the next three years -- five in 1996, 15 in
1997 and six in 1998; however, 22 of these leases have renewal options. Sixteen
of AMF's international centers have leases which expire in the next three
years -- seven in 1996, five in 1997 and four in 1998; however, 11 of these
leases have renewal options. AMF generally has not had difficulty renewing
leases when and where it wished to do so.
EMPLOYEES (BOWLING CENTER OPERATIONS)
As of December 31, 1995, AMF's bowling center operations had approximately
6,845 employees. This table includes the employees at the centers in Spain and
Switzerland that are being retained by the Sellers. The number of employees
varies depending on the time of year. Employees are divided along functional
lines as shown in the table below.
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NUMBER OF EMPLOYEES
<TABLE>
<CAPTION>
COUNTRY OPERATIONS(a) CORPORATE
- ------------------------------------------------------------------- ------------- ---------
<S> <C> <C>
United States...................................................... 5,103 118
----- ---
Australia.......................................................... 648 17
United Kingdom..................................................... 331 9
Mexico............................................................. 217 18
Hong Kong.......................................................... 69 9
Japan.............................................................. 75 4
France............................................................. 72 3
Spain.............................................................. 43 2
Switzerland........................................................ 21 4
Canada............................................................. 24 0
China.............................................................. 54 4
----- ---
Total International........................................... 1,554 70
----- ---
Total Worldwide............................................... 6,657 188
===== ===
</TABLE>
- ---------------
(a) Numbers vary depending on the time of year.
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AMF BOWLING EQUIPMENT MANUFACTURING BUSINESS
AMF is one of the world's leading manufacturers of bowling center
equipment, and management believes that AMF, together with Brunswick, accounts
for approximately 89% of the world's installed base of bowling center equipment.
Management believes that AMF alone accounts for approximately 41% of the world's
installed base of bowling center equipment and is a supplier to an estimated
10,000 bowling centers in over 50 countries.
The bowling equipment industry generally encompasses the manufacture of
automatic pinspotters (machines which set and reset bowling pins and return the
players' bowling balls), computerized automatic scoring systems, wood and
synthetic bowling lanes, lane maintenance systems (automated machines that dust,
clean and oil lanes to meet technical specifications), masking panels
(decorative covers installed in front of pinspotters), ball returns, seating,
bumper bowling systems (bumper guards, often used by children, which prevent
gutter balls), replacement and maintenance parts and operating supplies such as
spare parts, pins, lane oils, bowling balls, bowling shoes and other bowling
accessories. AMF either manufactures or resells all of these products.
The two categories of AMF's bowling equipment manufacturing business are
(i) recurring sales of replacement and spare parts and supplies, resale
products, and major modernization equipment (collectively, "Replacement and
Modernization" sales) to established bowling centers in both mature and
developing markets and (ii) sales of the bowling equipment necessary to outfit a
new bowling center or to expand an existing bowling center ("New Center
Packages" or "NCPs"). New Center Packages include a pinspotter, and the vast
majority also include all of the other equipment needed to outfit one new
bowling lane.
AMF and Brunswick are the only full-line manufacturers of Replacement and
Modernization products that compete on a global basis. AMF's primary competitors
for Replacement and Modernization sales (other than Brunswick) are much smaller
companies that tend to offer a narrower range of products and are often
regionally focused. AMF's primary competitor for worldwide sales of NCPs
historically has been Brunswick. However, AMF also competes, primarily in China
and Korea, with DACOS, a Korea-based manufacturer.
AMF positions its products as the highest quality, most technologically
advanced products in the industry, allowing AMF generally to command premium
prices. AMF's long history of bowling equipment innovation began 50 years ago
when AMF revolutionized ten-pin bowling with the introduction of the automatic
pinspotter. Today, AMF manufactures the fastest pinspotter (for play conducted
under conditions specified by the American Bowling Congress), the
highest-scoring lanes and the most durable pins. The superior speed of AMF's
pinspotter directly influences the amount of bowling revenue a bowling center
can generate, and the reliability and ease of repair is an important marketing
tool against sellers of refurbished equipment. AMF's synthetic lanes, introduced
in 1988, are the performance leaders. In the annual American Bowling Congress
tournament, where AMF and Brunswick supply the equipment on alternating years,
every major scoring record has been set on AMF's synthetic lanes. The lives of
both the pinspotter and lanes, when properly maintained, typically exceed 35
years. Internal tests demonstrate that AMF pins are more durable under stress
conditions and less likely to break. In general, AMF's products are developed
through internal research and development efforts. AMF holds over 40 U.S.
patents for its various proprietary products and technologies.
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<PAGE> 93
Sales and EBITDA for AMF's manufacturing business and for the two
categories are presented below:
AMF MANUFACTURING RESULTS(a)
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------
1991 1992 1993 1994 1995
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Total Manufacturing Combined
Total revenue.......................... $155.7 $186.7 $235.0 $292.4 $272.6
EBITDA................................. 33.6 44.5 67.1 80.6 74.5
EBITDA margin.......................... 21.6% 23.8% 28.6% 27.6% 27.3%
Replacement and Modernization Products
Revenue................................ N/A N/A $112.4 $121.9 $120.0
EBITDA................................. N/A N/A 29.7 30.4 27.1
EBITDA margin.......................... N/A N/A 26.4% 24.9% 22.6%
New Center Packages
Total NCPs sold........................ 1,896 2,210 3,577 4,941 4,437
Revenue................................ N/A N/A $122.6 $170.5 $152.6
EBITDA................................. N/A N/A 37.4 50.1 47.4
EBITDA margin.......................... N/A N/A 30.5% 29.4% 31.1%
</TABLE>
- ---------------
(a) Excludes sales to AMF bowling center operations of $9.2 million, $8.7
million, $8.6 million, $9.3 million and $13.9 million for the years ended
December 31, 1991, 1992, 1993, 1994 and 1995, respectively. The EBITDA
associated with this revenue was $3.5 million, $4.1 million, $4.0 million,
$4.1 million and $4.8 million for the years ended December 31, 1991, 1992,
1993, 1994 and 1995, respectively.
REPLACEMENT AND MODERNIZATION SALES
The potential customers for sales of Replacement and Modernization products
include all bowling centers in operation today, and the number of these
potential customers will continue to grow as the number of centers increases. In
order for a bowling center to remain competitive and satisfy its customers, the
center operator must make certain periodic investments in its bowling center's
equipment. Some of these investments must be made on approximately an annual
basis, such as certain replacement parts and replacement pins; these annual
investments represent relatively modest expenditures necessary to maintain the
center. Other equipment, such as automatic scoring systems, replacement lanes
and upgraded automated lane maintenance equipment, require less frequent but
more significant investments by center operators. Management believes that many
of these modernizations are necessary for a center to maintain its existing
customer base.
AMF's large share of the installed base of bowling center equipment has
established the brand name and quality reputation of its products in the bowling
industry. AMF's experienced sales force and reputation for quality help AMF
develop strong relationships with bowling center operators and mechanics, the
primary customers for Replacement and Modernization products. These long-
standing customer relationships, predictable demand, a steadily increasing
installed base and AMF's ability to supply a full product line have historically
made the Replacement and Modernization category a stable and recurring base of
revenue and EBITDA for AMF.
NEW CENTER PACKAGES
Each New Center Package includes a pinspotter, and the vast majority also
include the other equipment needed to outfit one new bowling lane. A complete
New Center Package requires an
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<PAGE> 94
investment, on average, of approximately $30,000 to $35,000 per lane for the
equipment, plus approximately $3,000 to $3,500 per lane for installation. A
complete New Center Package consists of an automatic pinspotter (approximately
57% of the cost of a complete NCP), a lane package (22%), automatic scoring
equipment (15%), seating, a ball lift and ball return, and various other
supplies and miscellaneous items.
AMF and Brunswick are the only two full-line manufacturers of equipment
comprising a New Center Package. Used equipment dealers or refurbishers combine
used pinspotters with other used and some new equipment to create their own
version of a "NCP." AMF's primary competitor for worldwide sales of NCPs
historically has been Brunswick. However, AMF also competes, primarily in China
and Korea, with DACOS.
Almost all of the new bowling centers built in the world today are being
built outside of the U.S., predominantly in Asia. As bowling markets develop,
new centers continue to be built until the number of installed lanes serving the
local population reaches a point at which the prospective economic returns from
the construction of a new bowling center begin to decline. In the U.S., Taiwan
and Japan, which are mature bowling markets, the population per lane in 1995 was
2,031, 1,439 and 3,903, respectively. (Calculated by dividing total population
by number of lanes. Total population is obtained from the "Population Reference
Bureau." Lane numbers are estimates received from AMF Regional Sales
Representatives.) In developing markets the population per lane is significantly
higher, suggesting the opportunity for additional growth. For example, in China,
where the population is approximately 1.2 billion, and the demand for bowling
and new bowling centers has begun to grow, the population per lane is only
approximately 351,000. There can be no assurance, however, that China or other
markets will follow this pattern.
Revenue growth over the past five years for AMF's NCP segment has resulted
primarily from increased unit sales to Taiwan and Korea, where the popularity of
bowling and the consequent demand for new bowling centers has increased
dramatically over the last few years, and to China, where the demand for
bowling, and for new bowling centers, has begun to show high growth. (See table
below.) In the early 1990s, AMF focused its resources and attention on the
demand in the Korean and Taiwanese markets. AMF benefited from local laws in
Korea and Taiwan prohibiting the import and use of used or refurbished capital
equipment generally, including bowling equipment specifically, which precluded
the resale of used equipment. NCP sales to Korea and Taiwan declined
substantially in the first quarter of 1996 as compared to the first quarter of
1995, and management expects NCP sales in Korea and Taiwan to continue to
decline over the next few years as these markets continue to mature. Over the
next several years, AMF expects to benefit from increases in demand from
selected international markets, including continued growth in China and growth
in Indonesia, India, Malaysia, Poland, and other selected markets in Asia,
Europe and South America. However, there can be no assurance that such growth
will materialize.
See "Management's Discussion and Analysis of Financial Condition and
Results of Operations -- Backlog; Recent NCP Sales."
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<PAGE> 95
NUMBER OF AMF'S NEW CENTER PACKAGES SOLD
(UNITS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------
1991 1992 1993 1994 1995
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Korea................................... 1,070 1,437 2,025 2,202 1,445
Taiwan.................................. 326 324 835 1,882 1,363
China................................... 0 0 66 133 795
----- ----- ----- ----- -----
Subtotal...................... 1,396 1,761 2,926 4,217 3,603
Other................................... 500 449 651 724 834
----- ----- ----- ----- -----
Total......................... 1,896 2,210 3,577 4,941 4,437
===== ===== ===== ===== =====
% Change................................ -- 16.6% 61.9% 38.1% (10.2)%
</TABLE>
AMF sold 795 New Center Packages in China in 1995, roughly 30%, in
management's estimate, of the total number of NCPs sold to China in 1995.
Management believes that Brunswick accounted for approximately 40%, and others,
primarily DACOS and certain used equipment refurbishers, accounted for the
remaining approximately 30%. AMF will aggressively seek to grow its share of
this expanding market in 1996 by opening new sales offices, adding local staff,
increasing local technical support, aggressively promoting its products and
introducing products particularly suited to China. Representative offices in
Beijing and Shanghai began operations during 1996.
BILLIARDS
In addition to bowling equipment manufacturing, AMF manufactures and sells
PlayMaster billiards tables. PlayMaster sells an extensive line of home
billiards tables and a limited line of commercial billiards tables. AMF also
owns a pool cue manufacturing business, Legendary, which markets a limited line
of high-end pool cues. For the year ended December 31, 1995, PlayMaster and
Legendary had EBITDA of $2.3 million and a deficit of $0.8 million,
respectively.
COMPETITIVE STRENGTHS (MANUFACTURING)
AMF attributes its position as a leading bowling equipment manufacturer to
the following factors:
LARGE SHARE OF THE INSTALLED BASE OF BOWLING CENTER EQUIPMENT. Management
believes that AMF alone accounts for approximately 41% of the world's installed
base of bowling center equipment and is a supplier to an estimated 10,000
bowling centers in over 50 countries. AMF's share of the installed base of
equipment helps establish AMF's industry reputation, supports AMF's sales
efforts through its large number of existing customer relationships and aids AMF
with regard to sales of Replacement and Modernization products. AMF enjoys
strong brand loyalty, and AMF's experience has shown that past purchasers of AMF
New Center Packages tend to purchase AMF's Replacement and Modernization
products for several years after their initial purchases of AMF New Center
Packages, although there are competing suppliers of replacement parts and
equipment.
STRONG DIRECT SALES FORCE AND EXTENSIVE DISTRIBUTOR NETWORK. AMF's direct
sales network provides AMF greater control over the sale of its products.
Through this network, AMF develops long-term sales relationships with bowling
center operators and mechanics both domestically and internationally. AMF's
extensive distributor network complements the direct sales effort by providing
sales coverage in selected international markets. With the exception of
Brunswick, AMF's primary competitors for Replacement and Modernization sales are
generally smaller and, in contrast to AMF's broad sales coverage, do not
maintain as significant a sales presence either domestically or internationally.
Management believes that the strength of its sales force and distributor network
allows AMF to successfully serve the installed base of AMF equipment operators
as well as sell Replacement and Modernization products to non-AMF equipment
operators.
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<PAGE> 96
LOW-COST MANUFACTURER. Management believes that AMF is generally a
low-cost producer of equipment for both the Replacement and Modernization and
New Center Package categories. Management believes that AMF's generally low cost
position has helped it to maintain its leading competitive standing. In
addition, AMF's manufacturing business enjoys a high variable cost position.
Management estimates that approximately 75% of the cost of a NCP is variable
(based on 1995 NCP volumes and before purchase accounting adjustments from the
Acquisition), which helps to protect AMF's EBITDA margins in the event of lower
unit production.
SUPERIOR PRODUCTS. AMF positions its products as the highest quality, most
technologically advanced products in the industry, allowing AMF generally to
charge premium prices. For example, AMF manufactures the fastest pinspotter (for
play conducted under conditions specified by the American Bowling Congress), the
highest-scoring synthetic lanes, and the most durable pins. The pinspotter
(approximately 57% of the total cost of a New Center Package) is one of the keys
to a bowling center's return on investment because the speed and reliability of
a pinspotter directly influence the amount of bowling revenue a bowling center
can generate. AMF believes the superior speed and reliability of its pinspotters
are competitive strengths that assist it in marketing AMF New Center Packages.
MOTIVATED AND EXPERIENCED MANAGEMENT TEAM. AMF's manufacturing management
team is experienced and is motivated by an attractive incentive compensation
program to produce strong revenue and EBITDA performance.
STRATEGIES (MANUFACTURING)
AMF intends to pursue the following strategies to enhance further its
position and to increase sales and profits in manufacturing:
EXPAND LEADING POSITION IN REPLACEMENT AND MODERNIZATION SALES. As the
worldwide installed base of bowling equipment grows, management believes that
AMF's strong direct sales force, its extensive distributor network and its high
quality products will allow AMF to increase its sales of Replacement and
Modernization products. AMF expects to continue to improve its existing product
line and develop new value-added products targeted specifically to the existing
bowling center operators' needs.
GROW NEW CENTER PACKAGE SALES. AMF's recognized brand name, its
technologically advanced products and its strong sales force should continue to
position AMF to take advantage of increasing international New Center Package
demand in parts of Asia and other possible high-growth regions.
MAINTAIN LOW-COST MANUFACTURING POSITION. AMF's position as a low-cost
producer has allowed it to generate high EBITDA margins. AMF expects to continue
to maintain its low-cost manufacturing position through taking further advantage
of manufacturing efficiencies, continuous improvement programs and its low-cost
non-union work force.
MAINTAIN PRODUCT SUPERIORITY. AMF expects to continue to maintain its
technological lead through its research efforts and continued development of
new, more advanced products. In order to keep its competitive edge, AMF conducts
its research and development efforts internally.
There can be no assurance that AMF will be able to maintain these
competitive strengths or implement these strategies successfully. See "Risk
Factors."
SALES AND MARKETING (MANUFACTURING)
AMF's equipment sales units operate separately from the manufacturing
operations. Sales efforts are organized into five geographic zones: the
Americas, Europe, Asia-Pacific (other than Japan), Japan and Sweden. In each of
the countries it serves, AMF, through either its direct sales force or its
distributor network, sells the entire AMF product line and also acts as a
distributor for
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<PAGE> 97
certain competitive products including bowling balls (for Columbia and Ebonite)
and a polymer film used to extend the life of wood lanes (for Brunswick).
AMF's sales force serves, and AMF is a supplier to, over 10,000 accounts in
over 50 countries. The 33-person domestic sales force serves approximately 7,000
accounts throughout the U.S. The domestic sales force concentrates its sales
efforts on Replacement and Modernization products. AMF also maintains a
telemarketing group which complements the domestic sales force by calling on
selected accounts.
Outside the U.S., AMF employs a total of 177 people, who sell AMF products
through direct sales and service offices located in Australia, France, Germany,
Sweden, the United Kingdom, Mexico, China, Hong Kong, Japan and Korea. Each of
these sales offices sells both New Center Packages and Replacement and
Modernization products, with the emphasis depending on local market demand for
each product category. In higher growth markets, AMF's sales force develops
relationships with local entrepreneurs and investors who are likely to build new
bowling centers and purchase New Center Packages, while sales offices in mature
markets focus their resources on the Replacement and Modernization sales. In
each country where AMF has direct sales offices, AMF provides extensive customer
services, including technical and installation support, inventory/spare part
assistance and training of local bowling center mechanics.
In certain slower growth or mature bowling markets, AMF generally utilizes
bowling equipment distributors in order to minimize fixed costs. AMF did,
however, use distributors in two high growth markets, Korea, which until 1993
required the use of a local distributor, and Taiwan. AMF continues to utilize
its Taiwanese distributor, but AMF recently replaced its Korean distributor with
a direct sales office in Seoul. Management believes this replacement has led to
better sales coverage in Korea. In China, AMF has concluded that it can most
effectively cover the growth in NCP demand through direct sales offices. AMF
opened permanent offices in Beijing and Shanghai in 1996. In addition, AMF
complements its sales coverage of China with additional coverage from its Hong
Kong sales office.
Most NCP sales, including those to international distributors and some
affiliates, are sold using letters of credit denominated in U.S. dollars.
Contract terms are Free on Board (F.O.B.) - U.S. plant. If collection problems
occur, the Company typically has three weeks to resolve them and it can hold
shipments at either the U.S. port or the port of entry, if necessary.
Shipments to AMF's Japan, U.K. and Sweden affiliate offices are not always
secured by letters of credit. Typical terms of sale require the customer to pay
90% of the equipment cost prior to installation. The remaining 10% is typically
due within 30 days of installation sign-off. These NCPs are sold in local
currency and affiliates adjust pricing to reflect prevailing exchange rates to
the extent competitive conditions allow.
AMF markets its products on a product-by-product basis. Its programs
include the development of sales support material, the design of advertising
campaigns for trade journals and direct mailings to the customer base. In
addition, at the corporate level, AMF's manufacturing business sponsors
tournaments, such as the AMF Dick Weber Classic, to promote the AMF brand name.
COMPETITION (MANUFACTURING)
AMF and Brunswick, a publicly-traded producer of marine and recreational
products, are the two largest manufacturers of bowling center equipment in the
world. Management estimates that AMF and Brunswick together account for
approximately 89% of the worldwide installed base of bowling center equipment,
with AMF accounting for approximately 41% and Brunswick accounting for
approximately 48%. The remaining 11% of the installed base is shared by several
companies which no longer manufacture equipment (such as Furukawa Mining Company
Ltd. and Kanematsu, Ltd.), DACOS and several smaller manufacturers.
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<PAGE> 98
AMF and Brunswick are the only full-line manufacturers of Replacement and
Modernization products that compete on a global basis. AMF's primary competitors
for Replacement and Modernization sales (other than Brunswick) are much smaller
companies that tend to offer a narrower range of products and are often
regionally focused. AMF's primary competitor for worldwide sales of NCPs
historically has been Brunswick. However, AMF also competes, primarily in China
and Korea, with DACOS, a Korea-based manufacturer.
Because of bowling equipment's relatively long useful life, used equipment
can be refurbished and sold, most often to builders of new centers.
Refurbishers, who are often U.S.-based, currently compete with AMF's sales
efforts in new high growth markets. However, refurbished equipment is often
slower, less reliable and more difficult to repair. Therefore, AMF is well
positioned with its higher performing NCP.
Although there are no other competitors that are as large as either AMF or
Brunswick, AMF competes with smaller, often regionally-focused companies in
certain product lines. These competitors include Eastern Bowling Company, Inc.
and The Scorekeeper (a division of DACOS) (automatic scoring products), Heddon
Bowling Corporation ("Heddon"), Quality Bowling Corp., Vantage Bowling
Corporation ("Vantage"), and JCP Construction ("JCP") (replacement pinspotters),
DBA Products Company, Inc. (automated lane maintenance machines), Heddon and
Murrey International Bowling and Billiards, Inc. (synthetic lanes), Vulcan
Corporation and Diamond Duramid, Inc. (pins), and Vantage and JCP (spare parts).
OPERATIONS (MANUFACTURING)
Management believes that AMF's generally low-cost position generates higher
EBITDA margins for its products than those of its competitors. Many of AMF's
competitors outsource significant portions of the manufacture of many of their
products, while AMF's manufacturing is more vertically integrated. Management
believes that AMF's generally low-cost position has helped it to maintain its
leading competitive standing.
AMF's manufacturing business enjoys a high variable cost position.
Management estimates that approximately 75% of the cost of a NCP is variable
(based on 1995 NCP volumes and before the purchase accounting adjustment
resulting from the Acquisition), which helps to protect AMF's EBITDA margins in
the event of lower unit production. This variable cost profile is due to AMF's
strategy of always sourcing components to the low-cost manufacturer, whether an
outside vendor or in-house producer. These components are typically assembled
in-house using a predominantly low-skilled, non-union labor force whose size can
be managed over time. This high degree of variable costs reduces the impact of
changes in NCP unit sales on AMF's profitability. Indicative of the high
variable cost component, gross margins on NCPs, inclusive of depreciation, have
remained between 40.9% and 42.0% for the years 1993 to 1995 while NCP units sold
have increased approximately 24.0% over the same period. In addition, AMF does
not face any major capacity issues, and most operations currently are operating
on a single shift.
RESEARCH AND DEVELOPMENT (MANUFACTURING)
Virtually all the Research and Development effort in the manufacturing
business is focused on either developing new products to fill specific customer
needs or enhancing current products. Very little investment is made in basic
research. The Company tends to adapt technologies and materials developed and
proven outside the bowling industry for use in products within the bowling
industry. In-house engineering staff conduct on-going product enhancement and
cost-reduction initiatives. AMF augments its engineering staff with contract
employees and the use of outside engineering firms during major product
development programs.
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<PAGE> 99
PROPERTIES (MANUFACTURING)
As of December 31, 1995, AMF's manufacturing operations owned or leased
facilities at four different locations in the U.S., three for its bowling
equipment manufacturing business and one for its billiards businesses. AMF also
leased facilities at nine different international locations, which are used as
offices or warehouses. These facilities are listed below.
U.S. FACILITIES
<TABLE>
<CAPTION>
APPROXIMATE
LOCATION PRODUCTS SQUARE FOOTAGE OWNED/LEASED
- ------------------------- ------------------------------------ -------------- ------------
<S> <C> <C> <C>
Richmond, VA Pinspotters, automatic scoring, 360,000 Owned
synthetic lanes, other capital
equipment, consumer products
Used pinspotters 54,000 Leased
Lowville, NY Pins and wood lanes 121,000 Owned
50,000 Owned
Golden, CO Lane maintenance equipment 50,000 Leased
(Century)
Bland, MO Billiards tables (PlayMaster) 37,210 Owned
33,373 Leased
32,000 Owned
24,000 Owned
16,000 Owned
11,000 Leased
</TABLE>
INTERNATIONAL FACILITIES
<TABLE>
<CAPTION>
APPROXIMATE
LOCATION FUNCTIONS SQUARE FOOTAGE OWNED/LEASED
---------------------------------------- --------------- -------------- ------------
<S> <C> <C> <C>
Emu Plains, Australia................... Office 400 Leased
Warehouse 10,100 Leased
Hong Kong............................... Office 2,500 Leased
Office 1,125 Leased
Levallois-Perret, France................ Office 984 Leased
Warehouse 1,470 Leased
Mainz-Kastel, Germany................... Office 656 Leased
Warehouse 1,650 Leased
Yokohama, Japan......................... Office 4,626 Leased
Warehouse 8,880 Leased
Service Center 1,634 Leased
Seoul, Korea............................ Office 5,119 Leased
Warehouse 7,472 Leased
Mexico City, Mexico..................... Office 1,300 Leased
Warehouse 11,431 Leased
Granna, Sweden.......................... Office 4,515 Leased
Warehouse 12,705 Leased
Hemel Hempstead, United Kingdom......... Office 11,500 Leased
Warehouse 11,770 Leased
</TABLE>
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EMPLOYEES (MANUFACTURING)
As of December 31, 1995, AMF's manufacturing business had approximately 984
full-time employees. Employees are divided along functional lines as shown in
the table below.
EMPLOYEES
<TABLE>
<CAPTION>
SEGMENT NUMBER OF EMPLOYEES
----------------------------------------------------------------- -------------------
<S> <C>
Manufacturing
Bowling products............................................... 635
Billiards products............................................. 114
---
Subtotal.................................................... 749
Sales
Australia...................................................... 7
Americas....................................................... 33
Europe......................................................... 46
Asia-Pacific................................................... 63
Japan.......................................................... 45
Sweden......................................................... 16
Billiards products............................................. 3
---
Subtotal.................................................... 213
Corporate........................................................ 22
---
Total.................................................. 984
===
</TABLE>
LEGAL PROCEEDINGS
AMF is currently, and is from time to time, subject to claims and suits
arising in the ordinary course of its business, including employment
discrimination claims, workers' compensation claims and minor personal injury
claims of customers of AMF's bowling centers. In certain such actions,
plaintiffs request punitive or other damages that may not be covered by
insurance. It is the opinion of management that the various asserted claims and
litigation in which AMF is currently involved will not have a material adverse
effect on its financial position. However, no assurance can be given as to the
ultimate outcome with respect to such claims and litigation. The resolution of
such claims and litigation could be material to the Company's operating results
for any particular period, depending upon the level of income for such period.
AMF is a defendant in a patent infringement action (Kegel v. AMF Bowling,
Inc.) with respect to the oil application system used in a lane cleaning machine
manufactured by AMF. The plaintiffs, competitors of AMF, obtained a summary
judgment on the issue of liability in December 1994. AMF appealed the court's
final judgment and the appeal is currently pending. A trial on damages will not
occur unless and until the liability issue is resolved against AMF. The
plaintiff is claiming damages of approximately $3.0 million, and alleges a right
to increased damages up to three times that amount for "willful infringement."
Immediately after the summary judgment, AMF changed its manufacturing method to
one that does not use the disputed oil application system and has recently
introduced an advanced lane cleaning machine that uses new technology.
AMF has been charged with infringement by Joseph Gentiluomo, the owner of a
patent relating to certain bowling balls. Although no action has been filed
against AMF, Mr. Gentiluomo has filed an infringement suit against Brunswick
Bowling & Billiards Corporation and Columbia 300, Inc. (Gentiluomo v. Brunswick
Bowling & Billiards Corporation, et al.), and has informed AMF that he "intends
to pursue all available rights and remedies against AMF and all other infringers
. . . prior to or upon conclusion of the pending lawsuit."
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Actions have been brought against AMF by AMF's former Korean distributor,
in both Korea and New York State. These actions arise from the same factual
circumstances, and allege that certain notices of termination of plaintiff's
distributorship agreement with AMF were deficient. On February 16, 1996, the
Korean Court dismissed the litigation on jurisdictional grounds, although such
decision is subject to appeal. In the New York Supreme Court action, the
plaintiff is seeking $41.8 million in general damages as well as $100.0 million
in punitive damages. In both situations, pursuant to the Stock Purchase
Agreement, the Sellers agreed to indemnify the Company against all liabilities
in connection with both of these actions, and to assume the defense in such
litigation.
On March 5, 1996, the defendant in an action entitled Northland Bowl and
Sports Center, Inc. and Recreation Associates, II v. Golden Giant, Inc., d/b/a
Golden Giant Building Systems, Court of Common Pleas, Centre County, Pa. (Index
No. 96-75), asserted a third-party claim against AMF and other parties.
Defendant, Golden Giant, a construction company, was previously named as
defendant by a bowling center (not owned or operated by AMF) in connection with
the collapse of the center's roof in early 1994. Golden Giant has now named AMF,
charging it with negligence and breach of implied warranty for installing
scoring monitors (four years before the roof collapsed) on a portion of the
building that allegedly could not adequately support the additional weight of
the equipment. The bowling center plaintiff claims total damages in amounts
exceeding $3.5 million, and Golden Giant asserts that, if plaintiff is entitled
to any recovery, it should be in whole or part against AMF.
REGULATORY MATTERS
There are no unique federal or state regulations applicable to bowling
center operations or equipment manufacturing. States and local governments
require establishments to hold permits to sell alcoholic beverages and, although
regulations vary from state to state, once permits are issued, they generally
remain in place indefinitely (except for routine renewals) without burdensome
reporting or supervision other than revenue tax reports.
In September 1995, the Justice Department informed AMF of the results of an
investigation that it had conducted in early 1994 at six Fair Lanes bowling
centers, prior to Fair Lanes' Chapter 11 filing. The investigation was to
evaluate compliance with the Americans with Disabilities Act. The Justice
Department concluded that there were violations, because Fair Lanes had
apparently failed to respond appropriately or to take corrective action while it
was in Chapter 11. Since informing AMF of the results of this investigation, the
Justice Department has inspected an additional four AMF bowling centers.
Although it has not formally reported any violations at these four AMF centers,
it has indicated by telephone that its inspector believed that there were some
violations. AMF believes that many of the potential violations at the six Fair
Lanes bowling centers have been corrected since AMF took control of Fair Lanes.
AMF intends to provide the Justice Department with the details of the corrective
action taken at the Fair Lanes centers.
ENVIRONMENTAL REGULATION
AMF's operations are subject to federal, state, local and foreign
environmental laws and regulations that impose limitations on the discharge of,
and establish standards for the handling, generation, emission, release,
discharge, treatment, storage and disposal of, certain materials, substances and
wastes. To the best of AMF's knowledge, AMF's operations are in material
compliance with the terms of all applicable environmental laws and regulations.
AMF's Century Division leases a facility in Golden, Colorado. In connection
with the landlord's recent attempted sale of the facility, a potential buyer
conducted exploratory groundwater sampling that yielded evidence of potential
groundwater contamination in one monitoring well on the site. The landlord is
currently conducting additional tests to determine the existence and extent of
any such contamination. AMF believes that, pursuant to the 1990 asset purchase
agreement by which AMF acquired the Century Division, it is indemnified by the
former shareholders of Century International
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<PAGE> 102
for the costs of any necessary remediation at the Golden, Colorado facility for
contamination that occurred prior to 1990. To the extent that contamination may
have been caused by AMF since 1990, AMF would not be indemnified. AMF is not,
however, aware of any post-1990 contamination. AMF cannot at this time estimate
the potential costs of investigation or cleanup, if any, but, based on currently
available information, AMF believes that its liability with respect to any such
investigation or cleanup is unlikely to have a material adverse effect on AMF's
business or financial condition or its financial statements taken as a whole.
AMF's Trinity Avenue site, which is part of AMF's facility in Lowville, New
York, is undergoing groundwater remediation in connection with solvent
contamination dating to 1986, when underground storage tanks were removed. The
site is listed on the New York State Registry of Inactive Hazardous Waste Sites.
AMF believes that liability for the remediation rests with a third party under
the 1986 agreement pursuant to which the Sellers acquired from such third party
the core bowling equipment manufacturing business. Such third party has taken
responsibility to date and is implementing the remedy. In the event that such
third party were unable to meet its obligations with respect to the remediation,
AMF could be held responsible for such remediation.
Another property, the AMF bowling center at Bristol Pike Lanes, Croydon,
Pennsylvania, is located within the boundaries of the Croydon TCE Spill
Superfund site, which has been listed on the National Priorities List ("NPL")
under the federal Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA" or "Superfund"). The site includes an area of
groundwater contamination of approximately 3.5 square miles, and the bowling
center is close to properties identified by the U.S. Environmental Protection
Agency ("EPA") as potential sources of the contamination. The bowling center
does not appear to have contributed to the groundwater contamination, and EPA
has not listed AMF as a potentially responsible party. AMF does not believe that
the groundwater contamination at either of the sites described in this paragraph
and the preceding paragraph is likely to have a material adverse effect on AMF's
business or financial condition or on its financial statements taken as a whole.
AMF has received notices of potential liability under CERCLA or analogous
state statutes at eight off-site disposal facilities. AMF believes that the AMF
entity involved was a de minimis contributor of waste at each of these sites. In
addition, in connection with the Acquisition, AMF Reece Inc. will be required to
indemnify the Company for the liability at three of these sites under an
indemnity agreement which Sellers are obliged to procure. AMF does not believe
that its CERCLA liabilities for these eight sites in the aggregate will have a
material adverse effect on AMF's business or financial condition or on its
financial statements taken as a whole.
AMF cannot predict with any certainty whether future events, such as
changes in existing laws and regulations, may give rise to additional
environmental costs. Furthermore, actions by federal, state, local and foreign
governments concerning environmental matters could result in laws or regulations
that could increase the cost of producing AMF's products, or providing its
services, or otherwise adversely affect the demand for its products or services.
The Company's principal executive offices are located at 7313 Bell Creek
Road, Mechanicsville, VA 23111, telephone (804) 559-8600.
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<PAGE> 103
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth information concerning the individuals who
are expected to be the executive officers and directors of the Company
immediately following the Acquisition:
<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------------------- --- ---------------------------------------------------
<S> <C> <C>
Richard A. Friedman.............. 38 Director and President
Terence M. O'Toole............... 37 Director
Peter M. Sacerdote............... 58 Director
Charles M. Diker................. 61 Director
Paul B. Edgerley................. 40 Director
Howard A. Lipson................. 32 Director
Douglas J. Stanard............... 49 Director; Chief Operating Officer;
President -- Bowling Center Operations
Robert L. Morin.................. 37 Director; Executive Vice President; President --
Manufacturing Operations
Stephen E. Hare.................. 42 Executive Vice President; Chief Financial Officer
Michael P. Bardaro............... 45 Vice President; Vice President, Finance -- Bowling
Center Operations
William W. Flexon................ 33 Vice President; Vice President, Finance --
Manufacturing Operations
</TABLE>
RICHARD A. FRIEDMAN is a general partner at Goldman Sachs where he is the
head of the Principal Investment Area. He joined Goldman Sachs in 1981 and
became a partner in 1990. Mr. Friedman is a member of Goldman Sachs' Operating
Committee, Risk Committee, Investment Committee and Real Estate Principal
Investment Committee. He is on the Advisory Committees or Boards of Directors of
Diamond Cable Communications PLC, Globe Manufacturing Co., Marcus Cable Company,
L.P., and Polo Ralph Lauren Enterprises, L.P. Mr. Friedman is also a member of
the Board of Trustees of The Dalton School in New York City. He received an A.B.
from Brown University and an M.B.A. from The University of Chicago.
TERENCE M. O'TOOLE is a general partner at Goldman Sachs in the Principal
Investment Area. He joined Goldman Sachs in 1983 and became a partner in 1992.
He is a member of Goldman Sachs' Investment Committee. Mr. O'Toole serves on the
Boards of Directors of Concentric Network Corporation, Insilco Corporation,
Rollerblade, Inc. and Western Wireless Corporation. He holds a B.S. degree from
Villanova University and an M.B.A. from the Stanford Graduate School of
Business.
PETER M. SACERDOTE is a limited partner of Goldman Sachs. He joined Goldman
Sachs in 1964 and served as a general partner from 1973 to 1990. During his
tenure at Goldman Sachs, Mr. Sacerdote was chairman of the Firm's Commitments,
Investment and Credit Committees, partner-in-charge of the Corporate Finance
Department from 1980 to 1987, and partner-in-charge of the Private Finance
Department from 1973 to 1980. Mr. Sacerdote is currently Chairman of Goldman
Sachs' Investment Committee and a member of Goldman Sachs' Real Estate Principal
Investment Committee. Mr. Sacerdote serves on the Boards of Directors of
Franklin Resources, Inc., QUALCOMM Incorporated and Weis Markets, Inc. Mr.
Sacerdote has a B.E.E. from Cornell University and an M.B.A. from the Harvard
Graduate School of Business Administration.
CHARLES M. DIKER has been Chairman of the Board of Cantel Industries since
1986 and he has been a limited partner of Weiss, Peck & Greer, an investment
management firm, since 1975. He has also been a director of BeautiControl
Cosmetics, International Specialty Products, Data Broadcasting and Chyron
Corporation since 1987, 1992, 1995 and 1994, respectively. He received an A.B.
from Harvard College and an M.B.A. from the Harvard Graduate School of Business
Administration.
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<PAGE> 104
PAUL B. EDGERLEY has been Managing Director of Bain Capital, Inc., an
investment firm, since 1993. From 1990 to 1993 he was a General Partner of Bain
Venture Capital, and from 1988 to 1990 he was a principal of Bain Capital
Partners. He currently serves on the Boards of Directors of Masland Corporation
and GS Industries Inc. Mr. Edgerley received a B.S. from Kansas State University
and an M.B.A. with distinction from the Harvard Graduate School of Business
Administration.
HOWARD A. LIPSON is Senior Managing Director of The Blackstone Group, and
has been involved in the firm's principal activities since 1988. Prior to
joining Blackstone, Mr. Lipson was a member of the Mergers and Acquisitions
Group of Salomon Brothers Inc. He currently serves on the Boards of Directors of
UCAR International Inc., Volume Services, Inc. and Ritvik Holdings, Inc. Mr.
Lipson received a B.S. in Economics from the Wharton School of The University of
Pennsylvania.
STEPHEN E. HARE is an Executive Vice President and Chief Financial Officer
of AMF Group Inc. He joined AMF in May 1996. Prior to joining AMF, Mr. Hare was
Senior Vice President and Chief Financial Officer of James River Corporation of
Virginia, beginning in 1992. Before joining James River Corporation, he was
Senior Vice President of Investment Banking at Kidder, Peabody & Co. in New
York. Mr. Hare holds a Certified Public Accountant license. He received a B.B.A.
from Notre Dame and an M.B.A. from the Harvard Graduate School of Business
Administration.
DOUGLAS J. STANARD is the Chief Operating Officer of AMF Group Inc. and the
President of AMF's bowling center operations. He joined AMF in 1992 after having
been President of Stewart Foods, Inc. from 1989 to 1992 and President of
Beatrice International Food (Europe) S.A. from 1984 to 1988. Mr. Stanard
received a B.S. degree from Northern Illinois University and a J.D. degree from
The College of William and Mary.
ROBERT L. MORIN is an Executive Vice President of AMF Group Inc. and the
President of AMF's manufacturing operations. He joined AMF in 1992 as General
Manager of the Capital Equipment Division. Prior to joining AMF, Mr. Morin
worked as a Management Consultant from 1985 to 1992 at Booz, Allen & Hamilton,
Inc., a management consultant firm, specializing in operations management. Mr.
Morin also spent three years as an engineer at General Motors. He holds a B.S.
degree from Notre Dame and an M.B.A. from the Graduate School of Business
Administration at the University of Virginia.
MICHAEL P. BARDARO is a Vice President of AMF Group Inc. and the Vice
President, Finance of AMF's bowling center operations. He joined AMF in 1994
after having been Controller at General Medical Manufacturing Co. in Richmond,
Virginia between 1989 and 1994 and Vice President/Controller at Virginia Linen
Service, Inc. between 1986 and 1989. Mr. Bardaro holds a Certified Public
Accountant License in Virginia. He received a B.S. degree in Accounting from the
University of Cincinnati.
WILLIAM W. FLEXON is a Vice President of AMF Group Inc. and the Vice
President, Finance of AMF's manufacturing operations. He first joined AMF's tax
department in 1988 and became Tax Manager in 1991. Between December 1992 and
April 1994, Mr. Flexon worked at Financial Decision Systems as a Tax Software
Application Consultant. He then returned to AMF in April 1994. Mr. Flexon holds
a Certified Public Accountant license in Virginia. He received a B.S. degree in
Business Administration from the University of Richmond.
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<PAGE> 105
EXECUTIVE COMPENSATION
The following table sets forth the cash compensation paid by AMF to each of
its most highly compensated executive officers whose total cash compensation
exceeded $100,000 during the last fiscal year, for each of the three years in
the period ended December 31, 1995:
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
<TABLE>
<CAPTION>
AWARDS
-------------------- PAYOUTS
OTHER ---------------------------- ALL
ANNUAL COMPENSATION ANNUAL RESTRICTED SECURITIES OTHER
-------------------------- COMPEN- STOCK UNDERLYING COMPEN-
SALARY BONUS SATION AWARD(S) OPTIONS/SARS LTIP SATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($) ($) ($) ($)
- ----------------------------- ---- ------- ------- ------- ---------- ------------ ------------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Douglas J. Stanard...........
President, Worldwide 1993 180,000 100,750 -- -- -- -- --
Bowling Centers 1994 180,000 112,500 -- -- -- -- --
1995 225,000 204,750 -- -- -- -- --
Robert L. Morin..............
General Manager, 1993 100,000 58,825 -- -- -- 10,000 shares(a) --
AMF Bowling, Inc. 1994 103,000 59,950 -- -- -- -- --
President, AMF Bowling, 1995 180,286 60,125 -- -- -- -- --
Inc.
Michael P. Bardaro...........
Treasurer/Controller, 1993 N/A N/A N/A N/A N/A N/A N/A
AMF Bowling Centers 1994 44,371(b) 4,500 -- -- -- -- --
Chief Financial Officer, 1995 95,833 29,958 -- -- -- -- 2,327
AMF Bowling Centers
</TABLE>
- ---------------
(a) Prior to the Acquisition, Mr. Morin held 10,000 shares of phantom stock in
the Capital Equipment Division ("CED") of AMF Bowling, Inc., under a Phantom
Stock Plan (the "Phantom Stock Plan"). Under the Phantom Stock Plan, the
phantom stock was valued at five times the average earnings of CED for the
current and two preceding fiscal years. In connection with the Acquisition,
the shares of phantom stock issued under the Phantom Stock Plan were
exchanged for $86.01 per share in cash and the Phantom Stock Plan was
terminated.
(b) Employment commenced July 1994.
EMPLOYMENT AGREEMENTS
Mr. Stanard has an employment agreement with AMF Holdings Inc., Holdings'
parent company ("Parent") and the Company, and Mr. Morin has an employment
agreement with Parent and a subsidiary of the Company, each for an employment
period ending on May 1, 1999. Pursuant to these agreements, each receives
compensation consisting of salary and an incentive bonus of up to 50% of the
executive's annual salary if certain operational and financial targets are met.
(Mr. Stanard's annual base salary is $350,000, and Mr. Morin's annual base
salary is $250,000.) Under their respective employment agreements, Mr. Stanard
holds the position of Chief Operating Officer of the Company and Mr. Morin holds
the position of Chief Executive Officer of AMF Bowling, Inc. ("AMF Bowling"), an
indirect subsidiary of the Company. In addition, Mr. Stanard is currently
serving as President of AMF Bowling Centers, Inc. The employment agreements
provide for payment of accrued compensation, continuation of certain benefits
and payment of a portion of the executive's bonus (if the applicable targets are
later met) following termination of employment by the Company, in the case of
Mr. Stanard, and by AMF Bowling, in the case of Mr. Morin, (in each case, the
executive's "Employer"). The agreements further provide for a severance payment
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<PAGE> 106
equal to the executive's annual base salary if termination by the Employer is
not due to death or disability. The executive's employment will be deemed to
have been terminated by his Employer if all or substantially all of the stock or
assets of such Employer are sold or disposed of to an unaffiliated third party
and the executive is not thereafter employed by Parent or one of its continuing
affiliates, however neither Parent nor the executive's Employer will have any
obligations with respect to accrued salary, continuation of benefits, allocated
portion of bonus and, if applicable, severance payments to either Mr. Stanard or
Mr. Morin upon termination of his employment if he is hired by the purchaser of
the Company's stock or assets, or if his employment is continued by the Company.
Messrs. Stanard and Morin each purchased, pursuant to their respective
employment agreements, 150,000 shares of Parent Common Stock (the "Purchased
Stock") for the payment of $500,000 in cash plus a non-recourse promissory note
for $1,000,000, payable to Parent and secured by the purchased stock which has
been pledged pursuant to a stock pledge agreement between the executive and
Parent. In addition, Mr. Stanard was granted options to purchase 130,000 shares
of Parent Common Stock and Mr. Morin was granted options to purchase 110,000
shares of Parent Common Stock (together, the "Options"). Unless sooner exercised
or forfeited as provided, the Options expire on May 1, 2006. To the extent not
inconsistent with the employment agreements, the Options are governed by
Parent's 1996 Stock Incentive Plan (the "Stock Incentive Plan"), described
below. Twenty percent of the Options vest on May 1, 1997 and on each May 1
thereafter through the year 2001.
The employment agreements further provide that, prior to the consummation
of an initial public offering or offerings by Parent with gross proceeds in the
aggregate of at least $100 million (an "IPO"), Parent may, upon termination of
the executive's employment for any reason (including death), repurchase all of
the shares of Purchased Stock and any shares of Parent Common Stock issued upon
exercise of the Options (together, "Restricted Stock") held by him for fair
market value as of a specified date. The executive or his legal representative
may, prior to such an initial public offering or offerings, require Parent to
repurchase all of his Restricted Stock at fair market value (in the case of
death or disability) or otherwise at the original price paid for the shares, if
his Employer terminates his employment for any reason. Immediately prior to
certain change in control transactions, any then unvested Options will vest. If
any successor to Parent or the executive's Employer acquires all or
substantially all of the business and/or assets of Parent or such Employer,
Parent may purchase all of the Restricted Stock held by the executive for its
fair market value, and any Options then held by him for the fair market value of
the underlying Parent Common Stock less the exercise price of the Options.
AMF HOLDINGS INC. 1996 STOCK INCENTIVE PLAN
In connection with the Acquisition, Parent adopted the AMF Holdings, Inc.
1996 Stock Incentive Plan (the "Stock Incentive Plan") under which Parent may
grant incentive awards in the form of shares of Parent Common Stock ("Restricted
Stock Awards"), options to purchase shares of Parent Common Stock ("Stock
Options") and stock appreciation rights ("Stock Appreciation Rights") to certain
officers, employees, consultants and non-employee directors ("Participants") of
Parent and its affiliates. The total number of shares of Parent Common Stock
initially reserved and available for grant under the Stock Incentive Plan is
1,767,151. A committee of Parent's board of directors (the "Committee") is
authorized to make grants and various other decisions under the Stock Incentive
Plan and to make determinations as to a number of the terms of awards granted
under the Stock Incentive Plan. Unless otherwise determined by the Committee,
any Participant granted an award under the Stock Incentive Plan must become a
party to, and agree to be bound by, the Stockholders Agreement (as defined
below).
Stock Option awards under the Stock Incentive Plan may include incentive
stock options, nonqualified stock options, or both types of Stock Options, in
each case with or without Stock Appreciation Rights. Stock Options are
nontransferable (except under certain limited circumstances) and, unless
otherwise determined by the Committee, have a term of ten years. Upon a
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<PAGE> 107
Participant's death or when the Participant's employment with Parent or the
applicable affiliate of Parent is terminated for any reason, such Participant's
previously unvested Stock Options are forfeited and the Participant or his legal
representative may, within three months (if termination of employment is for any
reason other than death) or one year (in the case of the Participant's death),
exercise any previously vested Stock Options. Stock Appreciation Rights may be
granted in conjunction with all or part of any Stock Option award, and are
exercisable, subject to certain limitations, only in connection with the
exercise of the related Stock Option. Upon the termination or exercise of the
related Stock Option, Stock Appreciation Rights terminate and are no longer be
exercisable. Stock Appreciation Rights are transferable only with the related
Stock Options.
Unless otherwise provided in the related award agreement or, if applicable,
the Stockholders Agreement, immediately prior to certain change of control
transactions described in the Stock Incentive Plan, all outstanding Stock
Options and Stock Appreciation Rights will, subject to certain limitations,
become fully exercisable and vested and any restrictions and deferral
limitations applicable to any Restricted Stock Awards will lapse.
The Stock Incentive Plan will terminate 10 years after its effective date;
however, awards outstanding as of such date will not be affected or impaired by
such termination. Parent's board of directors and the Committee have authority
to amend the Stock Incentive Plan and awards granted thereunder, subject to the
terms of the Stock Incentive Plan.
Pursuant to an Option Agreement dated May 1, 1996, Charles M. Diker, a
director of Parent, Holdings and the Company, pursuant to the Stock Incentive
Plan, was granted non-qualified Stock Options to purchase 100,000 shares of
Parent Common Stock at an exercise price of $10.00 per share. One third of such
options vested on May 1, 1996, and the remaining options vest over the following
two-year period. Mr. Diker's Option Agreement provides that, prior to the
consummation of an IPO, Parent may, upon termination of Mr. Diker's service as a
director of Parent for any reason (including death), repurchase of all of the
shares of Restricted Stock held by him for fair market value as of a specified
date. Mr. Diker or his legal representative may, prior to an IPO, require Parent
to repurchase all of his Restricted Stock at fair market value (in the case of
death or disability) or otherwise at the original price paid for the shares, if
Parent terminates his service as a director of Parent for any reason. If any
successor to Parent acquires all or substantially all of the business and/or
assets of Parent, Parent may purchase all of the Stock Options then held by Mr.
Diker for the fair market value of the underlying Parent Common Stock less the
exercise price of the Stock Options. Mr. Diker is a party to the Stockholders
Agreement and any Plan Shares held by Mr. Diker will be subject to the terms of
the Stockholders Agreement in addition to the terms of his Option Agreement.
OWNERSHIP OF CAPITAL STOCK
The following table sets forth certain information, as of May 31, 1996,
regarding beneficial ownership of the common stock ("Parent Common Stock") of
Holdings' parent company, AMF Holdings Inc., by each stockholder who is known by
the Company to own beneficially, more than 5% of the outstanding Parent Common
Stock, each director of the Company, each executive officer of the Company and
all directors and executive officers of the Company as a group. Except as set
forth in the footnotes to the table, each stockholder listed below has informed
the Company that such stockholder has (i) sole voting and investment power with
respect to such stockholder's shares of Parent Common Stock and (ii) record and
beneficial ownership with respect to such stockholder's shares of Parent Common
Stock.
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<PAGE> 108
<TABLE>
<CAPTION>
SHARES OF PARENT
COMMON STOCK
BENEFICIALLY OWNED
NAME AND ADDRESS OF -------------------------
BENEFICIAL OWNER NUMBER PERCENTAGE
----------------------------------------------------------- ---------- ----------
<S> <C> <C>
The Goldman Sachs Group, L.P.(a)........................... 26,870,000 68.7%
85 Broad Street,
New York, New York 10004
The Blackstone Group(b).................................... 5,000,000 13.1%
375 Park Avenue
New York, New York 10154
Kelso & Company(c)......................................... 5,000,000 13.1%
350 Park Avenue
New York, New York 10022
Richard A. Friedman(d)..................................... -- --
Terence M. O'Toole(e)...................................... -- --
Peter M. Sacerdote(f)...................................... -- --
Charles M. Diker........................................... 100,000 *
Paul B. Edgerley........................................... -- --
Howard A. Lipson........................................... -- --
Robert L. Morin............................................ 150,000 *
Douglas J. Stanard......................................... 150,000 *
Stephen E. Hare............................................
Michael P. Bardaro......................................... -- --
William W. Flexon.......................................... -- --
All directors and executive officers as a group (11
persons)................................................. 300,000 *
</TABLE>
- ---------------
(a) Of the total number of shares beneficially owned by The Goldman Sachs Group,
L.P. ("The Goldman Sachs Group"), 870,000 shares are owned by The Goldman
Sachs Group, 16,760,476.2 shares are owned by GS Capital Partners II, L.P.,
6,662,976.2 shares are owned by GS Capital Partners II Offshore, L.P.,
618,214.3 shares are owned by Goldman, Sachs & Co. Verwaltungs GmbH, as
nominee for GS Capital Partners II Germany, C.L.P., 392,102.5 shares are
owned by Stone Street Fund 1995, L.P., 670,372.7 shares are owned by Stone
Street Fund 1996, L.P., 441,230.8 shares are owned by Bridge Street Fund
1995, L.P. and 454,627.3 shares are owned by Bridge Street Fund 1996, L.P.
The 870,000 shares beneficially owned by The Goldman Sachs Group represent
870,000 warrants to purchase shares of Parent Common Stock, which were
issued upon the closing of the Acquisition. GS Capital Partners II, L.P., GS
Capital Partners II Offshore, L.P., GS Capital Partners II Germany, C.L.P.,
Stone Street Fund 1995, L.P., Bridge Street Fund 1995, L.P. and Bridge
Street Fund 1996, L.P. are investment partnerships that are managed by
Goldman Sachs, which has full dispositive power with respect to the holdings
of such partnerships. Affiliates of The Goldman Sachs Group are the general
or managing partners of such partnerships and have full voting power with
respect to the holdings of such partnerships.
(b) Of the total number of shares beneficially owned by The Blackstone Group,
3,593,528 shares are owned by Blackstone Capital Partners II Merchant
Banking Fund L.P., 1,050,133 shares are owned by Blackstone Offshore Capital
Partners II L.P. and 356,339 shares are owned by Blackstone Family
Investment Partnership L.P.
(c) Of the total number of shares beneficially owned by Kelso & Company,
4,700,000 shares are owned by Kelso Investment Associates V, L.P. and
300,000 are owned by Kelso Equity Partners V, L.P.
(d) Mr. Friedman, who is a general partner of Goldman Sachs, disclaims
beneficial ownership of the shares owned by The Goldman Sachs Group and its
affiliates.
(e) Mr. O'Toole, who is a general partner of Goldman Sachs, disclaims beneficial
ownership of the shares owned by The Goldman Sachs Group and its affiliates.
(f) Mr. Sacerdote, who is a limited partner of Goldman Sachs, disclaims
beneficial ownership of the shares owned by The Goldman Sachs Group and its
affiliates.
* Less than 1%
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<PAGE> 109
STOCKHOLDERS AGREEMENT
On April 30, 1996, Parent, GSCP, Blackstone Capital Partners II Merchant
Banking Fund L.P., Blackstone Offshore Capital Partners II L.P. and Blackstone
Family Investment Partnership L.P. (collectively, "Blackstone"), Kelso Equity
Partners V, L.P. and Kelso Investment Associates V, L.P. (collectively,
"Kelso"), Bain Capital Fund V, L.P., Bain Capital Fund V-B, L.P., BCIP
Associates and BCIP Trust Associates, L.P. (collectively, "Bain" and, with
Blackstone and Kelso, the "Governance Investors"), Citicorp North America, Inc.
("Citibank"), Charles M. Diker ("Diker" and, collectively with Blackstone,
Kelso, Bain and Citibank, the "Investors"), Robert L. Morin ("Morin") and
Douglas J. Stanard ("Stanard" and, with Morin, the "Management Investors," and,
with the Investors, the "Stockholders") entered into a Stockholders Agreement
(the "Stockholders Agreement"), which regulates the relationship among Parent
and the Stockholders.
The Stockholders Agreement confers on GSCP the right to increase or
decrease the board of directors (the "Board") from its initial size of nine
members. GSCP has the right to nominate five directors, and to nominate a
majority (not limited to a simple majority) of the members of the Board, so long
as GSCP and its Affiliates hold a majority of the outstanding shares of Parent
Common Stock. Each Governance Investor has the right to nominate, subject to
GSCP consent, one member of the Board, so long as the number of shares held by
it and certain of its permitted transferees under the Stockholders Agreement is
equal to at least one-half the sum of the number of shares initially purchased
by it plus the number of additional shares that the Governance Investor may be
required to purchase pursuant to the "overcall" provisions of the Stockholders
Agreement described below (in each case subject to appropriate adjustment). If a
Governance Investor is no longer entitled to nominate a director, the director
is required to resign or be subject to removal by the Stockholders. Each of GSCP
and the Governance Investors has the right to recommend removal, with or without
cause, of any director nominated by it, in which case such director must resign
immediately or be subject to removal by the Stockholders. In the event of death,
removal or resignation of a director nominated by a Governance Investor, so long
as the Governance Investor continues to have the right to nominate a director
for such position, the Governance Investor has the right to nominate (subject to
GSCP consent) a director to fill the vacancy created. A quorum may be
constituted by a majority of the number of directors then in office, but not
less than one-third of the whole Board, including at least one GSCP director.
Pursuant to the "overcall" provisions of the Stockholders Agreement, each
of GSCP and the Investors (other than Mr. Diker) has agreed to purchase
additional shares of Parent Common Stock having an aggregate purchase price of
up to 20% of the amount initially invested by such funding investor (i.e.,
collectively up to a total of $75,600,000) upon the request of the Board. Any
such additional investments are required to be made pro rata by the funding
investors. The commitment to purchase additional shares terminates on May 1,
1998. Funds raised through such additional investments may only be used to
finance acquisitions of businesses or assets, capital expenditures, investments
in partnerships or joint ventures or other investments in the business of Parent
and its subsidiaries, or any similar transactions or expenditures.
The Stockholders Agreement provides for the continual existence of an
Executive Committee, consisting of two directors designated by GSCP. The
Executive Committee may exercise all the powers and authority of the Board
(subject to any restrictions under Delaware law) except with respect to those
actions requiring a Special Vote and, in the case of matters requiring a prior
meeting of the Board, only after such meeting has occurred. A Special Vote is
required for (i) the issuance of capital stock below fair market value, (ii) the
grant or issuance of options or warrants exercisable or exchangeable for more
than 2,877,151 shares, (iii) entering into transactions with Affiliates of GSCP,
and (iv) amendments to the Stockholders Agreement or Parent's Charter or By-Laws
which amendments would adversely affect the rights and obligations of Blackstone
and Kelso, provided that any amendment affecting a Stockholder differently from
any other Stockholder requires such Stockholder's approval. Matters requiring a
Special Vote must be approved by a majority of the GSCP directors who are
partners or employees of Goldman Sachs and who are not
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employees of Parent and its subsidiaries, and at least one Investor Director
nominated by Blackstone or Kelso (if there is one serving at such time).
Under the Stockholders Agreement, Goldman Sachs has the exclusive right to
perform all consulting, financing, investment banking and similar services for
Parent and its subsidiaries, for customary compensation and on terms customary
for similar engagements with unaffiliated third parties. Neither Parent nor its
subsidiaries are allowed to engage any person to perform such services during
the term of the Stockholders Agreement, except to the extent Goldman Sachs shall
consent thereto or shall decline, at its sole election, to perform such
services.
Certain provisions in the Stockholders Agreement relate to the possibility
that the Parent Common Stock may be the subject of an underwritten initial
public offering, pursuant to a registration statement under the Securities Act,
with aggregate gross proceeds to Parent of at least $100 million (an "IPO"). The
rights of the Stockholders under the Stockholders Agreement will terminate upon
the consummation of an IPO, other than certain rights relating to transfer,
registration rights and certain governance provisions. The remaining rights and
obligations (other than registration rights) will terminate after an IPO, upon
the first to occur of: (i) GSCP, the Investors and their Permitted Transferees
holding in the aggregate less than 50% of the sum of the number of shares of
Parent Common Stock outstanding, on a fully diluted basis, immediately after
giving effect to the transactions contemplated by the Subscription Agreement
(which agreement was entered into on the same date and by the same parties as
the Stockholders Agreement, except for the Management Investors) and the number
of additional shares, if any, issued pursuant to the overcall provisions of the
Stockholders Agreement, and (ii) GSCP, the Investors and their Permitted
Transferees holding in the aggregate less than 40% of Parent's fully diluted
shares then outstanding. Notwithstanding these provisions, in the event of any
merger, recapitalization, consolidation, reorganization or other restructuring
of the Parent as a result of which the Stockholders and their Permitted
Transferees own less than a majority of the outstanding voting power of the
entity surviving such transaction, the Stockholders Agreement terminates.
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CERTAIN TRANSACTIONS
Goldman Sachs and its affiliates have certain interests in the Company in
addition to being the Initial Purchaser of the Notes. Richard A. Friedman and
Terence M. O'Toole, each of whom is a general partner of Goldman Sachs, and
Peter M. Sacerdote, who is a limited partner of Goldman Sachs, are directors of
the Company. Goldman Sachs and its affiliates together currently beneficially
own a majority of the outstanding voting equity of Holdings' parent company;
thus Goldman Sachs will be deemed to be an "affiliate" of the Company. See
"Ownership of Capital Stock." Goldman Sachs received an underwriting discount of
approximately $19.0 million in connection with its purchase and resale of the
Notes. Goldman Sachs also served as financial advisor to the sellers of AMF in
connection with the Acquisition and received a fee in the form of 10-year
warrants to purchase 2.2% of the common stock of Holdings' parent company, on a
fully diluted basis. The warrants are valued for accounting purposes at
approximately $8.7 million. In addition, Goldman Sachs is entitled to the
reimbursement of its expenses.
In connection with the senior debt, Goldman Sachs acted as Syndication
Agent, Goldman Sachs and Citicorp Securities, Inc. acted as Arrangers, and
Citibank, N.A. is acting as administrative agent. Goldman Sachs received a fee
of approximately $9.5 million and was reimbursed for expenses in connection with
such services. Goldman Sachs also received a cash fee of $5.0 million from the
Company in connection with the Acquisition.
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DESCRIPTION OF SENIOR DEBT
The Company has entered into a Credit Agreement (the "Credit Agreement")
with Goldman Sachs, its affiliate Pearl Street, L.P. ("Pearl Street"), Citibank,
N.A. ("Citibank") and its affiliates Citicorp Securities, Inc. and Citicorp USA,
Inc. and certain other banks, financial institutions and institutional lenders
(collectively, the "Lenders") providing for (i) syndicated senior secured term
loan facilities aggregating $515.0 million (the "Term Facilities"), (ii) a
senior secured multiple-draw term facility of $100.0 million, and, upon the
Company's achieving a Pro Forma Senior Debt/EBITDA ratio of less than or equal
to 2.5 to 1, up to an additional $50.0 million (the "Acquisition Facility") and
(iii) a senior secured revolving credit facility of up to $50.0 million (the
"Working Capital Facility", and together with the Term Facilities and the
Acquisition Facility, the "Senior Facilities"). In connection with such
financing, Goldman Sachs acted as Syndication Agent, Goldman Sachs and Citicorp
Securities, Inc. acted as Arrangers, and Citibank, N.A. is acting as
administrative agent.
The execution of the Credit Agreement, the borrowings necessary to complete
the Acquisition and the delivery of required documentation thereunder occurred
simultaneously with the closing of the Acquisition.
The following summary of the material provisions of the Credit Agreement
does not purport to be complete, and is qualified by reference to the full text
of the Credit Agreement, which has been filed as an exhibit to the Registration
Statement of which this Prospectus is a part.
The Term Facilities consist of the following three tranches: (i) a Term
Loan Facility of $250.0 million, (ii) an AXELs(SM) Series A Facility of $190.0
million and (iii) an AXELs(SM) Series B Facility of $75.0 million. The Term
Facilities provide for quarterly amortization until final maturity. The Term
Loan Facility will mature five years, the AXELs(SM) Series A Facility will
mature seven years, and the AXELs(SM) Series B Facility will mature eight years
after the closing of the Senior Facilities. The Company will be required to make
scheduled amortization payments on the Term Facilities as follows (dollars in
millions):
<TABLE>
<CAPTION>
TERM AXELS(SM) AXELS(SM)
TWELVE MONTHS LOAN SERIES A SERIES B
ENDING MARCH 31, FACILITY FACILITY FACILITY TOTAL
- ------------------ -------- -------- -------- ------
<S> <C> <C> <C> <C>
1997 $ 35.0 $ 2.0 $ 1.2 $ 38.2
1998 40.0 2.0 1.2 43.2
1999 45.0 2.0 1.2 48.2
2000 55.0 2.0 1.2 58.2
2001 75.0 2.0 1.2 78.2
2002 -- 80.0 1.2 81.2
2003 -- 100.0 1.2 101.2
2004 -- -- 66.6 66.6
------ ------ ----- ------
$ 250.0 $190.0 $ 75.0 $515.0
====== ====== ===== ======
</TABLE>
In addition, the Company will be required to make prepayments on the Senior
Facilities under certain circumstances, including upon certain asset sales,
issuances of debt and public issuance of equity securities. The Company will
also be required to make prepayments on the Senior Facilities in an amount equal
to (i) 75% (to be reduced to 50% for years in which the Company's Total
Debt/EBITDA ratio for the prior 12 months is less than 4.0 to 1.0) of the
Company's Excess Cash Flow (as defined in the Credit Agreement) or (ii) during
each of the first three years after the closing of the Senior Facilities, if
less than the amount described in clause (i), the amount by which the Company's
Excess Cash Flow for such year exceeds $10.0 million (during the first two years
after closing) or $20.0 million (during the third year after closing). These
mandatory prepayments will be applied to prepay the Senior Facilities in the
following order: first, to the Term Facilities, ratably among each tranche, and
the Acquisition Facility, to be applied to the installments of each such
Facility on a pro rata basis, and second, to the permanent reduction of the
Working Capital
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Facility. Notwithstanding the foregoing, in the event that prepayments of the
AXELs(SM) Series A Facility and the AXELs(SM) Series B Facility on or prior to
the second anniversary of the closing have reached an aggregate amount of $25
million, the Lenders in such Facilities can refuse to accept additional
prepayments during such period, in which case the amounts so refused instead
shall be allocated first to the Acquisition Facility and the Term Loan Facility
on a pro rata basis, and second, to the permanent reduction of the Working
Capital Facility. The Term Loan Facility will bear interest, at the Company's
option, at Citibank's customary base rate plus 1.5% or at Citibank's Eurodollar
rate plus 2.5%. The AXELs(SM) Series A Facility will bear interest, at the
Company's option, at Citibank's customary base rate plus 1.875% or at Citibank's
Eurodollar rate plus 2.875%. The AXELs(SM) Series B Facility will bear interest,
at the Company's option, at Citibank's customary base rate plus 2.125% or at
Citibank's Eurodollar rate plus 3.125%. As shown in Note (f) to the Pro Forma
Consolidated Statements of Income, interest expense for the year ended December
31, 1995, on a pro forma basis, on the $515.0 million of Senior Debt would have
been $39.6 million.
The Company has the ability to borrow an additional $50.0 million for
general corporate purposes pursuant to the Working Capital Facility and an
additional $100.0 million, and, upon reaching a Pro Forma Senior Debt/EBITDA
ratio of less than or equal to 2.5 to 1, up to an additional $50.0 million, to
finance acquisitions and to refinance new center construction pursuant to the
Acquisition Facility, subject to the Company meeting certain pro forma financial
covenants and limitations imposed on the amount borrowed, including that the
amount borrowed under the Acquisition Facility shall not exceed 3.5 times the
deemed EBITDA of the business to be acquired or the newly constructed center.
The Acquisition Facility has a term of five years. The Acquisition Facility
will begin to amortize in November 1999, such that at April 30, 2000, the
outstanding principal will be reduced to $75.0 million, with final maturity at
April 30, 2001. The Acquisition Facility will bear interest until April 30,
1997, at the Company's option, at Citibank's customary base rate plus 1.5% or at
Citibank's Eurodollar rate plus 2.5%.
The Working Capital Facility has a term of five years and will be fully
revolving until final maturity. The Working Capital Facility will bear interest
until April 30, 1997, at the Company's option, at Citibank's customary base rate
plus 1.5% or at Citibank's Eurodollar rate plus 2.5%. Beginning May 1, 1997 the
margins above Citibank's customary base rate and Citibank's Eurodollar rate, at
which the Term Loan Facility, the Working Capital Facility and the Acquisition
Facility will bear interest, may be reduced pursuant to a floating performance
pricing grid which is based on the Total Debt/EBITDA ratio for the four fiscal
quarter rolling period then most recently ended.
The Senior Facilities are guaranteed by Holdings and by each of the
Company's present and future domestic Subsidiaries and are secured by all of the
stock of the Company and the Company's present and future domestic Subsidiaries
and Second-Tier Subsidiaries, and by 66% of the stock of the Company's present
and future international subsidiaries, and by substantially all of the Company's
and its present and future domestic Subsidiaries' present and future property
and assets. Any additional present or future subsidiaries of the Company that
become guarantors under the Senior Facilities will also jointly and severally
guarantee the Company's payment obligations on the Notes on a senior
subordinated basis.
COVENANTS
The Senior Facilities contain certain financial covenants, as well as
additional affirmative and negative covenants, constraining the Company. The
Company must maintain a minimum EBITDA (as defined in the Credit Agreement) of
not less than the sum of (i) an amount ranging from $140 million for the Rolling
Period (each a calendar quarter together with the three consecutive immediately
preceding calendar quarters) ending September 30, 1996, to $200 million for the
Rolling Period ending September 30, 2003 and thereafter, and (ii) the EBITDA
Adjustment Amount for such Rolling Period, which is equal to 80% of the
aggregate amount of the EBITDA of each
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bowling center acquired or constructed by the Company or any of its Subsidiaries
after May 1, 1996 and acquired or constructed at least 15 months prior to such
time of determination.
The Company must also maintain a Cash Interest Coverage Ratio (defined in
the Credit Agreement as the ratio of (a) consolidated EBITDA of the Company and
its Subsidiaries during a Rolling Period, as modified with respect to certain
bowling centers acquired or constructed after May 1, 1996 ("Modified
Consolidated EBITDA") to (b) cash interest payable on all Debt (as defined in
the Credit Agreement) of the Company and its Subsidiaries) at an amount ranging
from not less than 2.00 for the Rolling Period ending September 30, 1996, to not
less than 2.50 for the Rolling Period ending September 30, 2004 and thereafter.
The Company is required to maintain a Fixed Charge Coverage Ratio (defined in
the Credit Agreement as the ratio of (a) Modified Consolidated EBITDA less the
sum of (i) cash taxes paid plus (ii) Capital Expenditures made by the Company
and its Subsidiaries during such Rolling Period to (b) the sum of (i) cash
interest payable on all Debt plus (ii) principal amounts of all Debt payable by
the Company and its Subsidiaries during such Rolling Period) at an amount
ranging from not less than 1.05 for the Rolling Period ending September 30,
1996, to not less than 1.10 for the Rolling Period ending March 31, 2004 and
thereafter. A Senior Debt to EBITDA Ratio (defined in the Credit Agreement as
the ratio of Consolidated Debt (other than Subordinated Debt and Hedge
Agreements, as defined in the Credit Agreement) of the Company and its
Subsidiaries to Modified Consolidated EBITDA for that Rolling Period) must be
maintained at levels ranging from not less than 3.5 for the Rolling Period
ending September 30, 1996 to not less than 1.50 for the Rolling Period ending
September 30, 2003 and thereafter. A Total Debt to EBITDA Ratio (defined in the
Credit Agreement as the ratio of consolidated total Debt (other than Hedge
Agreements) of the Company and its Subsidiaries to Modified Consolidated EBITDA)
must be maintained at levels ranging from not less than 6.95 for the Rolling
Period ended September 30, 1996 to not less than 4.00 for the Rolling Period
ended September 30, 2003 and thereafter. In each case, the above-mentioned
ratios are calculated on a quarterly basis.
Affirmative covenants under the Senior Facilities oblige the Company and
its Subsidiaries to comply with all laws and regulations, as well as to pay all
taxes not being contested in good faith, to comply with environmental laws and
permits, to maintain insurance coverage, preserve its corporate existence,
permit the examination of its records and books of account by the agents or any
of the Lenders, to prepare environmental reports upon the reasonable request of
the administrative agent (in the case of a Default under the Credit Agreement or
based on the belief that hazardous materials contamination not otherwise
disclosed may be present on any property described in the mortgages), to keep
proper books of record and account, to maintain its properties in good working
condition, to comply with the terms of leaseholds and to perform and observe all
terms and provisions of each Related Document (defined as the purchase
agreement, the subordinated debt documents, the tax agreement, the stockholders
agreement and the support agreement). The Company is also required to conduct,
and cause each of its Subsidiaries to conduct, all transactions permitted under
the loan documents with any affiliates on fair and reasonable terms, to maintain
cash concentration accounts with Citibank, N.A. into which substantially all
proceeds of collateral are to be paid, and to guarantee obligations and give
security (upon the request of Citicorp USA, Inc. (together with any successor
appointed pursuant to the Credit Agreement, the "Collateral Agent"), at such
time as any new direct or indirect Subsidiary of the Company is formed or
acquired by the Company and the Guarantors (each, a "Loan Party"), or when any
property is acquired by any Loan Party). The Company must enter into prior to
June 30, 1996, and maintain after November 15, 1996 until the aggregate
outstanding amount under the Term Facilities is less than $400 million, interest
rate hedge agreements, covering a notional amount of not less than 50% of the
commitments under all the facilities and the other floating rate debt of the
Loan Parties. The Company must also complete the process of granting collateral
to the Collateral Agent within 60 days (or such later date as may be agreed to
by the Company and the Collateral Agent) after May 1, 1996.
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Negative covenants under the Senior Facilities prohibit the Company and its
Subsidiaries from incurring any liens (except for those created under the loan
documents or otherwise permitted under the Credit Agreement, including those
securing the Company's obligations as borrower not to exceed $5 million at any
time outstanding). The Company and its Subsidiaries are also prohibited from
incurring any debt, other than (in the case of the Company) debt owed to its
Subsidiaries or in respect of hedge agreements not entered into for speculative
purposes or (in the case of any Subsidiary) debt owed to the Company or any of
its wholly owned Subsidiaries, to the extent permitted under the Credit
Agreement or (in the case of either the Company or its Subsidiaries) debt
secured by permitted liens, capitalized leases not to exceed $10 million at any
time outstanding, any surviving debt and subordinated debt under the Notes,
among other things. The Company and its Subsidiaries may not incur any
obligations under leases having a term of one year or more that would cause
their direct and contingent liabilities for any 12 months to exceed (i) $25
million, (ii) the product of (x) $200,000 and (y) the number of leased bowling
centers acquired by the Company or any Subsidiaries after May 1, 1996 and (iii)
in each calendar year after 1996, an amount equal to 4% of the amount permitted
by this provision in the immediately preceding calendar year. The Company is
also prohibited from entering into a merger of which it is not the survivor or
to sell, lease, or otherwise transfer its asset other than in the ordinary
course of business, except as otherwise permitted by the Credit Agreement.
Investments by the Company or its Subsidiaries in any other Person is also
limited by formulas set forth in the Credit Agreement. The negative covenants
also related to the payment of dividends, prepayments of, and amendments of the
terms of, other debt (including the Notes and the Exchange Notes), amendment of
Related Documents, ownership change, negative pledges, partnerships, speculative
transactions, capital expenditures and payment restrictions affecting
subsidiaries. The Company is also subject to certain financial and other
reporting requirements.
EVENTS OF DEFAULT
The Senior Facilities contain customary Events of Default for
highly-leveraged financings. These include: the failure of the Company to pay
the principal of, interest on, or other amounts payable in connection with, any
advance under the Senior Facilities when they become due (in the case of
principal) or within three days after they become due; the incorrectness in any
material respect of any representation or warranty of a Loan Party under or in
connection with any loan document; the failure of any Loan Party to perform or
observe any term, covenant or agreement with regard to the use of proceeds
covenant, certain affirmative covenants, any negative covenants, the obligation
of the Company to give notice to the administrative agent and the lenders of any
default or any event likely to have a materially adverse effect and any
financial covenants under the Credit Agreement; the failure of any Loan Party to
perform any other term, covenant or agreement in any loan document, if such
failure remains unremedied for 15 days after knowledge by an officer of any Loan
Party or its Subsidiaries or notice by the administrative agent or any Lender;
the failure by any Loan Party or any material subsidiary to pay any principal
of, premium or interest on or any other amount payable in respect of any debt
outstanding in a principal amount of at least $25 million or any other event
shall occur that would permit the acceleration of any such debt or such debt is
accelerated; the failure of any Loan Party or any material subsidiaries to
generally pay debts as they become due, or their seeking of liquidation,
reorganization, relief or composition of it or its debts under any law relating
to bankruptcy, insolvency or reorganization, or such a proceeding instituted
against it remains undismissed and unstayed for a period of 30 days; the
rendering of any judgment or order for the payment of money in excess of $25
million against any Loan Party or any material subsidiary and either any
enforcement proceedings shall have commenced or 15 days shall have passed during
which no stay shall be in place; the rendering of any non-monetary judgment or
order against any Loan Party or any of material subsidiary that could reasonably
be likely to have a material adverse effect, and there is a period of 15 days
during which no stay of such judgment or order is in effect; any provision of
any loan document after delivery for any reason ceases to be valid and binding
on or enforceable against any Loan Party which is a party to it; any provision
relating to
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the subordination of the debt under the Notes and any other debt of any Loan
Party or any material subsidiary that is subordinated to the obligations of such
Loan Party to the Lenders or the agents for any reason ceases to be valid and
binding on or enforceable against any Loan Party which is a party to it; any
collateral document (excluding mortgages covering collateral which, in the
aggregate, is immaterial) after delivery ceases to create a valid and perfected
first priority lien on and security interest in the collateral purported to be
protected thereby; AMF Holdings Inc. ceases to own and control legally and
beneficially all of the outstanding shares of capital stock of AMF Group
Holdings Inc.; AMF Group Holdings Inc. ceases to own and control legally and
beneficially all of the outstanding shares of capital stock of the Company; a
change of control (as defined in the Credit Agreement) occurs; an ERISA event
occurs with respect to a single or multiple employer plan, and the sum of
insufficiency as to such Plan, aggregated with the insufficiency of any other
plans as to which an ERISA event occurred, exceeds $25 million; any Loan Party
or any ERISA affiliate is notified by the sponsor of a multiemployer plan that
it has incurred withdrawal liability with respect to such plan, which,
aggregated with other amounts required to be paid to multiemployer plans by the
Loan Parties and ERISA affiliates, exceeds $25 million (or requires payments
exceeding $7.5 million per annum); or any Loan Party or ERISA affiliate is
notified by the sponsor of a multiemployer plan that such plan is in
reorganization or being terminated, within the meaning of Title IV of ERISA,
resulting in an increase of aggregate annual contributions in specified amounts.
Upon the occurrence of an Event of Default, the administrative agent may declare
the commitment of the Lenders terminated and may declare the Notes and all
interest thereon and all other amounts payable under the Credit Agreement and
the other loan documents due, and may also take certain actions in respect of
any outstanding letters of credit.
Other Senior Debt
A mortgage having a principal amount of approximately $2.0 million as of
March 31, 1996, secured by a bowling center in Independence, Missouri, remains
outstanding as an obligation of AMF. The original obligation was for
approximately $1.7 million, with interest at a rate of 8.81% through October 1,
2013.
AMF is obligated to make future payments under a noncompetition agreement
that provides that such obligation will be secured by AMF's bowling center in
Hickory, North Carolina. The amount remaining to be paid as of January 1, 1996
was $0.4 million, and the final payment is due in 1999. This obligation is
reflected in other liabilities on the balance sheet of AMF Bowling Group.
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DESCRIPTION OF EXCHANGE NOTES
GENERAL
The Exchange Senior Subordinated Notes will be issued by the Company
pursuant to the same Indenture (the "Senior Subordinated Note Indenture") among
the Company, the Guarantors and IBJ Schroder Bank & Trust Company, as trustee
(the "Senior Subordinated Note Trustee"), under which the Senior Subordinated
Notes were issued. The Exchange Senior Subordinated Discount Notes will be
issued by the Company pursuant to an Indenture (the "Senior Subordinated
Discount Note Indenture" and, together with the Senior Subordinated Note
Indenture, the "Indentures") among the Company, the Guarantors and American Bank
National Association, as trustee (the "Senior Subordinated Discount Note
Trustee" and, together with the Senior Subordinated Note Trustee, the
"Trustees"), under which the Senior Subordinated Discount Notes were issued. The
terms of the Exchange Notes include those stated in the Indentures and those
made part of the Indentures by reference to the Trust Indenture Act of 1939 (the
"Trust Indenture Act"). The Exchange Notes are subject to all such terms, and
Holders of Exchange Notes are referred to the Indentures and the Trust Indenture
Act for a statement thereof. The following summary of certain provisions of the
Indentures and the Registration Rights Agreement does not purport to be complete
and is qualified in its entirety by reference to the full text of such
documents, which have been filed as exhibits to the Registration Statement of
which this Prospectus is a part. The definitions of certain terms used in the
following summary are set forth below under the caption "-- Certain
Definitions."
As of May 31, 1996, all of the Company's Subsidiaries were Restricted
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 Indentures.
SUBORDINATION
The payment of principal of, premium, if any, and interest, including
Liquidated Damages, if any, on the Exchange Notes will be subordinated in right
of payment, in certain circumstances as set forth in the Indentures, to the
prior payment in full of all Senior Debt, whether outstanding on the date of the
Indentures or thereafter incurred.
The Indentures provide that, upon any distribution to creditors of the
Company in a liquidation or dissolution of the Company or in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to the
Company or its property, an assignment for the benefit of creditors or any
marshalling of the Company's assets and liabilities, the holders of Senior Debt
will be entitled to receive payment in full of all Obligations due in respect of
such Senior Debt (including interest after the commencement of any such
proceeding at the rate specified in the documents relating to the applicable
Senior Debt, whether or not the claim for such interest is allowed as a claim in
such proceeding) before the Holders of Exchange Notes will be entitled to
receive any payment with respect to the Exchange Notes, and until all
Obligations with respect to Senior Debt are paid in full, any distribution to
which the Holders of Exchange Notes would be entitled will be made to the
holders of Senior Debt (except that Holders of Exchange Notes may receive
payments made from the trust described under "-- Legal Defeasance and Covenant
Defeasance").
The Indentures also provide that the Company may not make any payment upon
or in respect of the Exchange Notes (except from the trust described under "--
Legal Defeasance and Covenant Defeasance") if (i) a default in the payment of
the principal of, premium, if any, or interest on Designated Senior Debt occurs
and is continuing, or any judicial proceeding is pending to determine whether
any such default has occurred, or (ii) any other default occurs and is
continuing with respect to Designated Senior Debt that permits, or would permit,
with the passage of time or the giving of notice or both, holders of the
Designated Senior Debt as to which such default relates to
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accelerate its maturity and the relevant Trustee receives a notice of such
default (a "Payment Blockage Notice") from the Company or the holders of any
Designated Senior Debt. Payments on the Exchange Notes may and shall be resumed
(a) in the case of a payment default, upon the date on which such default is
cured or waived or shall have ceased to exist, unless another default, event of
default or other event that would prohibit such payment shall have occurred and
be continuing, or all Obligations in respect of such Designated Senior Debt
shall have been discharged or paid in full and (b) in 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 by the relevant Trustee. No new period of payment blockage
may be commenced unless and until 360 days have elapsed since the first day of
effectiveness of the immediately prior Payment Blockage Notice. No nonpayment
default that existed or was continuing on the date of delivery of any Payment
Blockage Notice to the relevant Trustee shall be, or be made, the basis for a
subsequent Payment Blockage Notice unless such default shall have been
subsequently cured or waived for a period of not less than 180 days.
The Indentures further require that the Company promptly notify holders of
Senior Debt if payment of the Exchange 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, Holders of Exchange Notes may recover less
ratably than creditors of the Company who are holders of Senior Debt. See "Risk
Factors." On a pro forma basis, after giving effect to the Acquisition and the
related financing transactions, the principal amount of Senior Debt outstanding
at December 31, 1995 would have been approximately $517.0 million. The
Indentures limit, subject to certain financial tests, the amount of additional
Indebtedness, including Senior Debt, that the Company and its Restricted
Subsidiaries can incur. See "--Certain Covenants -- Incurrence of Indebtedness
and Issuance of Disqualified Stock."
"Designated Senior Debt" means (i) so long as the Senior Bank Debt is
outstanding, the Senior Bank Debt, (ii) the Senior Bank Hedging Obligations and
(iii) any other Senior Debt permitted under the Indentures the principal amount
of which is $25.0 million or more and that has been designated by the Company as
"Designated Senior Debt."
"Senior Bank Debt" means all Obligations in respect of the Indebtedness
outstanding under the New Bank Credit Agreement, together with any refunding,
refinancing or replacement (in whole or part) of such Indebtedness.
"Senior Bank Hedging Obligations" means all present and future Hedging
Obligations of the Company, whether existing now or in the future, that are
secured by the New Bank Credit Agreement or any of the collateral documents
executed from time to time in connection therewith.
"Senior Debt" means (i) the Senior Bank Debt, (ii) the Senior Bank Hedging
Obligations and (iii) any other Indebtedness permitted to be incurred by the
Company under the terms of the Indentures, unless the instrument under which
such Indebtedness is incurred expressly provides that it is on a parity with or
subordinated in right of payment to the Exchange Notes. Notwithstanding anything
to the contrary in the foregoing, Senior Debt does not include (1) any liability
for federal, state, local or other taxes owed or owing by the Company, (2) any
Indebtedness of the Company to any of its Restricted Subsidiaries or other
Affiliates (other than Goldman, Sachs & Co. and its Affiliates, including Pearl
Street L.P.), (3) any trade payables, (4) that portion of any Indebtedness that
is incurred in violation of the Indentures, (5) Indebtedness which, when
incurred and without respect to any election under Section 1111(b) of Title 11,
United States Code, is without recourse to the Company, (6) any Indebtedness,
Guarantee or obligation of the Company which is contractually subordinate in
right of payment to any other Indebtedness, Guarantee or obligation of the
Company; provided, however, that this clause (6) does not apply to the
subordination of liens or security interests covering particular properties or
types of assets securing Senior Debt, (7) Indebtedness evidenced by the Notes or
the Exchange Notes and (8) Capital Stock.
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The Exchange Notes will rank pari passu or senior in right of payment to
all Subordinated Indebtedness of the Company. The Exchange Senior Subordinated
Notes and the Exchange Senior Subordinated Discount Notes will rank pari passu
with each other. On the date this Prospectus, the only Subordinated Indebtedness
of the Company outstanding is the Notes.
SENIOR SUBORDINATED GUARANTEES
The Company's payment obligations under the Exchange Notes will be jointly
and severally guaranteed on a senior subordinated basis (the "Senior
Subordinated Guarantees") by Holdings and each of the Company's direct and
indirect domestic subsidiaries. The obligations of each Guarantor under its
Senior Subordinated Guarantee will be subordinated to its Guarantee of all
Obligations under the New Bank Credit Agreement (the "Senior Guarantees") and
will be limited so as not to constitute a fraudulent conveyance under applicable
law. See, however, "Risk Factors -- Fraudulent Conveyance."
The Indentures provide that no Guarantor may consolidate with or merge with
or into (whether or not such Guarantor is the surviving Person) another
corporation, Person or entity whether or not affiliated with such 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
Guarantor) assumes all the obligations of such Guarantor pursuant to a
supplemental indenture in form and substance reasonably satisfactory to the
Trustees, under the Notes and the Indentures; (ii) immediately after giving
effect to such transaction, no Default or Event of Default exists; and (iii)
except in the case of a merger of such Guarantor with or into the Company or
another Guarantor, the Company would be permitted by virtue of the Company's pro
forma Fixed Charge Coverage Ratio to incur, immediately after giving effect to
such transaction, at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in the covenant described below under
the caption "-- Incurrence of Indebtedness and Issuance of Disqualified Stock."
The Indentures provide that in the event of a sale or other disposition of
all or substantially all of the assets of any Guarantor (other than Holdings),
by way of merger, consolidation or otherwise, or a sale or other disposition
(including, without limitation, by foreclosure) of all of the Capital Stock of
any Guarantor (other than Holdings), then such Guarantor (in the event of a sale
or other disposition, by way of such a merger, consolidation or otherwise
(including, without limitation, by foreclosure), 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 or substantially all of the assets of such
Guarantor) will be automatically released and relieved of any obligations under
its Senior Subordinated Guarantee; provided that the Net Proceeds of such sale
or other disposition are applied in accordance with the applicable provisions of
the Indentures. See "-- Repurchase at the Option of Holders -- Asset Sales." The
Indentures also provide that upon the merger, consolidation, sale or other
disposition (including, without limitation, by foreclosure) of all or
substantially all of the assets of the Company, then Holdings will be
automatically released and relieved of any obligations under its Senior
Subordinated Guarantee; provided that such merger, consolidation or sale
complies with the applicable provisions of the Indentures. See "-- Certain
Covenants -- Merger, Consolidation, or Sale of All or Substantially All Assets."
Certain of the operations of the Company are conducted through Subsidiaries
that are not Guarantors and the Company is dependent upon the cash flow of those
Subsidiaries to meet its obligations, including its obligations under the
Exchange Notes. The Exchange Notes will be effectively subordinated to all
indebtedness and other liabilities (including trade payables and capital lease
obligations) of the Company's Subsidiaries that are not Guarantors. Such
indebtedness and liabilities aggregated approximately $7.8 million (excluding
inter-company payables to the Company) at March 31, 1996. Any right of the
Company to receive assets of any of such Subsidiaries upon the latter's
liquidation or reorganization (and the consequent right of the Holders of the
Exchange Notes to participate in those assets) will be effectively subordinated
to the claims of such
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Subsidiary's creditors, except to the extent that the Company or a Guarantor is
itself recognized as a creditor of such Subsidiary, in which case the claims of
the Company would still be subordinate to any security in the assets of such
Subsidiary and any indebtedness of such Subsidiary senior to that held by the
Company or a Guarantor. See "Risk Factors -- Holding Company Structure" and Note
5 to the Consolidated Balance Sheet of AMF Group Holdings Inc.
PRINCIPAL, MATURITY AND INTEREST OF THE EXCHANGE SENIOR SUBORDINATED NOTES
The Exchange Senior Subordinated Notes are general unsecured obligations of
the Company, limited in aggregate principal amount, together with any
outstanding Senior Subordinated Notes, to $250.0 million and will mature on
March 15, 2006. Interest on the Exchange Senior Subordinated Notes will accrue
at the rate of 10 7/8% per annum and will be payable in cash semi-annually in
arrears on March 15 and September 15, commencing on September 15, 1996, to
Holders of record on the immediately preceding March 1 and September 1. Interest
on the Exchange Senior Subordinated Notes will accrue from the most recent date
to which interest has been paid or, if no interest has been paid, from March 21,
1996, the date of original issuance of the Notes. Interest will be computed on
the basis of a 360-day year consisting of twelve 30-day months. Principal,
premium, if any, and interest, including Liquidated Damages, if any, on the
Exchange Senior Subordinated 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, including Liquidated
Damages, if any, may be made by check mailed to the Holders of the Exchange
Senior Subordinated Notes at their respective addresses set forth in the
register of Holders of Exchange Senior Subordinated Notes; provided, however,
that all payments with respect to Global Notes and definitive Notes the Holders
of which have given wire transfer instructions to the Company at least 10
Business Days prior to the applicable payment date 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 Senior Subordinated Note Trustee
maintained for such purpose. The Exchange Senior Subordinated Notes will be
issued in minimum denominations of $1,000 and integral multiples thereof.
PRINCIPAL, MATURITY AND INTEREST OF THE EXCHANGE SENIOR SUBORDINATED DISCOUNT
NOTES
The Exchange Senior Subordinated Discount Notes will be general unsecured
obligations of the Company, limited in aggregate principal amount at maturity,
together with any outstanding Senior Subordinated Discount Notes, to $452.0
million and will mature on March 15, 2006. Until March 15, 2001 (the "Full
Accretion Date"), no interest (other than Liquidated Damages, if applicable)
will be paid in cash on the Exchange Senior Subordinated Discount Notes, but the
Accreted Value will accrete (representing the amortization of original issue
discount) between the Issuance Date and the Full Accretion Date, on a
semi-annual bond equivalent basis using a 360-day year comprised of twelve
30-day months such that the Accreted Value shall be equal to the full principal
amount at maturity of the Exchange Senior Subordinated Discount Notes on the
Full Accretion Date. Beginning on the Full Accretion Date, interest on the
Exchange Senior Subordinated Discount Notes will accrue at the rate of 12 1/4%
per annum and will be payable in cash semi-annually in arrears on March 15 and
September 15, commencing on September 15, 2001, to Holders of record on the
immediately preceding March 1 and September 1. Interest on the Exchange Senior
Subordinated Discount Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the Full Accretion
Date. Interest will be computed on the basis of a 360-day year consisting of
twelve 30-day months. Principal, premium, if any, and interest, including
Liquidated Damages, if any, on the Exchange Senior Subordinated Discount 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, including Liquidated Damages, if any, may be made by check
mailed to the Holders of the Exchange Senior Subordinated Discount Notes at
their respective addresses set forth in the register of Holders of Senior
Subordinated Discount Notes; provided, however, that all payments with respect
to Global Notes and definitive Notes the Holders of which have given wire
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transfer instructions to the Company at least 10 Business Days prior to the
applicable payment date 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 Exchange Senior Subordinated Discount Note
Trustee maintained for such purpose. The Exchange Senior Subordinated Discount
Notes will be issued in minimum denominations of $1,000 and integral multiples
thereof.
SETTLEMENT AND PAYMENT
Payments by the Company in respect of the Exchange Notes (including
principal, premium, if any, interest and Liquidated Damages, if any) will be
made in immediately available funds as provided above. The Exchange Notes are
expected to trade in the Depository's Same-Day Funds Settlement System, and any
secondary market trading activity in the Exchange Notes will, therefore, be
required by the Depository to be settled in immediately available funds. No
assurance can be given as to the effect, if any, of such settlement arrangements
on trading activity in the Exchange Notes.
Because of time-zone differences, the securities account of Euroclear or
Cedel Bank participants (each, a "Member Organization") purchasing an interest
in a Global Note from a Participant (as defined herein) that is not a Member
Organization will be credited during the securities settlement processing day
(which must be a business day for Euroclear or Cedel Bank, as the case may be)
immediately following the DTC settlement date. Transactions in interests in a
Global Note settled during any securities settlement processing day will be
reported to the relevant Member Organization on the same day. Cash received in
Euroclear or Cedel Bank as a result of sales of interests in a Global Note by or
through a Member Organization to a Participant that is not a Member Organization
will be received with value on the DTC settlement date, but will not be
available in the relevant Euroclear or Cedel Bank cash account until the
business day following settlement in DTC.
OPTIONAL REDEMPTION
EXCHANGE SENIOR SUBORDINATED NOTES. Except as described below, the
Exchange Senior Subordinated Notes are not redeemable at the Company's option
prior to March 15, 2001. From and after March 15, 2001, the Exchange Senior
Subordinated Notes will be subject to redemption at the option of the Company,
in whole or in part, upon not less than 30 nor more than 60 days' written
notice, at the Exchange Senior Subordinated Note Redemption Prices (expressed as
percentages of principal amount) set forth below, plus accrued and unpaid
interest, including Liquidated Damages, if any, thereon to the applicable
redemption date, if redeemed during the twelve-month period beginning on March
15 of each of the years indicated below:
<TABLE>
<CAPTION>
PERCENTAGE OF
PRINCIPAL
YEAR AMOUNT
--------------------------------------------------------------- -------------
<S> <C>
2001........................................................... 105.438%
2002........................................................... 103.625%
2003........................................................... 101.813%
2004 and thereafter............................................ 100.000%
</TABLE>
Prior to March 15, 1999, the Company may, at its option, on any one or more
occasions, redeem up to $100.0 million in aggregate principal amount of Exchange
Senior Subordinated Notes at a redemption price equal to 110.875% of the
principal amount thereof, plus accrued and unpaid interest, including Liquidated
Damages, if any, thereon to the redemption date, with the net proceeds of public
or private sales of common stock of, or contributions to the common equity
capital of, the Company; provided that at least $150.0 million in aggregate
principal amount of Exchange Senior Subordinated Notes remains outstanding
immediately after the occurrence of such
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redemption; and provided, further, that such redemption shall occur within 60
days of the date of the closing of the related sale of common stock of, or
capital contribution to, the Company.
EXCHANGE SENIOR SUBORDINATED DISCOUNT NOTES. Except as described below,
the Senior Subordinated Discount Notes are not redeemable at the Company's
option prior to March 15, 2001. From and after March 15, 2001, the Exchange
Senior Subordinated Discount Notes will be subject to redemption at the option
of the Company, in whole or in part, upon not less than 30 nor more than 60
days' written notice, at the Exchange Senior Subordinated Discount Note
Redemption Prices (expressed as percentages of principal amount) set forth
below, plus accrued and unpaid interest (including Liquidated Damages, if any)
thereon to the applicable redemption date, if redeemed during the twelve-month
period beginning on March 15 of each of the years indicated below:
<TABLE>
<CAPTION>
PERCENTAGE OF
PRINCIPAL
YEAR AMOUNT
--------------------------------------------------------------- -------------
<S> <C>
2001........................................................... 106.125%
2002........................................................... 104.083%
2003........................................................... 102.042%
2004 and thereafter............................................ 100.000%
</TABLE>
Prior to March 15, 1999, the Company may, at its option, on any one or more
occasions, redeem the Exchange Senior Subordinated Discount Notes at a
redemption price equal to 112.250% of the Accreted Value thereof, plus accrued
and unpaid Liquidated Damages, if any, thereon to the redemption date, with the
net proceeds of public or private sales of common stock of, or contributions to
the common equity capital of, the Company; provided that at least $150.0 million
in aggregate Accreted Value of Exchange Senior Subordinated Discount Notes
remains outstanding immediately after the occurrence of such redemption; and
provided, further, that such redemption shall occur within 60 days of the date
of the closing of the related sale of common stock of, or capital contribution
to, the Company.
SELECTION AND NOTICE
If less than all of the Exchange Senior Subordinated Notes and/or Exchange
Senior Subordinated Discount Notes, as the case may be, are to be redeemed at
any time, selection of such Exchange Notes for redemption will be made by the
applicable Trustee in compliance with the requirements of the principal national
securities exchange, if any, on which the Exchange Notes are listed, or, if the
Exchange Notes are not so listed, on a pro rata basis, by lot or by such method
as the applicable Trustee shall deem fair and appropriate; provided that,
subject to the limitations described above, the Company may, at its option,
elect to redeem either Exchange Senior Subordinated Notes, Exchange Senior
Subordinated Discount Notes, or both Exchange Senior Subordinated Notes and
Exchange Senior Subordinated Discount Notes; and provided further, that no
Exchange Notes of $1,000 or less shall be redeemed in part.
Notices of redemption shall be mailed by first class mail at least 30 but
not more than 60 days before the redemption date to each Holder of Exchange
Notes to be redeemed at such Holder's registered address. If any Exchange Note
is to be redeemed in part only, the notice of redemption that relates to such
Exchange Note shall state the portion of the principal amount thereof to be
redeemed. A new Exchange 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 Exchange Note. On and after the redemption date,
unless the Company defaults in payment of the redemption price, interest ceases
to accrue on Exchange Notes or portions of them called for redemption.
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REPURCHASE AT THE OPTION OF HOLDERS
CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each Holder of Exchange Notes
will have the right to require the Company to repurchase all or any part (equal
to $1,000 or an integral multiple thereof) of such Holder's Exchange Notes
pursuant to the offer described below (the "Change of Control Offer") at an
offer price in cash (the "Change of Control Payment") equal to 101% of the
aggregate principal amount thereof plus accrued and unpaid interest, including
Liquidated Damages, if any, thereon to the date of repurchase (or if such Change
of Control Offer is with respect to the Exchange Senior Subordinated Discount
Notes prior to the Full Accretion Date, 101% of the Accreted Value thereof on
the date of repurchase plus accrued and unpaid Liquidated Damages, if any).
Within 30 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 Exchange Notes pursuant to the
procedures required by the Indentures 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 Exchange
Notes as a result of a Change of Control.
The Indentures provide that, prior to complying with the provisions of this
covenant, but in any event within 30 days following a Change of Control, the
Company will either repay all outstanding amounts under the New Bank Credit
Agreement or offer to repay in full all outstanding amounts under the New Bank
Credit Agreement and repay the Obligations held by each lender who has accepted
such offer or obtain the requisite consents, if any, under the New Bank Credit
Agreement to permit the repurchase of the Exchange Notes required by this
covenant.
On a date that is no earlier than 30 days nor later than 60 days from the
date that the Company mails notice of the Change of Control to the Holders (the
"Change of Control Payment Date"), the Company will, to the extent lawful, (1)
accept for payment all Exchange Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (2) deposit with the Paying Agents an
amount equal to the Change of Control Payment in respect of all Exchange Notes
or portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustees for cancellation the Exchange Notes so accepted together with an
Officers' Certificate stating the aggregate principal amount of Exchange Notes
or portions thereof being purchased by the Company. The Paying Agents will
promptly mail to each Holder of Exchange Notes so tendered the Change of Control
Payment for such Exchange Notes, and the Trustees will promptly authenticate and
mail (or cause to be transferred by book entry) to each Holder a new Exchange
Note equal in principal amount to any unpurchased portion of the Exchange Notes
surrendered, if any; provided that each such new Exchange Note will be in a
principal amount of $1,000 or an integral multiple thereof. The Company will
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
The Change of Control provisions described above will be applicable whether
or not any other provisions of the Indentures are applicable. Except as
described above with respect to a Change of Control, the Indentures do not
contain provisions that permit the Holders of the Exchange Notes to require that
the Company repurchase or redeem the Exchange Notes in the event of a takeover,
recapitalization or similar transaction.
The Company will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in the Indentures applicable to a Change of Control Offer made by the Company
and purchases all Exchange Notes validly tendered and not withdrawn under such
Change of Control Offer.
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The existence of a Holder's right to require the Company to repurchase such
Holder's Exchange Notes upon the occurrence of a Change of Control may deter a
third party from seeking to acquire the Company in a transaction that would
constitute a Change of Control.
ASSET SALES
The Indentures provide that the Company will not, and will not permit any
of its Restricted Subsidiaries to, cause, make or suffer to exist an Asset Sale
unless (i) the Company (or the Restricted Subsidiary, as the case may be)
receives consideration at the time of such Asset Sale at least equal to the fair
market value (evidenced by a resolution of the Board of Directors set forth in
an Officers' Certificate delivered to the Trustees) of the assets or Equity
Interests issued or sold or otherwise disposed of and (ii) except in the case of
a Permitted Asset Swap, at least 80% of the consideration therefor received by
the Company or such Restricted 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 Restricted Subsidiary's most recent balance sheet) of the
Company or any Restricted Subsidiary (other than contingent liabilities and
liabilities that are by their terms subordinated to the Notes or any guarantee
thereof) that are assumed by the transferee of any such assets pursuant to a
customary novation agreement that releases the Company or such Restricted
Subsidiary from further liability and (y) any notes or other obligations
received by the Company or any such Restricted Subsidiary from such transferee
that are immediately converted by the Company or such Restricted Subsidiary into
cash (to the extent of the cash received), shall be deemed to be cash for
purposes of this provision.
Within 365 days after the Company's or any Restricted Subsidiary's receipt
of the Net Proceeds of any Asset Sale, the Company or such Restricted Subsidiary
may apply the Net Proceeds from such Asset Sale, at its option, (i) to
permanently reduce Obligations under the New Bank Credit Agreement (and to
correspondingly reduce commitments with respect thereto) or other Senior Debt or
Pari Passu Indebtedness, (ii) to secure Letter of Credit Obligations to the
extent related letters of credit have not been drawn upon or returned undrawn,
(iii) to an investment in any one or more businesses, capital expenditures or
acquisitions of other assets, in each case, used or useful in a Principal
Business, (iv) to an investment in properties or assets that replace the
properties and assets that are the subject of such Asset Sale and/or (v) in the
case of a sale of a bowling center or bowling centers, deem such Net Proceeds to
have been applied pursuant to the immediately preceding clause (iv) to the
extent of any expenditures made to acquire or construct one or more bowling
centers in the general vicinity of the bowling center(s) sold within 365 days
preceding the date of the Asset Sale. Pending the final application of any such
Net Proceeds, the Company or such Restricted Subsidiary may temporarily reduce
Indebtedness under a revolving credit facility, if any, or otherwise invest such
Net Proceeds in Cash Equivalents. The Indentures will provide that any Net
Proceeds from the Asset Sale that are not invested as provided and within the
time period set forth in the first sentence of this paragraph will be deemed to
constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds
exceeds $25.0 million, the Company will be required to make an offer to all
Holders of Notes (an "Asset Sale Offer") to purchase the maximum principal
amount of Notes, that is an integral multiple of $1,000, that may be purchased
out of the Excess Proceeds at an offer price in cash in an amount equal to 100%
of the aggregate principal amount thereof, plus accrued and unpaid interest,
including Liquidated Damages, if any (or, if such Asset Sale Offer is with
respect to the Senior Subordinated Discount Notes prior to the Full Accretion
Date, 100% of the Accreted Value thereof on the date of purchase, plus accrued
and unpaid Liquidated Damages, if any), to the date fixed for the closing of
such offer, in accordance with the procedures set forth in the Indentures. The
Company will commence an Asset Sale Offer with respect to Excess Proceeds within
ten Business Days after the date that the aggregate amount of Excess Proceeds
exceeds $25.0 million by mailing the notice required pursuant to the terms of
the Indentures, with a copy to the Trustees. To the extent that the aggregate
amount of Exchange Notes tendered pursuant to an Asset Sale Offer is less than
the Excess Proceeds, the Company may use any remaining Excess Proceeds (x) to
offer to redeem Subordinated Indebtedness (a "Subordinated Asset Sale Offer")
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in accordance with the provisions of the indenture or other agreement governing
such Subordinated Indebtedness or (y) for any purpose not prohibited by the
Indentures. If the aggregate principal amount of Exchange Notes surrendered by
Holders thereof exceeds the amount of Excess Proceeds, the Trustees shall select
the Notes to be purchased on a pro rata basis, based upon the Accreted Value of
Exchange Senior Subordinated Discount Notes and the principal amount of Exchange
Senior Subordinated Notes tendered. Upon completion of any such Asset Sale
Offer, the amount of Excess Proceeds shall be reset at zero.
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 Exchange Notes as a result of an Asset Sale.
The New Bank Credit Agreement prohibits the Company from purchasing any
Exchange Notes, and also provides 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 Debt to which the Company
becomes a party may contain similar restrictions and provisions. In the event a
Change of Control occurs or an Asset Sale Offer is required to be made at a time
when the Company is prohibited from purchasing Exchange Notes, the Company could
seek the consent of its lenders to the purchase of Exchange Notes or could
attempt to refinance the borrowings that contain such prohibition. If the
Company does not obtain such a consent or repay such borrowings, the Company
will remain prohibited from purchasing Exchange Notes. In such case, the
Company's failure to purchase tendered Exchange Notes would constitute an Event
of Default under the Indentures. In such circumstances, the subordination
provisions in the Indentures would likely restrict payments to the Holders of
Exchange Notes.
CERTAIN COVENANTS
RESTRICTED PAYMENTS
The Indentures provide that the Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly: (i) declare or pay
any dividend or make any other payment or distribution on account of the
Company's or any of its Restricted Subsidiaries' 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
any Restricted Subsidiary of the Company); (ii) purchase, redeem, defease or
otherwise acquire or retire for value any Equity Interests of the Company or any
direct or indirect parent of the Company; (iii) make any principal payment on,
or purchase, redeem, defease or otherwise acquire or retire for value any
Subordinated Indebtedness, except at final maturity; or (iv) make any Restricted
Investment (all such payments and other actions set forth in clauses (i) through
(iv) above 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 shall have occurred and be
continuing or would occur as a consequence thereof;
(b) the Company would, at the time of such Restricted Payment and
immediately 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 the covenant described below under the caption
"-- 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 Restricted Subsidiaries
after the date of the Indentures (including Restricted Payments permitted
by clause (i) of the next succeeding paragraph, but excluding all other
Restricted Payments permitted by the next succeeding paragraph), is less
than the sum of (i) 50% of the Consolidated Net Income of the Company for
the period (taken as one
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accounting period) from the beginning of the first fiscal quarter
commencing after the date of the Indentures 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 (ii) 100% of the aggregate net cash proceeds and the fair
market value, as determined in good faith by the Board of Directors, of
marketable securities received by the Company from the issue or sale since
the date of the Indentures of Equity Interests (including Retired Capital
Stock (as defined below)) of the Company (except in connection with the
Acquisition) or of debt securities of the Company that have been converted
into such Equity Interests (other than Refunding Capital Stock (as defined
below) or Equity Interests or convertible debt securities of the Company
sold to a Restricted Subsidiary of the Company and other than Disqualified
Stock or debt securities that have been converted into Disqualified Stock),
plus (iii) 100% of the aggregate amounts contributed to the common equity
capital of the Company since the date of the Indentures (except amounts
contributed to finance the Acquisition), plus (iv) 100% of the aggregate
amounts received in cash and the fair market value of marketable securities
(other than Restricted Investments) received from (x) the sale or other
disposition of Restricted Investments made by the Company and its
Restricted Subsidiaries since the date of the Indentures or (y) the sale of
the stock of an Unrestricted Subsidiary or the sale of all or substantially
all of the assets of an Unrestricted Subsidiary to the extent that a
liquidating dividend is paid to the Company or any Subsidiary from the
proceeds of such sale, plus (v) 100% of any dividends received by the
Company or a Wholly Owned Restricted Subsidiary of the Company after the
date of the Indentures from an Unrestricted Subsidiary of the Company, plus
(vi) $10.0 million.
The foregoing provisions will not prohibit:
(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at the date of declaration such payment would
have complied with the provisions of the Indentures;
(ii) the redemption, repurchase, retirement or other acquisition of
any Equity Interests of the Company or any Restricted Subsidiary (the
"Retired Capital Stock") or any Subordinated Indebtedness, in each case,
in exchange for, or out of the proceeds of, the substantially concurrent
sale (other than to a Restricted Subsidiary of the Company) of Equity
Interests of the Company (other than any Disqualified Stock) (the
"Refunding Capital Stock"); provided that the amount of any such net
cash proceeds that are utilized for any such redemption, repurchase,
retirement or other acquisition shall be excluded from clause (c)(ii) of
the immediately preceding paragraph;
(iii) the defeasance, redemption or repurchase of Subordinated
Indebtedness with the net cash proceeds from an incurrence of Permitted
Refinancing Indebtedness;
(iv) the redemption, repurchase or other acquisition or retirement
for value of any Equity Interests of the Company or any Restricted
Subsidiary of the Company held by any member of the Company's (or any of
its Restricted Subsidiaries') management pursuant to any management
equity subscription agreement or stock option or similar agreement;
provided that the aggregate price paid for all such repurchased,
redeemed, acquired or retired Equity Interests shall not exceed the sum
of $5.0 million in any twelve-month period plus the aggregate cash
proceeds received by the Company during such twelve-month period from
any issuance of Equity Interests by the Company to members of management
of the Company and its Restricted Subsidiaries; provided that the amount
of any such net cash proceeds that are utilized for any such redemption,
repurchase, retirement or other acquisition shall be excluded from
clause (c)(ii) of the immediately preceding paragraph;
(v) Investments in Unrestricted Subsidiaries or in Joint Ventures
having an aggregate fair market value, taken together with all other
Investments made pursuant to this clause (v) that are at that time
outstanding, not to exceed 5% of Total Assets at the time of such
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Investment (with the fair market value of each Investment being measured
at the time made and without giving effect to subsequent changes in
value);
(vi) repurchases of Equity Interests deemed to occur upon exercise
or conversion of stock options, warrants, convertible securities or
other similar Equity Interests if such Equity Interests represent a
portion of the exercise or conversion price of such options, warrants,
convertible securities or other similar Equity Interests;
(vii) the making and consummation of a Subordinated Asset Sale
Offer in accordance with the provisions described under the caption
entitled "-- Repurchase at the Option of Holders -- Asset Sales"; and
(viii) any dividend or distribution payable on or in respect of any
class of Equity Interests issued by a Restricted Subsidiary of the
Company; provided that such dividend or distribution is paid on a pro
rata basis to all of the holders of such Equity Interests in accordance
with their respective holdings of such Equity Interests;
provided, further, that at the time of, and after giving effect to, any
Restricted Payment permitted under clauses (iv) or (v) above, no Default or
Event of Default shall have occurred and be continuing or would occur as a
consequence thereof.
As of May 31, 1996, all of the Company's Subsidiaries are Restricted
Subsidiaries. The Company will not permit any Unrestricted Subsidiary to become
a Restricted Subsidiary except pursuant to the last sentence of the definition
of "Unrestricted Subsidiary." For purposes of designating any Restricted
Subsidiary as an Unrestricted Subsidiary, all outstanding Investments by the
Company and its Restricted Subsidiaries (except to the extent repaid) in the
Subsidiary so designated will be deemed to be Restricted Payments in an amount
equal to the book value of such Investment at the time of such designation. Such
designation will only be permitted if a Restricted Payment in such amount would
be permitted at such time and if such Subsidiary otherwise meets the definition
of an Unrestricted Subsidiary. Unrestricted Subsidiaries will not be subject to
any of the restrictive covenants set forth in the Indentures.
The amount of all Restricted Payments (other than cash) shall be the fair
market value (evidenced by a resolution of the Board of Directors set forth in
an Officers' Certificate delivered to the Trustees) on the date of the
Restricted Payment of the asset(s) proposed to be transferred by the Company or
such Restricted Subsidiary, as the case may be, pursuant to the Restricted
Payment. Not later than the date of making any Restricted Payment, the Company
shall deliver to the Trustees an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by the covenant "Restricted Payments" were computed, which
calculations may be based upon the Company's latest available financial
statements.
INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED STOCK
The Indentures provide that the Company will not, and will not permit any
of its Subsidiaries to, directly or indirectly, create, incur, issue, assume,
guaranty or otherwise become directly or indirectly liable, contingently or
otherwise, with respect to (collectively, "incur" and correlatively, an
"incurrence" of) any Indebtedness (including Acquired Debt) and that the Company
will not issue any Disqualified Stock; provided, however, that the Company may
incur Indebtedness (including Acquired Debt) or issue shares of Disqualified
Stock if the Fixed Charge Coverage Ratio for the Company for the most recently
ended four full fiscal quarters for which internal financial statements are
available immediately preceding the date of such incurrence would have been at
least 2.00 to 1.0 if such date is on or prior to September 15, 1997, 2.25 to 1.0
if such date is after September 15, 1997 and on or prior to March 15, 1999 and
2.50 to 1.0 thereafter, in each case, determined on a pro forma basis (including
a pro forma application of the net proceeds therefrom), as if the additional
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Indebtedness had been incurred or the Disqualified Stock had been issued, as the
case may be, and the application of the proceeds therefrom had occurred at the
beginning of such four-quarter period.
The foregoing provisions will not apply to:
(a) the incurrence by the Company (and the Guarantee thereof by the
Guarantors) of (i) Indebtedness under the New Bank Credit Agreement and the
issuance of letters of credit thereunder (with letters of credit being
deemed to have a principal amount equal to the aggregate maximum amount
then available to be drawn thereunder, assuming compliance with all
conditions for drawing) up to an aggregate principal amount of $715.0
million outstanding at any one time, less principal repayments of term
loans and permanent commitment reductions with respect to revolving loans
and letters of credit under the New Bank Credit Agreement made after the
date of the Indentures and (ii) additional Indebtedness under the New Bank
Credit Agreement and the issuance of additional letters of credit
thereunder (with letters of credit being deemed to have a principal amount
equal to the aggregate maximum amount then available to be drawn
thereunder, assuming compliance with all conditions for drawing) up to an
aggregate principal amount of $75.0 million outstanding at any one time
(reduced by the aggregate principal amount (or accreted value, as
applicable) of Indebtedness outstanding pursuant to clause (l) below);
(b) the incurrence by the Company or any of its Restricted
Subsidiaries of any Existing Indebtedness;
(c) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by the Exchange Notes;
(d) Indebtedness (including Capital Lease Obligations) incurred by the
Company or any of its Restricted Subsidiaries to finance the purchase,
lease or improvement of property (real or personal), assets or equipment
(whether through the direct purchase of assets or the Capital Stock of any
Person owning such assets), in an aggregate principal amount not to exceed
5% of Total Assets at any time outstanding;
(e) Indebtedness incurred by the Company or any of its Restricted
Subsidiaries constituting reimbursement obligations with respect to letters
of credit issued in the ordinary course of business, including, without
limitation, letters of credit in respect of workers' compensation claims or
self-insurance, or other Indebtedness with respect to reimbursement type
obligations regarding workers' compensation claims;
(f) intercompany Indebtedness between or among the Company and any of
its Restricted Subsidiaries and Guarantees by a Restricted Subsidiary of
the Company of Indebtedness of any other Restricted Subsidiary of the
Company or the Company;
(g) Hedging Obligations that are incurred (1) for the purpose of
fixing or hedging interest rate risk with respect to any Indebtedness that
is permitted by the terms of the Indentures to be outstanding or (2) for
the purpose of fixing or hedging currency exchange rate risk with respect
to any currency exchanges;
(h) obligations in respect of performance and surety bonds and
completion guarantees provided by the Company or any Restricted Subsidiary
in the ordinary course of business;
(i) the incurrence by the Company or any of the Guarantors of
Indebtedness in connection with the acquisition of assets or a new
Restricted Subsidiary; provided that such Indebtedness was incurred by the
prior owner of such assets or such new Restricted Subsidiary prior to such
acquisition by the Company or such Restricted Subsidiary and was not
incurred in connection with, or in contemplation of, such acquisition; and
provided further that the Fixed Charge Coverage Ratio for the Company for
the most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date of such
transaction would have been at least 2.00 to 1.0 if such date is on or
prior to September 15, 1997, 2.25 to
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1.0 if such date is after September 15, 1997 and on or prior to March 15,
1999 and 2.50 to 1.0 thereafter, in each case, determined on a pro forma
basis, as if such transaction had occurred at the beginning of such
four-quarter period and such Indebtedness or Disqualified Stock and the
Consolidated Cash Flow of such merged or acquired Person had been included
for all purposes in such pro forma calculation;
(j) the incurrence by the Company or any of its Restricted
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 the Indentures to be
incurred;
(k) the incurrence by the Company's Unrestricted Subsidiaries of
Non-Recourse Debt, provided, however, that if any such Indebtedness ceases
to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be
deemed to constitute an incurrence of Indebtedness by a Restricted
Subsidiary of the Company; and
(l) the incurrence by the Company of additional Indebtedness not
otherwise permitted hereunder in an amount under this clause (l) not to
exceed $75.0 million in aggregate principal amount (or accreted value, as
applicable) outstanding at any one time (reduced by the aggregate principal
amount of Indebtedness outstanding pursuant to clause (a)(ii) above).
NO SENIOR SUBORDINATED DEBT
The Indentures provide that (i) the Company will not directly or indirectly
incur, create, issue, assume, guarantee or otherwise become liable for any
Indebtedness that is subordinate or junior in right of payment to any Senior
Debt and senior in any respect in right of payment to the Exchange Notes and
(ii) no Guarantor will directly or indirectly incur, create, issue, assume,
guarantee or otherwise become liable for any Indebtedness that is subordinate or
junior in right of payment to the Senior Guarantees and senior in any respect in
right of payment to the Senior Subordinated Guarantees.
LIENS
The Indentures provide that the Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume
or suffer to exist any Lien that secures obligations under any Pari Passu
Indebtedness or Subordinated Indebtedness on any asset or property now owned or
hereafter acquired by the Company or any of its Restricted Subsidiaries, or on
any income or profits therefrom, or assign or convey any right to receive income
therefrom to secure any Pari Passu Indebtedness or Subordinated Indebtedness,
unless the Exchange Notes are equally and ratably secured with the obligations
so secured or until such time as such obligations are no longer secured by a
Lien; provided, that in any case involving a Lien securing Subordinated
Indebtedness, such Lien is subordinated to the Lien securing the Exchange Notes
to the same extent that such Subordinated Indebtedness is subordinated to the
Exchange Notes.
DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES
The Indentures provide that the Company will not, and will not permit any
of its Restricted 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 Restricted Subsidiary to (i)(a) pay dividends or make any
other distributions to the Company or any of its Restricted 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 Restricted Subsidiaries, (ii) make loans or advances to the Company
or any of its Restricted Subsidiaries or (iii) sell, lease or transfer any of
its properties or assets to the Company or any of its Restricted Subsidiaries,
except for such encumbrances or restrictions existing under or by reason of (a)
Existing Indebtedness as in effect on the date of the Indentures, (b) the New
Bank Credit Agreement and any amendments,
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modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings thereof, provided that the New Bank Credit
Agreement and any amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacement or refinancings thereof are no more
restrictive taken as a whole with respect to such dividend and other payment
restrictions than those terms described in an exhibit to the Indentures, (c) the
Indentures and the Exchange Notes, (d) applicable law, (e) any instrument
governing Indebtedness or Capital Stock of a Person acquired by the Company or
any of its Restricted Subsidiaries as in effect at the time of such acquisition
(except to the extent such 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, provided that,
in the case of Indebtedness, such Indebtedness was permitted by the terms of the
Indentures to be incurred, (f) by reason of customary non-assignment or net
worth provisions in leases and other agreements entered into in the ordinary
course of business and consistent with past practices, (g) purchase money
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) 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, (i) other Indebtedness permitted to be incurred
subsequent to the date of the Indentures pursuant to the provisions of the
covenant described under "-- Incurrence of Indebtedness and Issuance of
Disqualified Stock"; provided that any such restrictions are customary with
respect to the type of Indebtedness being incurred (under the relevant
circumstances), (j) any Mortgage Financing or Mortgage Refinancing that imposes
restrictions on the real property securing such Indebtedness, (k) any Permitted
Investment, (l) contracts for the sale of assets, including, without limitation
customary restrictions with respect to a Restricted Subsidiary of the Company
pursuant to an agreement that has been entered into for the sale or disposition
of all or substantially all of the Capital Stock or assets of such Restricted
Subsidiary or (m) customary provisions in joint venture agreements and other
similar agreements.
MERGER, CONSOLIDATION, OR SALE OF ALL OR SUBSTANTIALLY ALL ASSETS
The Indentures provide that the Company may not 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 is a corporation organized or existing under the laws of the United States,
any state thereof or the District of Columbia; (ii) the entity or Person formed
by or surviving any such consolidation or merger (if other than the Company) or
the entity or Person to which such sale, assignment, transfer, lease, conveyance
or other disposition shall have been made assumes all the obligations of the
Company under the Exchange Notes, the Indentures and the Pledge and Escrow
Agreements pursuant to supplemental indentures in form reasonably satisfactory
to the applicable Trustee; (iii) immediately after such transaction no Default
or Event of Default exists; and (iv) except in the case of a merger of the
Company with or into a Wholly Owned Restricted Subsidiary of the Company, 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 shall 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 Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in the first paragraph of the
covenant described above under the caption "-- Incurrence of Indebtedness and
Issuance of Disqualified Stock." Notwithstanding the foregoing clauses (iii) and
(iv), (a) any Restricted
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Subsidiary may consolidate with, merge into or transfer all or part of its
properties and assets to the Company and (b) the Company may merge with an
Affiliate incorporated solely for the purpose of reincorporating the Company in
another jurisdiction.
TRANSACTIONS WITH AFFILIATES
The Indentures provide that the Company will not, and will not permit any
of its Restricted Subsidiaries to, make any payment to, or 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 or amend 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 Restricted Subsidiary than those that would have been obtained in a
comparable transaction by the Company or such Restricted Subsidiary with an
unrelated Person and (ii) the Company delivers to the Trustees (a) with respect
to any Affiliate Transaction or series of related Affiliate Transactions
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 of the
Board of Directors (if there are any disinterested members of the Board of
Directors) and (b) with respect to any Affiliate Transaction or series of
related Affiliate Transactions involving aggregate consideration in excess of
$10.0 million, or with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of $5.0
million as to which there are no disinterested members of the Board of
Directors, an opinion as to the fairness to the Holders of such Affiliate
Transaction from a financial point of view issued by an accounting, appraisal or
investment banking firm of national standing.
The foregoing provisions will not apply to the following: (i) transactions
between or among the Company and/or any of its Restricted Subsidiaries; (ii)
Restricted Payments or Permitted Investments permitted by the provisions of the
Indentures described above under "-- Restricted Payments"; (iii) the payment of
all fees, expenses and other amounts relating to the Acquisition; (iv) the
payment of reasonable and customary regular fees to, and indemnity provided on
behalf of, officers, directors, employees or consultants of the Company or any
Restricted Subsidiary of the Company; (v) the transfer or provision of
inventory, goods or services by the Company or any Restricted Subsidiary of the
Company in the ordinary course of business to any Restricted Subsidiary of the
Company on terms that are customary in the industry or consistent with past
practices; (vi) the execution of, or the performance by the Company or any of
its Restricted Subsidiaries of its obligations under the terms of, any financial
advisory, financing, underwriting or placement agreement or any other agreement
relating to investment banking or financing activities with Goldman Sachs or any
of its Affiliates including, without limitation, in connection with acquisitions
or divestitures, in each case to the extent that such agreement was approved by
a majority of the disinterested members of the Board of Directors in good faith;
(vii) payments, advances or loans to employees that are approved by a majority
of the disinterested members of the Board of Directors of the Company in good
faith; (viii) the performance of any agreement as in effect as of the date of
the Indentures or any amendment thereto or any transaction contemplated thereby
(including pursuant to any amendment thereto so long as any such amendment is
not disadvantageous to the Holders of the Exchange Notes in any material
respect); (ix) the existence of, or the performance by the Company or any of its
Restricted Subsidiaries of its obligations under the terms of, any stockholders
agreement (including any registration rights agreement or purchase agreement
related thereto) to which it is a party as of the date of the Indentures and any
similar agreements which it may enter into thereafter, provided, however, that
the existence of, or the performance by the Company or any of its Restricted
Subsidiaries of obligations under, any future amendment to any such existing
agreement or under any similar agreement entered into after the date of the
Indentures shall only be permitted by this clause (ix) to the extent that the
terms of any such amendment or new agreement are not otherwise disadvantageous
to the Holders of the
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Exchange Notes in any material respect; (x) transactions permitted by, and
complying with, the provisions of the covenant described under "-- Merger,
Consolidation, or Sale of All or Substantially All Assets;" and (xi)
transactions with suppliers or other purchases or sales of goods or services, in
each case in the ordinary course of business (including, without limitation,
pursuant to joint venture agreements) and otherwise in compliance with the terms
of the Indentures which are fair to the Company or its Restricted Subsidiaries,
in the reasonable determination of a majority of the disinterested members of
the Board of Directors of the Company or an executive officer thereof, or are on
terms at least as favorable as might reasonably have been obtained at such time
from an unaffiliated party.
ISSUANCES OF GUARANTEES OF INDEBTEDNESS
The Indentures provide that the Company will not permit any Restricted
Subsidiary, directly or indirectly, to Guarantee or pledge any assets to secure
the payment of any other Indebtedness unless such Restricted Subsidiary either
(i) is a Guarantor, or (ii) simultaneously executes and delivers supplemental
indentures to the Indentures providing for the Guarantee of the payment of all
Obligations with respect to the Exchange Notes by such Restricted Subsidiary,
which Guarantee shall be senior to such Restricted Subsidiary's Guarantee of or
pledge to secure any other Indebtedness that constitutes Subordinated
Indebtedness and subordinated to such Restricted Subsidiary's Guarantee of or
pledge to secure any other Indebtedness that constitutes Senior Debt to the same
extent as the Notes are subordinated to Senior Debt. In addition, the Indentures
provide that (x) if the Company shall, after the date of the Indentures, create
or acquire any new First-Tier Subsidiary, then such newly created or acquired
First-Tier Subsidiary shall execute a Senior Subordinated Guarantee and deliver
an opinion of counsel in accordance with the terms of the Indentures, (y) if any
First-Tier Subsidiary shall, after the date of the Indentures, create or acquire
any new Second-Tier Subsidiary, then such newly created or acquired Second-Tier
Subsidiary shall execute a Senior Subordinated Guarantee and deliver an opinion
of counsel in accordance with the terms of the Indentures and (z) if the Company
shall (whether before or after the date of the Indentures) create or acquire any
new Subsidiary (other than a First-Tier Subsidiary or Second-Tier Subsidiary)
that becomes a guarantor under the New Bank Credit Agreement, then such newly
created or acquired Subsidiary shall execute a Senior Subordinated Guarantee and
deliver an opinion of counsel in accordance with the terms of the Indentures.
Notwithstanding the foregoing, any such Senior Subordinated Guarantee shall
provide by its terms that it shall be automatically and unconditionally released
and discharged upon certain mergers, consolidations, sales and other
dispositions (including, without limitation, by foreclosure) pursuant to the
terms of the Indentures. See "-- Senior Subordinated Guarantees." The form of
such Senior Subordinated Guarantee is attached as an exhibit to each of the
Indentures.
ACTIVITIES OF HOLDINGS
In addition to the restrictions set forth above, the Indentures provide
that Holdings may not (i) hold any assets or incur any Indebtedness or (ii)
engage in any business activities; except that Holdings may (x) hold all, but
not less than all, of the Capital Stock of the Company and (y) be a co-obligor
and/or guarantor with respect to Indebtedness if the Company is a primary
obligor or guarantor of such Indebtedness and the net proceeds of such
Indebtedness are lent to the Company or one or more of its Restricted
Subsidiaries.
REPORTS
The Indentures provide that, whether or not required by the rules and
regulations of the Commission, so long as any Exchange Notes are outstanding,
the Company will, commencing after consummation of the Acquisition, furnish to
the Holders of Exchange Notes (i) all quarterly and annual financial information
that would be required to be contained in a filing with the Commission on Forms
10-Q and 10-K if the Company were required to file such Forms, including a
"Manage-
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ment'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 Commission on Form 8-K if the Company
were required to file such reports. In addition, whether or not required by the
rules and regulations of the Commission, following the consummation of the
Acquisition, the Company will file a copy of all such information and reports
with the Commission for public availability (unless the Commission will not
accept such a filing) and make such information available to securities analysts
and prospective investors upon request. In addition, the Company and the
Guarantors have agreed that, for so long as any Exchange Notes remain
outstanding, they will furnish to the Holders of the Exchange Notes 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.
EVENTS OF DEFAULT AND REMEDIES
The Indentures provide that each of the following constitutes an Event of
Default with respect to the Exchange Senior Subordinated Notes or the Exchange
Senior Subordinated Discount Notes, as the case may be: (i) default for 30 days
in the payment when due of interest, including Liquidated Damages, if any, on
the Exchange Notes (whether or not prohibited by the subordination provisions of
the Indentures); (ii) default in payment when due of the principal of or
premium, if any, on the Notes (whether or not prohibited by the subordination
provisions of the Indentures); (iii) failure by the Company for 30 days after
notice from either Trustee or the Holders of at least 25% in principal amount of
the then outstanding Exchange Senior Subordinated Notes or Exchange Senior
Subordinated Discount Notes, as the case may be, to comply with the provisions
described under "-- Escrow of Proceeds; Special Mandatory Redemption,"
"-- Change of Control," "-- Restricted Payments," "-- Incurrence of Indebtedness
and Issuance of Disqualified Stock" or "-- Merger, Consolidation, or Sale of All
or Substantially All Assets;" (iv) failure by the Company for 60 days after
notice from either Trustee or the Holders of at least 25% in principal amount of
the then outstanding Exchange Senior Subordinated Notes or Exchange Senior
Subordinated Discount Notes, as the case may be, to comply with any of its other
agreements in the Indentures or the Exchange Notes; (v) 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 Restricted Subsidiaries (or the payment of which is
guaranteed by the Company or any of its Restricted Subsidiaries) whether such
Indebtedness or guarantee now exists, or is created after the date of the
Indentures, which default 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
the maturity of which has been so accelerated, aggregates $25.0 million or more;
(vi) failure by the Company or any of its Restricted Subsidiaries to pay final
judgments aggregating in excess of $25.0 million, which judgments are not paid,
discharged or stayed for a period of 60 days; (vii) certain events of bankruptcy
or insolvency with respect to the Company or any of its Restricted Subsidiaries;
(viii) failure by the Company to comply with the provisions of the Pledge and
Escrow Agreements; and (ix) except as permitted by the Indentures, any Senior
Subordinated 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 (except by its terms) or any Guarantor, or any Person acting on behalf of
any Guarantor, shall deny or disaffirm its obligations under its Senior
Subordinated Guarantee.
If any Event of Default occurs and is continuing, any Trustee or the
Holders of at least 25% in principal amount of the then outstanding Exchange
Senior Subordinated Notes or Exchange Senior Subordinated Discount Notes, as the
case may be, may declare all the Exchange Senior Subordinated Notes or Exchange
Senior Subordinated Discount Notes, as the case may be, to be due and payable
immediately. Upon such declaration the principal, interest, premium, if any, and
Liquidated Damages, if any, shall be due and payable immediately; provided,
however, that so long as Senior Debt or any commitment therefor is outstanding
under the New Bank Credit Agreement, any such notice or declaration shall not be
effective until the earlier of (a) five Business Days after such
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notice is delivered to the Representative for the Senior Bank Debt or (b) the
acceleration of any Indebtedness under the New Bank Credit Agreement.
Notwithstanding the foregoing, in the case of an Event of Default arising from
certain events of bankruptcy or insolvency, with respect to the Company, any
Significant Restricted Subsidiary or any group of Restricted Subsidiaries that,
taken together, would constitute a Significant Restricted Subsidiary, all
outstanding Exchange Notes will become due and payable without further action or
notice. Holders of the Exchange Notes may not enforce the Indentures or the
Exchange Notes except as provided in the Indentures. Subject to certain
limitations, Holders of a majority in principal amount of the then outstanding
Exchange Notes may direct the applicable Trustee in its exercise of any trust or
power. Either Trustee may withhold from Holders of the Exchange Notes notice of
any continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest, including Liquidated Damages,
if any) if it determines that withholding notice is in their interest.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have had
to pay if the Company then had elected to redeem the Exchange Notes pursuant to
the optional redemption provisions of the applicable Indenture, an equivalent
premium shall also become and be immediately due and payable to the extent
permitted by law upon the acceleration of the Exchange Notes. If an Event of
Default occurs prior to March 15, 2001 by reason of any willful action (or
inaction) taken (or not taken) by or on behalf of the Company with the intention
of avoiding the prohibition on redemption of the Exchange Notes prior to March
15, 2001, then the premium specified in the applicable Indenture shall also
become immediately due and payable to the extent permitted by law upon the
acceleration of the Exchange Notes.
The Holders of a majority in aggregate principal amount of the Exchange
Senior Subordinated Notes or the Exchange Senior Subordinated Discount Notes, as
the case may be, then outstanding by notice to the applicable Trustee may on
behalf of the Holders of all of the Exchange Senior Subordinated Notes or the
Exchange Senior Subordinated Discount Notes, as the case may be, waive any
existing Default or Event of Default and its consequences under the applicable
Indenture except a continuing Default or Event of Default in the payment of
interest, including Liquidated Damages, if any, on, or the principal and
premium, if any, of, the Exchange Senior Subordinated Notes or the Exchange
Senior Subordinated Discount Notes, as the case may be.
The Company is required to deliver to each Trustee annually a statement
regarding compliance with the respective Indentures, and the Company is required
upon becoming aware of any Default or Event of Default, to deliver to each
Trustee a statement specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of the Company,
as such, shall have any liability for any obligations of the Company under the
Exchange Notes, the Indentures or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder of Exchange Notes by
accepting an Exchange Note waives and releases all such liability. The waiver
and release are part of the consideration for issuance of the Exchange Notes.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have all
obligations of the Company and the Guarantors discharged with respect to the
outstanding Exchange Senior Subordinated Notes and/or the outstanding Exchange
Senior Subordinated Discount Notes, as the case may be, and the Senior
Subordinated Guarantees ("Legal Defeasance") except for (i) the rights of
Holders of outstanding Exchange Notes to receive payments in respect of the
principal of, premium, if any, and interest, including Liquidated Damages, if
any, on such Exchange Notes when such payments are due from the trust referred
to below, (ii) the Company's obligations with respect to the
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Exchange Notes concerning issuing temporary Exchange Notes, registration of
Exchange Notes, mutilated, destroyed, lost or stolen Exchange 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
applicable Trustee, and the Company's obligations in connection therewith and
(iv) the Legal Defeasance provisions of the applicable Indenture. In addition,
the Company may, at its option and at any time, elect to have the obligations of
the Company and the Guarantors released with respect to certain covenants that
are described in the Senior Subordinated Note Indenture or the Senior
Subordinated Discount Note Indenture, and the Senior Subordinated Guarantees
("Covenant Defeasance") and thereafter any omission to comply with such
obligations shall not constitute a Default or Event of Default with respect to
the Exchange Senior Subordinated Notes or Exchange Senior Subordinated Discount
Notes, as the case may be, and the Senior Subordinated Guarantees. In the event
Covenant Defeasance occurs, certain events (not including non-payment,
bankruptcy, receivership, rehabilitation and insolvency events) described under
"-- Events of Default and Remedies" will no longer constitute an Event of
Default with respect to the Exchange Senior Subordinated Notes or Exchange
Senior Subordinated Discount Notes, as the case may be, and the Senior
Subordinated Guarantees.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i)
the Company or the Guarantors must irrevocably deposit with the appropriate
Trustee, in trust, for the benefit of the Holders of the Exchange Senior
Subordinated Notes or Exchange Senior Subordinated Discount Notes, as the case
may be, 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, including Liquidated Damages, if
any, on the outstanding Exchange Senior Subordinated Notes or Exchange Senior
Subordinated Discount Notes, as the case may be, on the stated maturity or on
the applicable redemption date, as the case may be, and the Company or the
Guarantors must specify whether the Exchange Senior Subordinated Notes or
Exchange Senior Subordinated Discount Notes, as the case may be, are being
defeased to maturity or to a particular redemption date; (ii) in the case of
Legal Defeasance, the Company or the Guarantors shall have delivered to the
appropriate Trustee an opinion of counsel in the United States reasonably
acceptable to such Trustee confirming that (A) the Company or the Guarantors
have received from, or there has been published by, the Internal Revenue Service
a ruling or (B) since the date of the applicable 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 Exchange Senior Subordinated Notes or Exchange Senior
Subordinated Discount Notes, as the case may be, 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 or the
Guarantors shall have delivered to the appropriate Trustee an opinion of counsel
in the United States reasonably acceptable to such Trustee confirming that the
Holders of the outstanding, Exchange Senior Subordinated Notes or Exchange
Senior Subordinated Discount Notes, as the case may be, 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
shall 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) or insofar as Events of Default from bankruptcy or insolvency
events are concerned, at any time in the period ending on the 91st day after the
date of 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 applicable Indenture) to which the
Company or any of its Restricted Subsidiaries is a party or by which the Company
or any of its Restricted Subsidiaries is bound; (vi) the Company or the
Guarantors must have delivered to the
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appropriate Trustee an opinion of counsel to the effect that after the 91st day
following the deposit, the trust funds will not be subject to the effect of any
applicable bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally; (vii) the Company or the Guarantors must deliver to
the appropriate Trustee an Officers' Certificate stating that the deposit was
not made by the Company or the Guarantors, as applicable, with the intent of
preferring the Holders of Exchange Senior Subordinated Notes or Exchange Senior
Subordinated Discount Notes, as the case may be, over the other creditors of the
Company or the Guarantors, as applicable, with the intent of defeating,
hindering, delaying or defrauding creditors of the Company or the Guarantors, as
applicable, or others; and (viii) the Company or the Guarantors must deliver to
the appropriate Trustee an Officers' Certificate and an opinion of counsel, each
stating that all conditions precedent provided for or relating to the Legal
Defeasance or the Covenant Defeasance have been complied with.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange Exchange Notes in accordance with the
Indentures. The Registrars and the Trustees 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 Indentures. The Company is not required to transfer or exchange
any Exchange Note selected for redemption. Also, the Company is not required to
transfer or exchange any Exchange Note for a period of 15 days before a
selection of Exchange Notes to be redeemed.
The registered Holder of an Exchange Note will be treated as the owner of
it for all purposes.
BOOK-ENTRY, DELIVERY AND FORM
The Exchange Notes initially issued in exchange for the Notes generally
will be represented by one or more fully-registered global notes (collectively,
the "Global Exchange Note"). Notwithstanding the foregoing, Notes held in
certificated form will be exchanged solely for Exchange Notes in certificated
form, as discussed below. The Global Exchange Note will be deposited upon
issuance with The Depository Trust Company (the "Depository") and registered in
the name of the Depository or a nominee of the Depository (the "Global Exchange
Note Registered Owner"). Except as set forth below, the Global Exchange Note may
be transferred, in whole and not in part, only to another nominee of the
Depository or to a successor of the Depository or its nominee.
The Depository is a limited-purpose trust company that was created to hold
securities for its participating organizations (collectively, the "Participants"
or the "Depository's Participants") and to facilitate the clearance and
settlement of transactions in such securities between Participants through
electronic book-entry changes in accounts of its Participants. The Depository's
Participants include securities brokers and dealers (including the Initial
Purchaser), banks and trust companies, clearing corporations and certain other
organizations. Access to the Depository's system is also available to other
entities such as banks, brokers, dealers and trust companies (collectively, the
"Indirect Participants" or the "Depository's Indirect Participants") that clear
through or maintain a custodial relationship with a Participant, either directly
or indirectly. Persons who are not Participants may beneficially own securities
held by or on behalf of the Depository only through the Depository's
Participants or the Depository's Indirect Participants. The ownership interest
and transfer of ownership interest of each actual purchaser of each security
held by or on behalf of the Depository are recorded on the records of the
Participants and Indirect Participants.
The Depository has also advised the Issuers that pursuant to procedures
established by it, (i) upon deposit of the Global Exchange Note, the Depository
will credit the accounts of Participants designated by the Exchange Agent with
portions of the principal amount of the Global Exchange Note and (ii) ownership
of such interests in the Global Exchange Note will be shown on, and the transfer
of ownership thereof will be effected only through, records maintained by the
Depository
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(with respect to the Participants) or by the Participants and the Indirect
Participants (with respect to other owners of beneficial interests in the Global
Exchange Note). 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 Exchange Notes is limited to that extent. For certain
other restrictions on the transferability of the Exchange Notes, see "Risk
Factors -- Restrictions on Transfer."
Except as described below, owners of interests in the Global Exchange Note
will not have Exchange Notes registered in their names, will not receive
physical delivery of Exchange Notes in definitive form and will not be
considered the registered owners or holders thereof under the Indentures for any
purpose.
Payments in respect of the principal of and premium, if any, and interest
on any Exchange Notes registered in the name of the Global Exchange Note
Registered Owner will be payable by the Trustees to the Global Exchange Note
Registered Owner in their capacity as the registered Holder under the
Indentures. Under the terms of the Indentures, the Company and the Trustees will
treat the persons in whose names the Exchange Notes, including the Global
Exchange Note, 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 Trustees nor any agent of the Company or the Trustees
has or will have any responsibility or liability for (i) any aspect of the
Depository's records or any Participant's records relating to or payments made
on account of beneficial ownership interests in the Global Exchange Note, or for
maintaining, supervising or reviewing any of the Depository's records or any
Participant's records relating to the beneficial ownership interests in the
Global Exchange Note or (ii) any other matter relating to the actions and
practices of the Depository or any of its Participants. The Depository has
advised the Issuers that its current practice, upon receipt of any payment in
respect of securities such as the Exchange 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 principal amount of beneficial interests in the relevant security as
shown on the records of the Depository unless the Depository 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 Exchange
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 the Depository, the Trustees or the Company.
Neither the Company nor the Trustees will be liable for any delay by the
Depository or any of its Participants in identifying the beneficial owners of
the Exchange Notes, and the Company and the Trustees may conclusively rely on
and will be protected in relying on instructions from the Global Exchange Note
Registered Owner for all purposes.
The Global Exchange Note is exchangeable for definitive Exchange Notes if
(i) the Depository notifies the Company that it is unwilling or unable to
continue as Depository of the Global Exchange Note and the Company thereupon
fails to appoint a successor Depository, (ii) the Company, at its option,
notifies the Trustees in writing that it elects to cause the issuance of the
Exchange Notes in definitive registered form, (iii) there shall have occurred
and be continuing an Event of Default or any event which after notice or lapse
of time or both would be an Event of Default with respect to the Exchange Notes
or (iv) as provided in the following paragraph. Such definitive Exchange Notes
shall be registered in the names of the owners of the beneficial interests in
the Global Exchange Note as provided by the Participants. Exchange Notes issued
in definitive form will be in fully registered form, without coupons, in minimum
denominations of $1,000 and integral multiples thereof. Upon issuance of
Exchange Notes in definitive form, the Trustees are required to register the
Exchange Notes in the name of, and cause the Exchange Notes to be delivered to,
the person or persons (or the nominee thereof) identified as the beneficial
owners as the Depository shall direct.
Subject to the restrictions on the transferability of the Exchange Notes
described in "Risk Factors -- Restrictions on Transfer," an Exchange Note in
definitive form will be issued (i) in the Exchange Offer solely in exchange for
certificated Notes or (ii) following the Exchange Offer, upon
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the resale, pledge or other transfer of any Exchange Note or interest therein to
any person or entity that does not participate in the Depository. The exchange
of certificated notes in the Exchange Offer may be made only by presentation of
the Notes, duly endorsed, together with a duly completed Letter of Transmittal
and other required documentation as described under "The Exchange Offer
- -- Procedures for Tendering" and "-- Guaranteed Delivery Procedures." Transfers
of certificated Exchange Notes may be made only by presentation of Exchange
Notes, duly endorsed, to the Trustees for registration of transfer on the Note
Register maintained by the Trustees for such purposes.
The information in this section concerning the Depository and the
Depository's book-entry system has been obtained from sources that the Company
believes to be reliable, but the Company takes no responsibility for the
accuracy thereof.
CERTIFICATED SECURITIES
Subject to certain conditions, any person having a beneficial interest in
the Global Exchange Notes may, upon request to the appropriate Trustee, exchange
such beneficial interest for Exchange Notes evidenced by registered, definitive
certificates ("Certificated Securities"). Upon any such issuance, the
appropriate Trustee is required to register such Certificated Securities in the
name of, and cause the same to be delivered to, such person or persons (or the
nominee of any thereof). In addition, if (i) the Company notifies the
appropriate Trustee in writing that the Depository is no longer willing or able
to act as a depositary and the Company is unable to locate a qualified successor
within 90 days or (ii) the Company, at its option, notifies the appropriate
Trustee in writing that it elects to cause the issuance of Exchange Notes in the
form of Certificated Securities under the applicable Indenture, then, upon
surrender by the Global Exchange Note Holder of its Global Exchange Notes,
Exchange Notes in such form will be issued to each person that the Global
Exchange Note Holder and the Depository identify as being the beneficial owner
of the related Exchange Notes.
Neither the Company nor the Trustees will be liable for any delay by the
Global Exchange Note Holder or the Depository in identifying the beneficial
owners of Exchange Notes and the Company and the Trustees may conclusively rely
on, and will be protected in relying on, instructions from the Global Exchange
Note Holder or the Depository for all purposes.
REGISTRATION RIGHTS; LIQUIDATED DAMAGES
The Company, the Guarantors and the Initial Purchaser entered into the
Registration Rights Agreement on March 21, 1996. Pursuant to the Registration
Rights Agreement, the Company and the Guarantors agreed to file with the
Commission on or prior to 30 days after the Acquisition Closing Date the
Exchange Offer Registration Statement on the appropriate form under the
Securities Act 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 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 and the Guarantors
are 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 Commission policy or (ii) any Holder of Transfer Restricted
Securities notifies the Company on or prior to the 20th Business Day following
consummation of the Exchange Offer that it alone or together with Holders who
hold in the aggregate at least $1.0 million in principal amount (or Accreted
Value, as applicable) of Notes (A) is prohibited by law or Commission policy
from participating in the Exchange Offer or (B) may not resell the Exchange
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) is a
broker-dealer and owns Notes acquired directly from the Company or an affiliate
of the Company, the Company and the Guarantors will file with the Commission a
Shelf Registration Statement to
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cover resales of the Notes by the Holders thereof who satisfy certain conditions
relating to the provision of information in connection with the Shelf
Registration Statement. The Company and the Guarantors will use their best
efforts to cause the applicable registration statement to be declared effective
as promptly as possible by the Commission. For purposes of the foregoing,
"Transfer Restricted Securities" means each Note until (i) the date on which
such Note has been exchanged by a person other than a broker-dealer for an
Exchange Note in the Exchange Offer, (ii) following the exchange by a
broker-dealer in the Exchange Offer of a Note for an Exchange Note, the date on
which such Exchange Note is sold to a purchaser who receives from such
broker-dealer on or prior to the date of such sale a copy of the prospectus
contained in the Exchange Offer Registration Statement, (iii) the date on which
such Note has been effectively registered under the Securities Act and disposed
of in accordance with the Shelf Registration Statement or (iv) the date on which
such Note is distributed to the public pursuant to Rule 144 under the Securities
Act. Notwithstanding the foregoing, at any time after Consummation (as defined
in the Registration Rights Agreement) of the Exchange Offer, the Company and the
Guarantors may allow the Shelf Registration Statement to cease to be effective
and usable if (i) the Board of Directors of the Company determines in good faith
that such action is in the best interests of the Company, and the Company
notifies the Holders within a certain period of time after the Board of
Directors makes such determination or (ii) the prospectus contained in the Shelf
Registration Statement contains an untrue statement of a material fact 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; provided
that the period referred to in the Registration Rights Agreement during which
the Shelf Registration Statement is required to be effective and usable will be
extended by the number of days during which such registration statement was not
effective or usable pursuant to the foregoing provisions.
The Registration Rights Agreement provides that (i) the Company and the
Guarantors will file an Exchange Offer Registration Statement with the
Commission on or prior to 30 days after the Acquisition Closing Date, (ii) the
Company and the Guarantors will use their best efforts to have the Exchange
Offer Registration Statement declared effective by the Commission on or prior to
90 days after the date on which such Exchange Offer Registration Statement is
filed with the Commission (which 90-day period shall be extended for a number of
days equal to the number of Business Days, if any, that the Commission is
officially closed during such period), (iii) unless the Exchange Offer would not
be permitted by applicable law or Commission policy, the Company and the
Guarantors will commence the Exchange Offer and use their best efforts to issue
on or prior to 30 days after the date on which the Exchange Offer Registration
Statement was declared effective by the Commission, Exchange Notes in exchange
for all Notes tendered prior thereto in the Exchange Offer and (iv) if obligated
to file the Shelf Registration Statement, the Company and the Guarantors will
use their best efforts to file the Shelf Registration Statement with the
Commission on or prior to 30 days after such filing obligation arises and to
cause the Shelf Registration Statement to be declared effective by the
Commission on or prior to 90 days after such filing obligation arises. If (a)
the Company and the Guarantors fail to file either of the Registration
Statements required by the Registration Rights Agreement on or before the date
specified for such filing, (b) either of such Registration Statements is not
declared effective by the Commission on or prior to the date specified for such
effectiveness (the "Effectiveness Target Date"), (c) the Company and the
Guarantors fail to consummate the Exchange Offer within 30 days of the
Effectiveness Target Date with respect to the Exchange Offer Registration
Statement, or (d) subject to the last sentence of the preceding paragraph, 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, subject to the last sentence
of the preceding paragraph, the Company will pay Liquidated Damages to each
Holder of Transfer Restricted Securities, with respect to the first 90-day
period immediately following the occurrence of such Registration Default in an
amount equal to $0.05 per week per $1,000 in principal amount (or, in the case
of the Senior Subordinated Discount Notes prior to the
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Full Accretion Date, Accreted Value) of Notes constituting Transfer Restricted
Securities held by such Holder. The amount of the Liquidated Damages will
increase by an additional $0.05 per week per $1,000 in principal amount (or, in
the case of the Senior Subordinated Discount Notes prior to the Full Accretion
Date, Accreted Value) of Notes constituting 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 $0.50 per week per
$1,000 in principal amount (or Accreted Value, as applicable) of Notes
constituting Transfer Restricted Securities. All accrued Liquidated Damages will
be paid by the Company in cash on each Damages Payment Date to the Global Note
Holder (and any Holder of Certificated Securities who has given wire transfer
instructions to the Company at least 10 Business Days prior to the Damages
Payment Date) by wire transfer of immediately available funds and to all other
Holders of Certificated Securities by mailing checks to their registered
address. Following the cure of all Registration Defaults, the accrual of
Liquidated Damages will cease.
Holders of Notes will be required to make certain representations to the
Company (as described in the Registration Rights Agreement) in order to
participate in the Exchange Offer and will be required to deliver information to
be used in connection with the Shelf Registration Statement and to provide
comments on the Shelf Registration Statement within the time periods set forth
in the Registration Rights Agreement in order to have their Notes included in
the Shelf Registration Statement and benefit from the provisions regarding
Liquidated Damages set forth above.
The summary herein 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, the full text of the Registration Rights
Agreement, which has been filed as an exhibit to the Registration Statement of
which this Prospectus is a part.
CONSENT OF THE HOLDERS
Except as described below under "-- Amendment, Supplement and Waiver," the
Notes and the Exchange Notes will be considered collectively to be a single
class for all purposes under the applicable Indenture, including, without
limitation, waivers, amendments, redemptions and Repurchase Offers, and for
purposes of this "Description of Notes" (except under the caption,
"-- Registration Rights; Liquidated Damages") all reference herein to "Exchange
Notes" shall be deemed to refer collectively to the Exchange Notes and any
Notes, unless the context otherwise requires.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the Indentures
and the Exchange Notes may be amended or supplemented with the consent of the
Holders of at least a majority in principal amount of the Exchange Senior
Subordinated Notes or Exchange Senior Subordinated Discount Notes, as the case
may be, then outstanding (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, such
Exchange Notes), and any existing default or compliance with any provision of
the Indentures or the Exchange Notes may be waived with the consent of the
Holders of a majority in principal amount of the then outstanding Exchange
Senior Subordinated Notes or Exchange Senior Subordinated Discount Notes, as the
case may be (including consents obtained in connection with a tender offer or
exchange offer for such Exchange Notes).
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any Exchange Notes held by a non-consenting Holder): (i) reduce
the principal amount of Exchange Notes whose Holders must consent to an
amendment, supplement or waiver, (ii) reduce the principal of or change the
fixed maturity of any Exchange Note or alter the provisions with respect to the
redemption of the Exchange Notes (other than provisions relating to the
covenants described above under "-- Repurchase at the Option of Holders"), (iii)
reduce the rate of or change the time for payment of interest, including
Liquidated Damages, if any, on any Exchange
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Note, (iv) waive a Default or Event of Default in the payment of principal of or
premium, if any, or interest, including Liquidated Damages, if any, on the
Exchange Notes (except a rescission of acceleration of the Exchange Senior
Subordinated Notes or Exchange Senior Subordinated Discount Notes, as the case
may be, by the Holders of at least a majority in aggregate principal amount
thereof and a waiver of the payment default that resulted from such
acceleration), (v) make any Exchange Note payable in money other than that
stated in the Exchange Notes, (vi) make any change in the provisions of the
Indentures relating to waivers of past Defaults or the rights of Holders of
Exchange Notes to receive payments of principal of or premium, if any, or
interest, including Liquidated Damages, if any, on the Exchange Notes, (vii)
waive a redemption payment with respect to any Exchange Note (other than a
payment required by one of the covenants described above under "-- Repurchase at
the Option of Holders") or (viii) make any change in the foregoing amendment and
waiver provisions.
Notwithstanding the foregoing, without the consent of any Holder of
Exchange Notes, the Company and the appropriate Trustee may amend or supplement
the Indentures or the Exchange Notes to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Exchange Notes in addition to or in
place of certificated Exchange Notes, to provide for the assumption of the
Company's obligations to Holders of Exchange Notes in the case of a merger or
consolidation, to make any change that would provide any additional rights or
benefits to the Holders of Exchange Notes or that does not adversely affect the
legal rights under the Indentures of any such Holder, or to comply with
requirements of the Commission in order to effect or maintain the qualification
of the Indentures under the Trust Indenture Act.
CONCERNING THE TRUSTEE
The Indentures contain certain limitations on the rights of the Trustees,
should either Trustee 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 Trustees will be permitted to
engage in other transactions; however, if either Trustee acquires any
conflicting interest it must eliminate such conflict within 90 days, apply to
the Commission for permission to continue or resign.
The Holders of a majority in principal amount of the then outstanding
Exchange Senior Subordinated Notes or Exchange Senior Subordinated Discount
Notes, as the case may be, will have the right to direct the time, method and
place of conducting any proceeding for exercising any remedy available to the
applicable Trustee, subject to certain exceptions. The Indentures provide that
in case an Event of Default shall occur (which shall not be cured), the Trustees
will be required, in the exercise of their power, to use the degree of care of a
prudent man in the conduct of his own affairs. Subject to such provisions,
neither Trustee will be under any obligation to exercise any of its rights or
powers under the Indentures at the request of any Holder, unless such Holder
shall have offered to the appropriate Trustee security and indemnity
satisfactory to it against any loss, liability or expense.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indentures. Reference
is made to the Indentures for a full disclosure of all such terms, as well as
any other capitalized terms used herein for which no definition is provided.
"Accreted Value" means, as of any date of determination prior to the Full
Accretion Date, the sum of (a) the initial offering price of each Exchange
Senior Subordinated Discount Note and (b) the portion of the excess of the
principal amount of each Exchange Senior Subordinated Discount Note over such
initial offering price which shall have been accreted thereon through such date,
such amount to be so accreted on a daily basis at 12 1/4% per annum of the
initial offering price of the Exchange Senior Subordinated Discount Notes,
compounded semi-annually on each
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March 15 and September 15 from the date of issuance of the Exchange Senior
Subordinated Discount Notes through the date of determination; provided that on
and after the Full Accretion Date the Accreted Value shall be equal to the
principal amount of the outstanding Exchange Senior Subordinated Discount Note.
"Acquired Debt" 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 Restricted 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
Restricted Subsidiary of such specified Person, and (ii) Indebtedness secured by
a Lien encumbering any asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For 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, shall 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 shall
be deemed to be control.
"AMF" means the AMF worldwide bowling businesses, including AMF Bowling,
Inc., AMF Bowling Centers, Inc., the AMF worldwide bowling centers and their
subsidiaries.
"Asset Sale" means:
(i) the sale, conveyance, transfer or other disposition (whether in a
single transaction or a series of related transactions) of property or assets
(including by way of a sale and leaseback) of the Company or any Restricted
Subsidiary (each referred to in this definition as a "disposition") or
(ii) the issuance or sale of Equity Interests of any Restricted Subsidiary
(whether in a single transaction or a series of related transactions),
in each case, other than:
(a) a disposition of Cash Equivalents or goods held for sale in the
ordinary course of business or obsolete equipment in the ordinary course of
business consistent with past practices of the Company;
(b) the disposition of all or substantially all of the assets of the
Company in a manner permitted pursuant to the provisions described above under
the covenant entitled "-- Merger, Consolidation, or Sale of All or Substantially
All Assets" or any disposition that constitutes a Change of Control pursuant to
the Indentures;
(c) any disposition that is a Restricted Payment or Permitted Investment
that is permitted under the covenant described above under "-- Restricted
Payments";
(d) any disposition, or related series of dispositions, of assets with an
aggregate fair market value of less than $2.5 million;
(e) any sale of Equity Interest in, or Indebtedness or other securities of,
an Unrestricted Subsidiary; and
(f) foreclosures on assets.
"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.
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"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 (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof, (iii) certificates of deposit and
eurodollar time deposits with maturities of one year or less from the date of
acquisition, bankers' acceptances with maturities not exceeding one year and
overnight bank deposits, in each case with any domestic bank having capital and
surplus in excess of $500.0 million and a Keefe Bank Watch Rating of "B" or
better, (iv) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clauses (ii) and (iii) above
entered into with any financial institution meeting the qualifications specified
in clause (iii) above and (v) commercial paper having the highest rating
obtainable from Moody's Investors Service, Inc. or Standard & Poor's Corporation
and in each case maturing within one year after the date of acquisition.
"Change of Control" means the occurrence of any of the following:
(i) the sale, lease, transfer, conveyance or other disposition (other than
by way of merger or consolidation), in one or a series of transactions, of all
or substantially all of the assets of the Company and its Restricted
Subsidiaries, taken as a whole, to any "person" (as such term is used in Section
13(d)(3) of the Exchange Act) other than the Permitted Holders and their Related
Parties;
(ii) the Company becomes aware (by way of a report or any other filing
pursuant to Section 13(d) of the Exchange Act, proxy, vote, written notice or
otherwise) of the acquisition by any Person or group (within the meaning of
Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor
provision), including any group acting for the purpose of acquiring, holding or
disposing of securities (within the meaning of Rule 13d-5(b)(1) under the
Exchange Act), other than the Permitted Holders or any of their Related Parties,
in a single transaction or in a related series of transactions, by way of
merger, consolidation or other business combination or purchase of beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any
successor provision) of 50% or more of the Voting Stock of the Company or
Holdings, and beneficially owns more of such Voting Stock than the Permitted
Holders and their Related Parties; or
(iii) a majority of the members of the Board of Directors of the Company
cease to be Continuing Directors.
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period plus (i) an amount
equal to any extraordinary loss plus any net loss realized in connection with an
Asset Sale (to the extent such losses were deducted in computing such
Consolidated Net Income), plus (ii) provision for taxes based on income or
profits of such Person and its Restricted Subsidiaries for such period, to the
extent that such provision for taxes was deducted in computing such Consolidated
Net Income, plus (iii) consolidated interest expense of such Person and its
Restricted Subsidiaries for such period, whether paid or accrued and whether or
not capitalized (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), to the extent that any
such expense was deducted in computing such Consolidated Net Income, plus (iv)
depreciation, amortization (including amortization of goodwill and other
intangibles but excluding amortization of prepaid cash expenses that were paid
in a prior period) and other non-cash charges (excluding any
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such non-cash charge to the extent that it represents an accrual of or reserve
for cash charges in any future period or amortization of a prepaid cash expense
that was paid in a prior period) of such Person and its Restricted Subsidiaries
for such period to the extent that such depreciation, amortization and other
non-cash charges were deducted in computing such Consolidated Net Income.
"Consolidated Net Income" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Restricted Subsidiaries
for such period, on a consolidated basis, determined in accordance with GAAP;
provided that (i) the Net Income (but not loss) for such period of any Person
that is not a Restricted Subsidiary or that is accounted for by the equity
method of accounting shall be included only to the extent of the amount of
dividends or distributions paid in cash to the referent Person or a Wholly Owned
Restricted Subsidiary thereof, (ii) the Net Income of any Restricted Subsidiary
shall be excluded to the extent that the declaration or payment of dividends or
similar distributions by that Restricted Subsidiary of that Net Income is not at
the date of determination permitted without any prior governmental approval
(that has not been obtained) or, directly or indirectly, by operation of the
terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Restricted
Subsidiary or its stockholders, (iii) the Net Income of any Person acquired in a
pooling of interests transaction for any period prior to the date of such
acquisition shall be excluded, (iv) the cumulative effect of a change in
accounting principles shall be excluded and (v) the Net Income of any
Unrestricted Subsidiary shall be excluded, whether or not distributed to the
Company or one of its Restricted Subsidiaries.
"Continuing Directors" means, as of any date of determination, any member
of the Board of Directors who (i) was a member of such Board of Directors on the
date of the Indentures or (ii) was nominated for election or elected to such
Board of Directors with, or whose election to such Board of Directors was
approved by, the affirmative vote of a majority of the Continuing Directors who
were members of such Board of Directors at the time of such nomination or
election or (iii) is any designee of the Permitted Holders or their Affiliates
or was nominated by the Permitted Holders or their Affiliates or any designees
of the Permitted Holders or their Affiliates on the Board of Directors.
"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.
"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, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, on or prior to the date
on which the Exchange Notes mature.
"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).
"Existing Indebtedness" means Indebtedness of AMF and its Restricted
Subsidiaries (other than Indebtedness under the New Bank Credit Agreement) in
existence on the date of the Indentures, until such amounts are repaid.
"First-Tier Subsidiaries" means each of the Subsidiaries directly owned by
the Company.
"Fixed Charge Coverage Ratio" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person and its
Restricted Subsidiaries for such period to the Fixed Charges of such Person and
its Restricted Subsidiaries for such period. In the event that the Company or
any of its Restricted Subsidiaries incurs, assumes, Guarantees or redeems any
Indebtedness (other than revolving credit borrowings) or issues Preferred Stock
subsequent to the commencement of the period for which the Fixed Charge Coverage
Ratio is being calculated but
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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 shall be calculated giving pro forma effect to such incurrence,
assumption, Guarantee or redemption of Indebtedness, or such issuance or
redemption of Preferred Stock, as if the same had occurred at the beginning of
the applicable four-quarter reference period. In addition, for purposes of
making the computation referred to above, (i) acquisitions that have been made
by the Company or any of its Restricted 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 shall be deemed to have occurred on the first day
of the four-quarter reference period and Consolidated Cash Flow for such
reference period shall be calculated (A) without giving effect to clause (iii)
of the proviso set forth in the definition of Consolidated Net Income and (B)
subject to clause (ii) of the definition of "Consolidated Net Income," by
treating a portion of the consolidated revenue for such period of any acquired
entity that derives at least 90% of its revenues from the ownership and
operation of bowling centers as Consolidated Cash Flow of such entity,
regardless of the actual operating results of such entity, such portion being
the percentage of the consolidated revenues of the Company's domestic bowling
center operations that constituted Consolidated Cash Flow for the most recently
ended four full fiscal quarters for which internal financial statements are
available and (ii) the Consolidated Cash Flow attributable to discontinued
operations, as determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, shall be excluded, and (iii) the
Fixed Charges attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall 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 Restricted Subsidiaries following the Calculation Date.
"Fixed Charges" means, with respect to any Person for any period, the sum
of (i) the consolidated interest expense of such Person and its Restricted
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 Restricted 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 Restricted Subsidiaries or secured by a
Lien on assets of such Person or one of its Restricted Subsidiaries (whether or
not such Guarantee or Lien is called upon) and (iv) the product of (a) all cash
dividend payments (and non-cash dividend payments in the case of a Person that
is a Restricted Subsidiary) paid to any Person other than the Company or a
Restricted Subsidiary on any series of Preferred Stock of such Person, times (b)
a fraction, the numerator of which is one and the denominator of which is one
minus the then current combined federal, state and local statutory tax rate of
such Person paying the dividend, expressed as a decimal, in each case, on a
consolidated basis and in accordance with GAAP.
"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 date of the Indentures.
"Government Securities" means securities that are (a) direct obligations of
the United States of America for the timely payment of which its full faith and
credit is pledged or (b) obligations of a Person controlled or supervised by and
acting as an agency or instrumentality of the United States of America the
timely payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America, which, in either case, are not
callable or redeemable at
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the option of the issuer thereof, and shall also include a depository receipt
issued by a bank (as defined in Section 3(a)(2) of the Securities Act), as
custodian with respect to any such Government Security or a specific payment of
principal of or interest on any such Government Security held by such custodian
for the account of the holder of such depository receipt; provided that (except
as required by law) such custodian is not authorized to make any deduction from
the amount payable to the holder of such depository receipt from any amount
received by the custodian in respect of the Government Security or the specific
payment of principal of or interest on the Government Security evidenced by such
depository receipt.
"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.
"Guarantors" means each of (i) Holdings, (ii) each of the First-Tier
Subsidiaries, (iii) each of the Second-Tier Subsidiaries and (iv) any other
Restricted Subsidiary of the Company that executes a Senior Subordinated
Guarantee in accordance with the provisions of the Indentures, and, in each
case, their respective successors and assigns. As a result of additional
Subsidiaries becoming Guarantors at the time of the Acquisition, the Guarantors
now consist of AMF Group Holdings Inc., a Delaware corporation of which the
Company is a wholly owned subsidiary, and each of the Company's direct and
indirect domestic subsidiaries.
"Hedging Obligations" means, with respect to any Person, the obligations of
such Person under (i) currency exchange or interest rate swap agreements,
currency exchange or interest rate cap agreements and currency exchange or
interest rate collar agreements and (ii) other agreements or arrangements
designed to protect such Person against fluctuations in currency exchange or
interest rates.
"Holder" means a holder of any of the Exchange Notes or Notes.
"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 indebtedness of any other Person.
"Independent Financial Advisor" means an accounting, appraisal, investment
banking firm or consultant of nationally recognized standing that is not an
Affiliate of the Company and that is, in the judgment of the Company's Board of
Directors, qualified to perform the task for which it has been engaged.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
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 of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP; provided that
an acquisition of Equity Interests or other securities by the Company for
consideration consisting of common equity securities of the Company shall not be
deemed to be an Investment. If the Company or any Subsidiary of the Company
sells or otherwise disposes of any
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Equity Interests of any direct or indirect Subsidiary of the Company such that,
after giving effect to any such sale or disposition, the Company no longer owns,
directly or indirectly, greater than 50% of the outstanding Equity Interests of
such Subsidiary, the Company shall be deemed to have made an Investment on the
date of any such sale or disposition equal to the fair market value of the
Equity Interests of such Subsidiary not sold or disposed of.
"Joint Ventures" means all corporations, partnerships, associations or
other business entities (i) that are engaged in a Principal Business and (ii) of
which 50% of the total voting power of shares of Capital Stock entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by the Company or one or more Restricted Subsidiaries
(or a combination thereof).
"Letter of Credit Obligations" means all Obligations in respect of
Indebtedness of the Company or any of its Restricted Subsidiaries with respect
to letters of credit issued pursuant to the New Bank Credit Agreement which
Indebtedness shall be deemed to consist of (a) the aggregate maximum amount then
available to be drawn under all such letters of credit (the determination of
such maximum amount to assume compliance with all conditions for drawing), and
(b) the aggregate amount that has then been paid by, and not reimbursed to, the
issuers under such letters of credit.
"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 thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Mortgage Financing" means the incurrence by the Company or a Restricted
Subsidiary of the Company of any Indebtedness secured by a mortgage or other
Lien on real property acquired or improved by the Company or any Restricted
Subsidiary of the Company after the date of the Indentures.
"Mortgage Refinancing" means the incurrence by the Company or a Restricted
Subsidiary of the Company of any Indebtedness secured by a mortgage or other
Lien on real property subject to a mortgage or other Lien existing on the date
of the Indentures or created or incurred subsequent to the date of the
Indentures as permitted by the terms of the Indentures and owned by the Company
or any Restricted Subsidiary of the Company.
"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 Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted 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 received by the Company or
any of its Restricted 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 brokerage 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 Senior Bank Debt) secured by a Lien on
the
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asset or assets that were the subject of such Asset Sale and any reserve for
adjustment in respect of the sale price of such asset or assets established in
accordance with GAAP.
"New Bank Credit Agreement" means the credit agreement to be entered into
by and among the Company and the financial institutions party thereto providing
a portion of the financing for the Acquisition, including any related notes,
guarantees, collateral documents, instruments and agreements executed in
connection therewith, and in each case as amended, modified, renewed, refunded,
replaced or refinanced (in whole or in part) from time to time.
"Non-Recourse Debt" means Indebtedness of an Unrestricted Subsidiary (i) as
to which neither the Company nor any of its Restricted 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 Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity; and (iii) as to which the lenders have been notified in
writing that they will not have any recourse to the stock or assets of the
Company or any of its Restricted Subsidiaries.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"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 set
forth in the Indentures.
"Pari Passu Indebtedness" means indebtedness which ranks pari passu in
right of payment to the Notes.
"Permitted Asset Swap" means any one or more transactions in which the
Company or any of its Restricted Subsidiaries exchanges assets for consideration
consisting of cash and/or assets that are used or useful in a Principal Business
and/or a controlling equity interest in a person engaged in a Principal
Business.
"Permitted Holders" means Goldman, Sachs & Co. and any of its Affiliates.
"Permitted Investments" means (a) any Investment in the Company or in a
Restricted Subsidiary of the Company; (b) any Investment in cash and Cash
Equivalents; (c) any Investment by the Company or any Restricted Subsidiary of
the Company in a Person, if as a result of such Investment (A) such Person
becomes a Restricted Subsidiary of the Company or (B) such Person, in one
transaction or a series of related transactions, 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 Restricted Subsidiary of the
Company; (d) any Investment made as a result of the receipt of consideration not
constituting cash or Cash Equivalents from an Asset Sale that was made pursuant
to and in compliance with the covenant described above under "-- Repurchase at
the Option of Holders -- Asset Sales;" (e) any Investment existing on the date
of the Indentures; (f) Permitted Asset Swaps; (g) any Investment by Restricted
Subsidiaries in other Restricted Subsidiaries and Investments by Subsidiaries
that are not Restricted Subsidiaries in other Subsidiaries that are not
Restricted Subsidiaries; (h) advances to employees not in excess of $5.0 million
outstanding at any one time; (i) any Investment acquired by the Company or any
of its Restricted Subsidiaries (A) in exchange for any other Investment or
accounts receivable held by the Company or any such Restricted Subsidiary in
connection with or as a result of a bankruptcy, workout, reorganization or
recapitalization of the issuer of such other Investment or accounts receivable
or (B) as a result of a foreclosure by the Company or any of its Restricted
Subsidiaries with respect to any secured
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Investment or other transfer of title with respect to any secured Investment in
default; (j) Hedging Obligations; (k) loans and advances to officers, directors
and employees for business-related travel expenses, moving expenses and other
similar expenses, in each case incurred in the ordinary course of business; (l)
Investments the payment for which consists exclusively of Equity Interests
(exclusive of Disqualified Stock) of the Company; and (m) additional Investments
having an aggregate fair market value, taken together with all other Investments
made pursuant to this clause (m) that are at that time outstanding, not to
exceed 5% of Total Assets at the time of such Investment (with the fair market
value of each Investment being measured at the time made and without giving
effect to subsequent changes in value).
"Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its Restricted 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 Restricted Subsidiaries
in whole or in part; provided that: (i) the principal amount (or accreted value,
if applicable) of such Permitted Refinancing Indebtedness does not exceed the
principal amount (or accreted value, if applicable) of the Indebtedness so
extended, refinanced, renewed, replaced, defeased or refunded (plus the amount
of reasonable expenses incurred in connection therewith); (ii) such Permitted
Refinancing Indebtedness has a final maturity date later than the final maturity
date of, and 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 Exchange Notes, such Permitted
Refinancing Indebtedness has a final maturity date later than the final maturity
date of, and is subordinated in right of payment to, the Exchange Notes on terms
at least as favorable to the Holders of Exchange Notes as those contained in the
documentation governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; and (iv) such Indebtedness is incurred either by
the Company or by the Restricted 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, government or any agency or political subdivision thereof or any
other entity.
"Preferred Stock" means any Equity Interest with preferential right of
payment of dividends or upon liquidation, dissolution, or winding-up.
"Principal Business" means (i) the design, manufacture and sale of bowling
and bowling center equipment and allied products, including without limitation,
pinspotters, scoring equipment, masking panels, seating, lane maintenance
machines, bumper bowling systems, electronic foul detectors, back office support
systems, bowling pins, wood and synthetic lanes, ball returns, ball lifts, ball
cleaners, other equipment used to equip or outfit a bowling center, spare and
replacement parts, maintenance equipment and supplies, bowling balls, bags,
shoes, shirts, pool and billiard tables and cues, shuffleboard and other gaming
tables, and any other equipment and products used or useful in the operation of
bowling centers, (ii) the ownership and operation of bowling centers, in the
United States and throughout the world, including without limitation bowling
operations, shoe rental, food and beverage sales and services, operation of
lounges and bars at or within a bowling center (including without limitation
sales and service of alcoholic beverages and provision of music and cabaret
activities), operation of pro shops (including without limitation sales and
service of merchandise), billiards and other table games, video and arcade
games, play centers, movie viewing, gaming activities, such as Pull-Tab,
lottery, video poker and keno, and any other activities which are or may become
associated with bowling centers, and (iii) any activity or business incidental,
directly related or similar to those set forth in clauses (i) or (ii) of this
definition, or any business or activity that is a reasonable extension,
development or expansion thereof or ancillary thereto.
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"Regulation S" means Regulation S promulgated under the Securities Act.
"Regulation S Exchange Global Notes" means the Regulation S Temporary
Exchange Global Notes or the Regulation S Permanent Exchange Global Notes, as
applicable.
"Regulation S Permanent Exchange Global Notes" means a permanent global
note that is deposited with and registered in the name of the Depository or its
nominee, representing a series of Exchange Senior Subordinated Notes and a
permanent global note that is deposited with and registered in the name of the
Depository or its nominee, representing a series of Exchange Senior Subordinated
Discount Notes, in each case, sold in reliance on Regulation S.
"Regulation S Temporary Global Exchange Notes" means a temporary global
note that is deposited with and registered in the name of the Depository or its
nominee, representing a series of Exchange Senior Subordinated Notes and a
temporary global note that is deposited with and registered in the name of the
Depository or its nominee, representing a series of Exchange Senior Subordinated
Discount Notes, in each case, sold in reliance on Regulation S.
"Related Parties" means any Person controlled by the Permitted Holders,
including any partnership of which any of the Permitted Holders or their
Affiliates is a general partner.
"Repurchase Offer" means an offer made by the Company to purchase all or
any portion of a Holder's Exchange Notes pursuant to the provisions described
under the covenants entitled "-- Repurchase at the Option of Holders -- Change
of Control" or "-- Repurchase at the Option of Holders -- Asset Sales."
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the referent
Person that is not (i) an Unrestricted Subsidiary or (ii) a direct or indirect
Subsidiary of an Unrestricted Subsidiary; provided, however, that upon the
occurrence of any Unrestricted Subsidiary ceasing to be an Unrestricted
Subsidiary, such Subsidiary shall be included in the definition of Restricted
Subsidiary.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 144A Global Notes" means a permanent global note that is deposited
with and registered in the name of the Depository or its nominee, representing a
series of Senior Subordinated Notes and a permanent global note that is
deposited with and registered in the name of the Depository or its nominee,
representing a series of Senior Subordinated Discount Notes, in each case, sold
in reliance on Rule 144A.
"Second-Tier Subsidiaries" means each of the Subsidiaries directly owned by
the First-Tier Subsidiaries.
"Senior Guarantees" means the Guarantees by the Guarantors of Obligations
under the New Bank Credit Agreement.
"Senior Subordinated Guarantees" means the Guarantees by the Guarantors of
the Obligations under the Indentures and the Exchange Notes.
"Significant Restricted Subsidiary" means any Restricted Subsidiary that
would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of
Regulation S-X, promulgated pursuant to the Act, as such Regulation is in effect
on the date of the Indentures.
"Special Redemption Price" has the meaning set forth under "-- Escrow of
Proceeds; Special Mandatory Redemption."
"Subordinated Indebtedness" means any Indebtedness of the Company or any of
its Restricted Subsidiaries which is expressly by its terms subordinated in
right of payment to any other Indebtedness.
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"Subsidiary" means, with respect to any Person, (i) 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) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or one or more Subsidiaries
of such Person (or any combination thereof).
"Total Assets" means, with respect to any Person, the total consolidated
assets of such Person and its Restricted Subsidiaries, as shown on the most
recent balance sheet of such Person.
"Unrestricted Subsidiary" means (i) any Subsidiary (other than the
Guarantors or any successor to any of them) 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 Debt; (b) is not party to any agreement, contract, arrangement or
understanding with the Company or any Restricted Subsidiary of the Company
unless the terms of any such agreement, contract, arrangement or understanding
are no less favorable to the Company or such Restricted 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 Restricted Subsidiaries has any direct or indirect 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; (d) has not guaranteed or otherwise directly or
indirectly provided credit support for any Indebtedness of the Company or any of
its Restricted Subsidiaries; and (e) has at least one director on its board of
directors that is not a director or executive officer of the Company or any of
its Restricted Subsidiaries and has at least one executive officer that is not a
director or executive officer of the Company or any of its Restricted
Subsidiaries. Any such designation by the Board of Directors shall be evidenced
to the Trustees by filing with the Trustees 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 described above under "Certain Covenants -- Restricted
Payments." If, at any time, any Unrestricted Subsidiary would fail to meet the
foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease
to be an Unrestricted Subsidiary for purposes of the Indentures and any
Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted
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 described under
"-- Incurrence of Indebtedness and Issuance of Disqualified Stock," the Company
shall be in default of such covenant). The Board of Directors of the Company may
at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary;
provided that such designation shall be deemed to be an incurrence of
Indebtedness by a Restricted Subsidiary of the Company of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if (i) such Indebtedness is permitted under the covenant described
under "Certain Covenants -- Incurrence of Indebtedness and Issuance of
Disqualified Stock," and (ii) no Default or Event of Default would be in
existence following such designation.
"Voting Stock" means, with respect to any Person, any class or series of
capital stock of such Person that is ordinarily entitled to vote in the election
of directors thereof at a meeting of stockholders called for such purpose,
without the occurrence of any additional event or contingency.
"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
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(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.
"Wholly Owned Restricted Subsidiary" is any Wholly Owned Subsidiary that is
a Restricted Subsidiary.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person
all of the outstanding Capital Stock or other ownership interests of which
(other than directors' qualifying shares) shall at the time be owned by such
Person or by one or more Wholly Owned Subsidiaries of such Person or by such
Person and one or more Wholly Owned Subsidiaries of such Person.
DESCRIPTION OF CERTAIN FEDERAL INCOME TAX
CONSEQUENCES OF AN INVESTMENT IN THE EXCHANGE NOTES
The following summary describes certain material United States ("U.S.")
federal income tax consequences relevant to the purchase, ownership and
disposition of Exchange Notes as of the date hereof. Unless otherwise indicated,
this summary deals only with United States Holders who hold such Exchange Notes
as capital assets. The following discussion does not purport to deal with all
aspects of U.S. federal income taxation that may be relevant to such holders,
nor does it address U.S. federal income tax consequences which may be relevant
to certain types of holders, such as dealers in securities or currencies,
financial institutions, life insurance companies, persons holding Exchange Notes
as a part of hedging or conversion transaction or a straddle or United States
Holders whose "functional currency" is not the U.S. dollar, that are subject to
special treatment under the Internal Revenue Code of 1986, as amended (the
"Code"). Furthermore, the discussion below is based upon the provisions of the
Code, and regulations, rulings and judicial decisions thereunder as of the date
hereof, and such authorities may be repealed, revoked or modified so as to
result in U.S. federal income tax consequences different from those discussed
below. PERSONS CONSIDERING THE PURCHASE, OWNERSHIP OR DISPOSITION OF EXCHANGE
NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE U.S. FEDERAL INCOME
TAX CONSEQUENCES IN LIGHT OF THEIR PARTICULAR SITUATIONS AS WELL AS ANY
CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE, LOCAL OR INTERNATIONAL TAXING
JURISDICTION.
As used herein, a "United States Holder" of an Exchange Note means a holder
that is a citizen or resident of the United States, a corporation, partnership
or other entity created or organized in or under the laws of the United States
or any political subdivision thereof, or an estate or trust the income of which
is subject to United States federal income taxation regardless of its source. A
"Non-United States Holder" is any holder that is not a United States Holder.
UNITED STATES HOLDERS
PAYMENTS OF INTEREST AND ORIGINAL ISSUE DISCOUNT
Exchange Senior Subordinated Notes. Interest on an Exchange Senior
Subordinated Note generally will be taxable to a United States Holder as
ordinary income at the time it is paid or accrued in accordance with the United
States Holder's method of accounting for tax purposes.
Exchange Senior Subordinated Discount Notes. For federal income tax
purposes, the exchange of Senior Subordinated Discount Notes for Exchange Senior
Subordinated Discount Notes will not be considered to alter the tax consequences
of ownership of Senior Subordinated Discount Notes. Therefore, the Exchange
Senior Subordinated Discount Notes will be considered to have been issued with
original issue discount ("OID") within the meaning of Section 1273(a) of the
Code. The amount of such OID equaled the difference between (i) the sum of all
amounts payable on the Senior Subordinated Discount Notes (including the
interest payable on such debentures) and (ii) the "issue price" of the Senior
Subordinated Discount Notes. The "issue price" of the Senior Subordinated
Discount Notes was the first price at which a substantial amount of the Senior
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Subordinated Discount Notes was sold (excluding sales to bond houses, brokers or
similar persons acting in the capacity of underwriter, placement agent or
wholesaler).
A United States Holder of the Exchange Senior Subordinated Discount Notes
must include such OID in income on an economic accrual basis (using the constant
yield method of accrual described in Section 1272(a) of the Code) and in advance
of the receipt of the cash to which such OID is attributable, regardless of such
holder's method of tax accounting. Under that method, a United States Holder
generally will have to include in income increasingly greater amounts of OID in
successive accrual periods. The Company is required to provide information
returns stating the amount of OID accrued on Exchange Senior Subordinated
Discount Notes held of record by persons other than corporations and other
exempt holders.
Since the yield-to-maturity on the Exchange Senior Subordinated Discount
Notes exceeds the sum of (x) the "applicable federal rate" (as determined under
Section 1274(d) of the Code) in effect for the month in which the Senior
Subordinated Discount Notes were issued (the "AFR") and (y) 5%, the Exchange
Senior Subordinated Discount Notes are considered "applicable high yield
discount obligations" under Section 163(i) of the Code. As a result, the Company
will not be allowed to take a deduction for interest (including OID) accrued on
the Exchange Senior Subordinated Discount Notes for U.S. federal income tax
purposes until such time as the Company actually pays such interest (including
OID) in cash or in other property (other than stock or debt of the Company or a
person deemed to be related to the Company under Section 453(f)(1) of the Code).
Since the yield-to-maturity on the Exchange Senior Subordinated Discount
Notes exceeds the sum of (x) the AFR and (y) 6% (such excess shall be referred
to hereinafter as the "Disqualified Yield"), the deduction for interest
(including OID) accrued on the Exchange Senior Subordinated Discount Notes will
be permanently disallowed (regardless of whether the Company actually pays such
interest or OID in cash or in other property) for U.S. federal income tax
purposes to the extent (approximately 0.27%) such interest or OID is
attributable to the Disqualified Yield on the Exchange Senior Subordinated
Discount Notes ("Dividend-Equivalent Interest"). For purposes of the
dividends-received deduction, such Dividend-Equivalent Interest will be treated
as a dividend to the extent it is deemed to have been paid out of the Company's
current or accumulated earnings and profits. Accordingly, a United States Holder
of an Exchange Senior Subordinated Discount Note that is a corporation may be
entitled to take a dividends-received deduction with respect to any Dividend-
Equivalent Interest received by such corporate holder on such Exchange Senior
Subordinated Discount Note.
ACQUISITION PREMIUM
Exchange Senior Subordinated Notes. If a United States Holder acquires an
Exchange Senior Subordinated Note or has acquired a Senior Subordinated Note, in
each case, for an amount more than its redemption price, the Holder may elect to
amortize such bond premium on a yield to maturity basis.
Exchange Senior Subordinated Discount Notes. A United States Holder who
acquires an Exchange Senior Subordinated Discount Note or has acquired a Senior
Subordinated Discount Note, in each case, for an amount less than the sum of all
amounts payable after the purchase date but greater than its "adjusted issue
price" immediately before such purchase will be considered to have purchased
such Senior Subordinated Discount Note (and its successor Exchange Senior
Subordinated Discount Note) or Exchange Senior Subordinated Discount Note at an
"acquisition premium." The "adjusted issue price" is equal to the instrument's
issue price increased by all previously accrued OID and reduced by the amount of
all previous payments. Under the acquisition premium rules of the Code, the
amount of OID which such United States Holder must include in its gross income
with respect to such Exchange Senior Subordinated Discount Note for any taxable
year will be reduced by the portion of such acquisition premium properly
allocable to such year.
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MARKET DISCOUNT
A purchase of an Exchange Note in a subsequent resale may be affected by
the market discount provisions of the Code. These rules generally provide that
subject to a statutorily defined de minimis exception, if a United States Holder
purchases an Exchange Note (or purchased a Note) at a "market discount," as
defined below, and thereafter recognizes gain upon a disposition of the Exchange
Note (including dispositions by gift or redemption), the lesser of such gain (or
appreciation, in the case of gift) or the portion of the market discount that
has accrued ("accrued market discount") while the Exchange Note (and its
predecessor Note, if any) was held by such United States Holder will be treated
as ordinary interest income at the time of disposition rather than as capital
gain. For an Exchange Senior Subordinated Note or a Senior Subordinated Note,
"market discount" is the excess of the stated redemption price at maturity over
the tax basis immediately after its acquisition by a United States Holder. For
an Exchange Senior Subordinated Discount Note or a Senior Subordinated Discount
Note, "market discount" is the excess of the adjusted issue price of the
Exchange Senior Subordinated Discount Note or the Senior Subordinated Discount
Note over its tax basis immediately after its acquisition by a United States
Holder. Market discount generally will accrue ratably during the period from the
date of acquisition to the maturity date of the Exchange Note, unless the United
States Holder elects to accrue such discount on the basis of the constant yield
method.
In lieu of including the accrued market discount in income at the time of
disposition, a United States Holder of an Exchange Note acquired at a market
discount (or acquired in exchange for a Note acquired at a market discount) may
elect to include the accrued market discount in income currently either ratably
or using the constant yield method. Once made, such an election applies to all
other obligations that the United States Holder purchases at a market discount
during the taxable year for which the election is made and in all subsequent
taxable years of the United States Holder, unless the Internal Revenue Service
consents to a revocation of the election. If an election is made to include
accrued market discount in income currently, the basis of an Exchange Note in
the hands of the United States Holder will be increased by the accrued market
discount thereon as it is includible in income.
SALE, RETIREMENT OR OTHER TAXABLE DISPOSITION OF EXCHANGE NOTES
A United States Holder will recognize gain or loss on the sale, retirement
or other taxable disposition of an Exchange Note equal to the difference between
the amount realized by the United States Holder upon such sale, retirement or
disposition (less any portion of such amount that is allocable to accrued
interest or OID, which amount generally will be taxable to a Holder as ordinary
income) and the United States Holder's adjusted tax basis in such Exchange Note.
Such gain or loss will be capital gain or loss and will be long-term capital
gain or loss if at the time of such sale, retirement or disposition, the United
States Holder held the Exchange Note for more than one year. Under current law,
net capital gains of individuals are, under certain circumstances, taxed at
lower rates than items of ordinary income. The deductibility of capital losses
is subject to limitations.
LIQUIDATED DAMAGES
The Company intends to take the position that the Liquidated Damages
described above under "Description of Exchange Notes -- Registration Rights;
Liquidated Damages" will be taxable to the holder as ordinary income in
accordance with the holder's method of accounting for tax purposes. The Internal
Revenue Service, however, may take a different position, which could affect the
timing of the holder's income and the amount and timing of the Company's
deduction with respect to the Liquidated Damages.
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NON-UNITED STATES HOLDERS
U.S. Withholding Taxes. Subject to the discussion of backup withholding set
forth below, payments of principal, premium, if any, and interest (including
OID) on the Exchange Notes to a Non-United States Holder who is the beneficial
owner of an Exchange Note will not be subject to the 30% U.S. withholding tax;
provided, in the case of a payment of premium, if any, and interest (including
OID) and Liquidated Damages, if any, that (i) the beneficial owner of the
Exchange Note 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
within the meaning of section 871(h)(3) of the Code and the regulations
thereunder, (ii) such beneficial owner is not a controlled foreign corporation
that is related to the Company through stock ownership, (iii) such beneficial
owner is not a bank whose receipt of interest on an Exchange Note is described
in section 881(c)(3)(A) of the Code and (iv) such beneficial owner satisfies the
statement requirement (described generally below) set forth in section 871(h)
(in the case of individuals) or section 881(c) (in the case of foreign
corporations) of the Code and the regulations thereunder.
To satisfy the statement requirement referred to in (iv) above, the
beneficial owner of an Exchange Note, or a financial institution holding the
Exchange Note on behalf of such owner, must provide, in accordance with
specified procedures, the Company or its paying agent, as the case may be, with
a statement to the effect that the beneficial owner is not a U.S. person.
Pursuant to current Temporary Treasury regulations, those requirements will be
met if (1) the beneficial owner provides his name and address, signs under
penalties of perjury and certifies, that he is not a U.S. person (which
certification may be made on an Internal Revenue Service Form W-8 (or successor
form)) or (2) a financial institution holding the Exchange Note on behalf of the
beneficial owner certifies, under penalties of perjury, that such statement has
been received by it and furnishes the Company or its paying agent, as the case
may be, with a copy thereof. Under the proposed Treasury regulations that have
not yet been put into effect, a Non-United States Holder can satisfy the
statement requirement without providing an Internal Revenue Service Form W-8 (or
successor form) if the Non-United States Holder holds the Exchange Notes through
an offshore account of a U.S. intermediary, provided the intermediary has
documentary evidence regarding the Non-United States Holder's status.
If a Non-United States Holder cannot satisfy the requirements of the
"portfolio interest" exception described above, payments of premium, if any, and
interest (including OID) made to Non-U.S. Holders by the Company (or its paying
agent) with respect to the Exchange Notes will be subject to a 30% U.S.
withholding tax unless the beneficial owner of the Exchange Note provides the
Company or its paying agent, as the case may be, with, and keeps current, (i) a
properly executed Internal Revenue Service Form 1001 (or successor form)
claiming an exemption from U.S. withholding tax under a U.S. income tax treaty
or (ii) a properly executed Internal Revenue Service Form 4224 (or successor
form) claiming such premium and/or interest is exempt from U.S. withholding tax
because such premium and/or interest is effectively connected with the conduct
of a U.S. trade or business by the Non-U.S. Holder. Proposed Treasury
regulations that have not yet been put into effect combine Internal Revenue
Service Form 1001 and Internal Revenue Service Form 4224 into a single new
Internal Revenue Service Form W-8 which will serve as the withholding
certificate for establishing most claims of withholding tax relief.
No U.S. withholding taxes will be imposed on any gain realized by a
Non-U.S. Holder upon the sale, retirement or other taxable disposition of its
Exchange Notes.
U.S. Federal Income Taxes. If a Non-United States Holder of an Exchange
Note is engaged in a trade or business in the United States and premium, if any,
or interest (including OID) paid on such Exchange Note is effectively connected
with the conduct of such U.S. trade or business, the Non-United States Holder,
although exempt from the U.S. withholding tax discussed above, will be subject
to U.S. federal income tax on such effectively connected income on a net income
basis in the same manner as if such Holder were a United States Holder. See
"United States Holders" above. In
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addition, if such Non-United States Holder is a foreign corporation, it may be
subject to a branch profits tax equal to 30% of its effectively connected
earnings and profits for the taxable year, subject to adjustments. For this
purpose, such premium, if any, and interest (including OID) will be included in
such foreign corporation's effectively connected earnings and profits.
Any gain realized by a Non-United States Holder on the sale, retirement or
other taxable disposition of an Exchange Note generally will not be subject to
U.S. federal income tax unless (i) such gain is effectively connected with a
trade or business carried on in the U.S. by such Non-United States Holder, or
(ii) in the case of a Non-United States Holder who is an individual, such
individual is present in the United States for 183 days or more in the taxable
year of such sale, retirement or disposition, and certain other conditions are
met.
U.S. Estate Taxes. An Exchange Note beneficially owned by an individual
who is a Non-United States Holder at the time of his or her death generally will
not be subject to U.S. federal estate tax as a result of such individual's
death, provided that (i) such individual 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 within the meaning of section 871(h)(3) of the Code,
and (ii) interest payments (including payments of OID) with respect to such
Exchange Note would not have been, if received at the time of such individual's
death, effectively connected with the conduct of a U.S. trade or business by
such individual.
INFORMATION REPORTING AND BACKUP WITHHOLDING
In general, information reporting requirements will apply to certain
payments of principal, interest, OID and premium paid on the Exchange Notes and
to the proceeds of the sale of an Exchange Note made to United States Holders
other than certain exempt recipients (such as corporations). A 31% backup
withholding tax will apply to such payments if the United States Holder fails to
provide a taxpayer identification number or certification of exempt status or
fails to report its full dividend and interest income.
No information reporting or backup withholding will be required with
respect to payments made by the Company or any paying agent to Non-United States
Holders if a statement described in (iv) under "-- Non-United States
Holders -- U.S. Withholding Taxes" has been received and the payor does not have
actual knowledge that the beneficial owner is a United States Person.
In addition, Temporary Treasury regulations provide that backup withholding
and information reporting will not apply if payments of principal, interest, OID
or premium on an Exchange Note are paid or collected by a foreign office of a
custodian, nominee or other foreign agent on behalf of the beneficial owner of
such Exchange Note, or if a foreign office of a foreign broker (as defined in
applicable Treasury regulations) pays the proceeds of the sale of an Exchange
Note to the owner thereof. However, under the proposed Treasury regulations that
have not yet been put into effect, information reporting will apply to payments
of principal, interest, OID or premium on an Exchange Note with respect to an
offshore account unless the Holder provides a statement described in (iv) under
"-- Non-United States Holders -- U.S. Withholding Taxes" or the Company obtains,
reviews and maintains documentary evidence sufficient to establish that the
Holder is a Non-United States Holder. Temporary Treasury regulations also
provide that if, however, such nominee, custodian, agent or broker is, for
United States federal income tax purposes, a U.S. Person, a controlled foreign
corporation or a foreign person that derives 50% or more of its gross income for
certain periods from the conduct of a trade or business in the United States,
such payments will not be subject to backup withholding but will be subject to
information reporting, unless (1) such custodian, nominee, agent or broker has
documentary evidence in its records that the beneficial owner is not a U.S.
Person and certain other conditions are met or (2) the beneficial owner
otherwise establishes an exemption. Temporary Treasury regulations provide that
the Treasury is considering whether backup withholding will apply with respect
to such payments of principal,
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interest, or the proceeds of a sale that are not subject to backup withholding
under the current regulations.
Payments of principal, interest, OID and premium on an Exchange Note to the
beneficial owner of an Exchange Note by a United States office of a custodian,
nominee or agent, or the payment by the United States office of a broker of the
proceeds of sale of an Exchange Note, will be subject to both backup withholding
and information reporting unless the beneficial owner provides the statement
referred to in (iv) above and the payor does not have actual knowledge that the
beneficial owner is a United States Person or otherwise establishes an
exemption.
Any amounts withheld under the backup withholding rules will be allowed as
a refund or a credit against such Holder's U.S. federal income tax liability
provided the required information is furnished to the IRS.
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
Prospectus in connection with any resale of such Exchange Notes. The Prospectus,
as it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of Exchange Notes received in exchange
for Notes where such Notes were acquired as a result of market-making activities
or other trading activities. The Company has agreed that, for a period of 180
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. In addition, until , 1996 (90 days after commencement of the
Exchange Offer), all dealers effecting transactions in the Exchange Notes may be
required to deliver a Prospectus.
The Company will not receive any proceeds from any sales of the Exchange
Notes by broker-dealers. Exchange 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 Exchange 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 the purchaser or to or through brokers or dealers who
may receive compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such Exchange Notes. Any
broker-dealer that resells the Exchange 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 Exchange Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of Exchange Notes and any commissions or concessions received by any
such persons may be deemed to be underwriting compensation under the Securities
Act. The Letters of Transmittal state that, by acknowledging that it will
deliver and by delivering a prospectus, a broker-dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.
For a period of 180 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 certain expenses
incident to the Exchange Offer, other than commission or concessions of any
brokers or dealers, and will indemnify the holders of the Exchange Notes
(including any broker-dealers) against certain liabilities, including
liabilities under the Securities Act.
By acceptance of this Exchange Offer, each broker-dealer that receives
Exchange Notes for its own account pursuant to the Exchange Offer agrees that,
upon receipt of notice from the Company of the happening of any event which
makes any statement in the Prospectus untrue in any material respect or which
requires the making of any changes in the Prospectus in order to make the
150
<PAGE> 158
statements therein not misleading (which notice the Company agrees to deliver
promptly to such broker-dealer), such broker-dealer will suspend use of the
Prospectus until the Company has amended or supplemented the Prospectus to
correct such misstatement or omission and has furnished copies of the amended or
supplemental Prospectus to such broker-dealer.
EXPERTS
The combined financial statements of AMF Bowling Group as of December 31,
1995 and 1994 and for each of the three years in the period ended December 31,
1995 included in this Prospectus have been so included in reliance on the report
of Price Waterhouse LLP, independent accountants, given on the authority of said
firm as experts in auditing and accounting.
The consolidated financial statements of Fair Lanes, Inc. as of September
29, 1994 and June 30, 1994 and for the three months ended September 29, 1994 and
year ended June 30, 1994 included in this Prospectus have been so included in
reliance on the report of, Price Waterhouse LLP, independent accountants, given
on the authority of said firm as experts in auditing and accounting.
The consolidated statements of loss, stockholder's equity and cash flows of
Fair Lanes, Inc. and subsidiaries for the year ended June 24, 1993 have been
included herein and in the registration statement in reliance upon the report of
KPMG Peat Marwick LLP, independent certified public accountants, appearing
elsewhere herein, and upon the authority of said firm as experts in accounting
and auditing.
The audited consolidated balance sheet of Holdings as of March 7, 1996
included in this Prospectus, has been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect
thereto, and is included herein, in reliance upon the authority of said firm as
experts in giving said report.
VALIDITY OF EXCHANGE NOTES
The validity of the Exchange Notes will be passed upon for the Company by
Wachtell, Lipton, Rosen & Katz, New York, New York, counsel to the Company.
151
<PAGE> 159
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
COMBINED FINANCIAL STATEMENTS OF AMF BOWLING GROUP
Report of Independent Accountants................................................. F-2
Combined Balance Sheets as of December 31, 1995 and 1994.......................... F-3
Combined Statements of Income for the Years Ended December 31, 1995, 1994 and
1993........................................................................... F-4
Combined Statements of Cash Flows for the Years Ended December 31, 1995, 1994 and
1993........................................................................... F-5
Combined Statements of Changes in Stockholders' Equity for the Years Ended
December 31, 1995, 1994 and 1993............................................... F-6
Notes to Combined Financial Statements............................................ F-7
Condensed Combined Balance Sheets as of March 31, 1996 and December 31, 1995
(Unaudited).................................................................... F-39
Condensed Combined Statements of Income for the Three Months Ended March 31, 1996
and 1995 (Unaudited)........................................................... F-40
Condensed Combined Statements of Cash Flows for the Three Months Ended March 31,
1996 and 1995 (Unaudited)...................................................... F-41
Condensed Combined Statements of Changes in Stockholders' Equity for the Three
Months Ended March 31, 1996 (Unaudited)........................................ F-42
Notes to Condensed Combined Financial Statements (Unaudited)...................... F-43
CONSOLIDATED FINANCIAL STATEMENTS OF FAIR LANES, INC. (DEBTOR-IN-POSSESSION) AND
SUBSIDIARIES
Report of Independent Accountants................................................. F-55
Independent Auditors' Report...................................................... F-56
Consolidated Balance Sheets as of September 29, 1994 and June 30, 1994............ F-57
Consolidated Statements of Loss for the Three Months Ended September 29, 1994 and
the Years Ended June 30, 1994 and June 24, 1993................................ F-58
Consolidated Statements of Cash Flows for the Three Months Ended September 29,
1994 and the Years Ended June 30, 1994 and June 24, 1993....................... F-59
Consolidated Statements of Stockholder's Equity for the Three Months Ended
September 29, 1994 and the Years Ended June 30, 1994 and June 24, 1993......... F-60
Notes to Consolidated Financial Statements........................................ F-61
CONSOLIDATED FINANCIAL STATEMENTS OF AMF GROUP HOLDINGS INC.
Report of Independent Public Accountants.......................................... F-72
Consolidated Balance Sheet as of March 7, 1996.................................... F-73
Notes to Consolidated Balance Sheet............................................... F-74
Condensed Pro Forma Consolidating Income Statement for the Year Ended December 31,
1995........................................................................... F-86
Consolidated Balance Sheet as of March 31, 1996 (Unaudited)....................... F-87
Consolidated Income Statement for the Period from Inception through March 31, 1996
(Unaudited).................................................................... F-88
Consolidated Statement of Cash Flows for the Period from Inception through March
31, 1996 (Unaudited)........................................................... F-89
Notes to Unaudited Consolidated Financial Statements.............................. F-90
Condensed Pro Forma Consolidating Balance Sheet as of March 31, 1996.............. F-100
Condensed Pro Forma Consolidating Income Statement for the Three Months Ended
March 31, 1996................................................................. F-101
</TABLE>
F-1
<PAGE> 160
REPORT OF INDEPENDENT ACCOUNTANTS
To the Boards of Directors
and the Stockholders
AMF Bowling Group
In our opinion, the accompanying combined balance sheets and the related
combined statements of income, of cash flows and of changes in stockholders'
equity present fairly, in all material respects, the financial position of AMF
Bowling Group at December 31, 1995 and 1994 and the results of its operations
and its cash flows for each of the three years in the period ended December 31,
1995, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of AMF Bowling Group's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which 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,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
Price Waterhouse LLP
Norfolk, Virginia
March 1, 1996, except as to the
fifth paragraph under Litigation
and claims -- Note 9, which is
as of March 6, 1996 and
Sale transaction under Note 16,
which is as of May 1, 1996
F-2
<PAGE> 161
AMF BOWLING GROUP
COMBINED BALANCE SHEETS
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1995 1994
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.......................................... $ 9,732 $ 8,174
Accounts and notes receivable, net of allowance for doubtful
accounts of $3,373 and $1,898, respectively..................... 39,026 50,646
Accounts and notes receivable -- affiliates........................ 3,979 2,191
Inventories........................................................ 39,821 34,120
Prepaid expenses and other......................................... 5,182 3,684
-------- --------
Total current assets....................................... 97,740 98,815
Notes receivable -- affiliates....................................... 22,941 21,607
Property and equipment, net.......................................... 259,724 269,636
Other assets......................................................... 19,973 20,132
-------- --------
Total assets............................................... $400,378 $410,190
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable................................................... $ 23,641 $ 33,310
Book overdrafts.................................................... 2,362 3,799
Accrued expenses and deposits...................................... 30,328 34,532
Accounts and notes payable -- affiliates........................... 1,989 15,510
Long-term debt, current portion.................................... 1,084 3,288
Income taxes payable............................................... 7,129 10,075
-------- --------
Total current liabilities.................................. 66,533 100,514
Long-term debt....................................................... 19,550 25,078
Notes payable -- affiliates.......................................... 146,727 145,459
Other liabilities.................................................... 6,030 6,765
-------- --------
Total liabilities.......................................... 238,840 277,816
-------- --------
Commitments and contingencies (Note 9)
Stockholders' equity:
Common stock....................................................... 1,538 1,536
Paid-in capital.................................................... 63,781 57,975
Retained earnings.................................................. 101,080 76,165
Equity adjustment from foreign currency translation................ (3,400) (3,302)
Notes receivable stock subscription................................ (1,461) --
-------- --------
Total stockholders' equity................................. 161,538 132,374
-------- --------
Total liabilities and stockholders' equity................. $400,378 $410,190
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE> 162
AMF BOWLING GROUP
COMBINED STATEMENTS OF INCOME
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Operating revenue:
Sales of products and services........................ $563,998 $515,426 $424,810
Revenue from operating lease activities............... 926 2,360 2,763
-------- -------- --------
Total operating revenue....................... 564,924 517,786 427,573
-------- -------- --------
Operating expenses:
Cost of sales......................................... 186,660 197,734 154,943
Bowling center operations............................. 201,985 138,038 123,934
Selling, general and administrative................... 51,866 57,336 46,096
-------- -------- --------
Total operating expenses...................... 440,511 393,108 324,973
-------- -------- --------
Operating income.............................. 124,413 124,678 102,600
Nonoperating income (expenses):
Interest expense...................................... (15,711) (7,394) (5,001)
Other expenses, net................................... (1,043) (1,188) (523)
Interest income....................................... 2,184 526 897
Foreign currency transaction loss..................... (979) (867) (425)
-------- -------- --------
Income before income taxes.............................. 108,864 115,755 97,548
Income tax expense...................................... 12,098 16,452 15,127
-------- -------- --------
Net income.................................... $ 96,766 $ 99,303 $ 82,421
======== ======== ========
</TABLE>
PRO FORMA FINANCIAL INFORMATION (UNAUDITED):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Income before income taxes and
pro forma adjustments................................. $108,864 $115,755 $ 97,548
Pro forma C Corporation -- tax provision................ 40,616 42,972 35,219
-------- -------- --------
Pro forma net income.................................... $ 68,248 $ 72,783 $ 62,329
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE> 163
AMF BOWLING GROUP
COMBINED STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1995 1994 1993
---------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income............................................ $ 96,766 $ 99,303 $ 82,421
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization...................... 39,139 24,776 21,421
Deferred income taxes.............................. (830) (19) (574)
Loss on sale of property and equipment, net........ 567 911 803
Changes in assets and liabilities, net of effects
from companies acquired:
Accounts and notes receivable, net............... 10,630 (9,014) (10,862)
Receivables and payables -- affiliates........... 6,147 4,725 3,543
Inventories...................................... (5,996) (1,411) (1,603)
Other assets and liabilities..................... (101) (1,000) 793
Accounts payable and accrued expenses............ (18,741) 3,838 8,597
Income taxes payable............................. (2,830) (2,390) 189
-------- -------- --------
Net cash provided by operating activities..... 124,751 119,719 104,728
-------- -------- --------
Cash flows from investing activities:
Acquisitions of operating units, net of cash
acquired........................................... -- (17,307) (2,469)
Purchase of property and equipment.................... (29,965) (17,788) (14,687)
Proceeds from sales of property and equipment......... 1,410 1,535 1,355
Other................................................. 229 941 (8)
-------- -------- --------
Net cash used for investing activities........ (28,326) (32,619) (15,809)
-------- -------- --------
Cash flows from financing activities:
Payments on credit note agreements, net............... (11,057) (3,689) (20,065)
Distributions to stockholders......................... (71,851) (78,170) (76,968)
Payment of long-term debt............................. (10,285) (1,104) (8,689)
Payment for redemption of stock....................... (3,960) -- --
Proceeds (payments) on notes payable --
stockholders, net.................................. (3,793) (8,560) 9,293
Capital contributions by stockholders................. 8,329 2,109 5,000
Other................................................. (2,056) (212) (240)
-------- -------- --------
Net cash used for financing activities........ (94,673) (89,626) (91,669)
Effect of exchange rates on cash.............. (194) 2,759 (271)
-------- -------- --------
Net increase (decrease) in cash......................... 1,558 233 (3,021)
Cash at beginning of year............................... 8,174 7,941 10,962
-------- -------- --------
Cash at end of year..................................... $ 9,732 $ 8,174 $ 7,941
======== ======== ========
</TABLE>
See Note 11 for supplemental disclosures to the Combined Statements of Cash
Flows.
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE> 164
AMF BOWLING GROUP
COMBINED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
EQUITY
ADJUSTMENT
FROM FOREIGN TOTAL
COMMON PAID-IN RETAINED CURRENCY STOCKHOLDERS'
STOCK CAPITAL EARNINGS TRANSLATION OTHER EQUITY
------ ------- -------- ------------ ------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1992.... $1,536 $41,714 $ 37,708 $ (4,641) $ (433) $ 75,884
Net income -- 1993.......... -- -- 82,421 -- -- 82,421
Distribution to
stockholders............. -- -- (74,556) -- -- (74,556)
Decrease in equity
adjustment from foreign
currency translation..... -- -- -- (748) -- (748)
Payment of notes receivable
officer/stockholder...... -- -- -- -- 433 433
Capital contributions....... -- 5,000 -- -- -- 5,000
------ ------- -------- ------- ------- --------
Balance, December 31, 1993.... 1,536 46,714 45,573 (5,389) -- 88,434
Net income -- 1994.......... -- -- 99,303 -- -- 99,303
Distribution to
stockholders............. -- -- (78,170) -- -- (78,170)
Increase in equity
adjustment from foreign
currency translation..... -- -- -- 2,087 -- 2,087
Capital contributions....... -- 2,109 -- -- -- 2,109
The Reece Corporation
merger................... -- 9,184 9,459 -- -- 18,643
Other....................... -- (32) -- -- -- (32)
------ ------- -------- ------- ------- --------
Balance, December 31, 1994.... 1,536 57,975 76,165 (3,302) -- 132,374
Net income -- 1995.......... -- -- 96,766 -- -- 96,766
Distribution to
stockholders............. -- -- (71,851) -- -- (71,851)
Redemption of stock......... -- (3,960) -- -- -- (3,960)
Decrease in equity
adjustment from foreign
currency translation..... -- -- -- (98) -- (98)
Sale of stock............... 2 1,479 -- -- (1,479) 2
Capital contributions....... -- 8,329 -- -- -- 8,329
Other....................... -- (42) -- -- 18 (24)
------ ------- -------- ------- ------- --------
Balance, December 31, 1995.... $1,538 $63,781 $101,080 $ (3,400) $(1,461) $ 161,538
====== ======= ======== ======= ======= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE> 165
AMF BOWLING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS
(IN THOUSANDS OF DOLLARS)
NOTE 1 -- ORGANIZATION AND BASIS OF PRESENTATION
AMF Bowling Group ("the Combined Companies") consists of the following
entities which are controlled by the Virginia Investment Trusts ("the Trusts").
S CORPORATIONS
- - AMF Bowling, Inc. ("AMF Bowling")
- - AMF Bowling Centers, Inc. ("AMF Bowling Centers")
- - AMF Beverage Company of Oregon, Inc.
- - King Louie Lenexa, Inc.
- - AMF Bowling Centers (Aust) International Inc.
- - AMF Bowling Centers (Canada) International Inc.
- - AMF BCO -- France One, Inc.
- - AMF BCO -- France Two, Inc.
- - AMF Bowling Centers (Hong Kong) International Inc.
- - AMF Bowling Centers International, Inc. -- Japan
- - AMF Bowling Mexico Holding Inc.
- - Boliches AMF, Inc.
- - AMF Bowling Centers II, Inc. -- Switzerland
- - AMF BCO -- U.K. One, Inc.
- - AMF BCO -- U.K. Two, Inc.
- - AMF BCO -- China, Inc.
- - AMF Bowling Centers China, Inc.
OTHER
- - AMF Catering Services Pty, Ltd.
- - Bush River Corporation
The Combined Companies operate 285 bowling centers at December 31, 1995 in
the United States and in nine foreign countries and manufacture and distribute a
full line of bowling and leisure related products. The principal markets for
bowling and leisure related equipment are domestic and foreign independent
bowling center operators. The accompanying combined financial statements have
been prepared for the purpose of presenting the financial position and results
of operations of the bowling related operations of the various entities
controlled by the Trusts.
NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying combined financial statements have been prepared on the
accrual basis of accounting and conform in all material respects to accounting
principles generally accepted in the United States. The accompanying combined
financial statements are stated in U.S. dollars. All significant intercompany
and intracompany balances and transactions have been eliminated in the
accompanying combined financial statements.
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 reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. The more significant estimates made by management include allowances for
obsolete
F-7
<PAGE> 166
AMF BOWLING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS)
inventory, uncollectible accounts receivable and litigation and claims, as well
as product warranty costs. Actual results could differ from those estimates.
FISCAL YEAR
The entities included in the accompanying combined financial statements
operate on fiscal years ending on December 31, except for AMF Bowling Centers,
which operated on a 52-week period ended on the last Sunday in December during
1993 and 1994, and the Fair Lanes operation which operated on a fiscal period
ended on December 29, 1994. For 1995, AMF Bowling Centers, including the
acquired Fair Lanes operation, adopted a calendar month-end; accordingly, the
results of operations for the period ended December 31, 1995 include AMF Bowling
Centers' operations for the period December 26, 1994 (December 30, 1994 with
respect to Fair Lanes operations) through December 31, 1995.
REVENUE RECOGNITION
Revenue is generally recognized from the sale of products at the time the
products are shipped. For larger contract orders, the Combined Companies
generally require that customers submit a deposit as a condition of accepting
the order. For nonaffiliate international sales, the Combined Companies
generally require the customer to obtain a letter of credit prior to shipment.
WARRANTY COSTS
AMF Bowling offers warranties for its various products and provides, by a
current charge to income, an amount it estimates will be needed to cover future
warranty obligations for products sold. Warranty expense aggregated $2,748,
$4,963 and $3,468 for the years ended December 31, 1995, 1994 and 1993,
respectively.
CASH AND CASH EQUIVALENTS
For the purpose of the statement of cash flows, the Combined Companies
consider all highly liquid debt instruments purchased with an original maturity
of three months or less at the date of purchase to be cash equivalents.
INVENTORIES
Manufacturing inventory is valued at the lower of cost or market, cost
being determined using the last-in, first-out (LIFO) method for domestic
inventories and the first-in, first-out (FIFO) method for foreign inventories.
Bowling center inventory is valued at the lower of cost or market with the
cost being determined using the actual or average cost method.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Expenditures for maintenance and
repairs which do not improve or extend the life of an asset are charged to
expense as incurred; major renewals or betterments are capitalized to the
property accounts. Upon retirement or sale of an asset, its cost and related
accumulated depreciation are removed from the property accounts, and any gain or
loss is recognized.
F-8
<PAGE> 167
AMF BOWLING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS)
Property and equipment are depreciated over their estimated useful lives
using straight-line and accelerated methods. Estimated useful lives of property
and equipment for financial reporting purposes are as follows:
<TABLE>
<S> <C>
Buildings and improvements.................................... 5 - 40 years
Bowling and related equipment................................. 5 - 10 years
Manufacturing equipment....................................... 2 - 7 years
Furniture and fixtures........................................ 3 - 8 years
</TABLE>
INCOME TAXES
Certain of the Combined Companies included in the accompanying combined
financial statements have elected S Corporation status under the Internal
Revenue Code (see Note 1). As an S Corporation, the companies may be liable for
U.S. federal income taxes under certain circumstances and liable for state
income taxes in certain jurisdictions; all other domestic income taxes are the
responsibility of the Combined Companies' stockholders.
The foreign branches of the S Corporations and other foreign entities file
income tax returns and pay taxes in their respective countries. The stockholders
receive a tax credit, subject to certain limitations, in their U.S. federal
income tax returns for foreign taxes paid by the foreign branches of the S
Corporations and certain other foreign entities.
Effective January 1, 1993, the Combined Companies adopted, on a prospective
basis, Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting
for Income Taxes." SFAS No. 109 mandates the liability method for computing
deferred income taxes. Because the Combined Companies have elected S Corporation
status, deferred income taxes are only provided with respect to state and
foreign income taxes. Adoption did not have a material effect on the
accompanying combined financial statements.
RESEARCH AND DEVELOPMENT COSTS
Expenditures relating to the development of new products, including
significant improvements and refinements to existing products, are expensed as
incurred. The amounts charged against income were approximately $3,600, $3,075
and $1,325 for the years ended December 31, 1995, 1994 and 1993, respectively.
ADVERTISING COSTS
Costs incurred for producing and communicating advertising are expensed
when incurred. The amounts charged against income were approximately $12,250,
$10,400 and $8,800 for the years ended December 31, 1995, 1994 and 1993,
respectively.
FOREIGN CURRENCY
In accordance with SFAS No. 52, "Foreign Currency Translation," all assets
and liabilities of the Combined Companies' foreign operations are translated
from foreign currencies into U.S. dollars at year-end exchange rates. Revenue
and expenses of foreign operations are translated using average exchange rates
that existed during the year and reflect currency exchange gains and losses
resulting from transactions conducted in other than local currencies.
Adjustments resulting from the translation of financial statements of foreign
operations into U.S. dollars are included in the equity adjustment from foreign
currency translation on the accompanying combined balance sheets. Gains
F-9
<PAGE> 168
AMF BOWLING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS)
and losses arising from transactions in foreign currencies are included as a
separate item in the accompanying combined statements of income.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value of financial instruments including cash and cash
equivalents, accounts receivable, accounts payable and short-term debt
approximated fair value at December 31, 1995 and 1994 because of the short
maturity of these instruments. The carrying value of long-term receivables and
payables approximated fair value as of December 31, 1995 and 1994 based upon
market rates for similar instruments.
NONCOMPETE AGREEMENTS
The Combined Companies have noncompete agreements with various individuals.
The assets are recorded at cost or at the present value of payments to be made
under these agreements, discounted at annual rates ranging from 8%-10%. The
assets are included in other noncurrent assets and are amortized on a
straight-line basis over the terms of the agreements. Noncompete obligations at
December 31, 1995 and 1994 were approximately $3,300 and $5,400, respectively.
Annual maturities on non-compete obligations as of December 31, 1995 are as
follows:
<TABLE>
<CAPTION>
PERIOD ENDING
DECEMBER 31,
- ------------------------------------------------------------------------------------
<S> <C>
1996................................................................................ 900
1997................................................................................ 700
1998................................................................................ 700
1999................................................................................ 400
2000................................................................................ 100
Thereafter.......................................................................... 500
------
$3,300
======
</TABLE>
NOTE 3 -- RELATED PARTY TRANSACTIONS
The Combined Companies have significant related party transactions with
several companies which are affiliated through common ownership and with certain
of its officers, directors and stockholders. A summary of the significant
balances and transactions with related parties follows.
F-10
<PAGE> 169
AMF BOWLING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS)
Accounts and notes receivable -- affiliates, including accrued interest, at
December 31, 1995 and 1994 consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1995 1994
------- -------
<S> <C> <C>
Accounts receivable -- affiliates............................ $ 2,084 $ 515
======= =======
Notes receivable -- AMF Reece................................ $12,910 $12,148
Notes receivable -- stockholders............................. 11,130 10,128
Note receivable -- AMF Machinery Systems (AMS)............... 796 1,007
------- -------
24,836 23,283
Current maturities........................................... (1,895) (1,676)
------- -------
$22,941 $21,607
======= =======
</TABLE>
Notes receivable -- AMF Reece represents various notes, plus accrued and
unpaid interest income, between AMF Bowling and AMF Reece, an affiliated
company. The notes earn interest monthly based on the LIBOR rate plus 0.75%,
which was 6.48% at December 31, 1995. Interest income for the year ended
December 31, 1995 was $762.
Notes receivable -- stockholders represents notes of $9,394 plus accrued
and unpaid interest income, between the Combined Companies and its stockholders.
The notes bear interest at the LIBOR, plus 0.75%, which was 6.48% at December
31, 1995. Interest income for the years ended December 31, 1995, 1994 and 1993
was $602, $70 and $55, respectively.
Accounts and notes payable -- affiliates at December 31, 1995 and 1994
consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1995 1994
-------- --------
<S> <C> <C>
Accounts payable -- stockholders........................... $ 322 $ 1,872
Accounts payable -- AMS.................................... 1,619 1,349
Accounts payable -- CCA Industries......................... 48 96
-------- --------
$ 1,989 $ 3,317
======== ========
Notes payable -- stockholders.............................. $117,022 $123,065
Note payable -- Fair Lanes, Inc............................ 24,096 20,827
Notes payable -- AMS....................................... 5,609 5,462
Capital lease obligations -- Commonwealth Leasing
Corporation (CLC)........................................ -- 8,298
-------- --------
146,727 157,652
Current maturities......................................... -- (12,193)
-------- --------
Long-term portion $146,727 $145,459
======== ========
</TABLE>
Notes payable -- stockholders includes $88,323, plus accrued and unpaid
interest, at December 31, 1995 ($80,350 at December 31, 1994) of 9.5% notes of
Fair Lanes, Inc. ("Fair Lanes") which were acquired by certain stockholders in
conjunction with the acquisition of Fair Lanes (Note 14). The note balance
includes interest from the period July 15, 1994 through January 15, 1995 which
was paid through the issuance of additional notes. The notes were assumed by AMF
Bowling Centers in connection with the acquisition of the assets of Fair Lanes
on July 2, 1995. The
F-11
<PAGE> 170
AMF BOWLING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS)
notes are payable in 2001. Interest expense for the years ended December 31,
1995 and 1994 was approximately $8,053 and $1,900, respectively.
Notes payable -- stockholders includes $16,773, plus accrued and unpaid
interest, on a $60,000 revolving line of credit between AMF Bowling Centers and
its stockholders which matures on December 31, 1998 and bears interest at the
lesser of the prime rate or the LIBOR rate plus 0.50% (6.23% at December 31,
1995). Interest expense on these notes was $562, $1,922 and $1,945 for the years
ended December 31, 1995, 1994 and 1993, respectively.
Also, included in notes payable -- stockholders is a $1,943 note, plus
accrued and unpaid interest, which represents the balance outstanding on a
$16,000 revolving line of credit between AMF Bowling and its stockholders. The
line bears interest at the prime rate (8.5% at December 31, 1995). Interest
expense on this note was $179 for the year ended December 31, 1995.
The average amount outstanding under the various lines of credit was $7,865
during fiscal 1995 and $34,733 during fiscal 1994. The maximum amount
outstanding under these agreements was $21,246 during fiscal 1995 and $43,403
during fiscal 1994. The average interest rate on the outstanding debt was 7.5%
during fiscal 1995 and 5.56% during fiscal 1994.
Note payable -- Fair Lanes relates to the acquisition of Fair Lanes' net
assets by AMF Bowling Centers from the AMF stockholders. The note bears interest
at prime and is payable on December 31, 1998. Interest expense for the year
ended December 31, 1995 was $1,187. The note bears interest at the prime rate
(8.5% at December 31, 1995).
The notes payable of $5,609 to AMS consist of various notes plus accrued
and unpaid interest which bear interest at 8.5%-11% and are payable on demand.
Interest expense on these notes was $417, $380 and $532 for the years ended
December 31, 1995, 1994 and 1993, respectively.
OTHER RELATED PARTY TRANSACTIONS
The Combined Companies were charged $1,622, $1,198 and $2,270 in management
fees for certain consulting and administrative services performed by affiliated
companies during the years ended December 31, 1995, 1994 and 1993, respectively.
In May 1995, the Combined Companies began purchasing health insurance from
CCA Industries, an affiliated company, on a fully insured basis. Total premiums
for the period from May 1995 to December 31, 1995 aggregated $889.
During the year ended December 31, 1995, Fair Lanes acquired equipment
which was leased from CLC, an affiliated company, for $1,367. The difference
between the capitalized lease obligation and the purchase price was treated as
an adjustment of the note payable -- Fair Lanes.
The Combined Companies purchased $1,429, $984 and $688 of used bowling
equipment from CLC during the years ended 1995, 1994 and 1993, respectively.
The Combined Companies charged service fees and sales commissions of $53,
$126 and $50 to CLC during the years ended December 31, 1995, 1994 and 1993,
respectively. These charges have been treated as reductions in selling, general
and administrative expenses.
The Combined Companies lease equipment from CCA Financial, an affiliated
company. Rent expense for the years ended December 31, 1995, 1994 and 1993 was
$444, $550 and $550, respectively.
F-12
<PAGE> 171
AMF BOWLING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS)
NOTE 4 -- INVENTORIES
Inventories at December 31, 1995 and 1994 consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1995 1994
--------- ---------
<S> <C> <C>
Raw materials.............................................. $ 10,590 $ 10,278
Work-in-progress........................................... 1,522 1,684
Finished goods and spare parts............................. 24,920 18,362
Merchandise inventory...................................... 4,045 4,596
------- -------
41,077 34,920
Inventory valuation reserves............................... (1,256) (800)
------- -------
$ 39,821 $ 34,120
======= =======
</TABLE>
Inventories were determined using the following methods at December 31,
1995 and 1994:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1995 1994
--------- ---------
<S> <C> <C>
LIFO (Domestic manufacturing).............................. $ 24,389 $ 22,324
FIFO (Foreign manufacturing)............................... 11,387 7,200
Other (Merchandise inventory).............................. 4,045 4,596
------- -------
$ 39,821 $ 34,120
======= =======
</TABLE>
If LIFO inventories had been valued at current costs, they would have been
greater by $2,496 and $2,467 at December 31, 1995 and 1994, respectively.
NOTE 5 -- PROPERTY AND EQUIPMENT
Property and equipment at December 31, 1995 and 1994 consist of the
following:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1995 1994
--------- ---------
<S> <C> <C>
Land....................................................... $ 25,692 $ 24,179
Buildings and improvements................................. 138,448 130,221
Equipment, furniture and fixtures.......................... 251,936 236,990
Construction in progress................................... 1,925 537
--------- ---------
418,001 391,927
Less: accumulated depreciation............................. (158,277) (122,291)
--------- ---------
$ 259,724 $ 269,636
========= =========
</TABLE>
Depreciation expense was $37,889, $23,184 and $19,029 for the years ended
December 31, 1995, 1994 and 1993, respectively.
F-13
<PAGE> 172
AMF BOWLING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS)
NOTE 6 -- ACCRUED EXPENSES AND DEPOSITS
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1995 1994
--------- ---------
<S> <C> <C>
Accrued compensation....................................... $ 7,152 $ 9,140
League bowling accounts.................................... 6,368 6,376
Other...................................................... 16,808 19,016
------- -------
$ 30,328 $ 34,532
======= =======
</TABLE>
NOTE 7 -- LONG-TERM DEBT
Long-term debt at December 31, 1995 and 1994 consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1995 1994
------- -------
<S> <C> <C>
Notes payable to bank -- guaranteed............................ $ 3,764 $ --
Mortgage and equipment notes................................... 14,469 15,496
Fair Lanes -- 9.5% note payable................................ -- 10,000
Industrial development bond.................................... 1,354 1,450
Note payable to bank........................................... -- 315
Other.......................................................... 1,047 1,105
------- -------
20,634 28,366
Current maturities............................................. (1,084) (3,288)
------- -------
Long-term portion.............................................. $19,550 $25,078
======= =======
</TABLE>
Notes payable to bank -- guaranteed represents a credit agreement entered
into between AMF Bowling Centers and a bank under which up to $32,750 may be
borrowed. An additional $25,000 may be borrowed from one or more additional
financial institutions. The notes bear interest at a rate equal to the lesser of
the prime rate or the LIBOR rate plus 0.50% (6.23% at December 31, 1995). The
notes are secured by certain tangible personal property of AMF Bowling Centers
and are guaranteed by certain stockholders. The bank credit agreement matures on
April 15, 1997, with the bank's commitment reduced by $3,750 in fiscal 1996
prior to final maturity. The bank credit agreement places certain limitations on
AMF Bowling Centers such that AMF Bowling Centers cannot sell assets or obtain
new debt. The agreement also requires AMF Bowling Centers to meet certain
financial covenants, including maximum debt to equity ratios, minimum tangible
net worth requirements and minimum earnings to charge ratios.
The mortgage and equipment notes are secured by first deeds of trust on
various bowling centers. The notes generally require monthly payments and mature
at various times through October 2008. Interest rates on these notes are
generally fixed and range from 3% to 12%.
The Industrial Development Bond is secured by a first deed of trust on one
of the bowling centers. The bond bears interest at a fluctuating rate based on
the prime rate of the lending bank (6.947% at December 31, 1995). Monthly
principal and interest payments are due through August 2001.
Note payable to bank represents a credit agreement between AMF Bowling and
a bank under which up to $15,000 may be borrowed. This arrangement is due to
expire on April 30, 1996. There were no borrowings at December 31, 1995 under
the agreement. Interest is payable monthly at the
F-14
<PAGE> 173
AMF BOWLING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS)
lower of the bank's prime rate or the adjusted LIBOR plus 0.50% (6.23% at
December 31, 1995). This agreement requires certain financial covenants to be
met, including maximum debt to equity ratios, minimum tangible net worth
requirements and minimum earnings to charge ratios.
AMF Bowling has a $3,500 revolving credit line with a bank which will
expire on June 30, 1996. No balance was outstanding at December 31, 1995.
Interest on outstanding borrowings is payable quarterly at the lower of the
bank's prime interest rate or the adjusted LIBOR rate plus 0.50% (6.23% at
December 31, 1995). Under this line were two standby letters of credit with
amounts outstanding at December 31, 1995 of $1,138, expiring on December 1,
1996, and of $12, expiring on August 19, 1996.
The average amount outstanding under the various lines of credit was
$21,807 during fiscal 1995 and $4,801 during fiscal 1994. The maximum amount
outstanding under these credit arrangements was $39,454 during fiscal 1995 and
$27,334 during fiscal 1994. The average interest rate on these credit
arrangements was 6.43% during fiscal 1995 and 6.06% during fiscal 1994.
AMF Bowling has available a foreign exchange line of $5,000 and a letter of
credit line of $1,000. No balances were outstanding at December 31, 1995. One
standby letter of credit with an amount at December 31, 1995 of $535, expiring
on January 18, 1996, and four import letters of credit totaling $142 were
outstanding under these lines.
Annual maturities of long-term debt as of December 31, 1995 are as follows:
<TABLE>
<CAPTION>
PERIOD ENDING
DECEMBER 31,
- -------------
<S> <C> <C>
1996............................................................... $ 1,084
1997............................................................... 6,150
1998............................................................... 1,077
1999............................................................... 778
2000............................................................... 4,198
Thereafter......................................................... 7,347
-------
$20,634
=======
</TABLE>
NOTE 8 -- INCOME TAXES
Income (loss) before income taxes consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------
1995 1994 1993
-------- -------- -------
<S> <C> <C> <C>
United States............................. $ 77,931 $ 75,807 $63,665
Foreign................................... 30,933 39,948 33,883
------- -------- -------
$108,864 $115,755 $97,548
======= ======== =======
</TABLE>
F-15
<PAGE> 174
AMF BOWLING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS)
The income tax provision (benefit) consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
CURRENT TAX EXPENSE
U.S. federal........................................ $ -- $ -- $ --
State and local..................................... 1,065 481 828
Foreign............................................. 11,961 15,450 14,902
------- ------- -------
Total current....................................... 13,026 15,931 15,730
------- ------- -------
DEFERRED TAX EXPENSE (BENEFIT)
U.S. federal........................................ -- -- --
State and local..................................... (32) -- --
Foreign............................................. (896) 521 (603)
------- ------- -------
Total deferred...................................... (928) 521 (603)
------- ------- -------
Total provisions.................................... $12,098 $16,452 $15,127
======= ======= =======
</TABLE>
Temporary differences and carryforwards which give rise to deferred tax
assets and liabilities at December 31, 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1995 1994
------- -------
<S> <C> <C>
DEFERRED TAX ASSETS
Current assets................................................. $ 1,198 $ 1,009
Noncurrent assets.............................................. 799 122
------- -------
Total deferred tax assets...................................... 1,997 1,131
------- -------
DEFERRED TAX LIABILITIES
Noncurrent liabilities......................................... (1,998) (2,005)
------- -------
Total deferred tax liabilities................................. (1,998) (2,005)
------- -------
Net deferred tax liabilities................................... $ (1) $ (874)
======= =======
</TABLE>
The primary determination of the deferred tax assets are book accruals not
deductible for tax purposes, such as the allowance for bad debts, inventory
reserves and various other accruals. Deferred tax liabilities are a result of
accelerated depreciation methods used for tax purposes.
F-16
<PAGE> 175
AMF BOWLING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS)
The provision for income taxes differs from the amount computed by applying
the statutory rate of 35% for the periods December 31, 1995 and 1994 and 34% for
the year ended December 31, 1993 to income before taxes. The principal reasons
for this difference are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Tax at federal statutory rate................... $ 38,102 $ 40,514 $ 33,166
Increase (decrease) in rates resulting from:
S Corporation election for U.S. federal tax
purposes................................... (38,102) (40,514) (33,166)
State and local taxes......................... 1,033 481 828
Foreign income taxes.......................... 11,065 15,971 14,299
-------- -------- --------
Total......................................... $ 12,098 $ 16,452 $ 15,127
======== ======== ========
</TABLE>
PRO FORMA PROVISION FOR INCOME TAXES (UNAUDITED) -- SEE NOTE 16
In the event the proposed transaction is consummated, the Combined
Companies will no longer be treated as an S Corporation for income tax purposes
in the United States, and in certain state jurisdictions.
Accordingly, the combined statements of income include a pro forma
adjustment for income taxes which would have been recorded if the Combined
Companies had not been an S Corporation, based on tax laws in effect during
these periods. The pro forma adjustment was computed separately for each entity
and then combined, except for purposes of computing the utilization of foreign
tax credits which were considered in the aggregate for the Combined Companies.
Pro forma income tax provisions are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
CURRENT
U.S. federal.................................... $ 26,404 $ 24,368 $ 18,480
State and local................................. 3,491 3,730 3,088
Foreign......................................... 11,961 15,450 14,902
-------- -------- --------
Total current................................... 41,856 43,548 36,470
-------- -------- --------
DEFERRED
U.S. federal.................................... (317) (979) (570)
State and local................................. (27) (118) (78)
Foreign......................................... (896) 521 (603)
-------- -------- --------
Total deferred.................................. (1,240) (576) (1,251)
-------- -------- --------
Total provisions................................ $ 40,616 $ 42,972 $ 35,219
======== ======== ========
</TABLE>
F-17
<PAGE> 176
AMF BOWLING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS)
Temporary differences and carryforwards which give rise to pro forma
deferred tax assets and liabilities at December 31, 1995 and 1994 are as
follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1995 1994
------- -------
<S> <C> <C>
DEFERRED TAX ASSETS
Current assets................................................. $ 6,178 $ 7,938
Noncurrent assets.............................................. 7,124 4,158
------- -------
Total deferred tax assets...................................... 13,302 12,096
------- -------
DEFERRED TAX LIABILITIES
Noncurrent liabilities......................................... (2,707) (2,624)
------- -------
Total deferred tax liabilities................................. (2,707) (2,624)
------- -------
Net deferred tax assets........................................ $10,595 $ 9,472
======= =======
</TABLE>
Pro forma deferred income taxes relate primarily to timing differences
between financial and income tax reporting for depreciation and certain accruals
which are not currently deductible for income tax purposes.
A reconciliation of the Combined Companies' pro forma United States income
tax provision computed by applying the statutory United States federal income
tax rate of 35% (34% in 1993) to the Combined Companies' income before income
taxes is presented in the following table:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Increases (reductions) resulting from:
United States federal income taxes at
statutory rate............................. $ 38,102 $ 40,514 $ 33,166
State taxes, net.............................. 2,272 2,304 1,948
Foreign income taxes.......................... 11,065 15,971 14,299
Foreign tax credits........................... (11,065) (15,971) (14,299)
Other business credits........................ -- (79) (2)
Nondeductible items........................... 171 134 20
Environmental tax............................. 102 103 87
Other......................................... (31) (4) --
------- -------- --------
$ 40,616 $ 42,972 $ 35,219
======= ======== ========
</TABLE>
NOTE 9 -- COMMITMENTS AND CONTINGENCIES
LEASES
The Combined Companies lease certain facilities and equipment under
operating leases which expire at various dates through 2011. These leases
generally contain renewal options and require the Combined Companies to pay
taxes, insurance, maintenance and other expenses in addition to the minimum
annual rentals. Certain leases require contingent payments based on usage of
equipment above certain specified levels. Such contingent rentals amounted to
$1,517, $1,275 and $1,100 for the years ended December 31, 1995, 1994 and 1993,
respectively.
F-18
<PAGE> 177
AMF BOWLING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS)
Future minimum rental payments under the operating lease agreements as of
December 31, 1995 are as follows:
<TABLE>
<CAPTION>
PERIOD ENDING
DECEMBER 31,
- -------------
<S> <C> <C>
1996.............................................................. $ 17,500
1997.............................................................. 13,800
1998.............................................................. 11,400
1999.............................................................. 9,900
2000.............................................................. 6,900
Thereafter........................................................ 47,900
-------
$107,400
=======
</TABLE>
Total rent expense under operating leases aggregated approximately $19,250,
$15,650 and $14,325 for the years ended December 31, 1995, 1994 and 1993,
respectively.
LITIGATION AND CLAIMS
AMF Bowling's Pins and Lanes division was the defendant in an
administrative proceeding related to a labor dispute. This claim was resolved in
favor of the division during 1995 and the related reserve of approximately
$1,100 was reversed and was recorded as a reduction of selling, general and
administrative expenses in the accompanying combined statement of income for the
year ended December 31, 1995.
AMF Bowling terminated its Korean distributorship agreement. The Korean
distributor filed suit against the company in Korea seeking an injunction
against AMF Bowling's Seoul Korea branch to prevent AMF Bowling from selling
bowling and bowling related products in Korea. On February 16, 1996, the Korean
court dismissed the litigation on jurisdictional grounds. Such decision is
subject to appeal.
On January 10, 1996, the Korean distributor filed a second suit in the
Supreme Court of the State of New York against AMF Bowling and AMF Bowling
Centers. The suit alleges a number of complaints related to the conduct and
termination of the Korean distributorship agreement and alleges that the
defendants caused the Korean distributor's insolvency. The Korean distributor is
seeking compensatory damages of at least $41,759 and punitive damages of at
least $100,000 or ten times the amount of compensatory damages awarded,
whichever is greater, under each of seven causes of action set forth in the
suit.
Management believes that the Korean distributorship agreement was properly
terminated and the actions against AMF Bowling and AMF Bowling Centers are
without merit. Management intends to vigorously defend against this claim. Under
the terms of the proposed sale agreement (Note 16), the current AMF shareholders
have agreed to indemnify the buyers for any loss related to this litigation.
On March 5, 1996, the defendant in an action entitled Northland Bowl and
Sports Center, Inc. and Recreation Associates, II v. Golden Giant, Inc., d/b/a
Golden Giant Building Systems, Court of Common Pleas, Centre County, Pa. (Index
No. 96-75), asserted a third-party claim against AMF Bowling and other parties.
Defendant, Golden Giant, a construction company, was previously named as
defendant by a bowling center (not owned or operated by the Combined Companies)
in connection with the collapse of the center's roof in early 1994. Golden Giant
has now named AMF Bowling, charging it with negligence and breach of implied
warranty for installing scoring monitors
F-19
<PAGE> 178
AMF BOWLING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS)
(four years before the roof collapsed) on a portion of the building that
allegedly could not adequately support the additional weight of the equipment.
The bowling center plaintiff claims total damages in amounts exceeding $3,500,
and Golden Giant asserts that, if plaintiff is entitled to any recovery, it
should be in whole or part against AMF Bowling.
AMF Bowling is involved in a patent infringement suit. The plaintiff in the
case, a competitor of AMF Bowling's Century division, obtained a summary
judgment on the issue of liability in December 1994. The court recently issued
an order which will permit AMF to appeal. The plaintiff claims damages in the
range of $3,000 to $9,000. A trial on damages will not occur unless and until
the liability issue is resolved against AMF Bowling. Management believes the
claim is without merit and intends to vigorously contest the claim.
AMF Bowling Centers and AMF Bowling are defendants in a wrongful death suit
related to an employee. The employee's estate is seeking compensatory damages up
to $3,000 plus $3,000 in punitive damages. However, the plaintiff's counsel has
verbally offered to settle the case for $350. Management believes the claim is
without merit and expects to vigorously contest the claim.
In addition, the Combined Companies are involved in certain other lawsuits
and claims arising out of normal business operations. The majority of these
relate to accidents at the Combined Companies' bowling centers. Management
believes that the ultimate resolution of such matters will not materially affect
the Combined Companies' results of operations or financial position.
While the ultimate outcome of the litigation and claims against the
Combined Companies cannot presently be determined, management believes the
Combined Companies have made adequate provision for possible losses. At December
31, 1995, the Combined Companies had recorded reserves aggregating approximately
$2,800 for litigation and claims, which are included in accrued expenses in the
accompanying combined balance sheet.
NOTE 10 -- EMPLOYEE BENEFIT PLANS
The Combined Companies have a defined contribution (401k) plan to which
domestic employees may make voluntary contributions based on their compensation.
Under the provisions of the plan, the Combined Companies can, at their option,
match a discretionary percentage of employee contributions and make an
additional contribution as determined by their Board of Directors. Contributions
vest 100% after a five-year period. The amounts charged to expense under this
plan were $1,122, $901 and $909 for the years ended December 31, 1995, 1994 and
1993, respectively.
One of the Combined Companies has a Stock Performance Plan ("the Plan") for
certain key employees. Under the terms of the Plan, eligible employees earn
Stock Performance Units as a result of the Company meeting certain operating
performance conditions, as defined by the Plan, relating to (1) sales, (2) cash
flow and (3) operating results. Benefits under the Plan vest over a five-year
period and will be paid in installments over a 10-year period without interest
(or less under certain conditions or if specified by the Company's Board of
Directors) upon the termination of an eligible employee. The Plan can be
terminated or amended at any time by the Company's Board of Directors. The
amount charged to expense under this plan was $622, $311 and $266 for the years
ended December 31, 1995, 1994 and 1993, respectively. The agreement contains a
provision which would accelerate the payout of the benefits from 10 years to
five years upon a change of control event and would require that interest be
paid on the unpaid balance.
Certain of the Combined Companies' foreign operations have employee benefit
plans covering selected employees. These plans vary as to the funding, including
local government, employee and employer funding. Each company has provided for
pension expense and made contributions to
F-20
<PAGE> 179
AMF BOWLING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS)
these plans in accordance with the requirements of the plans and local country
practices. The amounts charged to expense under these plans aggregated $806,
$701 and $570 for the years ended December 31, 1995, 1994 and 1993,
respectively.
NOTE 11 -- SUPPLEMENTAL DISCLOSURES TO THE COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Cash paid during the year for:
Interest.......................................... $ 5,909 $ 4,306 $ 3,987
Income taxes...................................... $16,922 $17,593 $15,032
</TABLE>
F-21
<PAGE> 180
AMF BOWLING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS)
NOTE 12 -- BUSINESS SEGMENTS
The Combined Companies operate in two major lines of business: operation of
bowling centers and manufacturing of bowling and related products. Information
concerning operations in these business segments for the years ended December
31, 1995, 1994 and 1993, and identifiable assets at December 31, 1995 and 1994,
is presented below:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Revenue from unaffiliated customers
Bowling Centers
Domestic $192,400 $121,600 $ 94,600
International 99,900 103,800 98,000
-------- -------- --------
292,300 225,400 192,600
Manufacturing 272,600 292,400 235,000
-------- -------- --------
$564,900 $517,800 $427,600
======== ======== ========
Intersegment sales
Bowling Centers
Domestic $ -- $ -- $ --
International -- -- --
-------- -------- --------
-- -- --
Manufacturing 13,900 9,300 8,600
-------- -------- --------
$ 13,900 $ 9,300 $ 8,600
======== ======== ========
Operating income
Bowling Centers
Domestic $ 26,500 $ 17,600 $ 14,700
International 23,700 26,400 21,200
-------- -------- --------
50,200 44,000 35,900
Manufacturing 75,700 80,900 67,700
Eliminations (1,500) (200) (1,000)
-------- -------- --------
$124,400 $124,700 $102,600
======== ======== ========
Identifiable assets
Bowling Centers
Domestic $224,500 $233,400
International 64,600 62,500
-------- --------
289,100 295,900
Manufacturing 119,800 119,000
Eliminations (8,500) (4,700)
-------- --------
$400,400 $410,200
======== ========
</TABLE>
F-22
<PAGE> 181
AMF BOWLING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Depreciation and amortization expense
Bowling Centers
Domestic $ 29,100 $ 14,700 $ 11,800
International 7,500 7,100 6,800
-------- -------- --------
36,600 21,800 18,600
Manufacturing 3,600 3,700 3,400
Eliminations (1,000) (700) (600)
-------- -------- --------
$ 39,200 $ 24,800 $ 21,400
======== ======== ========
Capital expenditures
Bowling Centers
Domestic $ 17,800 $ 10,400 $ 4,400
International 10,200 4,300 9,300
-------- -------- --------
28,000 14,700 13,700
Manufacturing 4,500 4,100 2,600
Eliminations (2,500) (1,000) (1,600)
-------- -------- --------
$ 30,000 $ 17,800 $ 14,700
======== ======== ========
</TABLE>
Sales to two distributors located in the Far East represented approximately
29% and 42% of total manufacturing operating revenues in 1995 and 1994,
respectively. In 1993, sales to one distributor represented approximately 24% of
total manufacturing operating revenues.
F-23
<PAGE> 182
AMF BOWLING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS)
NOTE 13 -- GEOGRAPHIC SEGMENTS
Information about the Combined Companies' operations in different
geographic areas for the years ended December 31, 1995, 1994 and 1993, and
identifiable assets at December 31, 1995 and 1994, are presented below:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Net operating revenue:
United States............................. $371,362 $296,273 $233,492
Japan..................................... 50,315 58,165 55,454
Hong Kong................................. 40,757 55,067 33,436
Korea..................................... 6,020 -- --
Australia................................. 47,102 43,945 41,199
United Kingdom............................ 26,128 27,647 28,059
Mexico.................................... 7,774 15,255 13,760
Sweden.................................... 9,982 9,746 8,411
Canada.................................... 598 664 1,110
Spain..................................... 2,668 2,566 4,068
Other European countries.................. 16,073 17,725 17,223
Eliminations.............................. (13,855) (9,267) (8,639)
-------- -------- --------
$564,924 $517,786 $427,573
======== ======== ========
</TABLE>
Net operating revenue for the United States manufacturing operation has
been reduced by $60,980, $69,163 and $50,070 for the years ended December 31,
1995, 1994 and 1993, respectively, to reflect the elimination of intracompany
sales between the domestic manufacturing operation and the manufacturing foreign
sales and service branches.
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Operating income
United States............................. $ 92,170 $ 83,278 $ 67,006
Japan..................................... 8,827 13,273 13,689
Hong Kong................................. 6,144 5,164 3,312
Korea..................................... (1,174) -- --
Australia................................. 13,317 11,996 10,498
United Kingdom............................ 2,437 3,744 3,856
Mexico.................................... 1,447 4,326 3,947
Sweden.................................... 1,535 1,685 1,496
Canada.................................... -- 3 (396)
Spain..................................... (95) 325 (65)
Other European countries.................. 1,281 1,054 199
Eliminations.............................. (1,476) (170) (942)
-------- -------- --------
$124,413 $124,678 $102,600
======== ======== ========
</TABLE>
F-24
<PAGE> 183
AMF BOWLING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS)
Operating income for the United States manufacturing operation has been
reduced by $938, $1,636 and $606 for the years ended December 31, 1995, 1994 and
1993, respectively, to reflect the elimination of intracompany gross profit
between the domestic manufacturing operation and the manufacturing foreign sales
and service branches.
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------
1995 1994
-------- --------
<S> <C> <C>
Identifiable assets
United States............................................ $311,266 $316,704
Japan.................................................... 22,137 19,149
Hong Kong................................................ 8,531 8,764
Korea.................................................... 2,918 --
Australia................................................ 31,574 32,477
United Kingdom........................................... 11,785 16,321
Mexico................................................... 4,471 6,431
Sweden................................................... 2,619 2,729
Canada................................................... 1,174 1,185
Spain.................................................... 1,971 2,098
Other European countries................................. 8,480 8,988
China.................................................... 2,024 --
Eliminations............................................. (8,572) (4,656)
-------- --------
$400,378 $410,190
======== ========
</TABLE>
Identifiable assets for the foreign sales and service branches have been
reduced by $4,432 and $3,494 at December 31, 1995 and 1994, respectively, to
reflect the elimination of intracompany gross profit in inventory between the
domestic manufacturing operations and the manufacturing foreign sales and
service branches.
NOTE 14 -- BUSINESS COMBINATIONS
Effective December 31, 1994, The Reece Corporation, a related company, was
merged into AMF Bowling. The merger was accounted for at historical cost as a
capital contribution. The Reece Corporation activities for 1995, 1994 and 1993
were not material to the combined financial statements.
Effective August 31, 1994, AMF Bowling acquired certain assets and
liabilities of Legendary Billiards, Inc. ("Legendary") for $215. Legendary is a
manufacturer of billiard cues. The acquisition was accounted for under the
purchase method, and the results of operations are included in the financial
statements from the date of acquisition.
Effective June 30, 1993, AMF Bowling acquired certain assets and
liabilities of Playmaster-Renaissance, Inc. ("Playmaster") for $2,469.
Playmaster is a manufacturer of billiard equipment. The acquisition was
accounted for under the purchase method, and the results of operations are
included in the financial statements from the date of acquisition.
Pro forma results of operations for the Legendary and Playmaster
acquisitions have not been presented because the effects of these acquisitions
were not material.
F-25
<PAGE> 184
AMF BOWLING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS)
Fair Lanes, Inc. (Fair Lanes) operated 106 bowling centers in the United
States and Puerto Rico. On June 22, 1994, Fair Lanes and its parent, Fair Lanes
Entertainment, Inc. (FLE), each filed voluntary petitions for relief under
Chapter 11 of Title 11 of the United States Code (Chapter 11). Fair Lanes'
operating subsidiaries did not file for Chapter 11 protection. At the time of
filing, liabilities subject to compromise consisted of Fair Lanes' $138,000
senior secured notes, which were publicly traded, and FLE's debt in the form of
$48,000 variable rate and zero coupon notes (these notes were also publicly
traded). The Bankruptcy Court approved the plan of reorganization effective
September 29, 1994 whereby the holders of FLE's $48,000 of notes received
approximately 6% of Fair Lanes' equity and the holders of Fair Lanes' $138,000
of notes received approximately 94% of Fair Lanes' equity and $90,350 of new
9.5% notes. The former Fair Lanes' equityholders' interests were eliminated as a
result of the reorganization. Through September 29, 1994, AMF's shareholders had
purchased old Fair Lanes' and FLE's notes which resulted in the AMF shareholders
obtaining approximately 56% of the voting shares of Fair Lanes. One other
shareholder held approximately 35% of the new stock and the remaining 9% was
held by other shareholders. The AMF shareholders were able to acquire the shares
held by the 35% shareholder on January 7, 1996 and an additional 2% of the
shares from other shareholders in open market purchases. On February 7, 1996,
the AMF shareholders affected a cash merger and bought out the remaining
shareholders.
The Fair Lanes' acquisition was accounted for as a purchase. As a result of
the relatively short acquisition period and the fact that the minority
shareholders' interest was not affected for losses during the acquisition
period, the combined financial statements include the results of operations for
periods subsequent to September 29, 1994.
The assets acquired and liabilities assumed were recorded at their
estimated fair value as follows:
<TABLE>
<S> <C>
Current assets.................................................. $ 3,059
Property and equipment.......................................... 141,785
Other assets.................................................... 12,643
Current liabilities............................................. (22,672)
Long-term liabilities........................................... (116,174)
---------
Purchase price.................................................. $ 18,641
=========
</TABLE>
The following summary presents unaudited pro forma combined results of
operations as if the acquisition of Fair Lanes occurred at the beginning of
1994, and includes adjustments related to depreciation of fixed assets and
interest expense on debt assuming the initial purchase price allocation occurred
as of January 1, 1994. In addition, expenses related to the Chapter 11
reorganization have been eliminated. The pro forma results are for illustrative
purposes only, and do not purport to be indicative of the actual results which
would have occurred had the transaction been consummated as of January 1, 1994,
nor are they indicative of future results of operations. The pro forma results
do not reflect changes in the business which have occurred subsequent to the
date of acquisition.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1994
------------
<S> <C>
Operating revenue.............................................. $590,459
Operating income............................................... 113,411
Income before income taxes..................................... 94,949
</TABLE>
F-26
<PAGE> 185
AMF BOWLING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS)
NOTE 15 -- STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
DECEMBER 31, 1995
-----------------------------------------------------------------------------------------------
COMMON STOCK NOTES
----------------------- RECEIVABLE TOTAL
ISSUED AND COMMON PAID IN RETAINED DEFERRED STOCK STOCKHOLDERS'
AUTHORIZED OUTSTANDING STOCK CAPITAL EARNINGS TRANSLATION SUBSCRIPTION EQUITY
---------- ----------- ------ ------- -------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AMF Bowling, Inc............... 10,000 950.6689 $ 1 $28,213 $ 54,463 $ 593 $ -- $ 83,270
AMF Bowling Centers, Inc....... 15,000 9,485.1000 9 29,122 13,436 -- (726) 41,841
AMF Beverage Company of Oregon,
Inc.......................... 10,000 94.8510 -- -- 382 -- -- 382
King Louie Lenexa, Inc. 30,000 94.8510 -- -- 859 -- -- 859
AMF Bowling Centers (Aust.)
International Inc............ 10,000 948.5100 1 492 25,251 (74) (503) 25,167
AMF Bowling Centers (Canada)
International Inc............ 10,000 948.5100 1 2,109 (1,286) 85 -- 909
AMF BCO - France One, Inc...... 10,000 1,000.0000 1 31 681 (44) -- 669
AMF BCO - France Two, Inc...... 10,000 1,000.0000 1 83 1,842 (119) -- 1,807
AMF Bowling Centers (Hong Kong)
International, Inc........... 10,000 948.5100 1 57 2,420 -- (62) 2,416
AMF Bowling Centers
International, Inc.
(Japan)...................... 10,000 9,485.1000 10 156 4,285 611 (170) 4,892
AMF Bowling Mexico Holding,
Inc.......................... 1,000 75.6972 1,507 226 2,753 (3,258) -- 1,228
Boliches AMF, Inc.............. 10,000 100.0000 1 60 814 (815) -- 60
AMF Bowling Centers II Inc.
(Switzerland)................ 1,000 100.0000 1 -- 617 61 -- 679
AMF BCO - U.K. One, Inc........ 10,000 100.0000 1 129 (186) (113) -- (169)
AMF BCO - U.K. Two, Inc........ 10,000 100.0000 1 352 (509) (310) -- (466)
AMF BCO - China, Inc........... 10,000 1,000.0000 1 577 (97) (4) -- 477
AMF Bowling Centers China,
Inc.......................... 10,000 1,000.0000 1 2,174 (367) (13) -- 1,795
Bush River Corporation......... 100,000 18,895.1919 -- -- 230 -- -- 230
Eliminations................... -- -- -- -- (4,508) -- -- (4,508)
------- -------- ------- ------- -------- --------
Totals......................... $1,538 $63,781 $101,080 $(3,400) $ (1,461) $161,538
======= ======== ======= ======= ======== ========
</TABLE>
F-27
<PAGE> 186
AMF BOWLING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
DECEMBER 31, 1994
-------------------------------------------------------------------------------------------------
COMMON STOCK NOTES
------------------------ RECEIVABLE TOTAL
ISSUED AND COMMON PAID IN RETAINED DEFERRED STOCK STOCKHOLDERS'
AUTHORIZED OUTSTANDING STOCK CAPITAL EARNINGS TRANSLATION SUBSCRIPTION EQUITY
---------- ----------- ------- ------- -------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AMF Bowling, Inc............... 10,000 970.2237 $ 1 $32,173 $40,894 $ 72 $ -- $ 73,140
AMF Bowling Centers, Inc....... 15,000 9,390.2500 9 22,813 8,668 -- -- 31,490
AMF Beverage Company of Oregon,
Inc.......................... 10,000 93.9025 -- -- 155 -- -- 155
King Louie Lenexa, Inc. 30,000 93.9025 -- -- 755 -- -- 755
AMF Bowling Centers (Aust.)
International Inc............ 10,000 939.0250 1 -- 19,486 (675) -- 18,812
AMF Bowling Centers (Canada)
International Inc............ 10,000 939.0250 1 2,109 (1,232) 85 -- 963
AMF BCO - France One, Inc...... 10,000 1,000.0000 1 31 522 (70) -- 484
AMF BCO - France Two, Inc...... 10,000 1,000.0000 1 82 1,410 (188) -- 1,305
AMF Bowling Centers (Hong Kong)
International, Inc. ......... 10,000 939.0250 1 -- 1,833 -- -- 1,834
AMF Bowling Centers
International, Inc.
(Japan)...................... 10,000 9,390.2500 10 -- 2,848 882 -- 3,740
AMF Bowling Mexico Holding,
Inc.......................... 1,000 75.6972 1,507 226 3,519 (2,461) -- 2,791
Boliches AMF, Inc.............. 10,000 100.0000 1 60 954 (573) -- 442
AMF Bowling Centers II Inc.
(Switzerland)................ 1,000 100.0000 1 -- 672 12 -- 685
AMF BCO - U.K. One, Inc........ 10,000 100.0000 1 129 (407) (104) -- (381)
AMF BCO - U.K. Two, Inc........ 10,000 100.0000 1 352 (1,110) (282) -- (1,039)
Bush River Corporation......... 100,000 18,706.2400 -- -- 231 -- -- 231
Eliminations................... -- -- -- -- (3,033) -- -- (3,033)
------- -------- ------- ------- -------- --------
Totals......................... $1,536 $57,975 $76,165 $(3,302) $ -- $132,374
======= ======== ======= ======= ======== ========
</TABLE>
NOTE 16 -- SUBSEQUENT EVENTS
OTHER
Effective February 29, 1996, the stock of AMF Bowling, S.A. was distributed
to the shareholders of Boliches AMF, Inc. and AMF Bowling Mexico Holding, Inc.
AMF Bowling, S.A. operates two bowling centers in Spain and had total assets and
stockholders' equity of approximately $1,800 and $900, respectively, at December
31, 1995.
Cash distributions to shareholders from January 1, 1996 to March 1, 1996
aggregated $6,381.
F-28
<PAGE> 187
AMF BOWLING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS)
SALE TRANSACTION
On February 16, 1996, the stockholders of the Combined Companies executed a
Stock Purchase Agreement, subject to certain closing conditions, to sell the
stock and certain assets of the individual companies to an entity organized by
GS Capital Partners II, L.P. (the "Purchaser"). On May 1, 1996, the sale
transaction was completed.
In conjunction with the acquisition of the Combined Companies, AMF Group
Inc. issued Senior Subordinated Notes and Senior Subordinated Discount Notes on
March 21, 1996. On May 1, 1996, AMF Group Inc. executed a bank credit agreement
and certain additional subsidiaries of AMF Group Inc. became guarantors of the
Senior Subordinated Notes and the Senior Subordinated Discount Notes. These
financing arrangements provide for guarantees by the following companies which
became indirect subsidiaries of AMF Group Inc., which is the borrower and issuer
of the notes evidencing such indebtedness. Guarantor companies include the
following:
- AMF Bowling Centers, Inc.
- Bush River Corporation
- King Louie Lenexa, Inc.
- AMF Beverage Company of Oregon, Inc.
- AMF Bowling, Inc.
- AMF Bowling Centers (Aust) International Inc.
- AMF Bowling Centers (Canada) International Inc.
- AMF BCO -- France One, Inc.
- AMF BCO -- France Two, Inc.
- AMF Bowling Centers (Hong Kong), International Inc.
- AMF Bowling Centers International, Inc. (Japan)
- AMF Bowling Mexico Holding Inc.
- Boliches AMF, Inc.
- AMF BCO -- U.K. One, Inc.
- AMF BCO -- U.K. Two, Inc.
- AMF BCO -- China, Inc.
- AMF Bowling Centers China, Inc.
Included with the guarantor companies is AMF Bowling Centers II, Inc.
(Switzerland) which sold assets of one bowling center to a newly formed
subsidiary of AMF Group Inc., which became a guarantor.
F-29
<PAGE> 188
AMF BOWLING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS)
Non-guarantor companies include the following foreign subsidiaries of certain of
the guarantor companies:
- AMF Bowling (Unlimited)
- Worthington North Properties Limited
- AMF Bowling France SNC
- AMF Bowling de Paris SNC
- AMF Bowling de Lyon La Part Dieu SNC
- AMF Bowling S.A.
- Boliches y Compania
- Operadora Mexicana de Boliches, S.A.
- Promotora de Boliches, S.A. de C.V.
- Inmeubles Obispado, S.A.
- Inmeubles Minerva, S.A.
- Boliches Mexicano, S.A.
- AMF Bowling Centers (China) Company
- AMF Garden Hotel Bowling Center Company
Included in the non-guarantor companies is AMF Bowling S.A. which sold assets of
two bowling centers in Spain to a newly formed subsidiary of AMF Group Inc.,
which became a guarantor company.
The following condensed combining information presents:
- Condensed combining balance sheets as of December 31, 1995 and 1994 and
the related condensed combining statements of income and of cash flows
for the years ended December 31, 1995, 1994 and 1993.
- Elimination entries necessary to combine the entities comprising the
Combined Companies.
F-30
<PAGE> 189
AMF BOWLING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS)
CONDENSED COMBINING BALANCE SHEETS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
NON-
GUARANTOR GUARANTOR COMBINED
COMPANIES COMPANIES ELIMINATIONS COMPANIES
--------- --------- ------------ ---------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................ $ 8,843 $ 889 $ -- $ 9,732
Accounts and notes receivable, net of
allowance for doubtful accounts....... 37,499 1,527 -- 39,026
Accounts and notes
receivable -- affiliates.............. 4,477 7,465 (7,963) 3,979
Inventories.............................. 38,042 1,779 -- 39,821
Prepaid expenses and other............... 3,944 1,238 -- 5,182
-------- ------- ------- --------
Total current assets.................. 92,805 12,898 (7,963) 97,740
Notes receivable -- affiliates............. 22,941 -- -- 22,941
Property and equipment, net................ 250,637 10,582 (1,495) 259,724
Other assets............................... 29,869 822 (10,718) 19,973
-------- ------- ------- --------
Total assets.......................... $396,252 $24,302 $(20,176) $400,378
======== ======= ======= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable......................... $ 22,313 $ 1,403 $ (75) $ 23,641
Book overdrafts.......................... 2,362 -- -- 2,362
Accrued expenses and deposits............ 28,203 2,125 -- 30,328
Accounts and notes
payable -- affiliates................. 1,821 7,033 (6,865) 1,989
Long-term debt, current portion.......... 1,084 -- -- 1,084
Income taxes payable..................... 5,930 1,199 -- 7,129
-------- ------- ------- --------
Total current liabilities............. 61,713 11,760 (6,940) 66,533
Long-term debt............................. 19,550 -- -- 19,550
Notes payable -- affiliates................ 146,639 1,076 (988) 146,727
Other liabilities.......................... 5,282 748 -- 6,030
-------- ------- ------- --------
Total liabilities..................... 233,184 13,584 (7,928) 238,840
-------- ------- ------- --------
Commitments and contingencies (Note 9)
Stockholders' equity:
Common stock............................. 1,538 3,941 (3,941) 1,538
Paid-in capital.......................... 63,781 4,153 (4,153) 63,781
Retained earnings........................ 102,610 7,300 (8,830) 101,080
Equity adjustment from foreign currency
translation........................... (3,400 ) (4,676) 4676 (3,400 )
Notes receivable stock subscription...... (1,461 ) -- -- (1,461 )
-------- ------- ------- --------
Total stockholders' equity............ 163,068 10,718 (12,248) 161,538
-------- ------- ------- --------
Total liabilities and stockholders'
equity.............................. $396,252 $24,302 $(20,176) $400,378
======== ======= ======= ========
</TABLE>
F-31
<PAGE> 190
AMF BOWLING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS)
CONDENSED COMBINING BALANCE SHEETS
DECEMBER 31, 1994
<TABLE>
<CAPTION>
NON-
GUARANTOR GUARANTOR COMBINED
COMPANIES COMPANIES ELIMINATIONS COMPANIES
--------- --------- ------------ ---------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................ $ 6,653 $ 1,521 $ -- $ 8,174
Accounts and notes receivable, net of
allowance for doubtful accounts....... 47,867 2,779 -- 50,646
Accounts and notes
receivable -- affiliates.............. 610 1,669 (88) 2,191
Inventories.............................. 32,321 1,799 -- 34,120
Prepaid expenses and other............... 2,963 721 -- 3,684
-------- ------- ------- --------
Total current assets.................. 90,414 8,489 (88) 98,815
Notes receivable -- affiliates............. 21,607 -- -- 21,607
Property and equipment, net................ 259,892 10,992 (1,248) 269,636
Other assets............................... 28,008 776 (8,652) 20,132
-------- ------- ------- --------
Total assets.......................... $399,921 $20,257 $ (9,988) $410,190
======== ======= ======= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable......................... $ 31,999 $ 1,311 $ -- $ 33,310
Book overdrafts.......................... 3,799 -- -- 3,799
Accrued expenses and deposits............ 31,859 2,673 -- 34,532
Accounts and notes
payable -- affiliates................. 11,200 4,398 (88) 15,510
Long-term debt, current portion.......... 3,288 -- -- 3,288
Income taxes payable..................... 7,989 2,086 -- 10,075
-------- ------- ------- --------
Total current liabilities............. 90,134 10,468 (88) 100,514
Long-term debt............................. 25,078 -- -- 25,078
Notes payable -- affiliates................ 145,459 -- -- 145,459
Other liabilities.......................... 5,628 1,137 -- 6,765
-------- ------- ------- --------
Total liabilities..................... 266,299 11,605 (88) 277,816
-------- ------- ------- --------
Commitments and contingencies (Note 9)
Stockholders' equity:
Common stock............................. 1,536 3,941 (3,941) 1,536
Paid-in capital.......................... 57,975 1,400 (1,400) 57,975
Retained earnings........................ 77,413 6,989 (8,237) 76,165
Equity adjustment from foreign currency
translation........................... (3,302 ) (3,678) 3,678 (3,302 )
Total stockholders' equity............ 133,622 8,652 (9,900) 132,374
-------- ------- ------- --------
Total liabilities and stockholders'
equity.............................. $399,921 $20,257 $ (9,988) $410,190
======== ======= ======= ========
</TABLE>
F-32
<PAGE> 191
AMF BOWLING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS)
CONDENSED COMBINING STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
NON-
GUARANTOR GUARANTOR COMBINED
COMPANIES COMPANIES ELIMINATIONS COMPANIES
--------- --------- ------------ ---------
<S> <C> <C> <C> <C>
Operating revenue:
Sales of products and services........... $532,349 $34,197 $ (2,548) $563,998
Revenue from operating lease
activities............................ 926 -- -- 926
-------- -------- ------- -------
Total operating revenue............... 533,275 34,197 (2,548) 564,924
-------- -------- ------- -------
Operating expenses:
Cost of sales............................ 183,511 4,730 (1,581) 186,660
Bowling center operations................ 185,055 16,930 -- 201,985
Selling, general and administrative...... 45,890 6,696 (720) 51,866
-------- -------- ------- -------
Total operating expenses.............. 414,456 28,356 (2,301) 440,511
-------- -------- ------- -------
Operating income...................... 118,819 5,841 (247) 124,413
Nonoperating income (expenses):
Interest expense......................... (15,569 ) (142) -- (15,711 )
Other expenses, net...................... (600 ) (443) -- (1,043 )
Interest income.......................... 1,837 347 -- 2,184
Equity in earnings of subsidiaries....... 3,444 -- (3,444) --
Foreign currency transaction loss........ (465 ) (514) -- (979 )
-------- -------- ------- -------
Income before income taxes................. 107,466 5,089 (3,691) 108,864
Income tax expense......................... 10,453 1,645 -- 12,098
-------- -------- ------- -------
Net income............................ $ 97,013 $ 3,444 $ (3,691) $ 96,766
======== ======== ======= =======
</TABLE>
F-33
<PAGE> 192
AMF BOWLING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS)
CONDENSED COMBINING STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
NON-
GUARANTOR GUARANTOR COMBINED
COMPANIES COMPANIES ELIMINATIONS COMPANIES
--------- --------- ------------ ---------
<S> <C> <C> <C> <C>
Operating revenue:
Sales of products and services........... $478,056 $ 40,930 $ (3,560) $515,426
Revenue from operating lease
activities............................ 969 1,391 -- 2,360
-------- -------- ------- --------
Total operating revenue............... 479,025 42,321 (3,560) 517,786
-------- -------- ------- --------
Operating expenses:
Cost of sales............................ 192,941 6,694 (1,901) 197,734
Bowling center operations................ 117,619 22,061 (1,642) 138,038
Selling, general and administrative...... 52,586 4,750 -- 57,336
-------- -------- ------- --------
Total operating expenses.............. 363,146 33,505 (3,543) 393,108
-------- -------- ------- --------
Operating income...................... 115,879 8,816 (17) 124,678
Nonoperating Income (expenses):
Interest expense......................... (7,164 ) (230 ) -- (7,394 )
Other expenses, net...................... (1,188 ) -- -- (1,188 )
Interest income.......................... 231 295 -- 526
Equity in earnings of subsidiaries....... 5,179 -- (5,179) --
Foreign currency transaction loss........ (654 ) (213 ) -- (867 )
-------- -------- ------- --------
Income before income taxes................. 112,283 8,668 (5,196) 115,755
Income tax expense......................... 12,963 3,489 -- 16,452
-------- -------- ------- --------
Net income............................ $ 99,320 $ 5,179 $ (5,196) $ 99,303
======== ======== ======= ========
</TABLE>
F-34
<PAGE> 193
AMF BOWLING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS)
CONDENSED COMBINING STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31, 1993
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
NON-
GUARANTOR GUARANTOR COMBINED
COMPANIES COMPANIES ELIMINATIONS COMPANIES
--------- --------- ------------ ---------
<S> <C> <C> <C> <C>
Operating revenue:
Sales of products and services................. $389,341 $39,053 $ (3,584) $424,810
Revenue from operating lease activities........ 1,744 1,019 -- 2,763
-------- ------- ------- --------
Total operating revenue..................... 391,085 40,072 (3,584) 427,573
-------- ------- ------- --------
Operating expenses:
Cost of sales.................................. 150,605 6,197 (1,859) 154,943
Bowling center operations...................... 101,800 23,341 (1,207) 123,934
Selling, general and administrative............ 42,411 3,685 -- 46,096
-------- ------- ------- --------
Total operating expenses.................... 294,816 33,223 (3,066) 324,973
-------- ------- ------- --------
Operating income............................ 96,269 6,849 (518) 102,600
Nonoperating income (expenses):
Interest expense............................... (4,787 ) (214) -- (5,001 )
Other expenses, net............................ (523 ) -- -- (523 )
Interest income................................ 446 451 -- 897
Equity in earnings of subsidiaries............. 4,537 -- (4,537) --
Foreign currency transaction loss.............. (391 ) (34) -- (425 )
-------- ------- ------- --------
Income before income taxes....................... 95,551 7,052 (5,055) 97,548
Income tax expense............................... 12,612 2,515 -- 15,127
-------- ------- ------- --------
Net income.................................. $ 82,939 $ 4,537 $ (5,055) $ 82,421
======== ======= ======= ========
</TABLE>
F-35
<PAGE> 194
AMF BOWLING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS)
CONDENSED COMBINING STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
NON-
GUARANTOR GUARANTOR COMBINED
COMPANIES COMPANIES ELIMINATIONS COMPANIES
--------- --------- ------------ ---------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income..................................... $ 97,013 $ 3,444 $ (3,691) $ 96,766
Adjustments to reconcile net income to net cash
provided by operating activities:
Equity in earnings of subsidiaries.......... (3,444 ) -- 3,444 --
Dividends from non-guarantor companies...... 3,133 -- (3,133) --
Depreciation and amortization............... 36,661 2,682 (204) 39,139
Deferred income taxes....................... 215 (1,045 ) -- (830 )
Loss on sale of property and equipment,
net....................................... 567 567
Changes in assets and liabilities, net of
effects from companies acquired:
Accounts and notes receivable, net........ 11,864 (1,234 ) -- 10,630
Receivables and payables -- affiliates.... 7,262 (1,115 ) -- 6,147
Inventories............................... (5,596 ) (400 ) -- (5,996 )
Other assets and liabilities.............. (2,484 ) (369 ) 2,752 (101 )
Accounts payable and accrued expenses..... (19,187 ) 446 -- (18,741 )
Income taxes payable...................... (2,039 ) (791 ) -- (2,830 )
-------- ------- ------- --------
Net cash provided by operating
activities........................... 123,965 1,618 (832) 124,751
-------- ------- ------- --------
Cash flows from investing activities:
Purchase of property and equipment............. (26,411 ) (4,005 ) 451 (29,965 )
Proceeds from sales of property and
equipment................................... 494 916 -- 1,410
Other.......................................... 229 -- -- 229
-------- ------- ------- --------
Net cash used for investing
activities........................... (25,688 ) (3,089 ) 451 (28,326 )
-------- ------- ------- --------
Cash flows from financing activities:
Dividends to guarantor companies............... -- (3,133 ) 3,133 --
Payments on credit note agreements, net........ (11,057 ) -- -- (11,057 )
Distributions to stockholders.................. (71,851 ) -- -- (71,851 )
Payment of long-term debt...................... (10,605 ) 320 -- (10,285 )
Payment for redemption of stock................ (3,960 ) -- -- (3,960 )
Proceeds (payments) on notes payable --
stockholders, net........................... (4,882 ) 1,089 -- (3,793 )
Proceeds from long-term debt................... --
Capital contributions by stockholders.......... 8,329 -- -- 8,329
Capital contributions from guarantor........... -- 2,752 (2,752) --
Other.......................................... (2,056 ) -- -- (2,056 )
-------- ------- ------- --------
Net cash (used for) provided by
financing activities................. (96,082 ) 1,028 381 (94,673 )
Effect of exchange rates on cash....... (5 ) (189 ) -- (194 )
-------- ------- ------- --------
Net increase (decrease) in cash.................. 2,190 (632 ) -- 1,558
Cash at beginning of year........................ 6,653 1,521 -- 8,174
-------- ------- ------- --------
Cash at end of year.............................. $ 8,843 $ 889 $ -- $ 9,732
======== ======= ======= ========
</TABLE>
F-36
<PAGE> 195
AMF BOWLING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS)
CONDENSED COMBINING STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1994
<TABLE>
<CAPTION>
NON-
GUARANTOR GUARANTOR COMBINED
COMPANIES COMPANIES ELIMINATIONS COMPANIES
---------- ---------- ------------ ---------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income................................... $ 99,320 $ 5,179 $ (5,196) $ 99,303
Adjustments to reconcile net income to net
cash provided by operating activities:
Equity in earnings of subsidiaries........ (5,179) -- 5,179 --
Dividends from non-guarantor companies.... 5,084 -- (5,084) --
Depreciation and amortization............. 21,606 3,343 (173) 24,776
Deferred income taxes..................... (104) 85 -- (19 )
Loss on sale of property and equipment,
net..................................... 911 -- -- 911
Changes in assets and liabilities, net of
effects from companies acquired:
Accounts and notes receivable, net...... (9,325) 311 -- (9,014 )
Receivables and
payables -- affiliates............... 3,692 1,033 -- 4,725
Inventories............................. (1,369) (42) -- (1,411 )
Other assets............................ (864) (136) -- (1,000 )
Accounts payable and accrued expenses... 3,929 (91) -- 3,838
Income taxes payable.................... (3,207) 817 -- (2,390 )
----- ----- ---- ------
Net cash provided by operating
activities........................... 114,494 10,499 (5,274) 119,719
----- ----- ---- ------
Cash flows from investing activities:
Acquisitions of operating units, net of cash
acquired.................................. (17,307) -- -- (17,307 )
Purchase of property and equipment........... (16,692) (1,286) 190 (17,788 )
Proceeds from sales of property and
equipment................................. 1,494 41 -- 1,535
Other........................................ 941 -- -- 941
----- ----- ---- ------
Net cash used for investing
activities........................... (31,564) (1,245) 190 (32,619 )
----- ----- ---- ------
Cash flows from financing activities:
Dividends to guarantor companies............. -- (5,084) 5,084 --
Payments on credit note agreements, net...... (3,689) -- -- (3,689 )
Distributions to stockholders................ (78,170) -- -- (78,170 )
Payment of long-term debt.................... (740) (364) -- (1,104 )
Proceeds (payments) on notes payable --
stockholders, net......................... (4,989) (3,571) -- (8,560 )
Capital contributions by stockholders........ 2,109 -- -- 2,109
Other........................................ (212) -- -- (212 )
----- ----- ---- ------
Net cash used for financing
activities......................... (85,691) (9,019) 5,084 (89,626 )
Effect of exchange rates on cash..... 2,488 271 -- 2,759
----- ----- ---- ------
Net increase (decrease) in cash................ (273) 506 -- 233
Cash at beginning of year...................... 6,926 1,015 -- 7,941
----- ----- ---- ------
Cash at end of year............................ $ 6,653 $ 1,521 $ -- $ 8,174
===== ===== ==== ======
</TABLE>
F-37
<PAGE> 196
AMF BOWLING GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS OF DOLLARS)
CONDENSED COMBINING STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1993
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
NON-
GUARANTOR GUARANTOR COMBINED
COMPANIES COMPANIES ELIMINATIONS COMPANIES
--------- --------- ------------ ---------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income..................................... $ 82,939 $ 4,537 $ (5,055) $ 82,421
Adjustments to reconcile net income to net cash
provided by operating activities:
Equity in earnings of subsidiaries.......... (4,537 ) -- 4,537 --
Dividends from non-guarantor companies...... 5,474 -- (5,474) --
Depreciation and amortization............... 18,382 3,210 (171) 21,421
Deferred income taxes....................... (510 ) (64 ) -- (574 )
Loss on sale of property and equipment,
net....................................... 803 -- -- 803
Changes in assets and liabilities, net of
effects from companies acquired:
Accounts and notes receivable, net........ (10,335 ) (527 ) -- (10,862 )
Receivables and payables -- affiliates.... 3,715 (172 ) -- 3,543
Inventories............................... (1,385 ) (218 ) -- (1,603 )
Other assets and liabilities.............. 623 170 -- 793
Accounts payable and accrued expenses..... 9,066 (469 ) -- 8,597
Income taxes payable...................... 593 (404 ) -- 189
-------- -------- ------- --------
Net cash provided by operating
activities........................... 104,828 6,063 (6,163) 104,728
-------- -------- ------- --------
Cash flows from investing activities:
Acquisitions of operating units, net of cash
acquired.................................... (2,469 ) -- -- (2,469 )
Purchase of property and equipment............. (10,755 ) (4,621 ) 689 (14,687 )
Proceeds from sales of property
and equipment............................... 1,225 130 -- 1,355
Other.......................................... (8 ) -- -- (8 )
-------- -------- ------- --------
Net cash used for investing
activities........................... (12,007 ) (4,491 ) 689 (15,809 )
-------- -------- ------- --------
Cash flows from financing activities:
Dividends to guarantor companies............... -- (5,474 ) 5,474 --
Payments on credit note agreements, net........ (20,065 ) -- -- (20,065 )
Distributions to stockholders.................. (76,968 ) -- -- (76,968 )
Payment of long-term debt...................... (8,427 ) (262 ) -- (8,689 )
Payment for redemption of stock................ -- -- -- --
Proceeds (payments) on notes payable --
stockholders, net........................... 8,652 641 -- 9,293
Capital contributions by stockholders.......... 5,000 -- -- 5,000
Other.......................................... (240 ) -- -- (240 )
-------- -------- ------- --------
Net cash used for financing
activities........................... (92,048 ) (5,095 ) 5,474 (91,669 )
Effect of exchange rates on cash....... (154 ) (117 ) -- (271 )
-------- -------- ------- --------
Net increase (decrease) in cash.................. 619 (3,640 ) -- (3,021 )
Cash at beginning of year........................ 6,307 4,655 -- 10,962
-------- -------- ------- --------
Cash at end of year.............................. $ 6,926 $ 1,015 $ -- $ 7,941
======== ======== ======= ========
</TABLE>
F-38
<PAGE> 197
AMF BOWLING GROUP
CONDENSED COMBINED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
MARCH
31, DECEMBER 31,
1996 1995
-------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents...................................... $ 12,769 $ 9,732
Accounts and notes receivable, net of allowance for doubtful
accounts of $3,224 and $3,373, respectively................. 31,080 39,026
Accounts and notes receivable -- affiliates.................... 12,021 3,979
Inventories.................................................... 44,030 39,821
Prepaid expenses and other..................................... 5,969 5,182
-------- --------
Total current assets................................... 105,869 97,740
Notes receivable -- affiliates................................... 23,245 22,941
Property and equipment, net...................................... 253,505 259,724
Other assets..................................................... 18,252 19,973
-------- --------
Total assets........................................... $400,871 $400,378
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable............................................... $ 19,039 $ 23,641
Book overdrafts................................................ 1,350 2,362
Accrued expenses and deposits.................................. 34,640 30,328
Accounts and notes payable -- affiliates....................... -- 1,989
Long-term debt, current portion................................ 951 1,084
Income taxes payable........................................... 5,940 7,129
-------- --------
Total current liabilities.............................. 61,920 66,533
Long-term debt................................................... 27,321 19,550
Notes payable -- affiliates...................................... 132,869 146,727
Other liabilities................................................ 5,251 6,030
-------- --------
Total liabilities...................................... 227,361 238,840
-------- --------
Commitments and contingencies (Note 3)
Stockholders' equity:
Common stock................................................... 1,538 1,538
Paid-in capital................................................ 63,781 63,781
Retained earnings.............................................. 113,519 101,080
Equity adjustment from foreign currency translation............ (3,879) (3,400)
Notes receivable stock subscription............................ (1,449) (1,461)
-------- --------
Total stockholders' equity............................. 173,510 161,538
-------- --------
Total liabilities and stockholders' equity............. $400,871 $400,378
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-39
<PAGE> 198
AMF BOWLING GROUP
CONDENSED COMBINED STATEMENTS OF INCOME
(UNAUDITED)
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
-----------------------------
1996 1995
-------- --------
<S> <C> <C>
Operating revenues:
Sales of products and services............................. $122,947 $156,536
Revenue from operating lease activities.................... 396 335
-------- --------
Total operating revenues........................... 123,343 156,871
-------- --------
Operating expenses:
Cost of sales.............................................. 31,319 48,712
Bowling center operating expenses.......................... 52,169 52,490
Selling, general and administrative........................ 11,965 14,012
-------- --------
Total operating expenses........................... 95,453 115,214
-------- --------
Operating income................................... 27,890 41,657
Nonoperating expenses:
Interest expense........................................... (3,802) (3,727)
Other expenses, net........................................ (164) (626)
Interest income............................................ 394 403
Foreign currency transaction loss.......................... (22) (222)
-------- --------
Income before income taxes................................... 24,296 37,485
Income tax expense........................................... 2,720 3,305
-------- --------
Net income......................................... $ 21,576 $ 34,180
======== ========
</TABLE>
PRO FORMA FINANCIAL INFORMATION (UNAUDITED):
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
-----------------------------
1996 1995
-------- --------
<S> <C> <C>
Net income before income taxes and pro forma adjustments..... $ 24,296 $ 37,485
Pro forma C Corporation -- tax provision..................... 9,245 13,958
-------- --------
Pro forma net income......................................... $ 15,051 $ 23,527
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-40
<PAGE> 199
AMF BOWLING GROUP
CONDENSED COMBINED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
-----------------------------
1996 1995
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income................................................. $ 21,576 $ 34,180
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization........................... 10,969 9,204
Deferred income taxes................................... -- (12)
Loss on sale of property and equipment, net............. -- 341
Changes in assets and liabilities:
Accounts and notes receivable......................... 7,606 4,132
Receivables and payables -- affiliates................ (7,861) (408)
Inventories........................................... (4,404) (2,193)
Other assets and liabilities.......................... (1,232) (3,236)
Accounts payable and accrued expenses................. (915) (1,439)
Income taxes payable.................................. (1,470) (4,178)
------- -------
Net cash provided by operating activities............. 24,269 36,391
------- -------
Cash flows from investing activities:
Purchase of property and equipment......................... (4,408) (4,277)
Other...................................................... 811 (179)
------- -------
Net cash used for investing activities.................. (3,597) (4,456)
------- -------
Cash flows from financing activities:
Borrowings (payments) on credit note agreements, net....... 7,638 (10,821)
Distributions to stockholders.............................. (9,137) (15,049)
Payments of notes payable -- affiliates.................... -- (715)
Payment for redemption of common stock..................... -- (3,960)
Proceeds (payments) on notes payable -- stockholders, net.. (15,721) (199)
Change in notes receivable -- affiliates................... 12 (1,338)
Capital contribution by stockholders....................... -- 6,897
Other...................................................... (212) (885)
------- -------
Net cash used for financing activities................ (17,420) (26,070)
Effect of exchange rates on cash...................... (215) 196
------- -------
Net increase in cash......................................... 3,037 6,061
Cash at beginning of period.................................. 9,732 8,174
------- -------
Cash at end of period........................................ $ 12,769 $ 14,235
======= =======
</TABLE>
F-41
<PAGE> 200
AMF BOWLING GROUP
CONDENSED COMBINED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 1996
(UNAUDITED)
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
EQUITY
ADJUSTMENT
FROM FOREIGN TOTAL
COMMON PAID-IN RETAINED CURRENCY STOCKHOLDERS'
STOCK CAPITAL EARNINGS TRANSLATION OTHER EQUITY
------ ------- -------- -------------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balances, December 31, 1995.... $1,538 $63,781 $101,080 $ (3,400) $(1,461) $161,538
Net income................... -- -- 21,576 -- -- 21,576
Distributions to
stockholders.............. -- -- (9,137) -- -- (9,137)
Decrease in equity adjustment
from foreign currency
translation............... -- -- -- (479) -- (479)
Other........................ -- -- -- -- 12 12
------ ------- -------- ------- ------- --------
Balance, March 31, 1996........ $1,538 $63,781 $113,519 $ (3,879) $(1,449) $173,510
====== ======= ======== ======= ======= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-42
<PAGE> 201
AMF BOWLING GROUP
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
(IN THOUSANDS OF DOLLARS)
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
AMF Bowling Group ("the Combined Companies") consists of various entities
which are controlled by the Virginia Investment Trusts ("the Trusts"). On
January 1, 1996, the Trusts contributed their stock in AMF Bowling Centers
(Aust) International, Inc. to the Richmond Community Foundation, a non-profit
organization.
The accompanying unaudited condensed combined financial statements reflect
all adjustments (consisting of normal recurring accruals) which are, in the
opinion of management, necessary for a fair presentation of the results of
operations for the interim periods. The interim financial information and notes
thereto should be read in conjunction with the Combined Companies' December 31,
1995 financial statements. The results of operations for the three months ended
March 31, 1996 and 1995 are not necessarily indicative of results to be expected
for the entire year.
The combined statements of income include a pro forma adjustment for income
taxes which would have been recorded if the Combined Companies had not been S
Corporations, based on tax laws in effect during these periods. The pro forma
adjustment was computed separately for each entity and then combined, except for
purposes of computing the utilization of foreign tax credits which were
considered in the aggregate for the Combined Companies.
Operating revenues are comprised of the following:
<TABLE>
<CAPTION>
MARCH 31,
---------------------
1996 1995
-------- --------
<S> <C> <C>
Bowling centers $ 83,055 $ 85,818
Manufacturing 40,288 71,053
-------- --------
$123,343 $156,871
======== ========
</TABLE>
NOTE 2 -- INVENTORIES
Inventories by major classification are as follows:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
---------- -------------
<S> <C> <C>
Raw materials $10,664 $10,590
Work-in-process 2,118 1,522
Finished goods and spare parts 28,925 24,920
Merchandise inventory 3,206 4,045
------- -------
44,913 41,077
Inventory valuation reserves (883) (1,256)
------- -------
$44,030 $39,821
======= =======
</TABLE>
NOTE 3 -- COMMITMENTS AND CONTINGENCIES
AMF Bowling terminated its Korean distribution agreement. The Korean
distributor filed suit against the company in Korea seeking an injunction
against AMF Bowling's Seoul Korea branch to prevent AMF Bowling from selling
bowling and bowling related products in Korea. On February 16,
F-43
<PAGE> 202
AMF BOWLING GROUP
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
(IN THOUSANDS OF DOLLARS)
1996, the Korean court dismissed the litigation on jurisdictional grounds. Such
decision is subject to appeal.
On January 10, 1996, the Korean distributor filed a second suit in the
Supreme Court of the State of New York against AMF Bowling and AMF Bowling
Centers. The suit alleges a number of complaints related to the conduct and
termination of the Korean distributorship agreement and alleges that the
defendants caused the Korean distributor's insolvency. The Korean distributor is
seeking compensatory damages of at least $41,759 and punitive damages of at
least $100,000 or ten times the amount of compensatory damages awarded,
whichever is greater, under each of seven causes of action set forth in the
suit.
Management believes that the Korean distributorship agreement was properly
terminated and the actions against AMF Bowling and AMF Bowling Centers are
without merit. Management intends to vigorously defend against this claim. Under
the terms of the sale agreement (Note 6), the current AMF shareholders have
agreed to indemnify the buyers for any loss related to this litigation.
On March 5, 1996, the defendant in an action entitled Northland Bowl and
Sports Center, Inc. and Recreation Associates, II v. Golden Giant, Inc., d/b/a
Golden Giant Building Systems, Court of Common Pleas, Centre County, Pa. (Index
No. 96-75), asserted a third-party claim against AMF Bowling and other parties.
Defendant, Golden Giant, a construction company, was previously named as
defendant by a bowling center (not owned or operated by the Combined Companies)
in connection with the collapse of the center's roof in early 1994. Golden Giant
has now named AMF Bowling, charging it with negligence and breach of implied
warranty for installing scoring monitors (four years before the roof collapsed)
on a portion of the building that allegedly could not adequately support the
additional weight of the equipment. The bowling center plaintiff claims total
damages in amounts exceeding $3,500, and Golden Giant asserts that, if plaintiff
is entitled to any recovery, it should be in whole or part against AMF Bowling.
AMF Bowling is involved in a patent infringement suit. The plaintiff in the
case, a competitor of AMF Bowling's Century division, obtained a summary
judgment on the issue of liability in December 1994. The court recently issued
an order which will permit AMF to appeal. The plaintiff claims damages in the
range of $3,000 to $9,000. A trial on damages will not occur unless and until
the liability issue is resolved against AMF Bowling. Management believes the
claim is without merit and intends to vigorously contest the claim.
AMF Bowling Centers and AMF Bowling are defendants in a wrongful death suit
related to an employee. The employee's estate is seeking compensatory damages up
to $3,000 plus $3,000 in punitive damages. However, the plaintiff's counsel has
verbally offered to settle the case for $350. Management believes the claim is
without merit and expects to vigorously contest the claim.
In addition, the Combined Companies are involved in certain other lawsuits
and claims arising out of normal business operations. The majority of these
relate to accidents at the Combined Companies' bowling centers. Management
believes that the ultimate resolution of such matters will not materially affect
the Combined Companies' results of operations or financial position.
While the ultimate outcome of the litigation and claims against the
Combined Companies cannot presently be determined, management believes the
Combined Companies have made adequate provision for possible losses. At March
31, 1996 and December 31, 1995, the Combined Companies had recorded reserves
aggregating approximately $2,564 and $2,800, respectively, for litigation and
claims, which are included in accrued expenses in the accompanying combined
balance sheet.
F-44
<PAGE> 203
AMF BOWLING GROUP
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
(IN THOUSANDS OF DOLLARS)
NOTE 4 -- LONG-TERM DEBT
Long-term debt at March 31, 1996 and December 31, 1995 consists of the
following:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
--------- ------------
<S> <C> <C>
Notes payable to bank -- guaranteed....................... $24,409 $ 3,764
Mortgage and equipment notes.............................. 1,971 14,469
Industrial development bond............................... -- 1,354
Note payable to bank...................................... 864 --
Other..................................................... 1,028 1,047
------- -------
28,272 20,634
Current maturities........................................ (951) (1,084)
------- -------
Long-term portion......................................... $27,321 $ 19,550
======= =======
</TABLE>
F-45
<PAGE> 204
AMF BOWLING GROUP
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
(IN THOUSANDS OF DOLLARS)
NOTE 5 -- STOCKHOLDERS' EQUITY
Stockholders' equity at March 31, 1996 consists of the following:
<TABLE>
<CAPTION>
MARCH 31, 1996
-----------------------------------------------------------------------------------------------
NOTES
RECEIVABLE TOTAL
ISSUED AND COMMON PAID IN RETAINED DEFERRED STOCK STOCKHOLDERS'
AUTHORIZED OUTSTANDING STOCK CAPITAL EARNINGS TRANSLATION SUBSCRIPTION EQUITY
---------- ----------- ------ ------- -------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
AMF Bowling, Inc............... 10,000 950.6689 $ 1 $28,213 $ 54,545 $ 353 $ -- $ 83,112
AMF Bowling Centers, Inc....... 15,000 9,485.1000 9 29,122 24,848 -- (737) 53,242
AMF Beverage Company of Oregon,
Inc.......................... 10,000 94.8510 -- -- -- -- -- --
King Louis Lenoxa, Inc......... 30,000 94.8510 -- -- -- -- -- --
AMF Bowling Centers (Aust)
International, Inc........... 10,000 948.5100 1 492 26,594 (64) (492) 26,531
AMF Bowling Centers (Canada)
International, Inc........... 10,000 948.5100 1 2,109 (1,211) 85 -- 984
AMF BCO -- France One, Inc..... 10,000 1,000.0000 1 31 681 (53) -- 660
AMF BCO -- France Two, Inc..... 10,000 1,000.0000 1 83 1,841 (144) -- 1,781
AMF Bowling Centers (Hong Kong)
International, Inc........... 10,000 948.5100 1 57 2,534 -- (64) 2,528
AMF Bowling Centers
International, Inc.
(Japan)...................... 10,000 9,485.1000 10 156 4,996 420 (156) 5,426
AMF Bowling Mexican Holding,
Inc.......................... 1,000 75.6972 1,507 226 3,068 (3,245) -- 1,556
Boliches AMF, Inc.............. 10,000 100.0000 1 60 816 (863) -- 14
AMF Bowling Centers II Inc.
(Switzerland)................ 1,000 100.0000 1 -- 748 61 -- 810
AMF BCO -- U.K. One, Inc....... 10,000 100.0000 1 129 (116) (111) -- (97)
AMF BCO -- U.K. Two, Inc....... 10,000 100.0000 1 352 (316) (304) -- (267)
AMF BCO -- China, Inc.......... 10,000 1,000.0000 1 577 (152) (3) -- 423
AMF Bowling Centers China,
Inc.......................... 10,000 1,000.0000 1 2,174 (571) (11) -- 1,593
Bush River Corporation......... 100,000 18,895.1919 -- -- -- -- -- --
Eliminations................... -- -- -- -- (4,786) -- -- (4,786)
------ ------- -------- ------- ------- --------
Totals......................... $1,538 $63,781 $113,519 $(3,879) $ (1,449) $173,510
====== ======= ======== ======= ======= ========
</TABLE>
NOTE 6 -- SUBSEQUENT EVENTS
SALE TRANSACTION
At the opening of business on May 1, 1996, an investor group led by an
affiliate of Goldman, Sachs & Co. completed its acquisition of the stock and
certain assets of the Combined Companies. The new parent company is AMF Group
Inc.
BONUS AND SPECIAL PAYMENTS/SALE TRANSACTION COSTS
On April 29 and April 30, 1996, the Combined Companies paid bonuses and
special payments to employees, former employees and former directors in the
aggregate amount of $37,843 in
F-46
<PAGE> 205
AMF BOWLING GROUP
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
(IN THOUSANDS OF DOLLARS)
recognition of their services. Additionally, professional fees of $5,094 were
incurred as a result of the sale transaction. In addition, as a result of the
change in control transaction, certain payments under the Combined Companies'
performance plan were accelerated. Accordingly, on April 30, 1996 the Combined
Companies made payments of $3,085 related to these plans and the plans were
terminated.
DISTRIBUTIONS/CONTRIBUTIONS SUBSEQUENT TO MARCH 31, 1996
Cash distributions to stockholders from April 1, 1996 to April 30, 1996
aggregated approximately $28,109. In connection with the sale transaction, the
stockholders contributed notes payable -- affiliates to the capital of the
Combined Companies in the amount of approximately $151,985 and made cash
contributions in the amount of approximately $30,018. Subsequently, accounts and
notes payable/receivable with affiliates were paid.
F-47
<PAGE> 206
AMF BOWLING GROUP
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
(IN THOUSANDS OF DOLLARS)
NOTE 7 -- BUSINESS SEGMENTS
The Combined Companies operate in two major lines of business: operation of
bowling centers and manufacturing of bowling and related products. Information
concerning operations in these business segments for the three months ended
March 31, 1996 and 1995 and identifiable assets at March 31, 1996, are presented
below:
<TABLE>
<CAPTION>
MARCH 31,
---------------------
1996 1995
-------- --------
<S> <C> <C>
Revenue from unaffiliated customers
Bowling Centers
Domestic.................................................... $ 58,100 $ 60,700
International............................................... 25,000 25,100
-------- --------
83,100 85,800
Manufacturing.................................................. 40,200 71,100
-------- --------
$123,300 $156,900
========= =========
Intersegment Sales
Bowling Centers
Domestic.................................................... $ -- $ --
International............................................... -- --
-------- --------
-- --
Manufacturing.................................................. 2,800 4,300
-------- --------
$ 2,800 $ 4,300
========= =========
Operating Income
Bowling Centers
Domestic.................................................... $ 15,300 $ 14,400
International............................................... 5,700 6,600
-------- --------
21,000 21,000
Manufacturing.................................................. 7,200 21,200
Eliminations................................................... (300) (500)
-------- --------
$ 27,900 $ 41,700
========= =========
Identifiable Assets
Bowling Centers
Domestic.................................................... $228,700
International............................................... 66,500
--------
295,200
Manufacturing.................................................. 113,100
Eliminations................................................... (7,400)
--------
$400,900
=========
</TABLE>
F-48
<PAGE> 207
AMF BOWLING GROUP
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
MARCH 31,
---------------------
1996 1995
-------- --------
<S> <C> <C>
Depreciation and Amortization Expense
Bowling Centers
Domestic.................................................... $ 8,500 $ 7,000
International............................................... 1,900 1,600
-------- --------
10,400 8,600
Manufacturing.................................................. 900 900
Eliminations................................................... (300) (300)
-------- --------
$ 11,000 $ 9,200
========= =========
Capital Expenditures
Bowling Centers
Domestic.................................................... $ 3,500 $ 2,500
International............................................... 1,200 1,100
-------- --------
4,700 3,600
Manufacturing.................................................. 300 1,500
Eliminations................................................... (600) (800)
-------- --------
$ 4,400 $ 4,300
========= =========
</TABLE>
NOTE 8 -- CONDENSED COMBINING FINANCIAL STATEMENTS
The following condensed combining information presents:
- A condensed combining balance sheet as of March 31, 1996 and condensed
combining statements of income and of cash flows for the three months
ended March 31, 1996 and 1995.
- Elimination entries necessary to combine the entities comprising the
Combined Companies.
F-49
<PAGE> 208
AMF BOWLING GROUP
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
(IN THOUSANDS OF DOLLARS)
CONDENSED COMBINING BALANCE SHEETS
MARCH 31, 1996
<TABLE>
<CAPTION>
NON-
GUARANTOR GUARANTOR COMBINED
COMPANIES COMPANIES ELIMINATIONS COMPANIES
--------- --------- ------------ ---------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................ $ 11,261 $ 1,508 $ -- $ 12,769
Accounts and notes receivable, net of
allowance for doubtful accounts....... 29,463 1,617 -- 31,080
Accounts and notes
receivable -- affiliates.............. 11,010 1,920 (909) 12,021
Inventories.............................. 42,275 1,755 -- 44,030
Prepaid expenses and other............... 4,488 1,481 -- 5,969
--------- --------- ------------ ---------
Total current assets............. 98,497 8,281 (909) 105,869
Notes receivable -- affiliates............. 23,245 -- -- 23,245
Property and equipment, net................ 244,206 10,926 (1,627) 253,505
Other assets............................... 28,793 578 (11,119) 18,252
--------- --------- ------------ ---------
Total assets..................... $ 394,741 $19,785 $(13,655) $400,871
========= ========= ========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable......................... $ 17,535 $ 1,504 $ -- $ 19,039
Book overdrafts.......................... 1,293 57 -- 1,350
Accrued expenses and deposits............ 32,447 2,193 -- 34,640
Accounts and notes
payable -- affiliates................. (1,575) 2,484 (909) --
Long-term debt, current portion.......... 951 -- -- 951
Income taxes payable..................... 4,378 1,562 -- 5,940
--------- --------- ------------ ---------
Total current liabilities........ 55,029 7,800 (909) 61,920
Long-term debt............................. 27,321 -- -- 27,321
Notes payable -- affiliates................ 132,851 18 -- 132,869
Other liabilities.......................... 4,403 848 -- 5,251
--------- --------- ------------ ---------
Total liabilities................ 219,604 8,666 (909) 227,361
========= ========= ========== =========
Commitments and contingencies
Stockholders' equity:
Common stock............................. 1,538 3,940 (3,940) 1,538
Paid-in capital.......................... 63,781 4,151 (4,151) 63,781
Retained earnings........................ 115,146 7,747 (9,374) 113,519
Equity adjustment from foreign currency
translation........................... (3,879) (4,719) 4,719 (3,879)
Notes receivable stock subscription...... (1,449) -- -- (1,449)
--------- --------- ------------ ---------
Total stockholders' equity....... 175,137 11,119 (12,746) 173,510
--------- --------- ------------ ---------
Total liabilities and
stockholders' equity........... $ 394,741 $19,785 $(13,655) $400,871
========= ========= ========== =========
</TABLE>
F-50
<PAGE> 209
AMF BOWLING GROUP
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
(IN THOUSANDS OF DOLLARS)
CONDENSED COMBINING STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 1996
<TABLE>
<CAPTION>
NON-
GUARANTOR GUARANTOR COMBINED
COMPANIES COMPANIES ELIMINATIONS COMPANIES
--------- --------- ------------ ---------
<S> <C> <C> <C> <C>
Operating revenues:
Sales of products and services........... $ 114,877 $ 9,038 $ (968) $122,947
Revenue from operating lease
activities............................ 396 -- -- 396
--------- --------- ------------ ---------
Total operating revenues......... 115,273 9,038 (968) 123,343
--------- --------- ------------ ---------
Operating expenses:
Cost of sales............................ 30,878 1,081 (640) 31,319
Bowling center operating expenses........ 46,829 5,573 (233) 52,169
Selling, general and administrative...... 11,418 547 -- 11,965
--------- --------- ------------ ---------
Total operating expenses......... 89,125 7,201 (873) 95,453
--------- --------- ------------ ---------
Operating income................. 26,148 1,837 (95) 27,890
Non-operating expenses:
Interest expense......................... (3,797) (5) -- (3,802)
Other expenses, net...................... (102) (62) -- (164)
Interest income.......................... 359 35 -- 394
Equity in earnings of subsidiaries....... 1,061 -- (1,061) --
Foreign currency transaction loss........ (16) (6) -- (22)
--------- --------- ------------ ---------
Income before income taxes................. 23,653 1,799 (1,156) 24,296
Income tax expense......................... 1,982 738 -- 2,720
--------- --------- ------------ ---------
Net income....................... $ 21,671 $ 1,061 $ (1,156) $ 21,576
========= ========= ========== =========
</TABLE>
F-51
<PAGE> 210
AMF BOWLING GROUP
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
(IN THOUSANDS OF DOLLARS)
CONDENSED COMBINING STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 1995
<TABLE>
<CAPTION>
NON-
GUARANTOR GUARANTOR COMBINED
COMPANIES COMPANIES ELIMINATIONS COMPANIES
---------- --------- ------------ ---------
<S> <C> <C> <C> <C>
Operating revenues:
Sales of products and services........... $ 148,720 $ 9,435 $ (1,619) $156,536
Revenue from operating lease
activities............................ 335 -- -- 335
-------- ------ -------- --------
Total operating revenues......... 149,055 9,435 (1,619) 156,871
-------- ------ -------- --------
Operating expenses:
Cost of sales............................ 48,663 1,116 (1,067) 48,712
Bowling center operating expenses........ 47,368 5,483 (361) 52,490
Selling, general and administrative...... 13,497 515 -- 14,012
-------- ------ -------- --------
Total operating expenses......... 109,528 7,114 (1,428) 115,214
-------- ------ -------- --------
Operating income................. 39,527 2,321 (191) 41,657
Nonoperating expenses:
Interest expense......................... (3,702) (25) -- (3,727)
Other expenses, net...................... (652) 26 -- (626)
Interest income.......................... 382 21 -- 403
Equity in earnings of subsidiaries....... 859 -- (859) --
Foreign currency transaction gain
(loss)................................ 353 (575) -- (222)
-------- ------ -------- --------
Income before income taxes................. 36,767 1,768 (1,050) 37,485
Income tax expense......................... 2,396 909 -- 3,305
-------- ------ -------- --------
Net income....................... $ 34,371 $ 859 $ (1,050) $ 34,180
======== ====== ======== ========
</TABLE>
F-52
<PAGE> 211
AMF BOWLING GROUP
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
(IN THOUSANDS OF DOLLARS)
CONDENSED COMBINING STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1996
<TABLE>
<CAPTION>
NON-
GUARANTOR GUARANTOR COMBINED
COMPANIES COMPANIES ELIMINATIONS COMPANIES
--------- --------- ------------ ---------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income................................. $ 21,671 $ 1,061 $ (1,156) $ 21,576
Adjustments to reconcile net income to net
cash provided by operating activities:
Equity in earnings of subsidiaries...... (1,061) -- 1,061 --
Dividends from non-guarantor
companies............................. 637 -- (637) --
Depreciation and amortization........... 10,422 648 (101) 10,969
Deferred income taxes................... (255) 255 -- --
Changes in assets and liabilities, net
of effects from companies acquired:
Accounts and notes receivable......... 7,734 (128) -- 7,606
Receivables and
payables -- affiliates............. (8,661) 800 -- (7,861)
Inventories........................... (4,402) (2) -- (4,404)
Other assets and liabilities.......... (1,106) (126) -- (1,232)
Accounts payable and accrued
expenses........................... (708) (207) -- (915)
Income taxes payable.................. (1,817) 347 -- (1,470)
---------- ---------- ---------- ----------
Net cash provided by operating
activities......................... 22,454 2,648 (833) 24,269
---------- ---------- ---------- ----------
Cash flows from investing activities:
Purchase of property and equipment......... (3,799) (805) 196 (4,408)
Other...................................... 811 -- -- 811
---------- ---------- ---------- ----------
Net cash used for investing
activities......................... (2,988) (805) 196 (3,597)
---------- ---------- ---------- ----------
Cash flows from financing activities:
Dividends to guarantor companies........... -- (637) 637 --
Payments on credit note agreements, net.... 7,638 -- -- 7,638
Distributions to stockholders.............. (9,137) -- -- (9,137)
Proceeds (payments) on notes payable --
stockholders, net....................... (15,281) (440) -- (15,721)
Changes in notes receivable -- affiliate... 12 -- -- 12
Other...................................... (212) -- -- (212)
---------- ---------- ---------- ----------
Net cash used for financing
activities......................... (16,980) (1,077) 637 (17,420)
Effect of exchange rates on cash...... (68) (147) -- (215)
---------- ---------- ---------- ----------
Net increase (decrease) in cash.............. 2,418 619 -- 3,037
Cash at beginning of period.................. 8,843 889 -- 9,732
---------- ---------- ---------- ----------
Cash at end of period........................ $ 11,261 $ 1,508 $ -- $ 12,769
========== ========== ========== ==========
</TABLE>
F-53
<PAGE> 212
AMF BOWLING GROUP
NOTES TO CONDENSED COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
(IN THOUSANDS OF DOLLARS)
CONDENSED COMBINING STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1995
<TABLE>
<CAPTION>
NON-
GUARANTOR GUARANTOR COMBINED
COMPANIES COMPANIES ELIMINATIONS COMPANIES
--------- --------- ------------ ---------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income................................... $ 34,371 $ 859 $ (1,050) $ 34,180
Adjustments to reconcile net income to net
cash provided by operating activities:
Equity in earnings of subsidiaries........ (859) -- 859 --
Dividends from non-guarantor companies.... 209 -- (209) --
Depreciation and amortization............. 8,605 702 (103) 9,204
Deferred income taxes..................... 211 (223) -- (12)
Loss on sale of property and equipment,
net..................................... 341 -- -- 341
Changes in assets and liabilities, net of
effect from companies acquired:
Accounts and notes receivable, net...... 5,425 (1,293) -- 4,132
Receivables and
payables -- affiliates............... (152) (256) -- (408)
Inventories............................. (1,578) (615) -- (2,193)
Other assets and liabilities............ (3,346) 110 -- (3,236)
Accounts payable and accrued expenses... (1,681) 242 -- (1,439)
Income taxes payable.................... (4,309) 131 -- (4,178)
---------- ---------- ---------- ----------
Net cash provided by operating
activities........................... 37,237 (343) (503) 36,391
---------- ---------- ---------- ----------
Cash flows from investing activities:
Purchase of property and equipment........... (4,050) (521) 294 (4,277)
Other........................................ (179) -- -- (179)
---------- ---------- ---------- ----------
Net cash used for investing
activities........................... (4,229) (521) 294 (4,456)
---------- ---------- ---------- ----------
Cash flows from financing activities:
Dividends to guarantor companies............. -- (209) 209 --
Payments on credit note agreements, net...... (10,821) -- -- (10,821)
Distributions to stockholders................ (15,049) -- -- (15,049)
Payment of notes payable -- affiliate........ (1,932) 1,217 -- (715)
Payment for redemption of stock.............. (3,960) -- -- (3,960)
Proceeds (payments) on notes payable --
stockholders, net......................... (199) -- -- (199)
Change in notes receivable -- affiliate...... (1,338) -- -- (1,338)
Capital contributions by stockholders........ 6,381 516 -- 6,897
Other........................................ (885) -- -- (885)
---------- ---------- ---------- ----------
Net cash used for financing
activities........................... (27,803) 1,524 209 (26,070)
Effect of exchange rates on cash........ 256 (60) -- 196
---------- ---------- ---------- ----------
Net increase (decrease) in cash................ 5,461 600 -- 6,061
Cash at beginning of period.................... 6,653 1,521 -- 8,174
---------- ---------- ---------- ----------
Cash at end of period.......................... $ 12,114 $ 2,121 $ -- $ 14,235
========== ========== ========== ==========
</TABLE>
F-54
<PAGE> 213
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
AMF Bowling Centers, Inc.
In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of loss, of cash flows and of stockholder's
equity present fairly, in all material respects, the financial position of Fair
Lanes, Inc. (Debtor-in-Possession) and its subsidiaries at September 29, 1994
and June 30, 1994, and the results of their operations and their cash flows for
the three months ended September 29, 1994 and the year ended June 30, 1994, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of Fair Lanes' management. Our responsibility
is to express an opinion on these statements based on our audits. We conducted
our audits of these statements in accordance with generally accepted auditing
standards which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
For the period June 22, 1994 through September 29, 1994, Fair Lanes, Inc.
operated as a debtor-in-possession pursuant to Chapter 11 of the United States
Bankruptcy Code. On September 20, 1994, the creditors approved and the
Bankruptcy Court confirmed a plan of reorganization, with an effective date of
September 29, 1994, whereby Fair Lanes' Senior Secured Noteholders gained
ownership and voting control of the majority of Fair Lanes' common stock. As a
result of the change of control, Fair Lanes, Inc. will adjust the carrying
values of its assets and liabilities to their estimated fair values as of
September 30, 1994, taking into consideration the effects of the plan of
reorganization. The accompanying consolidated financial statements do not
reflect these adjustments and, accordingly, the carrying value of Fair Lanes,
Inc.'s assets and liabilities will change from those reported in the
accompanying consolidated balance sheet as of September 29, 1994, as disclosed
in Note 3.
As discussed in Note 12, Fair Lanes, Inc. adopted the provisions of
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes," effective June 25, 1993.
Price Waterhouse LLP
Norfolk, Virginia
January 23, 1996
F-55
<PAGE> 214
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Fair Lanes, Inc.:
We have audited the accompanying consolidated statements of loss,
stockholder's equity and cash flows of Fair Lanes, Inc. and subsidiaries for the
year ended June 24, 1993. These consolidated financial statements are the
responsibility of Fair Lanes, Inc.'s management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, the consolidated statements of loss, stockholder's equity
and cash flows referred to above present fairly, in all material respects, the
results of operations and the cash flows of Fair Lanes, Inc. and subsidiaries
for the year ended June 24, 1993, in conformity with generally accepted
accounting principles.
KPMG PEAT MARWICK LLP
Baltimore, Maryland
September 10, 1993
F-56
<PAGE> 215
FAIR LANES, INC. (DEBTOR-IN-POSSESSION)
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
JUNE 30,
1994
SEPTEMBER 29, --------
1994
-------------
(SEE NOTE 3)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents....................................... $ 3,419 $ 4,005
Receivables, net of allowance................................... 153 166
Inventories..................................................... 2,192 2,001
Prepaid expenses and other assets............................... 1,880 2,324
-------- --------
Total current assets......................................... 7,644 8,496
Property and equipment, net....................................... 178,002 179,860
Value of acquired leases, net..................................... 13,521 13,821
Other assets...................................................... 3,548 3,758
-------- --------
$ 202,715 $205,935
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Borrowings on line-of-credit.................................... $ 3,500 $ --
Current maturities of long-term debt and obligations under
capital leases............................................... 2,109 2,332
Accounts payable................................................ 8,223 6,242
Accrued expenses and other liabilities.......................... 9,334 7,026
-------- --------
Total current liabilities.................................... 23,166 15,600
-------- --------
Long-term liabilities:
Long-term debt, less current maturities......................... 12,924 13,135
Obligations under capital leases, less current maturities....... 7,189 7,414
Deferred income taxes........................................... -- 4,276
Other........................................................... 5,175 3,542
-------- --------
Total long-term liabilities.................................. 25,288 28,367
-------- --------
Liabilities subject to compromise under reorganization
proceedings..................................................... 151,975 151,975
-------- --------
Total liabilities............................................ 200,429 195,942
-------- --------
Commitments and contingencies
Stockholder's equity:
Common stock -- $.01 par value per share, 1,000 shares, issued
and outstanding.............................................. -- --
Additional paid-in capital...................................... 45,023 45,023
Accumulated deficit............................................. (45,739) (37,999)
Advances from Entertainment..................................... 3,002 2,969
-------- --------
Total stockholder's equity................................... 2,286 9,993
-------- --------
$ 202,715 $205,935
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-57
<PAGE> 216
FAIR LANES, INC. (DEBTOR-IN-POSSESSION)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF LOSS
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 29, JUNE 30, JUNE 24,
1994 1994 1993
------------- ---------- ----------
<S> <C> <C> <C>
Operating revenue.................................... $ 19,376 $101,759 $116,029
Operating expenses:
Cost of merchandise sold........................... 2,032 10,321 12,031
Selling, general and administrative expenses....... 25,425 94,049 91,880
Corporate restructuring costs...................... -- -- 1,853
----- ------ ------
27,457 104,370 105,764
----- ------ ------
Operating income (loss).................... (8,081) (2,611) 10,265
Interest expense..................................... (2,654) (20,157) (21,087)
Other income (expense), net.......................... 7 (2,918) (247)
----- ------ ------
Loss before reorganization costs, income tax
benefit (provision) and cumulative effect of
accounting change............................... (10,728) (25,686) (11,069)
Reorganization costs................................. (1,288) (5,377) --
----- ------ ------
Loss before income tax benefit (provision) and
cumulative effect of accounting change.......... (12,016) (31,063) (11,069)
Income tax benefit (provision)....................... 4,276 11,804 (206)
----- ------ ------
Loss before cumulative effect of accounting
change.......................................... (7,740) (19,259) (11,275)
Cumulative effect of accounting change............... -- 3,902 --
----- ------ ------
Net loss................................... $ (7,740) $(15,357) $(11,275)
===== ====== ======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-58
<PAGE> 217
FAIR LANES, INC. (DEBTOR-IN-POSSESSION)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 29, JUNE 30, JUNE 24,
1994 1994 1993
------------- ---------- ----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss........................................... $(7,740) $(15,357) $(11,275)
Adjustments to reconcile net loss to net cash
provided by (used for) operating activities:
Depreciation and amortization................... 3,583 15,026 13,844
Amortization of deferred charges................ 32 754 474
Loss on disposal of assets...................... -- 2,632 157
Loss on equity investments...................... -- 1,132 --
Noncash reorganization costs.................... -- 3,618 --
Deferred income taxes........................... (4,276) (11,914) --
Cumulative effect of change in method of
accounting for income taxes................... -- (3,902) --
Changes in assets and liabilities:
Decrease (increase) in receivables............ 13 (68) 465
(Increase) decrease in inventories............ (191) (387) 109
(Increase) decrease in prepaid expenses and
other assets............................... 444 (902) 1,151
Increase (decrease) in accounts payable and
accrued expenses........................... 4,289 (5,695) (267)
Accrued interest with respect to liabilities
subject to compromise...................... 1,757 13,975 --
Other......................................... (123) (86) 1,297
------- -------- --------
Net cash provided by (used for) operating
activities............................... (2,212) (1,174) 5,955
------- -------- --------
Cash flows from investing activities:
Purchases of property and equipment................ (2,404) (5,453) (9,170)
Proceeds from sales of property and equipment...... -- 6,534 --
Other.............................................. 1,156 435 (264)
------- -------- --------
Net cash provided by (used for) investing
activities............................... (1,248) 1,516 (9,434)
------- -------- --------
Cash flows from financing activities:
Proceeds from short-term borrowings................ 3,500 6,000 3,500
Principal payments of indebtedness and obligations
under capital leases............................ (659) (8,757) (6,070)
Dividends paid to Bowling.......................... -- (1,565) (3,377)
Advances from Entertainment........................ 33 5,380 --
Other.............................................. -- (101) (506)
------- -------- --------
Net cash provided by (used for) financing
activities............................... 2,874 957 (6,453)
------- -------- --------
Net increase (decrease) in cash and cash
equivalents........................................ (586) 1,299 (9,932)
Cash and cash equivalents at beginning of year....... 4,005 2,706 12,638
------- -------- --------
Cash and cash equivalents at end of year............. $ 3,419 $ 4,005 $ 2,706
======= ======== ========
Cash paid during the period for:
Interest........................................... $ 889 $ 11,602 $ 20,533
======= ======== ========
Income taxes....................................... $ -- $ 110 $ 330
======= ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-59
<PAGE> 218
FAIR LANES, INC. (DEBTOR-IN-POSSESSION)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
ADDITIONAL ADVANCES TOTAL
PAID-IN ACCUMULATED (TO) FROM STOCKHOLDER'S
CAPITAL DEFICIT ENTERTAINMENT EQUITY
---------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
Balance at June 24, 1992..................... $ 45,023 $ (6,425) $(2,390) $ 36,208
Net loss for the year ended June 24,
1993.................................... -- (11,275) -- (11,275)
Dividends.................................. -- (3,377) -- (3,377)
Advances to Entertainment.................. -- -- (21) (21)
------- -------- ------- --------
Balance at June 24, 1993..................... 45,023 (21,077) (2,411) 21,535
Net loss for the year ended June 30,
1994.................................... -- (15,357) -- (15,357)
Dividends.................................. -- (1,565) -- (1,565)
Advances from Entertainment, net........... -- -- 5,380 5,380
------- -------- ------- --------
Balance at June 30, 1994..................... 45,023 (37,999) 2,969 9,993
Net loss for the three months ended
September 29, 1994...................... -- (7,740) -- (7,740)
Advances from Entertainment................ -- -- 33 33
------- -------- ------- --------
Balance at September 29, 1994................ $ 45,023 $ (45,739) $ 3,002 $ 2,286
======= ======== ======= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-60
<PAGE> 219
FAIR LANES, INC. (DEBTOR-IN-POSSESSION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS OF DOLLARS)
NOTE 1 -- BUSINESS
At September 29, 1994 and June 30, 1994, Fair Lanes, Inc.
(Debtor-in-Possession) and subsidiaries (Fair Lanes) operated 106 bowling
centers, containing 3,876 lanes, located in sixteen states and Puerto Rico.
Prior to Fair Lanes' emergence from bankruptcy, Fair Lanes was a
wholly-owned subsidiary of Fair Lanes Bowling, Inc. (Bowling), which was a
wholly-owned subsidiary of Fair Lanes Entertainment, Inc. (Debtor-in-Possession)
(Entertainment). Fair Lanes' assets represented substantially all of the
operating assets of Bowling and Entertainment. Effective with the emergence from
bankruptcy proceedings, Entertainment, Bowling and Fair Lanes, Inc. were merged
into one entity and a change in control occurred (see Notes 2 and 3).
NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The consolidated financial statements have been prepared on the accrual
basis of accounting utilizing guidance provided by American Institute of
Certified Public Accountants' Statement of Position 90-7, "Financial Statements
by Entities in Reorganization Under the Bankruptcy Code" (SOP 90-7). On
September 29, 1994, in accordance with Fair Lanes' Plan of Reorganization (the
"Plan") dated July 15, 1994, control of the majority of Fair Lanes' common stock
transferred to the holders of Fair Lanes' Senior Secured Notes. The revaluation
of Fair Lanes' assets and liabilities as a result of this reorganization and
change in control has not been reflected in the accompanying consolidated
balance sheet as of September 29, 1994 (see Note 3).
The consolidated financial statements include the accounts of Fair Lanes
and all of its wholly-owned subsidiaries. All intercompany transactions have
been eliminated in consolidation.
Fair Lanes reports on a 52-53 week year ending on the last Thursday of
June. Fiscal year 1993 consisted of 52 weeks and fiscal year 1994 consisted of
53 weeks. The three-month period ended September 29, 1994 consisted of 13 weeks.
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 reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements. Such estimates affect the reported amounts of expenses during
current and subsequent reporting periods, and actual results could differ from
such estimates.
CASH AND CASH EQUIVALENTS
Cash in excess of daily requirements is invested in marketable securities
consisting of commercial paper and bank repurchase agreements with maturities of
three months or less. Such investments are deemed to be cash equivalents for
purposes of the consolidated balance sheets and consolidated statements of cash
flows.
INVENTORIES
Inventories (principally food, beverage and pro shop merchandise) are
valued at the lower of cost or market with cost being determined by the first-in
first-out method.
F-61
<PAGE> 220
FAIR LANES, INC. (DEBTOR-IN-POSSESSION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost less accumulated depreciation and
amortization. Depreciation, including amortization of property under capital
leases, is provided by the straight-line method over the estimated useful lives
of the assets as follows:
<TABLE>
<CAPTION>
ASSETS CLASS USEFUL LIVES
------------------------------------------------- ------------------------
<S> <C>
Buildings........................................ 30-40 years
Machinery and equipment.......................... 4-20 years
Leasehold improvements and property under capital
leases......................................... Shorter of the estimated
useful lives or terms of
leases
</TABLE>
Additions and major improvements are capitalized and included in the
property accounts; the cost of routine maintenance and repairs is charged to
expense as incurred. Upon sale or other disposal of depreciable assets, the
related cost and accumulated depreciation and amortization are removed from the
accounts and any gain or loss is reflected in income.
VALUE OF ACQUIRED LEASES
Value of acquired leases result from purchase accounting adjustments
assigning values to favorable bowling center capital and operating lease
obligations and are being amortized over the remaining lives of the leases.
These leases have an average remaining life of approximately 10 years as of
September 29, 1994.
DEFERRED FINANCING COSTS
Costs incurred to obtain financing are deferred and amortized over the
lives of the related debt using the interest method. During the year ended June
30, 1994, Fair Lanes wrote off the unamortized deferred financing costs
associated with the Senior Secured Notes (see Note 9).
DEFERRED INCOME TAXES
At June 25, 1993, Fair Lanes adopted the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS No.
109), which required, among other things, a change from the deferred method to
the asset and liability method of accounting for deferred income taxes. Under
the asset and liability method, deferred income taxes are generally recognized
for temporary differences between the financial reporting basis and income tax
basis of assets and liabilities based on enacted tax rates expected to be in
effect when such amounts are realized or settled. The effects of changes in tax
laws or rates on deferred tax assets and liabilities are recognized in the
period that includes the enactment date.
Under the deferred method applied in prior periods, deferred income taxes
were recognized for income and expense items that were reported in different
periods for financial reporting and income tax purposes based on the tax rates
applicable in the period of the calculations and were not adjusted for
subsequent changes in tax laws or rates.
RECLASSIFICATIONS
Certain amounts for 1993 have been reclassified to conform to the
presentations for 1994.
F-62
<PAGE> 221
FAIR LANES, INC. (DEBTOR-IN-POSSESSION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 3 -- REORGANIZATION PLAN AND LIQUIDITY
During the year ended June 30, 1994, Fair Lanes' cash resources were
insufficient to meet its debt service obligations with respect to the $138,000
of 11 7/8% Senior Secured Notes due August 15, 1997 (Senior Secured Notes).
Accordingly, management and the Board of Directors of Fair Lanes determined that
it was in the best interest of Fair Lanes to suspend interest payments on its
Senior Secured Notes commencing with the February 15, 1994 interest payment and
to pursue a negotiated restructuring of Fair Lanes' capital structure.
Management of Fair Lanes and committees representing certain Senior Secured
Noteholders of Fair Lanes and certain security holders of Entertainment agreed
in principle to support the Plan. On June 22, 1994 (Petition Date), Fair Lanes
and Entertainment filed a combined voluntary petition for relief under Chapter
11 of the federal bankruptcy laws in the United States Bankruptcy Court for the
District of Maryland, Baltimore Division (the Bankruptcy Court). Accordingly,
for the period June 22, 1994 through September 29, 1994, Fair Lanes was
operating as a Debtor-in-Possession under the jurisdiction of the Bankruptcy
Court. As a Debtor-in-Possession, Fair Lanes could not engage in transactions
outside the ordinary course of business without approval of the Bankruptcy
Court, after notice and hearing.
Liabilities subject to compromise in the accompanying consolidated balance
sheets represent Fair Lanes' liabilities as of the Petition Date subject to
adjustment in the reorganization process and consist of the Senior Secured Notes
of $138,000 and accrued interest thereon from August 16, 1993 to June 22, 1994
of $13,975. Fair Lanes defaulted on the February 15, 1994 interest payment and
stopped accruing interest on the Senior Secured Notes as of the Petition Date.
Under the contractual terms of the agreement, accrued interest on the Senior
Secured Notes at June 30, 1994 was $14,339. The Senior Secured Notes were issued
at a discount which was being amortized on the interest method over the term of
the loan. The unamortized discount at June 22, 1994 was approximately $444 and
was written off (see Note 9).
The Plan was approved by the creditors and confirmed by the Bankruptcy
Court on September 20, 1994 and was effective September 29, 1994. The confirmed
plan provided for the following:
CLAIMS OF THE FAIR LANES' SENIOR SECURED AND ENTERTAINMENT'S VARIABLE RATE AND
ZERO COUPON NOTEHOLDERS
The $138,000 of Senior Secured Notes were exchanged for a new issue of
$90,350 Senior Secured Notes (New Senior Secured Notes) and 94% of new Fair
Lanes' common stock. The New Senior Secured Notes bear interest at 9.5%.
Entertainment had $36,844 of variable rate notes and $7,375 of zero coupon
notes (accreted value) outstanding as of the Petition Date. Under the Plan, such
amounts were settled with the issuance of the remaining 6% of the new Fair
Lanes' common stock and warrants to purchase additional shares of the new Fair
Lanes' common stock. These warrants were not exercised and were subsequently
canceled.
OTHER GENERAL CLAIMS
Other obligations of Fair Lanes were to be settled in full. Substantially
all remaining liabilities were obligations of Fair Lanes' subsidiaries and
include trade debt, mortgage debt and capital lease obligations. Such
obligations were unaffected by the bankruptcy and the Plan.
F-63
<PAGE> 222
FAIR LANES, INC. (DEBTOR-IN-POSSESSION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
COMMON STOCK
The common stockholders of Fair Lanes and Entertainment received no shares
in the new Fair Lanes stock. As part of the transaction, Entertainment and
Bowling were merged into Fair Lanes.
NEW SENIOR SECURED NOTES
The New Senior Secured Notes may be redeemed at any time on or after July
15, 1997 and prior to maturity (July 15, 2001) at the option of Fair Lanes,
either in whole or in part, at redemption prices defined in the Indenture,
together with interest accrued to the date of redemption. However, at any time
prior to July 15, 1997, Fair Lanes may redeem up to $30,000 of the initial
principal amount of the New Senior Secured Notes from the net proceeds of one or
more underwritten public offerings of equity securities of Fair Lanes, at a
redemption price equal to 108.5% of the principal amount thereof plus accrued
and unpaid interest to the redemption date, provided that at least $60,000 of
the principal amount of New Senior Secured Notes remain outstanding immediately
after the occurrence of any such redemption and that any such redemption occurs
within 60 days following the closing of any such public offering. In addition,
Fair Lanes may be required to offer to repurchase the New Senior Secured Notes
upon the occurrence of a "change of control" event as described in the
Indenture.
The New Senior Secured Notes are secured by a pledge of all of the
outstanding shares of capital stock of each of Fair Lanes' operating
subsidiaries and require semiannual interest payments in January and July of
each year. Interest began accruing on the New Senior Secured Notes from July 15,
1994 (date of Plan's filing) and is included from this date to September 29,
1994 in the accompanying consolidated statement of loss.
OTHER PLAN COMPONENTS
Upon the emergence of Fair Lanes from bankruptcy proceedings, an unrelated
third party acquired majority ownership of Fair Lanes' common stock through its
prior ownership of the 11 7/8% bonds. Shortly thereafter, this third party
obtained 100% ownership of Fair Lanes' stock in a transaction accounted for by
the purchase method as of September 30, 1994. The following table summarizes the
adjustments required to record the reorganization and change in control:
<TABLE>
<CAPTION>
DEBT FAIR VALUE
ACTUAL DISCHARGE ADJUSTMENTS PRO FORMA
-------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Current assets..................... $ 7,644 $ -- $ (2,715) $ 4,929
Property, plant and equipment,
net.............................. 178,002 -- (36,217) 141,785
Value of acquired leases, net...... 13,521 -- (2,180) 11,341
Other assets....................... 3,548 -- (2,246) 1,302
-------- -------- -------- --------
$202,715 $ -- $ (43,358) $ 159,357
======== ======== ======== ========
Current liabilities................ $ 23,166 $ -- $ 1,376 $ 24,542
Long-term debt..................... 172,088 (61,625) -- 110,463
Other long-term liabilities........ 5,175 -- 536 5,711
Stockholder's equity............... 2,286 61,625 (45,270) 18,641
-------- -------- -------- --------
$202,715 $ -- $ (43,358) $ 159,357
======== ======== ======== ========
</TABLE>
F-64
<PAGE> 223
FAIR LANES, INC. (DEBTOR-IN-POSSESSION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 4 -- PROPERTY AND EQUIPMENT
Property and equipment consist of the following at September 29, 1994 and
June 30, 1994.
<TABLE>
<CAPTION>
SEPTEMBER 29, JUNE 30,
1994 1994
------------- ---------
<S> <C> <C>
Land and improvements..................................... $ 53,630 $ 53,626
Buildings................................................. 98,130 97,645
Machinery and equipment................................... 62,461 61,210
Leasehold improvements.................................... 9,036 8,772
Leased property under capital leases 13,610 13,610
------------- --------
236,867 234,863
Less -- accumulated depreciation and amortization......... 58,865 55,003
------------- --------
$ 178,002 $ 179,860
============= ========
</TABLE>
Depreciation expense, including property under capital leases, was $3,209,
$13,865 and $12,683 for the three months ended September 29, 1994 and the years
ended June 30, 1994 and June 24, 1993, respectively.
NOTE 5 -- ACCRUED EXPENSES AND OTHER LIABILITIES
Accrued expenses and other liabilities consist of the following at
September 29, 1994 and June 30, 1994:
<TABLE>
<CAPTION>
SEPTEMBER 29, JUNE 30,
1994 1994
------------- --------
<S> <C> <C>
Insurance................................................... $ 1,547 $ 1,547
Payroll..................................................... 1,949 2,330
Property taxes.............................................. 2,040 1,489
Reorganization costs........................................ 2,280 1,293
Other....................................................... 1,518 367
------------- --------
$ 9,334 $ 7,026
============= ========
</TABLE>
NOTE 6 -- SHORT-TERM BORROWINGS
In July 1993, Fair Lanes obtained a $6,000 seasonal loan from a principal
vendor which was repaid in December 1993.
In August 1994, Fair Lanes entered into a $4,000 line of credit agreement
with a bank. Borrowings under the line bear interest at the bank's prime rate
plus 1% and are secured by certain equipment of Fair Lanes' subsidiaries.
Interest is payable monthly. Subsequent to September 29, 1994, this line of
credit was repaid in full.
F-65
<PAGE> 224
FAIR LANES, INC. (DEBTOR-IN-POSSESSION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 7 -- OTHER INDEBTEDNESS
Other long-term debt secured by mortgages on real property and equipment,
exclusive of capital lease obligations, consists of the following at September
29, 1994 and June 30, 1994:
<TABLE>
<CAPTION>
SEPTEMBER 29, JUNE 30,
1994 1994
------------- --------
<S> <C> <C>
9% to 9 3/4% to 1997-2002.................................. $ 3,839 $ 3,939
10% to 10 1/2% to 1998-2007................................ 1,482 1,501
11% to 11 3/4% to 1998-2000................................ 7,741 7,774
Other...................................................... 735 794
------- -------
13,797 14,008
Less current maturities.................................... 873 873
------- -------
$12,924 $ 13,135
======= =======
</TABLE>
Annual maturities of other long-term debt for each of the five fiscal years
subsequent to September 29, 1994 are as follows:
<TABLE>
<S> <C>
Nine months ending June 1995...................................... $ 667
Year ending June 1996............................................. 958
Year ending June 1997............................................. 1,043
Year ending June 1998............................................. 2,236
Year ending June 1999............................................. 4,990
Thereafter........................................................ 3,903
-------
$ 13,797
=======
</TABLE>
At September 29, 1994, the carrying value of property and equipment
securing mortgages on real property and equipment was approximately $31,800.
The estimated fair values of other long-term debt approximate the carrying
values.
NOTE 8 -- ADVANCES FROM ENTERTAINMENT
During fiscal 1994, Fair Lanes obtained approximately $5,380 in cash
advances from Entertainment which was used primarily for operating needs. The
payables reported in the consolidated balance sheets of $3,002 and $2,969 at
September 29, 1994 and June 30, 1994, respectively, are net of prior year
amounts advanced to Entertainment for costs paid by Fair Lanes on behalf of
Entertainment. The Plan, described in Note 3, did not provide for repayment of
the net advances from Entertainment, and Fair Lanes has reflected the net
advances as an addition to equity.
F-66
<PAGE> 225
FAIR LANES, INC. (DEBTOR-IN-POSSESSION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 9 -- REORGANIZATION COSTS
Reorganization costs for the three months ended September 29, 1994 and the
year ended June 30, 1994 consist of the following:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEAR ENDED
SEPTEMBER 29, JUNE 30,
1994 1994
------------- ----------
<S> <C> <C>
Professional fees................................. $ 1,288 $1,759
Write-off unamortized discount and deferred
financing costs associated with pre-petition
debt............................................ -- 3,618
------ ------
$ 1,288 $5,377
====== ======
</TABLE>
NOTE 10 -- COMMITMENTS
Fair Lanes occupies various premises subject to long-term leases. In
addition to minimum annual rentals, certain leases provide for additional rents
based on a percentage of sales in excess of specified amounts. The majority of
the leases require Fair Lanes to pay all real estate taxes and to maintain
adequate insurance coverage in addition to other terms that vary with the
individual leases.
In addition, Fair Lanes leases automatic scoring and computerized control
center equipment installed in certain bowling centers under capital lease
agreements, which expire on various dates during 1996 to 1999.
Future minimum lease payments under capital leases, noncancellable
operating leases and operating subleases are as follows at September 29, 1994:
<TABLE>
<CAPTION>
OPERATING
CAPITAL ---------------------
LEASES LEASES SUBLEASES
------- ------- ---------
<S> <C> <C> <C>
FISCAL YEAR
Nine months ending June 1995......................... $ 2,059 $ 2,227 $ 65
Year ending June 1996................................ 2,655 2,584 83
Year ending June 1997................................ 2,316 2,292 83
Year ending June 1998................................ 2,175 1,648 83
Year ending June 1999................................ 1,275 1,292 52
Thereafter........................................... 104 5,650 551
------- ------- ----
Total minimum lease payments......................... 10,584 $15,693 $ 917
======= ====
Less amount representing interest.................... (2,159)
-------
Obligations under capital leases................... $ 8,425
=======
</TABLE>
F-67
<PAGE> 226
FAIR LANES, INC. (DEBTOR-IN-POSSESSION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Accumulated depreciation and amortization includes accumulated amortization
of $7,241 and $6,809 on property leased under capital leases at September 29,
1994 and June 30, 1994, respectively.
Rent expense consists of the following:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 29, JUNE 30, JUNE 24,
1994 1994 1993
------------- ---------- ----------
<S> <C> <C> <C>
Minimum rentals.................................. $ 732 $2,834 $3,318
Contingent rentals............................... 254 2,002 1,599
Less sublease rentals............................ (19) (74) (99)
---- ------ ------
$ 967 $4,762 $4,818
==== ====== ======
</TABLE>
NOTE 11 -- PENSION AND PROFIT SHARING PLANS
Fair Lanes had a defined benefit pension plan covering substantially all
employees. The benefits were based on years of service and the employees'
highest compensation during five consecutive years in the last 10 years of
employment. Fair Lanes' funding policy was to contribute annually the amount
that could be deducted for federal income tax purposes, assuming a 30-year
amortization of the unfunded accrued liability. Subsequent to the reorganization
of Fair Lanes, the defined benefit plan was frozen.
The following table sets forth the plan's funded status and the prepaid
pension cost included in the consolidated balance sheets at September 29, 1994
and June 30, 1994 based upon calculations made by consulting actuaries. Fair
Lanes obtains actuarial studies on an annual basis and an updated study for the
three months ended September 29, 1994 was not warranted.
<TABLE>
<S> <C>
Actuarial present value of obligations:
Accumulated benefit obligation including vested benefits of $7,339...... $ 7,537
----
Projected benefit obligation for services rendered to date................ $(8,597)
Plan assets at fair value, primarily listed stocks, corporate bonds and
U.S. government obligations............................................. 7,752
----
Plan assets (less than) in excess of projected benefit obligation......... (845)
Unrecognized prior service costs.......................................... (764)
Unrecognized net gain from past experience different from that assumed and
effect of changes in assumptions........................................ 1,757
----
Prepaid pension costs included in other assets $ 148
====
</TABLE>
F-68
<PAGE> 227
FAIR LANES, INC. (DEBTOR-IN-POSSESSION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Net periodic pension cost, as determined by consulting actuaries, included
the following for the year ended June 30, 1994 and June 24, 1993. Pension
expense for the three months ended September 29, 1994 was estimated to be $94.
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
JUNE 30, JUNE 24,
1994 1993
---------- ----------
<S> <C> <C>
Service costs -- benefits earned during the period.......... $ 357 $ 270
Interest cost on projected benefit obligation............... 545 503
Actual return on plan assets................................ 145 (422)
Net amortization and deferral............................... (731) (213)
---- ----
$ 316 $ 138
==== ====
</TABLE>
The weighted average discount rate and rate of increase in future
compensation levels used in determining the actuarial present value of the
projected benefit obligation was 6.46% and 4.5% in 1994 and 7.6% and 4.5% in
1993, respectively. The expected long-term rate of return on assets was 8%.
Fair Lanes has a profit sharing plan which covers substantially all
employees with at least one year of service. Generally, contributions are made
at the discretion of the Board of Directors. No contributions were made by Fair
Lanes for the three months ended September 29, 1994 or the years ended June 30,
1994 and June 24, 1993.
NOTE 12 -- INCOME TAXES
Fair Lanes files consolidated federal income tax returns with Entertainment
and prior to fiscal 1994 recorded its provision for federal income taxes for
financial reporting purposes in accordance with a tax allocation agreement with
Entertainment and Bowling. Such agreement provides that Fair Lanes will record
as expense its share of the federal income taxes payable by the consolidated
group in an amount that is based upon the ratio of the taxable income of Fair
Lanes and its subsidiaries to the taxable income of the consolidated group.
At June 25, 1993, Fair Lanes adopted the provisions of SFAS No. 109,
"Accounting for Income Taxes," which required Fair Lanes to record its income
tax provisions on a stand alone basis using the asset and liability method to
account for deferred income taxes. The cumulative effect of this change in
accounting method as of the date of adoption was to increase stockholder's
equity by $3,902. The change in accounting method required Fair Lanes to restate
the carrying values of assets acquired in prior business combinations by
increasing such values by approximately $18,000. The increase in carrying values
increased the loss before income tax benefit for the year ended June 30, 1994 by
$1,522 due to additional depreciation expense and a reduction of the gain on
sales of bowling centers. In addition, the change in accounting allowed Fair
Lanes to recognize a deferred income tax benefit of $11,914 related to the net
operating loss for the year ended June 30, 1994. Prior years' financial
statements were not restated to apply the provisions of SFAS No. 109.
F-69
<PAGE> 228
FAIR LANES, INC. (DEBTOR-IN-POSSESSION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The tax effect of temporary differences between the financial reporting basis
and income tax basis of assets and liabilities that are included in the net
deferred tax liability relate to the following:
<TABLE>
<CAPTION>
SEPTEMBER 29, JUNE 30,
1994 1994
------------- --------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforward......................... $ 16,300 $ 13,400
Accrued interest and deferred financing costs........... 7,458 6,883
Obligations under long-term consulting and noncompete
agreements........................................... 1,100 1,053
Other................................................... 3,741 3,460
------ ------
Gross deferred tax assets....................... 28,599 24,796
Gross deferred tax asset valuation allowance............ (290) --
------ ------
Gross deferred tax assets, net.................. 28,309 24,796
------ ------
Deferred tax liabilities:
Property and equipment and leasehold interest, primarily
due to differences in basis from business
combinations and depreciation and amortization....... (27,898) (28,358)
Other................................................... (411) (714)
------ ------
Gross deferred tax liabilities....................... (28,309) (29,072)
------ ------
Net deferred tax liability........................... $ -- $ (4,276)
====== ======
</TABLE>
The income tax benefit for the three months ended September 29, 1994 and
the year ended June 30, 1994 differed from the amounts computed by applying the
U.S. federal income tax rate of 34% to loss before income taxes as a result of
the following:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEAR ENDED
SEPTEMBER 29, JUNE 30,
1994 1994
------------- ----------
<S> <C> <C>
Expected tax benefit...................................... $ 4,085 $ 10,561
(Increase) reduction income tax benefit resulting from:
State and local tax benefit, net of federal taxes....... 481 1,243
Change in deferred tax asset valuation allowance........ (290) --
------ -------
$ 4,276 $ 11,804
====== =======
</TABLE>
The provision for income taxes for the year ended June 30, 1993 consisted
solely of state income taxes. Under the income tax accounting method utilized by
Fair Lanes for the year ended June 24, 1993, Fair Lanes was unable to recognize
an income tax benefit for its operating loss.
F-70
<PAGE> 229
FAIR LANES, INC. (DEBTOR-IN-POSSESSION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The income tax benefit (provision) consists of the following:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEAR ENDED YEAR ENDED
SEPTEMBER 29, JUNE 30, JUNE 24,
1994 1994 1993
------------- ---------- ----------
<S> <C> <C> <C>
Federal
Current.................................... $ -- $ -- $ --
Deferred................................... 3,826 9,940 --
------ ------- -----
3,826 9,940 --
------ ------- -----
State
Current.................................... -- (110) (206)
Deferred................................... 450 1,974 --
------ ------- -----
450 1,864 (206)
------ ------- -----
$ 4,276 $ 11,804 $ (206)
====== ======= =====
</TABLE>
The provisions for current state income taxes result from certain of Fair
Lanes' subsidiaries having taxable income in certain states. At June 30, 1994,
the consolidated group had a net operating loss carryforward available to reduce
future federal taxable income for income tax reporting purposes of approximately
$65,400, of which approximately $35,200 relates to Fair Lanes. Such amounts
expire in various amounts during the years 2002 to 2009. The Plan discussed in
Note 3 could have a significant effect on the amount and availability of net
operating loss carryforwards available to offset taxable income after the date
of the reorganization.
NOTE 13 -- OBLIGATIONS OF ENTERTAINMENT
In fiscal 1994, Fair Lanes distributed dividends to Bowling of $1,565.
Bowling distributed such amounts to Entertainment to enable it to pay interest
due on the variable rate notes.
NOTE 14 -- LITIGATION
Fair Lanes is subject to various lawsuits in the ordinary course of its
business, including employment-related matters. In the opinion of management,
none of the pending actions will have a material impact on Fair Lanes' financial
position or results of operations.
NOTE 15 -- BOWLING CENTER DISPOSITIONS
In the fourth quarter of fiscal 1993, Fair Lanes elected not to exercise
lease renewal options on two bowling centers. In the first quarter of fiscal
1994, Fair Lanes entered into a swap transaction in which it exchanged four
bowling centers in North Carolina for two bowling centers in each of Florida and
Texas. The swap transaction was accounted for at book value and, accordingly, no
gain or loss was recognized. Fair Lanes also sold four additional bowling
centers during the first quarter of fiscal 1994. The sale resulted in a loss of
$640 which is included in other income (expense), net in fiscal 1994.
F-71
<PAGE> 230
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To AMF Group Holdings Inc.:
We have audited the accompanying consolidated balance sheet of AMF Group
Holdings Inc. (a Delaware corporation) as of March 7, 1996. This financial
statement is the responsibility of the Company's management. Our responsibility
is to express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the balance sheet is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheet. 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 audit provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of AMF Group Holdings Inc. as of March
7, 1996, in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
New York, New York
March 7, 1996
F-72
<PAGE> 231
AMF GROUP HOLDINGS INC.
CONSOLIDATED BALANCE SHEET
MARCH 7, 1996
(DOLLARS NOT IN MILLIONS)
<TABLE>
<S> <C>
ASSETS
Cash................................................................................ $ 1,200
-------
Total assets................................................................... $ 1,200
======
STOCKHOLDERS' EQUITY
Common stock; $0.01 par value; 1,000 shares authorized;
100 shares issued and outstanding................................................. $ 1
Paid-in capital..................................................................... 1,199
-------
Total stockholders' equity..................................................... $ 1,200
======
</TABLE>
The accompanying notes are an integral part of this consolidated balance sheet.
F-73
<PAGE> 232
AMF GROUP HOLDINGS INC.
NOTES TO CONSOLIDATED BALANCE SHEET
MARCH 7, 1996
(DOLLARS NOT IN MILLIONS)
1. THE COMPANY
The accompanying consolidated balance sheet includes the accounts of AMF
Group Holdings Inc. ("Holdings"), a Delaware corporation, and its direct wholly
owned subsidiary, AMF Group Inc. (the "Company") and the Company's wholly owned
subsidiaries, AMF Bowling Centers Holdings Inc., AMF Bowling Holdings Inc., AMF
Worldwide Bowling Centers Holdings Inc., AMF Bowling Centers Switzerland Inc.
and AMF Bowling Centers Spain Inc. (collectively with Holdings and the Company,
the "Purchasers"). Each of these subsidiaries is a Delaware corporation.
Holdings is a wholly owned subsidiary of AMF Holdings Inc. (the "Parent"). The
Purchasers and the Parent are newly formed corporations organized by GS Capital
Partners II, L.P. and other investment funds (collectively, "GSCP") affiliated
with Goldman, Sachs & Co. Holdings, the Company and each of the Company's
subsidiaries were organized by GSCP to effect the acquisition of all of the
outstanding stock and certain of the assets of AMF Bowling, Inc., AMF Bowling
Centers, Inc., and other affiliated domestic and international corporations that
constitute AMF (collectively, "AMF").
AMF owns and operates commercial bowling centers in the United States and
worldwide. Management intends that Holdings and the Company will conduct all of
their business through subsidiaries and will have no operations of their own.
Holdings and the Company will be dependent on the cash flow of their
subsidiaries and distributions therefrom in order to meet debt service
obligations. Reference is made to the Risk Factors section of this Offering
Circular for a discussion of significant risks and uncertainties regarding the
Purchasers and the transaction discussed in Note 2.
2. THE ACQUISITION
Holdings has entered into a Stock Purchase Agreement dated February 16,
1996 (the "Stock Purchase Agreement") with the current stockholders of AMF (the
"Sellers"). The Stock Purchase Agreement provides for the acquisition of AMF
through a stock purchase by the Company's subsidiaries of all the outstanding
stock of the separate domestic and foreign corporations that constitute
substantially all of AMF and through the purchase of the assets of AMF's bowling
center operations in Spain and Switzerland (the "Acquisition"). The Company will
not acquire the assets of two bowling centers located, respectively, in Madrid,
Spain and Geneva, Switzerland (both of which will be retained by the Sellers).
The purchase price for the acquisition will be $1.325 billion, of which
$1.323 billion will be paid in cash and $2.0 million will be in the form of
assumption of debt at the closing of the Acquisition (the "Closing"). In
addition, the purchase price is subject to certain post-Closing adjustments as
follows: (i) the purchase price will be increased dollar-for-dollar by the
amount, if any, by which AMF's working capital (as defined in the Stock Purchase
Agreement) as of the Closing is greater than $33.7 million, and will be
decreased dollar-for-dollar by the amount, if any, by which AMF's working
capital as of the Closing is less than $33.7 million (the "Closing Working
Capital Adjustment"); (ii) the purchase price will be increased
dollar-for-dollar by the amount, if any, by which $5.0 million exceeds the
principal amount of the outstanding obligations as of the Closing (giving effect
to the Acquisition) under AMF's Stock Performance Plans, and will be decreased
dollar-for-dollar by the amount, if any, by which the principal amount of such
outstanding obligations as of the Closing (giving effect to the Acquisition)
exceeds $5.0 million (the "Stock Performance Plan Adjustment"); and (iii) if
Holdings has elected an Early Financing (as defined in the Stock Purchase
Agreement) by notifying the Sellers and if the Closing is requested by the
Sellers to occur on or before April 8, 1996 and Holdings' closing conditions
(other than the receipt of Financing) are then satisfied, the purchase price
will be increased by $10.0 million, and if the Closing occurs after April 8,
1996, the
F-74
<PAGE> 233
AMF GROUP HOLDINGS INC.
NOTES TO CONSOLIDATED BALANCE SHEET -- (CONTINUED)
purchase price will be increased by $10.0 million, less $0.2 million for each
day elapsed between April 8, 1996 and the date of the Closing, resulting in an
increase of $5.0 million if the Closing occurs on May 3, 1996 (the "Closing Date
Adjustment"). Except in certain circumstances, the Stock Purchase Agreement
provides for the Acquisition to be completed no earlier than April 4, 1996 and
no later than May 3, 1996, although these dates may be modified by the parties
to the Stock Purchase Agreement.
The Acquisition will be funded through issuances of senior debt, senior
subordinated notes and senior subordinated discount notes (collectively, the
"Financing") of $515.0 million, $250.0 million and $250.0 million, respectively,
the assumption of debt of $2.0 million and $375.0 million of equity. The total
funds will be used to make cash payments to AMF stockholders of $1,323.0 million
and the amount, if any, of the closing Working Capital Adjustment, the Stock
Performance Plan Adjustment and the Closing Date Adjustment and transaction
costs of approximately $53.9 million. Any remaining cash will be used for
general working capital purposes.
Goldman, Sachs & Co. will receive a cash fee of $5.0 million from the
Company in connection with the Acquisition. Goldman, Sachs & Co. has also served
as financial advisor to the sellers of AMF in connection with the acquisition
and is receiving a fee in the form of 10 year warrants to purchase 2.3% of the
common stock of the Parent on a fully diluted basis. The warrants are estimated
to have a fair market value of approximately $8.7 million. For accounting
purposes, the value of these non-cash warrants will be contributed to Holdings'
equity at Closing. In addition, Goldman, Sachs & Co. will be entitled to
reimbursement of expenses in connection therewith.
Generally, the Sellers are not providing indemnities to Holdings in
connection with the Acquisition. However, representations and warranties of
Sellers that will survive the Closing are that (i) the Sellers will deliver to
Holdings good title to the Stock and the purchased assets free and clear of any
liens, claims, charges, security interests, options or other legal or equitable
encumbrances or restrictions, and all of the outstanding stock of the
corporations that constitute AMF is owned beneficially and of record by the
Sellers, and is validly issued, fully-paid and non-assessable; and (ii) each of
the corporations that constitute AMF is at the time of the Acquisition and has
been historically an "S corporation" (within the meaning of Section 1361(a) of
the Code) for each of such corporation's entire existence, and no action has
been or will be taken to terminate, and no condition exists which could result
in the termination of, such election prior to the Closing. The representations
and warranties in clause (i) above will survive the Closing indefinitely, and
the representations and warranties in clause (ii) above will survive the Closing
until the expiration of the relevant statute of limitations (including any
extensions thereof) or, if later, until the resolution of any disputes arising
during such period, in each case applicable to the income tax return (the
"Applicable Return") of each AMF entity for the period ending on the date of the
Closing.
If any of the corporations that constitute AMF were found to have failed to
make a valid election to become an S corporation, or to have otherwise lost its
status as an S corporation, such corporation could be liable for taxes on income
for the periods in which S corporation status was not in effect. In addition,
loss of S corporation status could invalidate the step-up in the tax basis of
certain of AMF's assets that would otherwise result from the Acquisition,
causing the Company (or Holdings) to pay higher taxes on future income than
would be the case if the step-up in basis were allowed.
The Sellers have agreed to indemnify Holdings and its affiliates against
any liabilities incurred in connection with any breach of the representations
and warranties that survive the Closing, including but not limited to the tax
liabilities referred to in the preceding paragraph. The Sellers also have agreed
to indemnify Holdings and its affiliates against any liability arising from (i)
the ownership, conduct, condition or transfer at any time of any of the
businesses or other tangible or intangible assets or operations (a) transferred
to the Sellers or their affiliates prior to the Closing or
F-75
<PAGE> 234
AMF GROUP HOLDINGS INC.
NOTES TO CONSOLIDATED BALANCE SHEET -- (CONTINUED)
(b) owned, operated or conducted by the Sellers or certain affiliates on or
prior to the Closing and which were not owned, operated or conducted as part of
AMF's bowling center or manufacturing businesses; and (ii) certain litigation
brought against AMF by its former Korean distributor. The indemnification
excludes claims for incidental or consequential damages or damages for lost
profits. Each of the Sellers will be liable for indemnified losses only based on
their percentage stock ownership of AMF prior to the Acquisition; provided
however, that five irrevocable trusts (the "Trusts"), which as the owners of a
controlling interest of the Stock are together the principal selling
stockholder, will be jointly and severally liable for the aggregate
indemnification obligations of the Trusts. The Trusts will be required to
maintain, collectively, a $500.0 million minimum net worth (based upon fair
market value) at all times from the Closing through the date that is the fourth
anniversary of the last filed Applicable Return and a $250.0 million minimum net
worth (based upon fair market value) at all times thereafter through the date
that is the sixth anniversary of the last filed Applicable Return, subject to
extension under certain circumstances. The beneficiaries of the Trusts have
separately agreed to indemnify Holdings if the minimum net worth requirements
are not satisfied and if certain other circumstances occur.
A condition to Holdings' obligation to consummate the Acquisition is
Holdings' reasonable satisfaction that licenses to sell or serve alcoholic
beverages or to engage in gaming, lottery or gambling activities have been
received, or that other appropriate mechanisms which will not result in denial
or loss of a license or civil penalties or put the Company at risk of an
enforcement action for a violation of applicable state laws are in place and, in
each case, are expected to remain in place for the forseeable future without
material risk or expectation of losing such ability in the future (other than
the risk that any holder of a liquor license or a gaming, lottery or gambling
license that complies with the terms and requirements of such license and the
relevant law generally bears of nonrenewal), so that, after the Closing,
alcoholic beverages can continue to be sold or served and gaming activities can
continue to be conducted by AMF in essentially the same manner and on
essentially the same terms as before the Closing at AMF locations that would
reasonably be expected to enable AMF to derive, during the 10-month period
beginning on the date of Closing, revenue from the sale and/or service of
alcoholic beverages and, other than in the State of Washington, gaming, lottery
and gambling activities equal to at least 90% of the total of such revenue
during the 10 months ended October 31, 1995. To the extent that licenses
relating to the remaining 10% or less of such revenue are not obtained, such
revenue may be unavailable to the Company following the Acquisition. Holdings
has the ability to waive the condition described in this paragraph, subject to
any restrictions that may be contained in the Senior Debt covenants.
In connection with the Acquisition, AMF has entered into Trademark License
Agreements, dated February 16, 1996 (the "License Agreements"), licensing the
AMF name and related trademark rights to certain corporations owned by the
Sellers (the "Licensees"), for use in connection with the sale by Licensees of
sewing equipment, baking equipment and golf equipment. Certain of these products
currently are being marketed under the AMF name. No consideration separate from
the Acquisition is being paid by the Licensees in connection with the License
Agreements, and the license is royalty-free. The term of the licenses continues
indefinitely. The Licensees have expressly assumed and indemnified AMF against
all liabilities resulting from Licensees' use of the licensed trademarks.
In addition, Holdings has entered into a Non-Competition Agreement, dated
February 16, 1996 (the "Non-Competition Agreement"), with an individual
affiliated with the Sellers (the "Affiliated Party"), restricting the Affiliated
Party and certain affiliates from participating in the same or similar business
as AMF anywhere in the world for a period of five years from the Closing. The
Affiliated Party has also agreed that, during a period of three years from the
Closing, the Affiliated Party and certain affiliates will not, without the prior
written approval of Holdings, solicit any person who is a
F-76
<PAGE> 235
AMF GROUP HOLDINGS INC.
NOTES TO CONSOLIDATED BALANCE SHEET -- (CONTINUED)
management or other key employee of Holdings, the Company, AMF or any of their
subsidiaries or affiliates as of the date of the Non-Competition Agreement to
terminate his or her employment. In consideration of the Non-Competition
Agreement, Holdings has agreed to pay the Affiliated Party $50,000 per year
during the term of the Non-Competition Agreement.
Holdings has also entered into a Consulting and Non-Competition Agreement,
dated February 16, 1996 (the "Consulting and Non-Competition Agreement") with
one of the Sellers. This Seller has agreed to provide, for a period of two years
from the Closing, such consulting services to Holdings as may be requested from
time to time by the Board of Directors and/or the Chief Executive Officer of
Holdings. The Consulting and Non-Competition Agreement also restricts this
Seller and certain affiliates from participating in the same or similar business
as AMF anywhere in the world for a period of four years from the Closing. This
Seller also has agreed that, during a period of three years from the Closing,
the Seller and certain affiliates will not, without the prior written approval
of Holdings, solicit any person who is a management or other key employee of
Holdings, the Company, AMF or any of their subsidiaries or affiliates as of the
date of the Consulting and Non-Competition Agreement to terminate his or her
employment. Holdings has agreed to pay this Seller $100,000 per year during the
two-year period that the Seller will provide consulting services.
3. SENIOR DEBT
GSCP has entered into a commitment letter with Goldman, Sachs & Co. and its
affiliates, and Citibank, N.A. and its affiliates (collectively, "the Lenders"),
providing for (i) syndicated senior secured term loan facilities aggregating
$515.0 million (the "Term Loans"), (ii) a senior secured multiple-draw term
facility of, under certain conditions, over time, up to $100.0 million, and,
subject to satisfying a financial test, up to an additional $50.0 million (the
"Acquisition Facility") and (iii) a senior secured revolving credit facility of
up to $50.0 million (the "Working Capital Facility," and together with the Term
Loans and the Acquisition Facility, "Senior Debt"). Goldman, Sachs & Co. is
acting as syndication agent and, together with Citicorp Securities, Inc., are
acting as co-arrangers in connection with the Senior Debt. Citibank, N.A. will
act as administrative agent. Goldman, Sachs & Co. is receiving a fee of
approximately $9.5 million and having expenses reimbursed in connection
therewith.
The execution of the Senior Debt, the borrowings necessary to complete the
Acquisition and the delivery of required documentation thereunder, will occur
simultaneously with the closing of the Acquisition. The Lenders' obligation to
provide the senior financing is conditioned upon, among other things, the
preparation, execution and delivery of mutually acceptable loan documentation,
including a credit agreement incorporating substantially the terms and
conditions outlined in the commitment letter; the Lenders' satisfaction with the
final terms and conditions of the Acquisition; the consummation of the
Acquisition in accordance with all material terms of the Stock Purchase
Agreement; and the absence of any material adverse change in the business,
condition, operations, performance, properties or prospects of AMF or any of its
subsidiaries since December 31, 1995.
The Term Loans consist of (i) a Term Loan Facility of $250.0 million, (ii)
an AXELs(SM) Series A Facility of $190.0 million and (iii) an AXELs(SM) Series B
Facility of $75.0 million. The Term Loans provide for quarterly amortization
until final maturity. The Term Loan Facility will mature five years, the
AXELs(SM) Series A Facility will mature seven years and the AXELs(SM) Series B
Facility will mature eight years after the closing of the Senior Debt. The
following table summarizes scheduled amortization payments (dollars in
millions).
F-77
<PAGE> 236
AMF GROUP HOLDINGS INC.
NOTES TO CONSOLIDATED BALANCE SHEET -- (CONTINUED)
<TABLE>
<CAPTION>
AXELS(SM) SERIES AXELS(SM) SERIES
TERM LOAN A B
YEAR AFTER CLOSING FACILITY FACILITY FACILITY TOTAL
- --------------------- ----------- ---------------- ---------------- ------
<S> <C> <C> <C> <C>
1 $ 35.0 $ 2.0 $ 1.2 $ 38.2
2 40.0 2.0 1.2 43.2
3 45.0 2.0 1.2 48.2
4 55.0 2.0 1.2 58.2
5 75.0 2.0 1.2 78.2
6 -- 80.0 1.2 81.2
7 -- 100.0 1.2 101.2
8 -- -- 66.6 66.6
------ ------ ------ ------
$ 250.0 $190.0 $ 75.0 $515.0
====== ====== ====== ======
</TABLE>
In addition, the Company will be required to make prepayments on the Senior
Debt under certain circumstances, including upon certain asset sales and
issuance of debt or equity securities. The Company will also be required to make
prepayments on the Senior Debt in an amount equal to (i) 75% (to be reduced to
50% for years in which the Company's Total Debt/EBITDA ratio for the prior 12
months is less than 4.0 to 1.0) of the Company's Excess Cash Flow (as defined)
or (ii) during each of the first three years after the closing of the Senior
Debt, if less than the amount described in clause (i), the amount by which the
Company's Excess Cash Flow for such year exceeds $10.0 million (during the first
two years after closing) or $20.0 million (during the third year after closing).
These mandatory prepayments will be applied to prepay the Senior Debt in the
following order: first, to the Term Loans, ratably among each tranche and the
Acquisition Facility, and second, to the permanent reduction of the Working
Capital Facility. The Term Loan Facility will bear interest, at the Company's
option, at Citibank's customary base rate plus 1.5% or at Citibank's Eurodollar
rate plus 2.5%. The AXELs(SM) Series A Facility will bear interest, at the
Company's option, at Citibank's customary base rate plus 1.875% or at Citibank's
Eurodollar rate plus 2.875%. The AXELs(SM) Series B Facility will bear interest,
at the Company's option, at Citibank's customary base rate plus 2.125% or at
Citibank's Eurodollar rate plus 3.125%.
The Company will have the ability to borrow an additional $50.0 million for
general corporate purposes pursuant to the Working Capital Facility and, over
time, up to $100.0 million and, with the consent of the Lenders, up to an
additional $50.0 million for acquisitions pursuant to the Acquisition Facility,
subject to the Company meeting certain pro forma financial covenants and
limitations imposed on the amount borrowed for proposed acquisitions, including
that the amount borrowed under the Acquisition Facility shall not exceed 3.5
times the deemed EBITDA of the business to be acquired.
The Acquisition Facility will have a term of five years. Up to $25.0
million of the facility may be borrowed in the first year after the closing of
the Senior Debt, up to $25.0 million plus the amount available and not borrowed
during the first year may be borrowed in the second year after closing, and up
to $50.0 million plus the amount available and not borrowed during the second
year may be borrowed in the third year and in the first six months of the fourth
year after closing. The Acquisition Facility will begin to amortize 3.5 years
after closing, such that at the end of the fourth year after closing, the
outstanding principal will be reduced to $75.0 million, with final maturity at
the end of the fifth year after closing. The Acquisition Facility will bear
interest, at the Company's option, at Citibank's customary base rate plus 1.5%
or at Citibank's Eurodollar rate plus 2.5%.
The Working Capital Facility will have a term of five years and will be
fully revolving until final maturity. The Working Capital Facility will bear
interest, at the Company's option, at Citibank's customary base rate plus 1.5%
or at Citibank's Eurodollar rate plus 2.5%.
F-78
<PAGE> 237
AMF GROUP HOLDINGS INC.
NOTES TO CONSOLIDATED BALANCE SHEET -- (CONTINUED)
Beginning one year after the closing of the Senior Debt, the margins above
Citibank's customary base rate and Citibank's Eurodollar rate, at which the Term
Loan Facility, the Working Capital Facility and the Acquisition Facility will
bear interest, may be reduced pursuant to a floating performance pricing grid
which is based on the Total Debt/EBITDA ratio for the four fiscal quarter
rolling period then most recently ended.
The Senior Debt will be guaranteed by Holdings and by each of the Company's
present and future first-tier and second-tier subsidiaries (see Note 6), and
will be secured by all of the stock of the Company and the Company's present and
future first-tier and second-tier subsidiaries, by 66% of the stock of the
Company's present and future international subsidiaries, and by substantially
all of the Company's present and future property and assets. Any additional
present or future subsidiaries of the Company that become guarantors under the
Senior Debt will also jointly and severally guarantee the Company's payment
obligations on the notes referred to in Note 4 on a senior subordinated basis.
The Senior Debt will contain certain financial covenants, including, but
not limited to, covenants related to cash interest coverage, fixed charge
coverage, Senior Debt/EBITDA ratio, Total Debt/ EBITDA ratio and minimum EBITDA.
In addition, the Senior Debt will contain other affirmative and negative
covenants relating to (among other things) liens, payments on other debt,
transactions with affiliates, mergers and acquisitions, sales of assets, leases,
guarantees and investments. The Senior Debt will contain customary events of
default for highly-leveraged financings, including certain changes in ownership
or control of the Company.
The Company is required to obtain interest rate protection in form and with
parties acceptable to the Lenders, in an amount to be agreed upon, but in any
event for no less than 50% of the Senior Debt and the Company's other floating
rate debt.
The Senior Debt may not be finalized at the time the subordinated notes
discussed in Note 4 are issued. While the Company currently expects that the
principal amounts and amortization schedules of the Term Loan Facility, AXEL(SM)
Series A Facility and AXEL(SM) Series B Facility will remain as described
herein, there can be no assurance that the final amounts and terms and
conditions will not change from those described herein, although the Company
currently believes that changes, if any, to the principal amounts and
amortization schedules will not be substantial.
4. SENIOR SUBORDINATED NOTES AND SENIOR SUBORDINATED DISCOUNT NOTES
The Company has initiated an offering of senior subordinated notes (the
"Senior Subordinated Notes") with a principal amount of $250.0 million and
senior subordinated discount notes (the "Subordinated Discount Notes") with an
aggregate principal amount so as to generate gross proceeds of $250 million. The
Senior Subordinated Notes and the Senior Subordinated Discount Notes are
collectively referred to as the "Notes."
The Senior Subordinated Notes will mature on March 15, 2006. Interest will
accrue from the date of issuance at an annual rate of 10 7/8% and will be
payable in cash semi-annually in arrears on March 15 and September 15 of each
year commencing September 15, 1996.
The Senior Subordinated Discount Notes will mature on March 15, 2006. The
Senior Subordinated Discount Notes will be sold at a substantial discount to
their face amount and will result in an effective yield of 12 1/4% per annum,
computed on a semi-annual bond equivalent basis. No interest (other than
liquidated damages, if applicable) will accrue or be payable prior to March 15,
2001 (the "Full Accretion Date"). Commencing March 15, 2001 interest will accrue
and will be payable in cash semi-annually in arrears on each March 15 and
September 15 of each year beginning with the first such date after the Full
Accretion Date.
F-79
<PAGE> 238
AMF GROUP HOLDINGS INC.
NOTES TO CONSOLIDATED BALANCE SHEET -- (CONTINUED)
For federal income tax purposes, each Senior Subordinated Discount Note
will be deemed to be issued with "original issue discount" equal to the
difference between the issue price thereof and the sum of all cash payments
(whether denominated as principal or interest) to be made thereon. Each holder
of a Senior Subordinated Discount Note must include in gross income for federal
income tax purposes the sum of the daily portions of such original issue
discount for each day during each taxable year in which the Senior Subordinated
Discount Note is held, even though no interest payments will be received prior
to September 15, 2001.
The Company's payment obligations under the Notes will be jointly and
severally guaranteed on a senior subordinated basis (the "Senior Subordinated
Guarantees") by Holdings and each of the Company's subsidiaries identified in
Note 6 (collectively, the "Guarantors") and by any other subsidiaries of the
Company that act as guarantors of the Senior Debt. The guarantees will be
subordinated to the guarantees of Senior Debt issued by the Guarantors as
described in Note 3.
The Notes will be general, unsecured obligations of the Company, will be
subordinated in right of payment to all Senior Debt, as defined, of the Company,
will rank pari passu with all Senior Subordinated Debt of the Company and will
be senior in right of payment to all existing and future subordinated debt of
the Company. Following the Acquisition, the claims of the holders of the Notes
will be subordinated to the Senior Debt, and will be effectively subordinated to
all other indebtedness and other liabilities (including trade payables and
capital lease obligations) of the Company's subsidiaries that are not
Guarantors, through which the Company will conduct a portion of its operations
(See Note 6).
In the event of a Change of Control, as defined, the holders of the Senior
Subordinated Notes will have the right to require the Company to repurchase
their Senior Subordinated Notes in whole or in part, at a price equal to 101% of
the aggregate principal amount thereof plus accrued and unpaid interest, if any,
including liquidated damages, if any, to the date of repurchase. The Senior
Subordinated Note Indenture will require that prior to such a repurchase, the
Company must either repay all outstanding Senior Debt or obtain any required
consent to such repurchase.
In the event of a Change of Control, holders of the Senior Subordinated
Discount Notes will have the right to require the Company to repurchase their
Senior Subordinated Discount Notes, in whole or in part, at a price equal to
101% of the Accreted Value thereof, including Liquidated Damages, if any (or, if
after the Full Accretion Date, 101% of the principal amount thereof plus accrued
and unpaid interest, if any, including Liquidated Damages, if any, to the date
of repurchase). The Senior Subordinated Discount Note Indenture will require
that prior to such a repurchase, the Company must either repay all outstanding
indebtedness under the Senior Debt or obtain any required consent to such
repurchase.
Pending consummation of the Acquisition, the net proceeds from the issuance
of the Notes together with $100.0 million of equity contributions from GSCP and
a deposit, if any, from the Sellers (collectively, the "Escrow Funds") will be
held in escrow accounts (the "Escrow Accounts") pursuant to pledge and escrow
agreements (the "Pledge and Escrow Agreements"). The Escrow Funds will be
required to be invested in cash equivalents, as directed from time to time by
the Company. The Company will be permitted to obtain release of the Escrow Funds
upon consummation of the Acquisition. If consummation of the Acquisition has not
occurred on or prior to May 31, 1996, all outstanding Senior Subordinated Notes
will be subject to a special mandatory redemption with the Escrow Funds relating
thereto at the Special Redemption Price plus accrued and unpaid interest, if
any, plus Liquidated Damages, if any, to the date of redemption. The Special
Redemption Price will range from 101% of the principal amount of the Senior
Subordinated Notes, if the date of redemption is on or prior to April 18, 1996,
to 102.5% of the principal amount of the Senior Subordinated Notes, if the date
of redemption is on May 31, 1996.
F-80
<PAGE> 239
AMF GROUP HOLDINGS INC.
NOTES TO CONSOLIDATED BALANCE SHEET -- (CONTINUED)
Except for the special mandatory redemption described above and, as
described below, the Notes are not redeemable at the Company's option prior to
March 15, 2001. From and after March 15, 2001, the Notes will be subject to
redemption at the option of the Company, in whole or in part, at specified
redemption prices, together with accrued and unpaid interest, including
liquidated damages, if any, to the date of redemption.
Prior to March 15, 1999, up to $100.0 million in aggregate principal amount
of Senior Subordinated Notes will be redeemable at the option of the Company, on
one or more occasions, from the net proceeds of public or private sales of
common stock of, or contributions to the common equity capital of, the Company,
at a price of 110.875% of the principal amount of the Senior Subordinated Notes,
together with accrued and unpaid interest, if any, including Liquidated Damages,
if any, to the date of redemption; provided that at least $150.0 million in
aggregate principal amount of Senior Subordinated Notes remains outstanding
immediately after such redemption.
Prior to March 15, 1999, the Senior Subordinated Discount Notes will be
redeemable at the option of the Company, on one or more occasions, from the net
proceeds of public or private sales of common stock of, or contributions to the
common equity capital of, the Company, at a price of 112.250% of the Accreted
Value of the Senior Subordinated Discount Notes plus accrued and unpaid
Liquidated Damages, if any; provided that at least $150.0 million in Accreted
Value of Senior Subordinated Discount Notes remains outstanding immediately
after such redemption.
The Notes are subject to certain transfer restrictions.
The Indenture governing the Senior Subordinated Notes (the "Senior
Subordinated Note Indenture") and the Indenture governing the Senior
Subordinated Discount Notes (the "Senior Subordinated Discount Note Indenture"
and, together with the Senior Subordinated Note Indenture, the "Indentures")
will contain certain covenants that will, among other things, limit the ability
of the Company and its Restricted Subsidiaries, as defined therein, to incur
additional indebtedness and issue Disqualified Stock, as defined therein, pay
dividends or distributions or make investments or make certain other Restricted
Payments, as defined therein, enter into certain transactions with affiliates,
dispose of certain assets, incur liens securing pari passu and subordinated
indebtedness of the Company and engage in mergers and consolidations.
Pursuant to a Registration Rights Agreement (the "Registration Rights
Agreement") among the Company, the Guarantors and Goldman, Sachs & Co., the
Company and the Guarantors will agree to file a registration statement (the
"Exchange Offer Registration Statement") with respect to an offer to exchange
(i) the Senior Subordinated Notes for a new issue of debt securities of the
Company (the "Exchange Senior Subordinated Notes") and (ii) the Senior
Subordinated Discount Notes for a new issue of debt securities of the Company
(the "Exchange Senior Subordinated Discount Notes" and, together with the
Exchange Senior Subordinated Notes, the "Exchange Notes"), each of which will be
registered under the Securities Act of 1933, as amended (the "Securities Act"),
with terms identical to those of the Senior Subordinated Notes and the Senior
Subordinated Discount Notes, as applicable (the "Exchange Offer"). If (i) the
Exchange Offer is not permitted by applicable law or (ii) the holders of an
aggregate of at least $1.0 million in principal amount or Accreted Value of
Transfer Restricted Securities, as defined therein, notify the Company within
the specified time period that (A) they are prohibited by law or Commission
policy from participating in the Exchange Offer, (B) they may not resell
Exchange Notes acquired 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) they are
broker-dealers and hold Notes acquired directly from the Company or an affiliate
of the Company, then the Company and the Guarantors will be required to provide
a shelf registration statement (the "Shelf Registration Statement") to cover
resales of the Notes by the holders
F-81
<PAGE> 240
AMF GROUP HOLDINGS INC.
NOTES TO CONSOLIDATED BALANCE SHEET -- (CONTINUED)
thereof. Notwithstanding the foregoing, at any time after consummation of the
Exchange Offer, the Company and the Guarantors may allow the Shelf Registration
Statement to cease to be effective and usable if (i) the Board of Directors of
the Company determines in good faith that such action is in the best interests
of the Company, and the Company notifies the Holders within a certain period of
time after the Board of Directors makes such determination or (ii) the
prospectus contained in the Shelf Registration Statement contains an untrue
statement of material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided that the period referred to in the Registration Rights Agreement during
which the Shelf Registration Statement is required to be effective and usable
will be extended by the number of days during which such registration statement
was not effective or usable pursuant to the foregoing provisions.
If (i) the Company and the Guarantors fail to file within 30 days of the
closing of the Acquisition, or cause to become effective within 90 days after
the date of such filing, the Exchange Offer Registration Statement, or (ii) the
Company and the Guarantors are obligated to provide a Shelf Registration
Statement and such Shelf Registration Statement is not filed within 30 days, or
declared effective within 90 days, of the date on which the Company became so
obligated, or (iii) the Company and the Guarantors fail to consummate the
Exchange Offer within 30 days of the date on which the Exchange Offer
Registration Statement was required to be declared effective by the Commission
or (iv) subject to the last sentence of the preceding paragraph, the Shelf
Registration Statement or the Exchange Offer Registration Statement is declared
effective but shall thereafter cease to be effective or usable in connection
with resales of the Notes for the periods specified in the Registration Rights
Agreement (each such event referred to in clauses (i) through (iv) above a
"Registration Default"), then the Company shall pay to each holder of Transfer
Restricted Securities, with respect to the first 90-day period following such
Registration Default, liquidated damages ("Liquidated Damages") in an amount
equal to $0.05 per week per $1,000 in principal amount or Accreted Value, as
applicable, of Transfer Restricted Securities held by such holder. The amount of
such Liquidated Damages will increase by an additional $0.05 per week per $1,000
in principal amount or Accreted Value, as applicable, of Transfer Restricted
Securities held by such holders for each subsequent 90-day period until such
Registration Default has been cured, up to a maximum of $0.50 per week.
Following the cure of all Registration Defaults, the accrual of all Liquidated
Damages will cease.
Subject to the terms and conditions set forth in the purchase agreement
between the parties, the Company has agreed to sell to Goldman, Sachs & Co. (the
"Initial Purchaser"), and the Initial Purchaser has agreed to purchase from the
Company, all of the Notes being offered.
Under the terms and conditions of the purchase agreement, the Initial
Purchaser is committed to take and pay for all the Notes offered, if any are
taken.
The purchase price for the Senior Subordinated Notes and the Senior
Subordinated Discount Notes will be the respective offering prices set forth on
the cover page of the Offering Circular (collectively, the "Note Offering
Prices") less the underwriting discounts of 3.8% of the principal amount of the
Senior Subordinated Notes purchased and 2.101% of the principal amount of the
Senior Subordinated Discount Notes purchased. The Initial Purchaser proposes to
offer the Notes at their respective Note Offering Prices. After the Notes are
released for sale, the Note Offering Prices and other selling terms may from
time to time be varied by the Initial Purchaser.
The Initial Purchaser has agreed that it will offer or sell the Notes to
(i) persons whom it reasonably believes to be qualified institutional buyers in
reliance on Rule 144A under the Securities Act, (ii) a limited number of
institutional accredited investors within the meaning of Rule 501(a)(1),
F-82
<PAGE> 241
AMF GROUP HOLDINGS INC.
NOTES TO CONSOLIDATED BALANCE SHEET -- (CONTINUED)
(2), (3) or (7) of Regulation D under the Securities Act and (iii) to certain
persons outside the United States pursuant to Regulation S under the Securities
Act.
The Notes are expected to be eligible for trading in the Private Offerings,
Resales and Trading through Automatic Linkages (PORTAL) Market.
The Company has agreed that for a period of 90 days after the date of the
Offering Circular that it will not offer, sell, contract to sell or otherwise
dispose of, without the prior written consent of the Initial Purchaser, any
securities of the Company that are substantially similar to the Notes, other
than the Exchange Notes, or any securities of the Company convertible into or
exchangeable for securities of the Company substantially similar to the Notes.
The Company has been advised by the Initial Purchaser that the Initial
Purchaser, through Goldman Sachs International, as its selling agent, proposes
to resell Notes outside the United States in offshore transactions in reliance
on Regulation S under the Securities Act and in accordance with applicable law.
In each case, the Note Offering Prices and underwriting discounts are the same.
Any offer or sale of Notes in reliance on Rule 144A will be made by
broker-dealers who are registered as such under the Exchange Act. Terms used
above have the meanings given to them by Regulation S and Rule 144A under the
Securities Act.
The Initial Purchaser has acknowledged and agreed that, except as permitted
by the purchase agreement, it will not offer, sell or deliver the Notes, (i) as
part of the distribution at any time or (ii) otherwise until 40 days after the
later of the commencement of the Offering and the original issue date of the
Notes, within the United States or to, or for the account or benefit of, U.S.
Persons, and that it will send to each dealer to which it sells Notes in
reliance on Regulation S during the restricted period a confirmation or other
notice setting forth the restrictions on offers and sales of the Notes within
the United States or to, or for the account or benefit of, U.S. Persons. Terms
used in this paragraph have the meaning given to them by Regulation S under the
Securities Act.
In addition, until the expiration of the 40-day period referred to above,
an offer or sale of Notes within the United States by a dealer (whether or not
participating in the offering) may violate the registration requirements of the
Securities Act if such offer or sale is made otherwise than in accordance with
Rule 144A under the Securities Act or pursuant to another exemption from
registration under the Securities Act.
The Initial Purchaser has also represented and agreed that (i) it has not
offered or sold and will not offer or sell, any Notes to persons in the United
Kingdom prior to the expiry of the period of six months from the issue date of
the Notes, except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or agent)
for the purposes of their businesses or otherwise in circumstances which have
not resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995, (ii) it
has complied and will comply with all applicable provisions of the Financial
Services Act 1986 with respect to anything done by it in relation to the Notes
in, from or otherwise involving the United Kingdom, and (iii) it has only issued
or passed on and will only issue or pass on in the United Kingdom any document
received by it in connection with the issuance of the Notes to a person who is
of a kind described in Article 11(3) of the Financial Services Act 1986
(Investment Advertisements) (Exemptions) Order 1995 or is a person to whom the
document may otherwise lawfully be issued or passed on.
The Company has agreed to reimburse the Initial Purchaser for certain
expenses and the Company and the Guarantors have agreed to indemnify the Initial
Purchaser against certain liabilities, including liabilities under the
Securities Act.
F-83
<PAGE> 242
AMF GROUP HOLDINGS INC.
NOTES TO CONSOLIDATED BALANCE SHEET -- (CONTINUED)
The Notes are a new issue of securities with no established trading market.
The Company has been advised by the Initial Purchaser that it intends to make a
market in the Notes. However, the Initial Purchaser is not obligated to do so
and such market making may be interrupted or discontinued without notice.
Following consummation of the Exchange Offer contemplated by the Registration
Rights Agreement, because the Initial Purchaser is an affiliate of the Company,
the Initial Purchaser will be required to deliver a current "market-maker"
prospectus and otherwise comply with the registration requirements of the
Securities Act in connection with any secondary market sale of the Exchange
Notes, which may affect its ability to continue market-making activities. The
Initial Purchaser's ability to engage in market-making transactions will
therefore be subject to the availability of a current "market-maker" prospectus.
Under certain circumstances following completion of the Exchange Offer, the
Company and the Guarantors have agreed to make a "market-maker" prospectus
available to the Initial Purchaser to permit it to engage in market making
transactions. Notwithstanding the foregoing, at any time after consummation of
the Exchange Offer, the Company and the Guarantors may allow the "market-maker"
prospectus to cease to be effective and usable if (i) the Board of Directors of
the Company determines in good faith that such action is in the best interests
of the Company, and the Company notifies the holders within a certain period of
time after the Board of Directors makes such determination or (ii) the
"market-maker" prospectus contains an untrue statement of a material fact or
omits 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.
5. STOCK OPTION PLAN
In connection with the Acquisition, the Company will adopt a stock option
plan under which it will grant stock options to certain members of management to
purchase up to an aggregate of 3.4% of the Parent's common stock on a fully
diluted basis. In addition, certain executive officers will have the opportunity
to purchase, in the aggregate, up to $6.0 million of the Parent's common stock
at the same price per share to be paid by GSCP. These executive officers have
committed to purchase at least $3.0 million of the Parent's common stock. It is
expected that $1.0 million of the purchase price will be provided by the
executives, and the remainder will be loaned to the executives by the Company on
a non-recourse basis, with the purchased stock as security for the loans. If
these executive officers decide to purchase $6.0 million of the Parent's common
stock and all available options are granted, management's beneficial ownership
of the Parent's common stock will be approximately 4.9% of the Parent's common
stock on a fully diluted basis.
6. UNAUDITED PRO FORMA CONSOLIDATING GUARANTOR AND NON-GUARANTOR FINANCIAL
INFORMATION
As further discussed in Note 4, AMF Group Inc. intends to issue Senior
Subordinated Notes and Senior Subordinated Discount Notes. The Notes will be
jointly and severally guaranteed on a full and
F-84
<PAGE> 243
AMF GROUP HOLDINGS INC.
NOTES TO CONSOLIDATED BALANCE SHEET -- (Continued)
unconditional basis by Holdings and by AMF Group Inc.'s first-tier and
second-tier subsidiaries as follows (together with Holdings, the "Guarantor
Companies"):
- AMF Bowling Centers Holdings Inc.(a)
- AMF Bowling Holdings Inc.(a)
- AMF Bowling, Inc.
- AMF Bowling Centers, Inc.
- Bush River Corporation
- King Louie Lenexa, Inc.
- AMF Beverage Company of Oregon, Inc.
- AMF Worldwide Bowling Centers Holdings Inc.(a)
- AMF Bowling Centers (Aust) International Inc.
- AMF Bowling Centers (Canada) International Inc.
- AMF BCO -- France One, Inc.
- AMF BCO -- France Two, Inc.
- AMF Bowling Centers (Hong Kong) International Inc.
- AMF Bowling Centers International Inc. (Japan)
- AMF Bowling Mexico Holding, Inc.
- Boliches AMF, Inc.
- AMF BCO -- U.K. One, Inc.
- AMF BCO -- U.K. Two, Inc.
- AMF BCO -- China, Inc.
- AMF Bowling Centers China, Inc.
The following third-tier domestic subsidiaries of AMF Group Inc., all of
which will be wholly owned subsidiaries of AMF Worldwide Bowling Centers
Holdings Inc. have, at present, not provided guarantees (collectively, the
"Non-Guarantor Companies"):
- AMF Bowling (Unlimited)
- Worthing North Properties Limited
- AMF Bowling France SNC
- AMF Bowling de Paris SNC
- AMF Bowling de Lyon La Part Dieu SNC
- Boliches y Compania
- Operadora Mexicana de Boliches, S.A.
- Promotora de Boliches, S.A. de C.V.
- Immeubles Obispado, S.A.
- Immeubles Minerva, S.A.
- Boliches Mexicano, S.A.
- AMF Bowling Centers (China) Company
- AMF Garden Hotel Bowling Center Company
(a) As discussed in Note 1, these subsidiaries have been newly created by
Holdings and AMF Group Inc. to effect the acquisition of AMF.
It is management's intent to provide holders of the Notes with the same
guarantee structure as that which is ultimately provided to lenders of the
Senior Debt at the closing of the Senior Debt. Accordingly, the pro forma
consolidating guarantor and non-guarantor financial information presented in
this footnote is subject to change pending the closing of the Senior Debt.
F-85
<PAGE> 244
AMF GROUP HOLDINGS INC.
NOTES TO CONSOLIDATED BALANCE SHEET -- (CONTINUED)
The following unaudited pro forma condensed consolidating information with
respect to the Guarantor Companies and the Non-Guarantor Companies, together
with elimination entries, gives effect to the Acquisition and related financing
transactions as if such transactions had occurred as of January 1, 1995 for
purposes of the unaudited pro forma consolidating statement of income for the
year ended December 31, 1995.
The unaudited pro forma consolidating statement of income reflects pro
forma adjustments to (a) eliminate the effect of certain transactions
contemplated in the Stock Purchase Agreement, and (b) give effect to (i) the
acquisition of AMF by Holdings and the related Financing transactions and (ii)
costs incurred by AMF and included in the historical audited combined statement
of income for the year ended December 31, 1995, associated with the acquisition
of Fair Lanes, Inc. including duplicate corporate facilities and administrative
expenses. Certain pro forma adjustments result from management's preliminary
determination of purchase accounting adjustments and are based upon available
information and certain assumptions that Holdings considers reasonable under the
circumstances. Consequently, the amounts reflected in the unaudited pro forma
consolidating statement of income are subject to change.
The unaudited pro forma consolidating financial statements should be read
in conjunction with AMF's historical audited Combined Financial Statements and
related notes thereto, appearing elsewhere in this Offering Circular.
The unaudited pro forma consolidating financial statements do not purport
to be indicative of Holdings' financial condition or the results that would have
actually been obtained had such transactions been consummated as of the assumed
dates and for the periods presented, nor are they indicative of Holdings'
results of operation or financial condition for any future period or date.
As a result of the holding company structure of the Company, the holders of
the Notes will be structurally junior to all creditors of the subsidiaries that
are not Guarantors, except to the extent that the Company or a Guarantor is
itself recognized as a creditor of such subsidiary, in which case the claims of
the Company or such Guarantor would still be subordinate to any security in the
assets of such subsidiary and any indebtedness of such subsidiary senior to that
held by the Company or a Guarantor. In the event of the insolvency, liquidation,
reorganization, dissolution or other winding-up of the subsidiaries that are not
Guarantors, the Company will not receive funds available to pay to the holders
of the Notes in respect of the Notes until after the payment in full of the
claims of the creditors of the subsidiaries.
The Company's ability to service its indebtedness will be dependent, in
part, on its ability to utilize the cash flow generated by its foreign
operations. In general, U.S. federal and international tax laws provide that
income of international subsidiaries is subject to tax only in the local
jurisdiction and is not subject to U.S. federal income tax unless, and only to
the extent that such income is distributed as a dividend to the U.S. parent
company. The Company has not determined whether to cause its international
subsidiaries to pay dividends to the Company or to cause the net income of such
subsidiaries to be retained abroad. The Company may make loans to its foreign
subsidiaries, and, in that event, payments by the Company's foreign subsidiaries
to the Company on such intercompany loans may result in the repatriation of a
substantial portion of the cash flow of such subsidiaries without the payment of
taxes abroad. In addition, certain of the Company's subsidiaries may make
royalty payments to the Company. There can be no assurance, however, that the
interest payments on such intercompany loans or such royalty payments will not
be recharacterized as dividends, which could have adverse tax consequences to
the Company.
F-86
<PAGE> 245
AMF GROUP HOLDINGS INC.
CONDENSED PRO FORMA CONSOLIDATING INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)
(IN MILLIONS OF DOLLARS)
<TABLE>
<CAPTION>
NON- HOLDINGS
GUARANTOR GUARANTOR PRO FORMA
COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
--------- --------- ------------ ------------
<S> <C> <C> <C> <C>
Operating revenue.............................. $ 531.7 $33.4 $ (2.5) $ 562.6
Operating expenses:
Cost of sales................................ 180.6 4.6 (1.6) 183.6
Bowling center operations.................... 154.9 14.2 -- 169.1
Selling, general and administrative.......... 38.8 6.2 (0.7) 44.3
Depreciation and amortization................ 63.7 3.3 -- 67.0
-------- -------- ------ -- --------
Total operating expenses............. 438.0 28.3 (2.3) 464.0
-------- -------- ------ -- --------
Operating income (loss)................... 93.7 5.1 (0.2) 98.6
Nonoperating expenses
Interest expense, net........................ (102.4) 0.3 -- (102.1)
Other expenses, net.......................... (1.0) (1.0) -- (2.0)
-------- -------- ------ -- --------
Income (loss) before income taxes......... (9.7) 4.4 (0.2) (5.5)
Income tax provision (benefit)................. 9.2 (1.6) -- 10.8
-------- -------- ------ -- --------
Net income (loss)......................... $ (18.9) $ 2.8 $ (0.2) $ (16.3)
======== ======== ======== ========
</TABLE>
F-87
<PAGE> 246
AMF GROUP HOLDINGS INC.
CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1996
(UNAUDITED)
(IN MILLIONS)
<TABLE>
<S> <C>
ASSETS
Current assets
Cash and cash equivalents..................................... $ 606.4
------
Total current assets........................................ 606.4
Deferred financing costs...................................... 9.6
------
Total assets............................................. $ 616.0
======
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities
Accrued Interest.............................................. $ 0.8
Seller's deposit.............................................. 15.0
------
Total current liabilities................................ 15.8
Senior subordinated notes..................................... 250.0
Senior subordinated discount notes............................ 250.8
Common Stock; $0.01 par value; 1,000 shares authorized;
100 shares issued and outstanding........................... --
Paid-in capital............................................... 100.0
Retained Deficit.............................................. (0.6)
------
Total stockholder's equity............................... 99.4
------
Total liabilities and stockholder's equity......................... $ 616.0
======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-87
<PAGE> 247
AMF GROUP HOLDINGS INC.
CONSOLIDATED INCOME STATEMENT
FOR THE PERIOD FROM INCEPTION (JANUARY 12, 1996) THROUGH MARCH 31, 1996
(UNAUDITED)
(IN MILLIONS)
<TABLE>
<S> <C>
Interest income.................................................... $ 1.0
Interest expense................................................... 1.6
------
Income before income taxes....................................... (0.6)
Income tax provision............................................. --
------
Net loss...................................................... $ (0.6)
======
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-88
<PAGE> 248
AMF GROUP HOLDINGS INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM INCEPTION (JANUARY 12, 1996) THROUGH MARCH 31, 1996
(UNAUDITED)
(IN MILLIONS)
<TABLE>
<S> <C>
Cash flows from operating activities:
Net loss...................................................... $ (0.6)
Adjustments to reconcile net income to net cash provided by
operating activities:
Amortization of discount on senior subordinated discount
notes...................................................... 0.8
Changes in assets and liabilities:
Deferred financing costs................................. (9.6)
Accrued interest......................................... 0.8
-----
Net cash used for operating activities................. (8.6)
-----
Cash flows from financing activities:
Proceeds from deposit from seller............................. 15.0
Proceeds from issuance of senior subordinated notes........... 250.0
Proceeds from issuance of senior subordinated discount
notes........................................................ 250.0
Proceeds from contribution of equity.......................... 100.0
-----
Net cash provided by financing activities.............. 615.0
-----
Net increase in cash............................................... 606.4
Cash and cash equivalents at inception............................. --
-----
Cash and cash equivalents at end of period......................... $606.4
=====
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-89
<PAGE> 249
AMF GROUP HOLDINGS INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
1. THE COMPANY
Organization
The accompanying consolidated financial statements include the accounts of
AMF Group Holdings Inc. ("Holdings"), a Delaware corporation, and its direct
wholly owned subsidiary, AMF Group Inc. (the "Company") and the Company's wholly
owned subsidiaries, AMF Bowling Centers Holdings Inc., AMF Bowling Holdings
Inc., AMF Worldwide Bowling Centers Holdings Inc., AMF Bowling Centers
Switzerland Inc. and AMF Bowling Centers Spain Inc. (collectively with Holdings
and the Company, the "Purchasers"). Each of these subsidiaries is a Delaware
corporation.
Holdings is a wholly owned subsidiary of AMF Holdings Inc. (the "Parent").
The Purchasers and the Parent are newly formed corporations organized by GS
Capital Partners II, L.P. and other investment funds (collectively, "GSCP")
affiliated with Goldman, Sachs & Co. Holding, the Company and each of the
Company's subsidiaries were organized by GSCP to effect the acquisition of all
of the outstanding stock and certain of the assets of AMF Bowling, Inc., AMF
Bowling Centers, Inc., and other affiliated stock and certain of the assets of
AMF Bowling Centers, Inc., and other affiliated domestic and international
corporations that constitute AMF (collectively, "AMF").
AMF owns and operates commercial bowling centers in the United States and
worldwide. Management intends that Holdings and the Company will conduct all of
their business through subsidiaries and will have no operations of their own.
Holdings and the Company will be dependent on the cash flow of their
subsidiaries and distribution therefrom in order to meet debt service
obligations. Reference is made to the Risk Factors section of this Registration
Statement for a discussion of significant risks and uncertainties regarding the
Purchasers and the transaction discussed in Note 4.
Interim Financial Statements
The consolidated financial statements for the period from inception
(January 12, 1996) through March 31, 1996 are unaudited, but in the opinion of
management such financial statements have been presented on the same basis as
the audited consolidated financial statements and include all adjustments,
consisting only of normal recurring adjustments necessary for a fair
presentation of the financial position and results of operations and cash flows
for these periods.
As permitted under the applicable rules and regulations of the Securities
and Exchange Commission, these financial statements do not include all
disclosures normally included with audited financial statements, and,
accordingly, should be read in conjunction with the consolidated balance sheet
and notes thereto as of March 7, 1996.
Significant Accounting Policies
Cash Equivalents:
Highly liquid investments with an original maturity of three months or
less are generally considered to be cash equivalents.
F-90
<PAGE> 250
AMF GROUP HOLDINGS INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
MARCH 31, 1996
Deferred Financing Costs:
Deferred financing costs include costs incurred in connection with the
issuance of debt. Deferred financing costs are amortized on a straight-line
basis over the life of the underlying debt.
Income Taxes:
Deferred tax assets and liabilities are recognized for the future tax
consequences of the differences between financial statement carrying amounts of
assets and liabilities and their respective tax bases. These balances are
measured using enacted tax rates expected to apply to taxable income in the
years in which such temporary differences are expected to be recovered or
settled. If it is more likely than not that some portion or all of a deferred
tax asset will not be realized, a valuation allowance is recognized.
As of March 31, 1996, the Company had established a deferred tax asset
and a corresponding valuation allowance of $0.2.
2. THE ACQUISITION
Holdings entered into a Stock Purchase Agreement dated February 16, 1996
(the "Stock Purchase Agreement") with the then stockholders of AMF (the
"Sellers"). The Stock Purchase Agreement provided for the acquisition of AMF
through a stock purchase by the Company's subsidiaries of all the outstanding
stock of the separate domestic and foreign corporations that constitutes
substantially all of AMF and through the purchase of the assets of AMF's bowling
center operations in Spain and Switzerland (the "Acquisition"). The Company did
not acquire the assets of two bowling centers located, respectively, in Madrid,
Spain and Geneva, Switzerland (both of which will be retained by the Sellers).
The terms of the February 16, 1996 agreement are more fully described in Note 2
to the March 7, 1996 audited balance sheet.
The Acquisition was funded through issuances of senior debt, senior
subordinated notes and senior subordinated discount notes (collectively, the
"Financing") of $515.0 million, $250.0 million and $250.0 million, respectively,
the assumption of debt of $2.0 million and $391.0 million of equity.
Pending consummation of the Acquisition, which occurred on May 1, 1996, as
described in Note 4 below, the net proceeds from the issuance of the Notes (see
Note 3) together with $100.0 million of equity contributions from GSCP and a
deposit of $15.0 million from the Sellers are being held in escrow accounts. The
escrow accounts are required to be invested in cash equivalents, as directed
time to time by the Company. The Company will be permitted to obtain release of
the escrow funds upon consummation of the Acquisition.
3. SENIOR SUBORDINATED NOTES AND SENIOR SUBORDINATED DISCOUNT NOTES
On March 21, 1996, the Company issued senior subordinated notes (the
"Senior Subordinated Notes") with a principal amount of $250.0 million and
senior subordinated discount notes (the "Senior Subordinated Discount Notes")
with an aggregate principal amount so as to generate gross proceeds of $250.0
million. The Senior Subordinated Notes and the Senior Subordinated Discount
Notes are collectively referred to as the "Notes". These Notes are more fully
described in Note 4 to the March 7, 1996 audited balance sheet.
F-91
<PAGE> 251
AMF GROUP HOLDINGS INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
MARCH 31, 1996
4. SUBSEQUENT EVENTS
On April 11, 1996 Holdings and the Sellers entered into a letter agreement
(the "Letter Agreement") amending the Stock Purchase Agreement. Under the terms
of the Letter Agreement, certain of the Sellers (the "Covenantors") have agreed
to make certain payments to Holdings if the net income before interest, taxes,
depreciation, amortization, and certain non-cash, extraordinary, non-recurring
and non-operating items ("EBITDA") of AMF Bowling, Inc., the entity that
principally operates AMF's bowling manufacturing business, does not achieve
certain agreed upon objectives during the period from May 1, 1996 through June
30, 1997.
The Acquisition of AMF took place on May 1, 1996 (the "Closing Date"). As a
result of the Acquisition, the Company owns or operates all 205 of AMF's
domestic bowling centers and 78 of AMF's international bowling centers. The
purchase price for the Acquisition was $1,325 billion, less approximately $2.0
million of assumed debt, plus the Stock Performance Plan Adjustment of $5.0
million and the Closing Date Adjustment of $5.2 million. The Closing Working
Capital Adjustment will be determined in connection with an audit of the closing
balance sheet of AMF. Amounts with respect to post-closing adjustments will bear
interest from the Closing Date through the day prior to payment.
The execution of the Senior Bank Credit Agreement occurred simultaneously
with the closing of the Acquisition as described in Note 3 to the March 7, 1996
audited balance sheet.
In connection with the Senior Bank Credit Agreement, the covenants were
finalized to contain certain financial covenants, as well as additional
affirmative and negative covenants, constraining the Company. The Company must
maintain a minimum EBITDA (as defined in the Credit Agreement) of not less than
the sum of (i) an amount ranging from $140 million for the Rolling Period (each
a calendar quarter together with the three consecutive immediately preceding
calendar quarters) ending September 30, 1996, to $200 million for the Rolling
Period ending September 30, 2003 and thereafter, and (ii) the EBITDA Adjustment
Amount for such Rolling Period, which is equal to 80% of the aggregate amount of
the EBITDA of each bowling center acquired or constructed by the Company or any
of its Subsidiaries after May 1, 1996 and acquired or constructed at least 15
months prior to such time of determination.
The Company must also maintain a Cash Interest Coverage Ratio (defined in
the Credit Agreement as the ratio of (a) consolidated EBITDA of the Company and
its Subsidiaries during a Rolling Period, as modified with respect to certain
bowling centers acquired or constructed after May 1, 1996 ("Modified
Consolidated EBITDA") to (b) cash interest payable on all Debt (as defined in
the Credit Agreement) of the Company and its Subsidiaries) at an amount ranging
from not less than 2.00 for the Rolling Period ending September 30, 1996, to not
less than 2.50 for the Rolling Period ending September 30, 2004 and thereafter.
The Company is required to maintain a Fixed Charge Coverage Ratio (defined in
the Credit Agreement as the ratio of (a) Modified Consolidated EBITDA less the
sum of (i) cash taxes paid plus (ii) Capital Expenditures made by the Company
and its Subsidiaries during such Rolling Period to (b) the sum of (i) cash
interest payable on all Debt plus (ii) principal amounts of all Debt payable by
the Company and its Subsidiaries during such Rolling Period) at an amount
ranging from not less than 1.05 for the Rolling Period ending September 30,
1996, to not less than 1.10 for the Rolling Period ending March 31, 2004 and
thereafter. A Senior Debt to EBITDA Ratio, (defined in the Credit Agreement as
the ratio of Consolidated Debt (other than Subordinated Debt and Hedge
Agreements, as defined in the Credit Agreement) of the Company and its
Subsidiaries to Modified Consolidated EBITDA for that Rolling
F-92
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AMF GROUP HOLDINGS INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
MARCH 31, 1996
Period) must be maintained at levels ranging from not less than 3.5 for the
Rolling Period ending September 30, 1996 to not less than 1.50 for the Rolling
Period ending September 30, 2003 and thereafter. A Total Debt to EBITDA Ratio
(defined in the Credit Agreement as the ratio of consolidated total Debt (other
than Hedge Agreements) of the Company and its Subsidiaries to Modified
Consolidated EBITDA) must be maintained at levels ranging from not less than
6.95 for the Rolling Period ended September 30, 1996 to not less than 4.00 for
the Rolling Period ended September 30, 2003 and thereafter. In each case, the
above-mentioned ratios are calculated on a quarterly basis.
Affirmative covenants under the Senior Facilities oblige the Company and
its Subsidiaries to comply with all laws and regulations, as well as to pay all
taxes not being contested in good faith, to comply with environmental laws and
permits, to maintain insurance coverage, preserve its corporate existence,
permit the examination of its records and books of account by the agents or any
of the Lenders, to prepare environmental reports upon the reasonable request of
the administrative agent (in the case of a Default under the Credit Agreement or
based on the belief that hazardous materials contamination not otherwise
disclosed may be present on any property described in the mortgages), to keep
proper books of record and account, to maintain its properties in good working
condition, to comply with the terms of leaseholds and to perform and observe all
terms and provisions of each Related Document (defined as the purchase
agreement, the subordinated debt documents, the tax agreement, the stockholders
agreement and the support agreement). The Company is also required to conduct,
and cause each of its Subsidiaries to conduct, all transactions permitted under
the loan documents with any affiliates on fair and reasonable terms, to maintain
cash concentration accounts with Citibank, N.A. into which substantially all
proceeds of collateral are to be paid, and to guarantee obligations and give
security (upon the request of Citicorp USA, Inc. (together with any successor
appointed pursuant to the Credit Agreement, the "Collateral Agent"), at such
time as any new direct or indirect Subsidiary of the Company is formed or
acquired by the Company and the Guarantors (each, a "Loan Party"), or when any
property is acquired by any Loan Party). The Company must enter into prior to
June 30, 1996, and maintain after November 15, 1996 until the aggregate
outstanding amount under the Term Facilities is less than $400 million, interest
rate hedge agreements, covering a notional amount of not less than 50% of the
commitments under all the facilities and the other floating rate debt of the
Loan Parties. The Company must also complete the process of granting collateral
to the Collateral Agent within 60 days (or such later date as may be agreed to
by the Company and the Collateral Agent) after May 1, 1996.
Negative covenants under the Senior Facilities prohibit the Company and its
Subsidiaries from incurring any liens (except for those created under the loan
documents or otherwise permitted under the Credit Agreement, including those
securing the Company's obligations as borrower not to exceed $5 million at any
time outstanding). The Company and its Subsidiaries are also prohibited from
incurring any debt, other than (in the case of the Company) debt owed to its
Subsidiaries or in respect of hedge agreements not entered into for speculative
purposes or (in the case of any Subsidiary) debt owed to the Company or any of
its wholly owned Subsidiaries, to the extent permitted under the Credit
Agreement or (in the case of either the Company or its Subsidiaries) debt
secured by permitted liens, capitalized leases not to exceed $10 million at any
time outstanding, any surviving debt and subordinated debt under the Notes,
among other things. The Company and its Subsidiaries may not incur any
obligations under leases having a term of one year or more that would cause
their direct and contingent liabilities for any 12 months to exceed (i) $25
million,
F-93
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AMF GROUP HOLDINGS INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
MARCH 31, 1996
(ii) the product of (x) $200,000 and (y) the number of leased bowling centers
acquired by the Company or any Subsidiaries after May 1, 1996 and (iii) in each
calendar year after 1996, an amount equal to 4% of the amount permitted by this
provision in the immediately preceding calendar year. The Company is also
prohibited from entering into a merger of which it is not the survivor or to
sell, lease, or otherwise transfer its asset other than in the ordinary course
of business, except as otherwise permitted by the Credit Agreement. Investments
by the Company or its Subsidiaries in any other Person is also limited by
formulas set forth in the Credit Agreement. The negative covenants also related
to the payment of dividends, prepayments of, and amendments of the terms of,
other debt (including the Notes), amendment of Related Documents, ownership
change, negative pledges, partnerships, speculative transactions, capital
expenditures and payment restrictions affecting subsidiaries. The Company is
also subject to certain financial and other reporting requirements.
In accordance with the Registration Rights Agreement, the Company has
initiated an offering of Exchange Senior Subordinated Notes and Exchange Senior
Subordinated Discount Notes (collectively, the "Exchange Notes") and has filed a
registration statement with the Securities and Exchange Commission.
The Exchange Senior Subordinated Notes will mature on March 15, 2006.
Interest will accrue from the date of issuance at an annual rate of 10 7/8% and
will be payable in cash semi-annually in arrears on March 15 and September 15 of
each year commencing September 15, 1996.
The Exchange Senior Subordinated Discount Notes will mature on March 15,
2006. The Exchange Senior Subordinated Discount Notes will result in an
effective yield of 12 1/4% per annum, computed on a semi-annual bond equivalent
basis. No interest (other than liquidated damaged, if applicable) will accrue or
be payable prior to March 15, 2001 (the "Full Accretion Date"). Commencing March
15, 2001 interest will accrue and will be payable in cash semi-annually in
arrears on each March 15 and September 15 of each year beginning with the first
such date after the Full Accretion Date.
For federal income tax purposes, each Exchange Senior Subordinated Discount
Note will be considered to have been issued with "original issue discount" equal
to the difference between the issue price of the Senior Subordinated Discount
Note for which it is exchanged and the sum of all cash payments (whether
denominated as principal or interest) to be made on such Senior Subordinated
Discount Note. Each holder of an Exchange Senior Subordinated Discount Note must
include in gross income for federal income tax purposes the sum of the daily
portions of such original issue discount for each day during each taxable year
in which the Exchange Senior Subordinated Discount Note is held, even though no
interest payments will be received prior to September 15, 2001.
The Company's payment obligations under the Notes will be jointly and
severally guaranteed on a senior subordinated basis (the "Senior Subordinated
Guarantees") by Holdings and each of the Company's subsidiaries identified in
Note 5 below (collectively, the "Guarantors"). The guarantees will be
subordinated to the guarantees of Senior Debt issued by the Guarantors as
described in Note 5.
The Exchange Notes will be general unsecured obligations of the Company,
will be subordinated in right of payment to all Senior Debt, as defined, of the
Company, will rank pari passu with all Senior Subordinated Debt of the Company
and will be senior in right of payment to all existing and
F-94
<PAGE> 254
AMF GROUP HOLDINGS INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
MARCH 31, 1996
future subordinated debt of the Company. Following the Acquisition, the claims
of the holders of the Exchange Notes will be subordinated to the Senior Debt,
and will be effectively subordinated to all other indebtedness and other
liabilities (including trade payables and capital lease obligations) of the
Company's subsidiaries that are not Guarantors, through which the Company will
conduct a portion of its operations (See Note 5).
In the event of a Change of Control, as defined, the holders of the
Exchange Senior Subordinated Notes will have the right to require the Company to
repurchase their Exchange Senior Subordinated Notes in whole or in part, at a
price equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest, if any, including liquidated damages, if any, to the date of
repurchase. The Exchange Senior Subordinated Discount Note Indenture will
require that prior to such a repurchase, the Company must either repay all
outstanding indebtedness under the Senior Debt or obtain any required consent to
such repurchase.
Except for the special mandatory redemption described above and, as
described below, the Exchange Notes are not redeemable at the Company's option
prior to March 15, 2001. From and after March 15, 2001, the Exchange Notes will
be subject to redemption at the option of the Company, in whole or in part, at
specified redemption prices, together with accrued and unpaid interest,
including liquidated damages, if any, to the date of redemption.
Prior to March 15, 1999, up to $100.0 million in aggregate principal amount
of Exchange Senior Subordinated Notes will be redeemable at the option of the
Company, on one or more occasions, from the net proceeds of public or private
sales of common stock of, or contributions to the common equity capital of, the
Company, at a price of 110.875% of the principal amount of the Exchange Senior
Subordinated Notes, together with accrued and unpaid interest, if any, including
Liquidated Damages, if any, to the date of redemption; provided that at least
$150.0 million aggregate principal amount of Exchange Senior Subordinated Notes
remains outstanding immediately after such redemption.
Prior to March 15, 1999, the Exchange Senior Subordinated Discount Notes
will be redeemable at the option of the Company, on one or more occasions, from
the net proceeds of public or private sales of common stock of, or contributions
to the common equity capital of, the Company, at a price of 112.250% of the
Accreted Value of the Exchange Senior Subordinated Discount Notes plus accrued
and unpaid Liquidated Damages, if any; provided that at least $150.0 million in
Accreted Value of Exchange Senior Subordinated Discount Notes remains
outstanding immediately after such redemption.
The Indenture governing the Exchange Senior Subordinated Notes (the
"Exchange Senior Subordinated Note Indenture") and the Indenture governing the
Exchange Senior Subordinated Discount Notes (the "Exchange Senior Subordinated
Discount Note Indenture" and, together with the Exchange Senior Subordinated
Note Indenture, the "Exchange Note Indentures") will contain certain covenants
that will, among other things, limit the ability of the Company and its
Restricted Subsidiaries, as defined therein, to incur additional indebtedness
and issue Disqualified Stock, as defined therein, pay dividends or distributions
or make investments or make certain other Restricted Payments, as defined
therein, enter into certain transactions with affiliates, dispose of certain
assets, incur liens securing pari passu and subordinated indebtedness of the
Company and engage in mergers and consolidations.
F-95
<PAGE> 255
AMF GROUP HOLDINGS INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
MARCH 31, 1996
5. EMPLOYMENT AGREEMENTS, STOCK INCENTIVE PLAN AND STOCKHOLDERS AGREEMENT
The Parent has entered into two employment agreements with executives of
AMF, each for a term ending on May 1, 1999. The agreement calls for compensation
consisting of a salary and an incentive bonus of up to 50% of the executive's
annual salary, if certain operational and financial targets are met. The
employment agreement also calls for a continuation of certain benefits following
termination of employment.
These two executives were also granted options to purchase a total of
240,000 shares of common stock of the Parent. Unless sooner exercised or
forfeited as provided, the options expire on May 1, 2006. Twenty percent of the
options vest on each of the first five anniversaries of the Closing Date. The
exercise price of the options is $10.00 per share, which approximates the fair
value of the common stock at the date of the grant.
The employment agreements further provide that, prior to the consummation
of an initial public offering or offerings by Parent with gross proceeds in the
aggregate of at least $100 million (an "IPO"), Parent may, upon termination of
the executive's employment for any reason (including death), repurchase all of
the shares of Purchased Stock and any shares of Parent Common Stock issued upon
exercise of the Options (together, "Restricted Stock") held by him for fair
market value as of a specified date. The executive or his legal representative
may, prior to such an initial public offering or offerings, require Parent to
repurchase all of his Restricted Stock at fair market value (in the case of
death) or otherwise at the original price paid for the shares, if the executive
dies or if his Employer terminates his employment for any reason. Immediately
prior to certain change in control transactions, any then unvested Options will
vest. If any successor to Parent or the executive's Employer acquires all or
substantially all of the business and/or assets of Parent or such Employer,
Parent may purchase all of the Restricted Stock held by the executive for its
fair market value, and any Options then held by him for the fair market value of
the underlying Parent Common Stock less the exercise price of the Options.
The Parent's stockholders have entered into a Stockholders Agreement which
provides for, amongst other things, that Goldman Sachs has the exclusive right
to perform all consulting, financing, investment banking and similar services
for Parent and its subsidiaries, for customary compensation and on terms
customary for similar engagements with unaffiliated third parties. Neither
Parent nor its subsidiaries are allowed to engage any person to perform such
services during the term of the Stockholders Agreement, except to the extent
Goldman Sachs shall consent thereto or shall decline, at its sole election, to
perform such services.
In connection with the Acquisition, Parent adopted the AMF Holdings, Inc.
1996 Stock Incentive Plan (the "Stock Incentive Plan") under which Parent may
grant incentive awards in the form of shares of Parent Common Stock ("Restricted
Stock Awards"), options to purchase shares of Parent Common Stock ("Stock
Options") and stock appreciation rights ("Stock Appreciation Rights") to certain
officers, employees, consultants and non-employee directors ("Participants") of
Parent and its affiliates. The total number of shares of Parent Common Stock
initially reserved and available for grant under the Stock Incentive Plan is
1,767,151. A committee of Parent's board of directors (the "Committee") is
authorized to make grants and various other decisions under the Stock Incentive
Plan and to make determination as to a number of the terms of awards granted
under the Stock Incentive Plan. Unless otherwise determined by the Committee,
any Participant granted an award under the Stock Incentive Plan must become a
party to, and agree to be bound by, the Stockholders Agreement (as defined
below).
F-96
<PAGE> 256
AMF GROUP HOLDINGS INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
MARCH 31, 1996
Stock Option awards under the Stock Incentive Plan may include incentive
stock options, nonqualified stock options, or both types of Stock Options, in
each case with or without Stock Appreciation Rights. Stock Options are
nontransferable (except under certain limited circumstances) and, unless
otherwise determined by the Committee, have a term of ten years. Upon a
Participant's death or when the Participant's employment with Parent or the
applicable affiliate of Parent is terminated for any reason, such Participant's
previously unvested Stock Options are forfeited and the Participant or his legal
representative may, within three months (if termination of employment is for any
reason other than death) or one year (in the case of the Participant's death),
exercise any previously vested Stock Options. Stock Appreciation Rights may be
granted in conjunction with all or part of any Stock Option award, and are
exercisable, subject to certain limitations, only in connection with the
exercise of the related Stock Option. Upon the termination or exercise of the
related Stock Option, Stock Appreciation Rights terminate and are no longer be
exercisable. Stock Appreciation Rights are transferable only with the related
Stock Options.
Unless otherwise provided in the related award agreement or, if applicable,
the Stockholders Agreement, immediately prior to certain change of control
transactions described in the Stock Incentive Plan, all outstanding Stock
Options and Stock Appreciation Rights will, subject to certain limitations,
become fully exercisable and vested and any restrictions and deferral
limitations applicable to any Restricted Stock Awards will lapse.
The Stock Incentive Plan will terminate 10 years after its effective date;
however, awards outstanding as of such date will not be affected or impaired by
such termination. Parent's board of directors and the Committee have authority
to amend the Stock Incentive Plan and awards granted thereunder, subject to the
terms of the Stock Incentive Plan.
6. UNAUDITED PRO FORMA CONSOLIDATING GUARANTOR AND
NON-GUARANTOR FINANCIAL INFORMATION
The Notes are, and the Exchange Notes will be jointly and severally
guaranteed on a full and unconditional basis by Holdings and by AMF Group Inc.'s
first and second tier subsidiaries as follows (together with Holdings, the
"Guarantor Companies"):
- AMF Bowling Centers Holdings Inc.(a)
- AMF Bowling Holdings Inc.(a)
- AMF Bowling, Inc.
- AMF Bowling Centers, Inc.
- Bush River Corporation
- King Louie Lenexa, Inc.
- AMF Beverage Company of Oregon, Inc.
- AMF Worldwide Bowling Centers Holdings Inc.(a)
- AMF Bowling Centers (Aust) International Inc.
- AMF Bowling Centers (Canada) International Inc.
- AMF BCO -- France One, Inc.
- AMF BCO -- France Two, Inc.
- AMF Bowling Centers (Hong Kong) International Inc.
- AMF Bowling Centers International Inc. (Japan)
- AMF Bowling Mexico Holding, Inc.
- Boliches AMF, Inc.
F-97
<PAGE> 257
AMF GROUP HOLDINGS INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
MARCH 31, 1996
- AMF BCO -- U.K. One, Inc.
- AMF BCO -- U.K. Two, Inc.
- AMF BCO -- China, Inc.
- AMF Bowling Centers China, Inc.
The following third-tier domestic subsidiaries of AMF Group Inc., all of
which will be wholly owned subsidiaries of AMF Worldwide Bowling Centers
Holdings Inc. have not provided guarantees (collectively, the "Non-Guarantor
Companies"):
- AMF Bowling (Unlimited)
- Worthing North Properties Limited
- AMF Bowling France SNC
- AMF Bowling de Paris SNC
- AMF Bowling de Lyon La Part Dieu SNC
- Boliches y Compania
- Operadora Mexicana de Boliches, S.A.
- Promotora de Boliches, S.A. de C.V.
- Immeubles Obispado, S.A.
- Immeubles Minerva, S.A.
- Boliches Mexicano, S.A.
- AMF Bowling Centers (China) Company
- AMF Garden Hotel Bowling Center Company
The following unaudited pro forma condensed consolidating information with
respect to the Guarantor Companies and Non-Guarantor Companies, together with
elimination entries, gives effect to the Acquisition and related financing
transactions as if such transactions had occurred:
(i) as of March 31, 1996 for purposes of the unaudited pro forma
consolidating balance sheet as of March 31, 1996; and
(ii) as of January 1, 1996 for the purposes of the unaudited pro forma
consolidating statement of income for the three months ended March 31,
1996.
The unaudited pro forma consolidating statement of income reflects pro
forma adjustments to (a) eliminate the effect of certain transactions
contemplated in the Stock Purchase Agreement, and (b) give effect to the
acquisition of AMF by Holdings and the related Financing transactions. Certain
pro forma adjustments result from management's preliminary determination of
purchase accounting adjustments and are based upon available information and
certain assumptions that Holdings considers reasonable under the circumstances.
Consequently, the amounts reflected in the unaudited pro forma consolidating
statement of income are subject to change.
The unaudited consolidating balance sheet reflects pro forma adjustments to
(a) eliminate the effect of certain transactions contemplated in the Stock
Purchase Agreement, and (b) give effect to the acquisition of AMF by Holdings
and the related Financing transactions, including the application of the
estimated net proceeds therefrom as though they had occurred as of March 31,
1996. The Acquisition will be accounted for by the purchase method of
accounting, pursuant to which the purchase price is allocated among the acquired
assets and liabilities in accordance with estimates of fair market value on the
date of acquisition. The unaudited pro forma consolidating balance sheet
reflects preliminary estimates of the allocation of the purchase price. The pro
forma adjustments
F-98
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AMF GROUP HOLDINGS INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
MARCH 31, 1996
represent Holdings' management's preliminary determination of purchase
accounting adjustments and are based upon the results of a formal appraisal of
certain assets and other available information and certain assumptions that
Holdings considers reasonable under the circumstances. Consequently, the amounts
reflected in the unaudited pro forma consolidating balance sheet are subject to
change. A substantial portion of the excess purchase price has been allocated to
goodwill. Management believes that the net benefit of leases in which current
lease payments are below fair market value approximates the amount reflected in
the historical balance sheet of AMF as of March 31, 1996 of approximately $10.7
million. No other specific intangibles have been identified.
The unaudited pro forma consolidating financial statements should be read
in conjunction with AMF's historical Combined Financial Statements and related
notes thereto, appearing elsewhere in this Registration Statement as well as the
audited balance sheet as of March 7, 1996.
The unaudited pro forma consolidating financial statements do not purport
to be indicative of Holdings' financial condition or the results that would have
actually been obtained had such transactions been consummated as of the assumed
dates and for the period presented, nor are they indicative of Holdings' results
of operations or financial condition for any future period or date.
F-99
<PAGE> 259
AMF GROUP HOLDINGS INC.
CONDENSED PRO FORMA CONSOLIDATING BALANCE SHEET
AS OF MARCH 31, 1996
(UNAUDITED)
(IN MILLIONS OF DOLLARS)
<TABLE>
<CAPTION>
NON- HOLDINGS
GUARANTOR GUARANTOR PRO FORMA
COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
--------- --------- ------------ ------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.............. $ 27.3 $ 1.5 $ -- $ 28.8
Accounts and notes receivable.......... 29.4 1.6 -- 31.0
Accounts and notes receivable --
affiliates.......................... (1.0 ) 1.9 (0.9) --
Inventories............................ 42.1 1.7 -- 43.8
Prepaid expenses and other............. 4.4 1.5 -- 5.9
------- ------- ------- -------
Total current assets........... 102.2 8.2 (0.9) 109.5
Investment in subsidiaries............... 71.4 -- (71.4) --
Property and equipment................... 503.0 22.7 -- 525.7
Goodwill................................. 760.5 51.8 -- 812.3
Deferred financing costs................. 36.4 -- -- 36.4
Other assets............................. 17.7 0.6 -- 18.3
------- ------- ------- -------
Total assets................... $1,491.2 $ 83.3 $ (72.3) $1,502.2
======= ======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable....................... $ 18.9 $ 1.5 $ -- $ 20.4
Accrued expenses and deposits.......... 47.9 2.2 -- 50.1
Accounts and notes payable --
affiliates.......................... (1.6 ) 2.5 (0.9) --
Current portion of long-term debt...... 38.4 -- -- 38.4
Income taxes payable................... 4.1 1.6 -- 5.7
------- ------- ------- -------
Total current liabilities...... 107.7 7.8 (0.9) 114.6
Long-term debt........................... 979.4 -- -- 979.4
Other liabilities........................ 3.5 0.8 -- 4.3
Deferred income tax liabilities.......... 10.2 3.3 -- 13.5
------- ------- ------- -------
Total liabilities.............. 1,100.8 11.9 (0.9) 1,111.8
------- ------- ------- -------
Stockholders' equity:
Common stock........................... 0.4 -- -- 0.4
Paid-in capital........................ 390.6 71.4 71.4 390.6
Retained earnings...................... (0.6 ) -- -- (0.6)
------- ------- ------- -------
Total stockholders' equity..... 390.4 71.4 71.4 390.4
------- ------- ------- -------
Total liabilities and
stockholders'
equity....................... $1,491.2 $ 83.3 $ (72.3) $1,502.2
======= ======= ======= =======
</TABLE>
F-100
<PAGE> 260
AMF GROUP HOLDINGS INC.
CONDENSED PRO FORMA CONSOLIDATING INCOME STATEMENT
FOR THE THREE MONTHS ENDED MARCH 31, 1996
(UNAUDITED)
(IN MILLIONS OF DOLLARS)
<TABLE>
<CAPTION>
NON- HOLDINGS
GUARANTOR GUARANTOR PRO FORMA
COMPANIES COMPANIES ELIMINATIONS CONSOLIDATED
--------- --------- ------------ ------------
<S> <C> <C> <C> <C>
Operating revenue.............................. $ 114.9 $ 8.8 $ (1.0) $122.7
Operating expenses:
Cost of sales................................ 30.2 1.1 (0.7) 30.6
Bowling center operations.................... 37.0 4.9 (0.2) 41.7
Selling, general and administrative.......... 10.9 0.5 -- 11.4
Depreciation and amortization................ 15.6 0.8 -- 16.4
-------- ------ -- ------ -- ------- -
Total operating expenses............. 93.7 7.3 (0.9) 100.1
-------- ------ -- ------ -- ------- -
Operating income (loss)................... 21.2 1.5 (0.1) 22.6
Nonoperating expenses
Interest expense, net........................ (23.8) -- -- (23.8)
Other expenses, net.......................... (0.1) (0.1) -- (0.2)
-------- ------ -- ------ -- ------- -
Income (loss) before income taxes......... (2.7) 1.4 (0.1) (1.4)
Income tax provision (benefit)................. 1.7 0.7 -- 2.4
-------- ------ -- ------ -- ------- -
Net income (loss)......................... $ (4.4) $ 0.7 $ (0.1) $ (3.8)
======== ======== ======== ========
</TABLE>
F-101
<PAGE> 261
- ------------------------------------------------------
- ------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED
IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES
OTHER THAN THE SECURITIES TO WHICH IT RELATES OR AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH
SUCH OFFER OR SOLICITATION IS UNLAWFUL. 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 DATE
SUBSEQUENT TO THE DATE HEREOF.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 2
Prospectus Summary.................... 3
Risk Factors.......................... 22
The Exchange Offer.................... 29
Certain Federal Income Tax
Consequences of the Exchange
Offer............................... 38
The Acquisition....................... 39
Capitalization........................ 42
Pro Forma Consolidated Financial
Statements.......................... 43
Selected Combined Financial Data...... 53
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 56
Business.............................. 70
Management............................ 96
Ownership of Capital Stock............ 100
Certain Transactions.................. 104
Description of Senior Debt............ 105
Description of Exchange Notes......... 110
Description of Certain Federal Income
Tax Consequences of an Investment in
the Exchange Notes.................. 145
Plan of Distribution.................. 150
Experts............................... 151
Validity of Exchange Notes............ 151
Index to Financial Statements......... F-1
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
AMF GROUP INC.
OFFER TO EXCHANGE
$250,000,000
10 7/8% SERIES A SENIOR
SUBORDINATED NOTES DUE 2006
FOR
10 7/8% SERIES B SENIOR
SUBORDINATED NOTES DUE 2006
AND
$452,000,000
12 1/4% SERIES A SENIOR SUBORDINATED
DISCOUNT NOTES DUE 2006
FOR
12 1/4% SERIES B SENIOR SUBORDINATED
DISCOUNT NOTES DUE 2006
------------------
------------------
- ------------------------------------------------------
- ------------------------------------------------------
LOGO
<PAGE> 262
PAGES TO BE USED IN MARKET-MAKING PROSPECTUS
<PAGE> 263
[ALTERNATE COVER FOR MARKET-MAKING PROSPECTUS]
AMF GROUP INC.
10 7/8% SENIOR SUBORDINATED NOTES DUE 2006
12 1/4% SENIOR SUBORDINATED DISCOUNT NOTES DUE 2006
(GUARANTEED BY CERTAIN AFFILIATED COMPANIES AS DESCRIBED HEREIN)
------------------------
The 10 7/8% Series B Senior Subordinated Notes due 2006 (the "Exchange
Senior Subordinated Notes") were issued in exchange for the 10 7/8% Series A
Senior Subordinated Notes due 2006 (the "Senior Subordinated Notes") and the
12 1/4% Series B Senior Subordinated Discount Notes due 2006 (the "Exchange
Senior Subordinated Discount Notes" and, collectively with the Exchange Senior
Subordinated Notes, the "Exchange Notes") were issued in exchange for the
12 1/4% Series A Senior Subordinated Discount Notes due 2006 (the "Senior
Subordinated Discount Notes") by AMF Group Inc. (the "Company"), a Delaware
corporation. The Exchange Notes are guaranteed on a senior subordinated basis by
AMF Group Holdings Inc., a Delaware corporation of which the Company is a wholly
owned subsidiary, and by each of the Company's direct and indirect domestic
subsidiaries (the "Guarantors"). See "Description of Exchange Notes."
The Exchange Senior Subordinated Notes will bear interest from March 21,
1996, the date of issuance of the Senior Subordinated Notes that are tendered in
exchange for the Exchange Senior Subordinated Notes (or the most recent Interest
Payment Date (as defined) to which interest on such Notes has been paid), at a
rate equal to 10 7/8% per annum. Interest on the Exchange Senior Subordinated
Notes will be payable semiannually on March 15 and September 15 of each year,
commencing September 15, 1996. The Exchange Senior Subordinated Discount Notes
will not bear interest until March 15, 2001, and thereafter will bear interest
at a rate equal to 12 1/4% per annum. Interest on the Exchange Senior
Subordinated Discount Notes will be payable semiannually on March 15 and
September 15 of each year commencing September 15, 2001.
The Exchange Notes are redeemable at the option of the Company, in whole or
in part, at any time on or after March 15, 2001, at the redemption prices set
forth herein, together with accrued and unpaid interest, if any, to the date of
redemption. See "Prospectus Summary -- Summary of Terms of Exchange Notes."
Prior to March 15, 1999, up to $100 million in aggregate principal amount
of Exchange Senior Subordinated Notes will be redeemable at the option of the
Company, on one or more occasions, from the net proceeds of public or private
sales of common stock of, or contributions to the common equity capital of, the
Company, at a price of 110.875% of the principal amount of the Exchange Senior
Subordinated Notes, together with accrued and unpaid interest, if any, to the
date of redemption; provided that at least $150 million in aggregate principal
amount of Exchange Senior Subordinated Notes remains outstanding immediately
after such redemption. In addition, prior to March 15, 1999, the Exchange Senior
Subordinated Discount Notes will be redeemable at the option of the Company, on
one or more occasions, from the net proceeds of public or private sales of
common stock of, or contributions to the common equity capital of, the Company,
at a price of 112.250% of the Accreted Value of the Exchange Senior Subordinated
Discount Notes; provided that at least $150 million in Accreted Value of
Exchange Senior Subordinated Discount Notes remains outstanding immediately
after such redemption. Upon the occurrence of a Change of Control, each Holder
of Exchange Notes may require the Company to repurchase all or a portion of such
Holder's Exchange Notes at 101% of the aggregate principal amount of the
Exchange Senior Subordinated Notes and 101% of the Accreted Value of the
Exchange Senior Subordinated Discount Notes, as applicable, together with
accrued and unpaid interest, if any, to the date of repurchase. See "Risk
Factors -- Payment Upon a Change of Control" and "Description of Exchange
Notes."
A-1
<PAGE> 264
[ALTERNATE COVER FOR MARKET-MAKING PROSPECTUS -- CONTINUED]
The Exchange Notes are general, unsecured obligations of the Company, are
subordinated to all Senior Debt of the Company and rank pari passu with all
senior subordinated debt of the Company and are senior in right of payment to
all existing and future subordinated indebtedness of the Company. The claims of
holders of the Exchange Notes are effectively subordinated to the Senior Debt,
which, as of March 31, 1996, on a pro forma basis giving effect to the
Acquisition and the related financing transactions, would have been
approximately $517 million, $515 million of which would have been fully secured
borrowings under the New Bank Credit Agreement, and are effectively subordinated
to approximately $7.8 million of indebtedness and other liabilities (including
trade payables and capital lease obligations) of the Company's subsidiaries that
are not Guarantors. See "The Acquisition" and "Capitalization."
------------------------
SEE "RISK FACTORS," COMMENCING ON PAGE [33], FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE
EXCHANGE NOTES.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Prospectus has been prepared for and is to be used by Goldman, Sachs &
Co. in connection with offers and sales in market-making transactions of the
Exchange Notes. The Company will not receive any of the proceeds of such sales.
Goldman, Sachs & Co. may act as a principal or agent in such transactions. The
Exchange Notes may be offered in negotiated transactions or otherwise.
GOLDMAN, SACHS & CO.
------------------------
The date of this Prospectus is , 1996.
A-2
<PAGE> 265
[ALTERNATE SECTION FOR MARKET-MAKING PROSPECTUS]
No dealer, salesperson or other person has been authorized to give
information or to make any representations not contained in this Prospectus,
and, if given or made, such information or representations must not be relied
upon as having been authorized by the Company or Goldman Sachs. This Prospectus
does not constitute an offer to sell or the solicitation of an offer to buy any
security other than the Exchange Notes offered hereby, nor does it constitute an
offer to sell or the solicitation of an offer to buy any of the Exchange Notes
to any person in any jurisdiction in which it is unlawful to make such an offer
or solicitation to such person. 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 date subsequent to the
date hereof.
AVAILABLE INFORMATION
The Company and the Guarantors (as defined herein) have filed with the
Securities and Exchange Commission ("SEC") a Registration Statement on Form S-4
under the Securities Act for the registration of the Exchange Notes offered
hereby (the "Registration Statement"). This Prospectus, which constitutes a part
of the Registration Statement, does not contain all of the information set forth
in the Registration Statement, certain items of which are contained in exhibits
and schedules to the Registration Statement as permitted by the rules and
regulations of the SEC. For further information with respect to the Company or
the Exchange Notes offered hereby, reference is made to the Registration
Statement, including the exhibits and financial statement schedules thereto,
which may be inspected without charge at the public reference facility
maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, and
copies of which may be obtained from the SEC at prescribed rates. Statements
made in this Prospectus concerning the contents of any document referred to
herein are not necessarily complete. With respect to each such document filed
with the SEC as an exhibit to the Registration Statement, reference is made to
the exhibit for a more complete description of the matter involved, and each
such statement shall be deemed qualified in its entirety by such reference.
Upon the effectiveness of the Registration Statement, the Company became
subject to the information requirements of the Securities Exchange Act of 1934
(the "Exchange Act"), and in accordance therewith will file reports and other
information with the SEC. Such reports and other information filed by the
Company can be inspected and copied at the public reference facilities of the
SEC at 450 Fifth Street, N.W., Washington, D.C. 20549 and the regional offices
of the SEC located at 7 World Trade Center, New York, New York 10048 and 500
West Madison Street, 14th Floor, Chicago, Illinois 60661. Copies of such
materials may be obtained from the Public Reference Section of the SEC,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at its
public reference facilities in New York, New York and Chicago, Illinois at
prescribed rates.
So long as the Company is subject to the periodic reporting requirements of
the Exchange Act, it is required to furnish the information required to be filed
with the SEC to (i) IBJ Schroder Bank and Trust Company as trustee (the "Senior
Subordinated Note Trustee"), under the Indenture dated as of March 21, 1996 (the
"Senior Subordinated Note Indenture") among the Company, the Guarantors and the
Senior Subordinated Note Trustee, pursuant to which the outstanding 10 7/8%
Senior Subordinated Notes due 2006 of the Company (the "Senior Subordinated
Notes") were, and the Exchange Senior Subordinated Notes will be, issued and
(ii) American Bank National Association as trustee (the "Senior Subordinated
Discount Note Trustee" and, collectively with the Senior Subordinated Note
Trustee, the "Trustees"), under the Indenture dated as of March 21, 1996 (the
"Senior Subordinated Discount Note Indenture") among the Company, the Guarantors
and the Senior Subordinated Discount Note Trustee, pursuant to which the
outstanding 12 1/4% Senior Subordinated Discount Notes due 2006 of the Company
(the "Senior Subordinated Discount Notes") were, and the Exchange Senior
Subordinated Discount Notes will be, issued and (iii) the holders of the Notes
and the Exchange Notes. The Company has agreed that, even if they are not
required under the Exchange Act to furnish such information to the SEC, they
will nonetheless continue to furnish information that would be required to be
furnished by the Company by Section 13 of the Exchange Act to the Trustees and
the holders of the Notes or Exchange Notes as if they were subject to such
periodic reporting requirements.
A-3
<PAGE> 266
[ALTERNATE PAGE FOR MARKET-MAKING PROSPECTUS]
TRADING MARKET FOR THE EXCHANGE NOTES
There is no existing trading market for the Exchange Notes, and there can
be no assurance regarding the future development of a market for the Exchange
Notes or the ability of the Holders of the Exchange Notes to sell their Exchange
Notes or the price at which such Holders may be able to sell their Exchange
Notes. If such market were to develop, the Exchange Notes could trade at prices
that may be higher or lower than their initial offering price depending on many
factors, including prevailing interest rates, the Company's operating results
and the market for similar securities. Although it is not obligated to do so,
Goldman Sachs intends to make a market in the Exchange Notes. Any such
market-making activity may be discontinued at any time, for any reason, without
notice at the sole discretion of Goldman Sachs. No assurance can be given as to
the liquidity of or the trading market for the Exchange Notes.
Goldman Sachs may be deemed to be an affiliate of the Company and, as such,
may be required to deliver a prospectus in connection with its market-making
activities in the Exchange Notes. Pursuant to the Registration Rights Agreement,
the Company agreed to file and maintain a registration statement that would
allow Goldman Sachs to engage in market-making transactions in the Exchange
Notes. Subject to certain exceptions set forth in the Registration Rights
Agreement, the registration statement will remain effective for as long as
Goldman Sachs may be required to deliver a prospectus in connection with
market-making transactions in the Exchange Notes. The Company has agreed to bear
substantially all the costs and expenses related to such registration statement.
A-4
<PAGE> 267
[ALTERNATE PAGE FOR MARKET-MAKING PROSPECTUS]
USE OF PROCEEDS
This Prospectus is delivered in connection with the sale of the Exchange
Notes by Goldman Sachs in market-making transactions. The Company will not
receive any of the proceeds from such transactions.
A-5
<PAGE> 268
[ALTERNATE PAGE FOR MARKET-MAKING PROSPECTUS]
PLAN OF DISTRIBUTION
This Prospectus is to be used by Goldman Sachs in connection with offers
and sales of the Exchange Notes in market-making transactions effected from time
to time. Goldman Sachs may act as a principal or agent in such transactions,
including as agent for the counterparty when acting as principal or as agent for
both counterparties, and may receive compensation in the form of discounts and
commissions, including from both counterparties when it acts as agent for both.
Such sales will be made at prevailing market prices at the time of sale, at
prices related thereto or at negotiated prices.
Affiliates of Goldman Sachs currently own 68.7% of the Parent Common Stock.
See "Ownership of Capital Stock." Goldman Sachs has informed the Company that it
does not intend to confirm sales of the Exchange Notes to any accounts over
which it exercises discretionary authority without the prior specific written
approval of such transactions by the customer.
The Company has been advised by Goldman Sachs that, subject to applicable
laws and regulations, Goldman Sachs currently intends to make a market in the
Exchange Notes following completion of the Exchange Offer. However, Goldman
Sachs is not obligated to do so and any such market-making may be interrupted or
discontinued at any time without notice. In addition, such market-making
activity will be subject to the limits imposed by the Securities Act and the
Exchange Act. There can be no assurance that an active trading market will
develop or be sustained. See "Risk Factors -- Trading Market for the Exchange
Notes."
Goldman Sachs has provided investment banking services to the Company in
the past and may provide such services and financial advisory services to the
Company in the future. Goldman Sachs acted as purchasers in connection with the
initial sale of the Notes and received an underwriting discount of approximately
$19.0 million in connection therewith. See "Certain Transactions."
Goldman Sachs and the Company have entered into a registration rights
agreement with respect to the use by Goldman Sachs of this Prospectus. Pursuant
to such agreement, the Company agreed to bear all registration expenses incurred
under such agreement, and the Company agreed to indemnify Goldman Sachs against
certain liabilities, including liabilities under the Securities Act.
A-6
<PAGE> 269
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 102(b)(7) of the General Corporation Law of the State of Delaware
(the "DGCL"), provides that a corporation (in its original certificate of
incorporation or an amendment thereto) may eliminate or limit the personal
liability of a director (or certain persons who, pursuant to the provisions of
the certificate of incorporation, exercise or perform duties conferred or
imposed upon directors by the DGCL) to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director, provided that such
provisions shall not eliminate or limit the liability of a director (i) for any
breach of the director's duty of loyalty to the corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL
(providing for liability of directors for unlawful payment of dividends or
unlawful stock purchases or redemptions) or (iv) for any transaction from which
the director derived an improper personal benefit. Article VIII, Section 1 of
the Company's Certificate of Incorporation limits the liability of directors
thereof to the extent permitted by Section 102(b)(7) of the DGCL.
Under Section 145 of the DGCL, in general, a corporation may indemnify its
directors, officers, employees or agents against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by them in connection with any action, suit or proceeding brought by
third parties to which they may be made parties by reason of their being or
having been directors, officers, employees or agents and shall so indemnify such
persons if they acted in good faith and in a manner they reasonably believed to
be in or not opposed to the best interest of the corporation and, with respect
to any criminal action or proceeding, had no reasonable cause to believe their
conduct was unlawful. Article VIII, Section 2(a) of the Certificate of
Incorporation of the Company provides that the Company shall indemnify its
officers, directors, employees and agents to the full extent permitted by
Delaware law.
Article VIII, Section 2(a) of the Company's Certificate of Incorporation
also provides that the Company shall indemnify any such person seeking
indemnification in connection with a proceeding initiated by such person only if
such proceeding was authorized by the Board. Any rights to indemnification
conferred in Section 2 are contract rights, and include the right to be paid by
the Company the expenses incurred in defending any such proceeding in advance of
its final disposition, except that, if the DGCL requires, the payment of such
expenses incurred by a director or officer in such capacity in advance of final
disposition shall be made only upon delivery to the Company of an undertaking by
or on behalf of such director or officer, to repay all amounts so advanced if it
is ultimately determined that such director or officer is not entitled to be
indemnified under Section 2 or otherwise. By action of the board of directors,
the Company may extend such indemnification to employees and agents of the
Company.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits.
<TABLE>
<C> <S>
2.1 Stock Purchase Agreement, by and among AMF Group Holdings Inc. and the Sellers,
dated as of February 16, 1996.
2.2 Agreement among AMF Group Holdings Inc. and the Sellers, dated as of April 11, 1996,
amending certain terms of the Stock Purchase Agreement.
3.1 Certificate of Incorporation of the Company.
3.2 By-Laws of the Company.
</TABLE>
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<PAGE> 270
<TABLE>
<C> <S>
3.3 Certificate of Incorporation of AMF Group Holdings Inc.
3.4 By-Laws of AMF Group Holdings Inc.
3.5 Certificate of Incorporation of AMF Bowling Holdings Inc.
3.6 By-Laws of AMF Bowling Holdings Inc.
3.7 Certificate of Incorporation of AMF Bowling Centers Holdings Inc.
3.8 By-Laws of AMF Bowling Centers Holdings Inc.
3.9 Charter Documents of AMF Bowling, Inc.
3.10 Restated By-Laws of AMF Bowling, Inc.
3.11 Certificate of Incorporation of AMF Worldwide Bowling Centers Holdings Inc.
3.12 By-Laws of AMF Worldwide Bowling Centers Holdings Inc.
3.13 Charter Documents of AMF Bowling Centers, Inc.
3.14 Restated and Amended By-Laws of AMF Bowling Centers, Inc.
3.15 Articles of Incorporation of Bush River Corporation.
3.16 Amended and Restated By-Laws of Bush River Corporation.
3.17 Articles of Incorporation of AMF Beverage Company of Oregon, Inc.
3.18 By-Laws of AMF Beverage Company of Oregon, Inc.
3.19 Charter Documents of King Louie Lenexa, Inc.
3.20 Amended and Restated By-Laws of King Louie Lenexa, Inc.
3.21 Articles of Incorporation of AMF Beverage Company of W. Va., Inc.
3.22 By-Laws of AMF Beverage Company of W. Va., Inc.
3.23 Certificate of Incorporation of AMF Bowling Centers Switzerland Inc.
3.24 By-Laws of AMF Bowling Centers Switzerland Inc.
3.25 Charter Documents of AMF Bowling Centers (Aust) International Inc.
3.26 By-Laws of AMF Bowling Centers (Aust) International Inc.
3.27 Charter Documents of AMF Bowling Centers (Canada) International Inc.
3.28 Amended and Restated By-Laws of AMF Bowling Centers (Canada) International Inc.
3.29 Charter Documents of AMF Bowling Centers (Hong Kong) International Inc.
3.30 By-Laws of AMF Bowling Centers (Hong Kong) International Inc.
3.31 Charter Documents of AMF Bowling Centers International Inc.
3.32 By-Laws of AMF Bowling Centers International Inc.
3.33 Charter Documents of AMF BCO-UK One, Inc.
3.34 By-Laws of AMF BCO-UK One, Inc.
3.35 Charter Documents of AMF BCO-UK Two, Inc.
3.36 By-Laws of AMF BCO-UK Two, Inc.
3.37 Charter Documents of AMF BCO-France One, Inc.
</TABLE>
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<PAGE> 271
<TABLE>
<C> <S>
3.38 By-Laws of AMF BCO-France One, Inc.
3.39 Charter Documents of AMF BCO-France Two, Inc.
3.40 By-Laws of AMF BCO-France Two, Inc.
3.41 Certificate of Incorporation of AMF Bowling Centers Spain Inc.
3.42 By-Laws of AMF Bowling Centers Spain Inc.
3.43 Charter Documents of AMF Bowling Mexico Holding, Inc.
3.44 By-Laws of AMF Bowling Mexico Holding, Inc.
3.45 Charter Documents of Boliches AMF, Inc.
3.46 By-Laws of Boliches AMF, Inc. (formerly AMF Bowling Eight, Inc.)
3.47 Charter Documents of AMF BCO-China, Inc.
3.48 By-Laws of AMF BCO-China, Inc.
3.49 Articles of Incorporation of AMF Bowling Centers China, Inc.
3.50 By-Laws of AMF Bowling Centers China, Inc.
4.1 Indenture, dated as of March 21, 1996, as supplemented, by and among the Company,
the Guarantors and IBJ Schroder Bank & Trust Company with respect to the Senior
Subordinated Notes.
4.2 Indenture, dated as of March 21, 1996, as supplemented, by and among the Company,
the Guarantors and American Bank National Association with respect to the Senior
Subordinated Discount Notes.
4.3 Form of Exchange Senior Subordinated Note.
4.4 Form of Exchange Senior Subordinated Discount Note.
5.1 Opinion of Wachtell, Lipton, Rosen & Katz.
10.1 Registration Rights Agreement, dated as of March 21, 1996, by and among the Company,
the Guarantors and Goldman, Sachs & Co.
10.2 Credit Agreement dated as of May 1, 1996 among AMF Group Inc. and the Initial
Lenders and Initial Issuing Banks and Goldman, Sachs & Co. and Citicorp Securities,
Inc. as Arrangers and Goldman, Sachs & Co. as Syndication Agent and Citibank, N.A.
as Administrative Agent.
10.3 AMF Holdings Inc. 1996 Stock Incentive Plan (contained in Exhibit 10.4).
10.4 Stockholders Agreement, dated as of April 30, 1996, by and among Parent and the
Stockholders.
10.5 Registration Rights Agreement, dated as of April 30, 1996, by and among Parent and
the Stockholders.
10.6 Warrant Agreement, dated as of May 1, 1996, between Parent and The Goldman Sachs
Group, L.P.
10.7 Employment Agreement, dated as of May 1, 1996, by and among Parent, AMF Bowling,
Inc. and Robert L. Morin.
10.8 Employment Agreement, dated as of May 1, 1996, by and among Parent, the Company and
Douglas Stanard.
</TABLE>
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<PAGE> 272
<TABLE>
<C> <S>
10.9 Stock Option Agreement, dated as of May 1, 1996, between Parent and Charles M.
Diker.
12.1 Statements re computation of ratios.
21.1 Subsidiaries of the Company.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Price Waterhouse LLP.
23.3 Consent of KPMG Peat Marwick LLP.
23.4 Consent of Wachtell, Lipton, Rosen & Katz (contained in Exhibit 5.1).
24.1 Powers of Attorney.
25.1 Statement of Eligibility and Qualification of Trustee on Form T-1 of IBJ Schroder
Bank & Trust Company under the Trust Indenture Act of 1939.
25.2 Statement of Eligibility and Qualification of Trustee on Form T-1 of American Bank
National Association under the Trust Indenture Act of 1939.
27.1 Financial Data Schedule.
99.1 Form of Letter of Transmittal for the 10 7/8% Senior Subordinated Notes due 2006.
99.2 Form of Letter of Transmittal for the 12 1/4% Senior Subordinated Discount Notes due
2006.
</TABLE>
(b) Financial Statement Schedule.
22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(a)(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or 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 and of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
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
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<PAGE> 273
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) 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.
(c) 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-5
<PAGE> 274
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on May 31, 1996.
AMF GROUP INC.
By *
------------------------------------
Richard A. Friedman
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ----------------------------------- ------------------------------------- -------------
<C> <C> <S>
*
- -----------------------------------
Richard A. Friedman Chief Executive Officer and Director May 31, 1996
*
- -----------------------------------
Terence M. O'Toole Director May 31, 1996
*
- -----------------------------------
Peter M. Sacerdote Director May 31, 1996
*
- -----------------------------------
Douglas J. Stanard Chief Operating Officer and Director May 31, 1996
*
- -----------------------------------
Stephen E. Hare Treasurer, Chief Financial Officer May 31, 1996
and Chief Accounting Officer
*
- -----------------------------------
Charles M. Diker Director May 31, 1996
*
- -----------------------------------
Paul Edgerley Director May 31, 1996
*
- -----------------------------------
Howard A. Lipson Director May 31, 1996
*By: /s/ Richard A. Friedman
- ----------------------------------
Attorney-In-Fact
</TABLE>
II-6
<PAGE> 275
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on May 31, 1996.
AMF GROUP HOLDINGS INC.
By *
------------------------------------
Richard A. Friedman
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ----------------------------------- ------------------------------------- -------------
<C> <C> <S>
* Chief Executive Officer and Director May 31, 1996
- -----------------------------------
Richard A. Friedman
* Treasurer, Chief Financial Officer, May 31, 1996
- ----------------------------------- Chief Accounting Officer and Director
Terence M. O'Toole
*By: /s/ Richard A. Friedman
- ----------------------------------
Attorney-In-Fact
</TABLE>
II-7
<PAGE> 276
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on May 31, 1996.
AMF BOWLING HOLDINGS INC.
By *
------------------------------------
Robert L. Morin
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ----------------------------------- ------------------------------------- -------------
<C> <C> <S>
* Chief Executive Officer, Treasurer, May 31, 1996
- ----------------------------------- Chief Financial Officer, Chief
Robert L. Morin Accounting Officer and Director
* Director May 31, 1996
- -----------------------------------
William W. Flexon
*By:/s/ Richard A. Friedman
- -----------------------------------
Attorney-In-Fact
</TABLE>
II-8
<PAGE> 277
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on May 31, 1996.
AMF BOWLING CENTERS HOLDINGS INC.
By *
------------------------------------
Douglas J. Stanard
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ----------------------------------- ------------------------------------- -------------
<C> <C> <S>
* Chief Executive Officer and Director May 31, 1996
- -----------------------------------
Douglas J. Stanard
* Treasurer, Chief Financial Officer, May 31, 1996
- ----------------------------------- Chief Accounting Officer and Director
Michael P. Bardaro
*By: /s/ Richard A. Friedman
- -----------------------------------
Attorney-In-Fact
</TABLE>
II-9
<PAGE> 278
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on May 31, 1996.
AMF BOWLING, INC.
By *
------------------------------------
Robert L. Morin
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ----------------------------------- ------------------------------------- -------------
<C> <C> <S>
* Chief Executive Officer, Treasurer, May 31, 1996
- ----------------------------------- Chief Financial Officer, Chief
Robert L. Morin Accounting Officer and Director
*By: /s/ Richard A. Friedman
- -----------------------------------
Attorney-In-Fact
</TABLE>
II-10
<PAGE> 279
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on May 31, 1996.
AMF WORLDWIDE BOWLING CENTERS
HOLDINGS INC.
By *
------------------------------------
Douglas J. Stanard
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ----------------------------------- ------------------------------------- --------------
<C> <C> <S>
* Chief Executive Officer, Treasurer, May 31, 1996
- ----------------------------------- Chief Financial Officer, Chief
Douglas J. Stanard Accounting Officer and Director
* Director May 31, 1996
- -----------------------------------
Michael P. Bardaro
*By: /s/ Richard A. Friedman
- ----------------------------------
Attorney-In-Fact
</TABLE>
II-11
<PAGE> 280
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on May 31, 1996.
AMF BOWLING CENTERS, INC.
By *
------------------------------------
Douglas J. Stanard
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ----------------------------------- ------------------------------------- --------------
<C> <C> <S>
* Chief Executive Officer, and Director May 31, 1996
- -----------------------------------
Douglas J. Stanard
* Treasurer, Chief Financial Officer May 31, 1996
- ----------------------------------- and Chief Accounting Officer
Michael P. Bardaro
*By:/s/ Richard A. Friedman
- -----------------------------------
Attorney-In-Fact
</TABLE>
II-12
<PAGE> 281
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on May 31, 1996.
BUSH RIVER CORPORATION
By *
------------------------------------
Douglas J. Stanard
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ----------------------------------- ------------------------------------- --------------
<C> <C> <S>
* Chief Executive Officer, and Director May 31, 1996
- -----------------------------------
Douglas J. Stanard
* Treasurer, Chief Financial Officer May 31, 1996
- ----------------------------------- and Chief Accounting Officer
Michael P. Bardaro
*By: /s/ Richard A. Friedman
- ----------------------------------
Attorney-In-Fact
</TABLE>
II-13
<PAGE> 282
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on May 31, 1996.
AMF BEVERAGE COMPANY OF OREGON, INC.
By *
------------------------------------
Douglas J. Stanard
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ----------------------------------- ------------------------------------- -------------
<C> <C> <S>
*
- -----------------------------------
Douglas J. Stanard Chief Executive Officer and Director May 31, 1996
*
- -----------------------------------
Michael P. Bardaro Treasurer, Chief Financial Officer May 31, 1996
and Chief Accounting Officer
*By: /s/ Richard A. Friedman
- ----------------------------------
Attorney-In-Fact
</TABLE>
II-14
<PAGE> 283
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on May 31, 1996.
KING LOUIE LENEXA, INC.
By *
------------------------------------
Douglas J. Stanard
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ----------------------------------- ------------------------------------- -------------
<C> <C> <S>
*
- -----------------------------------
Douglas J. Stanard Chief Executive Officer and Director May 31, 1996
*
- -----------------------------------
Michael P. Bardaro Treasurer, Chief Financial Officer May 31, 1996
and Chief Accounting Officer
*By: /s/ Richard A. Friedman
- ----------------------------------
Attorney-In-Fact
</TABLE>
II-15
<PAGE> 284
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on May 31, 1996.
AMF BEVERAGE COMPANY OF W.VA., INC.
By *
------------------------------------
Douglas J. Stanard
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ----------------------------------- ------------------------------------- -------------
<C> <C> <S>
* Chief Executive Officer and Director May 31, 1996
- -----------------------------------
Douglas J. Stanard
* Treasurer, Chief Financial Officer May 31, 1996
- ----------------------------------- and Chief Accounting Officer
Michael P. Bardaro
*By: /s/ Richard A. Friedman
- ----------------------------------
Attorney-In-Fact
</TABLE>
II-16
<PAGE> 285
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on May 31, 1996.
AMF BOWLING CENTERS SWITZERLAND INC.
By *
------------------------------------
Guiseppe Avolio
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ----------------------------------- ------------------------------------- -------------
<C> <C> <S>
* Chief Executive Officer May 31, 1996
- -----------------------------------
Guiseppe Avolio
* Treasurer, Chief Financial Officer, May 31, 1996
- ----------------------------------- Chief Accounting Officer and Director
Douglas J. Stanard
* Director May 31, 1996
- -----------------------------------
Michael P. Bardaro
*By: /s/ Richard A. Friedman
- ----------------------------------
Attorney-In-Fact
</TABLE>
II-17
<PAGE> 286
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on May 31, 1996.
AMF BOWLING CENTERS (AUST)
INTERNATIONAL INC.
By *
------------------------------------
Douglas J. Stanard
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ----------------------------------- ------------------------------------- -------------
<C> <C> <S>
* Chief Executive Officer, Treasurer, May 31, 1996
- ----------------------------------- Chief Financial Officer, Chief
Douglas J. Stanard Accounting Officer and Director
*By: /s/ Richard A. Friedman
- ----------------------------------
Attorney-In-Fact
</TABLE>
II-18
<PAGE> 287
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on May 31, 1996.
AMF BOWLING CENTERS (CANADA)
INTERNATIONAL INC.
By *
------------------------------------
Douglas J. Stanard
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ----------------------------------- ------------------------------------- -------------
<C> <C> <S>
* Chief Executive Officer, Treasurer, May 31, 1996
- ----------------------------------- Chief Financial Officer, Chief
Douglas J. Stanard Accounting Officer and Director
* Director May 31, 1996
- -----------------------------------
Linda R. Ross
* Director May 31, 1996
- -----------------------------------
Sandra I. Harris
*By: /s/ Richard A. Friedman
- ----------------------------------
Attorney-In-Fact
</TABLE>
II-19
<PAGE> 288
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on May 31, 1996.
AMF BOWLING CENTERS (HONG KONG)
INTERNATIONAL INC.
By *
------------------------------------
Douglas J. Stanard
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ----------------------------------- ------------------------------------- -------------
<C> <C> <S>
* Chief Executive Officer, Treasurer, May 31, 1996
- ----------------------------------- Chief Financial Officer, Chief
Douglas J. Stanard Accounting Officer and Director
*By: /s/ Richard A. Friedman
- ----------------------------------
Attorney-In-Fact
</TABLE>
II-20
<PAGE> 289
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on May 31, 1996.
AMF BOWLING CENTERS
INTERNATIONAL INC.
By *
------------------------------------
Takashi Takeshige
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ----------------------------------- ------------------------------------- -------------
<C> <C> <S>
* Chief Executive Officer and May 31, 1996
- ----------------------------------- Managing Director
Takashi Takeshige
* Director May 31, 1996
- -----------------------------------
Douglas J. Stanard
* Treasurer, Chief Financial Officer May 31, 1996
- ----------------------------------- and Chief Accounting Officer
Michael P. Bardaro
*By: /s/ Richard A. Friedman
- ----------------------------------
Attorney-In-Fact
</TABLE>
II-21
<PAGE> 290
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on May 31, 1996.
AMF BCO-UK ONE, INC.
By *
------------------------------------
Douglas J. Stanard
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ----------------------------------- ------------------------------------- -------------
<C> <C> <S>
* Chief Executive Officer, Treasurer, May 31, 1996
- ----------------------------------- Chief Financial Officer, Chief
Douglas J. Stanard Accounting Officer and Director
*By: /s/ Richard A. Friedman
- ----------------------------------
Attorney-In-Fact
</TABLE>
II-22
<PAGE> 291
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on May 31, 1996.
AMF BCO-UK TWO, INC.
By *
------------------------------------
Douglas J. Stanard
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ----------------------------------- ------------------------------------- --------------
<C> <C> <S>
* Chief Executive Officer, Treasurer, May 31, 1996
- ----------------------------------- Chief Financial Officer, Chief
Douglas J. Stanard Accounting Officer and Director
*By: /s/ Richard A. Friedman
- ----------------------------------
Attorney-In-Fact
</TABLE>
II-23
<PAGE> 292
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on May 31, 1996.
AMF BCO-FRANCE ONE, INC.
By *
------------------------------------
Douglas J. Stanard
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ----------------------------------- ------------------------------------- --------------
<C> <C> <S>
* Chief Executive Officer, Treasurer, May 31, 1996
- ----------------------------------- Chief Financial Officer, Chief
Douglas J. Stanard Accounting Officer and Director
*By: /s/ Richard A. Friedman
- ----------------------------------
Attorney-In-Fact
</TABLE>
II-24
<PAGE> 293
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on May 31, 1996.
AMF BCO-FRANCE TWO, INC.
By *
------------------------------------
Douglas J. Stanard
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ----------------------------------- ------------------------------------- --------------
<C> <C> <S>
* Chief Executive Officer, Treasurer, May 31, 1996
- ----------------------------------- Chief Financial Officer, Chief
Douglas J. Stanard Accounting Officer and Director
*By: /s/ Richard A. Friedman
- ----------------------------------
Attorney-In-Fact
</TABLE>
II-25
<PAGE> 294
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on May 31, 1996.
AMF BOWLING CENTERS SPAIN, INC.
By *
------------------------------------
Asuncion Merinero
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ----------------------------------- ------------------------------------- --------------
<C> <C> <S>
* Chief Executive Officer, and May 31, 1996
- ----------------------------------- Managing Director
Asuncion Merinero
* Treasurer, Chief Financial Officer, May 31, 1996
- ----------------------------------- Chief Accounting Officer and Director
Douglas J. Stanard
* Director May 31, 1996
- -----------------------------------
Michael P. Bardaro
*By: /s/ Richard A. Friedman
- ----------------------------------
Attorney-In-Fact
</TABLE>
II-26
<PAGE> 295
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on May 31, 1996.
AMF BOWLING MEXICO HOLDING, INC.
By *
------------------------------------
Douglas J. Stanard
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ----------------------------------- ------------------------------------- --------------
<C> <C> <S>
* Chief Executive Officer, Treasurer, May 31, 1996
- ----------------------------------- Chief Financial Officer, Chief
Douglas J. Stanard Accounting Officer and Director
*By: /s/ Richard A. Friedman
- ----------------------------------
Attorney-In-Fact
</TABLE>
II-27
<PAGE> 296
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on May 31, 1996.
BOLICHES AMF, INC.
By *
------------------------------------
Douglas J. Stanard
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ----------------------------------- ------------------------------------- --------------
<C> <C> <S>
* Chief Executive Officer, Treasurer, May 31, 1996
- ----------------------------------- Chief Financial Officer, Chief
Douglas J. Stanard Accounting Officer and Director
*By: /s/ Richard A. Friedman
- ----------------------------------
Attorney-In-Fact
</TABLE>
II-28
<PAGE> 297
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on May 31, 1996.
AMF BCO-CHINA, INC.
By *
------------------------------------
Douglas J. Stanard
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ----------------------------------- ------------------------------------- --------------
<C> <C> <S>
* Chief Executive Officer, Treasurer, May 31, 1996
- ----------------------------------- Chief Financial Officer, Chief
Douglas J. Stanard Accounting Officer and Director
*By: /s/ Richard A. Friedman
- ----------------------------------
Attorney-In-Fact
</TABLE>
II-29
<PAGE> 298
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on May 31, 1996.
AMF BOWLING CENTERS CHINA, INC.
By *
------------------------------------
Douglas J. Stanard
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
- ----------------------------------- ------------------------------------- --------------
<C> <C> <S>
* Chief Executive Officer, Treasurer, May 31, 1996
- ----------------------------------- Chief Financial Officer, Chief
Douglas J. Stanard Accounting Officer and Director
*By: /s/ Richard A. Friedman
- ----------------------------------
Attorney-In-Fact
</TABLE>
II-30
<PAGE> 299
Schedule II
AMF BOWLING GROUP
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
DESCRIPTION BALANCE AT ADDITIONS DEDUCTIONS - BALANCE AT
(1) BEGINNING OF ------------------------------------------ WRITE-OFFS END OF PERIOD
PERIOD (1) (2)
CHARGED TO COSTS CHARGED TO OTHER
AND EXPENSES ACCOUNTS - DESCRIBE
- -----------------------------------------------------------------------------------------------------------------------------------
ACCOUNTS RECEIVABLE - ALLOWANCE FOR DOUBTFUL ACCOUNTS
<S> <C> <C> <C> <C>
Year ended December 31,
1995 $1,898 $2,118 $ (643) $3,373
1994 $1,793 $ 886 $ (781) $1,898
1993 $1,590 $ 650 $ (447) $1,793
Three Months ended March 31, (unaudited)
- ----------------------------------------
1996 $3,373 $ 25 $ (174) $3,224
1995 $1,898 $ 12 $ (12) $1,898
INVENTORY - RESERVES
Year ended December 31,
1995 $ 800 $ 954 $ (498) $1,256
1994 $ 769 $1,080 $(1,049) $ 800
1993 $ 749 $ 837 $ (817) $ 769
Three Months ended March 31, (unaudited)
- ----------------------------------------
1996 $1,256 $ 78 $ (451) $ 883
1995 $ 800 $ 150 $ (150) $ 800
</TABLE>
<PAGE> 300
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT PAGE
- ------- ------------------------------------------------------------------------------ -----
<C> <S> <C>
2.1 Stock Purchase Agreement, by and among AMF Group Holdings Inc. and the
Sellers, dated as of February 16, 1996. ......................................
2.2 Agreement among AMF Group Holdings Inc. and the Sellers, dated as of April 11,
1996, amending certain terms of the Stock Purchase Agreement. ................
3.1 Certificate of Incorporation of the Company. .................................
3.2 By-Laws of the Company. ......................................................
3.3 Certificate of Incorporation of AMF Group Holdings Inc. ......................
3.4 By-Laws of AMF Group Holdings Inc. ...........................................
3.5 Certificate of Incorporation of AMF Bowling Holdings Inc. ....................
3.6 By-Laws of AMF Bowling Holdings Inc. .........................................
3.7 Certificate of Incorporation of AMF Bowling Centers Holdings Inc. ............
3.8 By-Laws of AMF Bowling Centers Holdings Inc. .................................
3.9 Charter Documents of AMF Bowling, Inc. .......................................
3.10 Restated By-Laws of AMF Bowling, Inc. ........................................
3.11 Certificate of Incorporation of AMF Worldwide Bowling Centers Holdings
Inc. .........................................................................
3.12 By-Laws of AMF Worldwide Bowling Centers Holdings Inc. .......................
3.13 Charter Documents of AMF Bowling Centers, Inc. ...............................
3.14 Restated and Amended By-Laws of AMF Bowling Centers, Inc. ....................
3.15 Articles of Incorporation of Bush River Corporation. .........................
3.16 Amended and Restated By-Laws of Bush River Corporation. ......................
3.17 Articles of Incorporation of AMF Beverage Company of Oregon, Inc. ............
3.18 By-Laws of AMF Beverage Company of Oregon, Inc. ..............................
3.19 Charter Documents of King Louie Lenexa, Inc. .................................
3.20 Amended and Restated By-Laws of King Louie Lenexa, Inc. ......................
3.21 Articles of Incorporation of AMF Beverage Company of W. Va., Inc. ............
3.22 By-Laws of AMF Beverage Company of W. Va., Inc. ..............................
3.23 Certificate of Incorporation of AMF Bowling Centers Switzerland Inc. .........
3.24 By-Laws of AMF Bowling Centers Switzerland Inc. ..............................
3.25 Charter Documents of AMF Bowling Centers (Aust) International Inc. ...........
3.26 By-Laws of AMF Bowling Centers (Aust) International Inc. .....................
3.27 Charter Documents of AMF Bowling Centers (Canada) International Inc. .........
3.28 Amended and Restated By-Laws of AMF Bowling Centers (Canada)
International Inc. ...........................................................
3.29 Charter Documents of AMF Bowling Centers (Hong Kong) International Inc. ......
3.30 By-Laws of AMF Bowling Centers (Hong Kong) International Inc. ................
3.31 Charter Documents of AMF Bowling Centers International Inc. ..................
3.32 By-Laws of AMF Bowling Centers International Inc. ............................
3.33 Charter Documents of AMF BCO-UK One, Inc. ....................................
3.34 By-Laws of AMF BCO-UK One, Inc. ..............................................
</TABLE>
<PAGE> 301
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT PAGE
- ------- ------------------------------------------------------------------------------ -----
<C> <S> <C>
3.35 Charter Documents of AMF BCO-UK Two, Inc. ....................................
3.36 By-Laws of AMF BCO-UK Two, Inc. ..............................................
3.37 Charter Documents of AMF BCO-France One, Inc. ................................
3.38 By-Laws of AMF BCO-France One, Inc. ..........................................
3.39 Charter Documents of AMF BCO-France Two, Inc. ................................
3.40 By-Laws of AMF BCO-France Two, Inc. ..........................................
3.41 Certificate of Incorporation of AMF Bowling Centers Spain Inc. ...............
3.42 By-Laws of AMF Bowling Centers Spain Inc......................................
3.43 Charter Documents of AMF Bowling Mexico Holding, Inc..........................
3.44 By-Laws of AMF Bowling Mexico Holding, Inc....................................
3.45 Charter Documents of Boliches AMF, Inc........................................
3.46 By-Laws of Boliches AMF, Inc. (formerly AMF Bowling Eight, Inc.)..............
3.47 Charter Documents of AMF BCO-China, Inc.......................................
3.48 By-Laws of AMF BCO-China, Inc.................................................
3.49 Articles of Incorporation of AMF Bowling Centers China, Inc...................
3.50 By-Laws of AMF Bowling Centers China, Inc.....................................
4.1 Indenture, dated as of March 21, 1996, as supplemented, by and among the
Company, the Guarantors and IBJ Schroder Bank & Trust Company with respect to
the Senior Subordinated Notes.................................................
4.2 Indenture, dated as of March 21, 1996, as supplemented, by and among the
Company, the Guarantors and American Bank National Association with respect to
the Senior Subordinated Discount Notes. ......................................
4.3 Form of Exchange Senior Subordinated Note. ...................................
4.4 Form of Exchange Senior Subordinated Discount Note. ..........................
5.1 Opinion of Wachtell, Lipton, Rosen & Katz. ...................................
10.1 Registration Rights Agreement, dated as of March 21, 1996, by and among the
Company, the Guarantors and Goldman, Sachs & Co. .............................
10.2 Credit Agreement dated as of May 1, 1996 among AMF Group Inc. and the Initial
Lenders and Initial Issuing Banks and Goldman, Sachs & Co. and Citicorp
Securities, Inc. as Arrangers and Goldman, Sachs & Co. as Syndication Agent
and Citibank, N.A. as Administrative Agent. ..................................
10.3 AMF Holdings Inc. 1996 Stock Incentive Plan (contained in Exhibit 10.4). .....
10.4 Stockholders Agreement, dated as of April 30, 1996, by and among Holdings and
the Stockholders. ............................................................
10.5 Registration Rights Agreement, dated as of April 30, 1996, by and among
Holdings and the Stockholders. ...............................................
10.6 Warrant Agreement, dated as of May 1, 1996, between Holdings and The Goldman
Sachs Group, L.P. ............................................................
10.7 Employment Agreement, dated as of May 1, 1996, by and among Parent, AMF
Bowling, Inc. and Robert L. Morin. ...........................................
10.8 Employment Agreement, dated as of May 1, 1996, by and among Parent, the
Company and Douglas Stanard. .................................................
</TABLE>
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<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT PAGE
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<C> <S> <C>
10.9 Stock Option Agreement, dated as of May 1, 1996, by and among Parent and
Charles M. Diker. ............................................................
12.1 Statements re computation of ratios. .........................................
21.1 Subsidiaries of the Company. .................................................
23.1 Consent of Arthur Andersen LLP. ..............................................
23.2 Consent of Price Waterhouse LLP. .............................................
23.3 Consent of KPMG Peat Marwick LLP. ............................................
23.4 Consent of Wachtell, Lipton, Rosen & Katz (contained in Exhibit 5.1). ........
24.1 Powers of Attorney. ..........................................................
25.1 Statement of Eligibility and Qualification of Trustee on Form T-1 of IBJ
Schroder under the Trust Indenture Act of 1939. ..............................
25.2 Statement of Eligibility and Qualification of Trustee on Form T-1 of American
Bank under the Trust Indenture Act of 1939. ..................................
27.1 Financial Data Schedule. .....................................................
99.1 Form of Letter of Transmittal for the 10 7/8% Senior Subordinated Notes
due 2006. ....................................................................
99.2 Form of Letter of Transmittal for the 12 1/4% Senior Subordinated Discount
Notes due 2006. ..............................................................
</TABLE>
<PAGE> 1
Exhibit 2.1
STOCK PURCHASE AGREEMENT
by and among
AMF GROUP HOLDINGS INC.
and
THE SELLERS LISTED ON
THE SIGNATURE PAGES HERETO
February 16, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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ARTICLE I
<S> <C>
Certain Definitions ............................................................................... 2
ARTICLE II
Sale of Stock and Assets; Closing ................................................................. 15
Section 2.1. Purchase and Sale .................................................... 15
Section 2.2. Time and Place of Closing ............................................ 16
Section 2.3. Purchase Price Adjustment ............................................ 16
ARTICLE III
Representations and Warranties of Sellers ......................................................... 19
Section 3.1. Incorporation; Authorization; etc. ................................... 19
Section 3.2. Capitalization; Structure ............................................ 22
Section 3.3. Financial Statements ................................................. 23
Section 3.4. Real Properties ...................................................... 23
Section 3.5. Tangible Personal Property ........................................... 28
Section 3.6. Absence of Certain Changes ........................................... 29
Section 3.7. Litigation; Orders ................................................... 30
Section 3.8. Intellectual Property ................................................ 30
Section 3.9. Licenses, Approvals, Other Authorizations, Consents, Reports, etc. ... 32
Section 3.10. Labor Matters ........................................................ 33
Section 3.11. Compliance with Laws ................................................. 34
Section 3.12. Insurance ............................................................ 34
Section 3.13. Material Contracts ................................................... 35
Section 3.14. Brokers, Finders, etc. ............................................... 36
Section 3.15. Affiliate Transactions ............................................... 36
Section 3.16. Environmental Compliance ............................................. 37
Section 3.17. Customer and Supplier Relationships .................................. 39
Section 3.18. Products ............................................................. 39
Section 3.19. Undisclosed Liabilities .............................................. 39
Section 3.20. Disclosure ........................................................... 40
Section 3.21. Banks, Powers of Attorney ............................................ 40
Section 3.22. Sufficiency and Condition of Assets .................................. 41
Section 3.23. Nonforeign Certification ............................................. 41
ARTICLE IV
Representations and Warranties of Buyer ........................................................... 41
Section 4.1. Incorporation; Authorization; etc. ................................... 41
Section 4.2. Licenses, Approvals, Other Authorizations, Consents, Reports, etc. ... 42
Section 4.3. Acquisition of Shares for Investment ................................. 43
Section 4.4. Financial Capability ................................................. 43
</TABLE>
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ARTICLE V
<S> <C>
Covenants of Sellers and Buyer ................................................................. 43
Section 5.1. Investigation of Business; Access to
Properties and Records ......................................... 43
Section 5.2. Efforts; Obtaining Consents ....................................... 45
Section 5.3. Further Assurances ................................................ 46
Section 5.4. Conduct of Business ............................................... 47
Section 5.5. Preservation of Business .......................................... 50
Section 5.6. Non-Solicitation .................................................. 50
Section 5.7. Intercompany Accounts ............................................. 51
Section 5.8. Financing ......................................................... 51
Section 5.9. Ancillary Agreements .............................................. 55
Section 5.10. Resignations; Nominee Shareholders ................................ 55
Section 5.11. Current Information ............................................... 55
Section 5.12. Financial Statements .............................................. 56
Section 5.13. Further Actions ................................................... 56
Section 5.14. Insurance ......................................................... 57
Section 5.15. Renewal of Guaranteed Items ....................................... 59
Section 5.16. Brokers Fees ...................................................... 59
Section 5.17. Companies' Stock Performance Plans ................................ 59
ARTICLE VI
Employee Benefits .............................................................................. 60
Section 6.1. Employee Benefit Plans ............................................ 60
Section 6.2. Company Employee Benefit Plans .................................... 62
Section 6.3. Non-U.S. Company Employee Benefit
Plans .......................................................... 65
Section 6.4. Administration .................................................... 67
Section 6.5. 401(k) Plan ....................................................... 67
Section 6.6. Multiemployer Plans ............................................... 67
Section 6.7. Reportable Event .................................................. 68
ARTICLE VII
Tax Matters .................................................................................... 68
Section 7.1. Tax Returns of the Companies and
the Subsidiaries ............................................... 68
Section 7.2. Elections and Forms ............................................... 71
Section 7.3. Allocation of Certain Taxes ....................................... 72
Section 7.4. Filing Responsibility ............................................. 72
Section 7.5. Refunds and Carrybacks ............................................ 74
Section 7.6. Cooperation and Exchange of Information. .......................... 74
Section 7.7. Tax Indemnification by Sellers .................................... 76
Section 7.8. Definitions ....................................................... 77
</TABLE>
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ARTICLE VIII
<S> <C>
Conditions of Buyer's Obligation to Close ..................................................... 79
Section 8.1. Representations, Warranties and Covenants of Seller .............. 79
Section 8.2. Filings; Consents; Waiting Periods ............................... 80
Section 8.3. Litigation; Injunction ........................................... 81
Section 8.4. Financing ........................................................ 81
Section 8.5. Opinions ......................................................... 81
Section 8.6. FIRPTA Affidavit ................................................. 81
Section 8.7. Certain Agreements and Transfers ................................. 82
Section 8.8. Proceedings; Certificates ........................................ 82
Section 8.9. Armstrong Consulting Agreement ................................... 82
Section 8.10. Financial Statements ............................................. 82
Section 8.11. Outstanding Indebtedness ......................................... 83
ARTICLE IX
Conditions to Sellers' Obligation to Close .................................................... 83
Section 9.1. Representations, Warranties and Covenants of Buyer ............... 83
Section 9.2. Filings; Consents; Waiting Periods ............................... 83
Section 9.3. Litigation; Injunction ........................................... 84
Section 9.4. Opinions ......................................................... 84
Section 9.5. Certain Agreements ............................................... 84
Section 9.6. Proceedings; Certificates ........................................ 84
ARTICLE X
Survival; Indemnification ..................................................................... 85
Section 10.1. Survival ......................................................... 85
Section 10.2. Indemnification by Buyer ......................................... 85
Section 10.3. Indemnification by Sellers ....................................... 86
Section 10.4. Third Party Claims ............................................... 88
Section 10.5. No Consequential or Lost
Profits Damages ................................................ 89
Section 10.6. Limitations on Indemnification ................................... 89
Section 10.7. Trust Arrangements ............................................... 90
ARTICLE XI
Termination ................................................................................... 93
Section 11.1. Termination ...................................................... 93
Section 11.2. Procedure and Effect of Termination .............................. 93
ARTICLE XII
Miscellaneous ................................................................................. 94
Section 12.1. Counterparts ..................................................... 94
Section 12.2. Governing Law .................................................... 94
</TABLE>
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<TABLE>
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<S> <C>
Section 12.3. Entire Agreement ........................... 94
Section 12.4. Expenses ................................... 94
Section 12.5. Notices .................................... 95
Section 12.6. Successors and Assigns ..................... 96
Section 12.7. Designated Representative .................. 96
Section 12.8. Publicity .................................. 97
Section 12.9. Headings; Definitions ...................... 97
Section 12.10. Amendments and Waivers ..................... 97
Section 12.11. Severability ............................... 97
Section 12.12. Interpretation ............................. 98
Section 12.13. Schedules .................................. 98
Section 12.14. Trustees ................................... 98
Signatures .............................................................. 99
</TABLE>
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<PAGE> 6
Schedule 2.1 Stock of Foreign Bowling Centers Companies
Schedule 3.1(a) Form of Organization and Jurisdictions in
Which Companies are Qualified to Do Business
Schedule 3.1(b) Violations and Accelerations
Schedule 3.2(a) Stock Information
Schedule 3.2(c) Officers and Directors
Schedule 3.3 Financial Statements and Exceptions to Ap-
plicable Accounting Principles
Schedule 3.4(a) Owned Real Estate
Schedule 3.4(b) Leased Real Estate
Schedule 3.4(c) Properties under Management Agreements
Schedule 3.5 Tangible Personal Property
Schedule 3.6 Absence of Certain Changes
Schedule 3.7 Litigation
Schedule 3.8 Intellectual Property
Schedule 3.9(a) Government Licenses
Schedule 3.9(b) Seller Consents
Schedule 3.9(c) Concession Entities
Schedule 3.10 Labor Agreements, Disputes
Schedule 3.11 Compliance With Law
Schedule 3.12 Insurance Policies
Schedule 3.13 Material Contracts
Schedule 3.15 Affiliate Transactions
Schedule 3.16 Environmental Compliance
Schedule 3.17 Customer, Supplier and Distributor Relation-
ships
Schedule 3.18 Recalls Since January 1, 1993
Schedule 3.19 Undisclosed Liabilities
Schedule 3.21 Bank Accounts
Schedule 4.2 Buyer Consents
Schedule 5.4 Conduct of Business; Description of Excluded
Assets
Schedule 5.6 Overlapping Employees
Schedule 5.13 Retained Indebtedness
Schedule 5.15 List of Guaranteed Items
Schedule 6.1(a) Company Employee Benefit Plans
Schedule 6.1(d) Payments Caused By This Agreement
Schedule 6.1(l) Multiemployer Plans Disclosure
Schedule 6.2(c) Multiemployer Plans
Schedule 7.1(a) Income Tax Returns
Schedule 7.1(b) Contested Taxes; Reserves
Schedule 7.1(c) Tax Extensions and Powers of Attorneys
Schedule 7.1(d) Audits
Schedule 7.1(i) Partnership Status
Schedule 7.2(a) Section 338(g) Election Companies
Schedule 7.2(c) Tier 1 Allocation
Schedule 8.2 Buyer Filings and Consents
Schedule 9.2 Seller Filings and Consents
Schedule 10.2 Indemnified Agreements
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<PAGE> 7
Exhibit 1.1(a) Spanish Bowling Centers Agreement
Exhibit 1.1(b) Swiss Bowling Center Agreement
Exhibit 1.1(c) Forms of License Agreements
Exhibit 1.1(d) Armstrong Consulting Agreement
Exhibit 1.1(e) Reece Easement Agreement
Exhibit 1.1(f) Reece Indemnity
Exhibit 1.1(g) Related Land Sales Agreement
Exhibit 1.1(h) Trust Indemnities
Exhibit 5.8(c) Description of Seller Notes
Exhibit 8.5 Forms of Opinions of Sellers' Counsels
Exhibit 9.4 Form of New York Law Opinion of Buyer's Counsel
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<PAGE> 8
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement"), dated
February 16, 1996, is by and among the persons and entities listed on the
signature pages hereto as the stockholders (the "Sellers" or the
"Stockholders"), and AMF Group Holdings Inc., a Delaware corporation ("Buyer").
WHEREAS, the Manufacturing Business (as defined herein) of the
Sellers is conducted through AMF Bowling, Inc., a Virginia corporation, and the
branches thereof ("Bowling");
WHEREAS, the Domestic Bowling Centers Business (as defined
herein) of the Sellers is conducted through AMF Bowling Centers, Inc., a
Virginia corporation ("Bowling Centers"), Bush River Corporation, a South
Carolina corporation ("Bush River"), AMF Beverage Company of Oregon, Inc., an
Oregon corporation ("Oregon Beverage"), AMF Bowling Centers (Canada)
International Inc., a Virginia corporation ("AMF Canada") and King Louie Lenexa,
Inc., a Kansas corporation ("King Louie") (Bowling Centers, Bush River, Oregon
Beverage, AMF Canada and King Louie are hereinafter collectively referred to as
the "Bowling Centers Companies") and through the Puerto Rico operations
conducted by AMF Bowling Mexico Holding, Inc., a Delaware corporation;
WHEREAS, the Foreign Bowling Centers Business of the Sellers
is conducted through the Foreign Bowling Centers Companies and the Retained
Entities (as each such term is defined herein); and
WHEREAS, Buyer desires, either directly or through certain of
its subsidiaries, to purchase from the Sellers, and the Sellers desire to sell
to Buyer, 100% of the outstanding shares of common stock or other equity
interests of Bowling, the Bowling Centers Companies and the Foreign Bowling
Centers Companies upon the terms and subject to the conditions set forth herein
(the "Stock Purchases") and certain assets of the Retained Entities (the
"Purchased Assets") pursuant to the Spanish and Swiss Bowling Centers Agreements
and the Related Land Sales Agreement (as each such term is defined herein) (the
"Asset Purchases" and, collectively with the Stock Purchases, the "Stock and
Asset Purchases").
NOW, THEREFORE, the parties hereto agree as follows:
<PAGE> 9
ARTICLE I
Certain Definitions
As used in this Agreement the following terms shall have the
following respective meanings:
"Action" shall mean any complaint, claim, prosecution,
indictment, action, suit, arbitration, investigation, inquiry or proceeding by
or before any Governmental Authority.
"Adjusted Closing Date Balance Sheet" shall have the meaning
set forth in Section 2.3(d) hereof.
"Affiliate" shall mean any Person that directly, or indirectly
through one or more intermediaries, controls or is controlled by or is under
common control with the party specified.
"Agreement" shall have the meaning set forth in the
preamble hereof.
"Allocation Agreement" shall have the meaning set
forth in Section 7.2(c) hereof.
"AMF Canada" shall have the meaning set forth in the
recitals hereto.
"AMF Reece" shall mean AMF Reece, Inc., a Virginia
corporation.
"Ancillary Agreements" shall mean, collectively, the Spanish
and Swiss Bowling Centers Agreements, the Rolling Road Agreement, the Wilson
Road Agreement, the Reece Easement Agreement, the Reece Indemnity, the Armstrong
Consulting Agreement, the Related Land Sale Agreement, the Trust Indemnities,
and the License Agreements.
"Ancillary Parties" shall mean the parties to the Ancillary
Agreements other than (i) Buyer and its subsidiaries or (ii) the Companies or
the Subsidiaries.
"Applicable Accounting Principles" shall have the meaning set
forth in Section 3.3(b) hereof.
"Applicable Return" shall have the meaning set forth
in Section 10.1(a) hereof.
"Armstrong Consulting Agreement" shall mean the consulting and
non-competition agreement in the form set forth in
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<PAGE> 10
Exhibit 1.1(d) hereto, to be entered into by Buyer or one of its direct or
indirect subsidiaries and Beverley W. Armstrong on the date hereof.
"Arthur Andersen" shall mean Arthur Andersen LLP.
"Asset Purchases" shall have the meaning set forth in
the recitals hereto.
"Balance Sheet" shall have the meaning set forth in
Section 3.3(a) hereof.
"Bowling" shall have the meaning set forth in the
recitals hereto.
"Bowling Centers" shall have the meaning set forth in
the recitals hereto.
"Bowling Centers Business" shall mean the Domestic Bowling
Centers Business and the Foreign Bowling Centers Business taken as a whole.
"Bowling Centers Companies" shall have the meaning set
forth in the recitals hereto.
"Bush River" shall have the meaning set forth in the
recitals hereto.
"Business Condition" shall have the meaning set forth
in Section 3.1(a) hereof.
"Buyer" shall have the meaning set forth in the pre-
amble hereof.
"Buyer Contribution" shall have the meaning set forth
in Section 5.8(b).
"Buyer Indemnified Parties" shall have the meaning set forth
in Section 10.3 hereof.
"Buyer Notes" shall have the meaning set forth in
Section 5.8(c)(ii) hereof.
"Claim" shall have the meaning set forth in Section
5.14(a) hereof.
"CLC" shall mean Commonwealth Leasing Corporation.
"Closing" shall mean the consummation of the transactions
contemplated by Section 2.1 of this Agreement.
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<PAGE> 11
"Closing Date" shall mean, subject to the final sentence of
this definition, a date between April 4, 1996 and May 3, 1996, to be selected by
Sellers, which date shall be no earlier than the fifth day after Buyer's receipt
of an irrevocable written notice from Sellers requesting a specified date as the
Closing Date (the "Sellers Closing Notice") (if the Sellers Closing Notice is
not timely received by Buyer, the Closing Date shall be May 3, 1996), or if the
Sellers and Buyer mutually agree on a different date, the date upon which they
have mutually agreed; provided, however, the Closing Date may be delayed (y) up
to seven days, at the request of Buyer, subject to Buyer's continued compliance
with Section 5.2(a) and (z) up to 30 days (in addition to any delay contemplated
by the preceding clause (y)), at the request of Buyer but only if the Designated
Representative agrees, subject to Buyer's continued compliance with Section
5.2(a); and provided, further, assuming Buyer does not consummate an Early
Financing, that Buyer shall receive at least 30 days in advance of the Closing
Date a written notice from Price Waterhouse that (i) the audited combined
financial statements of the Manufacturing Business and the Bowling Centers
Business for the 12-month period ended December 31, 1995 (accompanied by the
unqualified opinion of Price Waterhouse) and (ii) the audited financial
statements for Fair Lanes, Inc., for the periods July 1, 1992 through June 30,
1993, July 1, 1993 through June 30, 1994, and July 1, 1994 through September 29,
1994 and September 30, 1994 through December 31, 1994 (each accompanied by the
unqualified opinion of Price Waterhouse or KPMG Peat Marwick, LLP) will be
delivered on or before the date specified in the notice (the "Expected Date"),
such Expected Date to be at least 10 calendar days prior to the Closing Date,
and such financial statements to be delivered on or before the Expected Date. If
Buyer does not consummate an Early Financing and any of the foregoing steps do
not occur on such schedule, the Closing Date shall be extended to the latest of:
(i) 30 calendar days after delivery of Price Waterhouse's written notice
described above; (ii) 12 calendar days after receipt of all of such audited
financial statements if received not more than two calendar days after the
Expected Date; and (iii) up to 30 calendar days (in the reasonable discretion of
Buyer) after the date of receipt of all of such audited financial statements if
such audited financial statements are received more than two calendar days after
the Expected Date.
"Closing Date Balance Sheet" shall have the meaning set forth
in Section 2.3(a) hereof.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and any successor thereto.
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<PAGE> 12
"Companies" shall mean Bowling, the Bowling Centers Companies
and the Foreign Bowling Center Companies and, except as expressly provided
herein, the Retained Entities.
"Companies Liquor Licenses" shall have the meaning set forth
in Section 3.9(a) hereof.
"Companies' Stock Performance Plans" shall mean the stock
performance plans set forth on Schedule 6.1(a) and such additional agreements of
the same type and form (including interest rate) that may be granted prior to
the Closing Date to certain employees of the Companies and the Subsidiaries as
disclosed in a letter delivered to Buyer prior to the Closing Date.
"Company Employee Benefit Plan" shall have the meaning set
forth in Section 6.1(a) hereof.
"Company Intellectual Property" shall have the meaning set
forth in Section 3.8 hereof.
"Company Patents" shall have the meaning set forth in
Section 3.8(d) hereof.
"Company Pension Plan" shall have the meaning set forth in
Section 6.1(c) hereof.
"Company Trademarks" shall have the meaning set forth
in Section 3.8(b) hereof.
"Concession Entities" shall have the meaning set forth
in Section 3.9(c) hereof.
"Continuing Affiliate" shall mean (i) any Seller, CCA
Industries, Inc., a Virginia corporation, or any of their respective Affiliates
(other than the Companies and the Subsidiaries) and (ii) William H. Goodwin,
Jr., members of his family, trusts for the benefit of Mr. Goodwin and/or members
of his family or any Affiliate of any of the foregoing (other than the Companies
and the Subsidiaries). For purposes of this definition, the term "Companies"
shall not include the Retained Entities.
"Controlled Group Liability" shall have the meaning set forth
in Section 6.2(f) hereof.
"Covered Liabilities" shall mean any and all debts, losses,
liabilities, claims, fines, royalties, deficiencies, damages, obligations,
payments (including, without limitation,
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<PAGE> 13
those arising out of any demand, assessment, settlement, judgment or compromise
relating to any Action), costs and expenses (including, without limitation,
interest and penalties due and payable with respect thereto and reasonable
attorneys' and accountants' fees and any other out-of-pocket expenses incurred
in investigating, preparing, defending, avoiding or settling any Action or in
enforcing another party's obligations hereunder), mature or unmatured, absolute
or contingent, accrued or unaccrued, liquidated or unliquidated, known or
unknown, including, without limitation, any of the foregoing arising under, out
of or in connection with any Action, order or consent decree of any Governmental
Authority or award of any arbitrator of any kind, or any law, rule, regulation,
contract, commitment or undertaking.
"Designated Representative" shall have the meaning set
forth in Section 12.7 hereof.
"Determination" shall have the meaning set forth in
Section 7.8(a) hereof.
"Discount Notes" shall have the meaning set forth in
Section 5.8(c)(ii) hereof.
"Domestic Bowling Centers Business" shall mean the business of
operating owned or leased bowling centers (including the sale therein of food
and beverages) throughout the United States of America, Canada and Puerto Rico
conducted by the Companies and the Subsidiaries.
"Domestic Returns" shall have the meaning set forth in
Section 7.8(b) hereof.
"Early Financing" shall mean the issuance and sale by Buyer or
an Affiliate of Buyer of subordinated debt securities for gross proceeds of at
least $350,000,000 which shall be consummated pursuant to Section 5.8(b) hereof.
"Early Financing Adjustment" shall have the meaning set forth
in Section 5.8(b) hereof.
"Election Companies" shall have the meaning set forth
in Section 7.2(a) hereof.
"Environmental Law" shall have the meaning set forth
in Section 3.16(a)(ii) hereof.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
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<PAGE> 14
"ERISA Affiliate" shall have the meaning set forth in
Section 6.2(d) hereof.
"Expected Date" shall have the meaning set forth in
the definition of "Closing Date."
"Expiration Date" shall have the meaning set forth in
Section 10.1(a) hereof.
"FATA" shall have the meaning set forth in Section 8.2
hereof.
"Financial Statements" shall have the meaning set
forth in Section 3.3(a) hereof.
"Financing" shall have the meaning set forth in Sec-
tion 5.8 hereof.
"Financing Commitments" shall have the meaning set
forth in Section 4.4 hereof.
"FIRPTA affidavit" shall have the meaning set forth in
Section 8.6 hereof.
"Foreign Bowling Centers Business" shall mean the business of
operating owned or leased bowling centers (including the sale therein of food
and beverages) throughout the world, excluding the United States of America,
Canada and Puerto Rico, conducted by the Companies and the Subsidiaries.
"Foreign Bowling Centers Companies" shall mean AMF Bowling
Centers (Aust.) International, Inc., a Virginia corporation, AMF Catering
Services Pty. Ltd., an Australian company, AMF Bowling Centers (Hong Kong)
International, Inc., a Virginia corporation, AMF Bowling Centers International
Inc., a Virginia corporation, AMF BCO-UK One, Inc., a Virginia corporation, AMF
BCO-UK Two, Inc., a Virginia corporation, AMF BCO-France One, Inc., a Virginia
corporation, AMF BCO-France Two, Inc., a Virginia corporation, AMF BCO-China
Inc., a Virginia corporation, AMF Bowling Centers China, Inc., a Virginia
corporation, AMF Bowling Mexico Holdings, Inc., a Delaware corporation and
Boliches AMF Inc., a Virginia corporation.
"Foreign Returns" shall have the meaning set forth in
Section 7.8(c) hereof.
"Fund" shall have the meaning set forth in Section 4.4
hereof.
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<PAGE> 15
"Governmental Authority" shall have the meaning set
forth in Section 3.1(b) hereof.
"GS Entities" shall have the meaning set forth in
Section 4.4 hereof.
"Hazardous Substance" shall have the meaning set forth
in Section 3.16(a)(i) hereof.
"Highly Confident Letter" shall have the meaning set forth in
Section 4.4 hereof.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"Income Tax Returns" shall have the meaning set forth in
Section 7.8(d) hereof.
"Income Taxes" shall have the meaning set forth in
Section 7.8(e) hereof.
"Initial Purchase Price" shall mean $1,325,000,000 reduced
dollar for dollar by the sum of (i) the principal amount of, and the accrued
interest on, mortgages, loans or indebtedness agreed by Buyer to remain
outstanding after the Closing or as set forth on Schedule 5.13 (except as
expressly set forth therein) and (ii) the aggregate purchase price paid by Buyer
or an Affiliate of Buyer pursuant to the Related Land Sale Agreement and
pursuant to the Spanish and Swiss Bowling Centers Agreements, representing the
aggregate consideration to be paid by Buyer pursuant hereto, before giving
effect to any adjustments pursuant to Section 2.3.
"Intellectual Property" shall have the meaning set
forth in Section 3.8 hereof.
"Intercompany Receivables" and "Intercompany Payables" shall
mean all accounts receivable, notes receivable, accounts payable, notes payable,
advances and loans (as applicable) between any Stockholder or any Continuing
Affiliate, on the one hand, and any of the Companies or Subsidiaries, on the
other hand.
"IRS" shall have the meaning set forth in Section
7.8(f) hereof.
"King Louie" shall have the meaning set forth in the
recitals hereto.
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"Leased Real Estate" shall have the meaning set forth in
Section 3.4(b) hereof.
"Leases" shall have the meaning set forth in Section
3.4(b)(i) hereof.
"License Agreements" shall mean the trademark license
agreements, in the forms set forth as Exhibit 1.1(c) hereto, to be entered into
by Bowling and each of Ben Hogan Company, AMF Reece, and AMF Machinery Systems,
Inc. on the Closing Date, pursuant to which Bowling will grant licenses to such
entities with respect to certain LICENSED MARKS (as defined therein).
"Licensed Intellectual Property" shall have the meaning set
forth in Section 3.8 hereof.
"Licenses" shall have the meaning set forth in Section
3.9(a) hereof.
"Liens" shall have the meaning set forth in Section
3.4(a) hereof.
"Manufacturing Business" shall mean the business of designing,
manufacturing, assembling, selling and/or distributing: bowling center
equipment, including automatic pinspotters, automatic scoring equipment, bowling
pins, lanes, ball returns and certain spare and replacement parts, allied
products such as bowling balls, bags and shoes; pool and billiard tables and
cues; and products related to the foregoing and certain other products currently
conducted by the Companies and the Subsidiaries.
"Multiemployer Plan" shall have the meaning set forth
in Section 6.2(d) hereof.
"Multiple Employer Plan" shall have the meaning set forth in
Section 6.2(e) hereof.
"Neutral Auditors" shall have the meaning set forth in
Section 2.3(d) hereof.
"Non-Company Participant" shall have the meaning set
forth in Section 6.5 hereof.
"Non-U.S. Company Employee Benefit Plans" shall have
the meaning set forth in Section 6.1(a) hereof.
"Ohyoung Litigation" shall mean the Actions filed by Ohyoung
Company, Ltd. against Bowling, Bowling Centers and AMF Bowling Companies Inc. in
the Supreme Court of the State of New
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York on January 18, 1996 and by Ohyoung Company, Ltd. against Bowling in the
Seoul District Court, Seoul, South Korea in November 1995, as the same may be
amended or supplemented from time to time, and any other Actions arising out of
or related to the facts or claims described in the foregoing Actions.
"Oregon Beverage" shall have the meaning set forth in
the recitals hereto.
"Other Taxes" shall have the meaning set forth in
Section 7.8(g) hereof.
"Owned Properties" shall have the meaning set forth in
Section 3.4(a) hereof.
"Patent" shall have the meaning set forth in Section
3.8 hereof.
"Permitted Liens" shall have the meaning set forth in
Section 3.4(a) hereof.
"Person" shall mean any individual, firm, corporation,
partnership or other entity (including Governmental Authorities), and shall
include any successor (by merger or otherwise) of such entity.
"Price Waterhouse" shall have the meaning set forth in
Section 2.3(a) hereof.
"Product Liability" shall have the meaning set forth
in Section 3.18 hereof.
"Profit Sharing Plan" shall have the meaning set forth in
Section 6.5 hereof.
"Purchased Assets" shall have the meaning set forth in
the recitals hereof.
"RCRA Hazardous Waste" shall have the meaning set forth in
Section 3.16(a)(iv) hereof.
"Readily Ascertainable Market Value" shall have the meaning
set forth in Section 10.7(a).
"Real Property" shall have the meaning set forth in
Section 3.16(a)(iii) hereof.
"Reduction Date" shall have the meaning set forth in
Section 10.7(a) hereof.
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"Reece Easement Agreement" shall mean the easement agreement
in the form attached as Exhibit 1.1(e) between AMF Reece and Bowling providing
for the sharing of certain facilities and equipment located on the Owned
Property of Bowling located in Richmond, Virginia and certain easements and
rights for the benefit of AMF Reece with respect to such Owned Property and for
the benefit of Bowling with respect to the real property of AMF Reece contiguous
to such Owned Property.
"Reece Indemnity" shall mean the indemnity agreement in the
form attached as Exhibit 1.1(f) between AMF Reece and Buyer pursuant to which
AMF Reece agrees to indemnify Buyer and its Affiliates with respect to certain
liabilities and obligations.
"Related Land" shall mean the parcels of real property
specified in Schedule 5.4 to be transferred at Closing to Buyer or its
Affiliates pursuant to the Related Land Sale Agreement.
"Related Land Sale Agreement" shall mean the sale agreement in
the form attached as Exhibit 1.1(g) between WBB and Buyer or an Affiliate of
Buyer providing for the sale to Buyer or its Affiliates on the Closing Date of
the Related Land.
"Resolution Period" shall have the meaning set forth
in Section 2.3(c) hereof.
"Retained Entities" shall mean AMF Bowling, SA, a corporation
organized under the laws of Spain, and AMF Bowling Centers II, Inc., a Delaware
corporation.
"Returns" shall have the meaning set forth in Section
7.8(h) hereof.
"Rolling Road Agreement" shall mean the management agreement
dated as of the date hereof between Fair Lanes, Inc., a Maryland corporation,
and Bowling Centers providing for the management by Bowling Centers of the
bowling center owned by Fair Lanes, Inc. located in Baltimore, Maryland.
"Section 338 Elections" shall have the meaning set forth in
Section 7.8(i) hereof.
"Section 338 Forms" shall have the meaning set forth in
Section 7.8(j) hereof.
"Section 338(g) Election" shall have the meaning set forth in
Section 7.8(k) hereof.
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"Section 338(h)(10) Election" shall have the meaning set forth
in Section 7.8(l) hereof.
"Section 1374 Tax" shall have the meaning set forth in Section
7.4(a)(i) hereof.
"Seller Financing Adjustment" shall have the meaning
set forth in Section 5.8(c) hereof.
"Seller Financing Option" shall have the meaning set forth in
Section 5.8(c) hereof.
"Seller Indemnified Parties" shall have the meaning set forth
in Section 10.2 hereof.
"Sellers" shall have the meaning set forth in the
preamble hereof.
"Sellers Closing Notice" shall have the meaning set
forth in the definition of "Closing Date."
"Sellers Contribution" shall have the meaning set
forth in Section 5.8(b) hereof.
"Sellers' Insurance Policies" shall have the meaning set forth
in Section 5.14(a) hereof.
"Sellers' knowledge" or "knowledge of Sellers" shall mean the
knowledge of those individuals who as of the date hereof or at anytime
thereafter are officers of CCA Industries, Inc., Bowling and Bowling Centers.
"Senior Notes" shall have the meaning set forth in
Section 5.8(c)(i) hereof.
"Shares" shall mean the shares of common stock and other
equity interests of the Companies to be purchased and sold pursuant to Section
2.1.
"Spanish and Swiss Bowling Centers Agreements" shall mean the
asset purchase agreements and related documentation, in the forms set forth as
Exhibit 1.1(a) and (b) hereto, to be entered into by Buyer or a subsidiary of
Buyer and AMF Bowling, SA and Buyer or a subsidiary of Buyer and AMF Bowling
Centers II, Inc. on the date of this Agreement.
"Stock and Asset Purchases" shall have the meaning set
forth in the recitals hereof.
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"Stock Purchases" shall have the meaning set forth in
the recitals hereof.
"Stockholders" shall have the meaning set forth in the
preamble hereof.
"Subchapter S Indemnity Period" shall have the meaning set
forth in Section 10.7(a) hereof.
"Subsidiaries" shall mean Inmuebles Obispado, S.A., a Mexican
corporation, Inmuebles Minerva, S.A., a Mexican corporation, Boliches Mexicanos,
S.A., a Mexican corporation, Promotora de Boliches, S.A. de C.V., a Mexican
corporation, Operadora Mexicana de Boliches, S.A., a Mexican corporation,
Boliches AMF y Compania, SNC, a Mexican corporation, AMF Bowling, an unlimited
liability company formed under the laws of the United Kingdom, Worthing North
Properties Limited, a United Kingdom private company, AMF Bowling France SNC, a
general partnership formed under the laws of France, AMF Bowling de Paris SNC, a
general partnership formed under the laws of France, AMF Bowling de Lyon le Part
Dieu SNC, a general partnership formed under the laws of France, AMF Bowling
Centers (China) Company, a general partnership formed under the laws of Hong
Kong, and AMF Garden Hotel Bowling Center Company, a cooperative joint venture
formed under the laws of the People's Republic of China, and "Subsidiary" shall
mean any of the foregoing.
"Successor Plan" shall have the meaning set forth in
Section 6.5 hereof.
"Tax Audit" shall have the meaning set forth in Section 7.6(d)
hereof.
"Tax Benefit" means the tax effect of any item of loss,
deduction or credit or any other item (including any increase in tax basis)
which decreases Taxes paid or payable including any interest with respect
thereto or interest that would have been payable but for such item.
"Tax Law" shall have the meaning set forth in Section
7.8(m) hereof.
"Taxes" shall have the meaning set forth in Section
7.8(n) hereof.
"Taxing Authority" shall have the meaning set forth in
Section 7.8(o) hereof.
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"Termination Date" shall have the meaning set forth in
Section 10.7(a) hereof.
"Tier 1 Allocation" shall have the meaning set forth in
Section 7.2(c) hereof.
"Tier 2 Allocation" shall have the meaning set forth in
Section 7.2(c) hereof.
"Tolling Event" shall have the meaning set forth in
Section 10.7(a).
"Total Purchase Price" shall mean the aggregate consideration
to be paid by Buyer pursuant hereto, after adjusting the Initial Purchase Price
to give effect to any adjustments pursuant to Section 2.3.
"Trademarks" shall have the meaning set forth in
Section 3.8(a) hereof.
"Trust Indemnities" shall mean the trust beneficiary indemnity
agreements, in the form set forth in Exhibit 1.1(h), entered into on the date of
this Agreement by Buyer and/or one or more of its direct or indirect
subsidiaries and the beneficiaries under the Trusts.
"Trustees" shall have the meaning set forth in the
definition of Trusts.
"Trusts" shall mean the Trusts which are parties
hereto with L.F. Loree, III and Norwood H. Davis, Jr., as successor
co-trustees (the "Trustees") U/A Dated 11/12/86 FBO William H. Goodwin, III,
Molly S. Goodwin, Matthew S. Goodwin, Sarah C. Goodwin and Peter O. Goodwin.
"U.S. GAAP" shall have the meaning set forth in
Section 3.3(b) hereof.
"WBB" shall mean WBB Partners, a Virginia general
partnership.
"Wilson Road Agreement" shall mean the management agreement
dated as of the date hereof between CLC and Bowling Centers providing for the
management by Bowling Centers of the bowling center owned by CLC located in
Humble, Texas.
"Withdrawal Liability" shall have the meaning set
forth in Section 6.2(d) hereof.
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"Working Capital," as of a specified date, shall mean the
excess of: (i) current assets, which are comprised of cash and cash equivalents,
accounts and notes receivable (net), inventory, prepaid expenses and other
assets which are properly treated as current assets in accordance with U.S.
GAAP; over (ii) current liabilities, which are comprised of accounts payable,
accrued expenses and deposits, accrued interest, and taxes payable, and all
other liabilities which are properly treated as current liabilities in
accordance with U.S. GAAP, payments to be made to Philip W. Knisely under the
consulting agreement made as of January 31, 1995 with Bowling, and the total
amount of noncompetes (whether reflected as long-term or short-term
liabilities), in each case, as reflected on the combined balance sheet of the
Companies as of such date in accordance with U.S. GAAP (but in any case
including all of the line items listed above whether or not required in
accordance with U.S. GAAP) consistently applied; provided that Working Capital
shall not include any liabilities under the Companies' Stock Performance Plans,
any Intercompany Receivables or any Intercompany Payables or any indebtedness
that results in a reduction in the Initial Purchase Price pursuant to the
definition thereof. The total amount of the noncompetes will be the same on the
Closing Date Balance Sheet as the amount thereof on the Balance Sheet, except to
the extent reduced by actual cash payments after October 31, 1995 to
unaffiliated third parties with respect to the underlying noncompetes.
ARTICLE II
Sale of Stock and Assets; Closing
Section 2.1. Purchase and Sale. On the basis of the
representations, warranties, covenants and agreements and subject to the
satisfaction or waiver (to the extent permitted) of the applicable conditions
set forth herein and in the Spanish and Swiss Bowling Centers Agreements, at the
Closing the Sellers will sell and Buyer and/or direct or indirect subsidiaries
of Buyer will purchase the Purchased Assets and the following shares owned by
the Stockholders: 950.66886883 shares of common stock of Bowling; 9,485.1 shares
of common stock of Bowling Centers; 18,895.1919193838, 94.851, 948.51 and 94.851
shares of common stock of Bush River, Oregon Beverage, AMF Canada, and King
Louie, respectively; and the number of shares or other equity interests of each
of the Foreign Bowling Centers Companies which is set forth in Schedule 2.1,
which constitute, and will constitute as of the Closing, 100% of the issued and
outstanding shares of capital stock or other equity interests of each of the
Companies (other than the Retained Entities). In
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payment for such Shares and the Purchased Assets and the execution of the
Ancillary Agreements, simultaneously with the delivery by the Stockholders of
certificates for such Shares, with all appropriate stock powers and requisite
tax stamps attached, properly signed, in form suitable for the transfer of such
Shares to Buyer, and the deliveries contemplated by the Spanish and Swiss
Bowling Centers Agreements, and subject to the satisfaction or waiver (to the
extent permitted) of the applicable conditions set forth herein and therein,
Buyer will wire transfer the Initial Purchase Price (along with the amounts
referred to in clause (ii) of the definition thereof pursuant to the agreements
referred to therein) in immediately available funds (or, if Buyer elects the
Seller Financing Option, it will wire transfer the portion of the Initial
Purchase Price to be paid in immediately available funds, along with the amounts
referred to in clause (ii) of the definition thereof pursuant to the agreements
referred to therein, and deliver the Buyer Notes) to the account or accounts
specified by the Designated Representative, including in each case to such
accounts and in such amounts necessary to repay indebtedness as contemplated by
Section 5.13(b).
Section 2.2. Time and Place of Closing. Subject to
satisfaction or waiver of the conditions to Closing hereto, the Closing shall
take place on the Closing Date at 10:00 A.M., New York City time, at the offices
of Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York, New York and
shall be deemed effective as of the opening of business on the Closing Date.
Section 2.3. Purchase Price Adjustment. (a) As soon as
practicable, but in no event later than 60 days following the Closing Date,
Sellers shall prepare a combined special purpose balance sheet of the Companies
as of the Closing Date (including the notes thereto, the "Closing Date Balance
Sheet"). The Closing Date Balance Sheet shall be prepared in accordance with the
Applicable Accounting Principles applied on a basis consistent with that used in
the preparation of the Balance Sheet. The Closing Date Balance Sheet shall
reflect all of the assets and liabilities being transferred to the Buyer and its
subsidiaries pursuant to this Agreement, the Spanish and Swiss Bowling Centers
Agreements and the Related Land Sales Agreement and shall exclude all assets and
liabilities of the Companies (including the Retained Entities) that are not
actually being transferred to Buyer and its subsidiaries pursuant to this
Agreement and such other agreements. The Closing Date Balance Sheet shall be
accompanied by a report by Price Waterhouse LLP ("Price Waterhouse"), the
Companies' independent public accountants prior to the Closing, to the effect
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that the Closing Date Balance Sheet has been prepared in accordance with the
Applicable Accounting Principles, except as otherwise contemplated by the
definition of "Working Capital".
(b) During the preparation of the Closing Date Balance Sheet
and the period of any dispute within the contemplation of this Section 2.3,
Buyer shall cause the Companies to (i) provide Sellers and Sellers' authorized
representatives, upon reasonable notice, full access during normal business
hours to the books, records, facilities and employees of the Companies to the
extent required for the preparation of the Closing Date Balance Sheet; provided,
however, that such access shall not unreasonably disrupt the personnel and
operations of the Companies and (ii) cooperate with Sellers and Sellers'
authorized representatives, including the provision on a timely basis of all
information reasonably requested by Sellers or Sellers' authorized
representatives and necessary or useful in preparing the Closing Date Balance
Sheet.
(c) Sellers shall deliver a copy of the Closing Date Balance
Sheet to Buyer promptly after it has been prepared. After receipt of the Closing
Date Balance Sheet, Buyer shall have 60 days to review the Closing Date Balance
Sheet, together with the workpapers used in the preparation thereof. Buyer and
its authorized representatives shall have full access during normal business
hours to all relevant books and records and employees of the Sellers and the
Continuing Affiliates to the extent required to complete their review of the
Closing Date Balance Sheet; provided, however, that such access shall not
unreasonably disrupt the personnel and operations of the Sellers and the
Continuing Affiliates, and Sellers will use reasonable efforts to cause Price
Waterhouse to provide Buyer and its accountants full access to the workpapers of
Price Waterhouse in connection with the preparation and audit of the Closing
Date Balance Sheet. Unless Buyer delivers written notice to the Designated
Representative on or prior to the 60th day after Buyer's receipt of the Closing
Date Balance Sheet specifying in reasonable detail all disputed items and the
basis therefor, Buyer shall be deemed to have accepted and agreed to the Closing
Date Balance Sheet. If Buyer so notifies Sellers of its objection to the Closing
Date Balance Sheet, Buyer and Sellers shall, within 30 days following such
notice (the "Resolution Period"), attempt to resolve their differences and any
resolution by them as to any disputed amounts shall be final, binding and
conclusive.
(d) If at the conclusion of the Resolution Period amounts
shall remain in dispute, then all amounts remaining in dispute shall be
submitted to a firm of nationally recognized
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independent public accountants (the "Neutral Auditors") selected by Sellers and
Buyer within 10 days after the expiration of the Resolution Period. If Sellers
and Buyer are unable to agree on the Neutral Auditors, then Buyer and Sellers
shall each have the right to request the American Arbitration Association to
appoint the Neutral Auditors who shall not have had a material business
relationship with Sellers, Buyer or any of their respective Affiliates or any of
the Continuing Affiliates within the past two years. The parties hereto agree to
execute, if requested by the Neutral Auditors, a reasonable engagement letter.
All fees and expenses relating to the work, if any, to be performed by the
Neutral Auditors shall be borne equally by Sellers and Buyer. The Neutral
Auditors shall act as an arbitrator to determine only those issues still in
dispute. The Neutral Auditors' determination shall be made within 30 days of
their selection, shall be set forth in a written statement delivered to Sellers
and Buyer and shall be final, binding and conclusive. The term "Adjusted Closing
Date Balance Sheet", as used herein, shall mean the definitive Closing Date
Balance Sheet agreed or deemed to have been agreed to by Buyer and Sellers in
accordance with Section 2.3(c) or the definitive Closing Date Balance Sheet
resulting from the determinations made by the Neutral Auditors in accordance
with this Section 2.3(d) (in addition to those items theretofore agreed to by
Sellers and Buyer).
(e) The Initial Purchase Price shall be (i) increased dollar
for dollar by the amount by which Working Capital shown on the Adjusted Closing
Date Balance Sheet exceeds $33,675,000 or (ii) decreased dollar for dollar by
the amount by which Working Capital shown on the Adjusted Closing Date Balance
Sheet is less than $33,675,000 (provided that, if the Early Financing Adjustment
or the Seller Financing Adjustment shall apply, in making the calculation
provided for in this sentence, there shall be substituted for $33,675,000 the
remainder obtained by subtracting the Early Financing Adjustment or the Seller
Financing Adjustment, if and to the extent applicable, from $33,675,000). The
Initial Purchase Price shall also be (i) increased dollar for dollar by the
amount by which $5 million exceeds the principal amount of the outstanding
obligations as of the Closing Date (giving effect to the consummation of the
Stock and Asset Purchases) under the Companies' Stock Performance Plans or (ii)
decreased dollar for dollar by the amount by which the principal amount of such
outstanding obligations as of the Closing Date (giving effect to consummation of
the Stock and Asset Purchases) exceeds $5 million. Any adjustments to the
Initial Purchase Price which are made pursuant to this Section 2.3(e) shall bear
interest at the London Interbank Offered Rates for three month periods as
reported in The Wall Street Journal (Eastern Edition) from time to time
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plus a margin of 275 basis points from (and including) the Closing Date to (and
including) the date immediately preceding the date of such payment. Any
adjustments to the Initial Purchase Price made pursuant to this Section 2.3(e)
shall be paid by wire transfer in immediately available funds to an account
specified by the party to whom such payment is owed within five business days
after the Adjusted Closing Date Balance Sheet is agreed or deemed to have been
agreed to by Buyer and Sellers or the written statement of the Neutral Auditors
setting forth their determination regarding any remaining disputed items is
delivered to Sellers and Buyer.
ARTICLE III
Representations and Warranties of Sellers
Sellers hereby represent and warrant to Buyer as follows:
Section 3.1. Incorporation; Authorization; etc. (a) Each of
the Companies and each Subsidiary is a corporation or other entity (as listed on
Schedule 3.1(a)) duly organized, validly existing and, to the extent applicable,
in good standing under the laws of the jurisdiction of its incorporation. Each
of the Companies and each Subsidiary has full corporate or other power and
authority to own its properties and assets and to carry on its business as it is
now being conducted and is in good standing and is duly qualified to transact
business in each jurisdiction in which the nature of property owned or leased by
it or the conduct of its business requires it to be so qualified, except where
the failure to be in good standing or to be duly qualified to transact business,
would not, individually or in the aggregate, have or reasonably be expected to
have a material adverse effect on the business, assets, liabilities, prospects,
condition (financial or otherwise) or results of operations (collectively, the
"Business Condition") of either the Manufacturing Business or the Bowling
Centers Business. Each jurisdiction in which any of the Companies or
Subsidiaries is qualified to do business is set forth in Schedule 3.1(a). Each
of the Sellers which is a corporation is duly organized, validly existing and in
good standing under the laws of the state of its incorporation and has full
corporate power and authority to own the Shares and to sell the Shares to Buyer
pursuant to this Agreement. Each of the Sellers which is a trust is duly formed,
validly existing and in good standing under the laws of the state of its
formation and has full power and authority to own the Shares and to sell the
Shares to Buyer pursuant to this Agreement. Each of the Retained Entities has
full corporate power and authority to own the Purchased Assets owned by it and
to sell or lease the Purchased Assets to Buyer
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or a Buyer Subsidiary pursuant to the Spanish and Swiss Bowling Centers
Agreements.
(b) Each of the Sellers and the Ancillary Parties which is a
corporation has full corporate power to execute and deliver this Agreement and
each of the Ancillary Agreements to which it is a party, to perform its
respective obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. Each of the Sellers and the
Ancillary Parties which is a natural person has all power and authority to enter
into this Agreement and each of the Ancillary Agreements to which it is a party,
to perform its respective obligations hereunder and thereunder, and to
consummate the transactions contemplated hereby and thereby. Each of the Sellers
which is a trust has full power to execute and deliver this Agreement and each
of the Ancillary Agreements to which it is a party, to perform its respective
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and each of the Ancillary Agreements, the performance of its obligations
hereunder and the consummation of the transactions contemplated hereby and
thereby by Sellers and the Ancillary Parties have been duly and validly
authorized: with respect to those Sellers and the Ancillary Parties which are
corporations, by all necessary corporate proceedings on the part of such party,
its Board of Directors and its stockholders; and with respect to those Sellers
which are trusts, by all necessary proceedings on the part of the trustees of
such Seller and, if required, the beneficiaries thereof. The execution, delivery
and performance of this Agreement and each of the Ancillary Agreements by each
Seller and Ancillary Party will not (i) violate or conflict with any provision
of the certificate of incorporation or By-laws of or any other organizational or
governing instrument of any Seller, Ancillary Party, the Companies or the
Subsidiaries, (ii) except as disclosed in Schedule 3.1(b), conflict with,
violate or constitute a default under any provision of, or be an event that is
(or with the giving of notice or passage of time or both will result in) a
violation of or default under, or result in the acceleration of or entitle any
party to accelerate (whether after the giving of notice or lapse of time or
both) any obligation or right under, or result in the imposition of any lien
upon or the creation of a security interest in any of the Shares, the Purchased
Assets or any of the assets or properties of any of the Companies or of any of
the Subsidiaries pursuant to, or require a consent or create a penalty or
increase any Company's or Subsidiary's payment or performance obligations under,
any mortgage, lien, lease, instrument, order, arbitration award, judgment or
decree, or any contract, agreement, license or permit, to which any Seller,
Ancillary Party, Company, Subsidiary or Continuing
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Affiliate is a party or by which any of them or any of their property is bound,
or (iii) violate or conflict with, or result in the imposition of any lien
(other than liens arising from any actions taken or arrangements made by Buyer)
upon any of the Shares, the Purchased Assets or any of the assets or properties
of any Company or any Subsidiary pursuant to, any provision of law, regulation,
rule, writ, injunction, decree, statute, order, judgment or ruling of any
federal, state, local, foreign, supernational or supranational court or tribunal
(including any court or tribunal dealing with labor matters), governmental,
regulatory or administrative agency, department, bureau, authority or commission
or arbitral panel ("Governmental Authority") or any other material restriction
of any kind or character to which any Seller, Ancillary Party, Company,
Subsidiary or Continuing Affiliate is or may be subject or by which any of them
or any of their property is or may be bound, that, in the case of either of
clauses (ii) and (iii), could, individually or in the aggregate, have a material
adverse effect on the Business Condition of the Manufacturing Business or the
Bowling Centers Business or prevent any of the Stock and Asset Purchases or
otherwise impair the performance of the other obligations of the Sellers or the
Ancillary Parties under this Agreement or any of the Ancillary Agreements. This
Agreement has been, and on the Closing Date each of the Ancillary Agreements to
which it is a party will be, duly executed and delivered by each of the Sellers
and the Ancillary Parties and, assuming the due execution hereof and thereof by
Buyer, this Agreement constitutes, and on the Closing Date each of the Ancillary
Agreements to which any Seller or Ancillary Party is a party will constitute,
the legal, valid and binding obligations of each of the Sellers and Ancillary
Parties, each enforceable against such Seller or such Ancillary Party in
accordance with its respective terms.
(c) Upon consummation of the Stock Purchases at the Closing,
as contemplated by this Agreement, the Stockholders will deliver to Buyer good
title to the Shares and the Purchased Assets free and clear of any liens,
claims, charges, security interests, options or other legal or equitable
encumbrances or restrictions (except those imposed by any action taken or
arrangement made by Buyer).
(d) The Sellers have delivered or caused to be delivered to
Buyer complete and correct copies of the trust instruments establishing and
governing each Seller which is a trust, the organizational instruments of each
Seller and each Company or Subsidiary which is neither a corporation, a trust
nor an individual, the Certificates of Incorporation and By-Laws (or similar
instruments) of each Seller and each Company or Subsidiary which is a
corporation, and has delivered or
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caused to be delivered to Buyer the corporate minute books and other books and
records of the Companies and the Subsidiaries. The minutes of the Companies
(other than the Retained Entities) and the Subsidiaries and the books and
records delivered to Buyer are true and correct in all material respects. True
and correct lists of the directors, officers, partners or other governing or
similarly empowered persons or organizations of the Companies (other than the
Retained Entities) and the Subsidiaries have been furnished to Buyer.
Section 3.2. Capitalization; Structure. (a) All of the
outstanding shares of the Companies are owned beneficially and of record by the
Stockholders. The authorized capital stock of each of the Companies and the
amount of such stock which is outstanding is as set forth in Schedule 3.2(a).
All of the outstanding shares of capital stock of the Companies, as listed on
Schedule 3.2(a), are validly issued, fully paid and nonassessable and owned by
the Stockholders in the respective amounts set forth in Schedule 3.2(a). The
authorized capital stock or other equity interests of the Subsidiaries and the
amount of such stock or other equity interests which is outstanding is as set
forth in Schedule 3.2(a). All of the outstanding shares of capital stock or
other equity interests of the Subsidiaries, as listed on Schedule 3.2(a), are
validly issued, fully paid and nonassessable and, except as listed on Schedule
3.2(a), owned by the Companies or other Subsidiaries, in the amounts set forth
on Schedule 3.2(a). Neither the Shares nor the shares of outstanding common
stock or other equity interests of any Subsidiary have been issued in violation
of, or are subject to, any preemptive rights. Except for the liens set forth on
Schedule 3.2(a) which will be released prior to the Closing, the shares of
capital stock or other equity interests of the Subsidiaries and the Shares are
owned in each case free and clear of any liens, claims, charges, security
interests, options or other legal or equitable encumbrances or restrictions.
There are no outstanding options, warrants, subscriptions or other rights of any
kind to acquire, or obligations to issue, shares of capital stock of any class
of, or other equity interests in, any Company or any Subsidiary or any
securities convertible into or exchangeable or exercisable for any shares of
capital stock of any class of, or other equity interests in, any Company or any
Subsidiary.
(b) Neither any Company nor any Subsidiary directly or
indirectly owns any capital stock of or other equity interests in any
corporation, partnership or other entity or other Person except for the
ownership of the outstanding shares or other equity interests of the
Subsidiaries, as set forth in Schedule 3.2(a).
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(c) Schedule 3.2(c) identifies the officers and directors of
the Companies and the Subsidiaries, which list shall be updated to reflect any
changes as of a date not later than ten business days prior to the Closing Date.
Section 3.3. Financial Statements. (a) Attached hereto as
Schedule 3.3 are true and complete copies of the combined financial statements
of the Companies, including combined balance sheets as of October 31, 1995,
December 31, 1994 and December 31, 1993, the combined statements of income and
combined statements of cash flows for the ten months ended October 31, 1995
and the fiscal-year periods ended December 31, 1994 and December 31, 1993, and
the combined statements of income for the fiscal-year periods ended December 31,
1992 and December 31, 1991 (such financial statements as of October 31, 1995 and
December 31, 1994 and for the ten months ended October 31, 1995 and the years
ended December 31, 1994 and December 31, 1993 being audited and accompanied by
the unqualified opinion of Price Waterhouse and as of December 31, 1993, 1992
and 1991 and for the periods ended December 31, 1992 and 1991 being unaudited
(the "Financial Statements," which term shall include the financial statements
referred to in the definition of "Closing Date" from and after the time of
delivery thereof). The audited combined balance sheet as of October 31, 1995 is
referred to in this Agreement as the "Balance Sheet."
(b) The Financial Statements present fairly the combined
financial position and results of operations and cash flows of the Companies for
the respective periods or as of the respective dates set forth therein, in each
case in accordance with United States generally accepted accounting principles
("U.S. GAAP") consistently applied (except as otherwise indicated therein or in
Schedule 3.3 (such accounting principles, with such exceptions thereto, are
referred to herein as the "Applicable Accounting Principles")). The Financial
Statements have been prepared from and in accordance with the books and records
of the Companies and the Subsidiaries.
Section 3.4. Real Properties. (a) Schedule 3.4(a) sets forth a
list of all real property owned in fee by the Companies or the Subsidiaries
(individually, an "Owned Property" and, collectively with the Related Land, the
"Owned Properties"). Except as set forth on Schedule 3.4(a), Schedule 3.4(b) or
Schedule 3.15, no Seller or Continuing Affiliate owns or has any interest in any
of the Owned Property or Leased Real Estate or in any other real property used
in conducting the Manufacturing Business or the Bowling Centers Business. A
Company, a Subsidiary or WBB has good fee title to each Owned Property,
including the buildings, structures and other improvements located thereon, in
each case free and clear of all
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mortgages, liens, security interests, easements, restrictive covenants,
rights-of-way, leases, purchase agreements, options and other encumbrances and
agreements ("Liens"), except (i) the Liens described in Schedule 3.4(a) hereto;
(ii) with respect to Liens not described or referred to on Schedule 3.4(a), (A)
platting, subdivision, zoning, building and other similar legal requirements,
(B) easements, restrictive covenants, rights-of-way, non-material leases and
leases identified as such on Schedule 3.13, encroachments and other encumbrances
and agreements (other than contracts or options pursuant to which any Owned
Property is or may be required to be sold), whether or not of record, and (C)
reservations of coal, oil, gas, minerals and mineral interests, whether or not
of record, none of which items set forth in this clause (ii) individually or in
the aggregate, could have a material adverse effect on the use of such Owned
Property as now used in the Manufacturing Business or the Bowling Centers
Business, on the value of such Owned Property or on the Business Condition of
either the Manufacturing Business or the Bowling Centers Business; (iii) with
respect to Liens not described or referred to on Schedule 3.4(a), mechanics',
materialmen's, carriers', workmen's, warehousemen's, repairmen's, landlords' or
other like liens securing obligations that are not delinquent or, if delinquent,
that are being contested in good faith and in respect of which the Companies
have created adequate reserves; and (iv) with respect to Liens not described or
referred to on Schedule 3.4(a), liens for Taxes and other governmental charges,
assessments or fees which (A) are not yet due and payable or which may be paid
without penalty or (B) are being contested in good faith through appropriate
procedures and in respect of which the Companies have created adequate reserves
(the items described in clauses (i) through (iv) are collectively referred to
herein as "Permitted Liens"). Sellers shall have no obligation to discharge any
Liens that are not Permitted Liens, except as set forth in Section 5.13. The
foregoing notwithstanding, with respect to matters described or referred to in
Schedule 3.4(a), the term "Permitted Liens" shall not include (1) Liens for
delinquent Taxes (unless and to the extent reserved or accrued on the Balance
Sheet and reflected in the calculation of Working Capital), (2) (a) judgments,
(b) attachments, (c) notices of pendency or (d) other notices involving
litigation against a Company or a Subsidiary, (3) mortgages, deeds of trust,
vendors' liens, contracts for deed or any documents relating thereto, including,
without limitation, owners' waivers and consents for the benefit of any lender
(except to the extent Buyer agrees to assume such Liens as identified on
Schedule 5.13), (4) Uniform Commercial Code financing statements or other
evidence of any security interest (other than with respect to leases or to Liens
securing indebtedness on Schedule 5.13), (5) leases and other agreements which
have expired but
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remain of record, (6) laws, ordinances and regulations of any Governmental
Authority which have been violated and which gives rise to a misrepresentation
by Sellers under the provisions of this Agreement, (7) restrictive covenants
which have been breached and the breach of which gives rise to a
misrepresentation by Sellers under this Agreement, (8) encroachments by
structures located on an Owned Property onto real property owned by third
parties which have a material adverse effect on the use or value of such Owned
Property, (9) leases of space to third parties (except such leases disclosed on
Schedules 3.4(a) or 3.13), (10) the existence of record title in any person or
entity other than Bowling Centers (with respect to the Bowling Centers Business)
or Bowling (with respect to the Manufacturing Business), (11) general exceptions
for rights of persons in possession, existing tenancies and liens for work
performed at or materials supplied to an Owned Property, and such other general
exceptions to title which would be omitted customarily in the sale of commercial
real property upon presentation by Sellers of an affidavit of title in the form
customarily employed in the jurisdiction in which such Owned Property is
located, (12) property descriptions that are erroneous in any material respect,
(13) purchase options, or (14) any other matter or matters which individually or
in the aggregate would have a material adverse effect on the Manufacturing
Business or the Bowling Centers Business, in each case taken as a whole. Except
as disclosed or referred to on Schedule 3.4(a), there are no eminent domain
(which term, as used herein, shall include other compulsory acquisitions or
takings by Governmental Authorities) proceedings pending or, to the knowledge of
Sellers, threatened against any Owned Property or any material portion thereof
which proceedings (if resulting in a taking of any Owned Property by a
Governmental Authority) could have a material adverse effect on the use or value
of such Owned Property as now used in the Manufacturing Business or the Bowling
Centers Business, or on the Business Condition of either the Manufacturing
Business or the Bowling Centers Business. Sellers have delivered or caused to be
delivered to Buyer, with respect to the Owned Properties, true and correct
copies of any title insurance commitments, title insurance policies and surveys
in the possession of Sellers or WBB. Except as disclosed in Schedule 3.4(a),
none of the Sellers, WBB, the Companies or the Subsidiaries has received any
notice from any city, village or other Governmental Authority of any zoning,
land use, building, fire or health code or other legal violation in respect of
any Owned Property, other than violations which have been corrected or which
could not, individually or in the aggregate, have a material adverse effect on
the use or value of such Owned Property as now used in the Manufacturing
Business or the Bowling Centers Business or on the value of such Owned Property.
Each Owned Property is adequate (from both a legal and a physical
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perspective, including, without limitation, with respect to compliance with
recorded agreements affecting the Owned Properties and listed on Schedule
3.4(a), but only to the extent compliance with such agreements is the
responsibility of Sellers, WBB, the Companies or the Subsidiaries under the
terms of such agreements) for the use now made thereof in the Manufacturing
Business or the Bowling Centers Business, except for such inadequacies as could
not, individually or in the aggregate, have a material adverse effect on the use
of such Owned Property as now used in the Manufacturing Business or the Bowling
Centers Business, or on the Business Condition of either the Manufacturing
Business or the Bowling Centers Business. The disposition of land parcels by the
Bowling Centers Companies to WBB or any Continuing Affiliate (other than the
Related Land) has not had and could not reasonably be expected to have an
adverse effect on the operation of any of the related Bowling Centers or the
compliance thereof with any laws, rules or regulations or recorded agreements.
(b) Schedule 3.4(b) lists all real property (including all
land and buildings) leased by any of the Companies or the Subsidiaries, as
lessee (the "Leased Real Estate"). Except as may otherwise be provided in
Schedule 3.4(b), Sellers have delivered or caused to be delivered to Buyer
complete and accurate copies of the written leases and subleases which are
described in Schedule 3.4(b). Except as disclosed on Schedule 3.4(b), neither
Seller, the Companies nor the Subsidiaries have received written notice of
eminent domain proceedings pending or threatened against any Leased Real Estate
which proceedings (if resulting in a taking of any Leased Real Estate by a
Governmental Authority), could have a material adverse effect on the use or
value of such Leased Real Estate as now used in the Manufacturing Business or
the Bowling Centers Business, or on the Business Condition of either the
Manufacturing Business or the Bowling Centers Business. Except as disclosed in
Schedule 3.4(b), none of the Sellers, the Companies or the Subsidiaries has
received any notice from any city, village or other Governmental Authority of
any zoning, building, fire or health code or other legal violation in respect of
any Leased Real Estate, other than violations which have been corrected or which
could not, individually or in the aggregate, have a material adverse effect on
the use or value of such Leased Real Estate as now used in the Manufacturing
Business or the Bowling Centers Business, or on the Business Condition of either
the Manufacturing Business or the Bowling Centers Business. Each Leased Real
Estate property is adequate (from both a legal and a physical perspective,
including, without limitation, with respect to compliance with agreements which
are recorded in any applicable public records in respect of any Leased Real
Estate, but only
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to the extent compliance with such agreements is the responsibility of any of
the Sellers, the Companies or the Subsidiaries under the terms of the applicable
Lease) for the use now made thereof in the Manufacturing Business or the Bowling
Centers Business, except for such inadequacies as could not, individually or in
the aggregate, have a material adverse effect on the use of such Leased Real
Estate property as now used in the Manufacturing Business or the Bowling Centers
Business, or on the Business Condition of either the Manufacturing Business or
the Bowling Centers Business. Other than for exceptions to the following which
are set forth in Schedule 3.4(b) or which, individually or in the aggregate, do
not have and are not reasonably likely to have a material adverse effect on the
use or value of any material Leased Real Estate as now used in the Manufacturing
Business, or the Bowling Centers Business, or on the Business Condition of
either the Manufacturing Business or the Bowling Centers Business:
(i) the leases relating to the Leased Real Estate (the
"Leases") are in full force and effect and are valid, binding and
enforceable in accordance with their respective terms;
(ii) no amount payable under any Lease is past due;
(iii) the Company or Subsidiary that is party to each of the
Leases is in compliance with all material commitments and obligations
on its part to be performed or observed under such Lease and is not
aware of the failure by any other party to such Leases to comply with
all of its material commitments and obligations;
(iv) none of the Sellers, the Companies or the Subsidiaries
has received any notice of (A) a default (which has not been cured),
offset or counterclaim under any Lease, or any other communication
calling upon it to comply with any provision of any Lease or asserting
non-compliance, and no event or condition has happened or presently
exists which constitutes a default or, after notice or lapse of time or
both, would constitute a default under any Lease, or (B) any Action
against any landlord under any Lease which if adversely determined
would result in such Lease being terminated or cut off;
(v) none of the Sellers, the Companies or the Subsidiaries has
assigned, mortgaged, pledged or otherwise encumbered its interest, if
any, under any
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Lease, except for assignments, mortgages, pledges or other
encumbrances which constitute Permitted Liens;
(vi) the Companies and the Subsidiaries have exercised within
the time prescribed in each Lease any option provided therein to extend
or renew the term thereof; and
(vii) the Companies and the Subsidiaries have registered the
leases of properties located in Spain in the appropriate and
corresponding Property Registries.
(c) Except as set forth in Schedule 3.4(a), Schedule 3.4(b) or Schedule
3.4(c), the Owned Properties and the Leased Real Estate constitute, in the
aggregate, all of the real property used to conduct the Manufacturing Business
and the Bowling Centers Business in the manner in which each of those Businesses
was conducted during the 10-month period ending October 31, 1995, except for
additions thereto and deletions therefrom in the ordinary course of business,
consistent with past practice and which could not have a material adverse effect
on the Business Condition of either the Manufacturing Business or the Bowling
Centers Business.
Section 3.5. Tangible Personal Property. Each of the Companies and the
Subsidiaries has good and valid title to all tangible personal property which it
owns, including all tangible personal property reflected in the Balance Sheet as
being owned by such Company or Subsidiary, as the case may be, except for
tangible personal property disposed of to third parties since October 31, 1995
in the ordinary course of business, consistent with past practice and which
could not have a material adverse effect on the Business Condition of either the
Manufacturing Business or the Bowling Centers Business, in each case free and
clear of all liens, security interests and other encumbrances, except (i)
mechanics', materialmen's, carriers', workmen's, warehousemen's, repairmen's,
landlord's or other like liens securing obligations that are not delinquent;
(ii) liens for Taxes and other governmental charges which are not due and
payable or which may be paid without penalty; (iii) other liens, security
interests and encumbrances, if any, set forth in Schedule 3.5; and (iv) liens,
security interests and other encumbrances which could not, individually or in
the aggregate, have a material adverse effect on the Business Condition of
either the Manufacturing Business or the Bowling Centers Business. Except as
could not, individually or in the aggregate, have a material adverse effect on
the Business Condition of either the Manufacturing Business or the Bowling
Centers Business, all of the tangible personal property which the
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Companies and the Subsidiaries lease are subject to leases which are in full
force and effect and which are the valid and binding obligations of the
Companies and the Subsidiaries and, to the knowledge of the Sellers, the other
parties thereto, and there are no existing defaults under such leases. Except as
set forth in Schedule 3.15 hereto, the tangible personal property of the
Companies and the Subsidiaries which is used in the Manufacturing Business or
the Bowling Centers Business and owned or leased by the Companies and the
Subsidiaries is, in the aggregate, all of the tangible personal property used to
conduct such businesses in the manner in which each such business was conducted
during the ten-month period ending October 31, 1995, except for additions
thereto and deletions therefrom in the ordinary course of business, consistent
with past practice and which could not have a material adverse effect on the
Business Condition of either the Manufacturing Business or the Bowling Centers
Business. Except as set forth on Schedule 3.5 or 3.15, no Seller or other
Continuing Affiliate owns or has any interest in any tangible personal property
used in conducting the Manufacturing Business or the Bowling Centers Business.
Section 3.6. Absence of Certain Changes. Except as disclosed in
Schedules 3.6 and 5.4 hereto, since October 31, 1995 each of the Manufacturing
Business and the Bowling Centers Business has been conducted in the ordinary
course consistent with past practice and there has been no material adverse
change in, or any development since the date of this Agreement which could
reasonably be expected to have a material adverse effect on, the Business
Condition of either such business. In addition, except as disclosed in Schedules
3.6 and 5.4, since October 31, 1995: (i) there has been no physical damage,
destruction, loss or abandonment that could have, individually or in the
aggregate, a material adverse effect on the Business Condition of either the
Manufacturing Business or the Bowling Centers Business; (ii) there has been no
sale, assignment or transfer of any material assets of any Company or
Subsidiary, except in the ordinary course of business, consistent with past
practice and which could not have a material adverse effect on the Business
Condition of either the Manufacturing Business or the Bowling Centers Business;
(iii) there has been no sale, assignment, transfer or license of any patents or
trademarks owned by any Company or Subsidiary nor has any Company or Subsidiary
sold, assigned, transferred or licensed any trade secrets (including formulae)
or software which it owns (other than licenses or sublicenses thereof in the
ordinary course of business, consistent with past practice and which could not
have a material adverse effect on the Business Condition of either the
Manufacturing Business or the Bowling Centers Business); (iv) none of the
Companies or the Subsidiaries has taken
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any action which, if taken from the date hereof through the Closing, would
violate Section 5.4(b) through (k) (and there have been no changes required by
U.S. GAAP referred to in Section 5.4(f)); and (v) none of the Companies or the
Subsidiaries has entered into any agreement to do any of the things previously
described in this Section 3.6.
Section 3.7. Litigation; Orders. Except as disclosed in Schedule 3.7
hereto, there are no Actions pending or, to the knowledge of Sellers, threatened
or claims asserted against any Company or Subsidiary that could, individually or
in the aggregate, have a material adverse effect on the Business Condition of
the Manufacturing Business or the Bowling Centers Business or in which the
complaint or claim specifically seeks to prohibit any of the Stock and Asset
Purchases or otherwise impair the consummation of this Agreement or the
Ancillary Agreements or the transactions contemplated hereby or thereby. Except
as disclosed in Schedule 3.7 hereto, there are no judgments or outstanding
orders, injunctions, decrees, stipulations, settlement agreements, citations,
investigations, fines or awards against or binding upon any Company or
Subsidiary or any of their respective properties or businesses that could have,
individually or in the aggregate, a material adverse effect on the Business
Condition of the Manufacturing Business or the Bowling Centers Business or
prohibit any of the Stock and Asset Purchases or otherwise impair the ability of
any Seller to complete the Stock and Asset Purchases or the transactions
contemplated hereby or by the Ancillary Agreements. Except as set forth in
Schedule 3.7, there is no material Action by any Company or Subsidiary pending
against any other party.
Section 3.8. Intellectual Property. Schedule 3.8 hereto is a true,
complete and accurate list, by country, of (a) all United States and foreign
trademarks and service marks (and registrations and applications therefor)
(collectively, "Trademarks") owned by any Company or Subsidiary or by any Seller
or Continuing Affiliate and utilized by or on behalf of any Company or
Subsidiary, (b) any of the foregoing licensed to or by any Company or Subsidiary
(together with the Trademarks referred to in clause (a), the "Company
Trademarks"), (c) all United States and foreign patents and patent applications
(collectively "Patents") owned by any Company or Subsidiary or by any Seller or
other Continuing Affiliate on behalf of any Company or Subsidiary and (d) any of
the foregoing (described in clause (c)) licensed to or by any Company or
Subsidiary (together with the Patents referred to in clause (c), the "Company
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Patents"). Schedule 3.8 accurately identifies, where appropriate, one or more of
the following for each item of the foregoing: name of mark or title of patent,
the registration number or serial number, patent issue or filing date and
inventor. Neither any Company nor any Subsidiary owns or licenses Trademarks or
Patents except as listed in Schedule 3.8. "Intellectual Property" shall be
defined herein as (i) Trademarks and Patents and (ii) non-patented formulae,
inventions, know-how, manufacturing procedures, processes, trade secrets,
proprietary information, software licenses, registered and unregistered design
rights and all other intellectual property and proprietary rights, and the
Intellectual Property owned by any Company or Subsidiaries or used by the
Companies and the Subsidiaries and owned by any Seller or Continuing Affiliate
is hereinafter collectively referred to as the "Company Intellectual Property."
Except as otherwise set forth on Schedule 3.8 hereto, the Companies and
Subsidiaries shall own from and after the Closing Date all Company Intellectual
Property free and clear of any security interests, licenses, or, to the
knowledge of Sellers, adverse claims or other restriction (except those imposed
by any action taken or arrangement made by Buyer), and shall possess from and
after the Closing Date pursuant to agreements with third parties set forth in
Schedule 3.8 hereto, upon and for the terms thereof, adequate and enforceable
licenses or other adequate and enforceable rights to use or obtain the benefit
of all other Intellectual Property that is used in the conduct of the
Manufacturing Business and the Bowling Centers Business ("Licensed Intellectual
Property"). Except as specifically identified in Schedule 3.8 or as will be
licensed by the Companies from and after the Closing pursuant to the License
Agreements, no Seller or other Continuing Affiliate owns or has any interest in
any Company Intellectual Property or any Licensed Intellectual Property. Except
as set forth on Schedule 3.8, there are no existing claims or, to the knowledge
of Sellers, threatened claims, of any third party based on the use by, or
challenging the ownership of, the Companies, the Subsidiaries, the Sellers, or
any Continuing Affiliate of any of the Company Intellectual Property or claims
of adverse ownership, invalidity, unenforceability or misuse of the Company
Intellectual Property and to the knowledge of the Sellers there are no grounds
for any such claim or challenge. No offers have been made to license to any of
the Companies, the Subsidiaries, the Sellers, or any Continuing Affiliate any
Intellectual Property that any Company or Subsidiary purports to own as Company
Intellectual Property. Except as described in Schedule 3.8, neither any Company
nor any Subsidiary has infringed or misappropriated, or is infringing or
misappropriating, any U.S. or foreign patents or copyrights or any U.S., state
or foreign trademarks, or other Intellectual Property rights of any Person.
Except as set forth on Schedule 3.8
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hereto, to the knowledge of Sellers there is no infringing use by any Person of
the Company Intellectual Property. To the knowledge of Sellers, the owners of
the Licensed Intellectual Property have taken all reasonable action necessary to
maintain and protect the Licensed Intellectual Property, and neither any Company
nor any Subsidiary has used or enforced, or failed to use or enforce, any of the
Company Intellectual Property in any manner which limits its validity or
enforceability or is reasonably expected to result in its invalidity,
unenforceability or misuse. Except as set forth on Schedule 3.8 hereto, to the
knowledge of Sellers there is no material infringement or misappropriation by
any Person of the Company Intellectual Property or the Licensed Intellectual
Property, and the Sellers are not aware of any facts raising a likelihood of
such infringement or misappropriation. The consummation of the transactions
contemplated by this Agreement will not alter, impair or extinguish any of the
Company Intellectual Property or the Licensed Intellectual Property.
Section 3.9. Licenses, Approvals, Other Authorizations, Consents,
Reports, etc. (a) The Companies and the Subsidiaries possess or have been
granted all registrations, filings, applications, certifications, notices,
consents, licenses, permits, approvals, certificates, franchises, orders,
qualifications, authorizations and waivers of any Governmental Authority
necessary to entitle it presently to conduct the Manufacturing Business and the
Bowling Centers Business in the manner in which it is presently being conducted
(the "Licenses"), except as set forth in Schedule 3.9(a) and except those
Licenses whose failure to possess or have granted could not have, individually
or in the aggregate, a material adverse effect on the Business Condition of the
Manufacturing Business or the Bowling Centers Business or give rise to any
material fines or any other criminal liabilities or any other material civil
penalties. Schedule 3.9(a) lists all licenses to serve or sell alcoholic
beverages which have been granted to any of the Companies or the Subsidiaries
(the "Companies Liquor Licenses"). Except as noted in Schedule 3.9(a), (i) all
of the Companies Liquor Licenses are in full force and effect and (ii) all of
the Licenses (excluding the Companies Liquor Licenses) are in full force and
effect except for those covered by this clause (ii) whose failure to be in full
force and effect could not have, individually or in the aggregate, a material
adverse effect on the Business Condition of the Manufacturing Business or the
Bowling Centers Business. Except as noted in Schedule 3.9(a), no Action is
pending or, to Sellers' knowledge, threatened seeking the revocation or
limitation of (i) any of the Companies Liquor Licenses or (ii) any License
(excluding the
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Companies Liquor Licenses) that, in the case of Licenses covered by this clause
(ii), could, individually or in the aggregate, have a material adverse effect on
the Business Condition of the Manufacturing Business or the Bowling Centers
Business.
(b) Schedule 3.9(b) hereto contains a list of all material
registrations, filings, applications, certifications, notices, consents,
licenses, permits, approvals, certificates, franchises, orders, qualifications,
authorizations and waivers required to be made, filed, given or obtained by any
Seller, Company or Subsidiary or any Continuing Affiliate with, to or from any
Governmental Authority in connection with, the consummation of the Stock and
Asset Purchases and performance of the other obligations of Sellers under this
Agreement and the Ancillary Agreements except for those that become applicable
solely as a result of the specific regulatory status or action (other than
actions contemplated by this Agreement) of Buyer or its Affiliates.
(c) Schedule 3.9(c) lists all entities ("Concession Entities") that
hold licenses to serve or sell alcoholic beverages in locations on the premises
of or associated with the facilities operated by any of the Companies or the
Subsidiaries. Schedule 3.9(c) also lists each stockholder or other equity owner
of each of the Concession Entities and lists all management agreements,
stockholder agreements, leases and other significant agreements or arrangements
relating to the relationships between the Companies and the Subsidiaries, on the
one hand, and the Concession Entities, on the other hand (complete and correct
copies of which (or descriptions of oral arrangements, if any) have been
provided to Buyer). Except as disclosed on Schedule 3.9(c), all such agreements
are in full force and effect, legal, valid and binding and enforceable against
the Companies and the Subsidiaries and, to the knowledge of Sellers, each other
party thereto in accordance with their terms, and all of the agreements,
arrangements and relationships between the Companies and the Subsidiaries, on
the one hand, and the Concession Entities, on the other hand, comply with all
applicable, laws, rules, statutes, orders, regulations and other requirements of
any Governmental Authorities in all material respects.
Section 3.10. Labor Matters. Schedule 3.10 hereto sets forth all
collective bargaining or other agreements with labor unions, trade unions,
employee representatives, work committees, guilds or associations representing
employees of any of the Companies or Subsidiaries. As of the date hereof, no
work stoppage against any of the Companies or Subsidiaries is pending or, to
Sellers' knowledge, threatened. Except as disclosed on Schedule 3.7, none of the
Companies or Subsidiaries
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is involved in or, to Sellers' knowledge, threatened with any labor dispute,
arbitration, lawsuit, grievance or administrative proceeding (other than
immaterial grievances), relating to labor matters involving any current or
former employee of any Company or Subsidiary that could have a material adverse
effect on the Business Condition of the Manufacturing Business or the Bowling
Centers Business. Except as set forth on Schedule 3.10, no union or association
organizing or election activities involving any nonunion employees of any
Company or Subsidiary are in progress or, to the knowledge of Sellers, have been
threatened since January 1, 1993.
Section 3.11. Compliance with Laws. Except as may be disclosed on
Schedule 3.11, the conduct of the business of the Companies and Subsidiaries is
in compliance and, to the knowledge of Sellers, has been in compliance with all
statutes, laws, regulations, ordinances, rules, judgments, orders or decrees
applicable thereto or to the Owned Properties or to the Leased Real Estate,
except for violations or failures so to comply, if any, that, individually or in
the aggregate, could not have a material adverse effect on the Business
Condition of the Manufacturing Business or the Bowling Centers Business. Except
as set forth on Schedule 3.11, none of the Sellers, and to the knowledge of
Sellers none of the Companies or the Subsidiaries has received notice of any
alleged violation of any statute, law, regulation, ordinance, rule, judgment,
order or decree from any Governmental Authority applicable to the Companies or
the Subsidiaries or to their properties which has not been satisfactorily
addressed except for violations, if any, that individually or in the aggregate
could not have a material adverse effect on the Business Condition of the
Manufacturing Business or the Bowling Centers Business or give rise to material
fines or other civil penalties or any criminal liabilities. In furtherance and
not in limitation of the foregoing, none of the Sellers, the Companies or the
Subsidiaries has, directly or indirectly, paid or delivered any fee, commission
or other sum of money or item of property, however characterized, to any
government official or other governmental party, in the United States or any
other country, which is in any manner related to the business or operations of
the Companies or the Subsidiaries and which was illegal under any statutes,
laws, regulations, ordinances, rules, judgments, orders or decrees of any
Governmental Authority (including, without limitation, the U.S. Foreign Corrupt
Practices Act).
Section 3.12. Insurance. Each of the Companies and Subsidiaries is
covered by valid and currently effective insurance policies issued in favor of
one or more Sellers and/or the Companies, or Subsidiaries that are customary for
privately-owned companies of similar size and financial condition in the
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industry and locale in which it operates. Schedule 3.12 lists all insurance
policies which are in effect covering any of the Companies, the Subsidiaries,
their respective Owned Property or Leased Real Estate or their employees and
such Schedule lists each of the parties to such policies. Except as set forth on
Schedule 3.12, all such policies are in full force and effect, all premiums due
thereon have been paid and the Sellers, the Companies, the Subsidiaries and the
Continuing Affiliates have complied with the provisions of such policies (except
for failures to be in full force and effect, to pay premiums and to comply
which, individually or in the aggregate, could not have a material adverse
effect on the Business Condition of the Manufacturing Business or the Bowling
Centers Business).
Section 3.13. Material Contracts. Except as set forth on Schedule 3.8,
3.13 or 6.1(a) hereto, as of the date hereof, neither any of the Companies nor
any of the Subsidiaries is a party to or bound by any written or oral (a)
employment, consulting or non-competition agreement or contract (in the case of
oral agreements or contracts, excluding those which are terminable at will
without any additional expense other than the payment of previously accrued
compensation) requiring payments of compensation to any one Person in excess of
$75,000 (exclusive of bonuses, to the extent such bonuses do not exceed 50% of
such Person's other compensation) per year or aggregate payments of compensation
to any one Person in excess of $150,000; (b) joint venture or partnership
contract or agreement; (c) contract or agreement restricting the right of the
Manufacturing Business or the Bowling Centers Business to compete in any way
with any other person or entity, which would apply to Buyer, any Company or
Subsidiary after the Closing; (d)(i) agreement or contract creating, evidencing
or securing obligations of any Company or Subsidiary for borrowed money, (ii)
purchase money indebtedness, (iii) any guarantee or assumption of an obligation
for borrowed money or purchase money indebtedness or other obligations of
reimbursement of any maker of a letter of credit or any guaranty of minimum
equity or capital or any make-whole or similar agreement, (iv) any loan or
extension of credit by any Company or Subsidiary or (v) bankers acceptance; (e)
agreement or contract relating to any outstanding commitment for capital
expenditures in excess of $250,000; (f) other than as set forth on Schedule 3.8,
licenses, whether as licensor or licensee, of any Intellectual Property; (g)
other than as set forth on Schedule 3.4(b), lease or sublease of, or option
relating to, Leased Real Estate; (h) any other material lease as lessee or
lessor of real or personal property; (i) capitalized lease or sale-leaseback or
material conditional sale agreement; (j) material distributorship or franchise
agreement; (k) material raw material or other supply
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agreements or any exclusive dealing, requirements or take-or-pay contracts;
(l) any brokerage or finders fee agreements; or (m) other contract or agreement,
entered into other than in the ordinary course of business, involving an
estimated total future payment or payments in excess of $500,000. Except as set
forth on Schedule 3.13 hereto, each contract or agreement set forth on Schedule
3.13 hereto is in full force and effect, and, to Sellers' knowledge, is legal,
valid and binding and enforceable against each other Person party thereto.
Except as set forth in Schedule 3.13 hereto, neither any of the Companies or
Subsidiaries, nor, to Sellers' knowledge, is any other party to any such
contract or agreement, in breach thereof or default thereunder and there does
not exist under any provision thereof, any event that, with the giving of notice
or the lapse of time or both, would constitute such a breach or default by any
Company or Subsidiary or, to Sellers' knowledge, by any other party to any such
contract or agreement, except for such breaches, defaults and events as to which
requisite waivers or consents have been or are obtained or which could not,
individually or in the aggregate, have a material adverse effect on the Business
Condition of the Manufacturing Business or the Bowling Centers Business. Except
as set forth on Schedule 3.13, Seller has delivered to Buyer true and correct
copies of each of such written agreements and contracts or provided written
summaries of any such oral agreements and contracts.
Section 3.14. Brokers, Finders, etc. Except for the services of
Goldman, Sachs & Co., and Wheat First Butcher Singer, neither any of the Sellers
nor any of their Affiliates has employed, or is subject to any valid claim of,
any broker, finder, or other similar intermediary in connection with the
transactions contemplated by this Agreement who might be entitled to a fee or
commission in connection with such transactions. None of Buyer, the Companies or
the Subsidiaries has or will have any obligations to Wheat First Butcher Singer
with respect to the transactions contemplated by this Agreement.
Section 3.15. Affiliate Transactions. Except as disclosed in the notes
to the Financial Statements or Schedule 3.13 or 3.15 hereto, (i) no Seller and
no trustee, beneficiary, officer, director, or employee of any Seller or of any
other Continuing Affiliate and no Continuing Affiliate provides or causes to be
provided to any Company or Subsidiary any assets, loans, advances, services or
facilities and (ii) none of the Companies or Subsidiaries provides or causes to
be provided to any such trustee, beneficiary, officer, director or employee or
Continuing Affiliate any assets, loans, advances, services or facilities. Except
as disclosed in Schedule 3.15 hereto, neither any Company or any Subsidiary,
jointly with any Seller or any other Continuing Affiliate, purchases or sells
goods or
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services and the Companies and the Subsidiaries do not have any other
significant business relationships with any Seller or any other Continuing
Affiliate. The only agreements, arrangements, relationships or other items
listed on Schedule 3.15 that will remain in place from and after the Closing or
with respect to which Buyer, the Companies, the Subsidiaries or any of their
Affiliates will have any ongoing obligations or duties, are those items (and
only with respect to such obligations or duties) which are explicitly identified
in Schedule 3.15 as remaining in place and having ongoing obligations or duties.
Section 3.16. Environmental Compliance. (a) For purposes of this
Section 3.16, (i) "Hazardous Substance" means any pollutant, contaminant,
hazardous or toxic substance or waste, solid waste, petroleum or any fraction
thereof, or any other chemical, substance or material listed or identified in or
regulated by or under any Environmental Law; (ii) "Environmental Law" means the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
Section 9601 et seq., the Solid Waste Disposal Act, as amended by the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq., the Clean Water
Act, 33 U.S.C. Section 1251 et seq., the Clean Air Act, 42 U.S.C. Section 7401
et seq., the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq., the
Safe Drinking Water Act, 42 U.S.C. Section 300f et seq., the Emergency Planning
and Community Right to Know Act, 42 U.S.C. Section 11001 et seq., the
Occupational Safety and Health Act, 29 U.S.C. Section 651 et seq., the Oil
Pollution Act, 33 U.S.C. Section 2701 et seq., in each case as amended from time
to time, and any other statute, rule, regulation, law, by-law, ordinance or
directive of any Governmental Authority dealing with the pollution or protection
of natural resources or the indoor or ambient environment or with the protection
of human health or safety; (iii) "Real Property" means the Owned Property and
the Leased Real Estate; and (iv) "RCRA Hazardous Waste" means a solid waste that
is listed or classified as a hazardous waste, as that term is defined in or
pursuant to the Resource Conservation and Recovery Act, as amended, 42 U.S.C.
Section 6901 et seq.
(b) Except as set forth on Schedule 3.16, there are no claims pending
or, to the knowledge of Sellers, threatened, and none of the Sellers, the
Companies or Subsidiaries has received any notice, alleging, warning or
notifying any Company or Subsidiary that any Company or Subsidiary is, has been
or may be in violation of or non-compliance with any Environmental Law.
(c) Except as set forth in Schedule 3.16, to the knowledge of Sellers,
no Hazardous Substances have ever been buried, spilled, leaked, discharged,
emitted, generated,
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stored, used or released, and no Hazardous Substances are now present in
amounts, concentrations or conditions requiring investigation, study, removal,
remediation or any other response action or corrective action under, or forms
the basis of a claim pursuant to, any Environmental Law, in, on, from or under
the Real Property or any other property with respect to which any Company or
Subsidiary may be identified as a potentially responsible party or otherwise
bear liability, except for immaterial quantities stored or used by any Company
or Subsidiary in the ordinary course of its business and in accordance with all
applicable Environmental Laws.
(d) Except as set forth in Schedule 3.16, the Real Property is not
being used and, to the knowledge of Sellers, never has been used in connection
with the business of manufacturing, storing or transporting Hazardous
Substances, and no RCRA Hazardous Wastes have been treated, stored or disposed
of there.
(e) Except as set forth in Schedule 3.16, there are not now and, to the
knowledge of Sellers, never have been any underground or above ground storage
tanks or other containment facilities of any kind on the Real Property which
contain or contained any Hazardous Substances.
(f) Except as set forth in Schedule 3.16, none of the Real Property is
or has been listed on the National Priorities List, the Comprehensive
Environmental Response, Compensation and Liability Information System or any
similar federal, state, local or foreign list, schedule, log, inventory or
database of sites or facilities with potential, threatened, suspected or actual
releases of Hazardous Substances.
(g) Schedule 3.16 identifies, and Sellers have provided to Buyer true
and correct copies of, all environmental audits or assessments relating in whole
or in part to any of the Companies or the Subsidiaries or the Manufacturing
Business or Bowling Centers Business undertaken by or on behalf of any of the
Sellers or any of their Affiliates, or, to Sellers' knowledge, by Governmental
Authorities or other third parties, and any written communications by the
Companies or the Subsidiaries or, to Sellers' knowledge, relating in whole or in
part to any of the Companies or the Subsidiaries or the Manufacturing Business
or Bowling Centers Business with environmental agencies, within the past six
years which describe the status of any Real Property or the compliance of the
owners or lessees thereof with respect to any Environmental Law.
(h) Except as set forth in Schedule 3.16, neither any Company nor any
Subsidiary has received any notice from any
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Governmental Authority or other third party that any of them or any of their
predecessors is or may be a potentially responsible party or may otherwise bear
liability for any actual or threatened release of Hazardous Substances at or
from any site or facility other than Real Property.
Section 3.17. Customer and Supplier Relationships. Schedule 3.17 lists
the 20 largest suppliers of each of the Manufacturing Business and the Bowling
Centers Business, and the 20 largest customers and 10 largest distributors for
the Manufacturing Business, in each case based on aggregate sales or purchases,
as the case may be, during the period January 1, 1995 through October 31, 1995,
and the approximate dollar amount of such aggregate sales or purchases in such
period. Except as set forth on Schedule 3.17, the relationships of the Companies
and Subsidiaries with such customers, suppliers and distributors are
satisfactory. The purchase by Buyer of the Shares pursuant to the Stock
Purchases and the consummation of the Asset Purchases will not materially
adversely affect the relationships of the Companies and the Subsidiaries with
such customers, suppliers and distributors.
Section 3.18. Products. Except as disclosed on Schedule 3.18, none of
the Companies or the Subsidiaries has incurred, nor do the Sellers know or have
any reason to believe there is any basis for alleging, any material liability,
damage, loss, cost or expense as a result of any defect or other deficiency
(whether of design, materials, workmanship, labeling instructions or otherwise)
("Product Liability") with respect to any product sold or services rendered by
or on behalf of the Companies or the Subsidiaries, whether such Product
Liability is incurred by reason of any express warranty (including, without
limitation, any warranty of merchantability or fitness), any doctrine of
common law (tort, contract or other), any statutory provision or otherwise and
irrespective of whether such Product Liability is covered by insurance. Except
as set forth on Schedule 3.18, (a) no product sold by any Company or Subsidiary,
and (b) no product produced for any Company or Subsidiary by a third party has
been recalled voluntarily or involuntarily since January 1, 1993, no such recall
is being considered by Sellers, and no such recall is being considered by any
Company or Subsidiary or has been requested or ordered by any Governmental
Authority or consumer group.
Section 3.19. Undisclosed Liabilities. Except (i) as disclosed in
Schedule 3.19 hereto, (ii) as and to the extent disclosed or reserved against on
the Balance Sheet or identified in the notes thereto, (iii) as incurred after
the date of the Balance Sheet in the ordinary course of the Manufacturing
Business or the Bowling Centers Business consistent with prior
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practice and not prohibited by this Agreement and which could not have a
material adverse effect on the Business Condition of the Manufacturing Business
or the Bowling Centers Business and (iv) those Covered Liabilities to the extent
constituting Taxes for which Sellers are responsible under Article VII, the
Companies and Subsidiaries do not have any liabilities or obligations of any
nature, whether known or unknown, absolute, accrued, contingent or otherwise and
whether due or to become due, that, individually or in the aggregate, have or
could have a material adverse effect on the Business Condition of the
Manufacturing Business or the Bowling Centers Business. Except for liabilities
which will be satisfied as a result of the Reece Indemnity and liabilities to be
satisfied at or before Closing, the Companies and the Subsidiaries do not have
any liabilities or obligations with respect to operations or entities which are
not included in the Manufacturing Business or the Bowling Centers Business.
Section 3.20. Disclosure. Neither this Agreement nor the Schedules
hereto, nor the Financial Statements, nor any information or data, or document
concerning the Shares, the Purchased Assets or the Companies or Subsidiaries or
the Manufacturing Business or the Bowling Centers Business or the transactions
contemplated hereby furnished to Buyer, contain or will contain any untrue
statement of a material fact or omit or will omit to state a material fact
necessary, in light of the circumstances under which it was or will be made, to
make any such statement not misleading. Except as expressly disclosed on the
Schedules, the copies of all deeds, leases, mortgages, deeds of trust, security
instruments, permits, litigation files, contracts, employee agreements and
licenses, which have heretofore been made available to Buyer are true, complete
and correct in all material respects and in the form in which each of such
documents is in effect (and, if oral, a true and complete description thereof
has been provided to Buyer). The Spanish and Swiss Bowling Centers Agreements
and the Related Land Sale Agreement are incorporated herein by reference and the
representations and warranties in this Article III are made as if all of the
assets being transferred to Buyer (or an Affiliate thereof) pursuant to the
Spanish and Swiss Bowling Centers Agreements and the Related Land Sale Agreement
were included in the assets of the Companies and the Subsidiaries and were being
transferred pursuant to this Agreement, but in the same form and manner
contemplated by such other agreements.
Section 3.21. Banks, Powers of Attorney. Except as set forth in
Schedule 3.21, neither any of the Companies or Subsidiaries has any accounts or
safe deposit boxes under its or their control or for their benefit at any bank
or other financial institution and the Companies and Subsidiaries have not
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entered into any powers of attorney other than customary powers of attorneys.
Schedule 3.21 sets forth the names of all persons authorized to draw on or have
access to the accounts and safe deposit boxes of any of the Companies or
Subsidiaries listed thereon. Copies of any powers of attorney granted by any of
the Companies or the Subsidiaries have been furnished to Buyer.
Section 3.22. Sufficiency and Condition of Assets. Except as disclosed
in the Schedules to this Agreement, from and after the acquisition of the Shares
pursuant to the Stock Purchases and the consummation of the Asset Purchases, the
Companies and the Subsidiaries will own or have valid rights to use all of the
assets, rights and/or interests which are used in, and are sufficient for, the
operation of each of the Manufacturing Business and the Bowling Centers Business
as it is currently being conducted in all material respects. The tangible assets
of the Companies and the Subsidiaries are in good working order, reasonable wear
and tear excepted, and are suitable for the use for which they are intended in
all material respects.
Section 3.23. Nonforeign Certification. None of the Sellers is a
"foreign person" within the meaning of Section 1445 of the Code.
ARTICLE IV
Representations and Warranties of Buyer
Buyer hereby represents and warrants to Sellers as follows:
Section 4.1. Incorporation; Authorization; etc. Buyer is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Buyer has full corporate power to execute and deliver this
Agreement and each of the Ancillary Agreements to which it is a party, to
perform its respective obligations hereunder and thereunder and to consummate
the transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and each of the Ancillary Agreements, the performance of its
obligations hereunder and thereunder and the consummation of the transactions
contemplated hereby and thereby by Buyer has been duly and validly authorized by
the Board of Directors of Buyer and no other corporate proceedings on the part
of Buyer, its Board of Directors or stockholders are necessary therefor. The
execution, delivery and performance of this Agreement and each of the Ancillary
Agreements to which it is a party by Buyer will not (i)
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violate or conflict with any provision of the charter or By-Laws or similar
organizational instrument of Buyer, (ii) conflict with, violate or constitute a
default under any provision of, or be an event that is (or with the giving of
notice or passage of time or both will result in) a violation of or default
under, or result in the acceleration of or entitle any party to accelerate
(whether after the giving of notice or lapse of time or both) any obligation or
right under, or result in the imposition of any lien upon or the creation of a
security interest in any of Buyer's assets or properties pursuant to, or require
a consent or create a penalty or increase Buyer's payment or performance
obligations under, any mortgage, lien, lease, instrument, order, arbitration
award, judgment or decree, or any material contract, agreement, license or
permit, to which Buyer is a party or any of its property is bound, or (iii)
violate or conflict with any provision of law, regulation, rule, writ,
injunction, decree, statute, order, judgment or ruling of any Governmental
Authority or any other material restriction of any kind or character to which
Buyer is subject or by which any of its property is bound, that, in the case of
clauses (ii) and (iii), would, individually or in the aggregate, have a material
adverse effect on Buyer's ability to consummate the Stock and Asset Purchases or
would otherwise prevent the performance of the other obligations of Buyer under
this Agreement and each of the Ancillary Agreements. This Agreement has been,
and on the Closing Date each of the Ancillary Agreements to which it is a party
will be, duly executed and delivered by Buyer, and, assuming the due execution
hereof and thereof by the Sellers and/or the other parties thereto, this
Agreement constitutes, and on the Closing Date each of the Ancillary Agreements
to which Buyer is a party will constitute, the legal, valid and binding
obligations of Buyer, each enforceable against Buyer in accordance with its
respective terms.
Section 4.2. Licenses, Approvals, Other Authorizations, Consents,
Reports, etc. Schedule 4.2 hereto contains a list of all registrations, filings,
applications, notices, consents, approvals, orders, qualifications or waivers
required to be made, filed, given or obtained by Buyer or any of its Affiliates
with, to or from any Governmental Authority in connection with the consummation
of the Stock and Asset Purchases and of the other obligations of Buyer under
this Agreement except for those (i) that become applicable solely as a result of
the specific regulatory status of Sellers, the Companies or the Subsidiaries or
any Continuing Affiliate or any change of ownership thereof, (ii) licenses
relating to the sale and service of alcoholic beverages, or (iii) the failure to
make, file, give or obtain which would not, individually or in the aggregate,
either have a material adverse effect on the Business
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Condition of Buyer or prevent the consummation of the Stock Purchases and the
other transactions contemplated hereby.
Section 4.3. Acquisition of Shares for Investment. Buyer has such
knowledge and experience in financial and business matters that it is capable of
evaluating the merits and risks of Buyer's purchase of the Shares and has been
provided access to personnel and books of the Companies and the Subsidiaries for
purposes of making its evaluation. Buyer is acquiring the Shares for investment
and not with a view toward or for sale in connection with any distribution
thereof, or with any present intention of distributing or selling the Shares.
Buyer agrees that the Shares may not be sold, transferred, offered for sale,
pledged, hypothecated or otherwise disposed of without registration under the
Securities Act of 1933, as amended, except pursuant to an exemption from such
registration available under such Act.
Section 4.4. Financial Capability. Buyer is a newly formed corporation
which has not conducted any business other than in connection with the
transactions contemplated by this Agreement. Buyer has delivered to Sellers
complete and correct copies of a commitment letter addressed to GS Capital
Partners II, L.P., GS Capital Partners II Offshore, L.P. and Goldman, Sachs &
Co. Verwaltungs GmbH (collectively, the "GS Entities") from Citibank, N.A.,
Citibank Securities, Inc., Citicorp USA, Inc., Goldman, Sachs & Co. and Pearl
Street, L.P. for the aggregate amount of $665 million in senior debt financing,
a commitment letter from the GS Entities and The Goldman Sachs Group, L.P.
(collectively, the "Fund") for $375 million of common equity financing
(collectively, the "Financing Commitments") and a highly confident letter from
Goldman, Sachs & Co. in respect of the placement of $350 million of subordinated
debt financing (the "Highly Confident Letter"). Such financings, in the
aggregate, if fully available, shall provide Buyer with sufficient funds to
consummate the Stock and Asset Purchases.
ARTICLE V
Covenants of Sellers and Buyer
Section 5.1. Investigation of Business; Access to Properties and
Records. (a) After the date hereof until the Closing Date, Sellers shall
continue to, and shall cause any Continuing Affiliate to continue to, afford to
representatives of Buyer full access (and shall cause the Companies and
Subsidiaries to continue to afford to representatives of Buyer full access),
without limitations other than as contemplated by this Section 5.1(a), to their
respective personnel, offices, plants,
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properties, books and records during normal business hours, upon reasonable
request, at any time, in order that Buyer may continue to have full opportunity
to make such investigations as it desires of the affairs of the Companies and
Subsidiaries; provided, however, that such investigation shall not unreasonably
disrupt the personnel and operations of any of the Sellers, any Continuing
Affiliate, the Companies or Subsidiaries.
(b) After the date hereof until the Closing Date, Sellers will continue
to supply Buyer with all relevant documents and information (both public and
nonpublic) for use in connection with Buyer's investigation contemplated hereby.
Such material is hereinafter referred to as "Evaluation Material." Buyer agrees
that it and its representatives will hold in confidence any Evaluation Material
it has received or will receive and will not disclose, except to the extent
required by law or otherwise deemed necessary or appropriate in the sole
discretion of Buyer in connection with Buyer's equity and debt financing
arrangements, all or any part of such material to anyone except its officers,
directors, employees, potential financing sources or other representatives who
are involved with the transaction contemplated by this Agreement. If this
Agreement is terminated, except as required by law, Buyer will return to
Sellers, or cause to be destroyed and will not retain the originals or any
copies of any documents constituting a part of the Evaluation Material furnished
to it, and after termination Buyer will continue to honor the confidentiality
agreement contained herein and will not use or disclose, directly or indirectly,
any information obtained from the Evaluation Material, except as required by
law.
(c) At the Closing or as soon thereafter as practicable, but in no
event later than 3 days after the Closing Date, Sellers will deliver or cause to
be delivered to Buyer all corporate records of the Companies and Subsidiaries,
and all other original (or copies thereof, if originals are not immediately
available) agreements, documents, books and records relating to the
Manufacturing Business and the Bowling Centers Business in the possession of
Sellers or their respective Affiliates to the extent not then in the possession
of any of the Companies or Subsidiaries.
(d) From and after the Closing Date, Sellers shall maintain the
confidentiality of nonpublic information with respect to the Companies and
Subsidiaries. In the event that Buyer or its Affiliates or representatives prior
to the Closing Date, or Sellers or any of the Continuing Affiliates or
representatives after the Closing Date, are requested, or become required by
law, to disclose any confidential information relating to the Companies and the
Subsidiaries (other than to the
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extent permitted by Section 5.1(b) in connection with Buyer's equity and debt
financing arrangements), such party will provide the other party with prompt
notice thereof (before such information is disclosed if practicable) so that
such other party may seek a protective order or other appropriate remedy and/or
waive compliance with the terms of this Section 5.1(d). In the event that such
protective order or other remedy is not obtained or that such other party, in
its sole discretion, waives compliance with the terms of this Section 5.1(d),
the party from which such information is requested or which is required by law
to disclose such information will furnish only that portion of such confidential
information which is legally required to be so disclosed and will exercise its
reasonable efforts to obtain reliable assurance that confidential treatment will
be accorded such confidential information. The parties hereto agree that the
injury caused by any breach of the covenants contained in this Section 5.1(d)
cannot be easily calculated and that any party seeking enforcement of such
covenants shall be entitled to equitable remedies, including without limitation
temporary and permanent injunctions, specific performance and an accounting for
profits.
(e) Information shall no longer be subject to the confidentiality
restrictions of Sections 5.1(b) and (d) to the extent that such information
becomes generally available to the public other than in violation of a
confidentiality agreement.
Section 5.2. Efforts; Obtaining Consents. (a) Subject to the terms and
conditions herein provided, each of the Sellers and Buyer agree to use its
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable to consummate and
make effective as promptly as practicable the transactions contemplated by this
Agreement and to cooperate with the other in connection with the foregoing,
including using its reasonable efforts (i) where practicable, to obtain all
necessary waivers, consents and approvals from other parties to material
agreements and contracts (including, without limitation, any debt-related
agreements) and, on the part of Buyer and the Sellers, to obtain without
additional cost to Buyer or the Sellers all consents and agreements and to make
such other provisions reasonably necessary or requested by Buyer to enable Buyer
(or a third party or third parties chosen by Buyer, but under the arrangements
currently in place and as currently operating) to continue to sell and serve
alcoholic beverages at each of the bowling centers currently operated by the
Bowling Centers Business and in the same manner and under the same terms and
arrangements currently sold and served without increasing the costs of such
activity to Buyer (or to the extent
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requested by Buyer, to enable Buyer to have the economic benefits thereof from
and after the Closing), (ii) to obtain all consents, approvals and
authorizations that are required to be obtained from Governmental Authorities,
(iii) to lift or rescind any injunction, restraining order, decree or other
order adversely affecting the ability of the parties hereto to consummate the
transactions contemplated hereby, (iv) to effect all necessary registrations and
filings including, but not limited to, filings under the HSR Act, FATA and any
similar required foreign filings and submissions of information requested by
Governmental Authorities, and (v) to fulfill all conditions to this Agreement.
(b) The parties hereto shall promptly inform the others of any material
communications from the United States Federal Trade Commission, the Department
of Justice or any other Governmental Authority regarding any of the transactions
contemplated hereby. If any party or any Affiliate thereof receives a request
for additional information or documentary material from any such Governmental
Authority with respect to the transactions contemplated hereby, then such party
will endeavor in good faith to make, or cause to be made, as soon as reasonably
practicable and after consultation with the other party, an appropriate response
in compliance with such request.
(c) The parties hereto agree that Buyer may restructure the form of the
acquisition of the Shares or the Purchased Assets contemplated hereby such that
the Companies or the assets thereof may be acquired by or merged into Buyer or
its Affiliates so long as such restructuring does not adversely affect the
Sellers (other than the requirement of the receipt of additional consents). If
such acquisition is so restructured, the parties agree to enter into appropriate
amendments to this Agreement to the extent necessary to accommodate such
restructuring. The covenants and other agreements contained in this Agreement
shall apply as if all of the assets being transferred to Buyer (or an Affiliate
thereof) pursuant to the Spanish and Swiss Bowling Centers Agreements and the
Related Land Sale Agreement were included in the assets of the Companies and the
Subsidiaries and were being transferred pursuant to this Agreement, but in the
form and manner contemplated by such other agreements.
Section 5.3. Further Assurances. Sellers and Buyer agree that, from
time to time, whether before, at or after the Closing Date, each of them will
execute and deliver such further instruments of conveyance and transfer and take
such other action (including on the part of the Sellers, using their reasonable
best efforts to cause the Continuing Affiliates and the Ancillary Parties to
take such action) as may be necessary to
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carry out the purposes and intents of this Agreement, to assure that Buyer has
acquired all of the rights and assets used or held for use in the Manufacturing
Business or the Bowling Centers Business during the ten-month period ended
October 31, 1995, other than such rights and assets disposed of to third parties
prior to the Closing as contemplated by Schedule 5.4 or in the ordinary course
of business and consistent with past practice and to assure that Sellers and the
Continuing Affiliates retain or acquire all rights and assets contemplated in
this Agreement to be retained or acquired by them. Sellers further agree to
change or revoke and to cause the Companies and the Subsidiaries to change or
revoke, at or prior to Closing, the (i) authorizations of persons permitted
access or control over the Companies' and the Subsidiaries' accounts and safe
deposit boxes at banks or other financial institutions and (ii) powers of
attorney, in each case, as requested by Buyer. In addition to the actions
contemplated by Section 5.2 to be taken prior to the Closing, in the event that
the assignments and conveyances contemplated by this Agreement and the Ancillary
Agreements shall not have been completed at or prior to the Closing, Sellers
shall, and shall cause the Continuing Affiliates and the Ancillary Parties to,
continue to use all commercially reasonable efforts to effect such assignments
and conveyances and will cooperate with Buyer, the Companies and the
Subsidiaries in any lawful and commercially feasible arrangement to provide that
the applicable Company or Subsidiary shall have all of the benefits of such
rights and assets. From and after the Closing, the Sellers will not, and will
not permit the Continuing Affiliates to, use any Company Intellectual Property
in their names or operations from and after the Closing Date, other than
pursuant to the License Agreements; provided, however, such entities will not be
in breach of this covenant with respect to use of such property in their names
so long as any nonpermitted names are changed within 90 days of the Closing Date
to no longer contain any reference to AMF, Fair Lanes or any other names that
are included in the Company Intellectual Property or are confusingly similar.
Section 5.4. Conduct of Business. From the date hereof until the
Closing, except as disclosed on Schedule 5.4 hereto or otherwise provided for in
this Agreement, and, except as consented to or approved by Buyer in writing,
Sellers covenant and agree that:
(a) each of the Companies and the Subsidiaries shall operate its
business in the ordinary and usual course in accordance with past practices;
(b) neither any Company nor any of the Subsidiaries shall issue, sell
or agree to issue or sell (i) any shares of
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its capital stock or other equity interests in any Company or any of the
Subsidiaries, or (ii) any securities convertible into, or options with respect
to, or warrants to purchase or rights to subscribe for, any shares of its
capital stock or other equity interests or make any change in its issued and
outstanding capital stock or other equity interests or redeem, purchase or
otherwise acquire any of its capital stock or other equity interests;
(c) neither any Company nor any Subsidiary shall (i) increase in any
manner the compensation of, or enter into any new bonus or incentive agreement
or arrangement with, any of its directors, officers or other employees other
than increases in compensation of employees who are not officers or directors in
the ordinary course of business and consistent with past practice and which are
not material in the aggregate; (ii) pay or agree to pay any pension, retirement
allowance or other employee benefit to any director, officer or employee,
whether past or present, other than as required by contracts or plan documents
in effect on the date of this Agreement; (iii) enter into any new employment,
severance, consulting, or other compensation agreement with any director,
officer or employee or other person; or (iv) commit itself to any additional
pension, profit-sharing, deferred compensation, group insurance, severance pay,
retirement or other employee benefit plan, fund or similar arrangement or adopt
or amend or commit itself to adopt or amend any of such plans, funds or similar
arrangements in existence on the date hereof;
(d) except as otherwise provided for in this Agreement, neither any
Company nor any Subsidiary shall (i) amend its certificate of incorporation or
By-laws, (ii) declare any dividend or make any distribution with respect to its
stock (other than dividends or distributions payable solely to a Company or a
Subsidiary in either case, which is wholly owned, directly or indirectly, by the
Stockholders, and other than dividends and distributions of cash), (iii) assume,
incur or guarantee any obligation for borrowed money, (iv) cancel or compromise,
except for compromises of current or former short-term trade receivables or
other current assets in the ordinary course of business consistent with past
practice, any debts owed to it, (v) waive or release any rights of material
value, or (vi) close any of its facilities;
(e) neither any Company nor any Subsidiary shall (i) sell, transfer,
lease or otherwise dispose of any of its bowling centers or any other material
assets or any Company Intellectual Property, (ii) create or permit to exist any
new security interest, lien or encumbrance on any of its properties or assets,
other than Permitted Liens on Owned Properties, (iii)
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enter into any joint venture, partnership or other similar arrangement or form
any other new material arrangement for the conduct of its business, or (iv) make
any material investment or purchase any material assets or securities of any
Person;
(f) neither any Company nor any Subsidiary shall permit a material
change in its credit practices or its methods of maintaining its books, accounts
or business records or, except as required by U.S. GAAP (in which event prior
notice shall be given to Buyer), change any of its accounting principles or the
methods by which such principles are applied for tax or financial reporting
purposes, and in the case of financial reporting purposes, from those used in
producing the Companies' October 31, 1995 audited combined financial statements;
(g) the Companies and the Subsidiaries together shall incur capital
expenditures, and shall only incur capital expenditures, in the ordinary course
of business and consistent with past practice;
(h) neither any of the Companies nor any of the Subsidiaries shall
substantially increase the total number of its employees or enter into a new
collective bargaining agreement with any employees;
(i) neither any of the Companies nor any of the Subsidiaries shall
enter into a material lease of real property, other than renewals of leases with
unrelated third parties in the ordinary course of business and consistent with
past practice, or permit any modification, amendment or waiver of the provisions
of any existing lease of real property, whether in connection with seeking or
obtaining a lessor's consent to the transactions contemplated by this Agreement
or otherwise, without the consent of the Buyer which will not be unreasonably
withheld if there are no significant changes to the economic terms thereof;
(j) neither any of the Companies nor any of the Subsidiaries shall
engage in purchases of inventory or raw materials other than in the ordinary
course of business and consistent with past practice;
(k) neither any of the Companies nor any of the Subsidiaries shall
enter into any noncompetition agreement;
(l) neither any Company nor any of the Subsidiaries shall enter into
any financing transactions, including permitting or causing the issuance of
letters of credit, that would
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create an impediment to satisfaction of the conditions and covenants contained
in this Agreement or to timely consummation of the Closing; and
(m) neither any of the Companies nor any of the Subsidiaries shall
agree to take any action prohibited by this Section 5.4.
The foregoing notwithstanding, any bonuses permitted to be paid as
reflected on Schedule 5.4 shall be limited to $30 million to domestic employees
and $15 million to non-domestic employees (but in any case, not to exceed $40
million in the aggregate). Any such bonuses shall be paid in cash, prior to the
Closing, and the funds used to pay such bonuses shall not be from the ordinary
course working capital of the Companies.
Section 5.5. Preservation of Business. From the date hereof until the
Closing, subject to the terms and conditions of this Agreement, Sellers shall,
and shall cause the Companies and Subsidiaries to, use reasonable efforts to
preserve the business, Company Intellectual Property and Licensed Intellectual
Property of the Companies and Subsidiaries intact, to maintain the Companies
Liquor Licenses and the liquor licenses held by the Concession Entities in full
force and effect, to preserve the good will of customers, suppliers, employees
and others having business relations with the Companies and Subsidiaries, to
retain its key employees, and to maintain insurance in full force and effect
with responsible companies, comparable in amount to that in effect on the date
of this Agreement, subject to the availability thereof at costs not materially
greater than at present.
Section 5.6. Non-Solicitation. (a) Sellers will not, and will cause the
other Continuing Affiliates not to, for a period of three years after the
Closing Date, without the prior written approval of Buyer, directly or
indirectly, solicit any person who is a management or other key employee of
Buyer, the Companies (including the Retained Entities) (other than as
contemplated by the Spanish and Swiss Bowling Centers Agreements) or the
Subsidiaries at the date hereof to terminate his or her employment with Buyer,
the Companies, the Subsidiaries or the Retained Entities. Schedule 5.6
identifies those persons who are officers or employees of both (i) one or more
of the Companies (including the Retained Entities) and the Subsidiaries and (ii)
one or more Seller or Continuing Affiliate, and specifies whether the
restriction on Sellers set forth in this Section 5.6 is applicable to each such
person. Sellers each agree that any remedy at law for any breach by it of this
Section 5.6 would be inadequate, and the non-breaching party would be entitled
to injunctive relief in such a case.
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(b) Prior to the Closing, until termination of this Agreement, Sellers
and the other Continuing Affiliates shall not, and shall not permit the
Companies or Subsidiaries to, (i) solicit any inquiries or proposals for, or
enter into or continue or resume any discussions with respect to or enter into
any agreement with respect to, any acquisition of any Shares or the Purchased
Assets, any shares of capital stock of any Subsidiary or all, or a substantial
part, of the assets of any of the Companies or Subsidiaries or (ii) furnish or
cause to be furnished any non-public information concerning the business and
operations of the Companies or Subsidiaries to any Person (other than to or at
the request of Buyer and its representatives) other than in the ordinary course
of business consistent with past practice. If at any time prior to the Closing,
any Seller or any Continuing Affiliate or any of their representatives is
approached by any third party which expresses an interest in making an
acquisition of the type referred to in clause (i) of the preceding sentence,
Sellers will promptly disclose to Buyer the nature of such contact and the
parties thereto.
Section 5.7. Intercompany Accounts. Except to the extent of
indebtedness repaid as directed by the Designated Representative pursuant to the
last sentence of Section 2.1, effective as of the Closing, all Intercompany
Receivables or Intercompany Payables then existing between Sellers or any other
Continuing Affiliate, on the one hand, and any Company or Subsidiary, on the
other hand, shall be settled by way of capital contribution (with respect to
Intercompany Payables due to Sellers or any other Continuing Affiliate) or by
way of dividend in kind (with respect to Intercompany Receivables of any of the
Companies or Subsidiaries owed by any Seller or any Continuing Affiliate).
Section 5.8. Financing. (a) Buyer shall use all commercially reasonable
efforts to obtain by the Closing Date, on the terms described in the Financing
Commitments and the Highly Confident Letter, all financing required to
consummate the transactions contemplated hereby on the terms set forth therein
(the "Financing"), in each case, except to the extent Buyer exercises its option
pursuant to Section 5.8(c) hereof or unless Buyer has made other arrangements
for the necessary financing. Buyer shall periodically brief Sellers on the
status of negotiations to obtain the Financing. If any portion of the Financing
becomes unavailable, Buyer will use all commercially reasonable efforts to
obtain necessary financing from another source, on and subject to substantially
the same terms and conditions as the portion of the Financing that has become
unavailable, in order to consummate the transactions contemplated
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hereby on the terms and within the time period set forth herein.
(b) Buyer may elect, in its sole discretion, to consummate the
subordinated debt portion of the Financing prior to the Closing Date as an early
financing (the "Early Financing") by furnishing Sellers with written notice of
such election and in such event Sellers shall advance (subject to repayment only
as set forth below) $15 million in cash to Buyer or a designated Affiliate of
Buyer (the "Sellers Contribution") and Buyer shall obtain $100 million from its
Affiliates (the "Buyer Contribution"), in each case on the second business day
immediately preceding the scheduled closing date of the Early Financing (as
Buyer may inform the Sellers in writing at least two business days prior
thereto; any such notice shall be revocable if such Early Financing is not
consummated). Following the closing of the Early Financing, the funds obtained
thereby, as well as the Sellers Contribution and the Buyer Contribution, shall
be invested and reinvested in a manner determined by Buyer in its sole
discretion and/or in accordance with any requirements of the terms of the Early
Financing. If the Early Financing is consummated and thereafter the Stock and
Asset Purchases are consummated pursuant to this Agreement, (i) at the Closing
Buyer shall return the Sellers Contribution to Sellers (as directed by the
Designated Representative), without interest and (ii) the specific amount of
Working Capital on which the adjustment set forth in the first sentence of
Section 2.3(e) is based (i.e., $33,675,000) shall be reduced by an amount (the
"Early Financing Adjustment") equal to $10,000,000 if the Closing is duly
requested by the Sellers Closing Notice to occur on or before April 8, 1996 (any
requested date contained in Sellers Closing Notice shall be a business day that
is no sooner than five days after the date such notice is actually received by
Buyer), provided that the amount of the Early Financing Adjustment shall
decrease $200,000 per day for each day after April 8, 1996 contained in such
notice to $5,000,000 if the Closing is duly requested by the Sellers Closing
Notice to occur on May 3, 1996 (which is the latest date which is permitted to
be contained therein). Notwithstanding the preceding sentence, if any of Buyer's
conditions to consummation of the Stock and Asset Purchases contained in Article
VIII of this Agreement (excluding Section 8.4) shall not have been satisfied (or
upon payment of the Initial Purchase Price to the accounts specified by the
Designated Representative would not be satisfied) or the condition in the senior
debt financing relating to the accuracy of the representations and warranties
set forth in the documentation of the senior debt financing shall not be
satisfied, in any case, on the date for Closing requested in the Sellers Closing
Notice, then the third business day after the day on which Buyer receives
written notice from Seller that
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all such conditions shall have been satisfied, rather than the Closing Date
requested in the Sellers Closing Notice, or the actual Closing Date if earlier,
shall be used for purposes of calculating the Early Financing Adjustment if the
Closing Date occurs after the date requested in the Sellers Closing Notice.
Buyer shall use its reasonable efforts to consummate the transactions
contemplated by this Agreement on the Closing Date requested in the Sellers
Closing Notice (it being understood that Buyer is not required to exercise the
Seller Financing Option in order to satisfy this sentence). In order for the
Closing to be duly requested by the Sellers Closing Notice for purposes of this
Section 5.8(b) and Section 5.8(c), the Sellers must reasonably believe that all
conditions to consummation of the Stock and Asset Purchases set forth in Article
VIII of this Agreement (other than those contained in Section 8.4) have been or
will be readily satisfied by the Closing Date requested in such Sellers Closing
Notice. If after the Sellers Contribution is made the Early Financing shall not
be consummated, Buyer shall promptly return the Sellers Contribution to Sellers
(as directed by the Designated Representative), without interest.
If the Early Financing is consummated and thereafter this Agreement
shall terminate for any reason without the Stock and Asset Purchases being
consummated, Buyer shall utilize the funds advanced as the Sellers Contribution
to defray the costs and expenses of the Early Financing, including without
limitation the underwriting discount or spread in connection with the issuance
and sale of the subordinated debt securities included in the Early Financing
(which amount shall equal one-half of the gross spread); accrued interest (net
of the interest income attributable to the investment and reinvestment of the
proceeds obtained from the sale of such subordinated debt securities through
their redemption), premium and penalties payable in respect of the relevant
subordinated debt securities through their redemption; legal, accounting and
printing fees and expenses attributable to the Early Financing; and other costs
and expenses attributable to the Early Financing, and in the event the funds
advanced as the Sellers Contribution shall exceed such costs and expenses of the
Early Financing, Buyer shall refund the excess to Sellers (as directed by the
Designated Representative).
(c) In the event an Early Financing is not consummated, Buyer may, at
its option, so long as it furnishes Sellers with prior written notice of its
election of the option provided by this Section 5.8(c) (the "Seller Financing
Option"), pay the Sellers at the Closing a portion of the Initial Purchase Price
in the form of (i) $200,000,000 principal amount of 12.5% Senior Subordinated
Notes due 2006 of AMF Group Inc. or another Affiliate of Buyer which is the
borrower under the
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senior debt financing contemplated by the Financing (the "Senior Notes") and
(ii) 13.5% Senior Subordinated Discount Notes due 2006 of AMF Group Inc. or
another Affiliate of Buyer which is the borrower under the senior debt financing
contemplated by the Financing having an aggregate principal amount which
corresponds to $150 million of accreted value on the Closing Date (the "Discount
Notes", and together with the Senior Notes, the "Buyer Notes"). The Buyer Notes
shall be redeemable at the option of the issuer at any time, in whole but not in
part, until the second anniversary of their issuance at 96.5% of principal
amount together with accrued and unpaid interest, if any, to the date of
redemption, in the case of the Senior Notes, and at 96.5% of accreted value, in
the case of the Discount Notes, and in each case having the other terms set
forth in Exhibit 5.8(c) to this Agreement. If Buyer elects the Seller Financing
Option and thereafter the Stock and Asset Purchases are consummated pursuant to
this Agreement, at the Closing, the Buyer Notes shall be delivered to Sellers
and shall be valued, for purposes of the Initial Purchase Price, at (and the
amount of the Initial Purchase Price payable in cash shall be reduced by)
$337,750,000 and the specific amount of Working Capital on which the adjustment
set forth in the first sentence of Section 2.3(e) is based (i.e., $33,675,000)
shall be reduced by an amount (the "Seller Financing Adjustment") equal to
$3,500,000 if the Closing is duly requested by the Sellers Closing Notice to
occur on or before April 8, 1996, provided that the amount of the Seller
Financing Adjustment shall decrease $140,000 per day for each day after April 8,
1996 contained in such notice to zero if the Closing is duly requested by the
Sellers Closing Notice to occur on May 3, 1996. Notwithstanding the preceding
sentence, if any of Buyer's conditions to consummation of the Stock and Asset
Purchases contained in Article VIII of this Agreement (excluding Section 8.4)
shall not have been satisfied (or upon payment of the Initial Purchase Price to
the accounts specified by the Designated Representative would not be satisfied)
or the condition in the senior debt financing relating to the accuracy of the
representations and warranties set forth in the documentation of the senior debt
financing shall not be satisfied, in any case, on the date for Closing requested
in the Sellers Closing Notice, then the third business day after the day on
which Buyer receives written notice from Seller that all such conditions shall
have been satisfied, rather than the Closing Date requested in the Sellers
Closing Notice, or the actual Closing Date if earlier, shall be used for
purposes of calculating the Seller Financing Adjustment if the Closing Date
occurs after the date requested in the Sellers Closing Notice. The amounts, if
any, of the subordinated debt securities to be acquired by each Seller pursuant
to this Section 5.8(c) shall be allocated among the Sellers as they shall
determine.
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Section 5.9. Ancillary Agreements. At the Closing, Buyer and
Sellers shall, and shall use their reasonable best efforts to cause each of the
other parties thereto to, execute and deliver the Ancillary Agreements which
have not been executed and delivered theretofore.
Section 5.10. Resignations; Nominee Shareholders. At the
Closing, Sellers shall cause to be delivered to Buyer duly signed resignations,
effective immediately after the Closing, of all directors and officers of all
the Companies (other than the Retained Entities) and the Subsidiaries designated
in writing by Buyer to Sellers at least five business days prior to the Closing
Date, or shall take such other action as is necessary to ensure that such
persons are not directors or officers of the Companies (other than the Retained
Entities) or Subsidiaries after the Closing. At the Closing, Sellers shall cause
to be transferred to such designees as Buyer may specify in writing all shares
of capital stock or other equity interests of the Companies (other than the
Retained Entities) and the Subsidiaries held by nominee shareholders.
Section 5.11. Current Information. During the period from the
date of this Agreement to the Closing, (i) Sellers shall notify Buyer of (A) any
change in the normal course of business or operations of the Companies or the
Subsidiaries that would be reasonably likely to have a material adverse effect
on the Business Condition of the Manufacturing Business or the Bowling Centers
Business, (B) the making or commencement of any governmental complaints,
investigations or hearings of which any of the Sellers has knowledge that would
be reasonably likely to have a material adverse effect on the Business Condition
of the Manufacturing Business or the Bowling Centers Business (or the receipt by
any Seller, Company or Subsidiary of any communications (of which any Seller or
any officer or director of any of the Companies or any Continuing Affiliate has
knowledge) indicating that the same may be contemplated), (C) the institution or
threat of any material litigation relating to any Company or Subsidiary or the
Manufacturing Business or the Bowling Centers Business of which any Seller has
knowledge, or the settlement of, or any other significant developments in, any
material litigation relating to any of the Companies or the Subsidiaries or
the Manufacturing Business or the Bowling Centers Business or (D) any notice
received from any of the customers, suppliers or distributors listed on Schedule
3.17 regarding the relationship between any Company or Subsidiary and such
customer, supplier or distributor and indicating a change, or anticipated
change, in such relationship that, if realized, would be reasonably likely to
have a material adverse effect on the commercial relationship between such
Company or Subsidiary and such customer, supplier or distributor and (ii)
Buyer shall
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give prompt notice to Sellers and Sellers shall give prompt notice to Buyer, of
(A) any representation or warranty made by it or them contained in this
Agreement which has become untrue or inaccurate in any material respect, or (B)
the failure by it or them to comply with or satisfy in any material respect any
covenant, condition, or agreement to be complied with or satisfied by it under
this Agreement; provided, however, that such notifications shall not excuse or
otherwise affect the representations, warranties, covenants or agreements of the
parties or the conditions to the obligations of the parties under this
Agreement.
Section 5.12. Financial Statements. Prior to the Closing,
Sellers shall deliver to Buyer promptly after they are prepared such monthly or
other financial statements or financial reports of the Companies as are prepared
by or relating to the Companies in the ordinary course of business consistent
with past practices and such other financial information as Buyer may reasonably
request, promptly after such request. Sellers shall use all reasonable efforts
to have Price Waterhouse and KPMG Peat Marwick, LLP consent to Buyer's use of
and reliance on the Financial Statements and such other financial statements of
the Companies or its predecessors as may be required for any portion of the
Financing or refinancings, exchanges or substitutions thereof, including in
connection with filings under the federal securities laws. Sellers shall use all
reasonable efforts to have Price Waterhouse deliver the audited financial
statements referred to in the definition of the term "Closing Date", and in the
form, with the opinions and on the time schedule referred to therein.
Section 5.13. Further Actions. Prior to or at the Closing,
Sellers agree that they will, or will cause the Companies and Subsidiaries to,
(a) take the actions described in Items 1(c) and (d), 3(e), 4(c) and 5(a)
through (g) of Schedule 5.4, including consummation of the transactions
contemplated by the Spanish and Swiss Bowling Centers Agreements and the Related
Land Sale Agreement and including the distribution by the stockholders of AMF
Bowling, S.A., to the stockholders of such stockholders, of all the equity of
AMF Bowling, S.A., and including the payment by the Sellers of all Taxes arising
out of such distribution, (b) except to the extent indebtedness is explicitly
set forth on Schedule 5.13 and whether or not disclosed on any other Schedule
hereto, or to the extent otherwise requested by Buyer prior to the repayment
thereof, repay in full at or prior to the Closing (including by directing Buyer
at the Closing pursuant to the last sentence of Section 2.1 to deliver a portion
of the Initial Purchase Price to the accounts of the lenders thereof) all
outstanding indebtedness for money borrowed and indebtedness evidenced by notes,
including without
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limitation, all mortgages, loans and similar instruments, including accrued
interest, premium, penalties and other costs, and (c) use all reasonable efforts
to eliminate or discharge all mortgages, liens and security interests on the
stock or assets of the Companies and the Subsidiaries and any other encumbrances
on the stock or assets of the Companies and the Subsidiaries, including, without
limitation, the Owned Properties, which encumbrances are described in clauses 1,
2(a), 2(b), 3, 4, 5 or 12 of the fifth sentence of Section 3.4(a). Buyer and
Sellers agree to cooperate with each other so that all outstanding letters of
credit relating to the Companies or any Subsidiaries or any Purchased Assets are
replaced prior to the Closing and that the parties whose obligations are being
secured by such letters of credit shall take such actions necessary in order to
have such replacements issued for their own accounts. Prior to the Closing,
Sellers shall take all such actions as are reasonably necessary, with Buyer
bearing any filing or similar fees of any Governmental Authorities, to effect
the assignment of Intellectual Property, if any, to be assigned pursuant to this
Agreement to any of the Companies or the Subsidiaries, and to record such
assignments with all applicable Governmental Authorities. Prior to the Closing,
Sellers shall (a) cause AMF Reece and Reece International, Inc. to prepare and
file in the United States Patent and Trademark Office a paper executed by legal
representatives duly authorized to act on behalf of co-registrants AMF Reece and
Reece International, Inc., expressly abandoning U.S. Trademark Registration No.
1,750,997 for the mark AMF REECE, and (b) cause Bowling to prepare and file in
the Chinese Trademark Office a paper executed by a legal representative duly
authorized to act on behalf of applicant AMF Bowling, Inc., expressly abandoning
Chinese Application No. 94033022, filed on April 19, 1994, for the mark AMF
REECE.
Section 5.14. Insurance. (a) From and after the Closing,
Sellers shall use all reasonable efforts, subject to the terms of the Sellers'
Insurance Policies, to retain the right to make claims and receive recoveries,
subject to Section 5.14(e), for the benefit of the Companies and Subsidiaries,
as well as for the benefit of Sellers and the Continuing Affiliates, under any
insurance policies maintained at any time prior to the Closing by any Seller or
a Continuing Affiliate or the predecessors of any of them (collectively, the
"Sellers' Insurance Policies"), covering any loss, liability, claim, damage or
expense relating to the assets, business, operations, conduct, products and
employees (including former employees) of any of the Companies, Subsidiaries and
their respective predecessors (in each case, in so far as they cover or
otherwise relate to the Manufacturing Business or the Bowling Centers Business
or otherwise relate to losses, liabilities, claims, damages or
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expenses as to which the Companies or the Subsidiaries could have
responsibility) that relates to or arises out of occurrences prior to or at the
Closing (a "Claim"). Sellers agree to use reasonable efforts so that the
Companies and Subsidiaries shall have the right, power and authority, subject to
any required consent of the carriers under the Sellers' Insurance Policies, in
the name of Sellers or any of their Continuing Affiliates, to make directly any
Claims under the Sellers' Insurance Policies and to receive directly recoveries
thereunder. Buyer agrees to notify Sellers, promptly upon making any such Claim,
of the basis and amount of such Claim.
(b) Buyer agrees to reimburse, indemnify and hold Sellers and
their Affiliates harmless for reasonable out-of-pocket costs and expenses
incurred to carry out any obligations pursuant to this Section 5.14 or as a
result of Claims being made after the Closing by or on behalf of any of the
Companies or Subsidiaries against Sellers' Insurance Policies. Buyer will pay
and bear all amounts relating to any self-retention or deductible and any gaps
in or limits on coverage applicable to a Claim asserted at any time with respect
to the applicable Sellers' Insurance Policy, after taking into account the
effect of any prior claim payments under the terms of such Sellers' Insurance
Policy, whether or not the applicable Sellers' Insurance Policy solely covers
claims of the Companies and Subsidiaries or covers claims of both Sellers and
their Continuing Affiliates on the one hand, and the Companies and Subsidiaries
on the other hand. In the event that any legal action, arbitration, negotiation
or other proceedings are required for coverage to be asserted against any
insurer or a Claim to be perfected, in each case on behalf of any of the
Companies or Subsidiaries, (i) Buyer shall, to the extent possible, do so at its
own expense or (ii) if Buyer is not permitted to assert coverage or perfect a
Claim, Sellers or one of their Affiliates shall do so, and, in either event,
Buyer shall hold harmless and indemnify Sellers and their Affiliates for any
reasonable costs and expenses that they may incur because of such action (other
than the incurrence of normal internal administrative expenses).
(c) Each of Sellers, Buyer, the Companies and the
Subsidiaries shall use its best efforts (i) to cooperate fully and to cause its
Affiliates to cooperate fully with the others in submitting good faith Claims on
behalf of the Companies and Subsidiaries under the Sellers' Insurance Policies
and (ii) to pay promptly over to Buyer (or, at Buyer's request, to specified
Companies or Subsidiaries) any and all amounts received by Sellers or their
Affiliates under the Sellers' Insurance Policies with respect to Claims.
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(d) Sellers and their Continuing Affiliates shall retain
custody of the Sellers' Insurance Policies and any and all service contracts,
claim settlements and all other insurance records relating thereto; and Buyer,
the Companies, and the Subsidiaries shall have access to and the right to make
copies of all such documents and records upon the reasonable request to Sellers
or their Continuing Affiliates.
(e) Nothing contained herein to the contrary shall prohibit
Sellers from managing their risk management program with respect to post-Closing
periods, including without limitation the cancellation or reduction of the
amount or scope of insurance coverage with respect to post-Closing periods, in a
manner consistent with their business judgment as applied to the operations of
Sellers and their Continuing Affiliates.
Section 5.15. Renewal of Guaranteed Items. Without the prior
written consent of the Designated Representative, none of Buyer, the Companies
nor the Subsidiaries shall, or shall permit any of their Affiliates to,
voluntarily renew or extend the terms of, or increase, directly or indirectly,
the Sellers' or another Continuing Affiliate's obligations under or transfer to
an unaffiliated third party any lease, loan, contract or other obligation
identified in Schedule 5.15 for which any Seller or a Continuing Affiliate is or
may be liable, as guarantor, primary obligor or otherwise for the benefit of the
Companies or any Subsidiaries (other than the Retained Entities), unless all
obligations of the Sellers and the Continuing Affiliates with respect thereto
are thereupon terminated by documentation reasonably satisfactory in form and
substance to the Designated Representative or unless the Sellers and/or the
Continuing Affiliates, as the case may be, are otherwise indemnified therefor.
Section 5.16. Brokers Fees. Buyer will pay Sellers'
obligations to Goldman, Sachs & Co. pursuant to that letter agreement dated
September 25, 1995. Sellers shall pay all obligations to Wheat First Butcher
Singer in connection with the transactions contemplated by this Agreement.
Section 5.17. Companies' Stock Performance Plans. Buyer shall
cause the Companies to perform all of the Companies' obligations under the
Companies' Stock Performance Plans. Buyer agrees that the Companies' obligation
to perform under the Companies' Stock Performance Plans shall not be treated as
indebtedness for purposes of determining the Initial Purchase Price nor as a
liability for purposes of determining the amount of Working Capital shown on the
Adjusted Closing Date Balance
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Sheet for the calculation of the adjustment to the Initial Purchase Price
contemplated by the first sentence of Section 2.3(e), but shall be used to
determine any adjustment to the Initial Purchase Price contemplated by the
second sentence of Section 2.3(e).
ARTICLE VI
Employee Benefits
Section 6.1. Employee Benefit Plans. The Sellers hereby
represent and warrant to Buyer as follows:
(a) Schedule 6.1(a) includes a complete list of all employee
benefit plans, programs, policies, practices, and other arrangements providing
benefits to any employee or former employee primarily employed in the United
States or subject to the laws of the United States or any state or jurisdiction
thereof or any beneficiary or dependent thereof, whether or not written, and
whether covering one person or more than one person, sponsored or maintained by
any of the Companies or the Subsidiaries or to which any of the Companies or the
Subsidiaries contribute or are obligated to contribute, other than solely by
reason of being an ERISA Affiliate of another entity (collectively, "Company
Employee Benefit Plans"). Without limiting the generality of the foregoing, the
term "Company Employee Benefit Plans" includes all employee welfare benefit
plans within the meaning of Section 3(1) of ERISA and all employee pension
benefit plans within the meaning of Section 3(2) of ERISA. Schedule 6.1(a) also
includes a complete list of all employee benefit plans, programs, policies,
superannuation schemes, retirement schemes, provident schemes, practices, and
other arrangements for any employee or former employee (including arrangements
for the payment to employees or their retirement or death or on the occurrence
of any permanent or temporary disability) primarily employed in countries other
than the United States or subject to the laws of countries other than the United
States or any beneficiary or dependent thereof, whether or not written and
whether covering one person or more than one person, sponsored or maintained by
any of the Companies or the Subsidiaries or to which any of the Companies or the
Subsidiaries contribute or are obligated to contribute (collectively, "Non-U.S.
Company Employee Benefit Plans").
(b) With respect to each Company Employee Benefit Plan and
Non-U.S. Company Employee Benefit Plan, Sellers have delivered to Buyer a true,
correct and complete copy of: (A) each writing constituting a part of such
Company Employee Benefit Plan and Non-U.S. Company Employee Benefit Plan,
including
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without limitation all plan documents, benefit schedules, participant
agreements, trust agreements, and insurance contracts and other funding
vehicles; (B) the three most recent Annual Reports (Form 5500 Series where
applicable) and accompanying schedules, if any; (C) the current summary plan
description, if any; (D) the most recent annual financial report, if any; and
(E) the most recent determination letter from the IRS or other relevant Taxing
Authority, if any. All financial statements and actuarial reports for each
Company Employee Benefit Plan and each Non-U.S. Company Employee Benefit Plan
have been prepared in accordance with generally accepted accounting principles
and actuarial principles, applied on a uniform and consistent basis. Except as
specifically provided in the foregoing documents delivered to Buyer, there are
no amendments to any Company Employee Benefit Plan or Non-U.S. Company Employee
Benefit Plan that have been adopted or approved nor have Sellers undertaken to
make any such amendments.
(c) Schedule 6.1(a) identifies each Company Employee Benefit
Plan that is intended to be a "qualified plan" satisfying the requirements of
Section 401(a) of the Code (a "Company Pension Plan").
(d) Except as otherwise set forth in Schedule 6.1(d) hereto,
neither the execution and delivery of this Agreement nor the Ancillary
Agreements nor the consummation of the transactions contemplated hereby or
thereby will (either alone or in conjunction with any subsequent or related
event, including without limitation, termination of employment) (i) result in
any material payment (including, without limitation, severance, unemployment
compensation, golden parachute or otherwise) becoming due from the Companies or
the Subsidiaries under any Company Employee Benefit Plan or Non-U.S. Company
Employee Benefit Plan or any collective bargaining agreement, (ii) materially
increase any compensation or benefits otherwise payable under any such Company
Employee Benefit Plan or Non-U.S. Company Employee Benefit Plan or collective
bargaining agreement or (iii) accelerate any material liability under any
Company Employee Benefit Plan or Non-U.S. Company Employee Benefit Plan because
of an acceleration of the time of payment or vesting of any rights or benefits
to which employees may be entitled thereunder. Neither the execution and
delivery of this Agreement nor the Ancillary Agreements nor the consummation of
the transactions contemplated hereby or thereby has resulted in or will result
in payments to "disqualified individuals" (as defined in Section 280G(c) of the
Code) of the Companies or the Subsidiaries which, individually or in the
aggregate, will constitute "excess parachute payments" (as defined in Section
280G(b) of the Code) resulting in the imposition of the excise
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tax under Section 4999 of the Code or the disallowance of deductions under
Section 280G of the Code.
(e) The Companies and the Subsidiaries have complied in all
material respects with the terms of any collective bargaining agreement to which
they are parties. No labor organization or group of employees of the Companies
or the Subsidiaries has made a pending demand for recognition or certification,
and there are no representation or certification proceedings or petitions
seeking a representation proceeding presently pending or threatened to be
brought or filed, with the National Labor Relations Board or any other labor
relations tribunal or authority. There are no organizing activities, strikes,
work stoppages, slowdowns, lockouts, material arbitrations or material
grievances, or other material labor disputes pending or threatened against or
involving the Companies or the Subsidiaries.
(f) For purposes of this Article VI, the term "employee" shall
be considered to include individuals rendering personal services to the
Companies as independent contractors.
(g) Each of the Companies and the Subsidiaries has withheld
appropriate withholding Taxes for all employees of the Companies and the
Subsidiaries and has paid such Taxes over to the appropriate Taxing Authority on
a timely basis.
(h) The Companies and the Subsidiaries have no liability for
life, health, medical or other welfare benefits to former employees or
beneficiaries or dependents thereof, except for health continuation coverage as
required by Section 4980B of the Code or Part 6 of Title I of ERISA and at no
expense to the Companies or the Subsidiaries.
Section 6.2. Company Employee Benefit Plans. The Sellers
hereby represent and warrant to Buyer as follows: (a) All Company Employee
Benefit Plans which are "employee benefit plans," as defined in Section 3(3) of
ERISA, in all material respects are in compliance with and have been
administered in compliance with all applicable requirements of law, including
but not limited to the Code and ERISA, and all contributions required to be made
to each such plan under the terms of such plan, ERISA or the Code for all
periods of time prior to October 31, 1995 or the Closing Date, as the case may
be, have been or, as applicable, will by the Closing Date be timely made or paid
in full or, to the extent not required to be made or paid on or before October
31, 1995 or the Closing Date, have been fully reflected on the Balance sheet or
will be fully reflected on the Closing Date Balance Sheet, respectively.
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(b) A favorable determination letter as to the qualification
of each Company Pension Plan under Section 401(a) of the Code has been issued
and remains in effect and the related trust has been determined to be exempt
from taxation under Section 501(a) of the Code and any amendment made or event
relating to such Company Pension Plan subsequent to the date of such
determination letter has not adversely affected the qualified status of such
Company Pension Plan. No issue concerning qualification of any Company Pension
Plan is pending before or, to the best knowledge and belief of the Sellers,
threatened by, the IRS. Each Company Pension Plan has been administered in
accordance with its terms, except for those terms which are inconsistent with
the changes required by the Code and any regulations and rulings promulgated
thereunder for which changes are not yet required to be made, in which case each
Company Pension Plan has been administered in accordance with the provisions of
the Code and such regulations and rulings, and neither the Sellers, the
Companies and the Subsidiaries, nor any fiduciary of any Company Pension Plan
has done anything which would adversely affect the qualified status of any
Company Pension Plan or related trust. Sellers and the Companies and the
Subsidiaries have performed all material obligations required to be performed by
them under, and are not in default under or in violation of, the terms of any of
the Company Employee Benefit Plans in any material respect. None of Sellers, the
Companies or the Subsidiaries or any other "disqualified person" (as defined in
Section 4975 of the Code) or "party-in-interest" (as defined in Section 3(14) of
ERISA) has engaged in any "prohibited transaction" (as such term is defined in
Section 4975 of the Code or Section 406 of ERISA), which could subject any
Company Employee Benefit Plan (or its related trust), the Companies or the
Subsidiaries or any officer, director or employee of the Companies or the
Subsidiaries to the tax or penalty imposed under Section 4975 of the Code; all
"fiduciaries," as defined in Section 3(21) of ERISA, with respect to the Company
Employee Benefit Plans have complied in all respects with the requirements of
Section 404 of ERISA; and no "reportable event" within the meaning of Section
4043 of ERISA has occurred with respect to any Company Pension Plan. The
Companies and the Subsidiaries have not incurred, and do not reasonably expect
to incur, any material liability to the Pension Benefit Guaranty Corporation
(except for required premium payments, which payments have been made when due).
(c) Except for the Multiemployer Plans set forth in Schedule
6.2(c), no Company Employee Benefit Plan is subject to Title IV or Section 302
of ERISA or Section 412 or 4971 of the Code.
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(d) With respect to each Multiemployer Plan, except as set
forth in Schedule 6.1(l): (i) none of the Companies or the Subsidiaries or any
ERISA Affiliates has incurred any Withdrawal Liability that has not been
satisfied in full; (ii) if any of the Companies or the Subsidiaries or any ERISA
Affiliates were to experience a withdrawal or partial withdrawal from such plan,
no material Withdrawal Liability would be incurred; (iii) none of the Companies
or the Subsidiaries or any ERISA Affiliate has received any notification, nor
has any reason to believe, that any such plan is in reorganization, has been
terminated, or may reasonably be expected to be in reorganization or to be
terminated, (iv) none of the Companies or the Subsidiaries or any ERISA
Affiliates has suffered a 70 percent decline in "contribution base units,"
within the meaning of Section 4205(b)(1)(A) of ERISA, in any plan year beginning
after 1979, and (v) none of the Companies or the Subsidiaries or any ERISA
Affiliates is liable or has been advised that it is liable for any funding taxes
under sections 413(b)(6) or 4971 of the Code on account of any accumulated
funding deficiency of any Multiemployer Plan to which any of the Companies or
the Subsidiaries or any ERISA Affiliates has contributed or is required to
contribute. For purposes of this Section 6.2(d), a "Multiemployer Plan" means
any "multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA to
which the Company or any ERISA Affiliate of the Company contributes, has an
obligation to contribute, or has at any time since September 2, 1974,
contributed or been obligated to contribute. For purposes of this Section
6.2(d), "Withdrawal Liability" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as
those terms are defined in Part I of Subtitle E of Title IV of ERISA.
(e) No Company Employee Benefit Plan is a plan that has two or
more contributing sponsors at least two of whom are not under common control,
within the meaning of Section 4063 of ERISA (a "Multiple Employer Plan"), nor
have the Companies or the Subsidiaries or any ERISA Affiliate of the Companies
or the Subsidiaries, at any time since September 2, 1974, contributed to or been
obligated to contribute to any Multiple Employer Plan. For purposes of this
Section 6.2, "ERISA Affiliate" means, with respect to any entity, trade or
business, any other entity, trade or business that is a member of a group
described in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1)
of ERISA that includes the first entity, trade or business, or that is a member
of the same "controlled group" as the first entity, trade or business pursuant
to Section 4001(a)(14) of ERISA.
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(f) There does not now exist, nor do any circumstances exist
that could result in, any Controlled Group Liability that would be a liability
of the Companies or the Subsidiaries following the Closing. Without limiting the
generality of the foregoing, neither the Companies, the Subsidiaries nor any
ERISA Affiliate of the Company or the Subsidiaries has engaged in any
transaction described in Section 4069 or Section 4204 of ERISA. "Controlled
Group Liability" means any and all liabilities under (i) Title IV of ERISA, (ii)
section 302 of ERISA, (iii) sections 412 and 4971 of the Code, (iv) the
continuation coverage requirements of section 601 et seq. of ERISA and section
4980B of the Code, and (v) corresponding or similar provisions of foreign laws
or regulations, other than such liabilities that arise solely out of, or relate
solely to, the Company Employee Benefit Plans.
(g) There are no pending or threatened claims (other than
claims for benefits in the ordinary course), lawsuits, audits, investigations or
arbitrations which have been threatened, asserted or instituted against the
Company Employee Benefit Plans, any fiduciaries thereof with respect to their
duties to the Company Employee Benefit Plans or the assets of any of the trusts
under any of the Company Employee Benefit Plans which could reasonably be
expected to result in any material liability of the Companies or the
Subsidiaries to the Pension Benefit Guaranty Corporation, the Department of
Treasury, the Department of Labor or any Multiemployer Plan.
Section 6.3. Non-U.S. Company Employee Benefit Plans. The
Sellers hereby represent and warrant to Buyer as follows:
(a) The Non-U.S. Company Employee Benefit Plans comply in all
material respects with, and have been managed in accordance with, all applicable
laws, regulations and requirements.
(b) Where Non-U.S. Company Employee Benefit Plans are funded
or insured, all contributions and other amounts due to or in respect of them or
any state pension arrangements by the Companies and the Subsidiaries have been
fully paid at Closing. Where such Non-U.S. Company Employee Benefit Plans are
unfunded or underfunded, appropriate reserves are established therefor in the
Financial Statements. The Companies and the Subsidiaries have not by any act or
omission, direct or indirect, materially increased their liabilities or
obligations to the Non-U.S. Company Employee Benefit Plans since the date of the
last actuary's report described in Section 6.3(c) below.
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(c) The Sellers have given the Buyer the actuary's report on
the latest actuarial valuation of each of the Non-U.S. Company Employee Benefit
Plans or such other information which accurately describes the financial
position of each of the Non-U.S. Company Employee Benefit Plans. Nothing has
happened since the date of that information which would adversely affect the
funding position of the Non-U.S. Company Employee Benefit Plans in a material
way.
(d) None of the Companies or the Subsidiaries intends to
terminate any of the Non-U.S. Company Employee Benefit Plans and there is no
material deficiency in any of the Non-U.S. Company Employee Benefit Plans'
assets which would arise in those circumstances.
(e) There is no dispute about the entitlements or benefits
payable under any of the Non-U.S. Company Employee Benefit Plans, no claim by or
against the managers or administrators of the Non-U.S. Company Employee Benefit
Plans or any of the Companies or the Subsidiaries has been made or threatened,
and there are no circumstances which might give rise to any such claim except
where any such event could not have, individually or in the aggregate, a
material adverse effect on the Business Condition of the Manufacturing Business
or the Bowling Centers Business.
(f) A copy of the latest return of the scheme lodged with the
Insurance and Superannuation Commissioner of Australia, a copy of the latest
audited accounts of the scheme and the last notice received by the scheme under
section 12 or section 13 of the Occupational Superannuation Standards Act 1987
of Australia or section 40 of the Superannuation Industry (Supervision) Act 1993
of Australia have been disclosed in writing by the Sellers to Buyer. Since the
date of the notice under section 12 or section 13 of the Occupational
Superannuation Standards Act of 1987 and Section 40 of the Superannuation
Industry (Supervision) Act 1993, there has not arisen or become known any fact
or circumstance which would result in the scheme not being a complying
superannuation fund in relation to any year of income or part of a year of
income.
(g) All Taxes which have been assessed or imposed upon a
Non-U.S. Company Employee Benefit Plan: (i) and which are due and payable have
been paid by the final date for payment by the trustee of the scheme; or (ii)
which are not yet payable but become payable prior to Closing will be paid by
the due date.
(h) No Company or Subsidiary: (i) will be liable to pay the
superannuation guarantee charge in respect of any of
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its employees or sub-contractors for that part of the current "contribution
period" (as defined in the Superannuation Guarantee (Administration) Act 1992 of
Australia) up to Closing; and (ii) has or will have any liability to pay the
superannuation guarantee charge or other amount payable under the Superannuation
Guarantee (Administration) Act 1992 in respect of any of its employees or
sub-contractors for any earlier "contribution period".
Section 6.4. Administration. The Sellers and Buyer shall each
make their appropriate employees available to the other at such reasonable times
as may be necessary for the proper administration by the other of any and all
matters relating to employee benefits affecting employees of the Companies and
the Subsidiaries, including benefits to which such employees may become entitled
after the Closing Date under any tax-qualified retirement plan maintained by the
Sellers or their Affiliates.
Section 6.5. 401(k) Plan. Sellers shall take all steps
necessary and appropriate so that effective on or before the Closing Date: (i)
no entity other than the Companies and the Subsidiaries is a participating
employer in the AMF Companies 401(k) Profit Sharing Plan (the "Profit Sharing
Plan"); (ii) all assets and liabilities under the Profit Sharing Plan
attributable to each Non-Company Participant (as defined below) shall have been
transferred to and assumed by one or more defined contribution plans qualified
under Section 401(a) of the Code and sponsored by Affiliates of Sellers other
than the Companies and the Subsidiaries (each such plan, a "Successor Plan");
and (iii) from and after the date of such transfer and assumption of assets and
liabilities by the Successor Plans, the participation of the Non-Company
Participants in the Profit Sharing Plan shall cease and none of the Companies,
the Subsidiaries or the Profit Sharing Plan shall have any liability with
respect to the participation of the Non-Company Participants in the Profit
Sharing Plan before such date. For purposes of this Section 6.5, (i) the term
"Non-Company Participant" shall mean any participant in the Profit Sharing Plan
who is a current or former employee of an Affiliate of the Sellers other than
the Companies or the Subsidiaries, and who will not become an employee of either
the Companies or the Subsidiaries on or immediately after the Closing Date, and
(ii) the term "Companies" shall not include the Retained Entities.
Section 6.6. Multiemployer Plans. Buyer and Sellers
acknowledge that the consummation of the transactions contemplated hereby will
not result in a withdrawal or partial withdrawal (within the meaning of Title IV
of ERISA) of the Companies and the Subsidiaries from any of the Multiemployer
Plans
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set forth in Schedule 6.2(c), and that any obligations of the Companies and the
Subsidiaries to contribute to such plans will remain in effect following the
Closing in accordance with applicable law and contractual obligations.
Section 6.7. Reportable Event. Sellers represent and warrant
that the consummation of the transactions contemplated hereby will not result in
a reportable event within the meaning of Section 4043 of ERISA with respect to
either (i) a Company Employee Benefit Plan, or (ii) any other employee benefit
plan sponsored by or maintained by Sellers, the Companies, the Subsidiaries or
any of their respective ERISA Affiliates to which Section 4043(b) of ERISA is
applicable. Sellers shall not give any notice of a reportable event pursuant to
Section 4043 of ERISA before the Closing.
ARTICLE VII
Tax Matters
Section 7.1. Tax Returns of the Companies and the
Subsidiaries. Sellers represent and warrant that:
(a) Except as set forth in Schedule 7.1(a) and except with
respect to the Retained Entities (i) all Income Tax Returns required to be filed
for taxable periods ending on or prior to the Closing Date by, or with respect
to any activities of, any of the Companies or the Subsidiaries have been or will
be filed in accordance with all applicable laws, and all Taxes shown to be due
on such Income Tax Returns have been or will be paid, (ii) all other material
Returns required to be filed before the Closing Date by, or with respect to any
activities of any of the Companies or the Subsidiaries have been or will be
filed in accordance with all applicable laws and all Taxes shown as due on such
Returns have been or will be paid, (iii) each of the Companies is and has been
an "S corporation" (within the meaning of Section 1361(a) of the Code) for each
taxable year (or portion thereof) for which such Company has been in existence,
and no action has or will be taken to terminate and no condition exists which
could result in the termination of such election prior to the Closing; (iv) none
of the Companies are or have been liable for the tax imposed under Section
1375(a) of the Code; and (v) none of the Companies are or have been liable for
the Tax imposed under Section 1374(a) of the Code.
(b) Except as set forth on Schedule 7.1(b) and except with
respect to the Retained Entities, since November 12, 1986, (i) no claim has been
made by any authority in a jurisdiction where the Companies or the Subsidiaries
do not file
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Returns that any of the Companies or the Subsidiaries are or may be subject to
taxation by that jurisdiction; (ii) except for Taxes being contested in good
faith and by appropriate proceedings and for which appropriate reserves are
established (all of which are identified in Schedule 7.1(b)), all Taxes owed by
any of the Companies and the Subsidiaries (whether or not shown on any Return)
have (or by the Closing Date will have) been duly and timely paid; (iii) the
unpaid Taxes of any of the Companies and the Subsidiaries did not, as of October
31, 1995, exceed the provision for Tax liabilities made on the books of any of
the Companies or the Subsidiaries and set forth on the Balance Sheet and will
not as of the Closing Date exceed the provision for Tax liabilities set forth on
the Closing Date Balance Sheet; (iv) all Taxes required to be withheld by or on
behalf of each of the Companies and the Subsidiaries have been withheld, and
such withheld Taxes have been duly and timely paid to the proper Governmental
Authorities; and (v) since October 31, 1995, no additional liability for Taxes
has arisen for any of the Companies or the Subsidiaries other than in the
ordinary course of business.
(c) Except as set forth on Schedule 7.1(c) and except with
respect to the Retained Entities, no agreement or other document extending, or
having the effect of extending, the period of assessment, payment or collection
of any Taxes for which any of the Companies or the Subsidiaries or any of their
predecessors may be held liable and no power of attorney with respect to any
such Taxes have been executed or filed with the IRS or any other Taxing
Authority.
(d) Sellers have provided to Buyer complete and accurate
copies of all Returns that are or have been required to be filed for all taxable
periods for which the statute of limitations has not run, examination reports,
and statements of deficiencies assessed against or agreed to by any of the
Companies (other than the Retained Entities) or the Subsidiaries or any of their
predecessors. Except as set forth on Schedule 7.1(d) and except with respect to
the Retained Entities, (i) no lien exists with respect to any asset of any of
the Companies or the Subsidiaries that arose in connection with any failure (or
alleged failure) to pay Taxes; (ii) there are no Taxes for which any of the
Companies or the Subsidiaries could be held liable which have been asserted in
writing by any Governmental Authority to be due; (iii) there are no pending
audits, examinations, or investigations with respect to any Taxes of any of the
Companies or the Subsidiaries; and (iv) no unresolved issue has been raised in
writing by any Governmental Authority in the course of any audit or examination
with respect to Taxes for which any of the Companies or the Subsidiaries could
be held liable. The most recent Income Tax Return for which an audit
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has been completed by the relevant Taxing Authority for each jurisdiction in
which the Companies (other than the Retained Entities) and the Subsidiaries do
business is set forth on Schedule 7.1(d).
(e) No consent or election has been made to have the
provisions of Section 341(f) of the Code apply to any of the Companies or the
Subsidiaries.
(f) None of the Companies or the Subsidiaries is party to or
bound by any closing agreement, gain recognition agreement, tax sharing, tax
indemnity, tax allocation or similar agreement or arrangement.
(g) None of the Companies or the Subsidiaries has either
agreed to or is required to make any adjustment under Section 481 of the Code
(or any comparable provision of state, local or foreign law) by reason of a
change in accounting method or otherwise.
(h) Each of the entities listed on Schedule 7.1(i) is a
partnership, not an association taxable as a corporation, for United States
federal Income Tax purposes.
(i) All stamp duty and other similar Tax payable with respect
to every contract or transaction to which any of the Companies (other than the
Retained Entities) or the Subsidiaries is or has been a party, or by which any
of the Companies or the Subsidiaries derives, has derived or will derive title
or any other substantial benefit has been duly paid. No contract is unstamped or
insufficiently stamped. No event has occurred as a result of which any stamp
duty or other similar Tax has become payable, from which any of the Companies
(other than the Retained Entities) or the Subsidiaries may have obtained relief.
(j) All information given to any Taxing Authority in
connection with or affecting any application for any ruling, consent or
clearance on behalf of any of the Companies (other than the Retained Entities)
or the Subsidiaries fully and accurately disclosed all facts and circumstances
material for the decision of the Taxing Authority. Each ruling, consent or
clearance is valid and effective, and each transaction for which such ruling,
consent or clearance has previously been obtained has been carried into effect
in accordance with the terms of the relevant application, ruling, consent or
clearance.
(k) None of the Companies (other than the Retained Entities)
or the Subsidiaries has done anything which has or
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would give rise to any Tax liability under the Australian Commonwealth Taxation
(Unpaid Company Tax) Assessment Act 1982, whether or not liability has been
discharged. The provisions of Section 160ZZS of the Australian Commonwealth
Income Tax Assessment Act 1936 have not applied to any asset acquired or deemed
to have been acquired by any of the Companies (other than the Retained Entities)
or the Subsidiaries before September 20, 1985, other than as a result of this
Agreement. Nothing has occurred with respect to the Companies (other than the
Retained Entities) and the Subsidiaries which would cause the disallowance for
Australian Tax purposes of either the carry forward of losses as of October 31,
1995 for any of the Companies or the Subsidiaries or the deduction of losses
incurred since October 31, 1995, other than as a result of entering into this
Agreement.
Section 7.2. Elections and Forms. (a) With respect to Buyer's
acquisition of the Shares of the companies set forth on Schedule 7.2(a) (the
"Election Companies") hereunder, Buyer shall properly make Section 338(g)
Elections in accordance with applicable Tax Laws. With respect to Sellers' sale
of the Shares of the Election Companies, Sellers and Buyer shall jointly make
Section 338(h)(10) Elections in accordance with applicable Tax Laws. Buyer and
Sellers agree to report the transfers of the Election Companies under this
Agreement consistent with the Section 338 Elections, and shall take no position
contrary thereto unless required to do so by applicable Tax Laws pursuant to a
Determination.
(b) Buyer shall be responsible for the preparation and filing
of all Section 338 Forms in accordance with applicable Tax Laws and the terms of
this Agreement. Sellers shall execute and deliver to Buyer such documents or
forms as are reasonably requested and are required by any Tax Laws properly to
complete the Section 338 Forms, at least 20 days prior to the date such Section
338 Forms are required to be filed.
(c) Buyer and the Sellers have agreed to allocate the purchase
price among the entities as set forth in Schedule 7.2(c) ("Tier 1 Allocation").
In accordance with the next sentence, Buyer shall prepare an allocation schedule
based upon the appraisals described in the next sentence (the "Allocation
Agreement") prior to the Closing Date concerning the computation of the
Aggregate Deemed Sale Price (as defined under applicable Treasury Regulations)
of the assets of each of the Election Companies for which a Section 338(h)(10)
Election is made under Section 7.2(a) and the allocation of such Aggregate
Deemed Sale Price among such assets. Buyer will retain Arthur Andersen to
perform an appraisal of the value of the equipment and real property (the
"tangible asset value") of Bowling and
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Bowling Centers and Buyer will allocate the purchase price to Bowling and
Bowling Centers as follows: (A) (i) to equipment and real property in an amount
equal to the tangible asset value, (ii) to inventory in an amount equal to the
"last in first out" (LIFO) cost as determined under U.S. GAAP and (iii) to other
tangible assets (including accounts receivable and prepaid assets) in an amount
equal to their tax basis on the Closing Date; and (B) to intangible assets in
the aggregate without further allocation to any particular category of
intangible assets (steps A and B being referred to as the "Tier 2 Allocation").
Buyer agrees that it will revise the Allocation Agreement only to the extent
necessary to reflect the differences, if any, between the Balance Sheet and the
Adjusted Closing Date Balance Sheet no later than sixty days before the last
date on which the Section 338(h)(10) election may be filed. Buyer and the
Sellers will accept such Tier 2 Allocation and will reflect such allocation in
all applicable tax returns filed by any of them, including but not limited to
Forms 8594 and 8023 (to be prepared by Arthur Andersen), in accordance with
United States tax principles. Such Forms 8594 and 8023, where applicable, will
be duly executed by the appropriate parties at or prior to the Closing.
(d) Sellers shall not take a position before any Taxing
Authority or otherwise (including in any Tax Return) inconsistent with the fact
that, except with respect to stock or assets acquired by the Companies after
January 1, 1995, with respect to each of the Companies, the net unrealized
built-in gain (as defined in Section 1374 of the Code or any similar provisions
of state and local Tax Laws) of each of the Companies is zero and that no net
recognized built-in gain (as defined in Section 1374 of the Code or any similar
provisions of state and local Tax Laws) results from any of the transactions
contemplated by this Agreement unless required to do so by applicable Tax Laws
pursuant to a Determination.
Section 7.3. Allocation of Certain Taxes. Buyer and Sellers
agree that if any of the Companies (other than the Retained Entities) are
permitted but not required under applicable state or local Income Tax laws to
treat the day before the Closing Date or the Closing Date as the last day of a
taxable period, Buyer and Sellers shall treat such day as the last day of a
taxable period.
Section 7.4. Filing Responsibility. (a) Sellers shall prepare
and file or shall cause each of the Companies, the Subsidiaries and their
Affiliates to prepare and file the following Returns with respect to each of the
Companies, the Subsidiaries and their Affiliates:
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(i) all United States federal Income Tax Returns and any
other Income Tax Returns required to be filed in any
jurisdiction in which the relevant Company has in
effect an election similar to the election under
Section 1362 of the Code, in each case, for any
taxable period ending on or before the Closing Date
(including, without limitation, any deemed sale
Return resulting from the filing of a Section 338
Election); provided, however, in the case of federal,
state and local Income Tax Returns including the
transactions contemplated by this Agreement, that
Sellers shall provide Buyer copies of the relevant
portions of such proposed Returns at least 30 days
prior to the due date of any such Returns and that
filing of any such Return is subject to Buyer's
approval of each such Return's characterization of
all issues related to any Taxes imposed by Section
1374(a) of the Code or any similar provisions of
state or local Tax Laws in connection with any of the
transactions contemplated by this Agreement other
than the application of that Tax to stock or assets
acquired by the Companies after January 1, 1995 (such
Taxes, other than Taxes imposed under Section
1374(d)(8) of the Code with respect to "recognized
built-in gain" (as defined in the Code) inherent in
stock or assets acquired by the Companies after
January 1, 1995, shall hereinafter be referred to
collectively as the "Section 1374 Tax") which
characterization shall be consistent with the
undertaking in Section 7.2(d) and which approval will
not be withheld unreasonably; and
(ii) all other Returns with respect to Taxes required to
be filed (taking into account extensions) prior to
the Closing Date.
(b) Buyer, the Companies, the Subsidiaries and the Affiliates
of the Companies and the Subsidiaries (other than the Continuing Affiliates)
shall file all other Returns with respect to the Companies, the Subsidiaries and
the Affiliates of the Companies and the Subsidiaries (other than the Continuing
Affiliates).
(c) With respect to any state, local or foreign Income Tax
Return for taxable periods beginning before the Closing Date and ending after
the Closing Date, Buyer shall cause each of the Companies and the Subsidiaries
to consult with Sellers concerning such Return. Each of the Companies and the
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Subsidiaries shall provide Sellers a copy of its proposed Return at least 15
days prior to the filing of such Return, and Sellers may provide comments to
each of the Companies and the Subsidiaries, which comments shall be delivered to
each of the Companies and the Subsidiaries within 7 days of receiving such
copies from each of the Companies and the Subsidiaries.
Section 7.5. Refunds and Carrybacks. (a) Sellers shall be
entitled to any refunds or credits of Taxes for which Sellers are liable
pursuant to Section 7.7.
(b) Buyer, the Companies, the Subsidiaries or the Affiliates
of the Companies and the Subsidiaries, as the case may be (excluding Sellers or
any of the Continuing Affiliates), shall be entitled to all other refunds or
credits of Taxes (including, without limitation, any Section 1374 Tax).
(c) Buyer shall cause each of the Companies, the Subsidiaries
and the Affiliates of the Companies and the Subsidiaries (excluding Sellers and
the other Continuing Affiliates) promptly to forward to Sellers or to reimburse
Sellers for any refunds or credits due Sellers (pursuant to the terms of this
Article VII) after receipt thereof, and Sellers shall promptly forward to Buyer
(pursuant to the terms of this Article VII) or reimburse Buyer for any refunds
or credits due Buyer after receipt thereof.
(d) Except as (i) required by a Determination, (ii) as other-
wise required by applicable law, (iii) in connection with a matter described in
the second sentence of Section 7.6(d) or (iv) to reflect the carryback of
losses, credits or other tax benefits incurred after the Closing Date, none of
Buyer, the Companies nor the Subsidiaries will, after the Closing Date, amend
any tax return relating to a period ending on or before the Closing Date without
the prior written consent of Sellers, which consent will not unreasonably be
withheld.
Section 7.6. Cooperation and Exchange of Information. (a)
Sellers shall prepare and submit to Buyer no later than three months after the
Closing Date, 1995 blank tax return workpaper packages. Buyer shall and shall
cause each of the Companies (excluding the Retained Entities) and the
Subsidiaries to prepare completely and accurately and to submit to Sellers
within three months of receipt all information as Sellers shall reasonably
request in such tax return workpaper packages.
(b) As soon as practicable, but in any event within 30 days
after Sellers' request, from and after the Closing Date, Buyer shall provide
Sellers with such cooperation and shall deliver to Sellers such information and
data concerning
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the pre-Closing operations of each of the Companies, the Subsidiaries and the
Affiliates of the Companies and the Subsidiaries and make available such
knowledgeable employees of the Companies, the Subsidiaries and the Affiliates of
the Companies and the Subsidiaries as Sellers may request, including providing
the information and data required by Sellers' customary tax and accounting
questionnaires, in order to enable Sellers to complete and file all Returns
which they may be required to file with respect to the operations and business
of each of the Companies, the Subsidiaries and the Affiliates of the Companies
and the Subsidiaries through the Closing Date or to respond to audits by any
Taxing Authorities with respect to such operations and to otherwise enable
Sellers to satisfy their internal accounting, tax and other legitimate
requirements. Such cooperation and information shall include without limitation
provision of powers of attorney for the purpose of signing Returns and defending
audits and promptly forwarding copies of appropriate notices and forms or other
communications received from or sent to any Taxing Authority which relate to
each of the Companies, the Subsidiaries and the Affiliates of the Companies and
the Subsidiaries, and providing copies of all relevant Returns, together with
accompanying schedules and related workpapers, documents relating to rulings or
other determinations by any Taxing Authority and records concerning the
ownership and tax basis of property, which Buyer, the Companies, the
Subsidiaries or the Affiliates of the Companies and the Subsidiaries may
possess. Buyer, the Companies, the Subsidiaries and the Affiliates of the
Companies and the Subsidiaries shall make their employees and facilities
available on a mutually convenient basis to provide explanation of any documents
or information provided hereunder.
(c) Buyer and Sellers and their respective Affiliates shall
cooperate in the preparation of all Returns relating in whole or in part to
taxable periods ending on or before or including the Closing Date that are
required to be filed after such date. Such cooperation shall include, but not be
limited to, furnishing prior years' Returns or return preparation packages
illustrating previous reporting practices or containing historical information
relevant to the preparation of such Returns, and furnishing such other
information within such party's possession requested by the party filing such
Returns as is relevant to their preparation. In the case of any state, local or
foreign joint, consolidated, combined, unitary or group relief system Returns,
such cooperation shall also relate to any other taxable periods in which one
party could reasonably require the assistance of the other party in obtaining
any necessary information.
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(d) Sellers shall have the right, at their own expense, to
control any audit or examination by any Taxing Authority ("Tax Audit"), initiate
any claim for refund, contest, resolve and defend against any assessment, notice
of deficiency, or other adjustment or proposed adjustment which in any such case
relates to Taxes for which Sellers are liable pursuant to Section 7.7, with
respect to each of the Companies and their Affiliates; provided, however, that
with respect to Taxes of the Companies (other than the Election Companies and
the Retained Entities) and with respect to state, foreign, and local taxes of
the Election Companies, no claim, contest or settlement shall be initiated,
defended, or resolved by Sellers if such claim, contest, or settlement could
reasonably be expected to have an adverse effect on such Companies after the
Closing and provided further that notwithstanding Sellers' rights to control any
Tax Audit which are provided for in this sentence, in the case of any Tax Audit
which in whole or in part involves Section 1374 Tax, any issues with respect to
such Section 1374 Tax shall not be controlled, contested, initiated, defended,
or resolved by Sellers but shall be controlled by Buyer as provided for in the
next sentence. Buyer shall have the right, at its own expense, to control any
other Tax Audit, initiate any other claim for refund, and contest, resolve and
defend against any other assessment, notice of deficiency, or other adjustment
or proposed adjustment (including any portion of Tax Audit involving any Section
1374 Tax issue). Sellers shall furnish Buyer, each of the Companies, the
Subsidiaries and the Affiliates of the Company and the Subsidiaries with their
cooperation in a manner comparable to that described in Section 7.6(b) hereof to
effect the purposes of this Section 7.6(d).
Section 7.7. Tax Indemnification by Sellers. Except to the
extent set forth in Section 12.4(B)(i) hereof, Sellers shall be liable for, and
shall hold Buyer, each of the Companies (excluding the Retained Entities), the
Subsidiaries and their respective Affiliates (other than the Continuing
Affiliates), and any successor corporations thereto or Affiliates thereof
harmless from and against the following Taxes with respect to the Companies
(excluding the Retained Entities), the Subsidiaries and the Affiliates of the
Companies and the Subsidiaries (other than the Continuing Affiliates):
(a) any and all Taxes imposed under Section 1374(d)(8) of the
Code with respect to "recognized built-in gain" (as defined in the Code)
inherent in stock or assets acquired by the Companies after January 1, 1995;
(b) any and all Taxes (other than Section 1374 Taxes)
resulting from or arising out of any transaction done by Sellers or any of their
Affiliates or the Continuing Affiliates
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outside of the ordinary course of business pursuant to or in anticipation of the
transactions contemplated by this Agreement;
(c) any and all Taxes imposed by law on Sellers;
(d) any and all Taxes resulting from or arising out of any
transfer of the equity of AMF Bowling, S.A. or the transfer of assets by
AMF Bowling, S.A. or AMF Bowling Centers II, Inc. in connection with or in
contemplation of the transactions contemplated by the Spanish and Swiss
Bowling Centers Agreements; and
(e) any and all Taxes attributable to the operations of an
entity (other than the Companies (excluding the Retained Entities), the
Subsidiaries, or any of their predecessors) for a taxable period ending on or
before the Closing Date and for which the Companies or the Subsidiaries
(including their predecessors) may be held liable solely by virtue of a
relationship to or affiliation with such entity under Treasury Regulation
section 1.1502-6 (relating to several liability) or any comparable or similar
provision providing for joint and/or several liability under state, local or
foreign Tax Laws.
Section 7.8. Definitions. For purposes of this Article VII,
the following terms shall have the meanings ascribed to them below:
(a) "Determination" means a "determination" as defined by
Section 1313(a) of the Code.
(b) "Domestic Returns" means returns, reports and forms
required to be filed with any taxing authority of the United States of
America, any state thereof or the District of Columbia and any local
governmental subdivision thereof (a "U.S. Taxing Authority").
(c) "Foreign Returns" means all Returns that are not Domestic
Returns.
(d) "Income Tax Returns" means federal, state, local or
foreign Income Tax Returns required to be filed with any Taxing
Authority that include any of the Companies, the Subsidiaries or the
Affiliates (excluding Sellers and any of the Continuing Affiliates).
(e) "Income Taxes" means (a) federal, state, local or foreign
income, or capital gains, franchise taxes or other taxes measured by
reference to income, or capital
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gains and all other taxes reported on any Returns, together with any
interest, penalties, charges or fees imposed with respect thereto, and
(b) any obligations under any agreements or arrangements with respect
to Income Taxes described in clause (a) above.
(f) "IRS" means the Internal Revenue Service.
(g) "Other Taxes" means all Taxes which are not Income Taxes.
(h) "Returns" means returns, reports and forms required to be
filed with any U.S. Taxing Authority or foreign Taxing Authority.
(i) "Section 338 Elections" shall mean both a Section 338(g)
Election and a Section 338(h)(10) Election.
(j) "Section 338 Forms" means all returns, documents,
statements, and other forms that are required to be submitted to any
federal, state, county, or other local Taxing Authority in connection
with a Section 338(g) Election or a Section 338(h)(10) Election.
Section 338 Forms shall include, without limitation, any "statement of
section 338 election" and IRS Form 8023 (together with any schedules or
attachments thereto) that are required pursuant to Treas. Reg. Section
1.338-1 or Treas. Reg. Section 1.338(h)(10)-1.
(k) "Section 338(g) Election" means an election described in
Section 338(g) of the Code with respect to Buyer's acquisition of the
Shares from Sellers pursuant to this Agreement. Section 338(g) Election
shall include any corresponding election under any other applicable Tax
Laws that requires a separate election with respect to Buyer's
acquisition of the Shares from Sellers under this Agreement.
(l) "Section 338(h)(10) Election" means an election described
in Section 338(h)(10) of the Code with respect to Sellers' sale of the
Shares to Buyer pursuant to this Agreement. Section 338(h)(10) Election
shall include any corresponding election under any other relevant Tax
Laws for which a separate election is permissible with respect to
Buyer's acquisition of the Shares from Sellers under this Agreement.
(m) "Tax Laws" means the Code, federal, state, county, local,
or foreign laws relating to Taxes and any
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regulations or official administrative pronouncements released
thereunder.
(n) "Taxes" means (a) all taxes (whether federal, state, local
or foreign) based upon or measured by income and any other tax
whatsoever, including, without limitation, gross receipts, profits,
sales, levies, imposts, deductions, charges, rates, duties, use,
occupation, value added, ad valorem, transfer, franchise, withholding,
payroll and social security, employment, excise, stamp duty or property
taxes, together with any interest, penalties, charges or fees imposed
with respect thereto and (b) any obligations under any agreements or
arrangements with respect to any Taxes described in clause (a) above.
(o) "Taxing Authority" means any governmental authority
including social security administration, domestic or foreign, having
jurisdiction over the assessment, determination, collection, or other
imposition of Tax.
ARTICLE VIII
Conditions of Buyer's Obligation to Close
Buyer's obligation to consummate the Stock and Asset Purchases
shall be subject to the satisfaction on or prior to the Closing Date of all of
the following conditions:
Section 8.1. Representations, Warranties and Covenants of
Seller. The representations and warranties of Sellers contained in this
Agreement (when read without regard to any qualifications to such
representations and warranties as to knowledge) shall be true and correct when
made and, except for representations and warranties that speak as of a specific
date or time (which need only be true and correct as of such date or time), on
and as of the Closing Date with the same effect as though such representations
and warranties had been made on and as of such date, in any case, except for
such breaches and inaccuracies in representations and warranties which are not
reasonably likely to have a material adverse effect on the Business Condition of
the Manufacturing Business or the Bowling Centers Business or on the aggregate
value of the Shares and the Purchased Assets to Buyer, and the covenants and
agreements of Sellers contained in this Agreement to be performed on or before
the Closing Date in accordance with this Agreement shall have been duly
performed in all material respects, and Buyer shall have received at the Closing
a certificate to the effect of the foregoing dated the Closing Date and validly
executed by the Designated Representative and the General Counsel of Bowling.
For purposes of this condition, breaches and inaccuracies
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of representations and warranties shall be deemed to be reasonably likely to
have a material adverse effect on the Business Condition of the Manufacturing
Business or the Bowling Centers Business or on the aggregate value of the Shares
and the Purchased Assets to Buyer when the aggregate consequences of all
breaches and inaccuracies of representations and warranties of Sellers, when
read without regard to any qualification to such representations and warranties
as to material adverse effect or knowledge, will be reasonably likely to have a
material adverse effect on the Business Condition of the Manufacturing Business
or the Bowling Centers Business or on the aggregate value of the Shares and the
Purchased Assets to Buyer.
Section 8.2. Filings; Consents; Waiting Periods. All
registrations, filings, applications, notices, consents, approvals, orders,
qualifications and waivers listed in Schedule 8.2 hereto and indicated therein
as being a condition to the Closing for Buyer shall have been filed, made or
obtained without any significant conditions or restrictions imposed (including,
whether or not listed on Schedule 8.2, (i) notification from the Australian
Treasurer under Australia's Foreign Acquisitions and Takeover Act 1975 ("FATA")
that there is no objection to the proposed acquisition of shares in AMF Bowling
Centers (Aust) International Inc. by Buyer and, if any conditions are imposed on
such acquisition by the Australian Treasurer, such conditions are satisfactory
to Buyer in its discretion, and (ii) those relating to the receipt of licenses
to sell or serve alcoholic beverages or to engage in gaming, lottery or gambling
activities (or the necessary consents or approvals with respect thereto)), and
all applicable waiting periods under the HSR Act and similar applicable foreign
regulations (including the FATA) shall have expired or been terminated;
provided, however, with respect to the receipt of licenses to sell or serve
alcoholic beverages or to engage in gaming, lottery or gambling activities (or
the necessary consents or approvals with respect thereto), such condition shall
not be satisfied unless Buyer is reasonably satisfied that licenses are in place
or that other appropriate mechanisms which will not result in denial or loss of
a license or penalties (other than immaterial civil penalties) or put the
Companies at risk of an enforcement action for a violation are in place and, in
each case, are expected to remain in place for the foreseeable future without
material risk or expectation of losing such ability in the future (other than
the risk that any holder of a liquor license or a gaming, lottery or gambling
license that complies with the terms and requirements of such license and the
relevant law generally bears of nonrenewal) so that after the Closing alcoholic
beverages can continue to be sold or served and gaming activities can continue
to be conducted in essentially the same manner and on essentially the same terms
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(and without any additional material restrictions) as before the Closing and in
compliance in all material respects with all applicable laws and rules,
regulations, statutes, licenses, and orders of any Governmental Authority
relating to the sale or service of alcoholic beverages or engaging in gaming,
lottery and gambling activities at bowling centers (or related premises) which
would reasonably be expected to enable the Companies and the Subsidiaries to
derive, during a 10-month period beginning on the Closing Date, at least 90% of
the total revenues from the sale and/or service of alcoholic beverages and,
other than in the State of Washington, gaming, lottery and gambling activities
(and from any related management service agreements and leases) during the
10-month period ended October 31, 1995.
Section 8.3. Litigation; Injunction. There shall be no
injunction, restraining order or decree of any nature of any Governmental
Authority of competent jurisdiction that is in effect that restrains or
prohibits or imposes substantial penalties or damages on Buyer or the Companies,
the Subsidiaries and their Affiliates with respect to (or any other materially
adverse relief or remedy in connection with), the consummation of the Stock and
Asset Purchases or the performance of the other material obligations of Sellers
or Buyer under this Agreement or the Ancillary Agreements, and there shall be no
Action pending or threatened seeking such relief.
Section 8.4. Financing. Buyer shall have obtained, pursuant to
the Financing Commitments and the subordinated debt financings or otherwise, the
funds necessary to consummate the transactions contemplated by this Agreement on
the terms set forth herein.
Section 8.5. Opinions. Buyer shall have received at Closing
opinions addressed to Buyer and dated the Closing Date from McGuire Woods Battle
& Boothe, L.L.P., counsel to the Sellers other than The Community Foundation,
Inc., Hunton & Williams, counsel to The Community Foundation, Inc., and certain
foreign counsel with respect to the matters and substantially in the forms set
forth in Exhibit 8.5 hereto. Such opinions shall state that such opinions are
made for the benefit of Buyer, Buyer's financing sources and Buyer's counsel and
that Buyer's financing sources and counsel shall be entitled to rely thereon as
if such opinion were addressed to such sources.
Section 8.6. FIRPTA Affidavit. Sellers shall have delivered to
Buyer an affidavit (a so-called "FIRPTA affidavit") in form and substance
reasonably satisfactory to Buyer duly executed and acknowledged, certifying
facts that would
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exempt the transactions contemplated hereby from the provisions of the Foreign
Investment in Real Property Tax Act.
Section 8.7. Certain Agreements and Transfers. Each of the
parties thereto shall have entered into the Ancillary Agreements and the
transactions contemplated by the Spanish and Swiss Bowling Centers Agreements
shall have been consummated except as contemplated by Schedule 8.2. The Related
Land (and any additional undeveloped parcels owned by a Continuing Affiliate
which had previously been owned by a Bowling Centers Company that are necessary
to enable Sellers to comply with the representation set forth in the penultimate
sentence of Section 3.4(a)) shall have been conveyed to Buyer or such other
entity (other than Bowling Centers) Buyer designates, in such manner as to vest
good and marketable title thereto as is reasonably acceptable to Buyer.
Section 8.8. Proceedings; Certificates. All corporate
proceedings of Sellers, the Companies and the Subsidiaries that are required in
connection with the transactions contemplated by this Agreement shall be
reasonably satisfactory in form and substance to Buyer and its counsel, and
Buyer and its counsel shall have received such evidence of such corporate
proceedings, certified if requested, as may be reasonably requested and is
customary in transactions such as the Stock and Asset Purchases. Sellers shall
have delivered to Buyer certificates representing the Shares, duly endorsed in
blank or accompanied by stock powers or other instruments of transfer duly
executed in blank, and bearing or accompanied by all requisite stock transfer
stamps, and made such other deliveries to Buyer as specified in the Spanish and
Swiss Bowling Centers Agreements except as contemplated by Schedule 8.2. There
shall have been eliminated or discharged, in all material respects, the
mortgages, liens and security interests on the stock or assets of the Companies
and the Subsidiaries and any other encumbrances on the stock or assets of the
Companies and the Subsidiaries which other encumbrances are described in clauses
1, 2(a), 2(b), 3, 4 or 5 of the fifth sentence of Section 3.4(a), and Buyer
shall have received evidence thereof which is satisfactory to it.
Section 8.9. Armstrong Consulting Agreement. The Armstrong
Consulting Agreement shall be in full force and effect.
Section 8.10. Financial Statements. Buyer shall have received
the financial statements and the notice from Price Waterhouse with respect
thereto on the time schedule referred to in the definition of the term "Closing
Date" and the
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final audited financial statements for Fair Lanes, Inc. referred to in such
definition shall not have material changes from the drafts of such statements
provided to Buyer by Price Waterhouse on February 16, 1996.
Section 8.11. Outstanding Indebtedness. Except to the extent
indebtedness is explicitly agreed by Buyer or as set forth on Schedule 5.13 to
remain an obligation of the Companies or the Subsidiaries after the Closing
(which, except to the extent expressly set forth on Schedule 5.13, shall reduce
the Initial Purchase Price), the Companies and the Subsidiaries shall have no
indebtedness for money borrowed or indebtedness evidenced by notes (including
without limitation any mortgages, loans and similar instruments) at the Closing
Date which are not repaid in full (including all accrued interest and any
premium, penalties and other costs resulting from such repayment) at the Closing
through payments directed by the Designated Representative pursuant to the last
sentence of Section 2.1.
ARTICLE IX
Conditions to Sellers' Obligation to Close
Sellers' obligation to consummate the Stock and Asset
Purchases shall be subject to the satisfaction on or prior to the Closing Date
of all of the following conditions:
Section 9.1. Representations, Warranties and Covenants of
Buyer. The representations and warranties of Buyer contained in this Agreement
shall be true and correct when made and (except for representations and
warranties that speak as of a specific date or time which need only be true and
correct as of such date or time) on and as of the Closing Date with the same
effect as though such representations and warranties had been made on and as of
such date (but without regard to any qualifications to such representations and
warranties as to knowledge), except for such breaches and inaccuracies in
representations and warranties which do not have a material adverse effect on
Buyer's ability to consummate the Stock and Asset Purchases, and the covenants
and agreements of Buyer contained in this Agreement to be performed on or before
the Closing Date in accordance with this Agreement shall have been duly
performed in all material respects, and Sellers shall have received at the
Closing a certificate to that effect dated the Closing Date and validly executed
by a senior officer of Buyer.
Section 9.2. Filings; Consents; Waiting Periods. All
registrations, filings, applications, notices, consents, approvals, orders,
qualifications and waivers listed in Schedule 9.2 hereto and indicated therein
as being a condition to
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the Closing for Sellers shall have been filed, made or obtained, and all
applicable waiting periods under the HSR Act and similar foreign regulations
(including FATA) shall have expired or been terminated.
Section 9.3. Litigation; Injunction. There shall be no
injunction, restraining order or decree of any nature of any Governmental
Authority of competent jurisdiction that is in effect that restrains or
prohibits or imposes substantial penalties or damages on Sellers and their
Affiliates (other than the Companies and the Subsidiaries) with respect to (or
any other materially adverse relief or remedy in connection with), the
consummation of the Stock and Asset Purchases or the performance of the other
material obligations of Sellers or Buyer under this Agreement or the Ancillary
Agreements, and there shall be no Action pending or threatened seeking such
relief.
Section 9.4. Opinions. Sellers shall have received from
Wachtell, Lipton, Rosen & Katz, Buyer's counsel, its opinion addressed to
Sellers and dated the Closing Date with respect to the matters and substantially
in the form set forth in Exhibit 9.4 hereto.
Section 9.5. Certain Agreements. Each of the parties thereto
shall have entered into the Ancillary Agreements.
Section 9.6. Proceedings; Certificates. All corporate
proceedings of Buyer that are required in connection with the transactions
contemplated by this Agreement shall be reasonably satisfactory in form and
substance to Sellers and their counsel, and Sellers and their counsel shall have
received such evidence of such corporate proceedings, certified if requested, as
may be reasonably requested and is customary in transactions such as the Stock
and Asset Purchases. Buyer shall have wire transferred to Sellers the Initial
Purchase Price, along with the amounts referred to in clause (ii) of the
definition thereof pursuant to the agreements referred to therein, in
immediately available funds (or, if Buyer elects the Seller Financing Option, it
shall have wire transferred the portion of the Initial Purchase Price to be paid
in immediately available funds, along with the amounts referred to in clause
(ii) of the definition thereof, and shall have delivered the Buyer Notes) to the
account or accounts specified by the Designated Representative.
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ARTICLE X
Survival; Indemnification
Section 10.1. Survival. (a) All representations and warranties
of the parties contained in this Agreement or in any Schedule hereto, or any
certificate, document or other instrument delivered in connection herewith shall
not survive the Closing, except for the representations and warranties set forth
in Sections 3.1(c) and 3.2(a), which shall survive any examination by or on
behalf of the parties hereto and the Closing indefinitely and Section
7.1(a)(iii) which shall survive any examination by or on behalf of the parties
hereto and the Closing until expiration of the relevant statute of limitations
(including any extensions thereof) or, if later, until resolution of any
disputes arising during such period, in each case applicable to the income tax
return (the "Applicable Return") of each of the Companies for the period ending
on the Closing Date (such later date being the "Expiration Date").
(b) The covenants and agreements which by their terms
contemplate performance after the Closing Date (including but not limited to the
indemnities) contained in this Agreement shall survive the execution and
delivery hereof, any examination by or on behalf of the parties hereto and the
completion of the transactions contemplated herein.
Section 10.2. Indemnification by Buyer. From and after the
Closing Date, Buyer shall indemnify and hold harmless Sellers, their Affiliates,
each of their respective directors, officers, employees and agents, and each of
the heirs, executors, successors and assigns of any of the foregoing
(collectively, the "Seller Indemnified Parties") from and against, and pay or
reimburse the Seller Indemnified Parties for, any and all Covered Liabilities
(and the costs and expenses, including reasonable attorneys' fees and expenses,
of enforcing Buyer's obligations hereunder) incurred by or asserted against any
of the Seller Indemnified Parties in connection with or arising from (i) any
breach of any covenant or agreement made by or on behalf of Buyer under this
Agreement which by its terms contemplates performance after the Closing Date
(including without limitation a breach by Buyer of Section 5.3) or under the
Spanish and Swiss Bowling Centers Agreements, the Rolling Road Agreement, the
Related Land Sale Agreement, and the Wilson Road Agreement (but excluding the
other Ancillary Agreements, each of which shall be governed by its own terms)
and (ii) any failure by the Companies or the Subsidiaries to perform or fulfill
their respective obligations under any contract, agreement or obligation listed
on Schedule 10.2 hereto of the Companies or the Subsidiaries for which Sellers
or any Continuing Affiliate
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is or may be liable as a guarantor, in any case, (x) after offset by any related
insurance proceeds or other recovery actually received and (y) (A) reduced by an
amount equal to the Tax Benefits, if any, attributable to such Covered Liability
and (B) increased by an amount equal to the Taxes, if any, attributable to the
receipt of any indemnity payment pursuant to the provisions hereof in respect of
such Covered Liability, but only to the extent, and at the time, that such Tax
Benefits are actually realized, or such Taxes are actually paid, as the case may
be, by such Seller Indemnified Party or any consolidated, combined or unitary
group of which any such Seller Indemnified Party is a member. Any payment made
to or on behalf of any Seller pursuant to this Section 10.2 shall, to the extent
appropriate, be treated by Sellers and Buyer as an adjustment to the Total
Purchase Price, and Sellers and Buyer agree, and Buyer agrees to cause the
Companies and the Subsidiaries, not to take any position inconsistent therewith
for any purpose, unless a final determination (which shall include the execution
of a Form 870-AD or successor form) with respect to the Seller Indemnified Party
causes any such payment not to constitute an adjustment to the Total Purchase
Price for federal income tax purposes.
Section 10.3. Indemnification by Sellers. (a) From and after
the Closing Date, each of the Sellers (other than The Community Foundation, Inc.
so long as it does not breach any covenant or agreement on its part from and
after the Closing) shall indemnify and hold harmless Buyer, its Affiliates, each
of their respective directors, partners, officers, employees and agents, and
each of the heirs, executors, successors and assigns of any of the foregoing
(collectively, the "Buyer Indemnified Parties") from and against, and pay or
reimburse the Buyer Indemnified Parties for, any and all Covered Liabilities
(and the costs and expenses, including reasonable attorneys' fees and expenses,
of enforcing Sellers' obligations hereunder) incurred by or asserted against any
of the Buyer Indemnified Parties in connection with or arising from:
(i) the ownership, conduct, condition or transfer at any time
of any of the businesses or other tangible or intangible assets or
operations (x) transferred to Sellers or their Affiliates prior to the
Closing as contemplated by Schedule 5.4 hereof or (y) owned, operated
or conducted by Sellers, the Continuing Affiliates, the Companies or
the Subsidiaries on or prior to (and with respect to Sellers and the
Continuing Affiliates, after) the Closing Date and which were not
owned, operated or conducted as part of the Manufacturing Business or
the Bowling Centers Business
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(with the Related Land and the businesses or other tangible or
intangible assets transferred to Buyer or an Affiliate thereof pursuant
to the Spanish and Swiss Bowling Centers Agreements being deemed to be
part of the Bowling Centers Business) (including as Sellers'
responsibility any Controlled Group Liability, except to the extent
that such Controlled Group Liability arises from the actions of the
Companies or the Subsidiaries or their respective legal predecessors
with respect to the Manufacturing Business or the Bowling Centers
Business, and also including as Sellers' responsibility the matters
referred to in Section 2.01 of the Reece Indemnity); and
(ii) (A) any breach of any covenant or agreement made by or on
behalf of any of the Sellers under this Agreement which by its terms
contemplates performance after the Closing Date (including without
limitation a breach by Sellers of Section 5.3 or nonperformance of its
obligations under Section 7.7 or, to the extent performance by a then
current or former Continuing Affiliate of the Sellers is required to
achieve the results contemplated by Section 5.3, the failure of such
Person to so perform as if it were subject to the same obligations as a
Seller (other than The Community Foundation, Inc.) under such Section)
or under the Spanish and Swiss Bowling Centers Agreements, the Rolling
Road Agreement, the Related Land Sale Agreement, the Wilson Road
Agreement (but excluding the other Ancillary Agreements, each of which
shall be governed by its own terms) or (B) any breach of any
representation or warranty made by or on behalf of any Seller under
this Agreement (and in the case of the representations made in Section
7.1(a)(iii) any alleged breach thereof) which survives the Closing,
including without limitation, any Taxes imposed on the Companies
(including the loss of expected Tax Benefits from and after the
Closing) as a result of the invalidity of the Section 338 Elections and
any Income Taxes imposed on the Companies with respect to operations
prior to the Closing Date and which would not have been imposed or lost
but for such invalidity); and
(iii) the Ohyoung Litigation;
in any case (x) after offset by any related insurance proceeds or other recovery
actually received and (y) (A) reduced by an amount equal to the Tax Benefits, if
any, attributable to such Covered Liability and (B) increased by an amount equal
to the Taxes, if any, attributable to the receipt of any indemnity payment
pursuant to the provisions hereof in respect of such Covered Liability, but only
to the extent, and at the time,
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that such Tax Benefits are actually realized, or such Taxes are actually paid,
as the case may be, by such Buyer Indemnified Party or any consolidated,
combined or unitary group of which any such Buyer Indemnified Party is a member.
(b) Any payment made to or on behalf of Buyer, to the extent
appropriate, pursuant to this Section 10.3 shall be treated by Sellers and Buyer
as an adjustment to the Total Purchase Price, and Sellers and Buyer agree, and
Buyer agrees to cause the Companies and the Subsidiaries, not to take any
position inconsistent therewith for any purpose, unless a final determination
(which shall include the execution of a Form 870-AD or successor form) with
respect to the Buyer Indemnified Party causes any such payment not to constitute
an adjustment to the Total Purchase Price for Federal income tax purposes.
Section 10.4. Third Party Claims. (a) This Section 10.4 sets
forth procedures for third-party claims (including without limitation the
Ohyoung Litigation for which all necessary notices to the Sellers, as the
indemnifying party, shall be deemed to have been given) as to which
indemnification may be required under Sections 10.2 or 10.3 hereunder. If a
claim by a third party is made against an indemnified party (i.e., a Seller
Indemnified Party or a Buyer Indemnified Party), and if such party intends to
seek indemnity with respect thereto under this Article X, such indemnified party
shall promptly notify the indemnifying party in writing of such claims setting
forth such claims in reasonable detail, provided that failure to give a timely
notice under this Section 10.4 shall not limit the indemnification obligations
of the indemnifying party hereunder except to the extent that the delay in
giving, or failure to give, such notice has an adverse effect upon the ability
of the indemnifying party to defend against such claim. The indemnifying party
shall have 30 days after receipt of such notice to undertake, conduct and
control, through counsel of its own choosing reasonably satisfactory to the
indemnified party and at its own expense, the settlement or defense of such
claim, and the indemnified party shall cooperate with it in connection
therewith; provided that (i) the indemnifying party shall conduct such
settlement or defense at all times in good faith and in a reasonable manner,
(ii) the indemnifying party shall promptly reimburse the indemnified party for
all out-of-pocket expenses incurred as a result of the assumption by the
indemnifying party of control of such settlement or defense, and (iii) the
indemnifying party shall permit the indemnified party to participate in such
settlement or defense through counsel chosen by such indemnified party, provided
that the fees and expenses of such counsel shall be borne by such indemnified
party unless the indemnified party reasonably concludes that counsel to the
indemnifying party has a conflict of interest. So long
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as the indemnifying party is reasonably contesting any such claim in good faith,
the indemnified party shall not pay or settle any such claim. Notwithstanding
the foregoing, the indemnified party shall have the right to pay or settle any
such claim, provided that in such event it shall waive any right to indemnity
therefor by the indemnifying party. If the indemnifying party does not elect to
assume control of the settlement or defense of a third party claim in the manner
provided herein, the indemnified party shall have the right to contest, settle
or compromise the claim but shall not thereby waive any right to indemnity for
any Covered Liabilities arising therefrom or in connection therewith pursuant to
this Agreement. The indemnifying party shall not, except with the consent of the
indemnified party, enter into any settlement or consent to entry of any judgment
that provides for injunctive or other non-monetary relief affecting the
indemnified party or does not include as an unconditional term thereof the
giving by the person or persons asserting such claim to all indemnified parties
(i.e., the Seller Indemnified Parties or the Buyer Indemnified Parties, as the
case may be) of an unconditional release from all liability with respect to such
claim or consent to entry of any judgment.
(b) Sellers and Buyer shall cooperate in the defense of any
claim or litigation subject to this Article X and the records of each shall be
available to the other with respect to such defense.
Section 10.5. No Consequential or Lost Profits Damages. No
party to this Agreement, nor any Buyer Indemnified Party or any Seller
Indemnified Party, shall seek or be entitled to incidental or consequential
damages (other than as contemplated by Section 10.3(a)(ii)(B) with respect to
expected Tax Benefits) or damages for lost profits in any claim for
indemnification under this Article X, nor shall it accept payment of any award
or judgment for such indemnification to the extent that such award or judgment
includes such party's incidental or consequential damages (except as referred to
above) or lost profits.
Section 10.6. Limitations on Indemnification. Notwithstanding
any other provision of this Agreement, (i) The Community Foundation, Inc. shall
not be liable for any indemnification under this Agreement (other than for
breaches of its own covenants and agreements on its part from and after the
Closing); (ii) the indemnification of Beverley W. Armstrong and Douglas J.
Stanard shall be several and not joint, and in no event shall either of them be
liable for indemnification in an amount in excess of his allocable portion of
the Total Purchase
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Price; (iii) Beverley W. Armstrong and Douglas J. Stanard, respectively, shall
be liable for the indemnification with respect to the first sentence of Section
3.2(a) only insofar as such representation relates to the Shares owned by him;
and (iv) in no event shall any of the Trusts be liable for indemnification in an
amount in excess of the aggregate portion of the Total Purchase Price allocable
to all of the Trusts and The Community Foundation, Inc., in the aggregate.
Section 10.7. Trust Arrangements. (a) Each of the Trusts
hereby covenants and agrees that the cumulative net worth of all of the Trusts
shall remain at a minimum of $500 million (based upon fair market value) at all
times from the Closing Date through the date that is the fourth anniversary of
the last filed Applicable Return (the "Reduction Date") and at a minimum of $250
million (based upon fair market value) at all times thereafter through the date
that is the sixth anniversary of the last filed Applicable Return (the
"Termination Date") (such period, subject to extension as provided below, the
"Subchapter S Indemnity Period"); provided, however, that if prior to the
occurrence of the Reduction Date or the Termination Date, as the case may be,
any of the Companies or the Sellers receives notice that any of the Applicable
Returns or any federal income tax returns of any of the Companies for a period
earlier than the period covered by the Applicable Return is under audit or
examination or the statute of limitations period with respect thereto is
otherwise extended (any of the foregoing a "Tolling Event"), then the Reduction
Date or the Termination Date, as the case may be, shall not be deemed to occur
until the later of the date a Determination is entered into with respect to such
return, or the date which would otherwise be the Reduction Date or the
Termination Date, as the case may be; provided, further, that in the event of a
Tolling Event, Buyer agrees in good faith to consider reductions in the retained
amounts required hereunder to the extent that the Sellers' indemnity obligations
hereunder, including such obligations as may result from an adverse
Determination on all issues potentially subject to examination by virtue of such
Tolling Event, together with interest, penalties and fees and expenses relating
thereto, would be less than the amounts otherwise required to be retained
hereunder. Each of the Trusts further covenants and agrees that during the
Subchapter S Indemnity Period the Trustees thereof shall deliver to Buyer within
30 calendar days of the end of each calendar quarter (i.e., March 31, June 30,
September 30 and December 31), an unaudited report, in the form dated January 1,
1995 and delivered to Buyer prior to the execution of this Agreement or
otherwise in a form reasonably acceptable to Buyer, in either case, specifying
the
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individual assets and liabilities of the Trusts and the valuations thereof,
reviewed and submitted by a designated representative of each of the Trusts,
stating the net worth of the Trusts (valued as contemplated by this Section
10.7) as of the end of such quarter (provided that an appraisal will not be
required for assets not having a "Readily Ascertainable Market Value" (as
defined below)). The Trustees shall provide Buyer with written notice within two
business days of learning that the net value of the assets of the Trusts having
a Readily Ascertainable Market Value is less than 50% of the net worth of the
Trusts which is required by this Section 10.7(a). In making any such
determination of net value, the Trustees shall subtract the liabilities of the
Trusts (other than liabilities secured by assets having at least 125% of the
value of the associated liabilities (determined on a separate basis for each
individual security arrangement as of the end of the applicable calendar
quarter) and non-recourse liabilities to which in either case assets having a
Readily Ascertainable Market Value are not subject) from the value of the gross
amount of assets having a Readily Ascertainable Market Value. Following receipt
of any such written notice, Buyer may, at its own expense and with the full
cooperation of the Trusts and the Trustees thereof, perform its own valuation of
the net worth of the Trusts, including obtaining appraisals of such assets of
the Trusts as it deems appropriate. The results of any such valuation by Buyer
shall be conclusive for purposes of determining whether the minimum net worth
requirement set forth in this Section 10.7(a) shall be met unless and until the
independent arbitrator selected pursuant to the following sentence shall
otherwise determine. In the event that as a result of any such valuation, Buyer
believes that the cumulative net worth of all of the Trusts is less than the
minimum net worth required to be maintained by this Section 10.7, Buyer shall
provide the Trusts with prompt written notice thereof accompanied by an
unaudited report stating the net worth of the Trusts (valued as contemplated by
this Section 10.7) as of the date of such valuation and specifying the
individual assets and liabilities of the Trusts and the valuations thereof,
together with copies of any appraisals obtained by Buyer in connection
therewith; upon their receipt of any such notice, the Trusts shall have the
right to submit any remaining dispute concerning the valuation of the net worth
of the Trusts to an independent arbitrator selected by the American Arbitration
Association, New York, New York, whose determination shall be binding on the
parties and conclusive for purposes of this Section 10.7. For purposes hereof,
assets have a "Readily Ascertainable Market Value" if they are traded on a
national securities exchange or the Nasdaq National Market (including Nasdaq
small-cap issues), or if they are obligations of the United States or any
department or agency thereof or of state or local governments or political
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subdivisions or authorities thereof which have a rating of at least investment
grade by Standard & Poors or Moody's Investors Service, or money market or other
mutual funds for which quotations are regularly included in The Wall Street
Journal. The Trusts and each of the Trustees thereof will use all reasonable
efforts to maintain the minimum net worth requirement set forth in this Section
10.7 and, if at any time such requirement is not met, to obtain additional funds
from the Continuing Affiliates to satisfy such requirement. In addition, to the
extent and at such time as any beneficiary of a Trust who is a minor as of the
date hereof ceases to be a minor, or any other party subsequently becomes such a
beneficiary, such beneficiary or other party shall be required to sign a Trust
Indemnity. The Trusts and the Trustees agree that no distributions shall be made
from any Trust to any Person except if such Person has theretofore executed a
Trust Indemnity or, in the cases of Sarah C. Goodwin and Peter O. Goodwin, while
they are minors, except if such distribution is made to their custodians under
the Virginia Uniform Transfers to Minors Act in such capacities who have
executed Trust Indemnities in such capacities. From and after the time that any
such Trust beneficiary referred to above is no longer a minor, no distributions
shall be made to such beneficiary until he or she has executed a Trust Indemnity
on his or her own behalf. If any subsequent beneficiary is a minor, the same
procedures shall apply to them as apply to Sarah C. Goodwin and Peter O. Goodwin
hereunder.
(b) Anything in Section 10.7(a) to the contrary not-
withstanding, the assets of the Trusts may, prior to the Termination Date, be
distributed (i) following 5 days' notice to Buyer, to a family limited
partnership all of whose limited partners are the beneficiaries of the Trusts if
prior thereto such family limited partnership assumes all of the obligations of
the Trusts under Article X of this Agreement to indemnify Buyer Indemnified
Parties and covenants to satisfy the requirements of this Section 10.7, in each
case in form and substance reasonably satisfactory to Buyer or (ii) to any other
entity, provided Buyer's written consent with respect thereto is obtained prior
to such distribution, which consent Buyer agrees not unreasonably to withhold as
long as (A) such other entity assumes all of the obligations of the Trusts under
Article X of this Agreement to indemnify Buyer Indemnified Parties and covenants
to satisfy the requirements of this Section 10.7, in each case in form and
substance reasonably satisfactory to Buyer and (B) Buyer reasonably believes
that the Buyer Indemnified Parties' receipt of the expected benefits of the
provisions of Article X of this Agreement could not be adversely affected by
such distribution.
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ARTICLE XI
Termination
Section 11.1. Termination. This Agreement may be terminated at
any time prior to the Closing by:
(a) the mutual consent of Sellers, acting through the
Designated Representative, and Buyer; or
(b) either Sellers, acting through the Designated
Representative, or Buyer, if any Governmental Authority of competent
jurisdiction shall have issued an injunction, restraining order or decree that
restrains or prohibits the consummation of the Stock and Asset Purchases or the
performance by the parties hereto of the other material obligations hereunder,
and such injunction, restraining order or decree shall have become final and
nonappealable; or
(c) either Sellers, acting through the Designated Rep-
resentative, or Buyer, if the Closing has not occurred by the close of business
on May 3, 1996 or, if so extended, on such later date as the Closing Date may be
extended as contemplated in the definition thereof in Article I hereof, provided
the failure to consummate the Stock or Asset Purchases on or before such date
did not result from the failure by the party seeking termination of this
Agreement to comply with its covenants and agreements provided for herein that
are required to be complied with prior to Closing.
Section 11.2. Procedure and Effect of Termination. In the
event of termination of this Agreement by either or both of Sellers and Buyer
pursuant to Section 11.1, written notice thereof shall forthwith be given by the
terminating party or parties to the other party or parties hereto, and this
Agreement shall thereupon terminate and become void and have no effect, and the
transactions contemplated hereby shall be abandoned without further action by
the parties hereto, except that the provisions of Sections 5.1(b), 5.8(b)
(second paragraph) and 12.4 shall survive the termination of this Agreement;
provided, however, that such termination shall not relieve any party hereto of
any liability for any breach of this Agreement (other than a breach of a
representation, as to which no party shall be liable hereunder). If this
Agreement is terminated as provided herein all filings, applications and other
submissions contemplated by Sections 3.9 and 4.2 shall, to the extent
practicable, be withdrawn from the agency or other persons to which they were
made.
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ARTICLE XII
Miscellaneous
Section 12.1. Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other party.
Section 12.2. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York without
reference to the choice of law principles thereof.
Section 12.3. Entire Agreement. This Agreement (including the
Ancillary Agreements and the other agreements referred to herein) and the
Schedules and Exhibits hereto contain the entire agreement between the parties
with respect to the subject matter hereof and there are no agreements,
understandings, representations or warranties between the parties other than
those set forth or referred to herein. Except for Sections 10.2, 10.3, 10.4 and
10.7, which are intended to benefit, and to be enforceable by, any of the Buyer
Indemnified Parties or the Seller Indemnified Parties, as applicable, and
Section 7.7 which is intended to benefit, and be enforceable by, the indemnified
Persons thereunder, this Agreement (including without limitation Article VI
hereof) is not intended to confer and shall not confer upon any person not a
party hereto (and their successors and assigns permitted by Section 12.6) any
rights or remedies hereunder.
Section 12.4. Expenses. Except as set forth in this Agreement,
whether the Stock and Asset Purchases are or are not consummated, all legal and
other costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such costs
and expenses, except that (A) Buyer agrees to pay (i) filing fees required with
respect to the filings under the HSR Act and FATA required in connection with
the Stock and Asset Purchases, (ii) the fees and expenses of Arthur Andersen,
Buyer's accountants, and (iii) the filing fees required in connection with any
applications by Buyer for consents to transfers of any liquor license to Buyer,
and (B) the Sellers on the one hand and Buyer on the other hand agree to pay
one-half of (i) any and all real property and other real property transfer,
stamp, gains, conveyance duties and other similar real property taxes (excluding
any such expenses or any other Taxes relating to the distribution of the equity
of AMF Bowling, S.A., or the transfers of assets by AMF Bowling, S.A. or AMF
Bowling Centers II,
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Inc. in connection with or in contemplation of the transactions contemplated by
the Spanish and Swiss Bowling Centers Agreements, with respect to which expenses
and taxes Sellers agree to bear the entire expense) and all documentary stamps,
stamp duties, filing fees, recording fees and sales and use taxes, and any
similar expenses, if any, and any penalties or interest with respect thereto,
payable in connection with consummation of the Stock and Asset Purchases, and
(ii) the costs and expenses of Price Waterhouse in connection with its audits
and preparation of the financial statements of the Companies relating to the
ten- and twelve-month periods ending October 31, 1995 and December 31, 1995 (in
the case of the December 31, 1995 audit, if done by Price Waterhouse),
respectively, and the Closing Date Balance Sheet (if done by Price Waterhouse),
and the costs and expenses of Price Waterhouse and KPMG Peat Marwick, LLP, as
the case may be, in connection with the audits of Fair Lanes referred to in the
definition of the term "Closing Date". Sellers shall pay any and all fines and
penalties assessed by Governmental Authorities relating to the liquor or gaming
licenses or the sale or service of liquor or the conduct of gaming activities by
the Companies, the Subsidiaries or the Concession Entities on or prior to the
Closing Date.
Section 12.5. Notices. All notices hereunder shall be
sufficiently given for all purposes hereunder if in writing and delivered
personally, sent by documented overnight delivery service or, to the extent
receipt is confirmed, telecopy, telefax or other electronic transmission service
to the appropriate address or number as set forth below. Notices to Sellers
shall be given to the Designated Representative on behalf of any and all Sellers
and addressed to:
Beverley W. Armstrong
c/o CCA Industries, Inc.
One James Center
Richmond, VA 23219
Telecopier No.: (804) 643-4208
with a copy to:
McGuire, Woods, Battle & Boothe, L.L.P.
One James Center
Richmond, VA 23219
Attn: Leslie A. Grandis
Wellford L. Sanders, Jr.
Telecopier No.: (804) 775-1061
or at such other address and to the attention of such other person as Sellers
may designate by written notice to Buyer. Notices to Buyer shall be addressed
to:
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AMF Group Holdings Inc.
c/o GS Capital Partners II, L.P.
85 Broad Street
New York, NY 10004
Attn: David J. Greenwald
Telecopier No.: (212) 902-3000
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Attn: Daniel A. Neff and
Mitchell S. Presser
Telecopier No: (212) 403-2000
or at such other address and to the attention of such other person as Buyer may
designate by written notice to Seller.
Section 12.6. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that no party hereto will assign its
rights or delegate its obligations under this Agreement without the express
prior written consent of each other party hereto, except that Buyer may assign
any or all of its right, title and interest under this Agreement to any one or
more Affiliates, provided that in the event of such assignment, Buyer shall not
be released from any obligations under this Agreement. Notwithstanding the
foregoing sentence, Buyer may assign this Agreement to any lender to Buyer or
any subsidiary of Buyer as security for obligations to such lender in respect of
the financing arrangements entered into in connection with the transactions
contemplated hereby and any refinancings, extensions, refundings or renewals
thereof, provided, however, that no assignment hereunder shall in any way affect
Buyer's obligations or liabilities under this Agreement.
Section 12.7. Designated Representative. Beverley W. Armstrong
shall be the designated representative (the "Designated Representative") of each
of the Sellers hereunder and each of the Sellers hereunder hereby designates the
Designated Representative to make all decisions and determinations and take all
actions (including giving any consents or waivers or agreeing to any amendments
to this Agreement or to termination hereof) required or permitted hereunder on
behalf of such Seller, and any such action, decision, determination or action so
made or taken shall be deemed the decision, determination or action of such
Seller, and any notice, document, certificate or
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information required to be given to any Seller shall be deemed so given if given
to the Designated Representative.
Section 12.8. Publicity. Sellers and Buyer agree that prior to
the earlier of the termination of this Agreement and the Closing they shall use
reasonable efforts, to coordinate and agree, prior to the release or issuance
thereof, upon any public release or announcement concerning the transactions
contemplated hereby to be issued by Sellers, Buyer or any of their Affiliates,
and Sellers and Buyer further agree that, except to the extent required by law,
no such public release or announcement shall be released or issued by any of
them or their respective Affiliates without the mutual consent of Buyer and the
Designated Representative.
Section 12.9. Headings; Definitions. The Section and Article
headings contained in this Agreement are inserted for convenience of reference
only and will not affect the meaning or interpretation of this Agreement. All
references to Sections or Articles contained herein mean Sections or Articles of
this Agreement unless otherwise stated. All capitalized terms defined herein are
equally applicable to both the singular and plural forms of such terms.
Section 12.10. Amendments and Waivers. This Agreement may not
be modified or amended except by an instrument or instruments in writing signed
by the party against whom enforcement of any such modification or amendment is
sought (or, in the case of the Sellers, if signed by the Designated
Representative). Any party hereto may, only by an instrument in writing (or, in
the case of the Sellers, if signed by the Designated Representative) waive
compliance by the other parties hereto with any term or provision of this
Agreement on the part of such other parties hereto to be performed or complied
with. The waiver by any party hereto of a breach of any term or provision of
this Agreement shall not be construed as a waiver of any subsequent breach.
Section 12.11. Severability. In the event that this Agreement,
or any of its provisions, or the performance of any provision, is found to be
illegal or unenforceable under applicable law now or hereafter in effect, the
parties shall be excused from performance of such portions of this Agreement as
shall be found to be illegal or unenforceable under the applicable laws or
regulations without affecting the validity of the remaining provisions of the
Agreement; provided that (i) the remaining provisions of the Agreement shall in
their totality constitute a commercially reasonable agreement, and (ii) should
any method of termination of this Agreement or a portion thereof be found to be
illegal or unenforceable, such method
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shall be reformed to comply with the requirements of applicable law so as, to
the greatest extent possible, to allow termination by that method. Nothing
herein shall be construed as a waiver of any party's right to challenge the
validity of such law.
Section 12.12. Interpretation. For the purposes of this
Agreement, (i) a "subsidiary" of an entity means any entity more than 50% of the
voting power of whose outstanding voting securities or equity interests are
directly or indirectly owned by such other entity, and (ii) "including" shall
mean "including without limitation."
Section 12.13. Schedules. Certain of the representations set
forth in this Agreement contemplate that there will be attached schedules
setting forth information that might be "material" or have a "material adverse
effect." Sellers may, at their option, include on such schedules items that are
not material or are not likely to have a material adverse effect in order to
avoid any misunderstanding, and any such inclusion shall not be deemed to be an
acknowledgment or representation by Sellers that such items are material or
would have a material adverse effect, to establish any standard of materiality
or material adverse effect, or define further the meaning of such terms for
purposes of this Agreement.
Section 12.14. Trustees. All actions hereunder or pursuant
hereto by the Trustees are in their representative capacity as trustees under
the Trusts, and not as individuals.
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IN WITNESS WHEREOF, this Agreement has been signed by or on
behalf of each of the parties as of the day first above written.
AMF GROUP HOLDINGS INC.
By:________________________________________
<PAGE> 107
IN WITNESS WHEREOF, this Agreement has been signed by or on
behalf of each of the parties as of the day first above written.
______________________________________
L.F. LOREE, III, SUCCESSOR
CO-TRUSTEE U/A DATED 11/12/86 FBO
WILLIAM H. GOODWIN, III, MOLLY S.
GOODWIN, MATTHEW T. GOODWIN, SARAH C.
GOODWIN AND PETER O. GOODWIN
<PAGE> 108
IN WITNESS WHEREOF, this Agreement has been signed by or on
behalf of each of the parties as of the day first above written.
______________________________________
NORWOOD H. DAVIS, JR., SUCCESSOR
CO-TRUSTEE U/A DATED 11/12/86 FBO
WILLIAM H. GOODWIN, III, MOLLY S.
GOODWIN, MATTHEW T. GOODWIN, SARAH C.
GOODWIN AND PETER O. GOODWIN
<PAGE> 109
IN WITNESS WHEREOF, this Agreement has been signed by or on
behalf of each of the parties as of the day first above written.
THE COMMUNITY FOUNDATION, INC.
By:__________________________________
Name:
Title:
<PAGE> 110
IN WITNESS WHEREOF, this Agreement has been signed by or on
behalf of each of the parties as of the day first above written.
_____________________________________
DOUGLAS J. STANARD
<PAGE> 111
IN WITNESS WHEREOF, this Agreement has been signed by or on
behalf of each of the parties as of the day first above written.
_____________________________________
BEVERLEY W. ARMSTRONG
<PAGE> 112
EXHIBIT 1.1(a)
SPANISH BOWLING CENTERS AGREEMENT
THIS SPANISH BOWLING CENTERS AGREEMENT (the "Agreement") dated as of
__________, 1996, is made between AMF BOWLING, S.A., a Spanish corporation
("Seller"), and [____________], a __________ corporation ("Buyer") and AMF GROUP
HOLDINGS INC., a Delaware corporation ("Holdings").
RECITALS
A. Seller has operated in Spain for some years bowling centers located:
(i) on real estate leased by Seller in Barcelona and Madrid (the "Sold Bowling
Centers"), and (ii) on real estate owned by Seller (the "AZCA Real Estate")
located at Paseo de Castellana 77, E-28046, Madrid, and described on Schedule 1
(the "AZCA Center"), constituting Seller's only business activity, which is an
independent economic and legal unit. Seller has operated and managed the Sold
Bowling Centers and the AZCA Center through an office located in Capitan Haya,
11th floor, Madrid (the "Office").
B. Seller has represented to Buyer that (i) the current employees
working in or primarily in connection with the AZCA Center are listed in
Schedule 2.1 hereto (the "AZCA Employees") and (ii) the current employees
working in or primarily in connection with the Sold Bowling Centers or the
Office are listed on Schedule 2.2 hereto (the "Transferred Employees").
C. Seller desires to sell to Buyer, and Buyer desires to purchase from
Seller, as an ongoing concern, all of the Seller's assets, properties, rights
and interests, except the AZCA Real Estate and the tangible personal property
used in the operation of the AZCA Center listed on Schedule 3 hereto (the "AZCA
Personal Property") (all such purchased assets, properties, rights and interests
being described on Schedule 4 hereto and referred to herein as the "Purchased
Assets"), on the terms and conditions set forth in this Agreement.
D. Buyer shall therefore have the right and ability to continue with
all the business activities of Seller, except for the ownership and operation of
the AZCA Real Estate, the AZCA Center and the AZCA Personal Property, which
shall continue to be owned by Seller.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties and agreements herein contained, the parties hereto
agree as follows:
<PAGE> 113
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.1 PURCHASE AND SALE OF ASSETS. Simultaneously with the execution and
delivery of this Agreement and the closing of the transactions contemplated by
the Stock Purchase Agreement (the "Stock Purchase Agreement"), dated as of
February __, 1996, among Holdings and the sellers named therein, Seller shall
sell to Buyer, and Buyer shall purchase from Seller, pursuant to the Bill of
Sale in the form attached hereto as Exhibit A (the "Bill of Sale"), the
Assignments and Assumptions of Leases attached hereto as Exhibits B-1, B-2 and
B-3 (the "Assignment and Assumptions Agreements") and the Instrument of
Assumption of Liabilities attached hereto as Exhibit C (the "Instrument of
Assumption"), all of the Purchased Assets, including, without limitation:
(a) the pin spotters, lanes, automatic scoring systems, ball
returns, seating, lockers, ball racks, rental shoes, bowling balls, pins and
spare parts and other equipment and property (collectively, "Center Equipment")
located at the Sold Bowling Centers or at the Office;
(b) all inventories of bowling balls, shoes, clothing, supplies,
food and beverages owned by Seller, held for resale and located at or in transit
to the Sold Bowling Centers (the "Center Inventory");
(c) the licenses and permits which are related to either of the
Sold Bowling Centers or the Office (other than those principally related to the
Excluded Assets);
(d) the rights of Seller in intellectual property other than that
relating principally to the AZCA Center (but including any such intellectual
property relating principally to the AZCA Center that would cause Seller to
violate Section 4.4 or such property which is owned or licensed by affiliates of
Holdings following the "Closing" under the Stock Purchase Agreement);
(e) the rights of Seller under all contracts and leases that relate
to the Sold Bowling Centers, the Purchased Assets and the Office, including, but
not limited to, those contracts and leases listed on Schedule 4 hereto;
(f) the accounts receivable of Seller to the extent not arising
from the AZCA Center;
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(g) electronic or paper copies of the books, files and records of
Seller relating to the ownership and operation of the Sold Bowling Centers, the
Office and the Purchased Assets;
(h) the prepaid expenses and deferred charges of Seller to the
extent relating to the Sold Bowling Centers, the Office or the Purchased Assets;
(i) all stock, securities and other investments owned by Seller and
any options, warrants or rights to acquire such interests and all rights as
partner or joint venturer in each partnership or joint venture in which Seller
is a partner or venturer or otherwise participates or any rights so to
participate or any similar rights;
(j) all rights and claims of Seller whether mature, contingent or
otherwise, against third parties relating to the Sold Bowling Centers, the
Office or the Purchased Assets, whether in tort, contract, or otherwise,
including, without limitation, causes of action, unliquidated rights and claims
under or pursuant to all warranties, representations and guarantees made by
manufacturers, suppliers or vendors;
(k) cash and cash equivalents of Seller; and
(l) all other tangible and intangible assets of Seller which are
not included in the excluded assets described in Section 1.2.
1.2 EXCLUDED ASSETS. The following (the "Excluded Assets") are the only
assets, properties, rights or interests of Seller not included in the Purchased
Assets, namely (i) the AZCA Real Estate, (ii) all Center Equipment located on
the AZCA Real Estate, including, but not limited to, the AZCA Personal Property,
(iii) the licenses, permits, intellectual property (subject to the exclusions
set forth in Section 1.1(d)), contracts and leases which relate principally to
the ownership or operation of the AZCA Center, (iv) the note receivable from AMF
Machinery Systems, Inc. and (v) the rights of Seller under a management services
agreement (the "Management Agreement"), dated as of January 1, 1995, between
Seller and AMF Bowling Centers II, Inc.
1.3 ASSUMED LIABILITIES. On the date hereof, Buyer will assume the
liabilities and obligations of Seller as more specifically described on Schedule
5 hereto; provided, however, that it will not assume (i) any liability to the
extent it relates to the ownership or operation of the Excluded Assets
(including, without limitation, withholding taxes and Social Security wages)
whether arising or accruing prior to, on or after the date hereof,
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(ii) any liabilities or obligations to pay or provide salaries, wages or other
compensation or employee benefits of any description to, or related to, any
past, present or future employees of the AZCA Center arising for any reason,
(iii) any liabilities arising under the Management Agreement or any other
agreement or relationship between Seller and any entity affiliated therewith,
(iv) any other liabilities of Seller which do not arise out of ownership or
operation of the Purchased Assets, or (v) any liabilities which Seller or
shareholders of Seller may incur or have incurred as a consequence of any
transfer of the shares of capital stock of Seller. To the extent liabilities
relate to the ownership or operation of both the Purchased Assets and the
Excluded Assets, such liabilities will be apportioned equitably between Buyer
and Seller based on the extent to which such liabilities relate to such
entities' respective assets.
1.4 PURCHASE PRICE. The amount to be paid for the Purchased Assets (the
"Purchase Price"), will be the net tax book value for United States tax purposes
of the Purchased Assets and will be paid in United States dollars.
ARTICLE II
EMPLOYEE AND EMPLOYEE MATTERS
2.1 EMPLOYEE LIABILITIES. As of the date hereof, Buyer shall employ all
of the Transferred Employees and Seller shall employ all the AZCA Employees.
Buyer shall assume and indemnify Seller for any liabilities or obligations to
pay or provide salaries, wages or other compensation or employee benefits of any
description to those persons employed by Seller on or prior to the date hereof
with respect to the Sold Bowling Centers and the Office. Seller shall assume and
indemnify Buyer for any liabilities or obligations to pay or provide salaries,
wages or other compensation or employee benefits of any description to those
persons employed by Seller on or prior to the date hereof with respect to the
AZCA Center. Buyer shall be responsible for and shall indemnify Seller for any
liabilities and obligations to pay or provide salaries, wages or other
compensation or employee benefits of any description to persons employed by
Buyer after the date hereof and Seller shall be responsible for and shall
indemnify Buyer for any liabilities and obligations to pay or provide salaries,
wages or other compensation or employee benefits of any description to persons
employed by the Seller after the date hereof.
2.2 EMPLOYEE BENEFITS. Seller and Buyer shall use commercially
reasonable efforts to effect the transfer to and assumption by Buyer of each
employee benefit plan currently
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maintained by Seller for the benefit of Seller's employees (other than any
exclusively related to current and former employees of the AZCA Center) ("Seller
Plans"). To the extent that any of the Seller Plans contain assets or are
subject to liabilities, Seller and Buyer shall each use commercially reasonable
efforts to effect the pro rata apportionment of such assets and liabilities
between Seller and Buyer, on the basis of whose current and former employees
such assets and liabilities relate to, or, if not feasible, on the basis of
headcount (in the case of Seller Plans for which as sets or liabilities of such
Seller Plans vary in proportion to headcount) or on the basis of payroll (in the
case of Seller Plans for which assets or liabilities of such Seller Plans vary
in proportion to payroll) or such other basis that will accomplish an equitable
apportionment between those assets sold by Seller hereunder and those retained.
2.3 EMPLOYEE NOTIFICATION. Seller and Buyer shall jointly notify each
employee of the assumption herein agreed, expressly stating which entity shall
be responsible for the employee's labor rights and obligations, and the date on
which such assumption shall be effective.
2.4 EMPLOYEES' DEREGISTRATION/REGISTRATION. Seller shall proceed to
deregister the employees from the Sold Bowling Centers and the Office as of
___________, 1996 and Buyer shall proceed to register them as of __________,
1996 with the Social Security.
ARTICLE III
CLOSING
3.1 DELIVERIES BY SELLER. Simultaneous with the execution and delivery
of this Agreement by Buyer and Seller, Seller has delivered to Buyer the
following:
(i) the fully executed Bill of Sale, the Assignment and
Assumption Agreements executed by Seller and the Landlord related
thereto and such other documents as may be necessary to transfer to
Buyer the Purchased Assets, including, but not limited to, notarial
deeds empowering Buyer to exercise any and all rights, notices and
remedies referred to in paragraphs 3 and 4 of the Bill of Sale;
(ii) evidence reasonably satisfactory to Buyer that Seller has
given all notices and obtained all consents necessary to transfer all
right, title and interest in the Purchased Assets to Buyer; and
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(iii) an opinion of Bufete M. Vega Penichet in form and
substance reasonably satisfactory to Buyer.
3.2 DELIVERIES BY BUYER. Simultaneous with the execution of this
Agreement, Buyer has delivered to Seller the following:
(i) the Purchase Price in immediately available funds;
(ii) the Assignment and Assumption Agreements and the
Instrument of Assumption, each executed by Buyer; and
(iii) an opinion of Spanish counsel to Buyer in form and
substance reasonably satisfactory to Seller.
ARTICLE IV
GENERAL PROVISIONS
4.1 INTERPRETATION. The headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
4.2 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
4.3 WARRANTIES. The sole representations and warranties of Buyer and
Seller with respect to the matters that are the subject of this Agreement, and
the rights and obligations of Seller and Buyer with respect to such
representations and warranties, are set forth in the Stock Purchase Agreement.
Buyer and Seller make no representations or warranties pursuant to this
Agreement.
4.4 USE OF INTELLECTUAL PROPERTY; CHANGE OF NAME. Except as permitted
by the terms of applicable intellectual property licenses referred to as
"License Agreements" in the Stock Purchase Agreement, Seller will not, and will
not permit its affiliates to, use any Company Intellectual Property (as defined
in the Stock Purchase Agreement) in their names or operations from and after the
date hereof; provided, however, that Seller may retain, maintain and use in
connection with the operation of the AZCA Center any currently existing signage
containing the mark AMF until the second anniversary of the date of execution of
this Agreement. The foregoing sentence notwithstanding, as soon as possible
after the date of execution of this Agreement, but in any event within three
months after the execution of this Agreement, Seller shall change
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its name to a name that does not contain "AMF" or references confusingly similar
to AMF.
4.5 MISCELLANEOUS. This Agreement (i) together with the Stock Purchase
Agreement (including the Ancillary Agreements referred to therein) constitute
the entire agreement and supersede any prior agreements or understandings,
written or oral, between the parties with respect to the subject matter hereof;
(ii) is not intended to, and shall not confer upon any other person or business
entity other than the parties hereto, any rights or remedies with respect to the
subject matter hereof; (iii) shall not be assigned by operation of law or
otherwise except that Buyer may assign any or all of its right, title and
interest under this Agreement to any one or more Affiliates (as defined in the
Stock Purchase Agreement), provided that in the event of such assignment Buyer
shall not be released from its obligations under this Agreement; and (iv) shall
be governed in all respects by the laws of New York without regard to its choice
of law rules.
4.6 JURISDICTION. ALL DISPUTES, CONTROVERSIES OR CLAIMS ARISING UNDER
OR RELATED TO THIS AGREEMENT SHALL BE SUBMITTED TO THE FEDERAL DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF NEW YORK AND EACH OF THE PARTIES HERETO IRREVOCABLY
SUBMITS TO THE JURISDICTION OF SUCH COURT IN CONNECTION THEREWITH.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed and their corporate seals to be hereto affixed and attested by their
duly authorized officers.
AMF BOWLING, S.A,
BY: ________________________________
TITLE: _____________________________
[__________________]
BY: ________________________________
TITLE: _____________________________
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AMF GROUP HOLDINGS INC.
BY: ________________________________
TITLE: _____________________________
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EXHIBITS
EXHIBIT A - BILL OF SALE
EXHIBIT B-1 - ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT B-2 - ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT B-3 - ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT C - INSTRUMENT OF ASSUMPTION OF LIABILITIES
SCHEDULES
SCHEDULE 1 - AZCA REAL ESTATE
SCHEDULE 2.1 - AZCA EMPLOYEES
SCHEDULE 2.2 - TRANSFERRED EMPLOYEES
SCHEDULE 3 - AZCA PERSONAL PROPERTY
SCHEDULE 4 - PURCHASED ASSETS
SCHEDULE 5 - ASSUMED LIABILITIES
<PAGE> 121
EXHIBIT A
BILL OF SALE AND ASSIGNMENT
THIS BILL OF SALE AND ASSIGNMENT ("Bill of Sale") is made this ___ day
of ________, 1996 by AMF BOWLING, S.A., a Spanish corporation ("Seller") in
favor of [_____________, a _________ corporation] ("Buyer").
RECITALS
A. Seller and Buyer are parties to a Spanish Bowling Center Agreement
(the "Agreement") dated as of the date hereof. Terms used in this Bill of Sale
shall have the same meaning as they have in the Agreement unless the context
provides otherwise.
B. The Agreement provides, among other things, that for the
consideration provided therein, Seller will sell to Buyer all of Seller's
assets, properties, rights and interests other than Excluded Assets.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged:
1. Seller hereby sells, transfers, conveys, assigns and delivers to
Buyer and its successors and assigns all of the assets, properties, rights and
interests of Seller other than the Excluded Assets (the "Purchased Assets"),
including, without limitation:
(a) the pin spotters, lanes, automatic scoring systems, ball
returns, seating, lockers, ball racks, rental shoes, bowling balls, pins and
spare parts and other equipment and property (collectively, "Center Equipment")
located at the Sold Bowling Centers and at the Office;
(b) all inventories of bowling balls, shoes, clothing, supplies,
food and beverages owned by Seller, held for resale and located at or in transit
to the Sold Bowling Centers (the "Center Inventory");
(c) the licenses and permits which are related to either of the Sold
Bowling Centers or the office (other than those principally related to the
Excluded Assets);
(d) the rights of Seller in intellectual property other than that
relating principally to the AZCA Center (but including any such intellectual
property relating principally to the AZCA
<PAGE> 122
Center that would cause Seller to violate Section 4.4 or such intellectual
property which is owned or licensed by affiliates of Holdings following the
"Closing" under the Stock Purchase Agreement);
(e) the rights of Seller under all contracts and leases that relate
to the Sold Bowling Centers, the Purchased Assets and the Office, including, but
not limited to, those contracts and leases listed on Schedule 1 hereto;
(f) the accounts receivable of Seller to the extent not arising from
the AZCA Center;
(g) electronic or paper copies of the books, files and records of
Seller relating to the ownership and operation of the Sold Bowling Centers, the
Office and the Purchased Assets;
(h) the prepaid expenses and deferred charges of Seller to the
extent relating to the Sold Bowling Centers, the Office or the Purchased Assets;
(i) all stock, securities and other investments owned by Seller and
any options, warrants or rights to acquire such interests and all rights as
partner or joint venturer in each partnership or joint venture in which Seller
is a partner or venturer or otherwise participates or any rights so to
participate or any similar rights;
(j) all rights and claims of Seller whether mature, contingent or
otherwise, against third parties relating to the Sold Bowling Centers, the
Office or the Purchased Assets, whether in tort, contract, or otherwise,
including, without limitation, causes of action, unliquidated rights and claims
under or pursuant to all warranties, representations and guarantees made by
manufacturers, suppliers or vendors;
(k) cash and cash equivalents of Seller; and
(l) all other tangible and intangible assets of Seller which are not
included in the excluded assets described in Paragraph 2.
2. The following (the "Excluded Assets") are the only assets,
properties, rights or interests of Seller not included in the Purchased Assets,
namely (i) the real property described on Schedule 2 (the "AZCA Real Estate"),
(ii) all Center Equipment located on the AZCA Real Estate, including, but not
limited to, the AZCA Personal Property, (iii) Seller's licenses, permits,
intellectual property (subject to the exclusions set forth in
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Section 1(d) contracts and leases which relate principally to the ownership or
operation of the AZCA Center, (iv) the note receivable from AMF Machinery
Systems, Inc. and (v) the rights of Seller under a management services agreement
(the "Management Agreement"), dated as of January 1, 1995, between Seller and
AMF Bowling Centers II, Inc.
3. This Bill of Sale and conveyance includes, without limitation,
choses in action for accounts payable to Seller accrued or accruing and unpaid
on or after the date of this instrument. Seller hereby constitutes and appoints
Buyer, its successors and assigns the true and lawful attorney of Seller, with
full power of substitution, having full right and authority, in the name of
Seller or otherwise, and for the benefit and at the expense of Buyer, its
successors and assigns:
(a) to collect for the account of Buyer amounts payable under any
and all claims, contracts, leases, licenses, permits, authorizations,
arrangements, commitments, loans, receivables of any kind or character and any
other items included in the Purchased Assets, including without limitation any
amounts payable as interest in respect thereof; and
(b) to institute and prosecute all proceedings which Buyer may deem
proper in order to collect, assert or enforce any claim, right, title, interest
or benefit in, to or under the assets, properties, rights, interests, business
and any other items included in the Purchased Assets, to defend or compromise
any and all actions, suits or proceedings in respect of such Purchased Assets,
and to do all such acts and things in relation thereto as Buyer shall deem
appropriate and advisable.
Seller hereby declares that the foregoing powers are coupled with an
interest and shall be irrevocable by it or by its subsequent dissolution or in
any manner or for any reason. Buyer shall be entitled to retain for its own
account any amounts collected pursuant to the foregoing powers, including any
amounts payable as interest in respect thereof.
4. Seller hereby agrees that, from time to time after the delivery of
this Bill of Sale, it will, at the request of Buyer and without further
consideration, promptly take such further action and execute and deliver such
additional assignments, bills of sale, consents or other similar instruments as
Buyer or its successors or assigns may reasonably deem necessary or appropriate
to complete the transfer of the title or possession of the Purchased Assets to,
or vest them in, Buyer and, in the case of any required consents, approvals,
waivers or authorizations, to use reasonable efforts to obtain such consents,
approvals, authorizations or waivers.
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5. Except as is set forth in Paragraph 6 below, nothing in this
instrument, express or implied, is intended or shall be construed to confer upon
any person, firm or corporation other than Buyer or its successors or assigns,
any remedy or claim.
6. The provisions of this Bill of Sale, which are intended to be
binding upon Seller, its successors and assigns, and are for the benefit of
Buyer, its successors and assigns, and all rights hereby granted Buyer,
including the right to act for Seller, may be exercised by Buyer, its successors
or assigns.
7. THIS BILL OF SALE SHALL BE GOVERNED IN ALL RESPECTS BY THE LAWS OF
NEW YORK WITHOUT REGARD TO ITS CHOICE OF LAW RULES.
8. ALL DISPUTES, CONTROVERSIES OR CLAIMS ARISING UNDER OR RELATED TO
THIS AGREEMENT SHALL BE SUBMITTED TO THE FEDERAL DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK AND EACH OF THE PARTIES HERETO IRREVOCABLY SUBMITS TO THE
JURISDICTION OF SUCH COURT IN CONNECTION THEREWITH.
IN WITNESS WHEREOF, Seller has caused this Bill of Sale to be signed by
a duly authorized officer of Seller on the date first above written.
AMF BOWLING, S.A.
BY:________________________________
TITLE:_____________________________
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EXHIBIT B-1
ASSIGNMENT AND ASSUMPTION OF LEASE
THIS AGREEMENT is made this ___ day of ________,1996 by and between AMF
BOWLING, S.A., a Spanish corporation ("Assignor") and [_______________, a
_________ corporation] ("Assignee").
RECITALS
A. Pursuant to that certain Spanish Bowling Center Agreement, dated as
of the date hereof, by and between Assignor and Assignee (the "Agreement"),
Assignor is selling to Assignee, among other things, the assets owned by
Assignor and used in connection with the operation of Assignor's bowling centers
located on real estate leased by Assignor in Barcelona and Madrid, Spain (the
"Sold Bowling Centers").
B. Assignor is the present holder of the lessee's interest in, to and
under a lease (the "Lease") with respect to the real property upon which the
Barcelona Sold Bowling Center is located, a copy of which Lease is attached
hereto and incorporated herein by this reference.
C. In connection with the sale and conveyance to Buyer of the assets
described in the Agreement, Assignee desires to obtain Assignor's interest in
and to assume Assignor's obligations under the Lease subject to the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing premises and mutual
covenants hereinafter set forth and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Assignor and Assignee
hereby agree as follows:
1. ASSIGNMENT. Assignor hereby assigns to Assignee all of Assignor's
rights, title and interest in, to and under the Lease.
2. ASSUMPTION. Assignee hereby accepts this assignment and agrees (i)
to assume all of the obligations of Assignor under the Lease, regardless of when
such obligations arose, (ii) to perform and observe all the covenants,
agreements, conditions and other provisions of said Lease to be observed and
performed on the part of Assignor thereunder and (iii) to indemnify and hold
harmless Assignor from any and all liability, claims, demands, charges and
expenses arising under the Lease, regardless of when such claim or liability
arose.
<PAGE> 126
3. CONSENT OF LANDLORD. ______________ hereby executes this Assignment
and Assumption of Lease to evidence its consent to the assignment evidenced
hereby and hereby waives any and all rights of "tanteo", "retracto", increase of
rent and indemnification that it might have as a consequence of this assignment
under the Lease or Spanish law.
4. BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the parties, their successors and assigns.
5. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF, SPAIN. ALL DISPUTES, CONTROVERSIES OR CLAIMS
ARISING UNDER OR RELATED TO THIS AGREEMENT SHALL BE SUBMITTED TO THE COURTS IN
THE VILLA OF BARCELONA AND EACH OF THE PARTIES HERETO IRREVOCABLY SUBMITS TO THE
JURISDICTION OF SUCH COURTS IN CONNECTION THEREWITH.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed as of the day and year first above written.
ASSIGNOR:
AMF BOWLING, S.A.
BY:________________________________
TITLE:_____________________________
ASSIGNEE:
[__________________]
BY:________________________________
TITLE:_____________________________
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LANDLORD:
INMOBILIARIA COLONIAL, S.A.
BY:________________________________
TITLE:_____________________________
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<PAGE> 128
EXHIBIT B-2
ASSIGNMENT AND ASSUMPTION OF LEASE
THIS AGREEMENT is made this ___ day of _________, 1996 by and between
AMF BOWLING, S.A., a Spanish corporation ("Assignor") and [_____________, a
_________ corporation] ("Assignee").
RECITALS
A. Pursuant to that certain Spanish Bowling Center Agreement, dated as
of the date hereof, by and between Assignor and Assignee (the "Agreement"),
Assignor is selling to Assignee, among other things, the assets owned by
Assignor and used in connection with the operation of Assignor's bowling centers
located on real estate leased by Assignor in Barcelona and Madrid, Spain (the
"Sold Bowling Centers").
B. Assignor is the present holder of the lessee's interest in, to and
under a lease (the "Lease") with respect to the real property upon which the
Madrid Sold Bowling Center is located, a copy of which Lease is attached hereto
and incorporated herein by this reference.
C. In connection with the sale and conveyance to Buyer of the assets
described in the Agreement, Assignee desires to obtain Assignor's interest in
and to assume Assignor's obligations under the Lease subject to the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing premises and mutual
covenants hereinafter set forth and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Assignor and Assignee
hereby agree as follows:
1. ASSIGNMENT. Assignor hereby assigns to Assignee all of Assignor's
rights, title and interest in, to and under the Lease.
2. ASSUMPTION. Assignee hereby accepts this assignment and agrees (i)
to assume all of the obligations of Assignor under the Lease, regardless of when
such obligations arose, (ii) to perform and observe all the covenants,
agreements, conditions and other provisions of said Lease to be observed and
performed on the part of Assignor thereunder and (iii) to indemnify and hold
harmless Assignor from any and all liability, claims, demands, charges and
expenses arising under the Lease, regardless of when such claim or liability
arose.
<PAGE> 129
3. CONSENT OF LANDLORD. _______________ hereby executes this Assignment
and Assumption of Lease to evidence its consent to the assignment evidenced
hereby and hereby waives any and all rights of "tanteo", "retracto", increase of
rent and indemnification that it might have as a consequence of this assignment
under the Lease or Spanish law.
4. BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the parties, their successors and assigns.
5. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF SPAIN. ALL DISPUTES, CONTROVERSIES OR CLAIMS ARISING
UNDER OR RELATED TO THIS AGREEMENT SHALL BE SUBMITTED TO THE COURTS OF THE VILLA
OF MADRID AND EACH OF THE PARTIES HERETO IRREVOCABLY SUBMITS TO THE JURISDICTION
OF SUCH COURTS IN CONNECTION THEREWITH.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed as of the day and year first above written.
ASSIGNOR:
AMF BOWLING, S.A.
BY:________________________________
TITLE:_____________________________
ASSIGNEE:
[__________________]
BY:________________________________
TITLE:_____________________________
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LANDLORD:
CENTRO COMERCIAL MADRID NORTE, S.A.
BY:________________________________
TITLE:_____________________________
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<PAGE> 131
EXHIBIT B-3
ASSIGNMENT AND ASSUMPTION OF LEASE
THIS AGREEMENT is made this ___ day of _________, 1996 by and between
AMF BOWLING, S.A., a Spanish corporation ("Assignor") and [_____________, a
_________ corporation] ("Assignee").
RECITALS
A. Pursuant to that certain Spanish Bowling Center Agreement, dated as
of the date hereof, by and between Assignor and Assignee (the "Agreement"),
Assignor is selling to Assignee, among other things, the assets owned by
Assignor and used in connection with the operation of Assignor's bowling centers
located on real estate leased by Assignor in Barcelona and Madrid, Spain (the
"Sold Bowling Centers").
B. Assignor is the present holder of the lessee's interest in, to and
under a lease (the "Lease") with respect to the real property upon which the
office from which Assignee manages its business is located, a copy of which
Lease is attached hereto and incorporated herein by this reference.
C. In connection with the sale and conveyance to Buyer of the assets
described in the Agreement, Assignee desires to obtain Assignor's interest in
and to assume Assignor's obligations under the Lease subject to the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing premises and mutual
covenants hereinafter set forth and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Assignor and Assignee
hereby agree as follows:
1. ASSIGNMENT. Assignor hereby assigns to Assignee all of Assignor's
rights, title and interest in, to and under the Lease.
2. ASSUMPTION. Assignee hereby accepts this assignment and agrees (i)
to assume all of the obligations of Assignor under the Lease, regardless of when
such obligations arose, (ii) to perform and observe all the covenants,
agreements, conditions and other provisions of said Lease to be observed and
performed on the part of Assignor thereunder and (iii) to indemnify and hold
harmless Assignor from any and all liability, claims, demands, charges and
expenses arising under the Lease, regardless of when such claim or liability
arose.
<PAGE> 132
3. CONSENT OF LANDLORD. _______________ hereby executes this Assignment
and Assumption of Lease to evidence its consent to the assignment evidenced
hereby and hereby waives any and all rights of "tanteo", "retracto", increase of
rent and indemnification that it might have as a consequence of this assignment
under the Lease or Spanish law.
4. BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the parties, their successors and assigns.
5. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF SPAIN. ALL DISPUTES, CONTROVERSIES OR CLAIMS ARISING
UNDER OR RELATED TO THIS AGREEMENT SHALL BE SUBMITTED TO THE COURTS OF THE VILLA
OF MADRID AND EACH OF THE PARTIES HERETO IRREVOCABLY SUBMITS TO THE JURISDICTION
OF SUCH COURTS IN CONNECTION THEREWITH.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed as of the day and year first above written.
ASSIGNOR:
AMF BOWLING, S.A.
BY:________________________________
TITLE:_____________________________
ASSIGNEE:
[__________________]
BY:________________________________
TITLE:_____________________________
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LANDLORD:
LUIS CARLOS PARRA ESPERON
BY:________________________________
TITLE:_____________________________
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<PAGE> 134
EXHIBIT C
INSTRUMENT OF ASSUMPTION OF LIABILITIES
THIS INSTRUMENT OF ASSUMPTION OF LIABILITIES ("Instrument of
Assumption") is made this ___ day of __________, 1996 by [____________, a
__________ corporation] ("Buyer"), in favor of AMF BOWLING, S.A., a Spanish
corporation ("Seller").
RECITALS
A. Buyer and Seller are parties to a Spanish Bowling Center Agreement
(the "Agreement") dated as of the date hereof. Terms used in this Instrument of
Assumption shall have the same meaning as they have in the Agreement unless the
context provides otherwise.
B. The Agreement provides, among other things, that for the
consideration provided therein, Buyer will assume certain obligations of Seller.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged:
1. Subject to the terms of the Agreement and the Stock Purchase
Agreement (the "Stock Purchase Agreement") dated as of February _, 1996, among
AMF Group Holdings Inc. and the Sellers named therein, Buyer hereby assumes all
of the liabilities and obligations of Seller existing on the date hereof as more
particularly described on Schedule 1 hereto, whether known or unknown,
regardless of whether accrued; provided, however, Buyer shall not assume (i) any
liability to the extent it relates to the ownership or operation of the Excluded
Assets (including, without limitation, withholding taxes and Social Security
wages) whether arising or accruing prior to, on or after the date hereof, (ii)
any liabilities or obligations to pay or provide salaries, wages or other
compensation or employee benefits of any description to, or related to, any past
present or future employees of the AZCA Center arising for any reason, (iii) any
liabilities arising under the Management Agreement or any other agreement or
relationship between Seller and any entity affiliated therewith, (iv) any other
liabilities of Seller which do not arise out of ownership or
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<PAGE> 135
operation of the Purchased Assets, or (v) any liabilities which Seller or
shareholders of Seller may incur or have incurred as a consequence of any
transfer of the shares of capital stock of Seller. To the extent liabilities
relate to the ownership or operation of both the Purchased Assets and the
Excluded Assets, such liabilities will be apportioned equitably between Buyer
and Seller based on the extent to which such liabilitiesy relate to such
entities' respective assets. Buyer does not assume any liabilities of Seller
except as provided in this Instrument of Assumption and the Agreement.
2. The assumption by Buyer of the liabilities and obligations of Seller
set forth in this Instrument of Assumption shall not be construed to defeat,
impair or limit in any way any rights of Buyer to dispute the validity or amount
thereof.
3. Buyer agrees that, from time to time after the delivery of this
Instrument of Assumption, it will, at the request of Seller and without further
consideration, promptly take such further action and execute and deliver such
additional documents as Seller may reasonably deem necessary in order to more
fully effectuate the assumption of liabilities provided for herein.
4. The provisions of this Instrument of Assumption are intended to be
binding upon Buyer, its successors and assigns, and are for the benefit of
Seller. Other than an assignment hereof to a buyer of substantially all of the
assets of Seller, Seller may not assign its rights hereunder without the prior
written permission of Buyer.
5. THIS INSTRUMENT OF ASSUMPTION SHALL BE GOVERNED IN ALL RESPECTS BY
THE LAWS OF NEW YORK WITHOUT REGARD TO ITS CHOICE OF LAW RULES.
6. ALL DISPUTES, CONTROVERSIES OR CLAIMS ARISING UNDER OR RELATED TO
THIS AGREEMENT SHALL BE SUBMITTED TO THE FEDERAL DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK AND EACH OF THE PARTIES HERETO IRREVOCABLY SUBMITS TO THE
JURISDICTION OF SUCH COURTS IN CONNECTION THEREWITH.
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<PAGE> 136
IN WITNESS WHEREOF, Buyer has caused this instrument to be signed by a
duly authorized officer on the date first above written.
[BUYER]
BY:________________________________
TITLE:_____________________________
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<PAGE> 137
EXHIBIT 1.1(b)
[THIS AGREEMENT MAY BE REVISED
TO COMPLY WITH SWISS LAW, WITHOUT EFFECT ON THE
ECONOMIC TRANSACTION.]
SWISS BOWLING CENTER AGREEMENT
THIS SWISS BOWLING CENTER AGREEMENT (the "Agreement"), dated as of
__________, 1996, is made between AMF BOWLING CENTERS II, a Delaware
corporation ("Seller"), and [_____________], a __________ corporation ("Buyer")
and AMF GROUP HOLDINGS INC., a Delaware corporation ("Holdings").
RECITALS
A. Seller has operated in Switzerland for some years bowling centers
located: (i) on real estate leased by Seller in Geneva, Switzerland (the "Thonex
Bowling Center"), and (ii) on real estate owned by Seller (the "Meyrin Real
Estate"), located at 67 ch. de l'Etang, 1219 Chatelaine/Geneva, Switzerland and
described on Schedule 1 (the "Meyrin Center"), constituting Seller's only
business activity. Seller has operated and managed the Sold Bowling Center and
the Meyrin Center through an office located at _______________ (the "Office").
B. Seller has represented to Buyer that (i) the current employees
working in or primarily in connection with the Meyrin Center are listed in
Schedule 2.1 hereto (the "Meyrin Employees") and (ii) the current employees
working in or primarily in connection with the Sold Bowling Center or the Office
are listed on Schedule 2.2 hereto (the Transferred Employees").
C. Seller desires to sell to Buyer, and Buyer desires to purchase from
Seller, as an ongoing concern, all of the Seller's assets, properties, rights
and interests, except the Meyrin Real Estate and the personal property used in
the operation of the Meyrin Center listed on Schedule 3 hereto (the "Meyrin
Personal Property"), (all such purchased assets, properties, rights and
interests being described on Schedule 4 hereto and referred to herein as the
"Purchased Assets"), on the terms and conditions set forth in this Agreement.
D. Buyer shall therefore have the right and ability to continue with
all the business activities of Seller, except for the ownership and operation of
the Meyrin Real Estate, the Meyrin
<PAGE> 138
Center and the Meyrin Personal Property, which shall continue to be owned and
operated by Seller.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties and agreements herein contained, the parties hereto
agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.1 PURCHASE AND SALE OF ASSETS. Simultaneously with the execution and
delivery of this Agreement and the closing of the transactions contemplated by
the Stock Purchase Agreement (the "Stock Purchase Agreement"), dated as of
February , 1996, among Holdings and the sellers named therein, Seller shall sell
to Buyer, and Buyer shall purchase from Seller, pursuant to the Bill of Sale in
the form attached hereto as Exhibit A (the "Bill of Sale"), the Assignments and
Assumptions of Leases attached hereto as Exhibits B-1 and B-2 (the "Assignments
and Assumptions of Leases") and the Instrument of Assumption of Liabilities
attached hereto as Exhibit C (the "Instrument of Assumption"), all of the
Purchased Assets, including, without limitation:
(a) the pin spotters, lanes, automatic scoring systems, ball
returns, seating, lockers, ball racks, rental shoes, bowling balls, pins and
spare parts and other equipment and property (collectively, "Center Equipment")
located at the Thonex Bowling Center or at the Office;
(b) all inventories of bowling balls, shoes, clothing, supplies,
food and beverages owned by Seller, held for resale and located at or in transit
to the Thonex Bowling Center (the "Thonex Center Inventory");
(c) the licenses and permits which are related to the Thonex
Bowling Center or the Office (other than those principally related to the
Excluded Assets);
(d) the rights of Seller in intellectual property other than that
relating principally to the Meyrin Center (but including any such intellectual
property relating principally to the Meyrin Center that would cause Seller to
violate Section 4.4 hereof or such property which is owned or licensed by
affiliates of Holdings following the "Closing" under the Stock Purchase
Agreement);
(e) the rights of Seller under all contracts and leases that relate
to the Thonex Bowling Center, the Office and the
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Purchased Assets, including, but not limited to, those contracts and leases
listed on Schedule 4 hereto;
(f) the accounts receivable of Seller to the extent not arising
from the operation of the Meyrin Center;
(g) electronic or paper copies of the books, files and records of
Seller relating to the ownership and operation of the Thonex Bowling Center, the
Office and the Purchased Assets;
(h) the prepaid expenses and deferred charges of Seller to the
extent relating to the Thonex Center, the Office or the Purchased Assets;
(i) all stock, securities and other investments owned by Seller and
any options, warrants or rights to acquire such interests and all rights as
partner or joint venturer in each partnership or joint venture in which Seller
is a partner or venturer or otherwise participates or any rights so to
participate or any similar rights;
(j) all rights and claims of Seller whether mature, contingent or
otherwise, against third parties to the extent relating to the Thonex Center,
the Office or the Purchased Assets, whether in tort, contract, or otherwise,
including, without limitation, causes of action, unliquidated rights and claims
under or pursuant to all warranties, representations and guarantees made by
manufacturers, suppliers or vendors;
(k) cash and cash equivalents of Seller; and
(l) all other tangible and intangible assets of Seller which are
not included in the excluded assets described in Section 1.2.
1.2 EXCLUDED ASSETS. The following (the "Excluded Assets") are the only
assets, properties, rights or interests not included in the Purchased Assets,
namely (i) the Meyrin Real Estate, (ii) all Center Equipment located on the
Meyrin Real Estate, including, but not limited to, the Meyrin Personal Property,
(iii) the licenses, permits, intellectual property (subject to the exclusions
set forth in Section 1.1(d)), contracts and leases which relate principally to
the ownership or operation of the Meyrin Center, and (iv) the rights of Seller
under a management services agreement (the "Management Agreement"), dated as of
January 1, 1995, between Seller and AMF Bowling, S.A.
1.3 ASSUMED LIABILITIES. On the date hereof, Buyer will assume the
liabilities and obligations of Seller as more
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specifically described on Schedule 5 hereto; provided, however, that it will not
assume (i) any liability to the extent it relates to the ownership or operation
of the Excluded Assets (including, without limitation, withholding taxes and
Social Security wages) whether arising or accruing prior to, on or after the
date hereof, (ii) any liabilities or obligations to pay or provide salaries,
wages or other compensation or employee benefits of any description to, or
related to, any past, present or future employees of Meyrin Center arising for
any reason, (iii) any liabilities arising under the Management Agreement or any
other agreement or relationship between Seller and any entity affiliated
therewith, or (iv) any other liabilities of Seller which do not arise out of
ownership or operation of the Purchased Assets. To the extent liabilities relate
to the ownership or operation of both the Purchased Assets and the Excluded
Assets, such liabilities will be apportioned equitably between Buyer and Seller
based on the extent to which such liabilities relate to such respective assets.
1.4 PURCHASE PRICE. The amount to be paid for the Purchased Assets (the
"Purchase Price"), will be the net tax book value for United States tax purposes
of the Purchased Assets and will be paid in United States dollars.
ARTICLE II
EMPLOYEE AND EMPLOYEE MATTERS
2.1 EMPLOYEE LIABILITIES. As of the date hereof, Buyer shall employ all
of the Transferred Employees and Seller shall employ all the Meyrin Employees.
Buyer shall assume and indemnify Seller for any liabilities or obligations to
pay or provide salaries, wages or other compensation or employee benefits of any
description to those persons employed by Seller on or prior to the date hereof
with respect to the Sold Bowling Center or the Office. Seller shall assume and
indemnify Buyer for any liabilities or obligations to pay or provide salaries,
wages or other compensation or employee benefits of any description to those
persons employed by Seller on or prior to the date hereof with respect to the
Meyrin Center. Buyer shall be responsible for and shall indemnify Seller for any
liabilities and obligations to pay or provide salaries, wages or other
compensation or employee benefits of any description to persons employed by
Buyer after the date hereof and Seller shall be responsible and shall indemnify
Buyer for any liabilities and obligations to pay or provide salaries, wages or
other compensation or employee benefits of any description to persons employed
by Seller after the date hereof.
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2.2 EMPLOYEE BENEFITS. Seller and Buyer shall use commercially
reasonable efforts to effect the transfer to and assumption by Buyer of each
employee benefit plan currently maintained by Seller for the benefit of Seller's
employees (other than any exclusively related to current or former employees of
the Meyrin Center) ("Seller Plans"). To the extent that any of the Seller Plans
contain assets or are subject to liabilities, Seller and Buyer shall each use
commercially reasonable efforts to effect the pro rata apportionment of such
assets and liabilities between Seller and Buyer, on the basis of whose current
and former employees such assets and liabilities relate to, and in any case, in
accordance with Swiss law and with the approval of the competent Swiss
authorities, if required.
2.3 EMPLOYEE NOTIFICATION. Seller and Buyer shall jointly notify each
employee of the assumption herein agreed, expressly stating which entity shall
be responsible for the employee's labor rights and obligations, and the date on
which such assumption shall be effective.
ARTICLE III
CLOSING
3.1 DELIVERIES BY SELLER. Simultaneous with the execution and delivery
of this Agreement by Buyer and Seller, Seller has delivered to Buyer the
following:
(i) the fully executed Bill of Sale; the Assignments and
Assumptions of Leases executed by the Seller and the Landlord related
thereto and such other documents as may be necessary to transfer to
Buyer the Purchased Assets, including, but not limited to, notarial
deeds empowering Buyer to exercise any and all rights, notices and
remedies referred to in paragraphs 3 and 4 of the Bill of Sale;
(ii) evidence reasonably satisfactory to Buyer that Seller has
given all notices and obtained all consents necessary to transfer all
right, title and interest in the Purchased Assets to Buyer; and
(iii) an opinion of Swiss counsel to Seller in form and content
reasonably satisfactory to Buyer.
3.2 DELIVERIES BY BUYER. Simultaneous with the execution of this
Agreement, Buyer has delivered to Seller the following:
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(i) the Purchase Price in immediately available Funds;
(ii) the Instrument of Assumption and the Assignments and
Assumptions of Leases, each executed by the Buyer; and
(iii) an opinion of Swiss counsel of counsel to the Buyer in
form and content reasonably satisfactory to Seller.
ARTICLE IV
GENERAL PROVISIONS
4.1 INTERPRETATION. The headings contained in this Agreement are for
reference purposes only and shall not affect the meaning or interpretation of
this Agreement.
4.2 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
4.3 WARRANTIES. The sole representations and warranties of Buyer and
Seller with respect to the matters that are the subject of this Agreement, and
the rights and obligations of Seller and Buyer with respect to such
representations and warranties, are set forth in the Stock Purchase Agreement.
Buyer and Seller make no representations or warranties pursuant to this
Agreement.
4.4 USE OF INTELLECTUAL PROPERTY; CHANGE OF NAME. Except as permitted
by the terms of applicable intellectual property licenses referred to as
"License Agreements" in the Stock Purchase Agreement, Seller will not, and will
not permit its affiliates to, use any Company Intellectual Property (as defined
in the Stock Purchase Agreement) in their names or operations from and after the
date hereof; provided, however, that Seller may retain, maintain and use in
connection with the operation of the Meyrin Center any currently existing
signage containing the mark AMF until the second anniversary of the date of
execution of this Agreement. The foregoing sentence notwithstanding, as soon as
possible after the date of execution of this Agreement, but in any event within
three months after the execution of this Agreement, Seller shall change its name
to a name that does not contain "AMF" or references confusingly similar to AMF.
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4.5 MISCELLANEOUS. This Agreement (i) together with the Stock Purchase
Agreement including the Ancillary Agreements referred to therein) constitute the
entire agreement and supersede any prior agreements or understandings, written
or oral, between the parties with respect to the subject matter hereof; (ii) is
not intended to, and shall not confer upon any other person or business entity
other than the parties hereto, any rights or remedies with respect to the
subject matter hereof; and (iii) shall not be assigned by operation of law or
otherwise except that Buyer may assign any or all of its right, title and
interest under this Agreement to any one or more Affiliates (as defined in the
Stock Purchase Agreement), provided that in the event of such assignment Buyer
shall not be released from its obligations under this Agreement.
4.6 GOVERNING LAW; LANGUAGE; ARBITRATION. (a) This Agreement shall be
governed by and construed in accordance with the internal laws of Switzerland
(excluding the provisions of the Convention on the International Sale of Goods
of April 11, 1980). This Agreement may be translated into languages other than
English, but the English version signed by the parties is the definitive
agreement of the parties.
(b) All disputes arising with respect to this Agreement shall
be finally decided by three arbitrators in accordance with the Rules of the
Chamber of Commerce and Industry of Geneva, Switzerland. The arbitration shall
take place in Geneva, Switzerland and shall be conducted in English.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed and their corporate seals to be hereto affixed and attested by their
duly authorized officers.
AMF BOWLING CENTERS II, INC.
BY:________________________________
TITLE:_____________________________
[__________________]
BY:________________________________
TITLE:_____________________________
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AMF GROUP HOLDINGS INC.
BY:________________________________
TITLE:_____________________________
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<PAGE> 145
EXHIBITS
EXHIBIT A - BILL OF SALE
EXHIBIT B-1 - ASSIGNMENT AND ASSUMPTION OF LEASE
EXHIBIT B-2 - ASSIGNMENT AND ASSUMPTION OF LEASE
EXHIBIT C - INSTRUMENT OF ASSUMPTION OF LIABILITIES
SCHEDULES
SCHEDULE 1 - MEYRIN REAL ESTATE
SCHEDULE 2.1 - MEYRIN EMPLOYEES
SCHEDULE 2.2 - TRANSFERRED EMPLOYEES
SCHEDULE 3 - MEYRIN PERSONAL PROPERTY
SCHEDULE 4 - PURCHASED ASSETS
SCHEDULE 5 - ASSUMED LIABILITIES
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EXHIBIT A
BILL OF SALE AND ASSIGNMENT
THIS BILL OF SALE AND ASSIGNMENT ("Bill of Sale") is made this ___ day
of __________, 1996 by AMF BOWLING CENTERS, II, INC., a Delaware corporation
("Seller") in favor of [_______________, a ____________ corporation] ("Buyer").
RECITALS
A. Seller and Buyer are parties to a Swiss Bowling Center Agreement
(the "Agreement") dated as of the date hereof. Terms used in this Bill of Sale
shall have the same meaning as they have in the Agreement unless the context
provides otherwise.
B. The Agreement provides, among other things, that for the
consideration provided therein, Seller will sell to Buyer all of Seller's
assets, properties, rights and interests other than Excluded Assets.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged:
1. Seller hereby, sells, transfers, conveys, assigns and delivers to
Buyer and its successors and assigns all of the assets, properties, rights and
interests of Seller, other than the Excluded Assets (the "Purchased Assets"),
including, without limitation:
(a) the pin spotters, lanes, automatic scoring systems, ball
returns, seating, lockers, ball racks, rental shoes, bowling balls, pins and
spare parts and other equipment and property (collectively, "Center Equipment")
located at the Thonex Bowling Center or at the Office;
(b) all inventories of bowling balls, shoes, clothing, supplies,
food and beverages owned by Seller, held for resale and located at or in transit
to the Thonex Bowling Center (the "Thonex Center Inventory");
(c) the licenses and permits which are related to the Thonex Bowling
Center or the Office (other than those principally related to the Excluded
Assets;
(d) the rights of Seller in intellectual property other than that
relating principally to the Meyrin Center (but including any such intellectual
property relating principally to the Meyrin
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Center that would cause Seller to violate Section 4.4 hereof or such property
which is owned or licensed by an affiliate of Holdings following the "Closing"
under the Stock Purchase Agreement);
(e) the rights of Seller under all contracts and leases that relate
to the Thonex Bowling Center, the Office and the Purchased Assets, including,
but not limited to, those contracts and leases listed on Schedule 1 hereto;
(f) the accounts receivable of Seller to the extent not arising from
the operation of the Meyrin Center;
(g) electronic or paper copies of the books, files and records of
Seller relating to the ownership and operation of the Thonex Bowling Center, the
Office and the Purchased Assets;
(h) the prepaid expenses and deferred charges of Seller to the
extent relating to the Thonex Bowling Center, the Office or the Purchased
Assets;
(i) all stock, securities and other investments owned by Seller and
any options, warrants or rights to acquire such interests and all rights as
partner or joint venturer in each partnership or joint venture in which Seller
is a partner or venturer or otherwise participates or any rights so to
participate or any similar rights;
(j) all rights and claims of Seller whether mature, contingent or
otherwise, against third parties relating to the Purchased Assets, whether in
tort, contract, or otherwise including, without limitation, causes of action,
unliquidated rights and claims under or pursuant to all warranties,
representations and guarantees made by manufacturers, suppliers or vendors;
(k) cash and cash equivalents of Seller; and
(l) all other tangible and intangible assets of Seller which are not
included in the excluded assets described in Paragraph 2.
2. The following (the "Excluded Assets") are the only assets
properties, rights or interests not included in the Purchased Assets, namely (i)
the real property described on Schedule 2 (the "Meyrin Real Estate"), (ii) all
Center Equipment located on the Meyrin Real Estate, including, but not limited
to, the Meyrin Personal Property, (iii) Seller's licenses, permits, intellectual
property (subject to the exclusions set forth in Section 1.1(d)),
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contracts and leases which relate principally to the ownership or operation of
the Meyrin Center, and (iv) the rights of Seller under a management services
agreement (the "Management Agreement"), dated as of January 1, 1995, between
Seller and AMF Bowling S.A.
3. This Bill of Sale and conveyance includes, without limitation,
choses in action for accounts payable to Seller accrued or accruing and unpaid
on or after the date of this instrument. Seller hereby constitutes and appoints
Buyer, its successors and assigns, the true and lawful attorney of Seller, with
full power of substitution, having full right and authority, in the name of
Seller or otherwise, and for the benefit and at the expense of Buyer, its
successors and assigns:
(a) to collect for the account of Buyer amounts payable under any
and all claims, contracts, leases, licenses, permits, authorizations,
arrangements, commitments, loans, receivables of any kind or character and any
other items included in the Purchased Assets, including without limitation any
amounts payable as interest in respect thereof; and
(b) to institute and prosecute all proceedings which Buyer may deem
proper in order to collect, assert or enforce any claim, right, title, interest
or benefit in, to or under the assets, properties, rights, interests, business
and any other items included in the Purchased Assets, to defend or compromise
any and all actions, suits or proceedings in respect of such Purchased Assets,
and to do all such acts and things in relation thereto as Buyer shall deem
appropriate and advisable.
Seller hereby declares that the foregoing powers are coupled with an
interest and shall be irrevocable by it or by its subsequent dissolution or in
any manner or for any reason. Buyer shall be entitled to retain for its own
account any amounts collected pursuant to the foregoing powers, including any
amounts payable as interest in respect thereof.
4. Seller hereby agrees that, from time to time after the delivery of
this Bill of Sale, it will, at the request of Buyer and without further
consideration, promptly take such further action and execute and deliver such
additional assignments, bills of sale, consents or other similar instruments as
Buyer or its successors or assigns may reasonably deem necessary or appropriate
to complete the transfer of the title or possession of the Purchased Assets to,
or vest them in, Buyer and, in the case of any required consents, approvals,
waivers or authorizations, to use reasonable efforts to obtain such consents,
approvals, authorizations or waivers.
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5. Except as is set forth in Paragraph 6 below, nothing in this
instrument, express or implied, is intended or shall be construed to confer upon
any person, firm or corporation other than Buyer or its successors or assigns,
any remedy or claim.
6. The provisions of this Bill of Sale, which are intended to be
binding upon Seller, its successors and assigns, and are for the benefit of
Buyer, its successors and assigns, and all rights hereby granted Buyer,
including the right to act for Seller, may be exercised by Buyer, its successors
or assigns.
7. This Agreement shall be governed by and construed in accordance with
the internal laws of Switzerland (excluding the provisions of the Convention on
the International Sale of Goods of April 11, 1980). This Agreement may be
translated into languages other than English, but the English version signed by
the parties is the definitive agreement of the parties.
8. All disputes arising with respect to this Agreement shall be
finally decided by three arbitrators in accordance with the Rules of the Chamber
of Commerce and Industry of Geneva, Switzerland. The arbitration shall take
place in Geneva, Switzerland and shall be conducted in English.
IN WITNESS WHEREOF, Seller has caused this Bill of Sale to be signed by
a duly authorized officer of Seller on the date first above written.
AMF BOWLING CENTERS II, INC.
BY:___________________________
TITLE:________________________
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EXHIBIT B-1
ASSIGNMENT AND ASSUMPTION OF LEASE
THIS AGREEMENT is made this ____ day of _________, 1996 by and between
AMF BOWLING CENTERS II, INC., a Delaware corporation ("Assignor") and
[_______________, a ___________ corporation] ("Assignee").
RECITALS
A. Pursuant to that certain Swiss Bowling Center Agreement, dated as of
the date hereof, by and between Assignor and Assignee (the "Agreement"),
Assignor is selling to Assignee, among other things, the assets owned by
Assignor and used in connection with the operation of Assignor's bowling center
located on real estate leased by Assignor in Geneva, Switzerland (the "Sold
Bowling Center").
B. Assignor is the present holder of the lessee's interest in, to and
under a lease (the "Lease") with respect to the real property upon which the
Sold Bowling Center is located, a copy of which Lease is attached hereto and
incorporated herein by this reference.
C. In connection with the sale and conveyance to Buyer of the assets
described in the Agreement, Assignee desires to obtain Assignor's interest in
and to assume Assignor's obligations under the Lease subject to the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing premises and mutual
covenants hereinafter set forth and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Assignor and Assignee
hereby agree as follows:
1. ASSIGNMENT. Assignor hereby assigns to Assignee all of Assignor's
rights, title and interest in, to and under the Lease.
2. ASSUMPTION. Assignee hereby accepts this assignment and agrees (i)
to assume all of the obligations of Assignor under the Lease, regardless of when
such obligations arose, (ii) to perform and observe all the covenants,
agreements, conditions and other provisions of said Lease to be observed and
performed on the part of Assignor thereunder and (iii) to indemnify and hold
harmless Assignor from any and all liability, claims, demands, charges and
expenses arising under the Lease, regardless of when such claim or liability
arose.
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3. CONSENT OF LANDLORD. __________ hereby executes this Assignment and
Assumption of Lease to evidence its consent to the assignment evidenced hereby
pursuant to Article 263, Paragraph 1 of the Swiss Code of Obligations.
4. BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the parties, their successors and assigns.
5. GOVERNING LAW; LANGUAGE; ARBITRATION. (a) This Agreement shall be
governed by and construed in accordance with the internal laws of Switzerland
(excluding the provisions of the Convention on the International Sale of Goods
of April 11, 1980). This Agreement may be translated into languages other than
English, but the English version signed by the parties is the definitive
agreement of the parties.
(b) All disputes arising with respect to this Agreement shall be
finally decided by three arbitrators in accordance with the Rules of the Chamber
of Commerce and Industry of Geneva, Switzerland. The arbitration shall take
place in Geneva, Switzerland and shall be conducted in English.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed as of the day and year first above written.
ASSIGNOR:
AMF BOWLING CENTERS II, INC.,
BY:__________________________
TITLE:_______________________
ASSIGNEE:
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[_______________]
BY:__________________________
TITLE:_______________________
LANDLORD:
[_______________]
BY:__________________________
TITLE:_______________________
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EXHIBIT B-2
ASSIGNMENT AND ASSUMPTION OF LEASE
THIS AGREEMENT is made this ____ day of _________, 1996 by and between
AMF BOWLING CENTERS II, INC., a Delaware corporation ("Assignor") and
[__________, a ________________ corporation] ("Assignee").
RECITALS
A. Pursuant to that certain Swiss Bowling Center Agreement, dated as of
the date hereof, by and between Assignor and Assignee (the "Agreement"),
Assignor is selling to Assignee, among other things, the assets owned by
Assignor and used in connection with the operation of Assignor's bowling center
located on real estate leased by Assignor in Geneva, Switzerland (the "Sold
Bowling Center") and the office used in connection with the management thereof
(the "Office").
B. Assignor is the present holder of the lessee's interest in, to and
under a lease (the "Lease") with respect to the real property upon which the
Office is located, a copy of which Lease is attached hereto and incorporated
herein by this reference.
C. In connection with the sale and conveyance to Buyer of the assets
described in the Agreement, Assignee desires to obtain Assignor's interest in
and to assume Assignor's obligations under the Lease subject to the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing premises and mutual
covenants hereinafter set forth and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Assignor and Assignee
hereby agree as follows:
1. ASSIGNMENT. Assignor hereby assigns to Assignee all of Assignor's
rights, title and interest in, to and under the Lease.
2. ASSUMPTION. Assignee hereby accepts this assignment and agrees (i)
to assume all of the obligations of Assignor under the Lease, regardless of when
such obligations arose, (ii) to perform and observe all the covenants,
agreements, conditions and other provisions of said Lease to be observed and
performed on the part
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of Assignor thereunder and (iii) to indemnify and hold harmless Assignor from
any and all liability, claims, demands, charges and expenses arising under the
Lease, regardless of when such claim or liability arose.
3. CONSENT OF LANDLORD. ____________________ hereby executes this
Assignment and Assumption of Lease to evidence its consent to the assignment
evidenced hereby pursuant to Article 263, Paragraph 1 of the Swiss Code of
Obligations.
4. BINDING EFFECT. This Agreement shall be binding upon and inure to
the benefit of the parties, their successors and assigns.
5. GOVERNING LAW; LANGUAGE; ARBITRATION. (a) This Agreement shall be
governed by and construed in accordance with the internal laws of Switzerland
(excluding the provisions of the Convention on the International Sale of Goods
of April 11, 1980). This Agreement may be translated into languages other than
English, but the English version signed by the parties is the definitive
agreement of the parties.
(b) All disputes arising with respect to this Agreement shall be
finally decided by three arbitrators in accordance with the Rules of the Chamber
of Commerce and Industry of Geneva, Switzerland. The arbitration shall take
place in Geneva, Switzerland and shall be conducted in English.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed as of the day and year first above written.
ASSIGNOR:
AMF BOWLING CENTERS II, INC.,
BY:______________________________
TITLE:___________________________
ASSIGNEE:
[_________________]
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BY:______________________________
TITLE:___________________________
LANDLORD:
[_________________]
BY:______________________________
TITLE:___________________________
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EXHIBIT C
INSTRUMENT OF ASSUMPTION OF LIABILITIES
THIS INSTRUMENT OF ASSUMPTION OF LIABILITIES ("Instrument of
Assumption") is made this ___ day of _______, 1996 by [_________________, a
________ corporation] ("Buyer"), in favor of AMF BOWLING CENTERS II, INC., a
Delaware corporation ("Seller").
RECITALS
A. Buyer and Seller are parties to a Swiss Bowling Center Agreement
(the "Agreement") dated as of the date hereof. Terms used in this Instrument of
Assumption shall have the same meaning as they have in the Agreement unless the
context provides otherwise.
B. The Agreement provides, among other things, that for the
consideration provided therein, Buyer will assume certain obligations of Seller.
NOW THEREFORE, in consideration of the premises and other good and
valuable consideration the receipt and sufficiency of which is hereby
acknowledged:
1. Subject to the terms of the Agreement and the Stock Purchase
Agreement (the "Stock Purchase Agreement") dated as of February , 1996, among
AMF Group Holdings, Inc. and the Sellers named therein, Buyer hereby assumes all
of the liabilities and obligations of Seller existing on the date hereof as more
particularly described on Schedule 1 hereto, whether known or unknown,
regardless of whether accrued; provided, however, that Buyer shall not assume
(i) any liability to the extent it relates to the ownership or operation of the
Excluded Assets (including, without limitation, withholding taxes and Social
Security wages) whether arising or accruing prior to, on or after the date
hereof, (ii) any liabilities or obligations to pay or provide salaries, wages or
other compensation or employee benefits of any description to, or related to,
any past, present or future employees of the Meyrin Center arising for any
reason, (iii) any liabilities arising under the Management Agreement or any
other agreement or relationship between Seller and any entity affiliated
therewith or (iv) any other liabilities of Seller which do not arise out of
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ownership or operation of the Purchased Assets. To the extent liabilities relate
to the ownership or operation of both the Purchased Assets and the Excluded
Assets, such liabilities will be apportioned equitably between Buyer and Seller
based on the extent to which such liabilities relate to such entities respective
assets. Buyer does not assume any liabilities of Seller except as provided in
this Instrument of Assumption and the Agreement.
2. The assumption by Buyer of the liabilities and obligations of Seller
set forth in this Instrument of Assumption shall not be construed to defeat,
impair or limit in any way any rights of Buyer to dispute the validity or amount
thereof.
3. Buyer agrees that, from time to time after the delivery of this
Instrument of Assumption, it will, at the request of Seller and without further
consideration, promptly take such further action and execute and deliver such
additional documents as Seller may reasonably deem necessary in order to more
fully effectuate the assumption of liabilities provided for herein.
4. The provisions of this Instrument of Assumption are intended to be
binding upon Buyer, its successors and assigns, and are for the benefit of
Seller. Other than an assignment to a buyer of substantially all of the assets
of Seller, Seller may not assign its rights hereunder without the prior written
permission of Buyer.
5. This Agreement shall be governed by and construed in accordance with
the internal laws of Switzerland (excluding the provisions of the Convention on
the International Sale of Goods of April 11, 1980). This Agreement may be
translated into languages other than English, but the English version signed by
the parties is the definitive agreement of the parties.
6. All disputes arising with respect to this Agreement shall be finally
decided by three arbitrators in accordance with the Rules of the Chamber of
Commerce and Industry of Geneva, Switzerland. The arbitration shall take place
in Geneva, Switzerland and shall be conducted in English.
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IN WITNESS WHEREOF, Buyer has caused this instrument to be signed by a
duly authorized officer on the date first above written.
[BUYER]
BY:_________________________
TITLE:______________________
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EXHIBIT 1.1(c)(1)
TRADEMARK LICENSE AGREEMENT
THIS TRADEMARK LICENSE AGREEMENT (this "Trademark License"),
dated as of February __, 1996, by and between AMF Bowling, Inc. ("LICENSOR"), a
Virginia corporation, and AMF Reece, Inc., a Virginia corporation ("LICENSEE").
WHEREAS, by virtue of a Stock Purchase Agreement (the "Stock
Purchase Agreement") executed concurrent herewith, AMF Group Holdings Inc. will
acquire, directly or indirectly, inter alia, 100% of the outstanding shares of
common stock of LICENSOR;
WHEREAS, LICENSOR owns worldwide rights in and to registered
and unregistered trademarks, trademark applications, service marks, service
names, trade names and similar property rights incorporating the marks AMF and
AMF (& Design) and all derivatives thereof (the "Marks") for various high
quality services and products;
WHEREAS, the Marks convey an indication of high quality
and prestige which has great commercial value;
WHEREAS, LICENSEE desires to acquire an exclusive,
royalty-free, worldwide, perpetual license to use the AMF and AMF (& Design)
marks in connection with LICENSEE'S FIELD OF USE, as hereinafter defined;
WHEREAS, LICENSOR desires to grant LICENSEE such a license
subject to the terms and conditions as set forth herein;
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WHEREAS, unless otherwise defined in this Agreement,
capitalized terms herein shall have the respective meanings given to them in the
Stock Purchase Agreement; and
WHEREAS, this Trademark License shall not become effective
unless and until the "Closing" occurs under the Stock Purchase Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 "GOODS" means any goods or services which are
included in the definition of LICENSEE'S FIELD OF USE.
Section 1.2 "LICENSED MARKS" means the AMF, and AMF (&
Design), Marks (in the form shown in Exhibit 1, attached hereto) and other marks
or names which use or incorporate the initials "AMF".
Section 1.3 "LICENSEE'S FIELD OF USE" means any goods or
services listed on Schedule A (attached hereto).
Section 1.4 "LICENSED TERRITORY" means all countries and
territories, worldwide.
ARTICLE II
LICENSE GRANT
Section 2.1 LICENSOR hereby grants to LICENSEE for the term
contemplated by Section 3.1 hereof an exclusive, worldwide, perpetual license to
use the LICENSED MARKS in
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connection with LICENSEE'S FIELD OF USE in the LICENSED TERRITORY.
Section 2.2 LICENSEE may from time to time request that
LICENSOR consent to LICENSEE'S use of the LICENSED MARKS in connection with
additional fields of use if at the time such request is made LICENSEE's proposed
additional use is not confusingly similar to LICENSOR's use or intended use of
the LICENSED MARKS or the use by any third party licensed by LICENSOR to use the
LICENSED MARKS in a different field of use. Such consent will be granted only in
LICENSOR'S sole discretion, and if granted, such additional fields of use will
thereafter be included in the definition of LICENSEE'S FIELD OF USE in this
Trademark License or on such other terms as may be agreed by the parties.
Section 2.3 Neither LICENSOR nor any of its successors or
assigns will use or grant any licenses to any other party to use the LICENSED
MARKS (or any mark confusingly similar to the LICENSED MARKS) for any goods or
services included in LICENSEE'S FIELD OF USE in the LICENSED TERRITORY during
the term of this License Agreement. Any attempted license by LICENSOR or any of
its successors or assigns that violates the exclusive rights granted to LICENSEE
herein will be void ab initio.
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ARTICLE III
TERM
Section 3.1 This Trademark License will continue in force in
perpetuity.
ARTICLE IV
ROYALTY
Section 4.1 The license hereby granted is royalty free.
ARTICLE V
QUALITY CONTROL
Section 5.1 LICENSEE warrants and agrees that all GOODS,
advertising, promotional materials, and all other materials in connection with
which the LICENSED MARKS are used by LICENSEE under this Trademark License will
be lawful, merchantable and of a good standard, quality and workmanship level.
Section 5.2 Based on representations by LICENSEE, LICENSOR
believes the products, materials and services offered for sale or sold by
LICENSEE as of the date of this Trademark License utilize and/or embody
standards, workmanship and quality levels which, if used in connection with the
LICENSED MARKS, will be acceptable to LICENSOR.
Section 5.3 LICENSOR may from time to time request from
LICENSEE (1) samples of the GOODS offered for sale under the
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LICENSED MARKS, (2) samples exhibiting, indicating or otherwise showing how the
LICENSED MARKS are being used or are intended to be used on or in connection
with the GOODS, including, but not limited to, advertising and other promotional
materials, and (3) information, in each case reasonably required by LICENSOR to
enable LICENSOR to confirm that LICENSEE is complying with Section 5.1. In
addition, LICENSOR may from time to time request descriptions and lists of the
GOODS offered for sale under the LICENSED MARKS. LICENSEE will supply
appropriate samples, descriptions, lists or information to LICENSOR within
thirty (30) days from receipt of LICENSOR's request.
Section 5.4 Failure of LICENSEE to meet the standards, quality
and workmanship levels set forth in Section 5.1 will constitute a material
breach of this Trademark License for which LICENSOR may seek specific
performance in accordance with Article XVII below.
ARTICLE VI
TRADEMARK USE
Section 6.1 Where reasonably appropriate, LICENSEE will
indicate in public uses of the LICENSED MARKS in a country in which such marks
are registered, that they are registered with the trademark office of such
country, by affixing to the GOODS or their containers the designation supplied
by LICENSOR.
Section 6.2 During the term of this Trademark License,
LICENSEE will not adopt or use any word, symbol, device,
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logo, mark or name that is confusingly similar to the LICENSED MARKS in
connection with the GOODS.
Section 6.3 LICENSEE may use the LICENSED MARKS as part of any
composite mark. In the event LICENSEE uses the LICENSED MARKS as part of any
composite mark, LICENSEE will clearly indicate on any goods, advertising or
promotional material bearing such composite mark that the LICENSED MARK is owned
by and licensed from LICENSOR. LICENSOR acknowledges that any other names or
marks used in composite marks with the LICENSED MARKS are not the property of
LICENSOR and LICENSOR will not use such other names or marks without the prior
written permission of LICENSEE.
Section 6.4 LICENSEE will not register or attempt to register
the LICENSED MARKS. LICENSEE will not register or attempt to register any word,
symbol, mark, device, logo or name that is confusingly similar to the LICENSED
MARKS or that includes the LICENSED MARKS.
Section 6.5 All use of the LICENSED MARKS by LICENSEE will
inure to the benefit of LICENSOR. All goodwill accrued by, and due to,
LICENSEE'S use of the LICENSED MARKS will be the sole and exclusive property of
LICENSOR. LICENSEE hereby assigns and transfers to LICENSOR all trademarks and
trademark rights created by such uses of the LICENSED MARKS, together with the
goodwill of the business in connection with which such trademarks are used
(provided, however, that in the event of a sale of substantially all of the
capital stock or assets of
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LICENSEE, LICENSOR acknowledges that the foregoing provisions of this Section
6.5 do not entitle LICENSOR to any portion of the purchase price for such stock
or assets which may be allocated to such goodwill).
Section 6.6 LICENSOR will use all reasonable efforts to
maintain existing registrations for the LICENSED MARKS in connection with the
GOODS. In the event LICENSEE wishes to apply for additional registrations
covering the LICENSED MARKS in the LICENSEE'S FIELD OF USE, such registrations
and the applications for registration thereof will designate LICENSOR as the
owner of the subject trademarks or service marks, and LICENSOR agrees to execute
any additional documents needed for such applications and registrations. The
costs for registering, obtaining and maintaining such additional registrations
will be borne by LICENSEE.
Section 6.7 LICENSEE will keep appropriate records relating to
the dates when each of the GOODS is first placed on sale or sold in the LICENSED
TERRITORY, and the dates of first use in each country of each different LICENSED
MARK on the GOODS. If reasonably requested to do so by LICENSOR, LICENSEE also
agrees to supply LICENSOR with samples, facsimiles or photographs of the
trademark usages in question and other information which will enable LICENSOR to
complete and obtain trademark or design applications or registrations, or to
evaluate or oppose any trademark or design applications, registrations, or uses
of third parties.
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Section 6.8 With respect to those countries which require
applications to register LICENSEE as a Permitted User or Registered User of the
LICENSED MARKS used on or in connection with the GOODS or which require the
recordation of this Trademark License, LICENSOR will be responsible for such
recording and LICENSEE agrees to execute and deliver to LICENSOR such
applications, agreements or other documents as may be necessary and as are
furnished by LICENSOR for such purposes, as long as such applications,
agreements or other documents are not contrary to the terms of this Trademark
License. The expense of such registration or recordation will be borne by
LICENSEE.
Section 6.9 Subject to the provisions of the preceding
Sections of this Article VI and Article XIII below, LICENSEE will use all
reasonable efforts to assist LICENSOR to protect and enforce the LICENSED MARKS.
LICENSEE will not take any action which impairs LICENSOR'S right, title or
interest in the LICENSED MARKS. LICENSEE acknowledges the validity of the
LICENSED MARKS, and LICENSOR'S ownership of the LICENSED MARKS, and LICENSEE
will not question or challenge either the validity or LICENSOR'S ownership of
the LICENSED MARKS during the term of this Trademark License.
Section 6.10 LICENSEE will use its best efforts to refrain
from any action during the term of this Trademark License, that would be
detrimental to, injure or impair the LICENSED MARKS or their registration or
goodwill, or any of LICENSOR'S common law or other rights in the LICENSED MARKS,
or
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the title, ownership, validity or enforceability of any of the foregoing.
ARTICLE VII
TERMINATION
Section 7.1 This Trademark License may not be terminated
without the prior written consent of LICENSEE. If it is determined that LICENSEE
has breached an obligation imposed on it by this Trademark License, LICENSOR'S
sole remedy will be to seek money damages for such material breach or seek
specific performance under Article XVII (including for those breaches referred
to in Section 5.4). In no event may this Trademark License be terminated by
LICENSOR for any breach by LICENSEE.
Section 7.2 In the event LICENSEE no longer intends to use the
LICENSED MARKS, in whole or in part, LICENSEE will give notice of such intent to
LICENSOR and the license, in whole or in part, as applicable, will terminate
upon receipt of such notice.
Section 7.3 After termination of this Trademark License,
LICENSEE will be permitted for a period of two (2) months to exhaust its then
current supply of corporate and business services, containers, brochures,
promotional materials, broadcasts, advertisements and all other documents or
things offered for sale, displayed, broadcast or in any other way shown or
disseminated by or for LICENSEE, as long as such actions are not materially
detrimental to LICENSOR. All remaining documents or things bearing the LICENSED
MARKS will be destroyed by
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LICENSEE or delivered to LICENSOR after the two (2) month period. Should
LICENSEE require additional time to exhaust its supply of documents or things
bearing the LICENSED MARKS it may request LICENSOR's consent to a reasonable
extension of the two (2) month period, which consent will not be unreasonably
withheld.
Section 7.4 This Trademark License shall automatically
terminate and be void and have no effect if the Closing under the Stock Purchase
Agreement does not occur.
ARTICLE VIII
ASSIGNABILITY
Section 8.1 LICENSOR retains the right to assign any and all
of its rights and interests in this Trademark License and the LICENSED MARKS.
This Trademark License will be binding upon any such assignee as well as upon
any successor of LICENSOR in ownership or control of the LICENSED MARKS. The
obligations of LICENSEE under this Trademark License will run in favor of any
such successor or assignee of LICENSOR.
Section 8.2 LICENSEE may assign its rights under this
Trademark License provided that (1) the assignee agrees in writing to be bound
by all of the terms of this Trademark License and (2) LICENSOR is notified in
advance of the identity of the prospective assignee and provided in advance with
a copy of the prospective assignment.
Section 8.3 LICENSEE may not sublicense, divide or franchise
its rights under this agreement. Any attempt by
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LICENSEE to sublicense, divide or franchise, or purported sublicense, division
or franchise of LICENSEE's rights, will be void ab initio.
ARTICLE IX
PROPERTY RIGHTS
Section 9.1 Nothing contained in this Trademark License will
operate as or be construed as an assignment of any right, title, or interest in
or to the LICENSED MARKS, any of the registrations thereof, any common law
rights, or any associated goodwill. Other than the license granted herein, all
right, title and interest in and to the LICENSED MARKS is owned and expressly
reserved by LICENSOR for its own use and benefit.
ARTICLE X
LAWS/REGULATIONS
Section 10.1 LICENSEE will obey, comply, and conform with all
applicable laws and regulations and obtain in advance any and all appropriate
government approvals, permits, licenses and the like pertaining to the sale,
offer for sale, manufacture, distribution, promotion and advertising of the
GOODS licensed hereunder.
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ARTICLE XI
RELATIONSHIP OF THE PARTIES
Section 11.1 This Trademark License does not create a
partnership, joint venture or agency relationship between the parties, and
neither LICENSEE nor LICENSOR will have any right, power or authority to act as
a legal representative of the other, and neither party will have any power to
obligate or bind the other, or to make any representations, express or implied,
on behalf of or in the name of the other in any manner or for any purpose
whatsoever.
ARTICLE XII
LIABILITY
Section 12.1 LICENSOR will have no liability whatsoever to
LICENSEE or any other person or entity for or on account of any injury, loss or
damage, of any kind or nature, sustained by, or any damage assessed or asserted
against, or any other liability incurred by or imposed upon LICENSEE or any
other person or entity, arising out of or in connection with or resulting from:
(i) the production, manufacture, distribution,
use, offer for sale, or sale of any GOODS and/or products and materials
under the LICENSED MARKS or under this Trademark License; or
(ii) any advertising or other promotional
activities by LICENSEE with respect to the GOODS and/or
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products and materials under the LICENSED MARKS or under
this Trademark License.
Section 12.2 LICENSEE agrees to defend, indemnify, and hold
harmless LICENSOR, its principals, directors, officers, partners, employees
and/or agents and LICENSOR'S parent companies, subsidiaries and affiliates, and
their officers, directors, principals, partners, employees and/or agents from
and against any and all liabilities, penalties, claims, demands, suits and
causes of action of any nature whatsoever, and any and all damages, costs and
expenses sustained or incurred (including cost of defense, settlement and
reasonable attorneys' fees and expenses, and the costs and expenses, including
reasonable attorneys' fees and expenses, of enforcing LICENSEE's obligations
hereunder), asserted by or on behalf of any person or entity arising out of the
production, manufacture, distribution, use, offer for sale or sale of any GOODS
and/or products and materials under the LICENSED MARKS by LICENSEE or under this
Trademark License, or advertising or other promotional activities by LICENSEE in
connection with the LICENSED MARKS and/or GOODS, or out of any breach of
representation or warranty by LICENSEE herein, or out of the negligent acts or
omissions of LICENSEE, its agents, representatives and/or employees in
connection with the production, manufacture, distribution, use, offer for sale
or sale of any GOODS and/or products and materials under the LICENSED MARKS by
LICENSEE or under this Trademark License.
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Section 12.3 LICENSEE will obtain all necessary insurance
policies from third parties not related to or affiliated with LICENSEE in
amounts considered reasonable by prudent businesses, providing LICENSOR with
primary coverage as a co-insured against the risks set forth in Section 12.2
and, within sixty (60) days after the Closing Date contemplated by the Stock
Purchase Agreement, provide LICENSOR with copies of said policies.
Section 12.4 LICENSOR agrees to notify LICENSEE promptly of
any asserted claims, demands, suits or causes of action which trigger LICENSEE'S
obligations under Section 12.2. Any failure by LICENSOR to make such
notification will not relieve or release LICENSEE from its obligations under
Section 12.2, except to the extent that such failure has an actual adverse
effect on LICENSEE'S ability to defend any such claim, demand, suit or cause of
action.
ARTICLE XIII
INFRINGEMENT
Section 13.1 Either party will immediately notify the other of
any suspected infringement of the LICENSED MARKS in LICENSEE'S FIELD OF USE in
the LICENSED TERRITORY. Such notification will include, without limitation,
immediately forwarding to the other party any and all documents relating to any
such suspected infringement and providing the other party
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with any and all facts and circumstances relating to such suspected
infringement.
Section 13.2 LICENSOR will have the primary right to institute
a suit for infringement, unfair competition or other action with respect to any
unauthorized use or suspected infringement. LICENSOR will have no duty to
initiate or pursue such suit if in its judgment the suit is not warranted or is
not in its best interests.
Section 13.3 LICENSEE may join and participate and be
represented in any infringement suit, at its own expense and by counsel of its
choosing, to protect its interests.
Section 13.4 LICENSOR and LICENSEE agree that they will, at
all times, reasonably cooperate with one another and with their respective
counsel in respect of any suspected infringement or suit for infringement,
including, but not limited to, having their respective principals, directors,
employees, officers and/or agents, or such individuals of their respective
parent companies, subsidiaries and affiliates, testify, and by making available
any records, papers, information, specimens and the like when reasonably
requested by the other party hereto.
Section 13.5 With respect to any infringement suit, LICENSEE
will be consulted regarding any proposed settlement or compromise and LICENSOR
will not settle such a suit in a manner which will have any adverse effect on
LICENSEE or LICENSEE's right to use the LICENSED MARKS in LICENSEE's FIELD OF
USE as
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permitted hereunder without LICENSEE's consent, which consent will not be
unreasonably withheld.
Section 13.6 LICENSOR and LICENSEE will share equitably in the
proceeds of any settlement or judgment in such an infringement suit, based on
their respective actual damages. There will be no sharing of proceeds with
LICENSEE in the event that an infringement suit does not involve an infringement
that is within the scope of the LICENSEE'S FIELD OF USE in the LICENSED
TERRITORY.
Section 13.7 If LICENSOR decides in its discretion not to take
any action with respect to any suspected infringement, then LICENSEE may, at its
own option and sole expense, take such action on its own behalf as it deems
appropriate and any damages, recovery, settlement, or compromise obtained
thereby will be for the account of LICENSEE.
ARTICLE XIV
SEVERABILITY
Section 14.1 If any part, term, or provision of this Trademark
License will be found illegal, unenforceable, or in conflict with any valid
controlling law, the validity of the remaining portions of any provisions, and
any other provisions in this Trademark License, will not be affected thereby.
Section 14.2 In the event the legality of any provision of
this Trademark License is brought into question because of a final decision,
unappealed or unappealable, by a
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court of competent jurisdiction of any country in which this Trademark License
applies, LICENSOR may, after consultation with and the consent of LICENSEE,
which will not be unreasonably withheld, revise the provision in question or may
delete it entirely so as to comply with the decision of said court.
ARTICLE XV
WAIVER, INTEGRATION, ALTERATION
Section 15.1 The waiver of a breach hereunder may be effected
only by a writing signed by the waiving party and will not constitute, or be
held to be, a waiver of any other or subsequent breach, or to affect in any way
the effect of such provision. Failure by either party to object to a breach will
not constitute or be held to be a waiver of such party's right to later object
to or seek appropriate redress for any other breach or subsequent breach.
Section 15.2 This Trademark License contains the entire
understanding between the parties and supersedes all other agreements,
representations and warranties, express or implied, between the parties
concerning the LICENSED MARKS.
Section 15.3 Any modification or amendment of this Trademark
License will be effective only if made in writing and signed by both parties.
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ARTICLE XVI
GOVERNING LAW
Section 16.1 This Trademark License will be construed and
interpreted and its performance will be governed by the substantive laws of the
State of New York.
ARTICLE XVII
ARBITRATION
Section 17.1 In the event LICENSOR and LICENSEE are unable to
amicably resolve any dispute, including compliance with the quality control
provisions of Article V and any other provisions of this Trademark License, such
dispute will be submitted for determination by binding arbitration in accordance
with the provisions of the rules of the American Arbitration Association (the
"AAA"). Such arbitration will take place in New York, New York and will be heard
by a panel of three arbitrators. One of such arbitrators shall be selected by
LICENSOR, one shall be selected by LICENSEE, and one shall be assigned by the
AAA. Each such arbitrator shall be a lawyer having at least three years of
experience practicing primarily in the field of trademark law.
Section 17.2 Any arbitration proceeding hereunder will be
initiated no more than thirty (30) days after receipt by LICENSOR or LICENSEE of
notice from the other of any dispute under Section 17.1 above, will be concluded
within two (2) months
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of its initiation and will be limited to a hearing of no more than three (3)
days.
Section 17.3 In the event the panel of arbitrators determines
that a breach of this Trademark License has occurred, the panel will promptly
advise LICENSOR and LICENSEE accordingly by written, reasoned decision, together
with recommendations for correcting the breach. The breaching party will have
thirty (30) days following receipt of such decision to obtain the other party's
consent to any proposed correction of the breach, which consent will not be
unreasonably withheld. Thereafter, the breaching party will have a further
thirty (30) days after obtaining such consent to correct the breach.
Section 17.4 In the event the breaching party does not obtain
the other party's consent to the correction of the breach, or does not correct
such breach, within the respective time periods provided in Section 17.3, the
other party will have the right to obtain, from any Court having jurisdiction
thereof, an order for specific performance based on the panel's decision,
directing the breaching party to correct the breach of this Trademark License
and, if the breaching party is the LICENSEE, prohibiting it from further use of
the LICENSED MARKS until compliance with any such order is achieved.
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ARTICLE XVIII
CAPTIONS
Section 18.1 The captions used in this Trademark License have
been inserted only for reference purposes. The captions and order of such
captions will not be deemed to govern, limit, modify, or in any manner affect
the scope, meaning, or intent of any of the provisions and/or terms of this
Trademark License, nor will any captions be given any legal effect.
ARTICLE XIX
NOTICES
Section 19.1 Any and all notices or other writings that are
required or permitted under any of the provisions of this Trademark License will
be in writing and will be deemed sufficiently given if delivered personally,
sent by documented overnight delivery service, mailed by certified mail, or to
the extent that receipt is confirmed, telecopy, telefax or other electronic
transmission service, addressed to the party concerned as follows:
If addressed to LICENSOR:
AMF Bowling, Inc.
c/o GS Capital Partners II, L.P.
85 Broad Street
New York, New York 10004
Attn: David J. Greenwald
Telephone No.: (212) 902-3000
With copies to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
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New York, New York 10019
Attn: Daniel A. Neff and
Mitchell S. Presser
Telecopier No.: (212) 403-2000
Bryan Cave LLP
245 Park Avenue
New York, New York 10167
Attn: Marc S. Gross
Arthur Mann
Telecopier No.: (212) 692-1900
If addressed to LICENSEE:
AMF Reece, Inc.
c/o CCA Industries, Inc.
One James Center
Richmond, Virginia 23219
Attn: Beverley W. Armstrong
Telephone No.: (804) 643-4200
With copies to:
McGuire Woods Battle & Boothe, L.L.P.
One James Center
901 East Cary Street
Richmond, Virginia 23219-4030
Attn: Leslie A. Grandis, Esquire
Wellford L. Sanders Jr., Esquire
Telephone No.: (804) 775-1000
Telecopier No.: (804) 775-1061
or any other addresses of which either party will notify the other in writing.
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IN WITNESS WHEREOF, the parties hereto have caused this
License Trademark License to be executed as indicated below.
AMF BOWLING, INC.
By:_________________________________
[Name, Title]
Title: _____________________________
Date:_______________________________
AMF REECE, INC.
By:_________________________________
Beverley W. Armstrong
Date:_______________________________
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<PAGE> 181
STATE OF )
)
COUNTY OF )
On this ________ day of _______________, 199_, before me
personally came _________________________, to me known, who being first duly
sworn did depose and say that he/she is the _______________________________ of
_____________________________, the corporation described herein and which
executed the above instrument, and that he/she signed the above instrument by
authority of the Board of Directors of said corporation.
________________________
Notary Public
My Commission Expires: __________________
SEAL
STATE OF )
)
COUNTY OF )
On this _________ day of _______________, 199_, before me
personally came _________________________, to me known, who being first duly
sworn did depose and say that he/she is the ____________________________ of
_________________________ , the corporation described herein and which executed
the above instrument, and that he/she signed the above instrument by authority
of the Board of Directors of said corporation.
________________________
Notary Public
My Commission Expires:_______________________
SEAL
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SCHEDULE A (AMF Reece, Inc.)
(i) Machinery apparatus and equipment for the manufacture of, processing,
handling and packaging of woven and non woven fabric, sheet goods and leather,
including without limitation:
(a) pocketwelt machines;
(b) automatic profile stitching systems;
(c) clothing manufacturing machinery;
(d) sewing machines;
(e) bagging systems;
(f) hand stitching equipment;
(g) eyelet buttonhole machines; and
(h) parts and accessories thereof.
(ii) The rendering of delivery, installation, repair or maintenance
services related to any of the foregoing.
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Exhibit 1 (AMF Reece, Inc.)
[AMF Mark]
[AMF (& Design) Mark]
<PAGE> 184
EXHIBIT 1.1(c)(2)
TRADEMARK LICENSE AGREEMENT
THIS TRADEMARK LICENSE AGREEMENT (this "Trademark License"),
dated as of February __, 1996, by and between AMF Bowling, Inc. ("LICENSOR"), a
Virginia corporation, and AMF Machinery Systems, Inc., a Virginia corporation
("LICENSEE").
WHEREAS, by virtue of a Stock Purchase Agreement (the "Stock
Purchase Agreement") executed concurrent herewith, AMF Group Holdings Inc. will
acquire, directly or indirectly, inter alia, 100% of the outstanding shares of
common stock of LICENSOR;
WHEREAS, LICENSOR owns worldwide rights in and to registered
and unregistered trademarks, trademark applications, service marks, service
names, trade names and similar property rights incorporating the marks AMF, AMF
(& Design), and AMFLOW and all derivatives thereof (the "Marks") for various
high quality services and products;
WHEREAS, the Marks convey an indication of high quality
and prestige which has great commercial value;
WHEREAS, LICENSEE desires to acquire an exclusive,
royalty-free, worldwide, perpetual license to use the AMF and AMF (& Design)
marks in connection with LICENSEE'S FIELD OF USE, as hereinafter defined;
WHEREAS, LICENSOR desires to grant LICENSEE such a license
subject to the terms and conditions as set forth herein;
<PAGE> 185
WHEREAS, unless otherwise defined in this Agreement,
capitalized terms herein shall have the respective meanings given to them in the
Stock Purchase Agreement; and
WHEREAS, this Trademark License shall not become effective
unless and until the "Closing" occurs under the Stock Purchase Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 "GOODS" means any goods or services which are
included in the definition of LICENSEE'S FIELD OF USE.
Section 1.2 "LICENSED MARKS" means the AMF, AMF (& Design),
and AMFLOW Marks (in the form shown in Exhibit 1, attached hereto) and other
marks or names which use or incorporate the initials "AMF".
Section 1.3 "LICENSEE'S FIELD OF USE" means any goods or
services listed on Schedule A (attached hereto).
Section 1.4 "LICENSED TERRITORY" means all countries and
territories, worldwide.
ARTICLE II
LICENSE GRANT
Section 2.1 LICENSOR hereby grants to LICENSEE for the term
contemplated by Section 3.1 hereof an exclusive, worldwide, perpetual license to
use the LICENSED MARKS in
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connection with LICENSEE'S FIELD OF USE in the LICENSED
TERRITORY.
Section 2.2 LICENSEE may from time to time request that
LICENSOR consent to LICENSEE'S use of the LICENSED MARKS in connection with
additional fields of use if at the time such request is made LICENSEE's proposed
additional use is not confusingly similar to LICENSOR's use or intended use of
the LICENSED MARKS or the use by any third party licensed by LICENSOR to use the
LICENSED MARKS in a different field of use. Such consent will be granted only in
LICENSOR'S sole discretion, and if granted, such additional fields of use will
thereafter be included in the definition of LICENSEE'S FIELD OF USE in this
Trademark License or on such other terms as may be agreed by the parties.
Section 2.3 Neither LICENSOR nor any of its successors or
assigns will use or grant any licenses to any other party to use the LICENSED
MARKS (or any mark confusingly similar to the LICENSED MARKS) for any goods or
services included in LICENSEE'S FIELD OF USE in the LICENSED TERRITORY during
the term of this License Agreement. Any attempted license by LICENSOR or any of
its successors or assigns that violates the exclusive rights granted to LICENSEE
herein will be void ab initio.
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ARTICLE III
TERM
Section 3.1 This Trademark License will continue in force in
perpetuity.
ARTICLE IV
ROYALTY
Section 4.1 The license hereby granted is royalty free.
ARTICLE V
QUALITY CONTROL
Section 5.1 LICENSEE warrants and agrees that all GOODS,
advertising, promotional materials, and all other materials in connection with
which the LICENSED MARKS are used by LICENSEE under this Trademark License will
be lawful, merchantable and of a good standard, quality and workmanship level.
Section 5.2 Based on representations by LICENSEE, LICENSOR
believes the products, materials and services offered for sale or sold by
LICENSEE as of the date of this Trademark License utilize and/or embody
standards, workmanship and quality levels which, if used in connection with the
LICENSED MARKS, will be acceptable to LICENSOR.
Section 5.3 LICENSOR may from time to time request from
LICENSEE (1) samples of the GOODS offered for sale under the
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LICENSED MARKS, (2) samples exhibiting, indicating or otherwise showing how the
LICENSED MARKS are being used or are intended to be used on or in connection
with the GOODS, including, but not limited to, advertising and other promotional
materials, and (3) information, in each case reasonably required by LICENSOR to
enable LICENSOR to confirm that LICENSEE is complying with Section 5.1. In
addition, LICENSOR may from time to time request descriptions and lists of the
GOODS offered for sale under the LICENSED MARKS. LICENSEE will supply
appropriate samples, descriptions, lists or information to LICENSOR within
thirty (30) days from receipt of LICENSOR's request.
Section 5.4 Failure of LICENSEE to meet the standards, quality
and workmanship levels set forth in Section 5.1 will constitute a material
breach of this Trademark License for which LICENSOR may seek specific
performance in accordance with Article XVII below.
ARTICLE VI
TRADEMARK USE
Section 6.1 Where reasonably appropriate, LICENSEE will
indicate in public uses of the LICENSED MARKS in a country in which such marks
are registered, that they are registered with the trademark office of such
country, by affixing to the GOODS or their containers the designation supplied
by LICENSOR.
Section 6.2 During the term of this Trademark License,
LICENSEE will not adopt or use any word, symbol, device,
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logo, mark or name that is confusingly similar to the LICENSED MARKS in
connection with the GOODS.
Section 6.3 LICENSEE may use the LICENSED MARKS as part of any
composite mark. In the event LICENSEE uses the LICENSED MARKS as part of any
composite mark, LICENSEE will clearly indicate on any goods, advertising or
promotional material bearing such composite mark that the LICENSED MARK is owned
by and licensed from LICENSOR. LICENSOR acknowledges that any other names or
marks used in composite marks with the LICENSED MARKS are not the property of
LICENSOR and LICENSOR will not use such other names or marks without the prior
written permission of LICENSEE.
Section 6.4 LICENSEE will not register or attempt to register
the LICENSED MARKS. LICENSEE will not register or attempt to register any word,
symbol, mark, device, logo or name that is confusingly similar to the LICENSED
MARKS or that includes the LICENSED MARKS.
Section 6.5 All use of the LICENSED MARKS by LICENSEE will
inure to the benefit of LICENSOR. All goodwill accrued by, and due to,
LICENSEE'S use of the LICENSED MARKS will be the sole and exclusive property of
LICENSOR. LICENSEE hereby assigns and transfers to LICENSOR all trademarks and
trademark rights created by such uses of the LICENSED MARKS, together with the
goodwill of the business in connection with which such trademarks are used
(provided, however, that in the event of a sale of substantially all of the
capital stock or assets of
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LICENSEE, LICENSOR acknowledges that the foregoing provisions of this Section
6.5 do not entitle LICENSOR to any portion of the purchase price for such stock
or assets which may be allocated to such goodwill).
Section 6.6 LICENSOR will use all reasonable efforts to
maintain existing registrations for the LICENSED MARKS in connection with the
GOODS. In the event LICENSEE wishes to apply for additional registrations
covering the LICENSED MARKS in the LICENSEE'S FIELD OF USE, such registrations
and the applications for registration thereof will designate LICENSOR as the
owner of the subject trademarks or service marks, and LICENSOR agrees to execute
any additional documents needed for such applications and registrations. The
costs for registering, obtaining and maintaining such additional registrations
will be borne by LICENSEE.
Section 6.7 LICENSEE will keep appropriate records relating to
the dates when each of the GOODS is first placed on sale or sold in the LICENSED
TERRITORY, and the dates of first use in each country of each different LICENSED
MARK on the GOODS. If reasonably requested to do so by LICENSOR, LICENSEE also
agrees to supply LICENSOR with samples, facsimiles or photographs of the
trademark usages in question and other information which will enable LICENSOR to
complete and obtain trademark or design applications or registrations, or to
evaluate or oppose any trademark or design applications, registrations, or uses
of third parties.
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Section 6.8 With respect to those countries which require
applications to register LICENSEE as a Permitted User or Registered User of the
LICENSED MARKS used on or in connection with the GOODS or which require the
recordation of this Trademark License, LICENSOR will be responsible for such
recording and LICENSEE agrees to execute and deliver to LICENSOR such
applications, agreements or other documents as may be necessary and as are
furnished by LICENSOR for such purposes, as long as such applications,
agreements or other documents are not contrary to the terms of this Trademark
License. The expense of such registration or recordation will be borne by
LICENSEE.
Section 6.9 Subject to the provisions of the preceding
Sections of this Article VI and Article XIII below, LICENSEE will use all
reasonable efforts to assist LICENSOR to protect and enforce the LICENSED MARKS.
LICENSEE will not take any action which impairs LICENSOR'S right, title or
interest in the LICENSED MARKS. LICENSEE acknowledges the validity of the
LICENSED MARKS, and LICENSOR'S ownership of the LICENSED MARKS, and LICENSEE
will not question or challenge either the validity or LICENSOR'S ownership of
the LICENSED MARKS during the term of this Trademark License.
Section 6.10 LICENSEE will use its best efforts to refrain
from any action during the term of this Trademark License, that would be
detrimental to, injure or impair the LICENSED MARKS or their registration or
goodwill, or any of LICENSOR'S common law or other rights in the LICENSED MARKS,
or
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the title, ownership, validity or enforceability of any of the foregoing.
ARTICLE VII
TERMINATION
Section 7.1 This Trademark License may not be terminated
without the prior written consent of LICENSEE. If it is determined that LICENSEE
has breached an obligation imposed on it by this Trademark License, LICENSOR'S
sole remedy will be to seek money damages for such material breach or seek
specific performance under Article XVII (including for those breaches referred
to in Section 5.4). In no event may this Trademark License be terminated by
LICENSOR for any breach by LICENSEE.
Section 7.2 In the event LICENSEE no longer intends to use the
LICENSED MARKS, in whole or in part, LICENSEE will give notice of such intent to
LICENSOR and the license, in whole or in part, as applicable, will terminate
upon receipt of such notice.
Section 7.3 After termination of this Trademark License,
LICENSEE will be permitted for a period of two (2) months to exhaust its then
current supply of corporate and business services, containers, brochures,
promotional materials, broadcasts, advertisements and all other documents or
things offered for sale, displayed, broadcast or in any other way shown or
disseminated by or for LICENSEE, as long as such actions are not materially
detrimental to LICENSOR. All remaining documents or things bearing the LICENSED
MARKS will be destroyed by
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LICENSEE or delivered to LICENSOR after the two (2) month period. Should
LICENSEE require additional time to exhaust its supply of documents or things
bearing the LICENSED MARKS it may request LICENSOR's consent to a reasonable
extension of the two (2) month period, which consent will not be unreasonably
withheld.
Section 7.4 This Trademark License shall automatically
terminate and be void and have no effect if the Closing under the Stock Purchase
Agreement does not occur.
ARTICLE VIII
ASSIGNABILITY
Section 8.1 LICENSOR retains the right to assign any and all
of its rights and interests in this Trademark License and the LICENSED MARKS.
This Trademark License will be binding upon any such assignee as well as upon
any successor of LICENSOR in ownership or control of the LICENSED MARKS. The
obligations of LICENSEE under this Trademark License will run in favor of any
such successor or assignee of LICENSOR.
Section 8.2 LICENSEE may assign its rights under this
Trademark License provided that (1) the assignee agrees in writing to be bound
by all of the terms of this Trademark License and (2) LICENSOR is notified in
advance of the identity of the prospective assignee and provided in advance with
a copy of the prospective assignment.
Section 8.3 LICENSEE may not sublicense, divide or franchise
its rights under this agreement. Any attempt by
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LICENSEE to sublicense, divide or franchise, or purported sublicense, division
or franchise of LICENSEE's rights, will be void ab initio.
ARTICLE IX
PROPERTY RIGHTS
Section 9.1 Nothing contained in this Trademark License will
operate as or be construed as an assignment of any right, title, or interest in
or to the LICENSED MARKS, any of the registrations thereof, any common law
rights, or any associated goodwill. Other than the license granted herein, all
right, title and interest in and to the LICENSED MARKS is owned and expressly
reserved by LICENSOR for its own use and benefit.
ARTICLE X
LAWS/REGULATIONS
Section 10.1 LICENSEE will obey, comply, and conform with all
applicable laws and regulations and obtain in advance any and all appropriate
government approvals, permits, licenses and the like pertaining to the sale,
offer for sale, manufacture, distribution, promotion and advertising of the
GOODS licensed hereunder.
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ARTICLE XI
RELATIONSHIP OF THE PARTIES
Section 11.1 This Trademark License does not create a
partnership, joint venture or agency relationship between the parties, and
neither LICENSEE nor LICENSOR will have any right, power or authority to act as
a legal representative of the other, and neither party will have any power to
obligate or bind the other, or to make any representations, express or implied,
on behalf of or in the name of the other in any manner or for any purpose
whatsoever.
ARTICLE XII
LIABILITY
Section 12.1 LICENSOR will have no liability whatsoever to
LICENSEE or any other person or entity for or on account of any injury, loss or
damage, of any kind or nature, sustained by, or any damage assessed or asserted
against, or any other liability incurred by or imposed upon LICENSEE or any
other person or entity, arising out of or in connection with or resulting from:
(i) the production, manufacture, distribution, use,
offer for sale, or sale of any GOODS and/or products and materials
under the LICENSED MARKS or under this Trademark License; or
(ii) any advertising or other promotional activities by
LICENSEE with respect to the GOODS and/or
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products and materials under the LICENSED MARKS or under this Trademark
License.
Section 12.2 LICENSEE agrees to defend, indemnify, and hold
harmless LICENSOR, its principals, directors, officers, partners, employees
and/or agents and LICENSOR'S parent companies, subsidiaries and affiliates, and
their officers, directors, principals, partners, employees and/or agents from
and against any and all liabilities, penalties, claims, demands, suits and
causes of action of any nature whatsoever, and any and all damages, costs and
expenses sustained or incurred (including cost of defense, settlement and
reasonable attorneys' fees and expenses, and the costs and expenses, including
reasonable attorneys' fees and expenses, of enforcing LICENSEE's obligations
hereunder), asserted by or on behalf of any person or entity arising out of the
production, manufacture, distribution, use, offer for sale or sale of any GOODS
and/or products and materials under the LICENSED MARKS by LICENSEE or under this
Trademark License, or advertising or other promotional activities by LICENSEE in
connection with the LICENSED MARKS and/or GOODS, or out of any breach of
representation or warranty by LICENSEE herein, or out of the negligent acts or
omissions of LICENSEE, its agents, representatives and/or employees in
connection with the production, manufacture, distribution, use, offer for sale
or sale of any GOODS and/or products and materials under the LICENSED MARKS by
LICENSEE or under this Trademark License.
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Section 12.3 LICENSEE will obtain all necessary insurance
policies from third parties not related to or affiliated with LICENSEE in
amounts considered reasonable by prudent businesses, providing LICENSOR with
primary coverage as a co-insured against the risks set forth in Section 12.2
and, within sixty (60) days after the Closing Date contemplated by the Stock
Purchase Agreement, provide LICENSOR with copies of said policies.
Section 12.4 LICENSOR agrees to notify LICENSEE promptly of
any asserted claims, demands, suits or causes of action which trigger LICENSEE'S
obligations under Section 12.2. Any failure by LICENSOR to make such
notification will not relieve or release LICENSEE from its obligations under
Section 12.2, except to the extent that such failure has an actual adverse
effect on LICENSEE'S ability to defend any such claim, demand, suit or cause of
action.
ARTICLE XIII
INFRINGEMENT
Section 13.1 Either party will immediately notify the other of
any suspected infringement of the LICENSED MARKS in LICENSEE'S FIELD OF USE in
the LICENSED TERRITORY. Such notification will include, without limitation,
immediately forwarding to the other party any and all documents relating to any
such suspected infringement and providing the other party
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with any and all facts and circumstances relating to such suspected
infringement.
Section 13.2 LICENSOR will have the primary right to institute
a suit for infringement, unfair competition or other action with respect to any
unauthorized use or suspected infringement. LICENSOR will have no duty to
initiate or pursue such suit if in its judgment the suit is not warranted or is
not in its best interests.
Section 13.3 LICENSEE may join and participate and be
represented in any infringement suit, at its own expense and by counsel of its
choosing, to protect its interests.
Section 13.4 LICENSOR and LICENSEE agree that they will, at
all times, reasonably cooperate with one another and with their respective
counsel in respect of any suspected infringement or suit for infringement,
including, but not limited to, having their respective principals, directors,
employees, officers and/or agents, or such individuals of their respective
parent companies, subsidiaries and affiliates, testify, and by making available
any records, papers, information, specimens and the like when reasonably
requested by the other party hereto.
Section 13.5 With respect to any infringement suit, LICENSEE
will be consulted regarding any proposed settlement or compromise and LICENSOR
will not settle such a suit in a manner which will have any adverse effect on
LICENSEE or LICENSEE's right to use the LICENSED MARKS in LICENSEE's FIELD OF
USE as
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permitted hereunder without LICENSEE's consent, which consent will not be
unreasonably withheld.
Section 13.6 LICENSOR and LICENSEE will share equitably in the
proceeds of any settlement or judgment in such an infringement suit, based on
their respective actual damages. There will be no sharing of proceeds with
LICENSEE in the event that an infringement suit does not involve an infringement
that is within the scope of the LICENSEE'S FIELD OF USE in the LICENSED
TERRITORY.
Section 13.7 If LICENSOR decides in its discretion not to take
any action with respect to any suspected infringement, then LICENSEE may, at its
own option and sole expense, take such action on its own behalf as it deems
appropriate and any damages, recovery, settlement, or compromise obtained
thereby will be for the account of LICENSEE.
ARTICLE XIV
SEVERABILITY
Section 14.1 If any part, term, or provision of this Trademark
License will be found illegal, unenforceable, or in conflict with any valid
controlling law, the validity of the remaining portions of any provisions, and
any other provisions in this Trademark License, will not be affected thereby.
Section 14.2 In the event the legality of any provision of
this Trademark License is brought into question because of a final decision,
unappealed or unappealable, by a
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court of competent jurisdiction of any country in which this Trademark License
applies, LICENSOR may, after consultation with and the consent of LICENSEE,
which will not be unreasonably withheld, revise the provision in question or may
delete it entirely so as to comply with the decision of said court.
ARTICLE XV
WAIVER, INTEGRATION, ALTERATION
Section 15.1 The waiver of a breach hereunder may be effected
only by a writing signed by the waiving party and will not constitute, or be
held to be, a waiver of any other or subsequent breach, or to affect in any way
the effect of such provision. Failure by either party to object to a breach will
not constitute or be held to be a waiver of such party's right to later object
to or seek appropriate redress for any other breach or subsequent breach.
Section 15.2 This Trademark License contains the entire
understanding between the parties and supersedes all other agreements,
representations and warranties, express or implied, between the parties
concerning the LICENSED MARKS.
Section 15.3 Any modification or amendment of this Trademark
License will be effective only if made in writing and signed by both parties.
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ARTICLE XVI
GOVERNING LAW
Section 16.1 This Trademark License will be construed and
interpreted and its performance will be governed by the substantive laws of the
State of New York.
ARTICLE XVII
ARBITRATION
Section 17.1 In the event LICENSOR and LICENSEE are unable to
amicably resolve any dispute, including compliance with the quality control
provisions of Article V and any other provisions of this Trademark License, such
dispute will be submitted for determination by binding arbitration in accordance
with the provisions of the rules of the American Arbitration Association (the
"AAA"). Such arbitration will take place in New York, New York and will be heard
by a panel of three arbitrators. One of such arbitrators shall be selected by
LICENSOR, one shall be selected by LICENSEE, and one shall be assigned by the
AAA. Each such arbitrator shall be a lawyer having at least three years of
experience practicing primarily in the field of trademark law.
Section 17.2 Any arbitration proceeding hereunder will be
initiated no more than thirty (30) days after receipt by LICENSOR or LICENSEE of
notice from the other of any dispute under Section 17.1 above, will be concluded
within two (2) months
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of its initiation and will be limited to a hearing of no more than three (3)
days.
Section 17.3 In the event the panel of arbitrators determines
that a breach of this Trademark License has occurred, the panel will promptly
advise LICENSOR and LICENSEE accordingly by written, reasoned decision, together
with recommendations for correcting the breach. The breaching party will have
thirty (30) days following receipt of such decision to obtain the other party's
consent to any proposed correction of the breach, which consent will not be
unreasonably withheld. Thereafter, the breaching party will have a further
thirty (30) days after obtaining such consent to correct the breach.
Section 17.4 In the event the breaching party does not obtain
the other party's consent to the correction of the breach, or does not correct
such breach, within the respective time periods provided in Section 17.3, the
other party will have the right to obtain, from any Court having jurisdiction
thereof, an order for specific performance based on the panel's decision,
directing the breaching party to correct the breach of this Trademark License
and, if the breaching party is the LICENSEE, prohibiting it from further use of
the LICENSED MARKS until compliance with any such order is achieved.
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ARTICLE XVIII
CAPTIONS
Section 18.1 The captions used in this Trademark License have
been inserted only for reference purposes. The captions and order of such
captions will not be deemed to govern, limit, modify, or in any manner affect
the scope, meaning, or intent of any of the provisions and/or terms of this
Trademark License, nor will any captions be given any legal effect.
ARTICLE XIX
NOTICES
Section 19.1 Any and all notices or other writings that are
required or permitted under any of the provisions of this Trademark License will
be in writing and will be deemed sufficiently given if delivered personally,
sent by documented overnight delivery service, mailed by certified mail, or to
the extent that receipt is confirmed, telecopy, telefax or other electronic
transmission service, addressed to the party concerned as follows:
If addressed to LICENSOR:
AMF Bowling, Inc.
c/o GS Capital Partners II, L.P.
85 Broad Street
New York, New York 10004
Attn: David J. Greenwald
Telephone No.: (212) 902-3000
With copies to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
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New York, New York 10019
Attn: Daniel A. Neff and
Mitchell S. Presser
Telecopier No.: (212) 403-2000
Bryan Cave LLP
245 Park Avenue
New York, New York 10167
Attn: Marc S. Gross
Arthur Mann
Telecopier No.: (212) 692-1900
If addressed to LICENSEE:
AMF Machinery Systems, Inc.
c/o CCA Industries, Inc.
One James Center
Richmond, Virginia 23219
Attn: Beverley W. Armstrong
Telephone No.: (804) 643-4200
With copies to:
McGuire Woods Battle & Boothe, L.L.P.
One James Center
901 East Cary Street
Richmond, Virginia 23219-4030
Attn: Leslie A. Grandis, Esquire
Wellford L. Sanders Jr., Esquire
Telephone No.: (804) 775-1000
Telecopier No.: (804) 775-1061
or any other addresses of which either party will notify the other in writing.
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IN WITNESS WHEREOF, the parties hereto have caused this
License Trademark License to be executed as indicated below.
AMF BOWLING, INC.
By:
---------------------------------
[Name, Title]
Title:
------------------------------
Date:
-------------------------------
AMF MACHINERY SYSTEMS, INC.
By:
---------------------------------
Beverley W. Armstrong
Date:
-------------------------------
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STATE OF )
)
COUNTY OF )
On this _________ day of ___________________, 199_, before me
personally came _________________________, to me known, who being first duly
sworn did depose and say that he/she is the _________ of ___________________,
the corporation described herein and which executed the above instrument, and
that he/she signed the above instrument by authority of the Board of Directors
of said corporation.
__________________________
Notary Public
My Commission Expires: ____________________
SEAL
STATE OF )
)
COUNTY OF )
On this___________day of__________________, 199_ , before me
personally came ________________________________, to me known, who being first
duly sworn did depose and say that he/she is the ________ of ________________,
the corporation described herein and which executed the above instrument, and
that he/she signed the above instrument by authority of the Board of Directors
of said corporation.
__________________________
Notary Public
My Commission Expires: ____________________
SEAL
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SCHEDULE A (AMF Machinery Systems, Inc.)
(i) Machinery, apparatus and equipment for the manufacture of, processing,
handling and packaging of food products.
(ii) Baking equipment, including, without limitation the following equipment
to be used for baking:
(a) bread makeup systems;
(b) dough distribution systems;
(c) rounders;
(d) flouring belt;
(e) flouring conveyor;
(f) outfeed conveyor;
(g) proofing conveyors;
(h) dough pump;
(i) dough transfer conveyor;
(j) verticle dough conveyor;
(k) baggers;
(l) slicers;
(m) mixers;
(n) kneaders;
(o) dividers;
(p) sheeters;
(q) moulders;
(r) panners;
(s) bulk packaging systems;
(t) basket loaders;
(u) flour reclaim systems;
(v) brown-n-serve packaging systems;
(w) depanners; and
(x) parts and accessories of baking machinery.
(iii) Machinery to manufacture tobacco products and parts and
accessories thereof.
(iv) Machinery used in the pharmaceutical industry, including but
not limited to mixers and parts and accessories thereof.
(v) Equipment and parts for the abrasives industry, machine tool
manufacturers and rubber processors.
(vi) The rendering of delivery, installation, repair or maintenance
services related to any of the foregoing.
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Exhibit 1 (AMF Machinery Systems, Inc.)
[AMF Mark]
[AMF (& Design) Mark]
[AMFLOW Mark]
<PAGE> 209
EXHIBIT 1.1(c)(3)
TRADEMARK LICENSE AGREEMENT
THIS TRADEMARK LICENSE AGREEMENT (this "Trademark License"),
dated as of February __, 1996, by and between AMF Bowling, Inc. ("LICENSOR"), a
Virginia corporation, and Ben Hogan Company, a Virginia corporation
("LICENSEE").
WHEREAS, by virtue of a Stock Purchase Agreement (the "Stock
Purchase Agreement") executed concurrent herewith, AMF Group Holdings Inc. will
acquire, directly or indirectly, inter alia, 100% of the outstanding shares of
common stock of LICENSOR;
WHEREAS, LICENSOR owns worldwide rights in and to registered
and unregistered trademarks, trademark applications, service marks, service
names, trade names and similar property rights incorporating the marks AMF and
AMF (& Design) and all derivatives thereof (the "Marks") for various high
quality services and products;
WHEREAS, the Marks convey an indication of high quality
and prestige which has great commercial value;
WHEREAS, LICENSEE desires to acquire an exclusive,
royalty-free, worldwide, perpetual license to use the AMF and AMF (& Design)
marks in connection with LICENSEE'S FIELD OF USE, as hereinafter defined;
WHEREAS, LICENSOR desires to grant LICENSEE such a license
subject to the terms and conditions as set forth herein;
WHEREAS, unless otherwise defined in this Agreement,
capitalized terms herein shall have the respective meanings given to them in the
Stock Purchase Agreement; and
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WHEREAS, this Trademark License shall not become effective
unless and until the "Closing" occurs under the Stock Purchase Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 "GOODS" means any goods or services which are
included in the definition of LICENSEE'S FIELD OF USE.
Section 1.2 "LICENSED MARKS" means the AMF, and AMF (&
Design), Marks (in the form shown in Exhibit 1, attached hereto) and other marks
or names which use or incorporate the initials "AMF".
Section 1.3 "LICENSEE'S FIELD OF USE" means any goods or
services listed on Schedule A (attached hereto).
Section 1.4 "LICENSED TERRITORY" means all countries and
territories, worldwide, with the exception of Mexico, which shall not be part of
the LICENSED TERRITORY.
ARTICLE II
LICENSE GRANT
Section 2.1 LICENSOR hereby grants to LICENSEE for the term
contemplated by Section 3.1 hereof an exclusive, worldwide, perpetual license to
use the LICENSED MARKS in connection with LICENSEE'S FIELD OF USE in the
LICENSED TERRITORY.
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Section 2.2 LICENSEE may from time to time request that
LICENSOR consent to LICENSEE'S use of the LICENSED MARKS in connection with
additional fields of use if at the time such request is made LICENSEE's proposed
additional use is not confusingly similar to LICENSOR's use or intended use of
the LICENSED MARKS or the use by any third party licensed by LICENSOR to use the
LICENSED MARKS in a different field of use. Such consent will be granted only in
LICENSOR'S sole discretion, and if granted, such additional fields of use will
thereafter be included in the definition of LICENSEE'S FIELD OF USE in this
Trademark License or on such other terms as may be agreed by the parties.
Section 2.3 Neither LICENSOR nor any of its successors or
assigns will use or grant any licenses to any other party to use the LICENSED
MARKS (or any mark confusingly similar to the LICENSED MARKS) for any goods or
services included in LICENSEE'S FIELD OF USE in the LICENSED TERRITORY during
the term of this License Agreement. Any attempted license by LICENSOR or any of
its successors or assigns that violates the exclusive rights granted to LICENSEE
herein will be void ab initio.
ARTICLE III
TERM
Section 3.1 This Trademark License will continue in force in
perpetuity.
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ARTICLE IV
ROYALTY
Section 4.1 The license hereby granted is royalty free.
ARTICLE V
QUALITY CONTROL
Section 5.1 LICENSEE warrants and agrees that all GOODS,
advertising, promotional materials, and all other materials in connection with
which the LICENSED MARKS are used by LICENSEE under this Trademark License will
be lawful, merchantable and of a good standard, quality and workmanship level.
Section 5.2 Based on representations by LICENSEE, LICENSOR
believes the products, materials and services offered for sale or sold by
LICENSEE as of the date of this Trademark License utilize and/or embody
standards, workmanship and quality levels which, if used in connection with the
LICENSED MARKS, will be acceptable to LICENSOR.
Section 5.3 LICENSOR may from time to time request from
LICENSEE (1) samples of the GOODS offered for sale under the LICENSED MARKS, (2)
samples exhibiting, indicating or otherwise showing how the LICENSED MARKS are
being used or are intended to be used on or in connection with the GOODS,
including, but not limited to, advertising and other promotional materials, and
(3) information, in each case reasonably required by LICENSOR to
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enable LICENSOR to confirm that LICENSEE is complying with Section 5.1. In
addition, LICENSOR may from time to time request descriptions and lists of the
GOODS offered for sale under the LICENSED MARKS. LICENSEE will supply
appropriate samples, descriptions, lists or information to LICENSOR within
thirty (30) days from receipt of LICENSOR's request.
Section 5.4 Failure of LICENSEE to meet the standards, quality
and workmanship levels set forth in Section 5.1 will constitute a material
breach of this Trademark License for which LICENSOR may seek specific
performance in accordance with Article XVII below.
ARTICLE VI
TRADEMARK USE
Section 6.1 Where reasonably appropriate, LICENSEE will
indicate in public uses of the LICENSED MARKS in a country in which such marks
are registered, that they are registered with the trademark office of such
country, by affixing to the GOODS or their containers the designation supplied
by LICENSOR.
Section 6.2 During the term of this Trademark License,
LICENSEE will not adopt or use any word, symbol, device, logo, mark or name that
is confusingly similar to the LICENSED MARKS in connection with the GOODS.
Section 6.3 LICENSEE may use the LICENSED MARKS as part of any
composite mark. In the event LICENSEE uses the LICENSED MARKS as part of any
composite mark, LICENSEE will
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clearly indicate on any goods, advertising or promotional material bearing such
composite mark that the LICENSED MARK is owned by and licensed from LICENSOR.
LICENSOR acknowledges that any other names or marks used in composite marks with
the LICENSED MARKS are not the property of LICENSOR and LICENSOR will not use
such other names or marks without the prior written permission of LICENSEE.
Section 6.4 LICENSEE will not register or attempt to register
the LICENSED MARKS. LICENSEE will not register or attempt to register any word,
symbol, mark, device, logo or name that is confusingly similar to the LICENSED
MARKS or that includes the LICENSED MARKS.
Section 6.5 All use of the LICENSED MARKS by LICENSEE will
inure to the benefit of LICENSOR. All goodwill accrued by, and due to,
LICENSEE'S use of the LICENSED MARKS will be the sole and exclusive property of
LICENSOR. LICENSEE hereby assigns and transfers to LICENSOR all trademarks and
trademark rights created by such uses of the LICENSED MARKS, together with the
goodwill of the business in connection with which such trademarks are used
(provided, however, that in the event of a sale of substantially all of the
capital stock or assets of LICENSEE, LICENSOR acknowledges that the foregoing
provisions of this Section 6.5 do not entitle LICENSOR to any portion of the
purchase price for such stock or assets which may be allocated to such
goodwill).
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Section 6.6 LICENSOR will use all reasonable efforts to
maintain existing registrations for the LICENSED MARKS in connection with the
GOODS. In the event LICENSEE wishes to apply for additional registrations
covering the LICENSED MARKS in the LICENSEE'S FIELD OF USE, such registrations
and the applications for registration thereof will designate LICENSOR as the
owner of the subject trademarks or service marks, and LICENSOR agrees to execute
any additional documents needed for such applications and registrations. The
costs for registering, obtaining and maintaining such additional registrations
will be borne by LICENSEE.
Section 6.7 LICENSEE will keep appropriate records relating to
the dates when each of the GOODS is first placed on sale or sold in the LICENSED
TERRITORY, and the dates of first use in each country of each different LICENSED
MARK on the GOODS. If reasonably requested to do so by LICENSOR, LICENSEE also
agrees to supply LICENSOR with samples, facsimiles or photographs of the
trademark usages in question and other information which will enable LICENSOR to
complete and obtain trademark or design applications or registrations, or to
evaluate or oppose any trademark or design applications, registrations, or uses
of third parties.
Section 6.8 With respect to those countries which require
applications to register LICENSEE as a Permitted User or Registered User of the
LICENSED MARKS used on or in connection with the GOODS or which require the
recordation of this Trademark
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License, LICENSOR will be responsible for such recording and LICENSEE agrees to
execute and deliver to LICENSOR such applications, agreements or other documents
as may be necessary and as are furnished by LICENSOR for such purposes, as long
as such applications, agreements or other documents are not contrary to the
terms of this Trademark License. The expense of such registration or recordation
will be borne by LICENSEE.
Section 6.9 Subject to the provisions of the preceding
Sections of this Article VI and Article XIII below, LICENSEE will use all
reasonable efforts to assist LICENSOR to protect and enforce the LICENSED MARKS.
LICENSEE will not take any action which impairs LICENSOR'S right, title or
interest in the LICENSED MARKS. LICENSEE acknowledges the validity of the
LICENSED MARKS, and LICENSOR'S ownership of the LICENSED MARKS, and LICENSEE
will not question or challenge either the validity or LICENSOR'S ownership of
the LICENSED MARKS during the term of this Trademark License.
Section 6.10 LICENSEE will use its best efforts to refrain
from any action during the term of this Trademark License, that would be
detrimental to, injure or impair the LICENSED MARKS or their registration or
goodwill, or any of LICENSOR'S common law or other rights in the LICENSED MARKS,
or the title, ownership, validity or enforceability of any of the foregoing.
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ARTICLE VII
TERMINATION
Section 7.1 This Trademark License may not be terminated
without the prior written consent of LICENSEE. If it is determined that LICENSEE
has breached an obligation imposed on it by this Trademark License, LICENSOR'S
sole remedy will be to seek money damages for such material breach or seek
specific performance under Article XVII (including for those breaches referred
to in Section 5.4). In no event may this Trademark License be terminated by
LICENSOR for any breach by LICENSEE.
Section 7.2 In the event LICENSEE no longer intends to use the
LICENSED MARKS, in whole or in part, LICENSEE will give notice of such intent to
LICENSOR and the license, in whole or in part, as applicable, will terminate
upon receipt of such notice.
Section 7.3 After termination of this Trademark License,
LICENSEE will be permitted for a period of two (2) months to exhaust its then
current supply of corporate and business services, containers, brochures,
promotional materials, broadcasts, advertisements and all other documents or
things offered for sale, displayed, broadcast or in any other way shown or
disseminated by or for LICENSEE, as long as such actions are not materially
detrimental to LICENSOR. All remaining documents or things bearing the LICENSED
MARKS will be destroyed by LICENSEE or delivered to LICENSOR after the two (2)
month period. Should LICENSEE require additional time to exhaust its supply of
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documents or things bearing the LICENSED MARKS it may request LICENSOR's consent
to a reasonable extension of the two (2) month period, which consent will not be
unreasonably withheld.
Section 7.4 This Trademark License shall automatically
terminate and be void and have no effect if the Closing under the Stock Purchase
Agreement does not occur.
ARTICLE VIII
ASSIGNABILITY
Section 8.1 LICENSOR retains the right to assign any and all
of its rights and interests in this Trademark License and the LICENSED MARKS.
This Trademark License will be binding upon any such assignee as well as upon
any successor of LICENSOR in ownership or control of the LICENSED MARKS. The
obligations of LICENSEE under this Trademark License will run in favor of any
such successor or assignee of LICENSOR.
Section 8.2 LICENSEE may assign its rights under this
Trademark License provided that (1) the assignee agrees in writing to be bound
by all of the terms of this Trademark License and (2) LICENSOR is notified in
advance of the identity of the prospective assignee and provided in advance with
a copy of the prospective assignment.
Section 8.3 LICENSEE may not sublicense, divide or franchise
its rights under this agreement. Any attempt by LICENSEE to sublicense, divide
or franchise, or purported
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sublicense, division or franchise of LICENSEE's rights, will be void ab initio.
ARTICLE IX
PROPERTY RIGHTS
Section 9.1 Nothing contained in this Trademark License will
operate as or be construed as an assignment of any right, title, or interest in
or to the LICENSED MARKS, any of the registrations thereof, any common law
rights, or any associated goodwill. Other than the license granted herein, all
right, title and interest in and to the LICENSED MARKS is owned and expressly
reserved by LICENSOR for its own use and benefit.
ARTICLE X
LAWS/REGULATIONS
Section 10.1 LICENSEE will obey, comply, and conform with all
applicable laws and regulations and obtain in advance any and all appropriate
government approvals, permits, licenses and the like pertaining to the sale,
offer for sale, manufacture, distribution, promotion and advertising of the
GOODS licensed hereunder.
ARTICLE XI
RELATIONSHIP OF THE PARTIES
Section 11.1 This Trademark License does not create a
partnership, joint venture or agency relationship between the
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parties, and neither LICENSEE nor LICENSOR will have any right, power or
authority to act as a legal representative of the other, and neither party will
have any power to obligate or bind the other, or to make any representations,
express or implied, on behalf of or in the name of the other in any manner or
for any purpose whatsoever.
ARTICLE XII
LIABILITY
Section 12.1 LICENSOR will have no liability whatsoever to
LICENSEE or any other person or entity for or on account of any injury, loss or
damage, of any kind or nature, sustained by, or any damage assessed or asserted
against, or any other liability incurred by or imposed upon LICENSEE or any
other person or entity, arising out of or in connection with or resulting from:
(i) the production, manufacture, distribution, use,
offer for sale, or sale of any GOODS and/or products and materials
under the LICENSED MARKS or under this Trademark License; or
(ii) any advertising or other promotional activities by
LICENSEE with respect to the GOODS and/or products and materials under
the LICENSED MARKS or under this Trademark License.
Section 12.2 LICENSEE agrees to defend, indemnify, and hold
harmless LICENSOR, its principals, directors, officers,
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<PAGE> 221
partners, employees and/or agents and LICENSOR'S parent companies, subsidiaries
and affiliates, and their officers, directors, principals, partners, employees
and/or agents from and against any and all liabilities, penalties, claims,
demands, suits and causes of action of any nature whatsoever, and any and all
damages, costs and expenses sustained or incurred (including cost of defense,
settlement and reasonable attorneys' fees and expenses, and the costs and
expenses, including reasonable attorneys' fees and expenses, of enforcing
LICENSEE's obligations hereunder), asserted by or on behalf of any person or
entity arising out of the production, manufacture, distribution, use, offer for
sale or sale of any GOODS and/or products and materials under the LICENSED MARKS
by LICENSEE or under this Trademark License, or advertising or other promotional
activities by LICENSEE in connection with the LICENSED MARKS and/or GOODS, or
out of any breach of representation or warranty by LICENSEE herein, or out of
the negligent acts or omissions of LICENSEE, its agents, representatives and/or
employees in connection with the production, manufacture, distribution, use,
offer for sale or sale of any GOODS and/or products and materials under the
LICENSED MARKS by LICENSEE or under this Trademark License.
Section 12.3 LICENSEE will obtain all necessary insurance
policies from third parties not related to or affiliated with LICENSEE in
amounts considered reasonable by prudent businesses, providing LICENSOR with
primary coverage as a co-insured against the risks set forth in Section 12.2
and,
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within sixty (60) days after the Closing Date contemplated by the Stock Purchase
Agreement, provide LICENSOR with copies of said policies.
Section 12.4 LICENSOR agrees to notify LICENSEE promptly of
any asserted claims, demands, suits or causes of action which trigger LICENSEE'S
obligations under Section 12.2. Any failure by LICENSOR to make such
notification will not relieve or release LICENSEE from its obligations under
Section 12.2, except to the extent that such failure has an actual adverse
effect on LICENSEE'S ability to defend any such claim, demand, suit or cause of
action.
ARTICLE XIII
INFRINGEMENT
Section 13.1 Either party will immediately notify the other of
any suspected infringement of the LICENSED MARKS in LICENSEE'S FIELD OF USE in
the LICENSED TERRITORY. Such notification will include, without limitation,
immediately forwarding to the other party any and all documents relating to any
such suspected infringement and providing the other party with any and all facts
and circumstances relating to such suspected infringement.
Section 13.2 LICENSOR will have the primary right to institute
a suit for infringement, unfair competition or other action with respect to any
unauthorized use or suspected infringement. LICENSOR will have no duty to
initiate or pursue
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<PAGE> 223
such suit if in its judgment the suit is not warranted or is not in its best
interests.
Section 13.3 LICENSEE may join and participate and be
represented in any infringement suit, at its own expense and by counsel of its
choosing, to protect its interests.
Section 13.4 LICENSOR and LICENSEE agree that they will, at
all times, reasonably cooperate with one another and with their respective
counsel in respect of any suspected infringement or suit for infringement,
including, but not limited to, having their respective principals, directors,
employees, officers and/or agents, or such individuals of their respective
parent companies, subsidiaries and affiliates, testify, and by making available
any records, papers, information, specimens and the like when reasonably
requested by the other party hereto.
Section 13.5 With respect to any infringement suit, LICENSEE
will be consulted regarding any proposed settlement or compromise and LICENSOR
will not settle such a suit in a manner which will have any adverse effect on
LICENSEE or LICENSEE's right to use the LICENSED MARKS in LICENSEE's FIELD OF
USE as permitted hereunder without LICENSEE's consent, which consent will not be
unreasonably withheld.
Section 13.6 LICENSOR and LICENSEE will share equitably in the
proceeds of any settlement or judgment in such an infringement suit, based on
their respective actual damages. There will be no sharing of proceeds with
LICENSEE in the event that an infringement suit does not involve an infringement
that
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<PAGE> 224
is within the scope of the LICENSEE'S FIELD OF USE in the LICENSED TERRITORY.
Section 13.7 If LICENSOR decides in its discretion not to take
any action with respect to any suspected infringement, then LICENSEE may, at its
own option and sole expense, take such action on its own behalf as it deems
appropriate and any damages, recovery, settlement, or compromise obtained
thereby will be for the account of LICENSEE.
ARTICLE XIV
SEVERABILITY
Section 14.1 If any part, term, or provision of this Trademark
License will be found illegal, unenforceable, or in conflict with any valid
controlling law, the validity of the remaining portions of any provisions, and
any other provisions in this Trademark License, will not be affected thereby.
Section 14.2 In the event the legality of any provision of
this Trademark License is brought into question because of a final decision,
unappealed or unappealable, by a court of competent jurisdiction of any country
in which this Trademark License applies, LICENSOR may, after consultation with
and the consent of LICENSEE, which will not be unreasonably withheld, revise the
provision in question or may delete it entirely so as to comply with the
decision of said court.
16
<PAGE> 225
ARTICLE XV
WAIVER, INTEGRATION, ALTERATION
Section 15.1 The waiver of a breach hereunder may be effected
only by a writing signed by the waiving party and will not constitute, or be
held to be, a waiver of any other or subsequent breach, or to affect in any way
the effect of such provision. Failure by either party to object to a breach will
not constitute or be held to be a waiver of such party's right to later object
to or seek appropriate redress for any other breach or subsequent breach.
Section 15.2 This Trademark License contains the entire
understanding between the parties and supersedes all other agreements,
representations and warranties, express or implied, between the parties
concerning the LICENSED MARKS.
Section 15.3 Any modification or amendment of this Trademark
License will be effective only if made in writing and signed by both parties.
ARTICLE XVI
GOVERNING LAW
Section 16.1 This Trademark License will be construed and
interpreted and its performance will be governed by the substantive laws of the
State of New York.
17
<PAGE> 226
ARTICLE XVII
ARBITRATION
Section 17.1 In the event LICENSOR and LICENSEE are unable to
amicably resolve any dispute, including compliance with the quality control
provisions of Article V and any other provisions of this Trademark License, such
dispute will be submitted for determination by binding arbitration in accordance
with the provisions of the rules of the American Arbitration Association (the
"AAA"). Such arbitration will take place in New York, New York and will be heard
by a panel of three arbitrators. One of such arbitrators shall be selected by
LICENSOR, one shall be selected by LICENSEE, and one shall be assigned by the
AAA. Each such arbitrator shall be a lawyer having at least three years of
experience practicing primarily in the field of trademark law.
Section 17.2 Any arbitration proceeding hereunder will be
initiated no more than thirty (30) days after receipt by LICENSOR or LICENSEE of
notice from the other of any dispute under Section 17.1 above, will be concluded
within two (2) months of its initiation and will be limited to a hearing of no
more than three (3) days.
Section 17.3 In the event the panel of arbitrators determines
that a breach of this Trademark License has occurred, the panel will promptly
advise LICENSOR and LICENSEE accordingly by written, reasoned decision, together
with recommendations for correcting the breach. The breaching party will have
thirty (30)
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<PAGE> 227
days following receipt of such decision to obtain the other party's consent to
any proposed correction of the breach, which consent will not be unreasonably
withheld. Thereafter, the breaching party will have a further thirty (30) days
after obtaining such consent to correct the breach.
Section 17.4 In the event the breaching party does not obtain
the other party's consent to the correction of the breach, or does not correct
such breach, within the respective time periods provided in Section 17.3, the
other party will have the right to obtain, from any Court having jurisdiction
thereof, an order for specific performance based on the panel's decision,
directing the breaching party to correct the breach of this Trademark License
and, if the breaching party is the LICENSEE, prohibiting it from further use of
the LICENSED MARKS until compliance with any such order is achieved.
ARTICLE XVIII
CAPTIONS
Section 18.1 The captions used in this Trademark License have
been inserted only for reference purposes. The captions and order of such
captions will not be deemed to govern, limit, modify, or in any manner affect
the scope, meaning, or intent of any of the provisions and/or terms of this
Trademark License, nor will any captions be given any legal effect.
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<PAGE> 228
ARTICLE XIX
NOTICES
Section 19.1 Any and all notices or other writings that are
required or permitted under any of the provisions of this Trademark License will
be in writing and will be deemed sufficiently given if delivered personally,
sent by documented overnight delivery service, mailed by certified mail, or to
the extent that receipt is confirmed, telecopy, telefax or other electronic
transmission service, addressed to the party concerned as follows:
If addressed to LICENSOR:
AMF Bowling, Inc.
c/o GS Capital Partners II, L.P.
85 Broad Street
New York, New York 10004
Attn: David J. Greenwald
Telephone No: (212) 902-3000
With copies to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attn: Daniel A. Neff and
Mitchell S. Presser
Telecopier No: (212) 403-2000
Bryan Cave LLP
245 Park Avenue
New York, New York 10167
Attn: Marc S. Gross
Arthur Mann
Telecopier No: (212) 692-1900
20
<PAGE> 229
If addressed to LICENSEE:
Ben Hogan Company
c/o CCA Industries, Inc.
One James Center
Richmond, Virginia 23219
Attn: Beverley W. Armstrong
Telephone No.: (804) 643-4200
With copies to:
McGuire Woods Battle & Boothe, L.L.P.
One James Center
901 East Cary Street
Richmond, Virginia 23219-4030
Attn: Leslie A. Grandis, Esquire
Wellford L. Sanders Jr., Esquire
Telephone No.: (804) 775-1000
Telecopier No.: (804) 775-1061
or any other addresses of which either party will notify the other in writing.
IN WITNESS WHEREOF, the parties hereto have caused this
License Trademark License to be executed as indicated below.
AMF BOWLING, INC.
By:
-----------------------------------------
[Name, Title]
Title:
--------------------------------------
Date:
---------------------------------------
BEN HOGAN COMPANY
By:
-----------------------------------------
Beverley W. Armstrong
Date:
---------------------------------------
21
<PAGE> 230
STATE OF )
)
COUNTY OF )
On this ________ day of ______________ , 199_, before me
personally came ________________________ , to me known, who being first duly
sworn did depose and say that he/she is the __________________ of
___________________, the corporation described herein and which executed the
above instrument, and that he/she signed the above instrument by authority of
the Board of Directors of said corporation.
------------------------------
Notary Public
My Commission Expires:
-------------------------
SEAL
STATE OF )
)
COUNTY OF )
On this ________ day of _______________, 199_, before me
personally came ________________________ , to me known, who being first duly
sworn did depose and say that he/she is the __________________ of
___________________, the corporation described herein and which executed the
above instrument, and that he/she signed the above instrument by authority of
the Board of Directors of said corporation.
------------------------------
Notary Public
My Commission Expires:
-------------------------
SEAL
22
<PAGE> 231
SCHEDULE A
The design, manufacture, sale or lease of the following golf equipment:
(i)
(a) golf clubs and headcovers;
(b) golf bags and golf bag covers;
(c) golf balls and tees;
(d) golf gloves;
(e) golf carts;
(f) golf travel covers;
(g) golf practice devices;
(h) golf divot repairers;
(i) component parts for the items listed above; and
(j) other golf accessories (excluding apparel) usable only
for the golf industry
(ii) The rendering of delivery, repair or maintenance services related
to any of the foregoing.
23
<PAGE> 232
Exhibit 1 (Ben Hogan Company)
[AMF Mark]
[AMF (& Design) Mark]
<PAGE> 233
EXHIBIT 1.1(d)
ARMSTRONG CONSULTING AND NON-COMPETITION AGREEMENT
THIS CONSULTING AND NON-COMPETITION AGREEMENT (the "Agreement") is
entered into as of this ____ day of February, 1996 by and between AMF GROUP
HOLDINGS INC., a Delaware corporation ("Buyer"), and Beverley W. Armstrong, a
resident of the Commonwealth of Virginia ("Armstrong").
R E C I T A L S
WHEREAS, Buyer and the Sellers named therein (hereinafter collectively
referred to as the "Stockholders") have entered into a Stock Purchase Agreement,
dated as of even date herewith (the "Stock Purchase Agreement"), pursuant to
which Stockholders are selling to Buyer all of the outstanding capital stock or
other equity interests of AMF Bowling, Inc., the Bowling Centers Companies and
the Foreign Bowling Centers Companies and certain assets of the Retained
Entities, each of which is engaged in the Business (as hereinafter defined); and
WHEREAS, unless otherwise defined in this Agreement, capitalized terms
herein shall have the respective meanings given to them in the Stock Purchase
Agreement; and
WHEREAS, Armstrong's execution and delivery of this Agreement is one
of the conditions to Buyer's execution and delivery of the Stock Purchase
Agreement; and
WHEREAS, in consideration of the payments to be made to Armstrong
pursuant to Section 1(c) hereof, each of Buyer and Armstrong desires to enter
into this Agreement; and
WHEREAS, this Agreement shall not become effective unless and until the
"Closing" occurs under the Stock Purchase Agreement;
NOW, THEREFORE, in consideration of the premises and direct and
indirect benefits to Armstrong and other consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. CONSULTING SERVICES.
(a) Armstrong shall make himself available to render consulting
services, on the terms and conditions set forth in this Agreement, for the
period beginning on the Closing Date and ending on the second anniversary
thereof (the "Consulting Period").
<PAGE> 234
(b) During the Consulting Period, Armstrong shall render such services
as may be requested from time to time by the Board of Directors and/or the Chief
Executive Officer of Buyer. Armstrong's services shall be performed at such
times and locations as shall be mutually convenient to Armstrong and Buyer;
provided, however, that Armstrong shall not be required to render consulting
services hereunder on more than 50 days in any twelve-month period and that
Armstrong shall be excused from rendering consulting services hereunder during
reasonable vacation periods. Buyer shall reimburse Armstrong for all reasonable
out-of-pocket expenses incurred by Armstrong in connection with his rendering of
consulting services hereunder, subject in each case to appropriate documentation
and prior approval by Buyer of any such expenses. During the Consulting Period,
Armstrong shall be deemed to be an independent contractor. As such, Armstrong
shall not participate in any of the benefits or plans of Buyer or its
subsidiaries.
(c) Buyer agrees to pay or cause a subsidiary thereof to pay Armstrong
$100,000 per year during the Consulting Period. Such payments shall be made on
the dates that are 12 months and 24 months from the Closing Date (unless this
Agreement is terminated prior to either the first or second such payment date);
provided, however, that upon any termination of this Agreement by Buyer prior to
the expiration of the Consulting Period pursuant to Section 8 hereof, Buyer
shall pay Armstrong upon the termination date an amount in respect of the
portion of the twelve-month period in which the termination occurs, that is
equal to the product of $100,000 times a fraction the numerator of which shall
be equal to the number of calendar days which shall have elapsed since the
Closing Date or the due date of the next preceding annual payment, as the case
may be, and the denominator of which shall be 365.
2. NONCOMPETITION.
(a) Armstrong agrees that during the four year period from and after
the Closing Date (the "noncompetition period"), except as otherwise provided in
Schedule 1 attached hereto, Armstrong will not, directly or indirectly, either
for himself or for, with or through any other Person, including any Person
directly or indirectly controlled by, or related by blood or marriage to,
Armstrong (an "Armstrong Affiliate"), participate in or permit his name to be
used by any corporation, partnership, firm, association or other enterprise or
entity involved in the same or similar business as the Business (as hereinafter
defined), including, without limitation, any production, promotional, marketing
and sales
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<PAGE> 235
activity. For purposes of this Agreement, the term "Business" shall mean any of
the following anywhere in the world: (i) the design, manufacture, assembly,
distribution, sale or service of equipment or other products for the bowling or
the billiards or pool industry, or (ii) the ownership, operation, management or
leasing of bowling centers or bowling equipment. For purposes of this Agreement,
the term "participate" includes any direct or indirect interest, whether as an
officer, director, employee, partner, sole proprietor, trustee, beneficiary,
agent, representative, independent contractor, consultant, advisor, provider of
personal services, creditor, owner (other than by ownership of less than one
percent of the stock of a publicly-held corporation whose stock is traded on a
national securities exchange or in the over-the-counter market (a "Public
Company"); provided, however, that the limitation in this parenthetical shall
not prohibit Armstrong or an Armstrong Affiliate from acquiring a position of
not more than 25% of the equity or voting power of a Public Company in which
none of Armstrong, any Armstrong Affiliate or any representative of either holds
a position as a corporate officer or director and which Public Company does not
derive more than 5% of its annual revenues from the Business) or otherwise.
Armstrong agrees that this covenant is reasonable with respect to its duration,
geographical area and scope. If, at the time of enforcement of this Section
1(a), a court holds that the restrictions stated herein are unreasonable under
circumstances then existing, the parties hereto agree that the maximum period,
scope, or geographical area legally permissible under such circumstances will be
substituted for the period, scope or area stated herein.
(b) Armstrong agrees that during the three-year period from and after
the Closing Date (the "nonsolicitation period"), except as otherwise provided
for in Schedule 2 attached hereto, without the prior written approval of Buyer,
Armstrong will not, and will cause the other Armstrong Affiliates not to,
solicit any person who is a management or other key employee of Buyer, the
Companies, the Subsidiaries or the Retained Entities at the date hereof to
terminate his or her employment with Buyer, the Companies, the Subsidiaries or
the Retained Entities. Armstrong agrees that this covenant is reasonable with
respect to its duration and scope. If, at the time of enforcement of this
Section 1(b), a court holds that the restrictions stated herein are unreasonable
under circumstances then existing, the parties hereto agree that the maximum
period or scope legally permissible under such circumstances will be substituted
for the period or scope stated herein.
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<PAGE> 236
3. REMEDIES. The parties hereto agree that Buyer would suffer
irreparable harm from a breach by Armstrong of any of the covenants or
agreements contained herein. Therefore, in the event of the actual or threatened
breach by Armstrong of any of the provisions of this Agreement, Buyer or its
successors or assigns may, in addition and supplementary to other rights and
remedies existing in its favor, apply to any court of law or equity of competent
jurisdiction for specific performance, injunctive or other relief in order to
enforce compliance with, or prevent any violation of, the provisions hereof. In
the event of any breach or violation by Armstrong of any of the provisions of
Section 2 of this Agreement, the noncompetition period and/or the
nonsolicitation period, as the case may be, described above will be tolled until
such breach or violation is cured. Armstrong agrees that these restrictions are
reasonable.
4. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
Buyer and its Affiliates, successors and assigns, and shall be binding upon
Armstrong and his legal representatives and assigns. Buyer may assign or
transfer its rights hereunder to any of its Affiliates or to a successor
corporation in the event of merger, consolidation, or transfer or sale of all or
substantially all of the assets of Buyer or of the Business or a part thereof.
5. INDEPENDENT COVENANTS. Armstrong agrees that the covenants made in
this Agreement shall be construed independently of any provisions of any
agreements between Buyer and Armstrong which provide for the personal services
of Armstrong or any Armstrong Affiliates to be performed for the benefit of
Buyer, if any, whether such other agreements are executed before, simultaneously
with, or after the execution of this Agreement. Moreover, the existence of any
claim or cause of action of Armstrong against Buyer or any of its Affiliates,
successors or assigns, whether or not predicated upon the terms of this
Agreement or any other agreement, shall not constitute a defense to the
enforcement of any of the covenants contained in this Agreement.
6. MODIFICATION OR WAIVER. No amendment, modification or waiver of this
Agreement shall be binding or effective for any purpose unless it is made in a
writing signed by the party against whom enforcement of such amendment,
modification or waiver is sought. No course of dealing between the parties to
this Agreement shall be deemed to affect or to modify, amend or discharge any
provision or term of this Agreement. No delay on the part of Buyer in the
exercise of any of its rights or remedies shall operate as a waiver thereof, and
no single or partial exercise by Buyer of any
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<PAGE> 237
such right or remedy shall preclude other or further exercise thereof. A waiver
of right or remedy on any one occasion shall not be construed as a bar to or
waiver of any such right or remedy on any other occasion.
7. JURISDICTION AND ENFORCEMENT. Buyer and Armstrong recognize that the
courts of one or more states of the United States (and one or more U.S. District
Courts) within the geographic scope of the foregoing covenants may hereafter
obtain personal and subject matter jurisdiction as may be necessary to
adjudicate the covenants set forth in this Agreement. If the courts of any one
or more of such states or such jurisdictions hold such covenants wholly or
partially unenforceable, by reason of the breadth of such scope or otherwise, it
is the intention of the parties that such determination not bar or in any way
affect Buyer's right to the relief provided above in the courts of any other
such state or other such jurisdiction as to breaches of such covenants in such
other state or such other jurisdiction, such covenants being severable into
diverse and independent covenants for this purpose. THIS AGREEMENT SHALL,
HOWEVER, BE GOVERNED, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.
8. SEVERABILITY. Whenever possible each provision and term of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision or term of this Agreement shall be held to
be prohibited by or wholly invalid under such applicable law, then such
provision or term shall be ineffective only to the extent of such provision or
invalidity, without invalidating or affecting in any manner whatsoever the
remainder of such provision or term or the remaining provisions or terms of this
Agreement; provided, however, that if a court having jurisdiction shall find
that the covenants contained in Section 2(a) or (b) hereof are not reasonable,
such court shall have the power to reduce the duration, geographic area or scope
of such covenants, and in this reduced form the covenants shall be enforceable.
9. TERMINATION. During the Consulting Period, the noncompetition period
and/or the nonsolicitation period, Buyer may, in its sole discretion, by written
notice thereof to Armstrong accompanied by Buyer's payment, if any, of any
accrued and unpaid amounts payable pursuant to the proviso to Section 1(c)
hereof, terminate this Agreement, whereupon it shall have no further effect. In
the event of termination of the Stock Purchase Agreement prior to the Closing,
this Agreement shall thereupon automatically terminate and become void and have
no effect without the necessity of any further
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<PAGE> 238
action by either party hereto. Otherwise, this Agreement shall, except with
respect to any obligations that remain unsatisfied with respect to the period
prior to such termination, automatically terminate and have no further effect,
without the necessity of any further action by either or both of Buyer or
Armstrong, upon expiration of the noncompetition period (as such period may be
tolled in accordance with Section 3 hereof).
10. NOTICE. All notices required to be given hereunder shall be
sufficiently given for all purposes hereunder if in writing and delivered
personally, sent by documented overnight delivery service or, to the extent
receipt is confirmed, telecopy, telefax or other electronic transmission service
to the appropriate address or number as set forth below. Notices to Armstrong
shall be given to Armstrong and addressed to:
Beverley W. Armstrong
c/o CCA Industries, Inc.
One James Center
Richmond, Virginia 23219
Telecopier No.: (804) 643-4208
with a copy to:
McGuire, Woods, Battle & Boothe, L.L.P.
One James Center
Richmond, Virginia 23219
Attn: Leslie A. Grandis and
Wellford L. Sanders, Jr.
Telecopier No.: (804) 775-1061
or at such other address and to the attention of such other person as Armstrong
may designate by written notice to Buyer. Notices to Buyer shall be addressed
to:
AMF Group Holdings Inc.
c/o GS Capital Partners II, L.P.
85 Broad Street
New York, NY 10004
Attn: David J. Greenwald
Telecopier No.: (212) 902-3000
-6-
<PAGE> 239
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Attn: Daniel A. Neff and
Mitchell S. Presser
Telecopier No.: (212) 403-2000
or at such other address and to the attention of such other person as Buyer may
designate by written notice to Armstrong.
11. COUNTERPARTS. This Agreement may be executed in separate
counterparts each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
12. HEADINGS. The headings of the paragraphs of this Agreement are
inserted for convenience only and shall not be deemed to constitute a part
hereof and shall not affect the construction or interpretation of this
Agreement.
13. NO STRICT CONSTRUCTION. The language used in this Agreement will be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction will be applied against any party.
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<PAGE> 240
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
AMF GROUP HOLDINGS INC.
By:______________________________
Title:
_________________________________
Beverley W. Armstrong
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<PAGE> 241
Schedule 1
to
Armstrong Consulting and Noncompetition Agreement
Anything to the contrary in Section 2(a) of the Agreement
notwithstanding, Armstrong and the Armstrong Affiliates shall have the right to
participate in the following:
(i) the ownership, operation, management or leasing of the following
bowling centers, (including, without limitation, billiard or pool facilities,
gaming rooms, arcades, snack bars, bars or lounges located therein and owned,
operated, managed or leased as a part thereof):
(a) a bowling center located at Bowling de Meyrin-Geneva, 67 ch. de
l'Etang, 1219 Chatelain/Geneva, Switzerland;
(b) a bowling center located at Paseo de la Castellana 77, E-28046
Madrid, Spain;
(c) a bowling center located at 2390 Wilson Road, Humble, Texas, during
and after termination of the Wilson Road Agreement; and
(d) a bowling center located at 1110 N. Rolling Road, Baltimore County,
Maryland, during the term of the Rolling Road Agreement.
(ii) the leasing (as lessor) or financing (as creditor) of bowling
equipment and the ownership, operation, management, sale or leasing of such
bowling centers as may be acquired from time to time by Armstrong or the
Armstrong Affiliates in connection with his or their bona fide leasing or
financing activities if, and only if, acquired in connection with a bona fide
workout relating to defaults under the lease or financing agreements relating to
the aforementioned equipment; provided, however, that should Armstrong or the
Armstrong Affiliates own or operate in excess of 10 such bowling centers at any
such time, in order not to be in violation of this Agreement, they will (and
Armstrong agrees to cause the Armstrong Affiliates to) promptly grant to Buyer
the right to elect to manage all centers in excess of such 10 centers for a
management fee that is equal to the fair market arm's length rate an operator of
Buyer's (and its Affiliates') qualifications would be paid to operate such
centers. Such rate is to be agreed to by the parties or, absent such agreement,
to be determined by arbitration by an arbitrator appointed by the American
Arbitration Association in New York
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<PAGE> 242
within 30 days of the request for such appointment by Armstrong or Buyer.
(Armstrong and Buyer agree to share the costs of such arbitration equally.)
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<PAGE> 243
Schedule 2
to
Armstrong Consulting and Noncompetition Agreement
Anything to the contrary in Section 2(b) of the Agreement
notwithstanding, Armstrong and the Armstrong Affiliates shall have the right to
solicit any person who is a management or other key employee of the bowling
centers listed in items (i)(a), (b) and (c) of Schedule 1 to the Agreement and
who, in any such case, is not a management or other key employee of any of the
operations or assets that Buyer and its Affiliates will directly or indirectly
acquire by virtue of consummation of the transactions contemplated by the Stock
Purchase Agreement or the other agreements referred to therein, to terminate his
or her employment with such employer.
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EXHIBIT 1.1(e)
AMENDMENT AGREEMENT
AMENDMENT AGREEMENT, dated as of ____________, 1996, between AMF
BOWLING, INC. ("AMF"), a Virginia corporation, having an address at 8800 AMF
Drive, Richmond, Virginia 23111, and AMF REECE, INC. ("Reece"), a Virginia
corporation, having an address at 8400 AMF Drive, Richmond, Virginia 23111.
WITNESSETH THAT:
WHEREAS, AMF is the owner of a parcel of land in Hanover County,
Virginia, described as Parcel I on Exhibit A attached hereto (the "Bowling
Land"), on which AMF has constructed a manufacturing facility (the "AMF Plant");
and
WHEREAS, Reece is the owner of a parcel of land in Hanover County,
Virginia, contiguous to the Bowling Land, described as Parcel II on Exhibit A
attached hereto (the "Reece Land"), on which Reece has constructed a
manufacturing facility (the "Reece Plant"); and
WHEREAS, AMF and Reece entered into an Easement Agreement and
Maintenance Agreement, dated as of December 16, 1991 (the "Easement Agreement"),
recorded on December 16, 1991 in the land records of Hanover County, Virginia in
Deed Book 889, page 80, pursuant to which, among other things, AMF granted to
Reece an easement for ingress and egress over and across the Bowling Land, and
AMF and Reece each granted easements to the other to use certain facilities
located on the Bowling Land and the Reece Land; and
WHEREAS, AMF Group Holdings, Inc., as of the date hereof, has acquired
all of the outstanding shares of common stock of AMF, and as a consequence of
such acquisition, AMF and Reece are no longer under common control; and
WHEREAS, in light of the foregoing, AMF and Reece desire to modify
certain terms and conditions of the Easement Agreement in the manner set forth
herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, AMF and Reece hereby agree as
follows:
1. (a) Definitions. Capitalized terms that are used in this Amendment
Agreement but are not defined herein shall have the respective meanings assigned
to such terms in the Easement Agreement.
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(b) The term "Plat", as used in the Easement Agreement and in this
Amendment Agreement, shall mean the plat entitled "Plat of 30+/- Acres Lying on
the East Line of Frontage Road, Route F306, Date: December 13, 1991 (P.N.
91068.01) 12/16/91 Revised to Show Improvements", prepared by Resource
International Ltd., a copy of which was attached to the Easement Agreement as
Exhibit 1.
(c) The term "propane tank", as used herein and in the Easement
Agreement, shall be deemed to include the propane vaporizer and propane transfer
station located on the Bowling Land.
2. Sanitary Sewer Easement. The following shall be added to the
Easement Agreement as new Section 2A of the Easement Agreement immediately
following the end of Section 2 thereof:
"2A. SANITARY SEWER EASEMENT.
(a) Easement. Reece grants to AMF, for its benefit and the
benefit of its successors and assigns, a non-exclusive easement (the
"Sanitary Sewer Easement") for the drainage of sewage from the Bowling
Land across the Reece Land in the pipes, conduits and facilities
constructed thereon and identified on the Plat (together with any
replacement therefor or relocation thereof as permitted herein, the
"Sanitary Sewer Facilities"). The foregoing shall not grant any rights
whatsoever for the benefit of the general public in the Sanitary Sewer
Easement or any other improvement now or hereafter located on the Bowling
Land or Reece Land and is solely for the benefit and use of AMF, Reece and
their successors and assigns.
(b) Maintenance. To avoid duplication of services and
additional cost, AMF and Reece agree that certain maintenance and services
affecting the Sanitary Sewer Facilities shall be performed by Reece and
that AMF shall reimburse Reece therefor as provided herein. Accordingly,
for the benefit of the Bowling Land, Reece agrees to:
(1) periodically and when necessary clean, repair and maintain
the Sanitary Sewer Facilities;
(2) operate, promptly repair and replace the Sanitary Sewer
Facilities as necessary.
AMF shall reimburse Reece for fifty percent (50%) of the cost to perform
the maintenance and services set forth above; provided, however, that (i)
AMF shall not be responsible for the cost to relocate the Sanitary Sewer
Facilities
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at the request of Reece; (ii) Reece shall not be responsible for any of
the cost to relocate the Sanitary Sewer Facilities at the request of AMF;
and (iii) AMF shall not be responsible to reimburse any portion of the
cost to replace any part of the Sanitary Sewer Facilities unless the
replacement and its cost are approved by AMF in writing prior to the
commencement of the work, which approval by AMF shall not be unreasonably
withheld or delayed. AMF shall provide the maintenance and upkeep of the
continuation of the Sanitary Sewer Facilities located on the Bowling Land.
(c) Relocation. Any relocation of the Sanitary Sewer
Facilities on the Reece Land that may be proposed by AMF shall be subject
to the consent of Reece. With AMF's prior written consent, which consent
shall not be unreasonably withheld or delayed, Reece may relocate the
Sanitary Sewer Facilities on the Reece Land if the relocation does not
substantially diminish the use of such facilities and such relocation is
approved by the appropriate officials of Hanover County, Virginia.
(d) Conditions. The Sanitary Sewer Easement shall exist, and
be subject to, and used only in accordance with the following terms and
conditions:
(1) The Sanitary Sewer Easement is conveyed subject
to all easements, agreements, covenants, restrictions and conditions
affecting the Reece Land or any part thereof.
(2) Reece further reserves the right to make any use
of the Sanitary Sewer Easement including the grant of other easements for
the use of the Sanitary Sewer Facilities that are not inconsistent with
the rights herein conveyed and does not unreasonably interfere with the
use of the Sanitary Sewer Easement by AMF."
3. Further Amendments to the Easement Agreement. (a) Section 1(c) of
the Easement Agreement shall be amended (i) by adding, after the words "Reece
Plant", the words "and the propane tank for the sole purpose of fueling
forklifts and similar vehicles", and (ii) by adding the following sentence at
the end of such Section 1(c):
"Any relocation of the Access Road that may be proposed by Reece shall
be subject to the consent of AMF."
(b) Section 1(b)(4)(iii) of the Easement Agreement shall be amended by
deleting the period after the word "work" at
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the end of the first sentence of such clause (iii), and by inserting, in lieu
thereof, the following:
", which approval by Reece shall not be unreasonably withheld or
delayed."
(c) Section 2(a) of the Easement Agreement shall be amended by adding
the following to the end of such Section 2(a):
"In addition, AMF grants to Reece for its benefit and the benefit of
its successors and assigns, a nonexclusive easement for the drainage of
surface water from the Reece Land across the Drainage Swale as shown on
the Plat and across the Bowling Land between such Drainage Swale and
the Reece Land."
(d) Section 2(b)(2)(iii) of the Easement Agreement shall be amended by
deleting the period after the word "work" at the end of the first sentence of
such clause (iii), and by inserting, in lieu thereof, the following:
", which approval by AMF shall not be unreasonably withheld or
delayed."
(e) The last sentence in Section 2(b) of the Easement Agreement shall
be amended and restated, in its entirety, to read as follows:
"AMF shall provide the maintenance and upkeep of the continuation of
the Drainage Facilities located on the Bowling Land, including (without
limitation) the Drainage Swale."
(f) The following sentence shall be added at the end of Section 2(c) of
the Easement Agreement:
"Any relocation of the Detention Basin or Drainage Facilities on the
Reece Land that may be proposed by AMF shall be subject to the consent
of Reece. With Reece's prior written consent, which consent shall not
be unreasonably withheld or delayed, AMF may relocate the Drainage
Swale on the Bowling Land if the relocation does not substantially
diminish the use of the Drainage Swale and such relocation is approved
by the appropriate officials of Hanover County, Virginia."
(g) The first sentence of Section 3(a) of the Easement Agreement is
hereby amended and restated, in its entirety, to read as follows:
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"AMF grants to Reece for its benefit and the benefit of its successors
and assigns, the nonexclusive right, easement and privilege to use the
propane tank, pump house, above-ground post indicator valve, detector
check pit/valve pit, water and sewer mains and all pipes, conduits and
facilities connecting them with the Reece Land which are located on or
under the Bowling Land and are identified on the Plat (the
"Facilities") for the intended purposes of the Facilities (and any
replacement therefor or relocation thereof as permitted herein), and to
have access to the propane tank for the sole purpose of fueling
forklifts and similar vehicles (the "Facilities Easement"), provided
that AMF and Reece acknowledge that any underground pipes and the
above-ground post indicator valve are not identified on the Plat but
are nevertheless deemed to be part of the Facilities."
(h) Section 3(b)(iii) of the Easement Agreement shall be amended by
deleting the period after the word "work" at the end of the first sentence of
such clause (iii), and by inserting, in lieu thereof, the following:
", which approval by Reece shall not be unreasonably withheld or
delayed."
(i) Section 3(c) of the Easement Agreement shall be amended by adding
the following sentence at the end of such Section 3(c):
"Any relocation of the Facilities on the Bowling Land that may be
proposed by Reece shall be subject to the consent of AMF."
4. Charges for Propane. AMF shall promptly install (and shall
subsequently maintain and repair) a meter to measure the propane use by Reece
from the propane tank located on the Bowling Land. Such meter shall be deemed
part of the Facilities, and the operation, repair and maintenance of such meter
shall be governed by Section 3(b) of the Easement Agreement, provided that Reece
shall pay 100% (and not 35%) of the reasonable installation, operation,
maintenance and repair costs of such meter. Reece shall pay the charges for its
propane use as indicated by such meter, and AMF shall pay for the balance of the
propane used from the propane tank, in a timely manner to the applicable public
utility or vendor.
5. Lawn Sprinkler System. Reece shall continue to operate, maintain and
repair the underground lawn sprinkler system that services both the Reece Land
and the Bowling Land in a
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manner consistent with Reece's prior practice, and, from and after the date
hereof, AMF shall promptly pay to Reece, on an annual basis, a fair and
equitable portion of Reece's operation, maintenance and repair costs for the
underground sprinkler system, as reasonably determined by Reece. Notwithstanding
the foregoing, (a) AMF shall have the right at any time, from and after the date
hereof, upon reasonable prior written notice to Reece, to terminate the services
from Reece described in this Section 5, and (b) Reece shall have the right, at
any time from and after the fifth (5th) anniversary of the date hereof, upon
reasonable prior written notice to AMF, to terminate the services from Reece
described in this Section 5. In such event, the party exercising its right to
terminate Reece's services under this Section 5 shall pay all costs required to
cap any existing underground water pipes, after which neither Reece nor AMF
shall have any further obligation to the other pursuant to this Section 5.
6. Easement for Trailer Parking. Reece hereby grants to AMF, for its
benefit and the benefit of its successors and assigns, the nonexclusive right,
easement and privilege, until the date four (4) years after the date hereof, to
use the parking lot on the Reece Land designated as "Parking" on the Plat, for
trailer parking as may be required by AMF, upon reasonable prior notice by AMF
to Reece, subject to there being available space in such parking lot at the
applicable time and further subject to any parked AMF trailers promptly
relinquishing their parking space after notice from Reece that such space is
needed by a Reece trailer. AMF shall promptly pay to Reece, on an annual basis,
a fair and equitable portion of the maintenance and repair costs for such
parking lot, as reasonably determined by Reece.
7. Use of Access Road. In the event that a change in the nature of the
business conducted at the Reece Land and/or Reece Plant results in increased
usage by Reece of the Access Road, then Reece's percentage of the operation,
maintenance and repair costs for the Access Road (as described in Section 1(b)
of the Easement Agreement) shall be increased by a fair and equitable amount as
may be reasonably determined by AMF, provided that in no event shall Reece be
entitled to use the Access Road in any manner which impairs the usage by AMF of
the Access Road, the Bowling Land or the AMF Plant. It is expressly acknowledged
that the terms "Reece" and "AMF", as used in this Section 7, include the
respective successors and assigns of such parties.
8. Indemnification. (a) Reece hereby indemnifies and holds harmless
AMF, its affiliates, and the officers, directors, shareholders, employees and
agents of any of the foregoing, from
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and against any and all costs, losses, liabilities, claims, damages and
obligations arising from the operation of any equipment or facilities on the
Reece Land or at the Reece Plant that are serviced by, or connected to, any
equipment or facilities located on the Bowling Land, and for Reece trailers
using the Access Road, other than costs, losses, liabilities, claims, damages or
obligations arising from the gross negligence or willful misconduct of AMF.
(b) AMF hereby indemnifies and holds harmless Reece, its affiliates,
and the officers, directors, shareholders, employees and agents of any of the
foregoing, from and against any and all costs, losses, liabilities, claims,
damages and obligations arising from the operation of any equipment or
facilities on the Bowling Land or at the AMF Plant that are serviced by, or
connected to, any equipment or facilities located on the Reece Land, other than
costs, losses, liabilities, claims, damages or obligations arising from the
gross negligence or willful misconduct of Reece.
(c) The provisions of this Section 8 shall survive the expiration or
prior termination of the Easement Agreement.
9. AMF's Estoppel. AMF hereby certifies that (a) the Easement Agreement
is unmodified and in full force and effect, (b) all sums payable under the
Easement Agreement by Reece have been paid through the date hereof, (c) AMF has
not received from Reece any notice of any default under the Easement Agreement
which has not been cured, and (d) to the knowledge of AMF, there are no defaults
by Reece under the Easement Agreement, nor has any event occurred which, with
the giving of notice or passage of time or both, would constitute a default by
Reece under the Easement Agreement.
10. Reece's Estoppel. Reece hereby certifies that (a) the Easement
Agreement is unmodified and in full force and effect, (b) all sums payable under
the Easement Agreement by AMF have been paid through the date hereof, (c) Reece
has not received from AMF any notice of any default under the Easement Agreement
which has not been cured, and (d) to the knowledge of Reece, there are no
defaults by AMF under the Easement Agreement, nor has any event occurred which,
with the giving of notice or passage of time or both, would constitute a default
by AMF under the Easement Agreement.
11. Amendment Agreement Governs. In the event of any conflict or
inconsistency between this Amendment Agreement and the terms and conditions of
the Easement Agreement, then the terms and conditions of this Amendment
Agreement shall govern and prevail, and the conflicting or inconsistent terms
and conditions
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of the Easement Agreement shall be deemed to be amended accordingly.
12. Recording. The parties will cause this Agreement to be recorded in
the land records of Hanover County, Virginia, and each party will pay or cause
to be paid one-half (1/2) of the recording fees due in connection with the
recordation of this Amendment Agreement.
13. References to Easement Agreement. All references in the Easement
Agreement to "this Agreement", "this Easement Agreement" or words of similar
import, and the terms "hereby", "hereof", "hereto", "herein", "hereunder" and
any similar terms, as used in the Easement Agreement, shall be deemed to refer
to the Easement Agreement, as amended by this Amendment Agreement.
14. Ratification. Except as amended or modified hereby, the terms and
conditions of the Easement Agreement are hereby ratified and confirmed in their
entirety.
15. Successors and Assigns. This Amendment Agreement and all of the
covenants herein shall be deemed to be covenants running with the land and shall
bind and inure to the benefit of the parties hereto and their successors and
assigns.
16. Counterparts. This Amendment Agreement may be executed in several
counterparts, each of which shall constitute one and the same instrument.
17. Further Assurances. Each party will execute, acknowledge and
deliver or cause to be executed, acknowledged and delivered all such instruments
and take all such action as the other party from time to time may reasonably
request in order that both parties may obtain the full benefits of the rights,
powers and remedies intended to be granted by the Easement Agreement (as amended
by this Amendment Agreement).
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment
Agreement to be duly executed as of the day and year first above written.
AMF BOWLING, INC., a Virginia
corporation
By: _________________________________
Title:
AMF REECE, INC., a Virginia
corporation
By: _________________________________
Title:
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<PAGE> 253
STATE OF )
)
COUNTY OF )
On this __________ day of _____________, 199_, before me personally
came ____________________________, to me known, who being first duly sworn did
depose and say that he/she is the ___________ of ____________________, the
corporation described herein and which executed the above instrument, and that
he/she signed the above instrument by authority of the Board of Directors of
said corporation.
_____________________
Notary Public
My Commission Expires:___________________
SEAL
STATE OF )
)
COUNTY OF )
On this __________ day of _____________, 199_, before me personally
came ____________________________, to me known, who being first duly sworn did
depose and say that he/she is the ___________ of ____________________, the
corporation described herein and which executed the above instrument, and that
he/she signed the above instrument by authority of the Board of Directors of
said corporation.
_____________________
Notary Public
My Commission Expires:___________________
SEAL
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<PAGE> 254
EXHIBIT A
PARCEL I:
ALL those certain pieces or parcels of land lying and being in Henry District,
Hanover County, Virginia, lying to the east of Route 295 and designated as
Parcel B, containing in the aggregate 36.7 acres, more or less, as more
particularly described on that certain plat of survey made by Resource
International, Ltd., dated September 16, 1987 and revised October 26, 1987,
entitled "Plat of Four Parcels of Land Lying on the Northeast Side of Route
F306, Hanover County, Virginia", a copy of which plat is attached to that
certain deed dated October 23, 1987, by and between Finnella (a/k/a Finella)
Saunders Fearnow, Trustee under the Will of George Nelson Fearnow, deceased,
party of the first part, Herbert C. Fearnow, Jr. and Brenda S. Fearnow, his
wife, Raymond M. Fearnow and Martha M. Fearnow, his wife, Wanda F. Birch and
James D. Birch, her husband, Joan P. Currie and Donald S. Currie, her husband,
and Jean F. Kidd and William F. Kidd, her husband, parties of the second part,
and LaVeer Properties, a Virginia general partnership, party of the third party,
and recorded in the Clerk's Office of the Circuit Court of Hanover County,
Virginia, in Deed book 695, at page 524.
BEING the same property conveyed to AMF Bowling Centers, Inc., a Virginia
corporation, by deed from LaVeer Properties, a Virginia general partnership,
dated June 29, 1988, recorded June 29, 1988, in the Clerk's Office, Circuit
Court, Henrico County, Virginia, in Deed Book 725, page 336.
LESS and except 1 acre, more or less, conveyed to AMF Reece, Inc., a Virginia
corporation, by deed from AMF Bowling, Inc., a Virginia corporation, dated
December 11, 1991, recorded December 16, 1991, in the Clerk's Office, Circuit
Court, Hanover County, Virginia, in Deed Book 889, page 78.
PARCEL II:
ALL that certain piece or parcel of land, lying and being in Mechanicsville
District, Hanover County, Virginia, lying to the east of Route 295 and
containing 30 +/- acres as shown on that certain plat of survey made by Resource
International, Ltd., dated December 13, 1991, and revised on December 16, 1991,
to show improvements, entitled "Plat of 30 +/- Acres Lying On The East Line Of
Frontage Road, Route F306, Mechanicsville District, Hanover County, Virginia", a
coy of which plat is recorded in Deed Book 34, page 369, and is more
particularly described as follows:
BEGINNING at a rod on the right of way line of Route F306, said rod being .7+/-
miles from the intersection of Route 627; thence along the line with AMF
Bowling, Inc. N 70(degree) 34' 42" E 1830' +/- to a point in the center line of
Jack's Branch; thence along the center line of Jack's Branch 1572' +/- to a
point, said point being at the intersection of the center line of Jack's Branch
and the Lands of William S. & Evelyn W. Winfrey; thence along the line with the
Winfrey's Land N. 85(degree) 36' 12" W 438' +/- to a rod; thence N 84(degree)
15' 38" W 223.92' to a rod; thence N 82(degree) 52' 04" W 380.66' to a rod on
the right of way of Route F306; thence N 19(degree) 25' 18" W 732.64' to the
point of beginning.
BEING the same property conveyed to AMF Reece, Inc., a Virginia corporation, by
deed from AMF Bowling, Inc., a Virginia corporation, dated December 12, 1991,
recorded December 16, 1991, in the Clerk's Office, Circuit Court, Hanover
County, Virginia, in Deed Book 889, page 78.
<PAGE> 255
EXHIBIT 1.1(f)
REECE INDEMNITY AGREEMENT
THIS INDEMNITY AGREEMENT (this "Agreement"), dated February ___, 1996,
is by and between AMF Reece, Inc., a Virginia corporation ("Reece"), and AMF
Group Holdings Inc., a Delaware corporation ("Buyer").
WHEREAS, pursuant to a Stock Purchase Agreement, dated February ___,
1996 (the "Stock Purchase Agreement"), Buyer has agreed to acquire from the
Sellers named therein the Manufacturing Business and the Bowling Centers
Business (as each is defined in the Stock Purchase Agreement) by means of the
acquisition of all of the outstanding common stock or other equity interests of
AMF Bowling, Inc., a Virginia corporation ("Bowling"), the Bowling Centers
Companies and the Foreign Bowling Centers Companies, and by means of the Asset
Purchases (as each are defined in the Stock Purchase Agreement); and
WHEREAS, The Reece Corporation, a Massachusetts corporation ("TRC") and
manufacturer of commercial sewing equipment, which was owned by certain of the
same Sellers who own Bowling and Reece, transferred to Reece all of its right,
title and interest in all of its assets and businesses (other than its rights
with respect to leasing of an airplane and as holder of certain notes) and
subsequently merged into Bowling on December 31, 1994; and
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WHEREAS, the Stock Purchase Agreement provides that Reece shall enter
into an Indemnity Agreement with Buyer in the form of this Agreement; and
WHEREAS, Reece's execution and delivery of this Agreement is one of the
conditions to Buyer's consummation of the Stock Purchase Agreement and Reece is
aware that Buyer would not have entered into the Stock Purchase Agreement but
for the entering into by Reece of this Agreement; and
WHEREAS, it is the intention of the parties hereto that Buyer, its
Affiliates (as defined in the Stock Purchase Agreement), each of their
respective directors, partners, officers, employees and agents, and each of the
heirs, executors, successors and assigns of any of the foregoing (collectively
the "Indemnitees") shall be fully protected from any and all Covered Liabilities
(as defined in the Stock Purchase Agreement) arising out of or based on the
merger of TRC into Bowling or the ownership, conduct, condition, transfer or
operations of TRC or Reece or any of their respective predecessors, and that
this Agreement shall be construed in a manner that gives meaning to the
indemnification provisions of the Stock Purchase Agreement and this Agreement as
complementary and, subject to Section 4.07 hereof, duplicative and not
conflicting; and
WHEREAS, as an inducement for Buyer to enter into the Stock Purchase
Agreement and in order to protect Buyer's investment and to enable Buyer to
enjoy the goodwill derived, directly and indirectly, from the acquisitions
contemplated by
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the Stock Purchase Agreement, each of Buyer and Reece desire to enter into this
Agreement;
NOW, THEREFORE, in consideration of the Stock Purchases and Asset
Purchases (as defined in the Stock Purchase Agreement) by Buyer and the benefits
and advantages to be derived by it therefrom, and for other good and valuable
consideration the receipt of which is hereby acknowledged, Reece hereby agrees
with Buyer as follows:
ARTICLE I
REPRESENTATIONS AND WARRANTIES
OF REECE
1.01. Reece's Authority and Approval. Reece represents and warrants to
the Indemnitees as follows: Reece has the corporate power to execute, deliver
and perform this Agreement and the transactions contemplated hereby and such
execution, delivery and performance have been duly authorized by all necessary
corporate action of Reece. Such execution, delivery and performance do not (i)
conflict with any term of the articles of incorporation or by-laws of Reece,
(ii) conflict with, result in a breach of, constitute a default (with due notice
or lapse of time or both) or give rise to any right of termination, cancellation
or acceleration under, any term or provision of any mortgage, indenture,
license, agreement or other obligation or instrument to which Reece is a party
or to which its properties or assets are subject, or (iii) violate
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any judgment, order, writ, injunction, decree, statute, rule, regulation, code
or ordinance applicable to Reece or any of its properties or assets. No consent
of any party to any contract or agreement to which Reece is a party or to which
any of its properties or assets is subject is required for the execution,
delivery or performance of this Agreement. This Agreement has been duly executed
and delivered by Reece and, assuming the due execution thereof by Buyer,
constitutes the legal, valid and binding obligation of Reece enforceable in
accordance with its terms.
ARTICLE II
INDEMNITY
2.01. Indemnity. Effective from and after the Closing Date (as defined
in the Stock Purchase Agreement), Reece hereby indemnifies and holds harmless
the Indemnitees from and against, and shall pay or reimburse the Indemnitees
for, any and all Covered Liabilities (and the costs and expenses, including
reasonable attorneys' fees and expenses, of enforcing Reece's obligations
hereunder) incurred by or asserted against any of the Indemnitees in connection
with or arising from the merger of TRC into Bowling or the ownership, conduct,
condition or transfer (prior to, on or after the date of the Stock Purchase
Agreement) of any of the businesses or other tangible or intangible assets or
operations owned, operated or conducted by TRC or Reece or any of their
respective predecessors including
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without limitation any businesses or operations or real property sold or
otherwise disposed of by Reece or TRC or any of their respective predecessors
(including without limitation to Reece). The indemnity provided by the preceding
sentence of this Section 2.01 shall include, without limitation, any Covered
Liabilities in connection with or arising from (a) the ownership, condition or
transfer of the properties and facilities operated by Reece or TRC in (i) Gorham
Industrial Park, Gorham, Maine (the "Gorham Facility"); (ii) Portland, Maine;
(iii) Waltham, Massachusetts; (iv) Stantonburg, North Carolina; and (v) Leiden,
the Netherlands; and any other properties or facilities at which TRC's or
Reece's business was carried on; (b) any claim under an indemnity agreement
dated December 31, 1992, between Reece and Sebago, Inc. or under a guaranty
given by Reece in an addendum dated December 30, 1992, to an agreement for the
purchase and sale of real estate dated December 8, 1992, between L.F. Loree, III
and Norwood H. Davis, Jr. and Sebago, Inc., including (i) a claim under the
indemnity given to Sebago, Inc. and others in connection with any contamination
of the soils or ground water of certain land described in the said indemnity
agreement attributable to or resulting from any contamination of the Gorham
Facility at the date thereof; and (ii) Reece's agreement, pursuant to the said
indemnity agreement, should the need arise, to be responsible for certain legal
costs and remedial and responsive actions; (c) the Portland Bangor Waste Oil
Company uncontrolled hazardous substances
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site, Wells, Maine, including the notice of potential liability and request for
participation in cleanup activities dated October 12, 1995, from the State of
Maine Department of Environmental Protection addressed to Reece c/o Bowling; (d)
the PSC Resources, Inc. National Priorities List site, Palmer, Massachusetts,
including the general notice letter dated March 18, 1992, and the Consent Decree
entered into with the United States of America and the Commonwealth of
Massachusetts signed by Reece on September 2, 1994; (e) the Union Chemical
Company, Inc. National Priorities List site, South Hope, Maine, including the
general notice letter dated March 23, 1987; (f) the ownership or condition of
the Reece property and facility at 8080 and 8400 AMF Drive, Richmond, Virginia,
and of any other properties or facilities at which Reece's or TRC's business is
or has been carried on; (g) (i) the requirements of Environmental Law (as
defined in the Stock Purchase Agreement) relating to any of the matters referred
to in the foregoing paragraphs (a) to (f), and (ii) the presence of, and the
requirements of Environmental Law relating to, any Hazardous Substance or RCRA
Hazardous Waste (as such terms are defined in the Stock Purchase Agreement) at
any of the properties or facilities referred to in the foregoing paragraphs (a)
to (f) or the off-site disposal of any such materials generated at any such
property or facility, including in each case legal liability to third parties,
cleanup of hazardous waste, cleanup of releases
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<PAGE> 261
or contamination resulting from improper cleanup, and all related legal fees,
costs and expenses for violations or conduct arising out of the business of TRC
or Reece, and (h) the existence or assertion of any action, lawsuit, claim or
proceeding by any third party (including any Governmental Authority), whether
based on negligence, strict liability or any other theory of recovery or relief,
at law or in equity, relating to any of the matters referred to in the foregoing
paragraphs (a) to (g).
2.02. Procedure for Defense and Indemnification of Third Party Claims.
(a) This Section 2.02 sets forth procedures for third-party claims as
to which indemnification may be required under this Agreement. If a claim is
made against an Indemnitee, and if such Indemnitee intends to seek indemnity
with respect thereto under this Agreement, such Indemnitee shall promptly notify
Reece in writing of such claims setting forth such claims in reasonable detail,
provided that failure to give a timely notice under this Section 2.02 shall not
limit the indemnification obligations of Reece hereunder except to the extent
that the delay in giving, or failure to give, such notice has an actual adverse
effect upon the ability of Reece to defend the underlying claim.
(b) Reece shall have 30 days after receipt of such notice to undertake,
conduct and control, through counsel of
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<PAGE> 262
its own choosing (reasonably satisfactory to the Indemnitee) and at its own
expense, the settlement or defense of such claim, and the Indemnitee shall
cooperate with it in connection therewith; provided that (i) Reece shall conduct
such settlement or defense at all times in good faith and in a reasonable
manner, (ii) Reece shall promptly reimburse the Indemnitee for all out-of-pocket
expenses incurred by the Indemnitee arising out of a claim, and (iii) Reece
shall permit the Indemnitee to participate in such settlement or defense through
counsel chosen by such Indemnitee, provided that the fees and expenses of such
counsel shall be borne by such Indemnitee unless it reasonably concludes and
advises Reece that counsel to Reece has a conflict of interest. So long as Reece
is reasonably contesting any such claim in good faith, an Indemnitee shall not
pay or settle any such claim. Notwithstanding the foregoing, an Indemnitee shall
have the right to pay or settle any such claim, provided that in such event it
shall waive any right to indemnity therefor by Reece.
(c) If Reece does not elect to assume control of the settlement or
defense of a claim in the manner provided herein, an Indemnitee shall have the
right to contest, settle or compromise the claim but shall not thereby waive any
right to indemnity for any Covered Liabilities arising therefrom or in
connection therewith pursuant to this Agreement.
(d) Reece shall not, except with the consent of the Indemnitee, enter
into any settlement or consent to entry of
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<PAGE> 263
any judgment that provides for injunctive or other non-monetary relief affecting
any Indemnitee or that does not include as an unconditional term thereof the
giving by the person or persons asserting such claim to all Indemnitees of an
unconditional release from all liability with respect to such claim or consent
to entry of any judgment.
(e) Reece and Buyer shall cooperate in the defense of any claim subject
to this Agreement and the records of each shall be available to the other with
respect to such defense.
ARTICLE III
REMEDIES AND EXPENSES
3.01. Remedies. Each of the Indemnitees may proceed to protect and
enforce any or all its rights under this Agreement by suit in equity, action at
law or by other appropriate proceedings, whether for the specific performance of
any covenants or agreements contained in this Agreement or otherwise, or to take
any action authorized or permitted under applicable law, and shall be entitled
to require and specifically enforce the performance of all acts and things
required to be performed hereunder by Reece. Each of the Indemnitees shall not
be required to exhaust any security or to pursue any other recourse or remedy
before asserting or enforcing their rights under this Agrement. Each and every
remedy of an Indemnitee shall, to the extent permitted by law, be cumulative and
shall be in addition
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<PAGE> 264
to any other remedy given hereunder or under any other agreement now or
hereafter existing at law or in equity.
ARTICLE IV
MISCELLANEOUS
4.01. Agreement Binding, Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the exclusive benefit of
the parties hereto, the Indemnitees and their respective successors and their
permitted assigns. Any Indemnitee may assign or transfer its rights hereunder to
any of its Affiliates or successors. This Agreement may not be assigned by Reece
without the prior written consent of Buyer and any such purported assignment
shall be void ab initio.
4.02. Survival of Representations, Warranties, Covenants and
Agreements. All representations, warranties, covenants, agreements and
indemnities contained herein shall survive the Closing of the Stock Purchase
Agreement (as defined therein) and shall continue in full force and effect until
such time as this Agreement is terminated in accordance with Article V hereof.
4.03. Governing Law. The terms of this Agreement shall be governed by,
and interpreted and construed in accordance with, the provisions of the internal
laws of the State of New York.
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<PAGE> 265
4.04. Amendment, Modification or Waiver. This Agreement may not be
amended except pursuant to an instrument in writing executed and delivered on
behalf of each of the parties hereto. No modification or waiver of this
Agreement shall be binding or effective for any purpose unless it is made in a
writing signed by the party against whom enforcement of such modification or
waiver is sought. No course of dealing between the parties to this Agreement
shall be deemed to affect or to modify, amend or discharge any provision or term
of this Agreement. No delay on the part of Buyer or an Indemnitee in the
exercise of any of its rights or remedies shall operate as a waiver thereof, and
no single or partial exercise by Buyer or an Indemnitee of any such right or
remedy shall preclude other or further exercise thereof. A waiver of right or
remedy on any one occasion shall not be construed as a bar to or waiver of any
such right or remedy on any other occasion.
4.05. Severability. If any term or provision of this Agreement or the
application thereof to any circumstance shall, in any jurisdiction and to any
extent, be invalid or unenforceable, such term or provision shall be ineffective
as to such jurisdiction to the extent of such invalidity or unenforceability
without invalidating or rendering unenforceable the remaining terms and
provisions hereof or the application of such term or provision to circumstances
other than those to
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<PAGE> 266
which it is held invalid or unenforceable. To the extent permitted by applicable
law, the parties hereto waive any provision of law which renders any term or
provision hereof invalid or unenforceable in any respect.
4.06. Notices. Any notice herein to a party shall be deemed to be
properly served if in writing and delivered or mailed to, in the case of Reece:
AMF Reece, Inc.
c/o CCA Industries, Inc.
One James Center
Richmond, Virginia 23219
Attention: Beverley W. Armstrong
with a copy to:
McGuire, Woods, Battle & Boothe, L.L.P.
One James Center
Richmond, Virginia 23219
Attn: Leslie A. Grandis and
Wellford L. Sanders, Jr.
Telecopier No.: (804) 775-1061
and, in the case of Buyer:
AMF Group Holdings Inc.
c/o GS Capital Partners II, L.P.
85 Broad Street
New York, NY 10004
Attention: David J. Greenwald
Telecopier No.: (212) 902-3000
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Attn: Daniel A. Neff and
Mitchell S. Presser
Telecopier No.: (212) 403-2000
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<PAGE> 267
or to such other address as shall have been furnished in writing to the other
party to this Agreement, and shall be deemed to have been given as of the time
delivered, or mailed, registered or certified mail, postage paid, except that
notice of termination hereof shall be effective only upon receipt.
4.07. Construction. Nothing contained in this Agreement shall limit or
affect in any way the indemnification obligations under the Stock Purchase
Agreement which are for the benefit of the Indemnitees and which apply to
Covered Liabilities to which this Agreement shall also apply. It is the
intention of the parties hereto that certain Covered Liabilities shall be
subject to indemnification both by Sellers under the Stock Purchase Agreement
and by Reece under this Agreement (and it shall be at the discretion of the
Indemnitees under this Agreement and the Buyer Indemnified Parties under the
Stock Purchase Agreement whether any claim in respect of such Covered
Liabilities is brought under this Agreement or the Stock Purchase Agreement or
both agreements), provided that the Indemnitees under this Agreement and the
Buyer Indemnified Parties under the Stock Purchase Agreement shall not recover
twice for the same Covered Liability.
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<PAGE> 268
ARTICLE V
TERMINATION
5.01. Termination of this Agreement. This Agreement may be terminated
upon written notice at any time by mutual agreement of the Boards of Directors
of Buyer and Reece. This Agreement shall terminate upon the acquisition of more
than 50% of the equity and voting shares of Reece by a Person (as defined in the
Stock Purchase Agreement) or a group of related Persons who are not Affiliates
(as defined in the Stock Purchase Agreement) or of the current shareholders of
Reece, or of any "Sellers" under the Stock Purchase Agreement or of any
Affiliates of any of the foregoing; provided, however, this Agreement shall not
so terminate if at such time there are then outstanding any claims or notices of
claims for which indemnity may be sought hereunder, unless Buyer is provided
with alternative indemnification (including pursuant to indemnification
arrangements with the Trusts (as defined in the Stock Purchase Agreement) under
the Stock Purchase Agreement, so long as the Trusts acknowledge such
obligations, in writing, at such time) and Buyer is reasonably satisfied that
such indemnification will fully and adequately indemnify Buyer for all of the
matters and for all of the Covered Liabilities and other fees and expenses for
which it is indemnified hereunder.
5.02. No Effect. This Agreement shall automatically terminate and be
void and have no effect if the Closing under the Stock Purchase Agreement does
not occur.
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<PAGE> 269
IN WITNESS WHEREOF, Buyer and Reece have caused this Agreement to be
executed as of the date first above written.
AMF GROUP HOLDINGS INC.
By:____________________________
AMF REECE, INC.
By:____________________________
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<PAGE> 270
EXHIBIT 1.1(g)
PURCHASE AND SALE AGREEMENT
AGREEMENT dated February ____, 1996 between WBB PARTNERS, a Virginia
general partnership, having an address at One James Center, Richmond, Virginia
23219 ("Seller"), and AMF GROUP HOLDINGS INC., a Delaware corporation, having an
address c/o GS Capital Partners II, L.P., 85 Broad Street, New York, New York
10004 ("Purchaser").
Reference is made to the Stock Purchase Agreement dated as of the date
hereof among L.F. Loree, III as successor co-trustee u/a dated 11/12/86 fbo
William H. Goodwin, III, Molly S. Goodwin, Matthew T. Goodwin, Sarah C. Goodwin
and Peter O. Goodwin, Norwood H. Davis, Jr., as successor co-trustee u/a dated
11/12/86 fbo William H. Goodwin III, Molly S. Goodwin, Matthew T. Goodwin, Sarah
C. Goodwin and Peter O. Goodwin, The Community Foundation, Inc., Douglas J.
Stanard, and Beverley W. Armstrong, as Sellers (collectively, the "Stock
Purchase Agreement Sellers"), and AMF Group Holdings Inc., as Buyer (as from
time to time amended or modified, the "Stock Purchase Agreement"). Capitalized
terms employed herein without definition have the meaning specified in the Stock
Purchase Agreement.
IT IS AGREED:
1. Conveyance of Properties. Concurrently with and at the Closing,
Seller shall convey to Purchaser and Purchaser shall purchase from Seller each
of the parcels of real property described or referred to on Schedule One annexed
hereto (the "Properties"). The transactions provided for in this Agreement shall
not occur if the Closing does not occur.
2. Purchase Price and Expenses. At the Closing, Purchaser shall pay to
Seller in immediately available funds the amount of $327,618.00 in consideration
of the conveyance of the Properties by Seller to Purchaser (the "Purchase
Price"). Seller and Purchaser shall effect a reasonable allocation of the
Purchase Price to individual Properties to the extent required to calculate any
transfer, stamp, gains, conveyance duties and other similar taxes and all
documentary stamps, stamp duties, filing fees, recording fees and similar
charges payable by reason of the conveyance of any Property provided for herein.
Seller and Purchaser shall share and pay the costs described in the immediately
preceding sentence in accordance with provisions of Section 12.4 of the Stock
Purchase Agreement as though Seller and Purchaser were parties to such
agreement.
3. Delivery of Deeds; Discharge of Liens. At the Closing, Seller shall
convey each Property to Purchaser by executing and delivering a good and
sufficient quitclaim deed under the laws of the jurisdiction in which such
Property is located. Prior to the Closing, Seller will remove or cause to be
discharged all Liens encumbering each Property to the same
<PAGE> 271
extent that Stock Purchase Agreement Sellers are required under the Stock
Purchase Agreement to remove Liens of the same type in respect of the Owned
Properties. All representations and warranties of the Stock Purchase Agreement
Sellers set forth in the Stock Purchase Agreement relating to the Owned
Properties are hereby incorporated by reference into this Agreement and are made
by the Seller with respect to each of the Properties. Section 10.1 of the Stock
Purchase Agreement shall govern the survival after the closing under this
Agreement of the representations and warranties incorporated in this Agreement
under the immediately preceding sentence. Except as otherwise provided in this
Section 3, the Properties shall be conveyed by Seller to Purchaser "AS IS" and
without any representations or warranties whatsoever.
4. Designee. Upon reasonable prior notice from Purchaser to Seller,
Purchaser may nominate one or more designees to take title to any one or more of
the Properties under this Agreement.
5. Miscellaneous. This Agreement shall be governed by the internal laws
of the State of New York without regard to principles of conflict of laws. This
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of the respective parties hereto. All notices given under this Agreement
shall be given in the manner specified in the Stock Purchase Agreement.
IN WITNESS WHEREOF, Seller and Purchaser have executed this agreement
as of the date first above written.
SELLER
WBB PARTNERS,
a Virginia general partnership
By:____________________________
General Partner
By:____________________________
General Partner
PURCHASER:
AMF GROUP HOLDINGS INC.
By:____________________________
Title:_________________________
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<PAGE> 272
SCHEDULE ONE
Legal Description for 1.4917 Acres of Land
Galveston, Texas
Adjacent to Star Lanes
(DO 124)
Being the West 295.9 feet of the East 355.9 feet of the
North One-Half of Lot 48, Texas City Heights, Galveston
County, Texas, consisting of 1.4927 acres, being more
particularly described on that certain plat of survey dated
September 12, 1990 and revised October 7, 1990 made by Gulf
Coast Engineering and Surveying and recorded in Volume 136,
Page 2 in the Office of the County Clerk of Galveston
County, Texas.
<PAGE> 273
SCHEDULE ONE
CONTINUED
Legal Description for 1.4793 Acres of Land
Marion County, Oregon
Adjacent to Firebird Lanes
(DO 84)
All that certain piece or parcel of land, lying and being in
Marion County, Oregon, containing 1.4793 acres, as shown on
Plat by Glen A. Richardson dated October 9, 1990 and
recorded in the Marion County Surveyor's Office as Document
No. 32267 and being more particularly described as follows:
Beginning at a 1/2 inch iron pipe which is 947.55 feet North
89(degree) 16' 23" East and 195.73 feet North 89(degree) 15'
29" East and 324.79 feet North 89(degree) 16' 07" East and
405.00 feet North 1(degree) 03' 00" East from a Marion
County monument marking the southeast corner of the Issac
Baker Donation Land Claim No. 91, in Township 7 South, Range
2 West of the Willamette Meridian in Marion County, Oregon;
thence South 88(degree) 57' 00" East 173.45 feet to a 1/2
inch iron pipe; thence South 1(degree) 08' 20" West 364.61
feet to a tack in lead on the northerly right of way line of
Center St. N.E.; thence, along said right of way line, South
89(degree) 16' 07" West 6.11 feet to a 1/2 inch iron pipe;
thence South 0(degree) 43' 53" East 5.00 feet to a tack in
lead in the face of the curb; thence South 89(degree) 16'
07" West 167.02 feet to a 1/2 inch iron pipe; thence,
leaving the right of way line, North 1(degree) 03' 00" East
374.99 feet to the point of beginning and containing 64,438
square feet of land, more or less.
<PAGE> 274
SCHEDULE ONE
CONTINUED
Legal Description for 1.189 Acres of Land
McLean County, Illinois
Adjacent to Circle Lanes
(DO 13)
Lots 9 and 10 in the Re-Subdivision of Lot 2, Circle Lanes Subdivision in the
City of Bloomington, according to the Plat thereof recorded February 20, 1991 as
Document No. 91-2439, in McLean County, Illinois.
<PAGE> 275
SCHEDULE ONE
CONTINUED
Legal Description for 4.518 Acres of Land
Muskegon County, Michigan
Adjacent to Muskegon Lanes
(DO 105)
That certain lot, which is part of the Northwest Fractional 1/4 of Section 7,
Town 10 North, Range 16 West, in Muskegon Township, Muskegon County, Michigan,
containing 4.518 acres as shown on plat of survey made by Moore & Bruggink,
Consulting Engineers, Land Surveyors, Planners dated February 7, 1991, a copy of
said plat is attached hereto and made a part hereof and which is more
particularly described as follows:
COMMENCING at the North 1/4 corner of said Section, thence South 0(degree) 52'
04" East along the North and South 1/4 line of said Section 1145.84 feet to a
point which is 200.00 feet Northerly of the Southeast corner of the Northeast
1/4 of said Northwest Fractional 1/4, thence South 89(degree) 00' 00" West
parallel to the South line of said Northeast 1/4 of the Northwest Fractional 1/4
a distance of 876.05 feet for POINT OF BEGINNING, thence South 1(degree) 02' 10"
East 133.19 feet, thence South 88(degree) 55' 40" West 253.27 feet, thence South
2(degree) 48' 40" East 584.12 feet, thence South 87(degree) 52' 00" West 224.69
feet to the Easterly Right of Way line of Whitehall Road (formerly State Highway
US-31), thence North 42(degree) 59' 00" West along said Easterly line 274.22
feet to the South line of the North 1650.00 feet of the West Fractional 1/2 of
said Northwest Fractional 1/4, thence North 88(degree) 28' 53" East parallel to
the North Line of said Section 202.07 feet to East line of said West Fractional
1/2 of the Northwest Fractional 1/4, thence North 1(degree) 00' 17" West along
said East line 516.11 feet to a point which is 200.00 feet Northerly of the
South line of the Northeast 1/4 of said Northwest Fractional 1/4, thence North
89(degree) 00' 00" East parallel to said South line 440.79 feet to Point of
Beginning.
TOGETHER with the right to use for means of ingress and egress the following two
(2) described parcels: (1) Commencing at the Southeast corner of the above
described parcel for POINT OF BEGINNING, thence North 87(degree) 52' 00" East
60.00 feet thence North 2(degree) 48' 40" West 100.00 feet, thence South
87(degree) 52' 00" West 60.00 feet, thence South 2(degree) 48' 40" East 100.00
feet to Point of Beginning. (2) "AGREEMENT", recorded in Liber 1223, Pages 639
through 652, for controlled access.
<PAGE> 276
SCHEDULE ONE
CONTINUED
Legal Description for 1.205 Acres of Land
Jefferson County, Kentucky
Adjacent to Rose Bowl South
(DO 117)
Property situated in the County of Jefferson, State of Kentucky, more
particularly described as follows:
BEING Tract A, consisting of 1.205 acres as shown on the Minor
Subdivision Plat of AMF Bowling Center Inc., 7709 Beulah Church Road,
D.B. 5980, Pg. 605 dated January 15, 1991 and approved by the
Louisville and Jefferson County Planning Commission on February 28,
1991, and designated as #53-91, the original of which is attached
hereto and made a part hereof and to which reference is hereby made for
a more particular description of the Property hereby conveyed.
Said Tract A is part of Tract 2, which consisted of 2.536 acres as
shown on the Minor Subidivision Plat of Rose Bowl Lanes, Inc. dated
August 6 and revised on August 8, 1980, and approved by the Louisville
and Jefferson County Planning Commission on August 19, 1980 and
designated as #l63-80, the original of which is attached to a deed
dated August 19, 1980 and recorded in Deed Book 5182, Page 433, in the
Office of the Clerk of the County Court of Jefferson County, Kentucky.
LESS AND EXCEPTING FROM the above described property so much as was
conveyed to the Commonwealth of Kentucky for the use and benefit of the
Departntent of Transportation by deed dated September 16, 1981, and
recorded in Deed Book 5287, Page 621, in the Jefferson County,
Kentucky, Clerk's Office; and by deed acknowledged April 10, 1985, and
recorded in Deed Book 5749, Page 962, in the aforesaid Clerk's Office.
BEING part of the property conveyed to Grantor by deed from AA Bowl of
Kentucky, Inc. dated as of May 21, 1990 and recorded on August 1, 1990,
in the Office of the County Clerk of Jefferson County, Kentucky in Deed
Book 5980, Page 605.
<PAGE> 277
SCHEDULE ONE
CONTINUED
Legal Description for 2.0359 Acres of Land
Savannah, Georgia
Adjacent to Major League Savannah
(DO 119)
All that certain lot, tract or parcel of land situate, lying and being
in Chatham County, Georgia, being a portion of a resubdivision of
portions of Shangri-La and Magnolia Gardens Subdivisions, said lot
being more particularly shown and delineated as Lot 18 upon a map or
plat of survey thereof made by Barrett & Exley, Inc., Registered Land
Surveyors, dated March 12, 1975, and of record in the office of the
Clerk of the Superior Court of Chatham County, Georgia, in Plat Record
Book Y, Page 191, containing approximately 2.0359 acres.
<PAGE> 278
SCHEDULE ONE
CONTINUED
Legal Description for .79 Acres of Land
Douglas County, Nebraska
Adjacent to King Louie Rose Bowl Lanes
(DO 136)
PARCEL 2:
Lots 11, 12, 13 and 14, and the West 18.00 feet of Lot 10, in Block 19, in
WALNUT HILL, an Addition to the City of Omaha, as surveyed, platted and
recorded, in Douglas County, Nebraska; together with the North Half (N1/2) of
the vacated alley adjacent to said Lots 11 and 12 and West 18.00 feet of Lot 10
on the South; and, together with the South Half (S1/2) of the vacated alley
adjacent to said Lots 13 and 14 on the North.
<PAGE> 279
SCHEDULE ONE
CONTINUED
Legal Description for 1.087 Acres of Land
Richmond County, Georgia
Adjacent to Masters Lanes
(DO 104)
All that lot, tract or parcel of land, consisting of 1.087 acres,
known as Tract "B", situate, lying and being in the 119th
District, G.M., Richmond County, Georgia, located on the southwest
side of Fort Gordon Highway (U.S. Hwy. 78 & 278). Beginning at a
point on the southwest boundary of Fort Gordon Highway 590 feet
North of the North line of Milledgeville Road; thence S 65(degree)
32' 30" W, 373.17 feet to a point; thence N 02(degree) 21' 25" E,
162.14 feet to a point; thence N 65(degree) 24' 40" E, 280.31 feet
to a point; thence in a southerly direction along the western
right-of-way line of fort Gordon Highway as it curves to the right
having a radius of 952.41 and an arc of 146.82 feet to the POINT
AND PLACE OF BEGINNING.
Said property is bounded now or formerly as follows: On the east
and northeast by Fort Gordon Highway; on the north by property of
Stella M. and Edward D. Durand; on the west by property of Kathryn
B. Day, Frances Irene Day; on the south by property of AMF Bowling
Centers I, Inc.
Reference is made to a plat of property prepared for AA Bowl of
Georgia, Inc. by George L. Godman & Associates dated September 15,
1982 for a more complete description as the metes, bounds,
distances and location of said property.
<PAGE> 280
SCHEDULE ONE
CONTINUED
Legal Description for 3.121 Acres of Land
Roanoke, Virginia
Adjacent to All Star Lanes
(DO 02)
All that lot, tract or parcel of land, consisting of 3.121 Acres,
known as Lot 2, lying and being on Melrose Avenue, N.W. in the
city of Roanoke, Virginia, and more particularly described on that
certain plat of survey entitled "Plat of Survey made for Glenn,
Flippen, Feldman & Darby, Attorneys showing property of All Star
Lanes being conveyed to All American Bowling Corporation 7.417
Acre South, Parts of Lots 1 & 21 Rt. Rev. A. Van De Vyver Map,
3437 Melrose Avenue, N.W., Roanoke, Virginia" made by C.B, Malcolm
& Son, dated December 27, 1984 and to which plat reference is made
for a more particular description of the property hereby conveyed.
BEING part of the same real estate conveyed to AMF Bowling Centers
I, Inc. by deed from All American Bowling Corporation, dated
January 31, 1990 and recorded February 14, 1990 in the Clerk's
Office, Circuit Court, City of Roanoke, Virginia, in Deed Book
1617, Page 00001.
<PAGE> 281
SCHEDULE ONE
CONTINUED
Legal Description for 1.062 Acres of Land
Jackson County, Missouri
Adjacent to King Louie Strike Market
(DO 96)
All of Lots A and B, Re-Plat of Tract 5, The Village of Summit East - 2nd Plat,
a subdivision in Lee's Summit, Jackson County, Missouri, recorded on February 11
1991 as Document No. I-1023211.
BEING part of the same land conveyed to AMF Bowling Centers I, Inc. by deed from
King Louie Bowling Corporation dated as of January 31, 1990 and recorded on
February 14, 1990 in the County of Jackson, State of Missouri in Book I1996,
Page 1366.
<PAGE> 282
SCHEDULE ONE
CONTINUED
Legal Description for .6619 Acres of Land
Boone County, Missouri
Adjacent to King Louie Town and Country
(DO 99)
Tract 2 of a Survey recorded at Book 688, Page 343, Deed Records of Boone
County, Missouri, being a part of Lots 50, 51 and 52 of Conley and Perkins
Subdivision as described by Survey recorded in Book 304, Page 444 and 445, and
including all easement rights as shown by easement recorded at Book 308, Page 39
and corrected by instrument recorded at Book 308, Page 122, Deed Records of
Boone County, Missouri.
Also subject to easements to the City of Columbia for street purposes recorded
at Book 379, Page 385, and at Book 308, Page 42, Deed Records of Boone County,
Missouri.
BEING part of the same land conveyed to AMF Bowling Centers I, Inc. by deed from
King Louie Bowling Corporation dated as of January 31, 1990 and recorded on
February 14, 1990 in the Deed Records of Boone County, Missouri at Book 760,
Page 343.
<PAGE> 283
SCHEDULE ONE
CONTINUED
Legal Description for 1.123 Acres of Land
Saline County, Kansas
Adjacent to King Louie All Star Lanes
(DO 91)
A tract of land in the Southwest Quarter (SW1/4) of Section Fourteen (14),
Township Fourteen (14) South, Range Three (3) West of the 6th P.M., Saline
County, Kansas, particularly described as follows:
Commencing at a point on the West right-of-way line of U.S. Highway 81, 978.62
feet North of the South line of said section; Thence S 89(degree) 51' 56" W,
309.78 feet to the point of beginning: Thence continuing S 89(degree) 51' 56" W,
210.00 feet; Thence S 00(degree) 51' 40" W, 233.07 feet; Thence N 89(degree) 51'
56" E, 210.00 feet; Thence N 00(degree) 51' 40" E, 233.07 feet back to the point
of beginning.
This tract contains 1.123 Acres as shown on plat of survey made by Forgy
Surveying, dated June 5, 1991, a copy of which is attached hereto and fully
incorporated herein.
BEING part of the same land conveyed to AMF Bowling Centers I, Inc. by deed from
Broadway Realty Company, Inc. dated as of January 31, 1990 and recorded on
February 15, 1990 in the County of Saline, State of Kansas in Book 355, Page
474.
<PAGE> 284
EXHIBIT 1.1(h)
BENEFICIARY INDEMNITY AGREEMENT
THIS INDEMNITY AGREEMENT (this "Agreement"), dated February ___, 1996,
is by and between the undersigned individual (the "Indemnitor"), and AMF Group
Holdings Inc., a Delaware corporation ("Buyer").
WHEREAS, pursuant to a Stock Purchase Agreement, dated February ___,
1996 (the "Stock Purchase Agreement"), Buyer has agreed to acquire from the
Sellers named therein the Manufacturing Business and the Bowling Centers
Business (as each is defined in the Stock Purchase Agreement) by means of the
acquisition of all of the outstanding common stock or other equity interests of
AMF Bowling, Inc., a Virginia corporation ("Bowling"), the Bowling Centers
Companies and the Foreign Bowling Centers Companies (collectively, the
"Companies"), and by means of the Asset Purchases (as each are defined in the
Stock Purchase Agreement); and
WHEREAS, a significant portion of the outstanding shares of common
stock of the Companies is owned by the Trusts (as defined in the Stock Purchase
Agreement), one of the beneficiaries of which is a signatory hereto and the
other beneficiaries of which are required to enter into similar indemnity
agreements concurrently herewith (the "Other Beneficiary Indemnity Agreements");
and
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WHEREAS, Section 10.7 of the Stock Purchase Agreement provides for the
maintenance by the Trusts of specified minimum amounts of net worth and for the
Indemnitor and the other beneficiaries of the Trusts to enter into indemnity
agreements with Buyer in substantially the form of this Agreement; and
WHEREAS, the Indemnitor's execution and delivery of this Agreement is
one of the conditions to Buyer's consummation of the Stock Purchase Agreement
and the Indemnitor is aware that Buyer would not have entered into the Stock
Purchase Agreement but for the entering into by the Indemnitor of this
Agreement; and
WHEREAS, it is the intention of the parties hereto that Buyer, its
Affiliates (as defined in the Stock Purchase Agreement), each of their
respective directors, partners, officers, employees and agents, and each of the
heirs, executors, successors and assigns of any of the foregoing (collectively
the "Indemnitees") shall be fully indemnified by the Indemnitor to the extent
and under the circumstances set forth in this Agreement, and that this Agreement
shall be construed in a manner that gives meaning to the indemnification
provisions of the Stock Purchase Agreement and this Agreement as complementary
and, subject to Section 4.07 hereof, duplicative and not conflicting; and
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WHEREAS, as an inducement for Buyer to enter into the Stock Purchase
Agreement and in order to protect Buyer's investment and to enable Buyer to
enjoy the goodwill derived, directly and indirectly, from the acquisitions
contemplated by the Stock Purchase Agreement, each of Buyer and the Indemnitor
desires to enter into this Agreement;
NOW, THEREFORE, in consideration of the Stock Purchases and Asset
Purchases (as defined in the Stock Purchase Agreement) by Buyer and the benefits
and advantages to be derived by it therefrom, and for other good and valuable
consideration the receipt of which is hereby acknowledged, the Indemnitor hereby
agrees with Buyer as follows:
ARTICLE I
REPRESENTATIONS AND WARRANTIES
OF INDEMNITOR
1.01. Indemnitor's Authority and Approval. The Indemnitor represents
and warrants to the Indemnitees as follows: the Indemnitor has the power to
execute, deliver and perform this Agreement and the transactions contemplated
hereby and such execution, delivery and performance have been duly authorized by
all necessary action on the Indemnitor's part. Such execution, delivery and
performance do not (i) conflict with, result in a breach of, constitute a
default (with due notice or
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lapse of time or both) or give rise to any right of termination, cancellation or
acceleration under, any term or provision of any mortgage, indenture, license,
agreement or other obligation or instrument to which the Indemnitor is a party
or to which the Indemnitor's properties or assets are subject, or (ii) violate
any judgment, order, writ, injunction, decree, statute, rule, regulation, code
or ordinance applicable to the Indemnitor or any of the Indemnitor's properties
or assets. No consent of any party to any contract or agreement to which the
Indemnitor is a party or to which any of the Indemnitor's properties or assets
is subject is required for the execution, delivery or performance of this
Agreement. This Agreement has been duly executed and delivered by the Indemnitor
and, assuming the due execution thereof by Buyer, constitutes the legal, valid
and binding obligation of the Indemnitor enforceable in accordance with its
terms.
ARTICLE II
INDEMNITY
2.01. Indemnity. (a) Effective from and after the Closing Date (as
defined in the Stock Purchase Agreement), if (and only if) the Triggering Events
(as defined below) shall occur, the Indemnitor hereby, jointly and severally
together with each of the indemnitors under the Other Beneficiary Indemnity
Agreements, indemnifies and holds harmless the Indemnitees
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from and against, and shall pay or reimburse the Indemnitees for, any and all
Covered Liabilities (as defined in the Stock Purchase Agreement) (and the costs
and expenses, including reasonable attorneys' fees and expenses, of enforcing
the Indemnitees' obligations hereunder) incurred by or asserted against any of
the Indemnitees in connection with or arising from any circumstance or condition
which, under the terms of the Stock Purchase Agreement, would entitle a Buyer
Indemnified Party to indemnification by any of the Sellers (as such terms are
defined in the Stock Purchase Agreement).
(b) For the purposes of this Agreement, the "Triggering Events" shall
occur if both (i) the net worth of the Trusts or any entity to which the Trusts'
assets are distributed in accordance with the provisions of Section 10.7(b) of
the Stock Purchase Agreement (the "Alternative Entity") shall be less than the
minimum net worth then required by Section 10.7(a) of the Stock Purchase
Agreement and (ii) the assets of the Trusts or the Alternative Entity are
insufficient or otherwise unavailable to satisfy the indemnification obligations
of the Trusts under the Stock Purchase Agreement.
2.02. Procedure for Defense and Indemnification.
The procedures set forth in Article X of the Stock Purchase Agreement
shall apply to claims for indemnity under
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this Agreement, treating the Indemnitor as the indemnifying party and the
Indemnitees as the indemnified party.
ARTICLE III
REMEDIES AND EXPENSES
3.01. Remedies. Each of the Indemnitees may proceed to protect and
enforce any or all its rights under this Agreement by suit in equity, action at
law or by other appropriate proceedings, whether for the specific performance of
any covenants or agreements contained in this Agreement or otherwise, or to take
any action authorized or permitted under applicable law, and shall be entitled
to require and specifically enforce the performance of all acts and things
required to be performed hereunder by the Indemnitor. Each of the Indemnitees
shall not be required to exhaust any security or to pursue any other recourse or
remedy before asserting or enforcing their rights under this Agrement. Each and
every remedy of an Indemnitee shall, to the extent permitted by law, be
cumulative and shall be in addition to any other remedy given hereunder or under
any other agreement now or hereafter existing at law or in equity.
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ARTICLE IV
MISCELLANEOUS
4.01. Agreement Binding, Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the exclusive benefit of
the parties hereto, the Indemnitees and their respective successors and their
permitted assigns. Any Indemnitee may assign or transfer its rights hereunder to
any of its Affiliates or successors. This Agreement may not be assigned by the
Indemnitor without the prior written consent of Buyer and any such purported
assignment shall be void ab initio.
4.02. Survival of Representations, Warranties, Covenants and
Agreements. All representations, warranties, covenants, agreements and
indemnities contained herein shall survive the Closing of the Stock Purchase
Agreement (as defined therein) and shall continue in full force and effect until
such time as this Agreement is terminated in accordance with Article V hereof.
4.03. Governing Law. The terms of this Agreement shall be governed by,
and interpreted and construed in accordance with, the provisions of the internal
laws of the State of New York.
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4.04. Amendment, Modification or Waiver. This Agreement may not be
amended except pursuant to an instrument in writing executed and delivered on
behalf of each of the parties hereto. No modification or waiver of this
Agreement shall be binding or effective for any purpose unless it is made in a
writing signed by the party against whom enforcement of such modification or
waiver is sought. No course of dealing between the parties to this Agreement
shall be deemed to affect or to modify, amend or discharge any provision or term
of this Agreement. No delay on the part of Buyer or an Indemnitee in the
exercise of any of its rights or remedies shall operate as a waiver thereof, and
no single or partial exercise by Buyer or an Indemnitee of any such right or
remedy shall preclude other or further exercise thereof. A waiver of right or
remedy on any one occasion shall not be construed as a bar to or waiver of any
such right or remedy on any other occasion.
4.05. Severability. If any term or provision of this Agreement or the
application thereof to any circumstance shall, in any jurisdiction and to any
extent, be invalid or unenforceable, such term or provision shall be ineffective
as to such jurisdiction to the extent of such invalidity or unenforceability
without invalidating or rendering unenforceable the remaining terms and
provisions hereof or the application of such term or provision to circumstances
other than those to
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which it is held invalid or unenforceable. To the extent permitted by applicable
law, the parties hereto waive any provision of law which renders any term or
provision hereof invalid or unenforceable in any respect.
4.06. Notices. Any notice herein to a party shall be deemed to be
properly served if in writing and delivered or mailed to, in the case of the
Indemnitor:
The Trustees of the Trusts
(as defined in the Stock Purchase Agreement)
c/o CCA Industries, Inc.
One James Center
Richmond, Virginia 23219
Attention:
with a copy to:
McGuire, Woods, Battle & Boothe, L.L.P.
One James Center
Richmond, Virginia 23219
Attn: Leslie A. Grandis and
Wellford L. Sanders, Jr.
Telecopier No.: (804) 775-1061
and, in the case of Buyer:
c/o GS Capital Partners II, L.P..
85 Broad Street
New York, NY 10004
Attn: David J. Greenwald
Telecopier No.: (212) 902-3000
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with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Attn: Daniel A. Neff and
Mitchell S. Presser
Telecopier No.: (212) 403-2000
or to such other address as shall have been furnished in writing to the other
party to this Agreement, and shall be deemed to have been given as of the time
delivered, or mailed, registered or certified mail, postage paid, except that
notice of termination hereof shall be effective only upon receipt.
4.07. Construction. Nothing contained in this Agreement shall limit or
affect in any way the indemnification obligations under the Stock Purchase
Agreement which are for the benefit of the Indemnitees and which apply to
Covered Liabilities to which this Agreement shall also apply.
It is the intention of the parties hereto that certain Covered
Liabilities shall be subject to indemnification both by Sellers under the Stock
Purchase Agreement and by the Indemnitor under this Agreement (and it shall be
at the discretion of the Indemnitees under this Agreement and the Buyer
Indemnified Parties under the Stock Purchase Agreement whether any claim in
respect of such Covered Liabilities is brought under this Agreement or the Stock
Purchase Agreement or both agreements), provided that the Indemnitees under this
Agreement and the Buyer Indemnified
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Parties under the Stock Purchase Agreement shall not recover twice for the same
Covered Liability.
ARTICLE V
TERMINATION
5.01. Termination of this Agreement. This Agreement may be terminated
upon written notice at any time by mutual agreement of the Board of Directors of
Buyer and the Indemnitor.
5.02. No Effect. This Agreement shall automatically terminate and be
void and have no effect if the Closing under the Stock Purchase Agreement does
not occur.
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IN WITNESS WHEREOF, Buyer and the Indemnitor have caused this Agreement
to be executed as of the date first above written.
AMF GROUP HOLDINGS INC.
By:_________________________________
____________________________________
[Indemnitor]
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EXHIBIT 5.8(c)
DESCRIPTION OF SELLER NOTES
GENERAL
The Senior Subordinated Notes will be issued by the Company pursuant to
an Indenture (the "Senior Subordinated Note Indenture") among the Company, the
Guarantors and IBJ Schroder Bank & Trust Company, as trustee (the "Senior
Subordinated Note Trustee"). The Senior Subordinated Discount Notes will be
issued by the Company pursuant to an Indenture (the "Senior Subordinated
Discount Note Indenture" and, together with the Senior Subordinated Note
Indenture, the "Indentures") among the Company, the Guarantors and American Bank
National Association, as trustee (the "Senior Subordinated Discount Note
Trustee" and, together with the Senior Subordinated Note Trustee, the
"Trustees"). The Senior Subordinated Notes and the Senior Subordinated Discount
Notes (collectively, the "Notes") will be issued by the Company in a private
transaction that is not subject to the registration requirements of the
Securities Act. The terms of the Notes include those stated in the Indentures
and those made part of the Indentures by reference to the Trust Indenture Act of
1939 (the "Trust Indenture Act"). The Notes are subject to all such terms, and
Holders of Notes are referred to the Indentures and the Trust Indenture Act for
a statement thereof. The following summary of certain provisions of the
Indentures does not purport to be complete and is qualified in its entirety by
reference to the Indentures, including the definitions therein of certain terms
used below. Copies of the proposed forms of Indentures are available from the
Company upon request. The definitions of certain terms used in the following
summary are set forth below under the caption "-- Certain Definitions."
As of the date of the Indentures, all of the Company's Subsidiaries
will be Restricted 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 Indentures.
TRANSFER RESTRICTIONS
The Notes may not be sold, transferred, pledged, hypothecated or
otherwise disposed of, in whole or in part, directly or indirectly, at any time
on or prior to April 1, 1997.
The Holders of the Notes will have the right to cause the Company and
the Guarantors to file a Shelf Registration Statement with respect to the Notes
at any time during the six-month period commencing April 1, 1998, upon not less
than 30 days' written notice, and to keep such Shelf Registration Statement
effective for a period of up to six months; provided, that the Company and the
Guarantors may defer filing a Shelf Registration Statement for a period of six
months after such filing obligation arises if they determine in good faith that
it is the best interests of the Company to postpone such filing.
In addition, the Notes will contain the following legend:
THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1993 (THE "SECURITIES ACT") AND (A) MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE
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TRANSFERRED EXCEPT (1) BY THE INITIAL INVESTOR (a) TO A PERSON WHOM THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (b) IN AN OFFSHORE
TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATIONS UNDER THE
SECURITIES ACT, (c) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (d) TO THE
COMPANY OR (e) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND (2), BY SUBSEQUENT INVESTORS, AS SET FORTH IN (1) ABOVE
AND, IN ADDITION, TO AN INSTITUTIONAL ACCREDITED INVESTOR IN A TRANSACTION
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND, IN
EACH CASE, IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES
OF THE UNITED STATES AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER
IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE NOTES EVIDENCED HEREBY
OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE. NO REPRESENTATION CAN
BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 FOR
RESALES OF THE NOTES.
SUBORDINATION
The payment of principal of, premium, if any, and interest on the Notes
will be subordinated in right of payment, in certain circumstances as set forth
in the Indentures, to the prior payment in full of all Senior Debt, whether
outstanding on the date of the Indentures or thereafter incurred.
The Indentures will provide that, upon any distribution to creditors of
the Company in a liquidation or dissolution of the Company or in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to the
Company or its property, an assignment for the benefit of creditors or any
marshalling of the Company's assets and liabilities, the holders of Senior Debt
will be entitled to receive payment in full of all Obligations due in respect of
such Senior Debt (including interest after the commencement of any such
proceeding at the rate specified in the documents relating to the applicable
Senior Debt, whether or not the claim for such interest is allowed as a claim in
such proceeding) before the Holders of Notes will be entitled to receive any
payment with respect to the Notes, and until all Obligations with respect to
Senior Debt are paid in full, any distribution to which the Holders of Notes
would be entitled will be made to the holders of Senior Debt (except that
Holders of Notes may receive payments made from the trust described under "--
Legal Defeasance and Covenant Defeasance").
The Indentures will also provide that the Company may not make any
payment upon or in respect of the Notes (except from the trust described under
"-- Legal Defeasance and Covenant Defeasance") if (i) a default in the payment
of the principal of, premium, if any, or interest on Designated Senior Debt
occurs and is continuing, or any judicial proceeding is pending to determine
whether any such default has occurred, or (ii) any other default occurs and is
continuing with respect to Designated Senior Debt that permits,
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or would permit, with the passage of time or the giving of notice or both,
holders of the Designated Senior Debt as to which such default relates to
accelerate its maturity and the Trustee receives a notice of such default (a
"Payment Blockage Notice") from the Company or the holders of any Designated
Senior Debt. Payments on the Notes may and shall be resumed (a) in the case of a
payment default, upon the date on which such default is cured or waived or shall
have ceased to exist, unless another default, event of default or other event
that would prohibit such payment shall have occurred and be continuing, or all
Obligations in respect of such Designated Senior Debt shall have been discharged
or paid in full and (b) in 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 by the Trustees. No
new period of payment blockage may be commenced unless and until 360 days have
elapsed since the first day of effectiveness of the immediately prior Payment
Blockage Notice. No nonpayment default 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 unless such default
shall have been subsequently cured or waived for a period of not less than 180
days.
The Indentures will further require that the Company promptly notify
holders of Senior Debt 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, Holders of Notes may recover less ratably
than creditors of the Company who are holders of Senior Debt. On a pro forma
basis, after giving effect to the Acquisition, the New Bank Credit Agreement and
the Offering and the application of the proceeds therefrom, the principal amount
of Senior Debt outstanding at December 31, 1995 would have been approximately
$665 million. The Indentures will limit, subject to certain financial tests, the
amount of additional Indebtedness, including Senior Debt, that the Company and
its Restricted Subsidiaries can incur. See "-- Certain Covenants-- Incurrence of
Indebtedness and Issuance of Disqualified Stock."
"Designated Senior Debt" means (i) so long as the Senior Bank Debt is
outstanding, the Senior Bank Debt, (ii) the Senior Bank Hedging Obligations and
(iii) any other Senior Debt permitted under the Indentures the principal amount
of which is $25 million or more and that has been designated by the Company as
"Designated Senior Debt."
"Senior Bank Debt" means all Obligations in respect of the Indebtedness
outstanding under the New Bank Credit Agreement, together with any refunding,
refinancing or replacement (in whole or part) of such Indebtedness.
"Senior Bank Hedging Obligations" means all present and future Hedging
Obligations of the Company, whether existing now or in the future, that are
secured by the New Bank Credit Agreement or any of the collateral documents
executed from time to time in connection therewith.
"Senior Debt" means (i) the Senior Bank Debt, (ii) the Senior Bank
Hedging Obligations and (iii) any other Indebtedness permitted to be incurred by
the Company under the terms of the Indentures, unless the instrument under which
such Indebtedness is incurred expressly provides that it is on a parity with or
subordinated in right of payment to the Notes. Notwithstanding anything to the
contrary in the foregoing, Senior Debt will not
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include (1) any liability for federal, state, local or other taxes owed or owing
by the Company, (2) any Indebtedness of the Company to any of its Restricted
Subsidiaries or other Affiliates (other than Goldman, Sachs & Co. and its
Affiliates, including Pearl Street L.P.), (3) any trade payables, (4) that
portion of any Indebtedness that is incurred in violation of the Indentures, (5)
Indebtedness which, when incurred and without respect to any election under
Section 1111(b) of Title 11, United States Code, is without recourse to the
Company, (6) any Indebtedness, Guarantee or obligation of the Company which is
contractually subordinate in right of payment to any other Indebtedness,
Guarantee or obligation of the Company; provided, however, that this clause (6)
shall not apply to the subordination of liens or security interests covering
particular properties or types of assets securing Senior Debt, (7) Indebtedness
evidenced by the Notes and (8) Capital Stock.
The Notes will rank pari passu or senior in right of payment to all
Subordinated Indebtedness of the Company. The Senior Subordinated Notes and the
Senior Subordinated Discount Notes will rank pari passu with each other. On the
date of the Indentures, the only Subordinated Indebtedness of the Company
outstanding will be the Notes.
SENIOR SUBORDINATED GUARANTEES
The Company's payment obligations under the Notes will be jointly and
severally guaranteed on a senior subordinated basis (the "Senior Subordinated
Guarantees") by Holdings and each of the Domestic Subsidiaries that Guarantees
the Senior Bank Debt (collectively, the "Guarantors"). The obligations of each
Guarantor under its Senior Subordinated Guarantee will be subordinated to its
Guarantee of all Obligations under the New Bank Credit Agreement (the "Senior
Guarantees") and will be limited so as not to constitute a fraudulent conveyance
under applicable law.
The Indentures will provide that no Guarantor may consolidate with or
merge with or into (whether or not such Guarantor is the surviving Person)
another corporation, Person or entity whether or not affiliated with such
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 Guarantor) assumes all the obligations of such Guarantor pursuant to a
supplemental indenture in form and substance reasonably satisfactory to the
Trustees, under the Notes and the Indentures; (ii) immediately after giving
effect to such transaction, no Default or Event of Default exists; and (iii)
except in the case of a merger of such Guarantor with or into the Company or
another Guarantor, the Company would be permitted by virtue of the Company's pro
forma Fixed Charge Coverage Ratio to incur, immediately after giving effect to
such transaction, at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in the covenant described below under
the caption "-- Incurrence of Indebtedness and Issuance of Disqualified Stock."
The Indentures will provide that in the event of a sale or other
disposition of all or substantially all of the assets of any Guarantor (other
than Holdings), by way of merger, consolidation or otherwise, or a sale or other
disposition (including, without limitation, by foreclosure) of all of the
capital stock of any Guarantor (other than Holdings), then such Guarantor (in
the event of a sale or other disposition, by way of such a merger, consolidation
or otherwise (including, without limitation, by foreclosure), of all of the
capital stock of such Guarantor) or the corporation acquiring the property (in
the event of a sale or
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other disposition of all or substantially all of the assets of such Guarantor)
will be automatically released and relieved of any obligations under its Senior
Subordinated Guarantee; provided that the Net Proceeds of such sale or other
disposition are applied in accordance with the applicable provisions of the
Indentures. See "Repurchase at the Option of Holders -- Asset Sales." The
Indentures will also provide that upon the merger, consolidation, sale or other
disposition (including, without limitation, by foreclosure) of all or
substantially all of the assets, of the Company, then Holdings will be
automatically released and relieved of any obligations under its Senior
Subordinated Guarantee; provided that such merger, consolidation or sale
complies with the applicable provisions of the Indentures. See "Certain
Covenants -- Merger, Consolidation or Sale of All or Substantially All Assets."
The Indentures will further provide that in the event that any Guarantor is
released and relieved of its obligations under its Senior Guarantee, then such
Guarantor will be automatically released and relieved of any obligations under
its Senior Subordinated Guarantee.
Certain of the operations of the Company are conducted through
Subsidiaries that are not Guarantors and the Company is dependent upon the cash
flow of those Subsidiaries to meet its obligations, including its obligations
under the Notes. The Notes will be effectively subordinated to all indebtedness
and other liabilities and commitments (including trade payables and lease
obligations) of the Company's Subsidiaries that are not Guarantors, which were
approximately $27.5 million (excluding inter-company payables to the Company) at
December 31, 1995. Any right of the Company to receive assets of any of such
Subsidiaries upon the latter's liquidation or reorganization (and the consequent
right of the Holders of the Notes to participate in those assets) will be
effectively subordinated to the claims of such Subsidiary's creditors, except to
the extent that the Company or a Guarantor is itself recognized as a creditor of
such Subsidiary, in which case the claims of the Company would still be
subordinate to any security in the assets of such Subsidiary and any
indebtedness of such Subsidiary senior to that held by the Company or a
Guarantor.
PRINCIPAL, MATURITY AND INTEREST OF THE SENIOR SUBORDINATED NOTES
The Senior Subordinated Notes will be general unsecured obligations of
the Company, limited in aggregate principal amount to $200 million and will
mature on April 1, 2006. Interest on the Senior Subordinated Notes will accrue
at the rate of 12 1/2% per annum and will be payable in cash semi-annually in
arrears on October 1 and April 1, commencing on October 1, 1996, to Holders of
record on the immediately preceding September 15 and March 15. Interest on the
Senior Subordinated 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
original issuance. Interest will be computed on the basis of a 360-day year
consisting of twelve 30-day months. Principal, premium, if any, and interest on
the Senior Subordinated 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 may be made by check mailed to
the Holders of the Senior Subordinated Notes at their respective addresses set
forth in the register of Holders of Senior Subordinated Notes. Until otherwise
designated by the Company, the Company's office or agency in New York will be
the office of the Senior Subordinated Note Trustee maintained for such purpose.
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PRINCIPAL, MATURITY AND INTEREST OF THE SENIOR SUBORDINATED DISCOUNT NOTES
The Senior Subordinated Discount Notes will be general unsecured
obligations of the Company, limited in aggregate principal amount at maturity to
$___ million and will mature on April 1, 2006. The Senior Subordinated Discount
Notes are being offered at an initial Accreted Value of $150 million, which
represents a substantial discount from their principal amount at maturity. Until
April 1, 2001 (the "Full Accretion Date"), no interest will be paid in cash on
the Senior Subordinated Discount Notes, but the Accreted Value will accrete
(representing the amortization of original issue discount) between the Issuance
Date and the Full Accretion Date, on a semi-annual bond equivalent basis using a
360-day year comprised of twelve 30-day months such that the Accreted Value
shall be equal to the full principal amount at maturity of the Senior
Subordinated Discount Notes on the Full Accretion Date. Beginning on the Full
Accretion Date, interest on the Senior Subordinated Discount Notes will accrue
at the rate of 13 1/2% per annum and will be payable in cash semi-annually in
arrears on October 1 and April 1, commencing on October 1, 2001, to Holders of
record on the immediately preceding September 15 and March 15. Interest on the
Senior Subordinated Discount Notes will accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from the Full
Accretion Date. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months. Principal, premium, if any and interest on
the Senior Subordinated Discount 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 may be made by check
mailed to the Holders of the Senior Subordinated Discount Notes at their
respective addresses set forth in the register of Holders of Senior Subordinated
Discount Notes. Until otherwise designated by the Company, the Company's office
or agency in New York will be the office of the Senior Subordinated Discount
Note Trustee maintained for such purpose.
OPTIONAL REDEMPTION
SPECIAL REDEMPTION. In addition to the customary redemption provisions
set forth below, on or prior to April 1, 1998, the Company may, at its option,
in whole but not in part, on any one or more occasions, upon not less than three
Business Days' written notice, redeem Notes at a redemption price equal to (i)
in the case of Senior Subordinated Notes, 96.5% of the aggregate principal
amount thereof, plus accrued and unpaid interest thereon to the redemption date
and (ii) in the case of Senior Subordinated Discount Notes, 96.5% of the
Accreted Value thereof on the date of redemption.
SENIOR SUBORDINATED NOTES. Except as described in the paragraph above
under "-- Special Redemption" and below, the Senior Subordinated Notes are not
redeemable at the Company's option prior to April 1, 2001. From and after April
1, 2001, the Senior Subordinated Notes will be subject to redemption at the
option of the Company, in whole or in part, upon not less than 30 nor more than
60 days' written notice, at the Senior Subordinated Note Redemption Prices
(expressed as percentages of principal amount) set forth below, plus accrued and
unpaid interest thereon to the applicable redemption date, if redeemed during
the twelve-month period beginning on April 1 of each of the years indicated
below:
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<TABLE>
<CAPTION>
Percentage of
Year Principal Amount
- ---- ----------------
<C> <C>
2001 106.250%
2002 103.125%
2003 101.563%
2004 and thereafter 100.000%
</TABLE>
Prior to April 1, 1999, the Company may, at its option, on any one or
more occasions, redeem up to $100 million in aggregate principal amount of
Senior Subordinated Notes at a redemption price equal to 111 1/2% of the
principal amount thereof, plus accrued and unpaid interest thereon to the
redemption date, with the net proceeds of public or private sales of Common
Stock of, or contributions to the common equity capital of, the Company;
provided that at least $100 million in aggregate principal amount of Senior
Subordinated Notes remains outstanding immediately after the occurrence of such
redemption; and provided, further, that such redemption shall occur within 60
days of the date of the closing of the related sale of Common Stock of, or
capital contribution to, the Company.
SENIOR SUBORDINATED DISCOUNT NOTES. Except as described in the
paragraph above under "-- Special Redemption" and below, the Senior Subordinated
Discount Notes are not redeemable at the Company's option prior to April 1,
2001. From and after April 1, 2001, the Senior Subordinated Discount Notes will
be subject to redemption at the option of the Company, in whole or in part, upon
not less than 30 nor more than 60 days' written notice, at the Senior
Subordinated Discount Note Redemption Prices (expressed as percentages of
principal amount) set forth below, plus accrued and unpaid interest thereon to
the applicable redemption date, if redeemed during the twelve-month period
beginning on April 1 of each of the years indicated below:
<TABLE>
<CAPTION>
Percentage of
Year Principal Amount
- ---- ----------------
<C> <C>
2001 106.750%
2002 103.375%
2003 101.688%
2004 and thereafter 100.000%s
</TABLE>
Prior to April 1, 1999, the Company may, at its option, on any one or
more occasions, redeem Senior Subordinated Discount Notes at a redemption price
equal to 112 1/2% of the Accreted Value thereof with the net proceeds of public
or private sales of Common Stock of, or contributions to the common equity
capital of, the Company; provided that at least $75 million in aggregate
Accreted Value of Senior Subordinated Discount
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Notes remains outstanding immediately after the occurrence of such redemption;
and provided, further, that such redemption shall occur within 60 days of the
date of the closing of the related sale of Common Stock of, or capital
contribution to, the Company.
SELECTION AND NOTICE
If less than all of the Senior Subordinated Notes and/or Senior
Subordinated Discount Notes, as the case may be, are to be redeemed at any time,
selection of such Notes for redemption will be made by the applicable 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 applicable Trustee shall deem
fair and appropriate; provided that, subject to the limitations described above,
the Company may, at its option, elect to redeem either Senior Subordinated
Notes, Senior Subordinated Discount Notes, or both Senior Subordinated Notes and
Senior Subordinated Discount Notes; and provided further, that no Notes of
$1,000 or less shall be redeemed in part.
Notices of redemption shall 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 such Holder's registered address. If any Note is to be redeemed
in part only, the notice of redemption that relates to such Note shall 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. On and after the
redemption date, unless the Company defaults in payment of the redemption price,
interest ceases to accrue on Notes or portions of them called for redemption.
MANDATORY REDEMPTION
Except as set forth below under "Repurchase at the Option of Holders,"
the Company is not required to make mandatory redemption or sinking fund
payments with respect to the Notes.
REPURCHASE AT THE OPTION OF HOLDERS
CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each Holder of Notes will
have the right to require the Company to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of such Holder's Notes pursuant to the
offer described below (the "Change of Control Offer") at an offer price in cash
(the "Change of Control Payment") equal to 101% of the aggregate principal
amount thereof plus accrued and unpaid interest thereon to the date of purchase
(or if such Change of Control Offer is with respect to the Senior Subordinated
Discount Notes prior to the Full Accretion Date, 101% of the Accreted Value
thereof on the date of purchase). Within 30 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 Indentures and
described in such notice. The Company will
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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.
The Indentures will provide that, prior to complying with the
provisions of this covenant, but in any event within 30 days following a Change
of Control, the Company will either repay all outstanding amounts under the New
Bank Credit Agreement or offer to repay in full all outstanding amounts under
the New Bank Credit Agreement and repay the Obligations held by each lender who
has accepted such offer or obtain the requisite consents, if any, under the New
Bank Credit Agreement to permit the repurchase of the Notes required by this
covenant.
On a date that is no earlier than 30 days nor later than 60 days from
the date that the Company mails notice of the Change of Control to the Holders
(the "Change of Control Payment 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 Agents 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 Trustees for
cancellation 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 Agents will promptly mail to each Holder of
Notes so tendered the Change of Control Payment for such Notes, and the Trustees
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 Company will
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
The Change of Control provisions described above will be applicable
whether or not any other provisions of the Indentures are applicable. Except as
described above with respect to a Change of Control, the Indentures do 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 Company will not be required to make a Change of Control Offer upon
a Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in the Indentures 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.
The existence of a Holder's right to require the Company to repurchase
such Holder's Notes upon the occurrence of a Change of Control may deter a third
party from seeking to acquire the Company in a transaction that would constitute
a Change of Control.
ASSET SALES
The Indentures will provide that the Company will not, and will not
permit any of its Restricted Subsidiaries to, cause, make or suffer to exist an
Asset Sale unless (i) the Company (or the Restricted Subsidiary, as the case may
be) receives consideration at the time of such Asset Sale at least equal to the
fair market value (evidenced by a resolution of
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the Board of Directors set forth in an Officers' Certificate delivered to the
Trustees) of the assets or Equity Interests issued or sold or otherwise disposed
of and (ii) except in the case of a Permitted Asset Swap, at least 80% of the
consideration therefor received by the Company or such Restricted 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 Restricted Subsidiary's most
recent balance sheet) of the Company or any Restricted Subsidiary (other than
contingent liabilities and liabilities that are by their terms subordinated to
the Notes or any guarantee thereof) that are assumed by the transferee of any
such assets pursuant to a customary novation agreement that releases the Company
or such Restricted Subsidiary from further liability and (y) any notes or other
obligations received by the Company or any such Restricted Subsidiary from such
transferee that are immediately converted by the Company or such Restricted
Subsidiary into cash (to the extent of the cash received), shall be deemed to be
cash for purposes of this provision.
Within 365 days after the Company's or any Restricted Subsidiary's
receipt of the Net Proceeds of any Asset Sale, the Company or such Restricted
Subsidiary may apply the Net Proceeds from such Asset Sale, at its option, (i)
to permanently reduce Obligations under the New Bank Credit Agreement (and to
correspondingly reduce commitments with respect thereto) or other Senior Debt or
Pari Passu Indebtedness, (ii) to secure Letter of Credit Obligations to the
extent related letters of credit have not been drawn upon or returned undrawn,
(iii) to an investment in any one or more businesses, capital expenditures or
acquisitions of other assets, in each case, used or useful in a Principal
Business, (iv) to an investment in properties or assets that replace the
properties and assets that are the subject of such Asset Sale and/or (v) in the
case of a sale of a bowling center or bowling centers, deem such Net Proceeds to
have been applied pursuant to the immediately preceding clause (iv) to the
extent of any expenditures made to acquire or construct one or more bowling
centers in the general vicinity of the bowling center(s) sold within 365 days
preceding the date of the Asset Sale. Pending the final application of any such
Net Proceeds, the Company or such Restricted Subsidiary may temporarily reduce
Indebtedness under a revolving credit facility, if any, or otherwise invest such
Net Proceeds in Cash Equivalents. The Indentures will provide that any Net
Proceeds from the Asset Sale that are not invested as provided and within the
time period set forth in the first sentence of this paragraph will be deemed to
constitute "Excess Proceeds." When the aggregate amount of Excess Proceeds
exceeds $25 million, the Company will be required to make an offer to all
Holders of Notes (an "Asset Sale Offer") to purchase the maximum principal
amount of Notes, that is an integral multiple of $1,000, that may be purchased
out of the Excess Proceeds at an offer price in cash in an amount equal to 100%
of the aggregate principal amount thereof, plus accrued and unpaid interest (or,
if such Asset Sale Offer is with respect to the Senior Subordinated Discount
Notes prior to the Full Accretion Date, 100% of the Accreted Value thereof on
the date of purchase), to the date fixed for the closing of such offer, in
accordance with the procedures set forth in the Indentures. The Company will
commence an Asset Sale Offer with respect to Excess Proceeds within ten Business
Days after the date that the aggregate amount of Excess Proceeds exceeds $25
million by mailing the notice required pursuant to the terms of the Indentures,
with a copy to the Trustees. To the extent that the aggregate amount of Notes
tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the
Company may use any remaining Excess Proceeds (x) to offer to redeem
Subordinated Indebtedness (a "Subordinated Asset Sale Offer") in accordance with
the provisions of the indenture or other agreement governing such Subordinated
Indebtedness or (y) for any purpose not prohibited by the Indentures. If the
aggregate principal amount of Notes surrendered by Holders thereof exceeds the
amount of Excess Proceeds,
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<PAGE> 306
the Trustees shall select the Notes to be purchased on a pro rata basis, based
upon the Accreted Value of Senior Subordinated Discount Notes and the principal
amount of Senior Subordinated Notes tendered. Upon completion of any such Asset
Sale Offer, the amount of Excess Proceeds shall be reset at zero.
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 an Asset Sale.
The New Bank Credit Agreement currently prohibits the Company from
purchasing any Notes, and also provides that certain change of control events
with respect to the Company would constitute a default thereunder. Any future
credit agreements or other agreements relating to Senior Debt to which the
Company becomes a party may contain similar restrictions and provisions. In the
event a Change of Control occurs or an Asset Sale Offer is required to be made
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 refinance the borrowings that contain such prohibition. If the Company does
not obtain such a consent or repay 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 the
Indentures. In such circumstances, the subordination provisions in the
Indentures would likely restrict payments to the Holders of Notes.
CERTAIN COVENANTS
RESTRICTED PAYMENTS
The Indentures will provide that the Company will not, and will not
permit any of its Restricted Subsidiaries to, directly or indirectly: (i)
declare or pay any dividend or make any other payment or distribution on account
of the Company's or any of its Restricted Subsidiaries' 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 any Restricted Subsidiary of the Company); (ii) purchase, redeem,
defease or otherwise acquire or retire for value any Equity Interests of the
Company or any direct or indirect parent of the Company; (iii) make any
principal payment on, or purchase, redeem, defease or otherwise acquire or
retire for value any Subordinated Indebtedness, except at final maturity; or
(iv) make any Restricted Investment (all such payments and other actions set
forth in clauses (i) through (iv) above 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 shall have occurred and be
continuing or would occur as a consequence thereof;
(b) the Company would, at the time of such Restricted Payment
and immediately 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
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<PAGE> 307
Coverage Ratio test set forth in the first paragraph of the covenant
described below under the caption "-- 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 Restricted
Subsidiaries after the date of the Indentures (including Restricted
Payments permitted by clause (i) of the next succeeding paragraph, but
excluding all other Restricted Payments permitted by the next
succeeding paragraph), is less than the sum of (i) 50% of the
Consolidated Net Income of the Company for the period (taken as one
accounting period) from the beginning of the first fiscal quarter
commencing after the date of the Indentures 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 (ii) 100% of the aggregate net cash proceeds and
the fair market value, as determined in good faith by the Board of
Directors, of marketable securities received by the Company from the
issue or sale since the date of the Indentures of Equity Interests
(including Retired Capital Stock (as defined below)) of the Company
(except in connection with the Acquisition) or of debt securities of
the Company that have been converted into such Equity Interests (other
than Refunding Capital Stock (as defined below) or Equity Interests or
convertible debt securities of the Company sold to a Restricted
Subsidiary of the Company and other than Disqualified Stock or debt
securities that have been converted into Disqualified Stock), plus
(iii) 100% of the aggregate amounts contributed to the common equity
capital of the Company since the date of the Indentures (except amounts
contributed to finance the Acquisition), plus (iv) 100% of the
aggregate amounts received in cash and the fair market value of
marketable securities (other than Restricted Investments) received from
(x) the sale or other disposition of Restricted Investments made by the
Company and its Restricted Subsidiaries since the date of the
Indentures or (y) the sale of the stock of an Unrestricted Subsidiary
or the sale of all or substantially all of the assets of an
Unrestricted Subsidiary to the extent that a liquidating dividend is
paid to the Company or any Subsidiary from the proceeds of such sale,
plus (v) 100% of any dividends received by the Company or a Wholly
Owned Restricted Subsidiary of the Company after the date of the
Indentures from an Unrestricted Subsidiary of the Company, plus (vi)
$10 million.
The foregoing provisions will not prohibit:
(i) the payment of any dividend within 60 days after the date
of declaration thereof, if at the date of declaration such payment
would have complied with the provisions of the Indentures;
(ii) the redemption, repurchase, retirement or other
acquisition of any Equity Interests of the Company or any Restricted
Subsidiary (the "Retired Capital Stock") or any Subordinated
Indebtedness, in each case, in exchange for, or out of the proceeds of,
the substantially concurrent sale (other than to a Restricted
Subsidiary of the Company) of Equity Interests of the Company (other
than any Disqualified Stock) (the "Refunding Capital Stock"); provided
that the amount of any such net cash proceeds that are utilized for any
such redemption, repurchase, retirement
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<PAGE> 308
or other acquisition shall be excluded from clause (c)(ii) of the
immediately preceding paragraph;
(iii) the defeasance, redemption or repurchase of Subordinated
Indebtedness with the net cash proceeds from an incurrence of Permitted
Refinancing Indebtedness;
(iv) the redemption, repurchase or other acquisition or
retirement for value of any Equity Interests of the Company or any
Restricted Subsidiary of the Company held by any member of the
Company's (or any of its Restricted Subsidiaries') management pursuant
to any management equity subscription agreement or stock option or
similar agreement; provided that the aggregate price paid for all such
repurchased, redeemed, acquired or retired Equity Interests shall not
exceed the sum of $5 million in any twelve-month period plus the
aggregate cash proceeds received by the Company during such
twelve-month period from any issuance of Equity Interests by the
Company to members of management of the Company and its Restricted
Subsidiaries; provided that the amount of any such net cash proceeds
that are utilized for any such redemption, repurchase, retirement or
other acquisition shall be excluded from clause (c)(ii) of the
immediately preceding paragraph;
(v) Investments in Unrestricted Subsidiaries or in Joint
Ventures having an aggregate fair market value, taken together with all
other Investments made pursuant to this clause (v) that are at that
time outstanding, not to exceed 5% of Total Assets at the time of such
Investment (with the fair market value of each Investment being
measured at the time made and without giving effect to subsequent
changes in value);
(vi) repurchases of Equity Interests deemed to occur upon
exercise or conversion of stock options, warrants, convertible
securities or similar Equity Interests if such Equity Interests
represent a portion of the exercise or conversion price of such
options, warrants, convertible securities or similar Equity Interests;
(vii) the making and consummation of a Subordinated Asset Sale
Offer in accordance with the provisions described under the caption
entitled "-- Repurchase at the Option of Holders -- Asset Sales"; and
(viii) any dividend or distribution payable on or in respect
of any class of Equity Interests issued by a Restricted Subsidiary of
the Company; provided that such dividend or distribution is paid on a
pro rata basis to all of the holders of such Equity Interests in
accordance with their respective holdings of such Equity Interests;
provided, further, that at the time of, and after giving
effect to, any Restricted Payment permitted under clauses (iv) or (v) above, no
Default or Event of Default shall have occurred and be continuing or would occur
as a consequence thereof.
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<PAGE> 309
As of the date of the Indentures, all of the Company's
Subsidiaries will be Restricted Subsidiaries. The Company will not permit any
Unrestricted Subsidiary to become a Restricted Subsidiary except pursuant to the
last sentence of the definition of "Unrestricted Subsidiary." For purposes of
designating any Restricted Subsidiary as an Unrestricted Subsidiary, all
outstanding Investments by the Company and its Restricted Subsidiaries (except
to the extent repaid) in the Subsidiary so designated will be deemed to be
Restricted Payments in an amount equal to the book value of such Investment at
the time of such designation. Such designation will only be permitted if a
Restricted Payment in such amount would be permitted at such time and if such
Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.
Unrestricted Subsidiaries will not be subject to any of the restrictive
covenants set forth in the Indentures.
The amount of all Restricted Payments (other than cash) shall
be the fair market value (evidenced by a resolution of the Board of Directors
set forth in an Officers' Certificate delivered to the Trustees) on the date of
the Restricted Payment of the asset(s) proposed to be transferred by the Company
or such Restricted Subsidiary, as the case may be, pursuant to the Restricted
Payment. Not later than the date of making any Restricted Payment, the Company
shall deliver to the Trustees an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by the covenant "Restricted Payments" were computed, which
calculations may be based upon the Company's latest available financial
statements.
INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED STOCK
The Indentures will provide that the Company will not, and
will not permit any of its Subsidiaries to, directly or indirectly, create,
incur, issue, assume, guaranty or otherwise become directly or indirectly
liable, contingently or otherwise, with respect to (collectively, "incur" and
correlatively, an "incurrence" of) any Indebtedness (including Acquired Debt)
and that the Company will not issue any Disqualified Stock; provided, however,
that the Company may incur Indebtedness (including Acquired Debt) or issue
shares of Disqualified Stock if the Fixed Charge Coverage Ratio for the Company
for the most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date of such
incurrence would have been at least 2.00 to 1.0 if such date is on or prior to
October 1, 1997, 2.25 to 1.0 if such date is after October 1, 1997 and on or
prior to April 1, 1999 and 2.50 to 1.0 thereafter, in each case, 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, as the case may be, and the application of
the proceeds therefrom had occurred at the beginning of such four-quarter
period.
The foregoing provisions will not apply to:
(a) the incurrence by the Company (and the Guarantee thereof
by the Guarantors) of (i) Indebtedness under the New Bank Credit
Agreement and the issuance of letters of credit thereunder (with
letters of credit being deemed to have a principal amount equal to the
aggregate maximum amount then available to be drawn thereunder,
assuming compliance with all conditions for drawing) up to an aggregate
principal amount of $865 million outstanding at any one time, less
principal repayments of term loans and permanent commitment reductions
with respect to revolving loans and letters of credit under the New
Bank Credit Agreement made after the date of
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the Indentures and (ii) additional Indebtedness under the New Bank
Credit Agreement and the issuance of additional letters of credit
thereunder (with letters of credit being deemed to have a principal
amount equal to the aggregate maximum amount then available to be drawn
thereunder, assuming compliance with all conditions for drawing) up to
an aggregate principal amount of $75 million outstanding at any one
time (reduced by the aggregate principal amount (or accreted value, as
applicable) of Indebtedness outstanding pursuant to clause (m) below);
(b) the incurrence by the Company or any of its Restricted
Subsidiaries of any Existing Indebtedness;
(c) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by the Notes;
(d) Indebtedness (including Capital Lease Obligations)
incurred by the Company or any of its Restricted Subsidiaries to
finance the purchase, lease or improvement of property (real or
personal), assets or equipment (whether through the direct purchase of
assets or the Capital Stock of any Person owning such assets), in an
aggregate principal amount not to exceed 5% of Total Assets at any time
outstanding;
(e) Indebtedness incurred by the Company or any of its
Restricted Subsidiaries constituting reimbursement obligations with
respect to letters of credit issued in the ordinary course of business,
including, without limitation, letters of credit in respect of workers'
compensation claims or self-insurance, or other Indebtedness with
respect to reimbursement type obligations regarding workers'
compensation claims;
(f) intercompany Indebtedness between or among the Company and
any of its Restricted Subsidiaries and Guarantees by a Restricted
Subsidiary of the Company of Indebtedness of any other Restricted
Subsidiary of the Company or the Company;
(g) Hedging Obligations that are incurred (1) for the purpose
of fixing or hedging interest rate risk with respect to any
Indebtedness that is permitted by the terms of the Indentures to be
outstanding or (2) for the purpose of fixing or hedging currency
exchange rate risk with respect to any currency exchanges;
(h) obligations in respect of performance and surety bonds and
completion guarantees provided by the Company or any Restricted
Subsidiary in the ordinary course of business;
(i) the incurrence by the Company or any of its Guarantors of
Indebtedness in connection with the acquisition of assets or a new
Restricted Subsidiary; provided that such Indebtedness was incurred by
the prior owner of such assets or such new Restricted Subsidiary prior
to such acquisition by the Company or such Restricted Subsidiary and
was not incurred in connection with, or in contemplation of, such
acquisition; and provided further that the Fixed Charge Coverage Ratio
for the Company for the most recently ended four full fiscal quarters
for which internal financial statements are available immediately
preceding the date of such transaction would have been at least 2.00 to
1.0 if such date is on or prior to October 1, 1997, 2.25 to 1.0 if such
date is after October 1, 1997 and on or prior to April 1, 1999
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and 2.50 to 1.0 thereafter, in each case, determined on a pro forma
basis, as if such transaction had occurred at the beginning of such
four-quarter period and such Indebtedness or Disqualified Stock and the
Consolidated Cash Flow of such merged or acquired Person had been
included for all purposes in such pro forma calculation;
(j) the incurrence by the Company or any of its Restricted
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 the
Indentures to be incurred;
(k) the incurrence by the Company's Unrestricted Subsidiaries
of Non-Recourse Debt, provided, however, that if any such Indebtedness
ceases to be Non-Recourse Debt of an Unrestricted Subsidiary, such
event shall be deemed to constitute an incurrence of Indebtedness by a
Restricted Subsidiary of the Company;
(l) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness, all of the net proceeds of which are used
to finance the purchase or redemption of Notes, in whole or in part,
provided, however, that if all of the Notes are to be purchased or
redeemed with the net proceeds of any additional Indebtedness incurred
hereunder, the amount of additional Indebtedness that may be incurred
pursuant to this clause (l) shall be unlimited; and
(m) the incurrence by the Company of additional Indebtedness
not otherwise permitted hereunder in an amount under this clause (m)
not to exceed $75 million in aggregate principal amount (or accreted
value, as applicable) outstanding at any one time (reduced by the
aggregate principal amount of Indebtedness outstanding pursuant to
clause (a)(ii) above).
NO SENIOR SUBORDINATED DEBT
The Indentures will provide that (i) the Company will not
directly or indirectly incur, create, issue, assume, guarantee or otherwise
become liable for any Indebtedness that is subordinate or junior in right of
payment to any Senior Debt and senior in any respect in right of payment to the
Notes and (ii) no Guarantor will directly or indirectly incur, create, issue,
assume, guarantee or otherwise become liable for any Indebtedness that is
subordinate or junior in right of payment to the Senior Guarantees and senior in
any respect in right of payment to the Senior Subordinated Guarantees.
LIENS
The Indentures will provide that the Company will not, and
will not permit any of its Restricted Subsidiaries to, directly or indirectly,
create, incur, assume or suffer to exist any Lien that secures obligations under
any Pari Passu Indebtedness or Subordinated Indebtedness on any asset or
property now owned or hereafter acquired by the Company or any of its Restricted
Subsidiaries, or on any income or profits therefrom, or assign or convey any
right to receive income therefrom to secure any Pari Passu Indebtedness or
Subordinated Indebtedness, unless the Notes are equally and ratably secured with
the obligations so secured or until such time as such obligations are no longer
secured by a Lien; provided,
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that in any case involving a Lien securing Subordinated Indebtedness, such Lien
is subordinated to the Lien securing the Notes to the same extent that such
Subordinated Indebtedness is subordinated to the Notes.
DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES
The Indentures will provide that the Company will not, and
will not permit any of its Restricted 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 Restricted Subsidiary to (i)(a) pay
dividends or make any other distributions to the Company or any of its
Restricted 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 Restricted Subsidiaries, (ii)
make loans or advances to the Company or any of its Restricted Subsidiaries or
(iii) sell, lease or transfer any of its properties or assets to the Company or
any of its Restricted Subsidiaries, except for such encumbrances or restrictions
existing under or by reason of (a) Existing Indebtedness as in effect on the
date of the Indentures, (b) the New Bank Credit Agreement as in effect as of the
date of the Indentures, and any amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacements or refinancings
thereof, provided that such amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacement 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 Bank Credit Agreement as in effect
on the date of the Indentures, (c) the Indentures and the Notes, (d) applicable
law, (e) any instrument governing Indebtedness or Capital Stock of a Person
acquired by the Company or any of its Restricted Subsidiaries as in effect at
the time of such acquisition (except to the extent such 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, provided that, in the case of Indebtedness, such
Indebtedness was permitted by the terms of the Indentures to be incurred, (f) by
reason of customary non-assignment or net worth provisions in leases and other
agreements entered into in the ordinary course of business and consistent with
past practices, (g) purchase money 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) 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,
(i) other Indebtedness permitted to be incurred subsequent to the date of the
Indentures pursuant to the provisions of the covenant described under "--
Incurrence of Indebtedness and Issuance of Disqualified Stock"; provided that
any such restrictions are customary with respect to the type of Indebtedness
being incurred (under the relevant circumstances), (j) any Mortgage Financing or
Mortgage Refinancing that imposes restrictions on the real property securing
such Indebtedness, (k) any Permitted Investment, (l) contracts for the sale of
assets, including, without limitation customary restrictions with respect to a
Restricted Subsidiary of the Company pursuant to an agreement that has been
entered into for the sale or disposition of all or substantially all of the
Capital Stock or assets of such Restricted Subsidiary or (m) customary
provisions in joint venture agreements and other similar agreements.
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MERGER, CONSOLIDATION, OR SALE OF ALL OR SUBSTANTIALLY ALL ASSETS
The Indentures will provide that the Company may not
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 is a corporation organized or existing under the laws of the United States,
any state thereof or the District of Columbia; (ii) the entity or Person formed
by or surviving any such consolidation or merger (if other than the Company) or
the entity or Person to which such sale, assignment, transfer, lease, conveyance
or other disposition shall have been made assumes all the obligations of the
Company under the Notes and the Indentures pursuant to supplemental indentures
in form reasonably satisfactory to the applicable Trustee; (iii) immediately
after such transaction no Default or Event of Default exists; and (iv) except in
the case of a merger of the Company with or into a Wholly Owned Restricted
Subsidiary of the Company, 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
shall 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 Indebtedness pursuant to the Fixed Charge Coverage Ratio test set
forth in the first paragraph of the covenant described above under the caption
"-- Incurrence of Indebtedness and Issuance of Disqualified Stock."
Notwithstanding the foregoing clauses (iii) and (iv), (a) any Restricted
Subsidiary may consolidate with, merge into or transfer all or part of its
properties and assets to the Company and (b) the Company may merge with an
Affiliate incorporated solely for the purpose of reincorporating the Company in
another jurisdiction.
TRANSACTIONS WITH AFFILIATES
The Indentures will provide that the Company will not, and
will not permit any of its Restricted Subsidiaries to, make any payment to, or
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 or amend 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 Restricted Subsidiary than those that would have
been obtained in a comparable transaction by the Company or such Restricted
Subsidiary with an unrelated Person and (ii) the Company delivers to the
Trustees (a) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of $5
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 of the Board of Directors (if there are any disinterested
members of the Board of Directors) and (b) with respect to any Affiliate
Transaction or series of related Affiliate Transactions involving aggregate
consideration in excess of $10 million, or with respect to any Affiliate
Transaction or series of related Affiliate Transactions involving aggregate
consideration in
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excess of $5 million as to which there are no disinterested members of the Board
of Directors, an opinion as to the fairness to the Holders of such Affiliate
Transaction from a financial point of view issued by an accounting, appraisal or
investment banking firm of national standing.
The foregoing provisions will not apply to the following: (i)
transactions between or among the Company and/or any of its Restricted
Subsidiaries; (ii) Restricted Payments or Permitted Investments permitted by the
provisions of the Indentures described above under the covenant entitled "--
Restricted Payments"; (iii) the payment of all fees, expenses and other amounts
as disclosed in this Offering Circular relating to the Acquisition; (iv) the
payment of reasonable and customary regular fees to, and indemnity provided on
behalf of, officers, directors, employees or consultants of the Company or any
Restricted Subsidiary of the Company; (v) the transfer or provision of
inventory, goods or services by the Company or any Restricted Subsidiary of the
Company in the ordinary course of business to any Restricted Subsidiary of the
Company on terms that are customary in the industry or consistent with past
practices; (vi) the execution of, or the performance by the Company or any of
its Restricted Subsidiaries of its obligations under the terms of, any financial
advisory, financing, underwriting or placement agreement or any other agreement
relating to investment banking or financing activities with Goldman, Sachs & Co.
or any of its Affiliates including, without limitation, in connection with
acquisitions or divestitures, in each case to the extent that such agreement was
approved by a majority of the disinterested members of the Board of Directors in
good faith; (vii) payments, advances or loans to employees that are approved by
a majority of the disinterested members of the Board of Directors of the Company
in good faith; (viii) the performance of any agreement as in effect as of the
date of the Indentures or any amendment thereto or any transaction contemplated
thereby (including pursuant to any amendment thereto so long as any such
amendment is not disadvantageous to the Holders of the Notes in any material
respect); (ix) the existence of, or the performance by the Company or any of its
Restricted Subsidiaries of its obligations under the terms of, any stockholders
agreement (including any registration rights agreement or purchase agreement
related thereto) to which it is a party as of the date of the Indentures and any
similar agreements which it may enter into thereafter, provided, however, that
the existence of, or the performance by the Company or any of its Restricted
Subsidiaries of obligations under, any future amendment to any such existing
agreement or under any similar agreement entered into after the date of the
Indentures shall only be permitted by this clause (ix) to the extent that the
terms of any such amendment or new agreement are not otherwise disadvantageous
to the Holders of the Notes in any material respect; (x) transactions permitted
by, and complying with, the provisions of the covenant described under "--
Merger, Consolidation, or Sale of All or Substantially All Assets"; and (xi)
transactions with suppliers or other purchases or sales of goods or services, in
each case in the ordinary course of business (including, without limitation,
pursuant to joint venture agreements) and otherwise in compliance with the terms
of the Indentures which are fair to the Company or its Restricted Subsidiaries,
in the reasonable determination of a majority of the disinterested members of
the Board of Directors of the Company or an executive officer thereof, or are on
terms at least as favorable as might reasonably have been obtained at such time
from an unaffiliated party.
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ISSUANCES OF GUARANTEES OF INDEBTEDNESS
The Indentures will provide that the Company will not permit
any Restricted Subsidiary, directly or indirectly, to Guarantee or pledge any
assets to secure the payment of any other Indebtedness unless such Restricted
Subsidiary either (i) is a Guarantor, or (ii) simultaneously executes and
delivers supplemental indentures to the Indentures providing for the Guarantee
of the payment of all Obligations with respect to the Notes by such Restricted
Subsidiary, which Guarantee shall be senior to such Restricted Subsidiary's
Guarantee of or pledge to secure any other Indebtedness that constitutes
Subordinated Indebtedness and subordinated to such Restricted Subsidiary's
Guarantee of or pledge to secure any other Indebtedness that constitutes Senior
Debt to the same extent as the Notes are subordinated to Senior Debt. In
addition, the Indentures will provide that if the Company shall, after the date
of the Indentures, create or acquire any new Domestic Subsidiary, then such
newly created or acquired Domestic Subsidiary shall execute a Senior
Subordinated Guarantee and deliver an opinion of counsel in accordance with the
terms of the Indentures. Notwithstanding the foregoing, any such Senior
Subordinated Guarantee shall provide by its terms that it shall be automatically
and unconditionally released and discharged under the circumstances described in
the Indentures. See "-- Senior Subordinated Guarantees." The form of such Senior
Subordinated Guarantee will be attached as an exhibit to each of the Indentures.
ACTIVITIES OF HOLDINGS
In addition to the restrictions set forth above, the
Indentures will provide that Holdings may not (i) hold any assets or incur any
Indebtedness or (ii) engage in any business activities; except that Holdings may
(x) hold all, but not less than all, of the Capital Stock of the Company and (y)
be a co-obligor and/or guarantor with respect to Indebtedness if the Company is
a primary obligor or guarantor of such Indebtedness and the net proceeds of such
indebtedness are lent to the Company or one or more of its Restricted
Subsidiaries.
REPORTS
The Indentures will provide that, whether or not required by
the rules and regulations of the Commission, so long as any Notes are
outstanding, the Company will furnish to the Holders of Notes (i) all quarterly
and annual financial information that would be required to be contained in a
filing with the Commission 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 Commission on Form 8-K if the Company were required to file such reports. In
addition, whether or not required by the rules and regulations of the
Commission, the Company will file a copy of all such information and reports
with the Commission for public availability (unless the Commission will not
accept such a filing) and make such information available to securities analysts
and prospective investors upon request. In addition, the Company and the
Guarantors have agreed that, for so long as any Notes remain outstanding, they
will furnish to the Holders of the Notes 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. Notwithstanding
the foregoing, until all of the Notes have been registered pursuant to the
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Shelf Registration Statement referred to above under the caption "-- Transfer
Restrictions", the Company's only obligation to provide the information
described above shall be to the Holders of the Notes.
EVENTS OF DEFAULT AND REMEDIES
The Indentures will provide that each of the following constitutes an
Event of Default with respect to the Senior Subordinated Notes or the Senior
Subordinated Discount Notes, as the case may be: (i) default for 30 days in the
payment when due of interest on the Notes (whether or not prohibited by the
subordination provisions of the Indentures); (ii) default in payment when due of
the principal of or premium, if any, on the Notes (whether or not prohibited by
the subordination provisions of the Indentures); (iii) failure by the Company
for 30 days after notice from either Trustee or the Holders of at least 25% in
principal amount of the then outstanding Senior Subordinated Notes or Senior
Subordinated Discount Notes, as the case may be, to comply with the provisions
described under the captions "-- Change of Control," "-- Restricted Payments,"
"-- Incurrence of Indebtedness and Issuance of Disqualified Stock" or "--
Merger, Consolidation or Sale of All or Substantially All Assets"; (iv) failure
by the Company for 60 days after notice from either Trustee or the Holders of at
least 25% in principal amount of the then outstanding Senior Subordinated Notes
or Senior Subordinated Discount Notes, as the case may be, to comply with any of
its other agreements in the Indentures or the Notes; (v) 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 Restricted Subsidiaries (or the payment of which is
guaranteed by the Company or any of its Restricted Subsidiaries) whether such
Indebtedness or guarantee now exists, or is created after the date of the
Indentures, which default 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
the maturity of which has been so accelerated, aggregates $25 million or more;
(vi) failure by the Company or any of its Restricted Subsidiaries to pay final
judgments aggregating in excess of $25 million, which judgments are not paid,
discharged or stayed for a period of 60 days; (vii) certain events of bankruptcy
or insolvency with respect to the Company or any of its Restricted Subsidiaries;
and (viii) except as permitted by the Indentures, any Senior Subordinated
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 (except by
its terms) or any Guarantor, or any Person acting on behalf of any Guarantor,
shall deny or disaffirm its obligations under its Senior Subordinated Guarantee.
If any Event of Default occurs and is continuing, any Trustee or the
Holders of at least 25% in principal amount of the then outstanding Senior
Subordinated Notes or Senior Subordinated Discount Notes, as the case may be,
may declare all the Senior Subordinated Notes or Senior Subordinated Discount
Notes, as the case may be, to be due and payable immediately. Upon such
declaration the principal and interest shall be due and payable immediately;
provided, however, that so long as Senior Debt or any commitment therefor is
outstanding under the New Bank Credit Agreement, any such notice or declaration
shall not be effective until the earlier of (a) five Business Days after such
notice is delivered to the Representative for the Senior Bank Debt or (b) the
acceleration of any Indebtedness under the New Bank Credit Agreement.
Notwithstanding the foregoing, in the case of an Event of Default arising from
certain events of bankruptcy or insolvency, with
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respect to the Company, any Significant Restricted Subsidiary or any group of
Restricted Subsidiaries that, taken together, would constitute a Significant
Restricted Subsidiary, all outstanding Notes will become due and payable without
further action or notice. Holders of the Notes may not enforce the Indentures or
the Notes except as provided in the Indentures. Subject to certain limitations,
Holders of a majority in principal amount of the then outstanding Notes may
direct the applicable Trustee in its exercise of any trust or power. Either
Trustee may withhold from Holders of the Notes notice of 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 case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have had
to pay if the Company then had elected to redeem the Notes pursuant to the
optional redemption provisions of the applicable Indenture, an equivalent
premium shall also become and be immediately due and payable to the extent
permitted by law upon the acceleration of the Notes. If an Event of Default
occurs prior to April 1, 2001 by reason of any willful action (or inaction)
taken (or not taken) by or on behalf of the Company with the intention of
avoiding the prohibition on redemption of the Notes prior to April 1, 2001, then
the premium specified in the applicable Indenture shall also become immediately
due and payable to the extent permitted by law upon the acceleration of the
Notes.
The Holders of a majority in aggregate principal amount of the Senior
Subordinated Notes or the Senior Subordinated Discount Notes, as the case may
be, then outstanding by notice to the applicable Trustee may on behalf of the
Holders of all of the Senior Subordinated Notes or the Senior Subordinated
Discount Notes, as the case may be, waive any existing Default or Event of
Default and its consequences under the applicable Indenture except a continuing
Default or Event of Default in the payment of interest on, or the principal of,
the Senior Subordinated Notes or the Senior Subordinated Discount Notes, as the
case may be.
The Company is required to deliver to each Trustee annually a statement
regarding compliance with the respective Indentures, and the Company is required
upon becoming aware of any Default or Event of Default, to deliver to each
Trustee a statement specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of the
Company, as such, shall have any liability for any obligations of the Company
under the Notes, the Indentures 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.
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LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have all
obligations of the Company and the Guarantors discharged with respect to the
outstanding Senior Subordinated Notes and/or the outstanding Senior Subordinated
Discount Notes, as the case may be, and the Senior Subordinated 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 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 applicable Trustee, and the Company's obligations in
connection therewith and (iv) the Legal Defeasance provisions of the applicable
Indenture. In addition, the Company may, at its option and at any time, elect to
have the obligations of the Company and the Guarantors released with respect to
certain covenants that are described in the Senior Subordinated Note Indenture
or the Senior Subordinated Discount Note Indenture, and the Senior Subordinated
Guarantees ("Covenant Defeasance") and thereafter any omission to comply with
such obligations shall not constitute a Default or Event of Default with respect
to the Senior Subordinated Notes or Senior Subordinated Discount Notes, as the
case may be, and the Senior Subordinated Guarantees. In the event Covenant
Defeasance occurs, certain events (not including non-payment, bankruptcy,
receivership, rehabilitation and insolvency events) described under "Events of
Default" will no longer constitute an Event of Default with respect to the
Senior Subordinated Notes or Senior Subordinated Discount Notes, as the case may
be, and the Senior Subordinated Guarantees.
In order to exercise either Legal Defeasance or Covenant Defeasance,
(i) the Company or the Guarantors must irrevocably deposit with the Trustee, in
trust, for the benefit of the Holders of the Senior Subordinated Notes or Senior
Subordinated Discount Notes, as the case may be, 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 on the outstanding Senior Subordinated Notes or Senior Subordinated
Discount Notes, as the case may be, on the stated maturity or on the applicable
redemption date, as the case may be, and the Company or the Guarantors must
specify whether the Senior Subordinated Notes or Senior Subordinated Discount
Notes, as the case may be, are being defeased to maturity or to a particular
redemption date; (ii) in the case of Legal Defeasance, the Company or the
Guarantors shall have delivered to the appropriate Trustee an opinion of counsel
in the United States reasonably acceptable to such Trustee confirming that (A)
the Company or the Guarantors have received from, or there has been published
by, the Internal Revenue Service a ruling or (B) since the date of the
applicable 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 Senior Subordinated
Notes or Senior Subordinated Discount Notes, as the case may be, 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 or the Guarantors shall have delivered to the
appropriate Trustee an opinion of counsel in the United States reasonably
acceptable to such Trustee confirming that the Holders of the outstanding
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Senior Subordinated Notes or Senior Subordinated Discount Notes, as the case may
be, 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 shall 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) or insofar as Events of Default from bankruptcy
or insolvency events are concerned, at any time in the period ending on the 91st
day after the date of 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 applicable Indenture) to which
the Company or any of its Restricted Subsidiaries is a party or by which the
Company or any of its Restricted Subsidiaries is bound; (vi) the Company or the
Guarantors must have delivered to the appropriate Trustee an opinion of counsel
to the effect that after the 91st day following the deposit, the trust funds
will not be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally; (vii) the
Company or the Guarantors must deliver to the appropriate Trustee an Officers'
Certificate stating that the deposit was not made by the Company or the
Guarantors, as applicable, with the intent of preferring the Holders of Senior
Subordinated Notes or Senior Subordinated Discount Notes, as the case may be,
over the other creditors of the Company or the Guarantors, as applicable, with
the intent of defeating, hindering, delaying or defrauding creditors of the
Company or the Guarantors, as applicable, or others; and (viii) the Company or
the Guarantors must deliver to the appropriate Trustee an Officers' Certificate
and an opinion of counsel, each stating that all conditions precedent provided
for or 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
Indentures. The Registrars and the Trustees 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 Indentures. 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
Indentures or the Notes may be amended or supplemented with the consent of the
Holders of at least a majority in principal amount of the Senior Subordinated
Notes or Senior Subordinated Discount Notes, as the case may be, then
outstanding (including, without limitation, consents obtained in connection with
a purchase of, or tender offer or exchange offer for, such Notes), and any
existing default or compliance with any provision of the Indentures or the Notes
may be waived with the consent of the Holders of a majority in principal amount
of the then outstanding Senior Subordinated Notes or Senior Subordinated
Discount Notes, as
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the case may be (including consents obtained in connection with a tender offer
or exchange offer for such Notes).
Without the consent of each Holder affected, an amendment or waiver may
not (with respect to any Notes held by a non-consenting Holder): (i) reduce the
principal amount of Notes whose Holders must consent to an amendment, supplement
or waiver, (ii) reduce the principal of or change the fixed maturity of any Note
or alter the provisions with respect to the redemption of the Notes (other than
provisions relating to the covenants described above under the caption "--
Repurchase at the Option of Holders"), (iii) reduce the rate of or change the
time for payment of interest on any Note, (iv) waive a Default or 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 Senior Subordinated Notes or
Senior Subordinated Discount Notes, as the case may be, by the Holders of at
least a majority in aggregate principal amount thereof 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) make any change in the
provisions of the Indentures relating to waivers of past Defaults or the rights
of Holders of Notes to receive payments of principal of or premium, if any, or
interest on the Notes, (vii) waive a redemption payment with respect to any Note
(other than a payment required by one of the covenants described above under the
caption "-- Repurchase at the Option of Holders") or (viii) 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 appropriate Trustee may amend or supplement the
Indentures or the Notes 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, 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 Indentures of any such Holder,
or to comply with requirements of the Commission in order to effect or maintain
the qualification of the Indentures under the Trust Indenture Act.
CONCERNING THE TRUSTEE
The Indentures contain certain limitations on the rights of the
Trustees, should either Trustee 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 Trustees will be
permitted to engage in other transactions; however, if either Trustee acquires
any conflicting interest it must eliminate such conflict within 90 days, apply
to the Commission for permission to continue or resign.
The Holders of a majority in principal amount of the then outstanding
Senior Subordinated Notes or Senior Subordinated Discount Notes, as the case may
be, will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the applicable Trustee,
subject to certain exceptions. The Indentures provide that in case an Event of
Default shall occur (which shall not be cured), the Trustees will be required,
in the exercise of their power, to use the degree of care of a prudent man in
the conduct of his own affairs. Subject to such provisions, neither Trustee will
be under any obligation to exercise any of its rights or powers under the
Indentures at
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the request of any Holder, unless such Holder shall have offered to the
appropriate Trustee security and indemnity satisfactory to it against any loss,
liability or expense.
ADDITIONAL INFORMATION
Anyone may obtain a copy of the Indentures without charge by writing to
AMF Group Inc., 7275 Glen Forest Drive, Suite 101, Richmond, Virginia, 23226,
Attention: Secretary.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indentures.
Reference is made to the Indentures for a full disclosure of all such terms, as
well as any other capitalized terms used herein for which no definition is
provided.
"Accreted Value" means, as of any date of determination prior to the
Full Accretion Date, the sum of (a) the initial offering price of each Senior
Subordinated Discount Note and (b) the portion of the excess of the principal
amount of each Senior Subordinated Discount Note over such initial offering
price which shall have been accreted thereon through such date, such amount to
be so accreted on a daily basis at 13 1/2% per annum of the initial offering
price of the Senior Subordinated Discount Notes, compounded semi-annually on
each October 1 and April 1 from the date of issuance of the Senior Subordinated
Discount Notes through the date of determination; provided that on and after the
Full Accretion Date the Accreted Value shall be equal to the principal amount of
the outstanding Senior Subordinated Discount Note.
"Acquired Debt" 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 Restricted 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
Restricted Subsidiary of such specified Person, and (ii) Indebtedness secured by
a Lien encumbering any asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For 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, shall 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 shall
be deemed to be control.
"Asset Sale" means:
(i) the sale, conveyance, transfer or other disposition (whether in a
single transaction or a series of related transactions) of property or assets
(including by way of a
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sale and leaseback) of the Company or any Restricted Subsidiary (each referred
to in this definition as a "disposition") or
(ii) the issuance or sale of Equity Interests of any Restricted
Subsidiary (whether in a single transaction or a series of related
transactions),
in each case, other than:
(a) a disposition of Cash Equivalents or goods held for sale in the
ordinary course of business or obsolete equipment in the ordinary course of
business consistent with past practices of the Company;
(b) the disposition of all or substantially all of the assets of the
Company in a manner permitted pursuant to the provisions described above under
the covenant entitled "-- Merger, Consolidation or Sale of All or Substantially
All Assets" or any disposition that constitutes a Change of Control pursuant to
the Indentures;
(c) any disposition that is a Restricted Payment or Permitted
Investment that is permitted under the covenant described above under "--
Restricted Payments";
(d) any disposition, or related series of dispositions, of assets with
an aggregate fair market value of less than $2.5 million;
(e) any sale of Equity Interest in, or Indebtedness or other securities
of, an Unrestricted Subsidiary; and
(f) foreclosures on assets.
"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 (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof, (iii) certificates of
deposit and eurodollar time deposits with maturities of one year or less from
the date of acquisition, bankers' acceptances with maturities not exceeding one
year and overnight bank deposits, in each case with any domestic bank having
capital and surplus in excess of $500 million and a Keefe Bank Watch Rating of
"B" or better, (iv) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clauses (ii) and (iii)
above entered into with any financial institution meeting the qualifications
specified in clause (iii) above and (v) commercial paper having the highest
rating obtainable from Moody's Investors Service, Inc. or
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Standard & Poor's Corporation and in each case maturing within one year after
the date of acquisition.
"Change of Control" means the occurrence of any of the following:
(i) the sale, lease, transfer, conveyance or other disposition (other
than by way of merger or consolidation), in one or a series of transactions, of
all or substantially all of the assets of the Company and its Restricted
Subsidiaries, taken as a whole, to any "person" (as such term is used in Section
13(d)(3) of the Exchange Act) other than the Permitted Holders and their Related
Parties;
(ii) the Company becomes aware (by way of a report or any other filing
pursuant to Section 13(d) of the Exchange Act, proxy, vote, written notice or
otherwise) of the acquisition by any Person or group (within the meaning of
Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor
provision), including any group acting for the purpose of acquiring, holding or
disposing of securities (within the meaning of Rule 13d-5(b)(1) under the
Exchange Act), other than the Permitted Holders or any of their Related Parties,
in a single transaction or in a related series of transactions, by way of
merger, consolidation or other business combination or purchase of beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any
successor provision) of 50% or more of the Voting Stock of the Company or
Holdings, and beneficially owns more of such Voting Stock than the Permitted
Holders and their Related Parties; or
(iii) a majority of the members of the Board of Directors of the
Company cease to be Continuing Directors.
"Consolidated Cash Flow" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period plus (i) an
amount equal to any extraordinary loss plus any net loss realized in connection
with an Asset Sale (to the extent such losses were deducted in computing such
Consolidated Net Income), plus (ii) provision for taxes based on income or
profits of such Person and its Restricted Subsidiaries for such period, to the
extent that such provision for taxes was deducted in computing such Consolidated
Net Income, plus (iii) consolidated interest expense of such Person and its
Restricted Subsidiaries for such period, whether paid or accrued and whether or
not capitalized (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), to the extent that any
such expense was deducted in computing such Consolidated Net Income, plus (iv)
depreciation, amortization (including amortization of goodwill and other
intangibles but excluding amortization of prepaid cash expenses that were paid
in a prior period) and other non-cash charges (excluding any such non-cash
charge to the extent that it represents an accrual of or reserve for cash
charges in any future period or amortization of a prepaid cash expense that was
paid in a prior period) of such Person and its Restricted Subsidiaries for such
period to the extent that such depreciation, amortization and other non-cash
charges were deducted in computing such Consolidated Net Income.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for
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such period, on a consolidated basis, determined in accordance with GAAP;
provided that (i) the Net Income (but not loss) for such period of any Person
that is not a Restricted Subsidiary or that is accounted for by the equity
method of accounting shall be included only to the extent of the amount of
dividends or distributions paid in cash to the referent Person or a Wholly Owned
Restricted Subsidiary thereof, (ii) the Net Income of any Restricted Subsidiary
shall be excluded to the extent that the declaration or payment of dividends or
similar distributions by that Restricted Subsidiary of that Net Income is not at
the date of determination permitted without any prior governmental approval
(that has not been obtained) or, directly or indirectly, by operation of the
terms of its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Restricted
Subsidiary or its stockholders, (iii) the Net Income of any Person acquired in a
pooling of interests transaction for any period prior to the date of such
acquisition shall be excluded, (iv) the cumulative effect of a change in
accounting principles shall be excluded and (v) the Net Income of any
Unrestricted Subsidiary shall be excluded, whether or not distributed to the
Company or one of its Restricted Subsidiaries.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors who (i) was a member of such Board of Directors
on the date of the Indentures or (ii) was nominated for election or elected to
such Board of Directors with, or whose election to such Board of Directors was
approved by, the affirmative vote of a majority of the Continuing Directors who
were members of such Board of Directors at the time of such nomination or
election or (iii) is any designee of the Permitted Holders or their Affiliates
or was nominated by the Permitted Holders or their Affiliates or any designees
of the Permitted Holders or their Affiliates on the Board of Directors.
"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.
"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, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the Holder thereof, in whole or in part, on or prior to the date
on which the Notes mature.
"Domestic Subsidiaries" means each of the direct or indirect Restricted
Subsidiaries of the Company that is organized or incorporated under the laws of
any state of the United States of America or the District of Columbia.
"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).
"Existing Indebtedness" means Indebtedness of the Company and its
Restricted Subsidiaries (other than Indebtedness under the New Bank Credit
Agreement) in existence on the date of the Indentures, until such amounts are
repaid.
"Fixed Charge Coverage Ratio" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person and its
Restricted Subsidiaries for such period to the Fixed Charges of such Person and
its Restricted Subsidiaries for such period. In the event that the Company or
any of its Restricted Subsidiaries incurs,
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assumes, Guarantees or redeems any Indebtedness (other than revolving credit
borrowings) or issues Preferred Stock subsequent to the commencement of the
period for which the Fixed Charge Coverage Ratio is being calculated but 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 shall be calculated giving pro forma effect to such incurrence,
assumption, Guarantee or redemption of Indebtedness, or such issuance or
redemption of Preferred Stock, as if the same had occurred at the beginning of
the applicable four-quarter reference period. In addition, for purposes of
making the computation referred to above, (i) acquisitions that have been made
by the Company or any of its Restricted 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 shall be deemed to have occurred on the first day
of the four-quarter reference period and Consolidated Cash Flow for such
reference period shall be calculated (A) without giving effect to clause (iii)
of the proviso set forth in the definition of Consolidated Net Income and (B)
subject to clause (ii) of the definition of "Consolidated Net Income," by
treating a portion of the consolidated revenue for such period of any acquired
entity that derives at least 90% of its revenues from the ownership and
operation of bowling centers as Consolidated Cash Flow of such entity,
regardless of the actual operating results of such entity, such portion being
the percentage of the consolidated revenues of the Company's domestic bowling
center operations that constituted Consolidated Cash Flow for the most recently
ended four full fiscal quarters for which internal financial statements are
available and (ii) the Consolidated Cash Flow attributable to discontinued
operations, as determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, shall be excluded, and (iii) the
Fixed Charges attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall 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 Restricted Subsidiaries following the Calculation Date.
"Fixed Charges" means, with respect to any Person for any period, the
sum of (i) the consolidated interest expense of such Person and its Restricted
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 Restricted 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 Restricted Subsidiaries or secured by a
Lien on assets of such Person or one of its Restricted Subsidiaries (whether or
not such Guarantee or Lien is called upon) and (iv) the product of (a) all cash
dividend payments (and non-cash dividend payments in the case of a Person that
is a Restricted Subsidiary) paid to any Person other than the Company or a
Restricted Subsidiary on any series of Preferred Stock of such Person, times (b)
a fraction, the numerator of which is one and the denominator of which is one
minus the then current combined federal, state and local statutory tax rate of
such Person, expressed as a decimal, in each case, on a consolidated basis and
in accordance with GAAP.
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"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 date of the Indentures.
"Government Securities" means securities that are (a) direct
obligations of the United States of America for the timely payment of which its
full faith and credit is pledged or (b) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the timely payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States of America, which, in either
case, are not callable or redeemable at the option of the issuer thereof, and
shall also include a depository receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act), as custodian with respect to any such Government
Security or a specific payment of principal of or interest on any such
Government Security held by such custodian for the account of the holder of such
depository receipt; provided, that (except as required by law) such custodian is
not authorized to make any deduction from the amount payable to the holder of
such depository receipt from any amount received by the custodian in respect of
the Government Security or the specific payment of principal of or interest on
the Government Security evidenced by such depository receipt.
"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.
"Guarantors" means each of (i) Holdings, (ii) the Domestic Subsidiaries
and (iii) any other Restricted Subsidiary of the Company that executes a Senior
Subordinated Guarantee in accordance with the provisions of the Indentures, and
their respective successors and assigns.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) currency exchange or interest rate swap
agreements, currency exchange or interest rate cap agreements and currency
exchange or interest rate collar agreements and (ii) other agreements or
arrangements designed to protect such Person against fluctuations in currency
exchange or interest rates.
"Holder" means a holder of any of the Notes.
"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)
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and, to the extent not otherwise included, the Guarantee by such Person of any
indebtedness of any other Person.
"Independent Financial Advisor" means an accounting, appraisal,
investment banking firm or consultant of nationally recognized standing that is,
in the judgment of the Company's Board of Directors, qualified to perform the
task for which it has been engaged.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
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 of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP; provided that
an acquisition of Equity Interests or other securities by the Company for
consideration consisting of common equity securities of the Company shall not be
deemed to be an Investment. If the Company or any Subsidiary of the Company
sells or otherwise disposes of any Equity Interests of any direct or indirect
Subsidiary of the Company such that, after giving effect to any such sale or
disposition, the Company no longer owns, directly or indirectly, greater than
50% of the outstanding Equity Interests of such Subsidiary, the Company shall be
deemed to have made an Investment on the date of any such sale or disposition
equal to the fair market value of the Equity Interests of such Subsidiary not
sold or disposed of.
"Joint Ventures" means all corporations, partnerships, associations or
other business entities (i) that are engaged in a Principal Business and (ii) of
which 50% of the total voting power of shares of Capital Stock entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by the Company or one or more Restricted Subsidiaries
(or a combination thereof).
"Letter of Credit Obligations" means all Obligations in respect of
Indebtedness of the Company or any of its Restricted Subsidiaries with respect
to letters of credit issued pursuant to the New Bank Credit Agreement which
Indebtedness shall be deemed to consist of (a) the aggregate maximum amount then
available to be drawn under all such letters of credit (the determination of
such maximum amount to assume compliance with all conditions for drawing), and
(b) the aggregate amount that has then been paid by, and not reimbursed to, the
issuers under such letters of credit.
"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 thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"Mortgage Financing" means the incurrence by the Company or a
Restricted Subsidiary of the Company of any Indebtedness secured by a mortgage
or other Lien on real property acquired or improved by the Company or any
Restricted Subsidiary of the Company after the date of the Indentures.
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"Mortgage Refinancing" means the incurrence by the Company or a
Restricted Subsidiary of the Company of any Indebtedness secured by a mortgage
or other Lien on real property subject to a mortgage or other Lien existing on
the date of the Indentures or created or incurred subsequent to the date of the
Indentures as permitted by the terms of the Indentures and owned by the Company
or any Restricted Subsidiary of the Company.
"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 Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted 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 received by the
Company or any of its Restricted 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 brokerage 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 Senior Bank Debt) secured
by a Lien on the asset or assets that were the subject of such Asset Sale and
any reserve for adjustment in respect of the sale price of such asset or assets
established in accordance with GAAP.
"New Bank Credit Agreement" means that certain credit agreement dated
as of March ___, 1996, by and among the Company and the financial institutions
party thereto, including any related notes, guarantees, collateral documents,
instruments and agreements executed in connection therewith, and in each case as
amended, modified, renewed, refunded, replaced or refinanced (in whole or in
part) from time to time.
"Non-Recourse Debt" means Indebtedness of an Unrestricted Subsidiary
(i) as to which neither the Company nor any of its Restricted 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 Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity; and (iii) as to which the lenders have been notified in
writing that they will not have any recourse to the stock or assets of the
Company or any of its Restricted Subsidiaries.
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"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"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 set
forth in the Indentures.
"Pari Passu Indebtedness" means indebtedness which ranks pari passu in
right of payment to the Notes.
"Permitted Asset Swap" means any one or more transactions in which the
Company or any of its Restricted Subsidiaries exchanges assets for consideration
consisting of cash and/or assets that are used or useful in a Principal Business
and/or a controlling equity interest in a person engaged in a Principal
Business.
"Permitted Holders" means Goldman, Sachs & Co. and any of its
Affiliates.
"Permitted Investments" means (a) any Investment in the Company or in a
Restricted Subsidiary of the Company; (b) any Investment in cash and Cash
Equivalents; (c) any Investment by the Company or any Restricted Subsidiary of
the Company in a Person, if as a result of such Investment (A) such Person
becomes a Restricted Subsidiary of the Company or (B) such Person, in one
transaction or a series of related transactions, 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 Restricted Subsidiary of the
Company; (d) any Investment made as a result of the receipt of consideration not
constituting cash or Cash Equivalents from an Asset Sale that was made pursuant
to and in compliance with the covenant described above under the caption "--
Repurchase at the Option of Holders -- Asset Sales"; (e) any Investment existing
on the date of the Indentures; (f) Permitted Asset Swaps; (g) any Investment by
Restricted Subsidiaries in other Restricted Subsidiaries and Investments by
Subsidiaries that are not Restricted Subsidiaries in other Subsidiaries that are
not Restricted Subsidiaries; (h) advances to employees not in excess of $5
million outstanding at any one time; (i) any Investment acquired by the Company
or any of its Restricted Subsidiaries (A) in exchange for any other Investment
or accounts receivable held by the Company or any such Restricted Subsidiary in
connection with or as a result of a bankruptcy, workout, reorganization or
recapitalization of the issuer of such other Investment or accounts receivable
or (B) as a result of a foreclosure by the Company or any of its Restricted
Subsidiaries with respect to any secured Investment or other transfer of title
with respect to any secured Investment in default; (j) Hedging Obligations; (k)
loans and advances to officers, directors and employees for business-related
travel expenses, moving expenses and other similar expenses, in each case
incurred in the ordinary course of business; (l) Investments the payment for
which consists exclusively of Equity Interests (exclusive of Disqualified Stock)
of the Company; and (m) additional Investments having an aggregate fair market
value, taken together with all other Investments made pursuant to this clause
(m) that are at that time outstanding, not to exceed 5% of Total Assets at the
time of such Investment (with the fair market value of each Investment being
measured at the time made and without giving effect to subsequent changes in
value).
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"Permitted Refinancing Indebtedness" means any Indebtedness of the
Company or any of its Restricted 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 Restricted Subsidiaries
in whole or in part; provided that: (i) the principal amount (or accreted value,
if applicable) of such Permitted Refinancing Indebtedness does not exceed the
principal amount (or accreted value, if applicable) of the Indebtedness so
extended, refinanced, renewed, replaced, defeased or refunded (plus the amount
of reasonable expenses incurred in connection therewith); (ii) such Permitted
Refinancing Indebtedness has a final maturity date later than the final maturity
date of, and 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 has a final maturity date later than the final maturity date of,
and is subordinated in right of payment to, the Notes on terms at least as
favorable to the Holders of Notes as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; and (iv) such Indebtedness is incurred either by the
Company or by the Restricted 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, government or any agency or political subdivision
thereof or any other entity.
"Preferred Stock" means any Equity Interest with preferential right of
payment of dividends or upon liquidation, dissolution, or winding up.
"Principal Business" means (i) the design, manufacture and sale of
bowling and bowling center equipment and allied products, including without
limitation, pin spotters, scoring equipment, masking panels, seating, lane
maintenance machines, bumper bowling systems, electronic foul detectors, back
office support systems, bowling pins, wood and synthetic lanes, ball returns,
ball lifts, ball cleaners, other equipment used to equip or outfit a bowling
center, spare and replacement parts, maintenance equipment and supplies, bowling
balls, bags, shoes, shirts, pool and billiard tables and cues, shuffleboard and
other gaming tables, and any other equipment and products used or useful in the
operation of bowling centers, (ii) the ownership and operation of bowling
centers, in the United States and throughout the world, including without
limitation bowling operations, shoe rental, food and beverage sales and
services, operation of lounges and bars at or within a bowling center (including
without limitation sales and service of alcoholic beverages and provision of
music and cabaret activities), operation of pro shops (including without
limitation sales and service of merchandise), billiards and other table games,
video and arcade games, play centers, movie viewing, gaming activities, such as
Pull-Tab lottery, video poker and keno, and any other activities which are or
may become associated with bowling centers, and (iii) any activity or business
incidental, directly related or similar to those set forth in clauses (i) or
(ii) of this definition, or any business or activity that is a reasonable
extension, development or expansion thereof or ancillary thereto.
"Related Parties" means any Person controlled by the Permitted Holders,
including any partnership of which any of the Permitted Holders or their
Affiliates is a general partner.
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"Repurchase Offer" means an offer made by the Company to purchase all
or any portion of a Holder's Notes pursuant to the provisions described under
the covenants entitled "-- Repurchase at the Option of Holders -- Change of
Control" or "-- Repurchase at the Option of Holders -- Asset Sales."
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not (i) an Unrestricted Subsidiary or (ii) a direct or
indirect Subsidiary of an Unrestricted Subsidiary; provided, however, that upon
the occurrence of any Unrestricted Subsidiary ceasing to be an Unrestricted
Subsidiary, such Subsidiary shall be included in the definition of Restricted
Subsidiary.
"Senior Guarantees" means the Guarantees by the Guarantors of
Obligations under the New Bank Credit Agreement.
"Senior Subordinated Guarantees" means the Guarantees by the Guarantors
of the Obligations under the Indentures and the Notes.
"Significant Restricted Subsidiary" means any Restricted Subsidiary
that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of
Regulation S-X, promulgated pursuant to the Act, as such Regulation is in effect
on the date of the Indentures.
"Subordinated Indebtedness" means any Indebtedness of the Company or
any of its Restricted Subsidiaries which is expressly by its terms subordinated
in right of payment to any other Indebtedness.
"Subsidiary" means, with respect to any Person, (i) 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) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or one or more Subsidiaries
of such Person (or any combination thereof).
"Total Assets" means, with respect to any Person, the total
consolidated assets of such Person and its Restricted Subsidiaries, as shown on
the most recent balance sheet of such Person.
"Unrestricted Subsidiary" means (i) any Subsidiary (other than the
Guarantors or any successor to any of them) 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 Debt; (b) is not party to any agreement, contract, arrangement or
understanding with the Company or any Restricted Subsidiary of the Company
unless the terms of any such agreement, contract, arrangement or understanding
are no less favorable to the Company or such Restricted Subsidiary than
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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 Restricted Subsidiaries has any direct or indirect 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; (d) has not guaranteed or otherwise directly or
indirectly provided credit support for any Indebtedness of the Company or any of
its Restricted Subsidiaries; and (e) has at least one director on its board of
directors that is not a director or executive officer of the Company or any of
its Restricted Subsidiaries and has at least one executive officer that is not a
director or executive officer of the Company or any of its Restricted
Subsidiaries. Any such designation by the Board of Directors shall be evidenced
to the Trustees by filing with the Trustees 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 described above under the caption "Certain Covenants
- -- Restricted Payments." If, at any time, any Unrestricted Subsidiary would fail
to meet the foregoing requirements as an Unrestricted Subsidiary, it shall
thereafter cease to be an Unrestricted Subsidiary for purposes of the Indentures
and any Indebtedness of such Subsidiary shall be deemed to be incurred by a
Restricted 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 described
under the caption "Incurrence of Indebtedness and Issuance of Disqualified
Stock," the Company shall be in default of such covenant). The Board of
Directors of the Company may at any time designate any Unrestricted Subsidiary
to be a Restricted Subsidiary; provided that such designation shall be deemed to
be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of
any outstanding Indebtedness of such Unrestricted Subsidiary and such
designation shall only be permitted if (i) such Indebtedness is permitted under
the covenant described under the caption "Certain Covenants -- Incurrence of
Indebtedness and Issuance of Disqualified Stock," and (ii) no Default or Event
of Default would be in existence following such designation.
"Voting Stock" means, with respect to any Person, any class or series
of capital stock of such Person that is ordinarily entitled to vote in the
election of directors thereof at a meeting of stockholders called for such
purpose, without the occurrence of any additional event or contingency.
"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.
"Wholly Owned Restricted Subsidiary" is any Wholly Owned Subsidiary
that is a Restricted Subsidiary.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such
Person all of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares) shall at the time be owned by
such Person or by one or more Wholly Owned Subsidiaries of such Person or by
such Person and one or more Wholly Owned Subsidiaries of such Person.
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ANNEX TO DESCRIPTION OF NOTES
[The following subordination provisions will appear in the Indentures]
ARTICLE 10
SUBORDINATION
Section 10.01. Agreement to Subordinate.
The Company agrees, and each Securityholder by accepting a Security
agrees, that the Indebtedness evidenced by the Security is subordinated in right
of payment, to the extent and in the manner provided in this Article, to the
prior payment in full of all Senior Debt (whether outstanding on the date hereof
or hereafter created, incurred, assumed or guaranteed), and that the
subordination is for the benefit of the holders of Senior Debt.
Section 10.02. Certain Definitions.
"Accrued Bankruptcy Interest" means, with respect to any Indebtedness
or Hedging Obligations under or secured by the New Bank Credit Agreement, all
interest accruing thereon after the filing of a petition by or against the
Company 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 or Hedging
Obligations, whether or not the claim for such interest is allowed as a claim
after such filing in any proceeding under such Bankruptcy Law.
"Bankruptcy Law" means title 11, U.S. Code or any similar Federal or
state law for the relief of debtors.
"Designated Senior Debt" means (i) so long as the Senior Bank Debt is
outstanding, the Senior Bank Debt, (ii) the Senior Bank Hedging Obligations and
(iii) any other Senior Debt permitted under this Indenture the principal amount
of which is $25 million or more and that has been designated by the Company as
"Designated Senior Debt."
"Representative" means the indenture trustee or other trustee, agent or
representative for any Senior Debt.
"Senior Bank Debt" means all Obligations in respect of the Indebtedness
outstanding under the New Bank Credit Agreement, together with any refunding,
refinancing or replacement (in whole or in part) of such Indebtedness.
"Senior Bank Hedging Obligations" means all present and future Hedging
Obligations of the Company, whether existing now or in the future, that are
secured by the New Bank Credit Agreement or any of the collateral documents
executed from time to time in connection therewith.
"Senior Debt" means (i) the Senior Bank Debt, (ii) the Senior Bank
Hedging Obligations and (iii) any other Indebtedness permitted to be incurred by
the Company under the terms of this Indenture, unless the instrument under which
such Indebtedness is incurred expressly provides that it is on a parity with or
subordinated in right of payment to the
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Notes. Notwithstanding anything to the contrary in the foregoing, Senior Debt
will not include (1) any liability for federal, state, local or other taxes owed
or owing by the Company, (2) any Indebtedness of the Company to any of its
Restricted Subsidiaries or other Affiliates (other than Goldman, Sachs & Co. and
its Affiliates, including Pearl Street L.P.), (3) any trade payables, (4) that
portion of any Indebtedness that is incurred in violation of this Indenture, (5)
Indebtedness which, when incurred and without respect to any election under
Section 1111(b) of Title 11, United States Code, is without recourse to the
Company, (6) any Indebtedness, Guarantee or obligation of the Company which is
contractually subordinate in right of payment to any other Indebtedness,
Guarantee or obligation of the Company; provided, however, that this clause (6)
shall not apply to the subordination of liens or security interests covering
particular properties or types of assets securing Senior Debt, (7) Indebtedness
evidenced by the Notes and (8) Capital Stock.
A distribution may consist of cash, securities or other property, by
set-off or otherwise.
All Designated Senior Debt now or hereafter existing and all other
Obligations relating thereto shall not be deemed to have been paid in full
unless the holders or owners thereof shall have received payment in full in cash
with respect to such Designated Senior Debt and all other Obligations with
respect thereto.
Section 10.03 Liquidation; Dissolution; Bankruptcy.
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, in
an assignment for the benefit of creditors or any marshalling of the Company's
assets and liabilities:
(1) holders of Senior Debt shall be entitled to receive payment in full
of all Obligations in respect of such Senior Debt (including Accrued
Bankruptcy Interest) and to have all outstanding Letter of Credit
Obligations fully cash collateralized before the Trustee or the
Securityholders shall be entitled to receive any payment of Obligations with
respect to the Securities (except that the Trustee or the Securityholders
may receive payments and other distributions made from any defeasance trust
created pursuant to Section [8.01] hereof); and
(2) until all Obligations with respect to Senior Debt (as provided in
subsection (1) above) are paid in full and all outstanding Letter of Credit
Obligations are fully cash collateralized, any distribution to which the
Trustee or the Securityholders would be entitled but for this Article,
including any such distribution that is payable or deliverable by reason of
the payment of any other Indebtedness of the Company being subordinated to
the payment of the Securities, shall be made to holders of Senior Debt or
their Representatives, ratably in accordance with the respective amounts of
the principal of such Senior Debt, interest (including Accrued Bankruptcy
Interest) thereon and all other Obligations with respect thereto (except
that Securityholders may receive payments and other distributions made from
any defeasance trust created pursuant to Section [8.01] hereof), as their
interests may appear.
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Section 10.04. Default on Designated Senior Debt.
The Company may not make any payment or distribution to the Trustee or
any Securityholder in respect of Obligations with respect to the Securities and
may not acquire from the Trustee or any Securityholder any Securities for cash
or property (other than payments and other distributions made from any
defeasance trust created pursuant to Section [8.01] hereof) until all principal
and other Obligations with respect to the Senior Debt have been paid in full if:
(i) a default in the payment of any principal or other Obligations with
respect to Designated Senior Debt occurs and is continuing (including any
default in payment upon the maturity of any Designated Senior Debt by lapse
of time, acceleration or otherwise), or any judicial proceeding is pending
to determine whether any such default has occurred; or
(ii) a default, other than a payment default described in subsection
(i) above, on Designated Senior Debt, including any event which, with giving
of notice or lapse of time, or both, would become an event of default and
including any default or event of default that would result upon any payment
or distribution with respect to the Securities, has occurred and is
continuing with respect to any Designated Senior Debt (as such default or
event of default is defined in any agreement, indenture or other document
governing such Designated Senior Debt) and the Trustee receives a notice of
the default (a "Payment Blockage Notice") from a Person who may give it
pursuant to Section 10.12 hereof. If the Trustee receives any such Payment
Blockage Notice, no subsequent Payment Blockage Notice shall be effective
for purposes of this Section unless and until at least 360 days shall have
elapsed since the first day of effectiveness of the immediately prior
Payment Blockage Notice. No nonpayment default 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 unless such default shall have been waived for a period of not less
than 180 days.
If the Company is prohibited from making payments on or distributions
in respect of the Securities or from acquiring the Securities, under subsection
(i) or (ii) above, the Company may and shall resume payments on and
distributions in respect of the Securities and may acquire them upon the earlier
of:
(1) the date upon which the default, event of default or other event
giving rise to such prohibition is cured or waived or shall have ceased to
exist, unless another default, event of default or other event that would
prohibit such payment, distribution or acquisition under Section 10.04(i) has
occurred and is continuing, or all Obligations in respect of such Designated
Senior Debt shall have been discharged or paid in full, or
(2) in the case of any prohibition referred to in Section 10.04(ii)
hereof, 179 days pass after the relevant Payment Blockage Notice is received by
the Trustee thereunder,
in each such case, if this Article otherwise permits the payment, distribution
or acquisition.
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Section 10.05. Acceleration of Securities.
If payment of the Securities is accelerated because of an Event of
Default, the Company shall promptly notify holders of Senior Debt of the
acceleration in accordance with Section 6.01 of this Indenture.
Section 10.06. When Distribution Must Be Paid Over.
If, notwithstanding the provisions of Sections 10.03 and 10.04, any
direct or indirect payment or distribution on account of principal of or
interest on or other Obligations with respect to the Securities or acquisition,
repurchase, redemption, retirement or defeasance of any of the Securities shall
be made by or on behalf of the Company (including any payments or distribution
by any liquidating trustee or agent or other Person in a proceeding referred to
in Section 10.03) and received by the Trustee or any Securityholder at a time
when such payment or distribution was prohibited by the provisions of Section
10.03 or 10.04 or such payment or distribution was required to be made to
holders of Senior Debt or their Representatives, then, unless and until such
payment or distribution is no longer prohibited by Section 10.03 or 10.04, such
payment or distribution shall be received, segregated from other funds or assets
and held in trust by the Trustee or such Securityholder, as the case may be,
for the benefit of, and shall be immediately paid or delivered over to, the
holders of Senior Debt or their Representatives, ratably in accordance with the
respective amounts of the principal of such Senior Debt, interest (including
Accrued Bankruptcy Interest) thereon and all other Obligations with respect
thereto held or represented by each, until the principal of all Senior Debt,
interest (including Accrued Bankruptcy Interest) thereon and all other
Obligations with respect thereto have been paid in full and all outstanding
Letter of Credit Obligations have been fully cash collateralized. Any
distribution to the holders of Senior Debt or their Representatives of assets
other than cash may be held by such holders or such Representatives as
additional collateral without any duty to the Securityholders to liquidate or
otherwise realize on such assets or to apply such assets to any Senior Debt or
other Obligations relating thereto.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform only such obligations on the part of the Trustee as are specifically set
forth in this Article 10, and no implied covenants or obligations with respect
to the holders of Senior Debt 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 Debt, and shall not be liable to any such holders if the
Trustee shall in good faith mistakenly pay over or distribute to or on behalf of
Securityholders or the Company or any other Person money or assets to which any
holders of Senior Debt shall be entitled by virtue of this Article 10, except if
such payment is made as a result of the willful misconduct or gross negligence
of the Trustee. Nothing in this Section 10.06 shall affect the obligation of any
Person other than the Trustee to hold such payment or distribution for the
benefit of, and to pay or deliver such payment or distribution over to, the
holders of Senior Debt or their Representatives.
Section 10.07. 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 Securities to violate this Article, but failure to give such
notice shall not affect the subordination of the Securities to the Senior Debt
as provided in this Article.
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Section 10.08. Subrogation.
After all Senior Debt is paid in full and until the Securities are paid
in full, Securityholders shall be subrogated (equally and ratably with all other
Indebtedness pari passu with the Securities) to the rights of holders of Senior
Debt to receive distributions applicable to Senior Debt to the extent that
distributions otherwise payable to the Securityholders have been applied to the
payment of Senior Debt. A distribution made under this Article to holders of
Senior Debt that otherwise would have been made to Securityholders is not, as
between the Company and Securityholders, a payment by the Company on the
Securities.
Section 10.09. Relative Rights.
This Article defines the relative rights of Securityholders and holders
of Senior Debt. Nothing in this Indenture shall:
(1) impair, as between the Company and Securityholders, the obligation
of the Company, which is absolute and unconditional, to pay principal of and
interest on the Securities in accordance with their terms;
(2) affect the relative rights of Securityholders and creditors of the
Company other than their rights in relation to holders of Senior Debt; or
(3) prevent the Trustee or any Securityholder from exercising its
available remedies upon a Default or Event of Default, subject to the rights
of holders and owners of Senior Debt to receive distributions and payments
otherwise payable to Securityholders.
If the Company fails because of this Article to pay principal of or
interest on a Security on the due date, the failure is still a Default or Event
of Default.
Section 10.10. Subordination May Not Be Impaired by Company.
No right of any present or future holder of Senior Debt to enforce the
subordination of the Indebtedness evidenced by the Securities shall be impaired
by any act or failure to act by the Company or any Holder of Notes or any holder
of Senior Debt or by the failure of the Company or any Holder of Notes or any
holder of Senior Debt to comply with this Indenture regardless of any knowledge
thereof that any such Holder of Notes or holder of Senior Debt, as the case may
be, may have or be otherwise charged with. The holders of Senior Debt may
extend, renew, restate, supplement, modify or amend the terms of the Senior Debt
or any Obligations with respect thereto or any security therefor and release,
sell or exchange such security and otherwise deal freely with the Company and
its Subsidiaries and Affiliates all without affecting the liabilities and
obligations of the parties to this Indenture or the Securityholders. No
provision in any supplemental indenture that adversely affects the subordination
of the Securities or other provisions of this Article 10 shall be effective
against the holders of the Designated Senior Debt that have not consented
thereto.
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Each Holder of the Securities by their acceptance thereof: (a)
acknowledges and agrees that the holders of any Senior Debt or their
Representative, in its or their discretion, and without affecting any rights of
any holder of Senior Debt under this Article 10, may foreclose any mortgage or
deed of trust covering interest in real property securing such Senior Debt or
any guarantee thereof by judicial or nonjudicial sale, even though such action
may release the Company or any guarantor of such Senior Debt from further
liability under such Senior Debt or any guarantee thereof or may otherwise limit
the remedies available to the holders thereof; and (b) hereby waives any defense
that such Securityholder may otherwise have to the enforcement by any holder of
any Senior Debt or any Representative of such holder against such Securityholder
of this Article 10 after or as a result of any action, including any such
defense based on any loss or impairment of rights of subrogation.
If at any time any payment of Obligations with respect to any Senior
Debt is rescinded or must otherwise be returned upon the insolvency, bankruptcy,
reorganization or liquidation of the Company or otherwise, the provisions of
this Article 10 shall continue to be effective or reinstated, as the case may
be, to the same extent as though such payments had not been made.
Section 10.11. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of
Senior Debt, 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 10, the Trustee and the Securityholders shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction or
upon any certificate of such Representative or of the liquidating trustee or
agent or other Person making any distribution to the Trustee or to the
Securityholders for the purpose of ascertaining the Persons entitled to
participate in such distribution, the holders of the Senior Debt 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 10.
Section 10.12. Rights of Trustee and Paying Agent.
Notwithstanding the provisions of this Article 10 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 Securities, unless the Trustee shall have received at
its Corporate Trust Office at least two Business Days prior to the date of such
payment written notice of facts that would cause the payment of any Obligations
with respect to the Securities to violate this Article. Only the Company or a
Representative may give the notice. Nothing in this Article 10 shall impair the
claims of, or payments to, the Trustee under or pursuant to Section [7.07]
hereof.
The Trustee in its individual or any other capacity may hold Senior
Debt with the same rights it would have if it were not Trustee. Any Agent may do
the same with like rights.
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Section 10.13. Authorization to Effect Subordination.
Each Holder of a Security 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 appropriate to effectuate the subordination as provided in this
Article 10, 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 [Credit Agents] are hereby authorized to file an appropriate claim
for and on behalf of the Holders of the Securities.
The Company, the Trustee and each Securityholder by their acceptance of
the Securities acknowledge that damages would be inadequate to compensate the
holders of Senior Debt for any breach or default by the Company, the Trustee or
any such Securityholder of its obligations under this Article 10, and,
therefore, agree that the holders of Senior Debt and their Representatives shall
be entitled to equitable relief, including injunctive relief and specific
performance, in the enforcement thereof.
Section 10.14. Amendments.
The provisions of this Article 10 shall not be amended or modified
without the written consent of the holders of all Senior Debt unless such
amendment or modification does not adversely affect the holders of such Senior
Debt.
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EXHIBIT 8.5(a)
[FORM OF OPINION OF McGUIRE, WOODS, BATTLE & BOOTHE, L.L.P.]
________________, 1996
AMF Holdings Inc.
AMF Group Holdings Inc.
AMF Group Inc.
c/o GS Capital Partners II, L.P.
85 Broad Street
New York, New York 10004
Ladies and Gentlemen:
We have acted as special counsel (i) to L. F. Loree III and Norwood H.
Davis, Jr., as successor co-trustees (the "Trustees") under an Irrevocable Trust
Agreement dated November 12, 1986, as amended (the "Trust Agreement"), made by
William H. Goodwin, Jr. establishing separate trusts (the "Trusts") for the
benefit of each of William Hunter Goodwin, III, Molly Shepherd Goodwin, Matthew
Tolley Goodwin, Sarah Camp Goodwin and Peter Overton Goodwin, (ii) to Douglas J.
Stanard ("Stanard") and (iii) to Beverley W. Armstrong ("Armstrong") (the
Trusts, Stanard and Armstrong being herein individually referred to as a
"Seller" and collectively as the "Sellers"), all in connection with the Stock
Purchase Agreement dated as of February 16, 1996 (the "Stock Purchase
Agreement") among AMF Group Holdings Inc., a Delaware corporation ("Holdings"),
the Trustees, The Community Foundation, Inc., a Virginia corporation, Stanard
and Armstrong. We have also acted as special counsel (i) to AMF Bowling, S.A., a
Spanish corporation ("AMF-SA"), in connection with the Spanish Bowling Centers
Agreement dated as of February 16, 1996 (the "Spanish Bowling Centers
Agreement") among AMF-SA, AMF Bowling Centers Spain Inc. and Holdings, (ii) to
AMF Bowling Centers II, Inc., a Delaware corporation ("AMFBC-II"), in connection
with the Swiss Bowling Centers Agreement dated as of February 16, 1996 (the
"Swiss Bowling Centers Agreement") among AMFBC-II, AMF Bowling
<PAGE> 341
AMF Holdings Inc.
AMF Group Holdings Inc.
AMF Group Inc.
___________________, 1996
Page 2
Centers Switzerland Inc. and Holdings, (iii) to WBB Partners, a Virginia general
partnership ("WBB"), in connection with the Related Land Sale Agreement, (iv) to
William Hunter Goodwin, III, Molly Shepherd Goodwin and Matthew Tolley Goodwin
(collectively the "Adult Beneficiaries") in connection with their respective
Trust Indemnities, (v) to Alice T. Goodwin, as Custodian under the Virginia
Uniform Transfers to Minors Act (the "Virginia UTMA") (the "Custodian") for each
of Sarah Camp Goodwin and Peter Overton Goodwin (collectively, the "Minor
Beneficiaries"), in connection with the respective Trust Indemnities of the
Minor Beneficiaries, (vi) to AMF Reece, Inc., a Virginia corporation ("AMF
Reece"), in connection with the Reece Indemnity and (vii) to each of Ben Hogan
Co., AMF Reece and AMF Machinery Systems, Inc. (each a "License Party" and,
collectively, the "License Parties") in connection with the License Agreements.
This opinion is being delivered pursuant to Section 8.5 of the Stock Purchase
Agreement. Terms used herein without definition which are defined in the Stock
Purchase Agreement are used herein as therein defined.
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of such documents, corporate records, certificates of
public officials and other instruments and have conducted such other
investigations of fact and law as we have deemed necessary or advisable for the
purposes of this opinion. Our review has included an examination of the
Partnership Agreement of WBB Partners dated November 19, 1987, as amended by the
First Amendment dated as of September 30, 1989, by the Second Amendment dated as
of December 31, 1989 and by the Third Amendment dated as of December 31, 1991
(the "WBB Partnership Agreement"). The partners of WBB have advised us that the
WBB Partnership Agreement is in full force and effect, has not been modified and
requires no amendment in order accurately to set forth the agreement of the
partners with respect to the existence or operation of WBB. Further, the
partners of WBB have advised us that no dissolution of WBB has occurred. We have
relied upon these representations in rendering this opinion.
<PAGE> 342
AMF Holdings Inc.
AMF Group Holdings Inc.
AMF Group Inc.
___________________, 1996
Page 3
We have relied with your permission and without independent
investigation on the opinion of Bufete M. Vega Penichet, which opinion has been
delivered to the addressees hereto, that AMF-SA is duly organized as a
corporation and in good standing under the laws of Spain, that AMF-SA has all
necessary corporate power to execute and deliver, and to perform its obligations
under, the Spanish Bowling Centers Agreement and to consummate the transactions
contemplated thereby, that the execution, delivery and performance by AMF-SA of
the Spanish Bowling Centers Agreement has been duly authorized by all necessary
corporate action on the part of AMF-SA and does not conflict with or contravene
any provisions of the certificate of incorporation or by-laws or similar
organizational documents of AMF-SA and that the Spanish Bowling Centers
Agreement has been duly executed and delivered by AMF-SA.
Based upon the foregoing and subject to the limitations and
qualifications hereinafter set forth, we are of the opinion that:
I. Each of the companies listed in Schedule A to this opinion which is
designated thereon as a Virginia or Delaware corporation (each a "Company" and,
collectively, the "Companies"), AMFBC-II, AMF Reece and each other License Party
is a corporation duly incorporated, validly existing and in good standing under
the laws of the jurisdiction of its incorporation and has all necessary
corporate power to own and lease its properties and assets and to carry on its
business as it is now being conducted. Each of the Trusts has been duly created
under the Trust Agreement and, to our knowledge, has not been terminated under
the Trust Agreement. WBB is validly existing as a partnership under the Virginia
Uniform Partnership Act (the "Virginia UPA").
1. The Trustees have all necessary power under the Trust Agreement to
execute and deliver, and to perform on behalf of the Trusts the respective
obligations of the Trusts under, the Stock Purchase Agreement and to consummate
the transactions contemplated thereby. The execution, delivery and performance
of the Stock Purchase Agreement by the Trusts and the consummation
<PAGE> 343
AMF Holdings Inc.
AMF Group Holdings Inc.
AMF Group Inc.
___________________, 1996
Page 4
of the transactions contemplated thereby have been duly and validly authorized
by all necessary proceedings on the part of the Trustees.
2. AMFBC-II has all necessary corporate power to execute and deliver,
and to perform its obligations under, the Swiss Bowling Centers Agreement and to
consummate the transactions contemplated thereby. WBB has all necessary power
under the WBB Partnership Agreement and under the Virginia UPA to execute and
deliver, and to perform its obligations under, the Related Land Sale Agreement
and to consummate the transactions contemplated thereby. AMF Reece has all
necessary corporate power to execute and deliver, and to perform its obligations
under, the Reece Indemnity and to consummate the transactions contemplated
thereby. Each License Party has all necessary corporate power to execute and
deliver, and to perform its obligations under, the License Agreement to which it
is a party and to consummate the transactions contemplated thereby.
3. The execution, delivery and performance by AMFBC-II of the Swiss
Bowling Centers Agreement, by AMF Reece of the Reece Indemnity and by each
License Party of the License Agreement to which it is a party and the
consummation of the transactions contemplated thereby have been duly and validly
authorized by all necessary corporate action of AMFBC-II, AMF Reece and each
License Party, respectively. The execution, delivery and performance by WBB of
the Related Land Sale Agreement and the consummation of the transactions
contemplated thereby have been duly and validly authorized by all necessary
partnership action under the WBB Partnership Agreement and the Virginia UPA.
4. The execution, delivery and performance by the Sellers of the Stock
Purchase Agreement, by Armstrong of the Armstrong Consulting Agreement, by
AMFBC-II of the Swiss Bowling Centers Agreement, by AMF-SA of the Spanish
Bowling Centers Agreement, by WBB of the Related Land Sale Agreement, by the
Adult Beneficiaries of their respective Trust Indemnities, by the Custodian of
the Trust Indemnities on behalf of the custodianship for each of the Minor
Beneficiaries, by AMF Reece of the Reece
<PAGE> 344
AMF Holdings Inc.
AMF Group Holdings Inc.
AMF Group Inc.
___________________, 1996
Page 5
Indemnity and by each License Party of the License Agreement to which it is a
party, as applicable, will not (i) violate or conflict with any provision of, as
applicable, (A) the Trust Agreement, (B) the Articles of Incorporation or
Certificate of Incorporation or By-laws of AMFBC-II, any of the Companies, AMF
Reece or any License Party or (C) the WBB Partnership Agreement or (ii) violate
or conflict with any provision of the Delaware General Corporation Law or any
United States federal, State of New York or Commonwealth of Virginia statute,
rule or regulation or any writ, injunction, decree, order or judgment under the
Delaware General Corporation Law or under any United States federal, State of
New York or Commonwealth of Virginia law known to us to be applicable to any
Seller, Armstrong, AMF-SA, AMFBC-II, WBB, any Adult Beneficiary, the Custodian,
AMF Reece, any License Party, any Company or any Subsidiary or any of their
respective properties that, in the case of clause (ii), could reasonably be
expected (individually or in the aggregate) to have a material adverse effect on
the Business Condition of the Manufacturing Business or the Bowling Centers
Business or prevent any of the Stock Purchases, the Asset Purchases, the sale of
the Related Land pursuant to the Related Land Sale Agreement (the "Related Land
Sale") or otherwise impair the performance of the other obligations of the
Sellers under the Stock Purchase Agreement, of Armstrong under the Armstrong
Consulting Agreement, of AMF-SA under the Spanish Bowling Centers Agreement, of
AMFBC-II under the Swiss Bowling Centers Agreement, of WBB under the Related
Land Sale Agreement, of the Adult Beneficiaries under their respective Trust
Indemnities, of the Custodian on behalf of the custodianships for the Minor
Beneficiaries under their respective Trust Indemnities, of AMF Reece under the
Reece Indemnity or of any License Party under the License Agreement to which it
is a party.
5. The Stock Purchase Agreement has been duly executed and delivered by
each of the Sellers. The Swiss Bowling Centers Agreement has been duly executed
and delivered by AMFBC-II. The Related Land Sale Agreement has been duly
executed and delivered by WBB. The Armstrong Consulting Agreement has been
executed and delivered by Armstrong. The Trust Indemnities have been executed
and delivered by the Adult Beneficiaries and by the
<PAGE> 345
AMF Holdings Inc.
AMF Group Holdings Inc.
AMF Group Inc.
___________________, 1996
Page 6
Custodian on behalf of the custodianships for the Minor Beneficiaries. The Reece
Indemnity has been duly executed and delivered by AMF Reece. Each License
Agreement has been duly executed and delivered by the License Party which is a
party thereto. Assuming the due execution of the Stock Purchase Agreement by the
Buyer and by The Community Foundation, Inc. and the due execution and delivery
of the Spanish Bowling Centers Agreement, the Related Land Sale Agreement, the
Armstrong Consulting Agreement, the Trust Indemnities and the Reece Indemnity by
the Buyer and the due execution and delivery of each License Agreement by
Bowling, the Stock Purchase Agreement, the Armstrong Consulting Agreement, the
Related Land Sale Agreement, the Trust Indemnities, the Reece Indemnity, the
License Agreements and, assuming the validity and enforceability of Section 4.5
of the Spanish Bowling Centers Agreement, the Spanish Bowling Centers Agreement
(other than the assignment and assumption of lease agreements relating thereto,
as to which we express no opinion) constitute the legal, valid and binding
obligations of each of the Sellers, AMF-SA, Armstrong, WBB, the Adult
Beneficiaries, the Custodian in her capacity as such, AMF Reece and each License
Party, respectively, in each case enforceable against such Person in accordance
with its respective terms, except as may be limited by bankruptcy, insolvency,
moratorium reorganization or other laws affecting the enforceability of
creditors' rights generally and by equitable principles of general applicability
(regardless of whether enforcement is sought in a proceeding in equity or at
law), and except as the Custodian's authority may be limited by the Virginia
UTMA.
6. Upon the consummation of the Stock Purchases in accordance with the
Stock Purchase Agreement, the delivery of certificates for the Shares to the
Buyer in registered form, issued or indorsed to the Buyer in blank, and the
registration of the Shares in the name of the Buyer in the stock records of the
Companies, the Buyer will, assuming that it has purchased the Shares in good
faith and without notice of any adverse claim, have acquired the Shares, free of
any adverse claim, any lien in favor of the Companies and any restrictions on
transfer imposed by the Companies.
<PAGE> 346
AMF Holdings Inc.
AMF Group Holdings Inc.
AMF Group Inc.
___________________, 1996
Page 7
7. The authorized capital stock of each of the Companies and the
amount of such stock which is outstanding is as set forth in Schedule 3.2(a) to
the Stock Purchase Agreement. All of the outstanding shares of capital stock of
the Companies, as listed on such Schedule 3.2(a), are validly issued, fully paid
and nonassessable. The stock record books of each of the Companies reflect that
the Stockholders are the holders of the outstanding shares of capital stock of
the Companies in the respective amounts set forth in such Schedule 3.2(a). To
our knowledge, the Shares have not been issued in violation of, and are not
subject to, any preemptive rights. To our knowledge, there are no outstanding
options, warrants, subscriptions or other rights of any kind to acquire, or
obligations to issue, shares of capital stock of any class of, or other equity
interests in, any Company or any securities convertible into or exchangeable or
exercisable for any shares of capital stock of any class of, or other equity
interests in, any Company.
8. To our knowledge, there are no material registrations, filings,
applications, certifications, notices, consents, licenses, permits, approvals,
certificates, franchises, orders, qualifications, authorizations and waivers
required to be made, filed, given or obtained by any Seller, AMF-SA, AMFBC-II,
Armstrong, WBB, any Adult Beneficiary, the Custodian, AMF Reece, any License
Party, any Company or any Subsidiary with, to or from any Governmental Authority
under United States federal law or under the Delaware General Corporation Law or
the laws of the State of New York or the Commonwealth of Virginia in connection
with the consummation of the Stock Purchases, the Asset Purchases or the Related
Land Sale and performance of the other obligations of Sellers under the Stock
Purchase Agreement, of AMF-SA or AMFBC-II under the Spanish and Swiss Bowling
Centers Agreements, respectively, of WBB under the Related Land Sale Agreement,
of Armstrong under the Armstrong Consulting Agreement, of the Adult
Beneficiaries under their Trust Indemnities, of the Custodian on behalf of the
custodianships for the Minor Beneficiaries under their Trust Indemnities, of AMF
Reece under the Reece Indemnity or of any License Party under the License
Agreement to which it is a party except for those which have been obtained,
those relating to liquor or other alcoholic beverage sales or services
<PAGE> 347
AMF Holdings Inc.
AMF Group Holdings Inc.
AMF Group Inc.
___________________, 1996
Page 8
or the conduct of gaming activities, those that become applicable solely as a
result of the specific regulatory status of the Buyer or its Affiliates or those
the failure to make, file, give or obtain which would not, individually or in
the aggregate, have a material adverse effect on the Business Condition of the
Manufacturing Business or the Bowling Centers Business or prevent the
performance of the obligations of the Sellers under the Stock Purchase
Agreement, of AMF-SA or AMFBC-II under the Spanish and Swiss Bowling Centers
Agreements, respectively, of WBB under the Related Land Sale Agreement, of
Armstrong under the Armstrong Consulting Agreement, of the Adult Beneficiaries
under their Trust Indemnities, of the Custodian on behalf of the custodianships
for the Minor Beneficiaries under their Trust Indemnities, of AMF Reece under
the Reece Indemnity or of any License Party under the License Agreement to which
it is a party.
9. Each of the Companies listed in Schedule B (other than AMF Bowling
Centers (Australia) International) is and has been an "S corporation" (within
the meaning of Section 1361(b) of the Code) for each taxable year (or portion
thereof) since the effective date noted opposite the name of each such Company
on Schedule B. AMF Bowling Centers (Australia) International was an "S
corporation" for each taxable year from the effective date noted opposite its
name on Schedule B through December 31, 1995.
Our opinion in paragraphs 5 and 9 above as to compliance with, and the
absence of filing under, certain laws, statutes, rules or regulations is based
upon a review of those statutes, rules and regulations which, in our experience,
are normally applicable to transactions such as those contemplated by the Stock
Purchase Agreement, the Spanish and Swiss Bowling Centers Agreements, the
Related Land Sale Agreement, the Armstrong Consulting Agreement, the Trust
Indemnities, the Reece Indemnity and the License Agreements. In rendering the
opinion set forth in paragraphs 5 and 9 above, we express no opinion as to the
applicability of any laws or regulations relating to liquor or other alcoholic
beverages sales or services or to the conduct or gaming activities.
<PAGE> 348
AMF Holdings Inc.
AMF Group Holdings Inc.
AMF Group Inc.
___________________, 1996
Page 9
Our opinion in paragraph 10 above is based upon: (i) the applicable
provisions of the Code, the Treasury Regulations promulgated thereunder,
legislative history, judicial decisions and administrative interpretations of
the foregoing as expressed in rulings and determinations of the Internal Revenue
Service (including, without limitation, private letter rulings, revenue rulings
and general counsel memoranda) as of the date of this letter, any of which is
subject to change at any time and, in some circumstances, with retroactive
effect; (ii) the assumption that the Form 2553 filed with the Internal Revenue
Service by each of such Companies satisfied the provisions of Treasury
Regulation section 1.1362-6(a)(2)(I) and former Treasury Regulation section
18.1362-1(a); and (iii) the certificates of the Trusts, Armstrong, Stanard,
William H. Goodwin, Daniel McCormack, appropriate officers of each of the
Companies, Reginald France, and Price Waterhouse & Co., copies of which are
attached hereto.
The foregoing opinion is subject to the following comments and
qualifications:
A. The enforceability of Sections 10.2 and 10.3 of the Stock
Purchase Agreement may be limited by (i) laws rendering unenforceable
indemnification contrary to Federal or state securities laws and the
public policy underlying such laws and (ii) laws limiting the
enforceability of provisions exculpating or exempting a party, or
requiring indemnification of a party for, liability for its own action
or inaction, to the extent the action or inaction involves gross
negligence, recklessness, willful misconduct or unlawful conduct. The
enforceability of the Trust Indemnity with respect to each
custodianship for a Minor Beneficiary depends upon a determination that
the Custodian under the Virginia UTMA is, by executing the Trust
Indemnity for each Minor Beneficiary, undertaking to expend custodial
property for the benefit of the Minor Beneficiary as contemplated and
authorized by Section 31-50 of the Code of Virginia, as amended, so as
to obtain for the Minor Beneficiary the benefit of
<PAGE> 349
AMF Holdings Inc.
AMF Group Holdings Inc.
AMF Group Inc.
___________________, 1996
Page 10
the transactions contemplated by the Stock Purchase Agreement. We are
aware of no judicial interpretation of Section 31-50 or corresponding
provisions of the similar laws of other states in the context of an
undertaking like the Trust Indemnities. The custodianship constitutes a
fiduciary relationship with respect to the ownership and management of
property for the benefit of a Minor Beneficiary, and not a
representative capacity for the Minor Beneficiary personally.
Accordingly, a custodian under the Virginia UTMA cannot bind a Minor
Beneficiary personally, but can only contract with respect to custodial
property.
B. We express no opinion as to Section 4.6 of the Spanish
Bowling Centers Agreement (and as to similar provisions of the
agreements relating thereto) insofar as such provision relates to the
subject matter jurisdiction of the United States District Court for the
Southern District of New York to adjudicate any controversy referred to
therein.
C. We express no opinion as to Section 4.5 of the Spanish
Bowling Centers Agreement (and as to similar provisions of the
agreements relating thereto) which purports to select the laws of the
State of New York to govern the interpretation and effect of such
Agreement.
The foregoing opinion is limited to matters involving the Federal
laws of the United States, the Delaware General Corporation Law and the laws of
the State of New York and the Commonwealth of Virginia, and we do not express
any opinion as to the laws of any other jurisdiction.
This opinion is issued solely for your benefit, for the benefit of
your counsel, Messrs. Wachtell, Lipton, Rosen & Katz, and for the benefit of the
Buyer's financing sources and is not to be relied upon by any other entity.
<PAGE> 350
AMF Holdings Inc.
AMF Group Holdings Inc.
AMF Group Inc.
___________________, 1996
Page 11
Very truly yours,
<PAGE> 351
Schedule A to Opinion of
McGuire Woods, Battle & Boothe, L.L.P.
COMPANIES
---------
<TABLE>
<CAPTION>
Jurisdiction of
Name of Company Incorporation
--------------- -------------
<S> <C>
AMF Bowling, Inc. Virginia
AMF Bowling Centers, Inc. Virginia
Bush River Corporation South Carolina
AMF Beverage Company of Oregon, Oregon
Inc.
AMF Bowling Centers (Canada) Virginia
International, Inc.
King Louie Lenexa, Inc. Kansas
AMF Bowling Centers (Aust) Virginia
International, Inc.
AMF Catering Services Pty. Ltd. Australia
AMF Bowling Centers (Hong Kong) Virginia
International, Inc.
AMF Bowling Centers International, Virginia
Inc.
AMF BCO - UK One, Inc. Virginia
AMF BCO - UK Two, Inc. Virginia
AMF BCO - France One, Inc. Virginia
AMF BCO - France Two, Inc. Virginia
AMF BCO - China, Inc. Virginia
AMF Bowling Centers China, Inc. Virginia
AMF Bowling Mexico Holding, Inc. Delaware
Boliches AMF, Inc. Virginia
</TABLE>
<PAGE> 352
Schedule B to Opinion of
McGuire Woods, Battle & Boothe, L.L.P.
<TABLE>
<CAPTION>
Name of Company Effective Date
- --------------- --------------
<S> <C>
AMF Bowling, Inc. January 1, 1988
AMF Bowling Centers, Inc. October 1, 1987
AMF Bowling Centers China, Inc. July 1, 1995
AMF BCO-France Two, Inc. July 31, 1989
AMF BCO-UK Two June 30, 1989
AMF Bowling Centers (Canada) January 1, 1990
International
AMF-BCO China, Inc. January 1, 1996
AMF Bowling Centers (Hong Kong) January 1, 1990
International
AMF Bowling Centers International, January 1, 1989
Inc.
AMF Bowling Centers II, Inc. January 1, 1991
AMF Bowling Center (Australia) January 1, 1989
International
</TABLE>
<PAGE> 353
EXHIBIT 8.5(b)
[FORM OF OPINION OF HUNTON & WILLIAMS]
______________, 1996
AMF Holdings Inc.
AMF Group Holdings Inc.
AMF Group Inc.
c/o GS Capital Partners II, L.P.
85 Broad Street
New York, New York 10004
Ladies and Gentlemen:
We have acted as special counsel to The Community Foundation, Inc., a
Virginia non-profit corporation ("The Community Foundation"), in connection with
the Stock Purchase Agreement dated as of February __, 1996 (the "Stock Purchase
Agreement") among L. F. Loree, III and Norwood H. Davis, Jr., as successor
co-trustees (the "Trustees") under an Irrevocable Trust Agreement dated November
12, 1986, as amended (the "Trust Agreement"), by William H. Goodwin, Jr.
establishing separate trusts (the "Trusts") for the benefit of each of William
Hunter Goodwin, III, Molly Shepherd Goodwin, Matthew Tolley Goodwin, Sarah Camp
Goodwin and Peter Overton Goodwin, The Community Foundation, Douglas J. Stanard
("Stanard"), Beverley W. Armstrong ("Armstrong") and AMF Group Holdings Inc., a
Delaware corporation ("the Buyer").
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of such documents, corporate records, certificates of
public officials and other instruments and have conducted such other
investigations of fact and law as we have deemed necessary or advisable for the
purposes of this opinion.
Based upon the foregoing and subject to the limitations and
qualifications hereinafter set forth, we are of the opinion that:
1. The Community Foundation is a nonstock corporation duly
incorporated, validly existing and in good standing under the laws of the
Commonwealth of Virginia.
2. The Community Foundation has all necessary corporate power to
execute and deliver, and to perform its obligations under the Stock Purchase
Agreement and to consummate the transactions contemplated thereunder.
<PAGE> 354
AMF Holdings Inc.
AMF Group Holdings Inc.
AMF Group Inc.
___________________, 1996
Page 2
3. The execution, delivery and performance by The Community Foundation
of the Stock Purchase Agreement and the consummation of the transactions
contemplated thereby have been duly and validly authorized by all necessary
corporate action of the Community Foundation.
4. The execution, delivery and performance by The Community Foundation
of the Stock Purchase Agreement will not (i) violate or conflict with any
provision of the Articles of Incorporation or By-laws of The Community
Foundation or (ii) violate or conflict with any provision of any United States
federal, State of New York or Commonwealth of Virginia statute, rule or
regulation or any writ, injunction, decree, order or judgment known to us to be
applicable to The Community Foundation that, in the case of clause (ii), could
reasonably be expected (individually or in the aggregate) to impair the ability
of The Community Foundation to perform its obligations under the Stock Purchase
Agreement.
5. The Stock Purchase Agreement has been duly executed and delivered by
The Community Foundation. Assuming the due execution of the Stock Purchase
Agreement by The Trustees, Stanard, Armstrong and the Buyer, the Stock Purchase
Agreement constitutes the legal, valid and binding obligation of The Community
Foundation, enforceable against The Community Foundation in accordance with its
terms, except as may be limited by bankruptcy, insolvency, moratorium,
reorganization or other laws affecting the enforceability of creditors' rights
generally and by equitable principles of general applicability (regardless of
whether enforcement is sought in a proceeding in equity or at law).
6. To our knowledge, there are no material registrations, filings,
applications, certifications, notices, consents, licenses, permits, approvals,
certificates, franchises, orders, qualifications, authorizations and waivers
required to be made, filed, given or obtained by The Community Foundation with,
to or from any Governmental Authority under United States federal law or under
the laws of the Commonwealth of Virginia or the State of New York in connection
with the consummation of the purchase from The Community Foundation of the
common stock of AMF Bowling Centers (Aust) International, Inc. and performance
of the other obligations of The Community Foundation under the Stock Purchase
Agreement except for those which have been obtained, approvals under the HSR Act
and those relating to liquor or other alcoholic beverage sales or services or
the conduct of gaming activities or those that become applicable solely as a
result of the specific regulatory status of the Buyer or its Affiliates.
<PAGE> 355
AMF Holdings Inc.
AMF Group Holdings Inc.
AMF Group Inc.
___________________, 1996
Page 3
Our opinions in paragraphs 4 and 6 above as to compliance with, and the
absence of filings under, certain laws, statutes, rules or regulations are based
upon a review of those statutes, rules and regulations which, in our experience,
are normally applicable to transactions such as those contemplated by the Stock
Purchase Agreement. In rendering the opinions set forth in paragraphs 4 and 6
above, we express no opinion as to the applicability of any laws or regulations
relating to liquor or other alcoholic beverages sales or services or to the
conduct of gaming activities. Whenever we refer to our knowledge of certain
matters of fact, we are referring to the actual knowledge of the lawyers of this
firm obtained in the representation of the Community Foundation.
The enforceability of Sections 10.2 and 10.3 of the Stock Purchase
Agreement may be limited by (i) laws rendering unenforceable indemnification
contrary to Federal or state securities laws and the public policy underlying
such laws and (ii) laws limiting the enforceability of provisions exculpating or
exempting a party, or requiring indemnification of a party for, liability for
its own action or inaction, to the extent the action or inaction involves gross
negligence, recklessness, willful misconduct or unlawful conduct.
The foregoing opinion is limited to matters involving the Federal laws
of the United States and the laws of the Commonwealth of Virginia and the State
of New York, and we do not express any opinion as to the laws of any other
jurisdiction.
This opinion is issued solely for your benefit, for the benefit of your
counsel, Messrs. Wachtell, Lipton, Rosen & Katz, and for the benefit of the
Buyer's financing sources [TO BE SPECIFICALLY IDENTIFIED IN OPINION AT TIME OF
CLOSING] and is not to be relied upon by any other entity.
Very truly yours,
<PAGE> 356
EXHIBIT 8.5(c)
[FORM OF LOCAL COUNSEL OPINION]
________________, 1996
AMF Holdings Inc.
AMF Group Holdings Inc.
AMF Group Inc.
c/o GS Capital Partners II, L.P.
85 Broad Street
New York, New York 10004
Ladies and Gentlemen:
We have acted as special [jurisdiction] counsel (i) to L. F. Loree, III
and Norwood H. Davis, Jr., as successor co-trustees (the "Trustees") under an
Irrevocable Trust Agreement dated November 12, 1986, as amended (the "Trust
Agreement"), by William H. Goodwin, Jr. establishing separate trusts (the
"Trusts") for the benefit of each of William Hunter Goodwin, III, Molly Shepherd
Goodwin, Matthew Tolley Goodwin, Sarah Camp Goodwin and Peter Overton Goodwin,
(ii) to Douglas J. Stanard ("Stanard") and (iii) to Beverley W. Armstrong
("Armstrong") (the Trusts, Stanard and Armstrong being herein individually
referred to as a "Seller" and collectively as the "Sellers"), all in connection
with the Stock Purchase Agreement dated as of February 16, 1996 (the "Stock
Purchase Agreement") among AMF Group Holdings Inc., a Delaware corporation
("Holdings"), the Trustees, The Community Foundation, Inc., a Virginia
corporation, Stanard and Armstrong. We have also acted as special counsel [to
AMF Bowling S.A., a Spanish corporation ("AMF-SA"), in connection with the
Spanish Bowling Centers Agreement, dated as of ______________, 1996 (the
"Spanish Bowling Centers Agreement") among AMF-SA, AMF Bowling Centers Spain
Inc. and Holdings] [to AMF Bowling Centers II, Inc., a Delaware corporation
("AMFBC-II", in connection with the Swiss Bowling Centers Agreement, dated as of
_____________, 1996 (the "Swiss Bowling Centers Agreement") among AMFBC-II, AMF
Bowling Centers Switzerland Inc. and Holdings]. This opinion is being delivered
pursuant to Section 8.5 of the Stock Purchase Agreement. Terms used herein
without definition which are defined in the Stock Purchase Agreement are used
herein as therein defined.
We have examined originals or copies, certified or otherwise identified
to our satisfaction, of such documents, corporate records, certificates of
public officials and other
<PAGE> 357
AMF Holdings Inc.
AMF Group Holdings Inc.
AMF Group Inc.
___________, 1996
Page 2
instruments and have conducted such other investigations of fact and law as we
have deemed necessary or advisable for the purposes of this opinion.
Based upon the foregoing and subject to the limitations and
qualifications hereinafter set forth, we are of the opinion that:
1. Each of the companies listed on Schedule A to this opinion which is
designated thereon as a [jurisdiction] corporation or other entity (each a
"Company" and, collectively, the "Companies") and each subsidiary which is
listed on Schedule B to this opinion which is designated thereon as organized
under the laws of [jurisdiction] (each a "Subsidiary" and, collectively, the
"Subsidiaries") is a corporation or other entity duly [incorporated/organized],
validly existing and in good standing under the laws of [jurisdiction] and has
all necessary corporate or other power to own and lease its properties and
assets and to carry on its business as it is now being conducted.
2. Each of the Companies or Subsidiaries that is a party to any of the
Ancillary Agreements has all necessary [corporate] power and authority to
execute and deliver each of such agreements to which it is a party, to perform
its respective obligations thereunder, and to consummate the transactions
contemplated thereby; and the execution, delivery and performance of each of the
Ancillary Agreements to which it is a party has been duly and validly authorized
by all necessary proceedings on the part of such Company or Subsidiary.
3. The execution, delivery and performance by each Company or
Subsidiary of each of the Ancillary Agreements to which such entity is a party
will not (i) violate or conflict with any provision of the certificate of
incorporation or By-laws of or any other organizational or governing instrument
(including any governing trust documents) of the Companies or the Subsidiaries
or (ii) violate or conflict with any provision of any [jurisdiction] statute,
rule or regulation or any writ, injunction, decree, order or judgment under any
[jurisdiction] law known to us to be applicable to any Company or Subsidiary or
any of their respective properties that, in the case of clause (ii), could be
reasonably be expected (individually or in the aggregate) to have a material
adverse effect on the Business Condition of the Manufacturing Business or the
Bowling Centers Business or prevent any of the Stock Purchases, the Asset
Purchases, the sale of the Related Land pursuant to the Related Land Sale
Agreement (the "Related Land Sale") or otherwise impair the performance of the
other obligations of any such entity under
<PAGE> 358
AMF Holdings Inc.
AMF Group Holdings Inc.
AMF Group Inc.
___________, 1996
Page 3
any of the Ancillary Agreements to which any such entity is a party.
4. Upon consummation of the purchases of the shares of common stock of
the Companies (the "Shares") in accordance with the Stock Purchase Agreement
(the "Stock Purchases") and the registration of the Shares in the name of the
Buyer in the stock records of the Companies, the Buyer will, assuming that it
has purchased the Shares [for value and] in good faith and without notice of any
adverse claim, have acquired all the rights of the Sellers in the Shares, free
of any adverse claim, any lien in favor of the Companies and any restrictions on
transfer imposed by the Companies.
5. The authorized capital stock of each of the Companies and the amount
of such stock which is outstanding is as set forth in Schedule 3.2(a) to the
Stock Purchase Agreement. All of the outstanding shares of capital stock of the
Companies, as listed on such Schedule 3.2(a), are validly issued, fully paid and
nonassessable. The stock record books of each of the Companies reflect that the
Stockholders are the holders of the outstanding shares of capital stock of the
Companies in the respective amounts set forth in such Schedule 3.2(a). The
authorized capital stock or other equity interests of the Subsidiaries and the
amount of such stock or other equity interests which is outstanding is as set
forth in such Schedule 3.2(a). All of the outstanding shares of capital stock or
other equity interests of the Subsidiaries, as listed on such Schedule 3.2(a),
are validly issued, fully paid and nonassessable. Except as listed on such
Schedule 3.2(a), the stock or similar record books of each of the Subsidiaries
reflect that the Companies or other Subsidiaries are the holders of the
outstanding shares of capital stock or other equity interests of the
Subsidiaries, in the respective amounts set forth in such Schedule 3.2(a). To
our knowledge, neither the Shares nor the shares of outstanding common stock or
other equity interests of any Subsidiary have been issued in violation of, or
are subject to, any preemptive rights. To our knowledge, there are no
outstanding options, warrants, subscriptions or other rights of any kind to
acquire, or obligations to issue, shares of capital stock of any class of, or
other equity interests in, any Company or any Subsidiary or any securities
convertible into or exchangeable or exercisable for any shares of capital stock
of any class of, or other equity interests in, any Company or any Subsidiary.
6. Assuming the due execution of the Swiss Bowling Centers Agreement by
AMF Bowling Centers Switzerland Inc. and Holdings, the Swiss Bowling Centers
Agreement constitutes the legal, valid and binding obligations of AMFBC-II
enforceable
<PAGE> 359
AMF Holdings Inc.
AMF Group Holdings Inc.
AMF Group Inc.
___________, 1996
Page 4
against AMFBC-II in accordance with its terms, except as may be limited by
bankruptcy, insolvency, moratorium, reorganization or other laws affecting the
enforceability of creditors' rights generally and by equitable principles of
general applicability (regardless of whether enforcement is sought in a
proceeding in equity or at law).
7. To our knowledge, there are no material registrations, filings,
applications, certifications, notices, consents, licenses, permits, approvals,
certificate, franchises, orders, qualifications, authorizations and waivers
required to be made, filed, given or obtained by any Seller, Company or
Subsidiary with, to or from any Governmental Authority under [jurisdiction] law
in connection with the consummation of the Stock Purchases, the Asset Purchases
and the Related Land Sale and performance of the other obligations of Sellers,
the Companies and the Subsidiaries under the Stock Purchase Agreement and the
Ancillary Agreements except for those which have been obtained, those relating
to the liquor or other alcoholic beverage sales or services or the conduct of
gaming activities or those that become applicable solely as a result of the
specific regulatory status of the Buyer or its Affiliates.
Our opinions in paragraphs 3 and 6 above as to compliance with, and the
absence of filings under, certain laws, statutes, rules or regulations are based
upon a review of those statutes, rules and regulations which, in our experience,
are normally applicable to transactions such as those contemplated by the Stock
Purchase Agreement and the Ancillary Agreements.
The foregoing opinions are limited to matters involving the laws of
[jurisdiction], and we do not express any opinion as to the laws of any other
jurisdiction.
This opinion is issued solely for your benefit and for the benefit of
your counsel, Messrs. Wachtell, Lipton, Rosen & Katz, and Messrs. McGuire,
Woods, Battle & Boothe, L.L.P. and for the benefit of Buyer's financing sources
and is not to be relied upon by any other entity.
Very truly yours,
<PAGE> 360
Schedule A to Opinion of
[Name of Local Counsel]
COMPANIES
<TABLE>
<CAPTION>
Jurisdiction of
Name of Company Incorporation
--------------- -------------
<S> <C>
AMF Bowling, Inc. Virginia
AMF Bowling Centers, Inc. Virginia
Bush River Corporation South Carolina
AMF Beverage Company of Oregon, Oregon
Inc.
AMF Bowling Centers (Canada) Virginia
International, Inc.
AMF Bowling Centers II, Inc. Delaware
AMF Bowling Centers (Aust) Virginia
International, Inc.
AMF Catering Services Pty. Ltd. Australia
King Louie Lenexa, Inc. Kansas
AMF Bowling Centers (Hong Kong) Virginia
International, Inc.
AMP Bowling Centers International, Virginia
Inc.
AMF BCO - UK One, Inc. Virginia
AMF BCO - UK Two, Inc. Virginia
AMF BCO - France One, Inc. Virginia
AMF BCO - France Two, Inc. Virginia
AMF BCO - China, Inc. Virginia
AMF Bowling Centers China, Inc. Virginia
AMF Bowling Mexico Holding, Inc. Delaware
Boliches AMF, Inc. Virginia
</TABLE>
<PAGE> 361
Schedule B to Opinion of
[Name of Local Counsel]
SUBSIDIARIES
<TABLE>
<CAPTION>
Jurisdiction of Form of
Name of Company Incorporation Organization
--------------- ------------- ------------
<S> <C> <C>
AMF Bowling, S.A. Spain corporation
Boliches AMF y Compania, SNC Mexico partnership
Inmeubles Obispado, S.A. Mexico corporation
Inmuebles Minerva, S.A. Mexico corporation
Boliches Mexicanos, S.A. Mexico corporation
Promotora de Boliches, S.A. de C.V. Mexico corporation
Operadora Mexicana de Boliches, S.A. Mexico corporation
AMF Bowling UK unlimited
liability co.
AMF Bowling France SNC France general
partnership
AMF Bowling de Paris SNC France general
partnership
AMF Bowling de Lyon de Part Dieu SNC France general
partnership
AMF Bowling Centers (China) Company Hong Kong general
partnership
AMF Garden Hotel Bowling Center China cooperative joint
Company venture
Worthing North Properties Limited UK private company
</TABLE>
<PAGE> 362
EXHIBIT 9.4(a)
[FORM OF WLRK OPINION]
__________ __, 1996
L.F. Loree III and Norwood H. Davis, Jr.,
Successor Co-Trustees under an irrevocable Trust Agreement dated November
12, 1986, as amended, made by William H. Goodwin, Jr., for the benefit of
each of William H. Goodwin, III, Molly S. Goodwin, Matthew T. Goodwin, Sarah
C. Goodwin and Peter O. Goodwin (the "Trusts")
c/o CCA Industries, Inc.
901 East Cary Street, Suite 1400
Richmond, VA 23219
Mr. Douglas J. Stanard
c/o CCA Industries, Inc.
901 East Cary Street, Suite 1400
Richmond, VA 23219
Mr. Beverley W. Armstrong
c/o CCA Industries, Inc.
901 East Cary Street, Suite 1400
Richmond, VA 23219
The Community Foundation, Inc.
9211 Foresthill Avenue
Richmond, VA 23235
Ladies and Gentlemen:
The undersigned have acted as special counsel to AMF Group Holdings
Inc., a Delaware corporation ("Buyer"), in connection with the execution and
delivery by Buyer (i) of a Stock Purchase Agreement, dated as of February 16,
1996, by and among Buyer, L.F. Loree III and Norwood H. Davis, Jr., successor
co-trustees under an irrevocable Trust Agreement, dated November 12, 1986, as
amended (the "Trust Agreement"),
<PAGE> 363
_____________, 1996
Page 2
made by William H. Goodwin, Jr., establishing separate trusts (the "Trusts") for
the benefit of each of William Hunter Goodwin, III, Molly Shephard Goodwin,
Matthew Tolley Goodwin, Sarah Camp Goodwin and Peter Overton Goodwin, The
Community Foundation, Inc., a Virginia nonprofit corporation (the "Community
Foundation"), Douglas J. Stanard ("Stanard") and Beverley W. Armstrong
("Armstrong") (the Trusts, the Community Foundation, Stanard and Armstrong being
herein individually referred to as a "Seller" and collectively as the
"Sellers"), and (ii) of the Spanish and Swiss Bowling Centers Agreements, the
Reece Indemnity, the Armstrong Consulting Agreement, the Related Land Sale
Agreement and the Trust Indemnities, (and as defined in the Stock Purchase
Agreement) (collectively, the "Other Buyer Documents"). This letter is being
delivered to you pursuant to Section 9.4 of the Stock Purchase Agreement. Terms
used herein without definition which are defined in the Stock Purchase Agreement
are used herein as therein defined.
The opinions set forth in this letter are based upon our review of (i)
the Certificate of Incorporation, By-Laws and records of the corporate or other
proceedings of Buyer and (ii) the Agreement, the Other Buyer Documents and other
documents and instruments delivered in connection with therewith (the "Sale
Documents"). We also have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have conducted such
investigations of fact and law as we have deemed necessary or advisable for
purposes of this opinion. In such examination, we have assumed the authenticity
of all documents submitted to us as originals and the conformity with the
originals of all documents submitted to us as copies and that all copies
submitted to us are true and correct copies of the originals. As to any facts
material to this opinion which we did not independently establish or verify, we
have, with your consent, relied upon the statements, certificates and
representations of officers and other representatives of Buyer. We have also
assumed the valid authorization, execution and delivery of the Stock Purchase
Agreement and the Other Buyer Documents by each party thereto other than Buyer,
and we have assumed that each such other party (in the case of parties which are
not natural persons) has been duly organized and is validly existing and in good
standing under its jurisdiction of organization, and that each such other party
has the legal capacity, power and authority to perform its obligations
thereunder, and that the Stock Purchase Agreement constitutes the valid and
binding
<PAGE> 364
_____________, 1996
Page 3
obligation of all such other parties, enforceable against them in accordance
with its terms.
We are members of the Bar of the State of New York, and we have not
considered, and we express no opinion as to, the laws of any jurisdiction other
than the laws of the State of New York, the General Corporation Law of the State
of Delaware and the laws of the United States of America in each case as in
effect on the date hereof (the "Relevant Laws").
Based upon the foregoing and subject to the qualifications set forth in
this letter, it is our opinion that:
1. Buyer is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware.
2. Buyer has all necessary corporate power to execute and deliver, and
to perform its obligations under, the Stock Purchase Agreement and each of the
Other Buyer Documents.
3. The execution, delivery and performance by Buyer of the Stock
Purchase Agreement and the Other Buyer Documents have been duly and validly
authorized by all necessary corporate action of Buyer.
4. The execution, delivery and performance by Buyer of the Stock
Purchase Agreement and Other Buyer Documents will not (i) violate or conflict
with any provision of the Certificate of Incorporation or Bylaws of Buyer or
(ii) violate or conflict with any provision of the Delaware General Corporation
Law or any United States federal or State of New York statute, rule or
regulation [or any writ, injunction, decree, order or judgment under the
Relevant Laws] known to us to be applicable to Buyer or any of its properties
that, in the case of clause (ii), could reasonably be expected (individually or
in the aggregate) to (i) have a material adverse effect on Buyer's ability to
consummate the Stock Purchases and the Asset Purchases or (ii) prevent the
performance of Buyer's other obligations under the Stock Purchase Agreement or
the Other Buyer Documents.
5. The Stock Purchase Agreement and the Other Buyer Documents have been
duly executed and delivered by Buyer. The Stock Purchase Agreement and, and
assuming the validity and
<PAGE> 365
_____________, 1996
Page 4
enforceability of Section 4.5 of the Spanish Bowling Centers Agreement, each of
the Other Buyer Documents (other than the Swiss Bowling Centers Agreement and
the agreements related thereto and the assignment and assumption of lease
agreements relating to the Spanish Bowling Centers Agreement, as to which
matters we express no opinion) constitute the legal, valid and binding
obligations of Buyer, in each case enforceable against Buyer, in accordance with
its respective terms, except as may be limited by bankruptcy, insolvency,
moratorium, reorganization or other laws affecting creditors' rights generally
and by equitable principles of general applicability (regardless of whether
enforcement is sought in a proceeding in equity or at law).
6. To our knowledge, there are no material registrations, filings,
applications, certifications, notices, consents, approvals, orders,
qualifications and waivers required to be made, filed, given or obtained by
Buyer with, to or from any Governmental Authority under United States federal
law or under the Delaware General Corporation Law or the laws of the State of
New York in connection with the consummation of the Stock Purchases, the Asset
Purchases or the Related Land Sale and performance of the other obligations of
Buyer under the Stock Purchase Agreement or any of the Other Buyer Documents
except for those which have been obtained, those that become applicable solely
as a result of the specific regulatory status of Sellers, the Companies or the
Subsidiaries or any Continuing Affiliate or any change of ownership thereof,
those relating to liquor or other alcoholic beverage sales or services or the
conduct of gaming activities or those the failure to make, file, give or obtain
which would not, individually or in the aggregate, prevent the consummation of
the Stock Purchases [and the other transactions contemplated thereby].
Our opinions in paragraphs 4 and 6 above as to compliance with certain
laws, statutes, rules or regulations are based upon a review of those statutes,
rules and regulations which, in our experience, are normally applicable to
transactions such as those contemplated by the Stock Purchase Agreement, the
Spanish and Swiss Bowling Centers Agreements, the Reece Indemnity, the Related
Land Sale Agreement, the Trust Indemnities and the Armstrong Consulting
Agreement. In rendering the opinions set forth in paragraphs 4 [,5] and 6 above,
we express no opinion as to the applicability of any laws or regulations
relating to liquor or other
<PAGE> 366
_____________, 1996
Page 5
alcoholic beverages sales or services or to the conduct or gaming activities.
The foregoing opinion is subject to the following comments and
qualifications:
A. The enforceability of Sections 10.2 and 10.3 of the Stock Purchase
Agreement may be limited by (i) laws rendering unenforceable indemnification
contrary to Federal or state securities laws and the public policy
underlying such laws and (ii) laws limiting the enforceability of provisions
exculpating or exempting a party, or requiring indemnification of a party
for, liability for its own action or inaction, to the extent the action or
inaction involves gross negligence, recklessness, willful misconduct or
unlawful conduct.
B. We express no opinion as to Section 4.6 of the Spanish Bowling
Centers Agreement (and as to similar provisions of the agreements related
thereto) insofar as such provision relates to the subject matter
jurisdiction of the United States District Court for the Southern District
of New York to adjudicate any controversy related to therein.
C. We express no opinion as to Section 4.5 of the Spanish Bowling
Centers Agreements (and as to similar provisions of the agreements related
thereto) which purports to select the laws of the State of New York to
govern the interpretation and effect of such Agreement.
This opinion is rendered to you and is solely for your benefit in
connection with the transactions contemplated by the Stock Purchase Agreement.
This opinion may not be relied upon by you for any other purpose, or furnished
to, quoted to, or relied upon by any other person, firm or corporation for any
purpose without our prior written consent.
Very truly yours,
<PAGE> 367
EXHIBIT 9.4(b)
NOTWITHSTANDING SECTION 9.4 OF THE STOCK PURCHASE AGREEMENT,
THE FOLLOWING OPINIONS WILL BE GIVEN BY BRYAN CAVE,
NOT WACHTELL, LIPTON, ROSEN & KATZ
February __, 1996
L. F. Loree, III, Successor Co-Trustee
Norwood H. Davis, Jr., Successor Co-Trustee
AMF Bowling Mexico Holding, Inc.
Boliches AMF, Inc.
The Community Foundation, Inc.
Douglas J. Stanard
Beverly W. Armstrong
Ladies and Gentlemen:
We have acted as special intellectual property counsel to AMF
Group Holdings, Inc., a Delaware corporation (the "Buyer"), in connection with
the Stock Purchase Agreement dated as of February __, 1996 (the "Stock Purchase
Agreement") among L. F. Loree, III and Norwood H. Davis, Jr., as successor
co-trustees (the "Trustees") under an Irrevocable Trust Agreement dated November
12, 1986, as amended (the "Trust Agreement"), by William H. Goodwin, Jr.
establishing separate trusts (the "Trusts") for the benefit of each of William
Hunter Goodwin, III, Molly Shepherd Goodwin, Matthew Tolley Goodwin, Sarah Camp
Goodwin and Peter Overton Goodwin, AMF Bowling Mexico Holding, Inc., a Delaware
corporation ("AMF-Mexico"), Boliches AMF, Inc., a Virginia corporation
("Boliches"), The Community Foundation, Inc., a Virginia non-profit corporation
(the "Community Foundation"), Douglas J. Stanard ("Stanard"), Beverly W.
Armstrong ("Armstrong") (the Trusts, AMF-Mexico, Boliches, the Community
Foundation, Stanard and Armstrong being herein individually referred to as a
"Seller" and collectively as the "Sellers") and the Buyer.
We have also acted as special intellectual property counsel to
the Buyer in connection with the Trademark License Agreements dated as of the
date hereof between AMF Bowling, Inc. ("Bowling") and each of Ben Hogan Company,
AMF Reece, Inc., and AMF Machinery Systems, Inc.
This opinion is being delivered pursuant to Section 9.4 of the
Stock Purchase Agreement. Terms used herein without definition which are defined
in the Stock Purchase Agreement are used herein as therein defined.
<PAGE> 368
L. F. Loree, III, Successor Co-Trustee
Norwood H. Davis, Jr., Successor Co-Trustee
AMF Bowling Mexico Holding, Inc.
Boliches AMF, Inc.
The Community Foundation, Inc.
Douglas J. Stanard
Beverly W. Armstrong
February __, 1996
Page 2
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have conducted such
other investigations of fact and law as we have deemed necessary or advisable
for the purposes of this opinion.
We have assumed with your permission and without independent
investigation that Bowling is duly organized as a corporation and in good
standing under the laws of the Commonwealth of Virginia, that Bowling has all
necessary corporate power to execute, deliver and perform its obligations under
the License Agreements, that the execution, delivery and performance by Bowling
of the License Agreements has been duly authorized by all necessary corporate
action on the part of Bowling and does not conflict with or contravene any
provisions of the articles of incorporation or by-laws of Bowling and that the
License Agreements have been duly executed and delivered by Bowling.
Based upon the foregoing and subject to the limitations and
qualifications hereinafter set forth, we are of the opinion that:
1. The execution, delivery and performance by Bowling of the
License Agreements will not violate or conflict with any United States federal
or State of New York statute, rule or regulation known to us to be applicable to
Bowling or any of its properties, or that could reasonably be expected
(individually or in the aggregate) to impair the ability of Bowling to perform
its obligations under the License Agreements.
2. Assuming the due execution and delivery of the License
Agreements by each of Ben Hogan Company, AMF Reece, Inc. and AMF Machinery
Systems, Inc., the License Agreements constitute the legal, valid and binding
obligations of Bowling, in each case enforceable against Bowling, in accordance
with its respective terms, except as may be limited by bankruptcy, insolvency,
moratorium reorganization or other laws affecting the enforceability of
creditors' rights generally and by equitable principles of general applicability
(regardless of whether enforcement is sought in a proceeding in equity or at
law).
<PAGE> 369
L. F. Loree, III, Successor Co-Trustee
Norwood H. Davis, Jr., Successor Co-Trustee
AMF Bowling Mexico Holding, Inc.
Boliches AMF, Inc.
The Community Foundation, Inc.
Douglas J. Stanard
Beverly W. Armstrong
February __, 1996
Page 3
3. To our knowledge, there are no material registrations,
filings, applications, certifications, notices, consents, licenses, permits,
approvals, certificates, franchises, orders, qualifications, authorizations and
waivers required to be made, filed, given or obtained by Bowling with, to or
from any Governmental Authority under United States federal law or the laws of
the State of New York in connection with the consummation of the License
Agreements.
Our opinion in paragraph 1 above as to compliance with certain
laws, statutes, rules or regulations is based upon a review of those statutes,
rules and regulations which, in our experience, are normally applicable to
transactions such as those contemplated by the License Agreements. In rendering
the opinion set forth in paragraphs 1 and 2 above, we express no opinion as to
the applicability of federal or state securities laws or regulations or as to
any laws or regulations relating to liquor or other alcoholic beverage sales or
services or the conduct of gaming activities.
The foregoing opinion is expressly subject to and dependent
upon, insofar as it relates to the Trademark License Agreements with AMF Reece,
Inc. and AMF Machinery Systems, Inc., the assignment to Bowling of U.S.
Trademark Registration No. 785,142 for the mark AMF for, inter alia, sewing
equipment and bakery equipment.
The foregoing opinion is limited to matters involving the
Federal laws of the United States and the laws of the State of New York, and we
do not express any opinion as to the laws of any other jurisdiction.
<PAGE> 370
L. F. Loree, III, Successor Co-Trustee
Norwood H. Davis, Jr., Successor Co-Trustee
AMF Bowling Mexico Holding, Inc.
Boliches AMF, Inc.
The Community Foundation, Inc.
Douglas J. Stanard
Beverly W. Armstrong
February __, 1996
Page 4
This opinion is issued solely for your benefit and for the
benefit of your counsel, Messrs. McGuire, Woods, Battle & Boothe, L.L.P., and is
not to be relied upon by any other entity.
Very truly yours,
BRYAN CAVE LLP
By
----------------------
<PAGE> 1
EXHIBIT 2.2
AMF Group Holdings Inc.
c/o GS Capital Partners II, L.P.
85 Broad Street
New York, NY 10004
April 11, 1996
VIA TELECOPY
Mr. Beverley W. Armstrong
As Designated Representative
c/o CCA Industries, Inc.
One James Center
Richmond, VA 23219
Telecopier No.: (804) 643-4208
Dear Mr. Armstrong:
This letter is written to you as the Designated Representative
of the Sellers under the Stock Purchase Agreement, dated February 16, 1996,
between AMF Group Holdings Inc. ("Buyer") and the Sellers listed on the
signature pages thereto (the "Stock Purchase Agreement"), to confirm our
understanding that each of the parties hereto agrees that the Stock Purchase
Agreement is hereby amended as set forth herein.
1. Within seven Business Days of receipt of notice thereof
from Buyer, along with Buyer's audited financial statements for the period from
inception of Buyer and ending December 31, 1996 and a copy of the calculation
described in this paragraph (the "1996 EBITDA Schedule") prepared by Buyer
together with the report described in this paragraph issued by Arthur Andersen
LLP ("Arthur Andersen"), the Sellers other than The Community Foundation, Inc.
and Douglas J. Stanard (the "Covenantors") shall pay to Buyer an amount equal to
the excess, if any (such excess being the "Actual 1996 Shortfall Amount"), of
(x) $60 million (reduced by the Stub Period EBITDA (as defined below), if the
Stub Period EBITDA is positive, or increased by the Stub Period EBITDA, if the
Stub Period EBITDA is negative (i.e., if the Stub Period EBITDA is negative $5
million, increased by $5 million)) ($60 million, as so reduced or increased by
the Stub Period EBITDA being hereinafter referred to as the "Maximum 1996
Shortfall Amount") over (y) the EBITDA (as defined below) from the operation of
AMF Bowling, Inc. ("Bowling") during the period commencing on the Closing Date
and ending December 31, 1996, as calculated by Buyer and upon which 1996 EBITDA
Schedule Arthur Andersen shall have issued an unqualified report in accordance
with generally accepted auditing standards to the effect that such 1996 EBITDA
<PAGE> 2
Schedule is fairly presented in all material respects in accordance with the
terms of this letter, which terms require that EBITDA be derived from Bowling's
financial statements for the applicable period prepared in accordance with
United States generally accepted accounting principles applied on a consistent
basis with Bowling's accounting policies and principles in effect for the year
ended December 31, 1995 as presented in the audited combined financial
statements of AMF Bowling Group for the year ended December 31, 1995, as audited
by Price Waterhouse LLP, previously delivered to Buyer (the "1995 Financial
Statements"), before any adjustments to reflect the purchase of Bowling by
Buyer, which calculation shall be final and binding on the parties hereto for
purposes of determining the payment to be made pursuant to this paragraph 1.
Notwithstanding the foregoing, if the Actual 1996 Shortfall Amount would exceed
one-third of the Maximum 1996 Shortfall Amount, the Covenantors will instead pay
to Buyer an amount equal to the sum of (a) one-third of the Maximum 1996
Shortfall Amount and (b) 50% of the amount by which the Actual 1996 Shortfall
Amount exceeds one-third of the Maximum 1996 Shortfall Amount; provided,
however, that, in any case, the maximum payment to be made pursuant to this
paragraph shall not exceed 50% of the Maximum 1996 Shortfall Amount.
2. Within seven Business Days of receipt of notice thereof
from Buyer, along with Buyer's audited financial statements for the six-month
period ending June 30, 1997 and a copy of the calculation described in this
paragraph (the "1997 EBITDA Schedule") prepared by Buyer together with the
report described in this paragraph issued by Arthur Andersen, the Covenantors
shall pay to Buyer an amount equal to the excess, if any (such excess being the
"Actual 1997 Shortfall Amount"), of (x) $35 million over (y) the EBITDA from the
operation of Bowling during the six-month period ending June 30, 1997, as
calculated by Buyer and upon which 1997 EBITDA Schedule Arthur Andersen shall
have issued an unqualified report in accordance with generally accepted auditing
standards to the effect that such 1997 EBITDA Schedule is fairly presented in
all material respects in accordance with the terms of this letter, which terms
require that EBITDA be derived from Bowling's financial statements for the
applicable period prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis with Bowling's accounting
policies and principles in effect for the year ended December 31, 1995 as
presented in the 1995 Financial Statements, before any adjustments to reflect
the purchase of Bowling by Buyer, which calculation shall be final and binding
on the parties hereto for purposes of determining the payment to be made
pursuant to this paragraph 2. Notwithstanding the foregoing, if the Actual 1997
Shortfall Amount would exceed $11,666,667,
-2-
<PAGE> 3
the Covenantors will instead pay to Buyer an amount equal to the sum of (a)
$11,666,667 plus (b) 50% of the amount by which the Actual 1997 Shortfall Amount
exceeds $11,666,667; provided, however, that, in any case, the maximum payment
to be made pursuant to this paragraph shall not exceed $17,500,000.
3. To the extent the sum of the individual payments by the
Covenantors required under each of paragraphs 1 and 2 above would exceed an
amount equal to the excess, if any, of (x) the sum of the Maximum 1996 Shortfall
Amount and $35 million (such sum being hereinafter referred to as the "Maximum
1996/1997 Shortfall Amount") over (y) the EBITDA from the operation of Bowling
during the period commencing on the Closing Date and ending June 30, 1997 (such
excess being hereinafter referred to as the "1996/1997 Excess Amount"),
calculated on the same basis as the calculations provided in paragraphs 1 and 2
above, the aggregate amount otherwise payable by the Covenantors pursuant to
such paragraphs shall be reduced to an amount equal to the 1996/1997 Excess
Amount; provided, however, that if the 1996/1997 Excess Amount would exceed
one-third of the Maximum 1996/1997 Shortfall Amount, the aggregate amount
otherwise payable by the Covenantors pursuant to paragraphs 1 and 2 above shall
be reduced to an amount equal to the sum of (i) one-third of the Maximum
1996/1997 Shortfall Amount and (ii) 50% of the amount by which the 1996/1997
Excess Amount exceeds one-third of the Maximum 1996/1997 Shortfall Amount, but,
in any case, not in excess of 50% of the Maximum 1996/1997 Shortfall Amount (the
"Covenantors' Aggregate Maximum Payment"); provided further that if an amount in
excess of the amount payable by the Covenantors after giving effect to this
sentence has theretofore been paid by the Covenantors to Buyer pursuant to this
letter, Buyer shall return such overpayment (but not to exceed the amount
received by Buyer pursuant to this letter) to the Covenantors within seven
Business Days of receipt of the notice contemplated by paragraph 2 above in
accordance with the written instructions of the Designated Representative. To
the extent the sum of the individual payments by the Covenantors required under
each of paragraphs 1 and 2 above is less than the lesser of the 1996/1997 Excess
Amount and the Covenantors' Aggregate Maximum Payment, the aggregate amount
otherwise payable by the Covenantors pursuant to such paragraphs shall be
increased to an amount equal to the lesser of the 1996/1997 Excess Amount and
the Covenantors' Aggregate Maximum Payment, and such increased amount (less the
amount theretofore paid by the Covenantors to Buyer pursuant to this letter)
shall be paid by the Covenantors to Buyer within seven Business Days of receipt
of the notice contemplated by paragraph 2 above.
-3-
<PAGE> 4
4. The term "EBITDA," as used herein shall mean, for any
period, (i) the sum of (a) net income (or net loss), (b) interest expense, (c)
income tax expense, (d) depreciation expense, (e) amortization expense, (f)
non-cash foreign exchange losses, if any, (g) extraordinary or non-recurring
losses, if any, (h) other non-operating expense, if any, and (i) with respect
to any period from and after the Closing Date, the amount, if any, by which
selling, general and administrative expense (including depreciation included in
selling, general and administrative expense) exceeds an amount equal to the
result of (x) $112,300 multiplied by (y) the number of calendar days in the
period for which EBITDA is being calculated, less (ii) the sum of (1) non-cash
foreign exchange gains, if any, (2) extraordinary or non-recurring revenues or
gains, if any, (3) other non-operating income, if any, and (4) with respect to
any period from and after the Closing Date, the amount, if any, by which
selling, general and administrative expense (including depreciation included in
selling, general and administrative expense) is less than an amount equal to the
result of (x) $112,300 multiplied by (y) the number of calendar days in the
period for which EBITDA is being calculated, in each case, of Bowling, and
before allocation of general corporate overhead of AMF Group Inc. or any other
entity that is a direct or indirect parent or sister corporation of Bowling
(from and after the Closing Date) or of the Continuing Affiliates (which for
purposes of this letter shall also include the Companies other than Bowling and
the Subsidiaries) (prior to the Closing Date) (amounts to be included in items
(b) through (i) and (1) through (4) shall be included only to the extent such
amounts were included in determining such net income (or net loss) under item
(a)). EBITDA shall not include revenues recognized or expenses incurred by Buyer
or the Sellers other than in the ordinary course of the operation of Bowling.
EBITDA shall be adjusted to eliminate intercompany transactions with other
direct and indirect subsidiaries of AMF Holdings Inc. (from and after the
Closing Date) or the Continuing Affiliates (prior to the Closing Date). EBITDA
shall not reflect divestitures or acquisitions of operating businesses or
transfers from Bowling to its affiliates or from Bowling's affiliates to Bowling
of assets or operations included in Bowling or such affiliates as presented in
the 1995 Financial Statements, as the case may be (which shall continue to be
calculated as if such changes were not made). Items classified as non-operating
income (expense) and selling, general and administrative expense shall be based
on United States generally accepted accounting principles applied on a
consistent basis with Bowling's accounting policies and principles in effect for
the year ended December 31, 1995 as presented in the 1995 Financial Statements.
Classification of non-operating expense or income shall be in conformity with
the applicable requirements of
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<PAGE> 5
Regulation S-X of the Securities and Exchange Commission's rules and regulations
as currently in effect. The term "Stub Period EBITDA" as used herein shall mean
the EBITDA (as defined above) from the operation of Bowling during the period
commencing April 1, 1996 and ending on the day immediately preceding the Closing
Date, calculated on the same basis as the calculations provided in paragraphs 1
and 2 above. The Covenantors shall permit Arthur Andersen full access during
normal business hours to all relevant books and records and employees of the
Covenantors and the Continuing Affiliates to the extent required to complete
their audit of the Stub Period EBITDA; provided, however, that such access shall
not unreasonably disrupt the personnel and operations of the Covenantors and the
Continuing Affiliates, and the Covenantors will use reasonable efforts to cause
Price Waterhouse to provide Buyer and Arthur Andersen full access to the
workpapers of Price Waterhouse in connection with the results of operations from
such period.
5. Capitalized terms used and not defined herein shall have
the meanings ascribed to such terms in the Stock Purchase Agreement.
6. Buyer shall furnish the Covenantors all quarterly and
annual financial information that is contained in Buyer's filings with the
Securities and Exchange Commission on Forms 10-Q and 10-K, in each case within
five Business Days of such filing and at the same time shall provide the
Covenantors with sales and cost of sales figures of Bowling for the most
recently ended quarter.
7. Following the payment by the Covenantors of all sums due to
Buyer pursuant to paragraphs 1, 2 and 3 of this letter calculated without regard
to this paragraph or the immediately following paragraph (the "Calculated
Payment"), and notwithstanding the provision in the penultimate sentence of
paragraphs 1 and 2 of this letter that the calculations therein are final and
binding on the parties hereto, the Covenantors may deliver a written notice to
Buyer requesting the access provided for in the following sentence. Thereafter,
Buyer shall give the Covenantors and their authorized representatives full
access during normal business hours to all relevant books and records and
employees of Buyer and its subsidiaries to the extent required to review the
calculations made pursuant to paragraphs 1, 2 and 3 of this letter; provided,
however, that such access shall not unreasonably disrupt the personnel and
operations of Buyer and its subsidiaries and Buyer will use reasonable efforts
to cause Arthur Andersen to provide the Covenantors and their firm of
accountants full access to the workpapers of Arthur Andersen in connection with
the preparation of the relevant financial statements and reports
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<PAGE> 6
referred to in paragraphs 1 and 2 above. Unless the Designated Representative
delivers a second written notice to Buyer on or prior to the 60th day after the
Designated Representative's receipt of the six-month financial statements
referred to in paragraph 2 above, which notice shall specify in reasonable
detail all disputed items and the basis therefor, each of the Covenantors shall
be deemed to have accepted and agreed to Buyer's calculations pursuant to
paragraphs 1, 2 and 3 of this letter. If the Designated Representative so
notifies Buyer of the Covenantors' objection to such calculations, Buyer and the
Covenantors shall, within 30 days following such notice (the "EBITDA Resolution
Period"), attempt to resolve their differences and any resolution by them as to
any disputed amounts shall be final, binding and conclusive, and shall be deemed
to be an adjustment to the Calculated Payment. Within seven Business Days after
the resolution of differences as to any disputed amounts, the party owing a
payment shall pay the same to the other (which, in the case of a payment owing
to the Covenantors, shall be paid to or at the direction of the Designated
Representative).
8. If at the conclusion of the EBITDA Resolution Period
amounts shall remain in dispute, then all amounts remaining in dispute shall be
submitted to a firm of nationally recognized independent public accountants (the
"Neutral Auditors") selected by the Designated Representative and Buyer within
10 days after the expiration of the EBITDA Resolution Period. If the Designated
Representative and Buyer are unable to agree on the Neutral Auditors, then Buyer
and the Designated Representative shall each have the right to request the
American Arbitration Association to appoint the Neutral Auditors who shall not
have had a material business relationship with the Covenantors, Buyer or any of
their respective Affiliates or any of the Continuing Affiliates within the past
two years. The parties hereto agree to execute, if requested by the Neutral
Auditors, a reasonable engagement letter. If the Neutral Auditors determine that
the Calculated Payment (after giving effect to all resolutions reached by the
parties pursuant to the last two sentences of paragraph 7) exceeds the amount
the Covenantors actually owe Buyer pursuant to paragraphs 1, 2 and 3 of this
letter by more than $1,000,000, all fees and expenses relating to the work, if
any, to be performed by the Neutral Auditors (and the fees and expenses of each
party's accountants and attorneys relating to such dispute), as well as the fees
and expenses, if any, of the American Arbitration Association, shall be borne by
Buyer, and if the Neutral Auditors determine that the Calculated Payment (after
giving effect to all resolutions reached by the parties pursuant to the last two
sentences of paragraph 7) does not exceed the
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<PAGE> 7
amount the Covenantors actually owe Buyer pursuant to paragraphs 1, 2 and 3 of
this letter by more than $1,000,000, all fees and expenses relating to the work,
if any, to be performed by the Neutral Auditors (and the fees and expenses of
each party's accountants and attorneys relating to such dispute), as well as the
fees and expenses, if any, of the American Arbitration Association, shall be
borne by the Covenantors. The Neutral Auditors shall act as an arbitrator to
determine only those issues still in dispute. The Neutral Auditors'
determination shall be made within 30 days of their selection, shall be set
forth in a written statement delivered to the Covenantors and Buyer in
accordance with the notice provisions of the Stock Purchase Agreement and shall
be final, binding and conclusive. The sums due pursuant to paragraphs 1, 2 and 3
of this letter shall be recalculated based on the determination of the Neutral
Auditors and any resolutions reached pursuant to the last two sentences of
paragraph 7 and, based on such recalculation, Buyer shall pay (in accordance
with the written instructions of the Designated Representative) any overpayment,
theretofore made by the Covenantors, or the Covenantors shall pay to Buyer any
shortfall based on the amounts theretofore paid, in either case, based on the
determination of the Neutral Auditors and, in any case, within seven Business
Days of the delivery of the written statement of such determination to Buyer and
the Designated Representative in accordance with the notice provisions in the
Stock Purchase Agreement. Any payment by any party pursuant to the last sentence
of paragraph 7 or pursuant to the preceding sentence of this paragraph 8 shall
bear interest at the London Interbank Offered Rates for three month periods as
reported in The Wall Street Journal (Eastern Edition) from time to time plus a
margin of 275 basis points from (and including) the date payment was made by the
Covenantors pursuant to paragraph 2 to (and including) the day preceding the day
of payment. The foregoing notwithstanding the Covenantors' and the Designated
Representative's rights to exercise any rights to access or to dispute the
amount of any payment included in the Calculated Payment or to request repayment
thereof pursuant to this paragraph and paragraph 7 are contingent upon the
Covenantors having paid Buyer the Calculated Payment in full in accordance with
the terms of this letter (including those relating to time of payment). The
Covenantors' and the Designated Representative's rights to exercise any rights
to access or to dispute the amount of any payment included in the Calculated
Payment or to request repayment thereof pursuant to this paragraph and paragraph
7 shall terminate immediately and automatically and without the requirement for
any notice thereof upon any breach or delay on the part of the Covenantors in
paying the Calculated Payment in accordance with the terms of this letter
(including those relating to time of payment).
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<PAGE> 8
9. Buyer and the Sellers hereby agree that the Sellers Closing
Notice may only request as the Closing Date a business day between April 25,
1996 and May 3, 1996.
10. The obligations of Buyer and the Sellers pursuant to this
letter shall be treated as agreements of such parties under the Stock Purchase
Agreement which by their terms contemplate performance after the Closing Date.
Except as amended hereby, the Stock Purchase Agreement shall remain in full
force and effect (including without limitation Section 10.1(a) thereof) and this
letter shall be treated and governed as if it were a provision incorporated in
the Stock Purchase Agreement. All references in the Stock Purchase Agreement to
the term "Agreement" shall refer to the Agreement as amended by this letter.
Sincerely,
AMF GROUP HOLDINGS INC.
Richard A. Friedman
President
Accepted and Agreed
as of the date first
written above:
__________________________________________
L.F. LOREE, III, SUCCESSOR
CO-TRUSTEE U/A DATED 11/12/86 FBO
WILLIAM H. GOODWIN, III, MOLLY S.
GOODWIN, MATTHEW T. GOODWIN, SARAH C.
GOODWIN AND PETER O. GOODWIN
__________________________________________
NORWOOD H. DAVIS, JR., SUCCESSOR
CO-TRUSTEE U/A DATED 11/12/86 FBO
WILLIAM H. GOODWIN, III, MOLLY S.
GOODWIN, MATTHEW T. GOODWIN, SARAH C.
GOODWIN AND PETER O. GOODWIN
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<PAGE> 9
THE COMMUNITY FOUNDATION, INC.
By: ______________________________________
Name:
Title:
__________________________________________
DOUGLAS J. STANARD
__________________________________________
BEVERLEY W. ARMSTRONG
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<PAGE> 1
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
AMF GROUP INC.
I, the undersigned, for the purpose of incorporating and organizing a
corporation under the General Corporation Law of the State of Delaware, do
hereby execute this Certificate of Incorporation and do hereby certify as
follows:
ARTICLE I
The name of the corporation (which is hereinafter referred to as the
"Corporation") is:
AMF Group Inc.
ARTICLE II
The address of the Corporation's registered office in the State of
Delaware is The Corporation Trust Center, 1209 Orange Street in the City of
Wilmington, County of New Castle. The name of the Corporation's registered agent
at such address is The Corporation Trust Company.
ARTICLE III
The purpose of the Corporation shall be to engage in any lawful act or
activity for which corporations may be organized and incorporated under the
General Corporation Law of the State of Delaware.
<PAGE> 2
ARTICLE IV
Section 1. The Corporation shall be authorized to issue 1,000 shares of
capital stock, of which all shares shall be shares of Common Stock, $.01 par
value ("Common Stock").
Section 2. Except as otherwise provided by law, the Common Stock shall
have the exclusive right to vote for the election of directors and for all other
purposes. Each share of Common Stock shall have one vote, and the Common Stock
shall vote together as a single class.
ARTICLE V
Unless and except to the extent that the By-Laws of the Corporation
shall so require, the election of directors of the Corporation need not be by
written ballot.
ARTICLE VI
In furtherance and not in limitation of the powers conferred by law,
the Board of Directors of the Corporation (the "Board") is expressly authorized
and empowered to make, alter and repeal the By-Laws of the Corporation by a
majority vote at any regular or special meeting of the Board or by written
consent, subject to the power of the stockholders of the Corporation to alter or
repeal any By-Laws made by the Board.
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<PAGE> 3
ARTICLE VII
The Corporation reserves the right at any time from time to time to
amend, alter, change or repeal any provision contained in this Certificate of
Incorporation, and any other provisions authorized by the laws of the State of
Delaware at the time in force may be added or inserted, in the manner now or
hereafter prescribed by law; and all rights, preferences and privileges of
whatsoever nature conferred upon stockholders, directors or any other persons
whomsoever by and pursuant to this Certificate of Incorporation in its present
form or as hereafter amended are granted subject to the right reserved in this
Article.
ARTICLE VIII
Section 1. Elimination of Certain Liability of Directors. A director of
the Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the General Corporation Law of the State of Delaware, or (iv) for
any transaction from which the director derived an improper personal benefit.
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<PAGE> 4
Section 2. Indemnification and Insurance.
(a) Right to Indemnification. Each person who was or is made a party or
is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director or officer
of the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged action
in an official capacity as a director, officer, employee or agent or in any
other capacity while serving as a director, officer, employee or agent, shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the General Corporation Law of the State of Delaware, as the same
exists or may hereafter be amended (but, in the case of any such amendment, only
to the extent that such amendment permits the Corporation to provide broader
indemnification rights than said law permitted the Corporation to provide prior
to such amendment), against all expense, liability and loss (including
attorneys' fees, judgments, fines, amounts paid or to be paid in settlement, and
excise taxes or penalties arising under
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<PAGE> 5
the Employee Retirement Income Security Act of 1974) reasonably incurred or
suffered by such person in connection therewith and such indemnification shall
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of his or her heirs, executors and
administrators; provided, however, that, except as provided in paragraph (b)
hereof, the Corporation shall indemnify any such person seeking indemnification
in connection with a proceeding (or part thereof) initiated by such person only
if such proceeding (or part thereof) was authorized by the Board. The right to
indemnification conferred in this Section shall be a contract right and shall
include the right to be paid by the Corporation the expenses incurred in
defending any such proceeding in advance of its final disposition; provided,
however, that, if the General Corporation Law of the State of Delaware requires,
the payment of such expenses incurred by a director or officer in his or her
capacity as a director or officer (and not in any other capacity in which
service was or is rendered by such person while a director or officer,
including, without limitation, service to an employee benefit plan) in advance
of the final disposition of a proceeding, shall be made only upon delivery to
the Corporation of an undertaking, by or on behalf of such director or officer,
to repay all amounts so advanced if it shall ultimately be determined that such
director or officer is not entitled to be indemnified under this Section or
otherwise.
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<PAGE> 6
The Corporation may, by action of the Board, provide indemnification to
employees and agents of the Corporation with the same scope and effect as the
foregoing indemnification of directors and officers.
(b) Right of Claimant to Bring Suit. If a claim under paragraph (a) of
this Section is not paid in full by the Corporation within thirty days after a
written claim has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant shall be entitled
to be paid also the expense of prosecuting such claim. It shall be a defense to
any such action (other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final disposition where
the required undertaking, if any is required, has been tendered to the
Corporation) that the claimant has not met the standards of conduct which make
it permissible under the General Corporation Law of the State of Delaware for
the Corporation to indemnify the claimant for the amount claimed, but the burden
of proving such defense shall be on the Corporation. Neither the failure of the
Corporation (including its Board, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set
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<PAGE> 7
forth in the General Corporation Law of the State of Delaware, nor an actual
determination by the Corporation (including its Board, independent legal
counsel, or its stockholders) that the claimant has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that the claimant has not met the applicable standard of conduct.
(c) Non-Exclusivity of Rights. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Section shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, provision of
the Certificate of Incorporation, By-law, agreement, vote of stockholders or
disinterested directors or otherwise.
(d) Insurance. The Corporation may maintain insurance, at its expense,
to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the General Corporation Law of the State of Delaware.
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<PAGE> 8
ARTICLE IX
The name and mailing address of the incorporator is Mitchell S.
Presser, Esq., c/o Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New
York, New York 10019.
IN WITNESS WHEREOF, I, the undersigned, being the incorporator
hereinbefore named, do hereby further certify that the facts hereinabove stated
are truly set forth and, accordingly, I have hereunto set my hand this 27th day
of December, 1995.
/s/ Mitchell S. Presser
-------------------
Mitchell S. Presser
Incorporator
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<PAGE> 1
EXHIBIT 3.2
BY-LAWS
of
AMF GROUP INC.
(as of December 27, 1995)
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE -- The registered office of AMF Group Inc.
(the "Corporation") shall be established and maintained at the office of The
Corporation Trust Company at The Corporation Trust Center, 1209 Orange Street
in the City of Wilmington, County of New Castle, State of Delaware, and said
Corporation Trust Company shall be the registered agent of the Corporation in
charge thereof.
SECTION 2. OTHER OFFICES -- The Corporation may have other offices, either
within or without the State of Delaware, at such place or places as the Board
of Directors may from time to time select or the business of the Corporation
may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. ANNUAL MEETINGS -- Annual meetings of stockholders for the
election of directors, and for such other business as may be stated in the
notice of the meeting, shall be held at such place, either within or without
the State of Delaware, and at such time and date as the Board of Directors, by
resolution, shall determine and as set forth in the notice of the meeting. If
the Board of Directors fails so to determine the time, date and place of
meeting, the annual meeting of stockholders shall be held at the registered
office of the Corporation on the first Tuesday in April. If the date of the
annual meeting shall fall upon a legal holiday, the meeting shall be held on
the next succeeding business day. At each
<PAGE> 2
annual meeting, the stockholders entitled to vote shall elect a Board of
Directors and they may transact such other corporate business as shall be
stated in the notice of the meeting.
SECTION 2. SPECIAL MEETINGS -- Special meetings of the stockholders for any
purpose or purposes may be called by the Chairman of the Board, the President
or the Secretary, or by resolution of the Board of Directors.
SECTION 3. VOTING -- Each stockholder entitled to vote in accordance with
the terms of the Certificate of Incorporation of the Corporation and these By-
Laws may vote in person or by proxy, but no proxy shall be voted after three
years from its date unless such proxy provides for a longer period. All
elections for directors shall be decided by plurality vote; all other
questions shall be decided by majority vote except as otherwise provided by
the Certificate of Incorporation or the laws of the State of Delaware.
A complete list of the stockholders entitled to vote at the meeting,
arranged in alphabetical order, with the address of each, and the number of
shares held by each, 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 in the
notice of the meeting, or, if not so specified, 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 any
stockholder who is entitled to be present.
SECTION 4. QUORUM -- Except as otherwise required by law, by the
Certificate of Incorporation of the Corporation or by these By-Laws, the
presence, in person or by proxy, of stockholders holding shares constituting a
majority of the voting power of the Corporation shall constitute a quorum at
all meetings of the stockholders. In case a quorum shall not be present at
any meeting, a majority in interest of the stockholders entitled to vote
thereat, present in person or by proxy, shall have the power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until the requisite amount of stock entitled to vote shall be
present. At any such adjourned meeting at which the requisite amount of stock
entitled to vote shall be represented, any business may be transacted that
might have been transacted at the meeting as originally noticed; but only
those stockholders entitled to vote at the meeting as originally noticed shall
be entitled to vote at any adjournment or adjournments thereof.
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<PAGE> 3
SECTION 5. NOTICE OF MEETINGS -- Written notice, stating the place, date
and time of the meeting, and the general nature of the business to be
considered, shall be given to each stockholder entitled to vote thereat, at
his or her address as it appears on the records of the Corporation, not less
than ten nor more than sixty days before the date of the meeting. No business
other than that stated in the notice shall be transacted at any meeting
without the unanimous consent of all the stockholders entitled to vote
thereat.
SECTION 6. ACTION WITHOUT MEETING -- Unless otherwise provided by the
Certificate of Incorporation of the Corporation, any action required or
permitted to be taken at any annual or special meeting of 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 such 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 III
DIRECTORS
SECTION 1. NUMBER AND TERM -- The business and affairs of the Corporation
shall be managed under the direction of a Board of Directors which shall
consist of not less than two persons. The exact number of directors shall
initially be five and may thereafter be fixed from time to time by the Board
of Directors. Directors shall be elected at the annual meeting of
stockholders and each director shall be elected to serve until his or her
successor shall be elected and shall qualify. A director need not be a
stockholder.
SECTION 2. RESIGNATIONS -- Any director may resign at any time. Such
resignation shall be made in writing, and shall take effect at the time
specified therein, and if no time be specified, at the time of its receipt by
the Chairman of the Board, the President or the Secretary. The acceptance of
a resignation shall not be necessary to make it effective.
SECTION 3. VACANCIES -- If the office of any director becomes vacant, the
remaining directors in the office, though less than a quorum, by a majority
vote, may appoint any qualified person to fill such vacancy, who shall hold
office
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<PAGE> 4
for the unexpired term and until his or her successor shall be duly chosen.
If the office of any director becomes vacant and there are no remaining
directors, the stockholders, by the affirmative vote of the holders of shares
constituting a majority of the voting power of the Corporation, at a special
meeting called for such purpose, may appoint any qualified person to fill such
vacancy.
SECTION 4. REMOVAL -- Except as hereinafter provided, any director or
directors may be removed either for or without cause at any time by the
affirmative vote of the holders of a majority of the voting power entitled to
vote for the election of directors, at an annual meeting or a special meeting
called for the purpose, and the vacancy thus created may be filled, at such
meeting, by the affirmative vote of holders of shares constituting a majority
of the voting power of the Corporation.
SECTION 5. COMMITTEES -- The Board of Directors may, by resolution or
resolutions passed by a majority of the whole Board of Directors, designate
one or more committees, each committee to consist of one or more directors of
the Corporation.
Any such committee, to the extent provided in the resolution of the Board
of Directors, or in these By-Laws, shall have and may exercise all the powers
and authority of the Board of Directors 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.
SECTION 6. MEETINGS -- The newly elected directors may hold their first
meeting for the purpose of organization and the transaction of business, if a
quorum be present, immediately after the annual meeting of the stockholders;
or the time and place of such meeting may be fixed by consent of all the
Directors.
Regular meetings of the Board of Directors may be held without notice at
such places and times as shall be determined from time to time by resolution
of the Board of Directors.
Special meetings of the Board of Directors may be called by the Chairman of
the Board or the President, or by the Secretary on the written request of any
director, on at least one day's notice to each director (except that notice to
any director may be waived in writing by such director) and shall be held at
such place or places as may be determined by the Board of Directors, or as
shall be stated in the call of the meeting.
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<PAGE> 5
Unless otherwise restricted by the Certificate of Incorporation of the
Corporation or these By-Laws, members of the Board of Directors, or any
committee designated by the Board of Directors, may participate in any meeting
of the Board of Directors or any committee thereof by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation in a
meeting shall constitute presence in person at the meeting.
SECTION 7. QUORUM -- A majority of the Directors shall constitute a quorum
for the transaction of business. If at any meeting of the Board of Directors
there shall be less than a quorum present, a majority of those present may
adjourn the meeting from time to time until a quorum is obtained, and no
further notice thereof need be given other than by announcement at the meeting
which shall be so adjourned. The vote of the majority of the Directors
present at a meeting at which a quorum is present shall be the act of the
Board of Directors unless the Certificate of Incorporation of the Corporation
or these By-Laws shall require the vote of a greater number.
SECTION 8. COMPENSATION -- Directors shall not receive any stated salary
for their services as directors or as members of committees, but by resolution
of the Board of Directors a fixed fee and expenses of attendance may be
allowed for attendance at each meeting. Nothing herein contained shall be
construed to preclude any director from serving the Corporation in any other
capacity as an officer, agent or otherwise, and receiving compensation
therefor.
SECTION 9. ACTION WITHOUT MEETING -- Any action required or permitted to be
taken at any meeting of the Board of Directors or of any committee thereof may
be taken without a meeting if a written consent thereto is signed by all
members of the Board of Directors or of such committee, as the case may be,
and such written consent is filed with the minutes of proceedings of the Board
of Directors or such committee.
ARTICLE IV
OFFICERS
SECTION 1. OFFICERS -- The officers of the Corporation shall be a
President, one or more Executive Vice Presidents, a Treasurer and a Secretary,
all of whom shall be elected by the Board of Directors and shall hold office
until their successors are duly elected and qualified. In addition, the Board
of Directors may elect such Vice Presidents,
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Assistant Secretaries and Assistant Treasurers as they may deem proper. The
Board of Directors may appoint such other officers and agents as it may deem
advisable, who shall hold their offices for such terms and shall exercise such
powers and perform such duties as shall be determined from time to time by the
Board of Directors.
SECTION 2. CHAIRMAN OF THE BOARD -- The Chairman of the Board shall not be
an officer of the corporation. He or she shall preside at all meetings of the
Board of Directors and shall have and perform such other duties as may be
assigned to him or her by the Board of Directors.
SECTION 3. PRESIDENT -- The President shall be the Chief Executive Officer
of the Corporation. He or she shall have the general powers and duties of
supervision and management usually vested in the office of President of a
corporation. The President shall have the power to execute bonds, mortgages
and other contracts on behalf of the Corporation, and to cause the seal to be
affixed to any instrument requiring it, and when so affixed the seal shall be
attested to by the signature of the Secretary or the Treasurer or an Assistant
Secretary or an Assistant Treasurer.
SECTION 4. EXECUTIVE VICE PRESIDENTS -- Each Executive Vice President shall
have such powers and shall perform such duties as shall be assigned to him or
her by the Board of Directors.
SECTION 5. TREASURER -- The Treasurer shall be the Chief Financial Officer
of the Corporation. He or she shall have the custody of the Corporate funds
and securities and shall keep full and accurate account of receipts and
disbursements in books belonging to the Corporation. He or she shall deposit
all moneys and other valuables in the name and to the credit of the
Corporation in such depositories as may be designated by the Board of
Directors. He or she shall disburse the funds of the Corporation as may be
ordered by the Board of Directors or the President, taking proper vouchers for
such disbursements. He or she shall render to the Chairman of the Board, the
President and Board of Directors at the regular meetings of the Board of
Directors, or whenever they may request it, an account of all his or her
transactions as Treasurer and of the financial condition of the Corporation.
If required by the Board of Directors, he or she shall give the Corporation a
bond for the faithful discharge of his or her duties in such amount and with
such surety as the Board of Directors shall prescribe.
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SECTION 6. SECRETARY -- The Secretary shall give, or cause to be given,
notice of all meetings of stockholders and of the Board of Directors and all
other notices required by law or by these By-Laws, and in case of his or her
absence or refusal or neglect so to do, any such notice may be given by any
person thereunto directed by the Chairman of the Board or the President, or by
the Board of Directors, upon whose request the meeting is called as provided
in these By-Laws. He or she shall record all the proceedings of the meetings
of the Board of Directors, any committees thereof and the stockholders of the
Corporation in a book to be kept for that purpose, and shall perform such
other duties as may be assigned to him or her by the Board of Directors, the
Chairman of the Board or the President. He or she shall have the custody of
the seal of the Corporation and shall affix the same to all instruments
requiring it, when authorized by the Board of Directors, the Chairman of the
Board or the President, and attest to the same.
SECTION 7. VICE PRESIDENTS, ASSISTANT TREASURERS AND ASSISTANT SECRETARIES
- -- Vice Presidents, Assistant Treasurers and Assistant Secretaries, if any,
shall be elected and shall have such powers and shall perform such duties as
shall be assigned to them, respectively, by the Board of Directors.
ARTICLE V
MISCELLANEOUS
SECTION 1. CERTIFICATES OF STOCK -- A certificate of stock shall be issued
to each stockholder certifying the number of shares owned by such stockholder
in the Corporation. Certificates of stock of the Corporation shall be of such
form and device as the Board of Directors may from time to time determine.
SECTION 2. LOST CERTIFICATES -- A new certificate of stock may be issued in
the place of any certificate theretofore issued by the Corporation, alleged to
have been lost or destroyed, and the Board of Directors may, in its
discretion, require the owner of the lost or destroyed certificate, or such
owner's legal representatives, to give the Corporation a bond, in such sum as
they may direct, not exceeding double the value of the stock, to indemnify the
Corporation against any claim that may be made against it on account of the
alleged loss of any such certificate, or the issuance of any such new
certificate.
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SECTION 3. TRANSFER OF SHARES -- The shares of stock of the Corporation
shall be transferable only upon its books by the holders thereof in person or
by their duly authorized attorneys or legal representatives, and upon such
transfer the old certificates shall be surrendered to the Corporation by the
delivery thereof to the person in charge of the stock and transfer books and
ledgers, or to such other person as the Board of Directors may designate, by
whom they shall be cancelled, and new certificates shall thereupon be issued.
A record shall be made of each transfer and whenever a transfer shall be made
for collateral security, and not absolutely, it shall be so expressed in the
entry of the transfer.
SECTION 4. STOCKHOLDERS RECORD DATE -- In order that the Corporation may
determine 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 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 of Directors may fix
a record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors and
which record date: (1) in the case of determination of stockholders entitled
to vote at any meeting of stockholders or adjournment thereof, shall, unless
otherwise required by law, not be more than sixty nor less than ten days
before the date of such meeting; (2) in the case of determination of
stockholders entitled to express consent to corporate action in writing
without a meeting, shall not be more than ten days from the date upon which
the resolution fixing the record date is adopted by the Board of Directors;
and (3) in the case of any other action, shall not be more than sixty days
prior to such other action. If no record date is fixed: (1) the record date
for determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the
day on which notice is given, or, if notice is waived, at the close of
business on the day next preceding the day on which the meeting is held; (2)
the record date for determining stockholders entitled to express consent to
corporate action in writing without a meeting when no prior action of the
Board of Directors is required by law, shall be the first day on which a
signed written consent setting forth the action taken or proposed to be taken
is delivered to the Corporation in accordance with applicable law, or, if
prior action by the Board of Directors is required by law, shall be at the
close of business on the day on which the Board of Directors adopts the
resolution taking such prior action; and (3) the record date for determining
stockholders for
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any other purpose shall be at the close of business on the day on which the
Board of Directors adopts the resolution relating thereto. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned
meeting.
SECTION S. DIVIDENDS -- Subject to the provisions of the Certificate of
Incorporation of the Corporation, the Board of Directors may, out of funds
legally available therefor at any regular or special meeting, declare
dividends upon stock of the Corporation as and when they deem appropriate.
Before declaring any dividend there may be set apart out of any funds of the
Corporation available for dividends, such sum or sums as the Board of
Directors from time to time in their discretion deem proper for working
capital or as a reserve fund to meet contingencies or for equalizing dividends
or for such other purposes as the Board of Directors shall deem conducive to
the interests of the Corporation.
SECTION 6. SEAL -- The corporate seal of the Corporation shall be in such
form as shall be determined by resolution of the Board of Directors. Said
seal may be used by causing it or a facsimile thereof to be impressed or
affixed or reproduced or otherwise imprinted upon the subject document or
paper.
SECTION 7. FISCAL YEAR -- The fiscal year of the Corporation shall be
determined by resolution of the Board of Directors.
SECTION 8. CHECKS -- All checks, drafts or other orders for the payment of
money, notes or other evidences of indebtedness issued in the name of the
Corporation shall be signed by such officer or officers, or agent or agents,
of the Corporation, and in such manner as shall be determined from time to
time by resolution of the Board of Directors.
SECTION 9. NOTICE AND WAIVER OF NOTICE -- Whenever any notice is required
to be given under these By-Laws, personal notice is not required unless
expressly so stated, and any notice so required shall be deemed to be
sufficient if given by depositing the same in the United States mail, postage
prepaid, addressed to the person entitled thereto at his or her address as it
appears on the records of the Corporation, and such notice shall be deemed to
have been given on the day of such mailing. Stockholders not entitled to vote
shall not be entitled to receive notice of any meetings except as otherwise
provided by law. Whenever any notice is required to be given
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under the provisions of any law, or under the provisions of the Certificate of
Incorporation of the Corporation or of these By-Laws, a waiver thereof, in
writing and signed by the person or persons entitled to said notice, whether
before or after the time stated therein, shall be deemed equivalent to such
required notice.
ARTICLE VI
AMENDMENTS
These By-Laws may be altered, amended or repealed at any annual meeting of
the stockholders (or at any special meeting thereof if notice of such proposed
alteration, amendment or repeal to be considered is contained in the notice of
such special meeting) by the affirmative vote of the holders of shares
constituting a majority of the voting power of the Corporation. Except as
otherwise provided in the Certificate of Incorporation of the Corporation, the
Board of Directors may by majority vote of those present at any meeting at
which a quorum is present alter, amend or repeal these By-Laws, or enact such
other By-Laws as in their judgment may be advisable for the regulation and
conduct of the affairs of the Corporation.
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EXHIBIT 3.3
CERTIFICATE OF INCORPORATION
OF
AMF GROUP HOLDINGS INC.
I, the undersigned, for the purpose of incorporating and organizing a
corporation under the General Corporation Law of the State of Delaware, do
hereby execute this Certificate of Incorporation and do hereby certify as
follows:
ARTICLE I
The name of the corporation (which is hereinafter referred to as the
"Corporation") is:
AMF Group Holdings Inc.
ARTICLE II
The address of the Corporation's registered office in the State of
Delaware is The Corporation Trust Center, 1209 Orange Street in the City of
Wilmington, County of New Castle. The name of the Corporation's registered
agent at such address is The Corporation Trust Company.
ARTICLE III
The purpose of the Corporation shall be to engage in any lawful act or
activity for which corporations may be organized and incorporated under the
General Corporation Law of the State of Delaware.
<PAGE> 2
ARTICLE IV
Section 1. The Corporation shall be authorized to issue 1,000 shares
of capital stock, of which all shares shall be shares of Common Stock, $.01 par
value ("Common Stock").
Section 2. Except as otherwise provided by law, the Common Stock shall
have the exclusive right to vote for the election of directors and for all other
purposes. Each share of Common Stock shall have one vote, and the Common Stock
shall vote together as a single class.
ARTICLE V
Unless and except to the extent that the By-Laws of the Corporation
shall so require, the election of directors of the Corporation need not be by
written ballot.
ARTICLE VI
In furtherance and not in limitation of the powers conferred by law,
the Board of Directors of the Corporation (the "Board") is expressly authorized
and empowered to make, alter and repeal the By-Laws of the Corporation by a
majority vote at any regular or special meeting of the Board or by written
consent, subject to the power of the stockholders of the Corporation to alter or
repeal any By-Laws made by the Board.
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ARTICLE VII
The Corporation reserves the right at any time from time to time to
amend, alter, change or repeal any provision contained in this Certificate of
Incorporation, and any other provisions authorized by the laws of the State of
Delaware at the time in force may be added or inserted, in the manner now or
hereafter prescribed by law; and all rights, preferences and privileges of
whatsoever nature conferred upon stockholders, directors or any other persons
whomsoever by and pursuant to this Certificate of Incorporation in its present
form or as hereafter amended are granted subject to the right reserved in this
Article.
ARTICLE VIII
Section 1. Elimination of Certain Liability of Directors. A director
of the Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the General Corporation Law of the State of Delaware, or (iv) for
any transaction from which the director derived an improper personal benefit.
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<PAGE> 4
Section 2. Indemnification and Insurance.
(a) Right to Indemnification. Each person who was or is made a
party or is threatened to be made a party to or is involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director or officer
of the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged action
in an official capacity as a director, officer, employee or agent or in any
other capacity while serving as a director, officer, employee or agent, shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the General Corporation Law of the State of Delaware, as the same
exists or may hereafter be amended (but, in the case of any such amendment, only
to the extent that such amendment permits the Corporation to provide broader
indemnification rights than said law permitted the Corporation to provide prior
to such amendment), against all expense, liability and loss (including
attorneys, fees, judgments, fines, amounts paid or to be paid in settlement, and
excise taxes or penalties arising under
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the Employee Retirement Income Security Act of 1974) reasonably incurred or
suffered by such person in connection therewith and such indemnification shall
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of his or her heirs, executors and
administrators; provided, however, that, except as provided in paragraph (b)
hereof, the Corporation shall indemnify any such person seeking indemnification
in connection with a proceeding (or part thereof) initiated by such person only
if such proceeding (or part thereof) was authorized by the Board. The right to
indemnification conferred in this Section shall be a contract right and shall
include the right to be paid by the Corporation the expenses incurred in
defending any such proceeding in advance of its final disposition; provided,
however, that, if the General Corporation Law of the State of Delaware requires,
the payment of such expenses incurred by a director or officer in his or her
capacity as a director or officer (and not in any other capacity in which
service was or is rendered by such person while a director or officer,
including, without limitation, service to an employee benefit plan) in advance
of the final disposition of a proceeding, shall be made only upon delivery to
the Corporation of an undertaking, by or on behalf of such director or officer,
to repay all amounts so advanced if it shall ultimately be determined that such
director or officer is not entitled to be indemnified under this Section or
otherwise.
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The Corporation may, by action of the Board, provide indemnification to
employees and agents of the Corporation with the same scope and effect as the
foregoing indemnification of directors and officers.
(b) Right of Claimant to Bring Suit. If a claim under paragraph
(a) of this Section is not paid in full by the Corporation within thirty days
after a written claim has been received by the Corporation, the claimant may at
any time thereafter bring suit against the Corporation to recover the unpaid
amount of the claim and, if successful in whole or in part, the claimant shall
be entitled to be paid also the expense of prosecuting such claim. It shall be
a defense to any such action (other than an action brought to enforce a claim
for expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any is required, has been
tendered to the Corporation) that the claimant has not met the standards of
conduct which make it permissible under the General Corporation Law of the State
of Delaware for the Corporation to indemnify the claimant for the amount
claimed, but the burden of proving such defense shall be on the Corporation.
Neither the failure of the Corporation (including its Board, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he or she has met the applicable standard of conduct
set
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forth in the General Corporation Law of the State of Delaware, nor an actual
determination by the Corporation (including its Board, independent legal
counsel, or its stockholders) that the claimant has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that the claimant has not met the applicable standard of conduct.
(c) Non-Exclusivity of Rights. The right to indemnification and
the payment of expenses incurred in defending a proceeding in advance of its
final disposition conferred in this Section shall not be exclusive of any other
right which any person may have or hereafter acquire under any statute,
provision of the Certificate of Incorporation, By-law, agreement, vote of
stockholders or disinterested directors or otherwise.
(d) Insurance. The Corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the General Corporation Law of the State of Delaware.
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ARTICLE IX
The name and mailing address of the incorporator is Mitchell S.
Presser, Esq., c/o Wachtell, Lipton, Rosen Katz, 51 West 52nd Street, New York,
New York 10019.
IN WITNESS WHEREOF, I, the undersigned, being the incorporator
hereinbefore named, do hereby further certify that the facts hereinabove stated
are truly set forth and, accordingly, I have hereunto set my hand this 12th day
of January, 1996.
/s/ Mitchell S. Presser
-----------------------
Mitchell S. Presser
Incorporator
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EXHIBIT 3.4
BY-LAWS
of
AMF GROUP HOLDINGS INC.
(as of January 12, 1996)
---------------------------------------
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE -- The registered office of AMF Group
Holdings Inc. (the "Corporation") shall be established and maintained at the
office of The Corporation Trust Company at The Corporation Trust Center, 1209
Orange Street in the City of Wilmington, County of New Castle, State of
Delaware, and said Corporation Trust Company shall be the registered agent of
the Corporation in charge thereof.
SECTION 2. OTHER OFFICES -- The Corporation may have other offices,
either within or without the State of Delaware, at such place or places as the
Board of Directors may from time to time select or the business of the
Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. ANNUAL MEETINGS -- Annual meetings of stockholders for the
election of directors, and for such other business as may be stated in the
notice of the meeting, shall be held at such place, either within or without the
State of Delaware, and at such time and date as the Board of Directors, by
resolution, shall determine and as set forth in the notice of the meeting. If
the Board of Directors fails so to determine the time, date and place of
meeting, the annual meeting of stockholders shall be held at the registered
office of the Corporation on the first Tuesday in April. If the date of the
annual meeting shall fall upon a legal holiday, the meeting shall be held on the
next succeeding business day. At each
<PAGE> 2
annual meeting, the stockholders entitled to vote shall elect a Board of
Directors and they may transact such other corporate business as shall be stated
in the notice of the meeting.
SECTION 2. SPECIAL MEETINGS -- Special meetings of the stockholders for
any purpose or purposes may be called by the Chairman of the Board, the
President or the Secretary, or by resolution of the Board of Directors.
SECTION 3. VOTING -- Each stockholder entitled to vote in accordance
with the terms of the Certificate of Incorporation of the Corporation and these
By-Laws may vote in person or by proxy, but no proxy shall be voted after three
years from its date unless such proxy provides for a longer period. All
elections for directors shall be decided by plurality vote; all other questions
shall be decided by majority vote except as otherwise provided by the
Certificate of Incorporation or the laws of the State of Delaware.
A complete list of the stockholders entitled to vote at the meeting,
arranged in alphabetical order, with the address of each, and the number of
shares held by each, 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 in the notice of
the meeting, or, if not so specified, 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 any stockholder
who is entitled to be present.
SECTION 4. QUORUM -- Except as otherwise required by law, by the
Certificate of Incorporation of the Corporation or by these By-Laws, the
presence, in person or by proxy, of stockholders holding shares constituting a
majority of the voting power of the Corporation shall constitute a quorum at all
meetings of the stockholders. In case a quorum shall not be present at any
meeting, a majority in interest of the stockholders entitled to vote thereat,
present in person or by proxy, shall have the power to adjourn the meeting from
time to time, without notice other than announcement at the meeting, until the
requisite amount of stock entitled to vote shall be present. At any such
adjourned meeting at which the requisite amount of stock entitled to vote shall
be represented, any business may be transacted that might have been transacted
at the meeting as originally noticed; but only those stockholders entitled to
vote at the meeting as originally noticed shall be entitled to vote at any
adjournment or adjournments thereof.
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SECTION 5. NOTICE OF MEETINGS -- Written notice, stating the place,
date and time of the meeting, and the general nature of the business to be
considered, shall be given to each stockholder entitled to vote thereat, at his
or her address as it appears on the records of the Corporation, not less than
ten nor more than sixty days before the date of the meeting. No business other
than that stated in the notice shall be transacted at any meeting without the
unanimous consent of all the stockholders entitled to vote thereat.
SECTION 6. ACTION WITHOUT MEETING -- Unless otherwise provided by the
Certificate of Incorporation of the Corporation, any action required or
permitted to be taken at any annual or special meeting of 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 such 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 III
DIRECTORS
SECTION 1. NUMBER AND TERM -- The business and affairs of the
Corporation shall be managed under the direction of a Board of Directors which
shall consist of not less than two persons. The exact number of directors shall
initially be two and may thereafter be fixed from time to time by the Board of
Directors. Directors shall be elected at the annual meeting of stockholders and
each director shall be elected to serve until his or her successor shall be
elected and shall qualify. A director need not be a stockholder.
SECTION 2. RESIGNATIONS -- Any director may resign at any time. Such
resignation shall be made in writing, and shall take effect at the time
specified therein, and if no time be specified, at the time of its receipt by
the Chairman of the Board, the President or the Secretary. The acceptance of a
resignation shall not be necessary to make it effective.
SECTION 3. VACANCIES -- If the office of any director becomes vacant,
the remaining directors in the office, though less than a quorum, by a majority
vote, may appoint any qualified person to fill such vacancy, who shall hold
office
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for the unexpired term and until his or her successor shall be duly chosen. If
the office of any director becomes vacant and there are no remaining directors,
the stockholders, by the affirmative vote of the holders of shares constituting
a majority of the voting power of the Corporation, at a special meeting called
for such purpose, may appoint any qualified person to fill such vacancy.
SECTION 4. REMOVAL -- Except as hereinafter provided, any director or
directors may be removed either for or without cause at any time by the
affirmative vote of the holders of a majority of the voting power entitled to
vote for the election of directors, at an annual meeting or a special meeting
called for the purpose, and the vacancy thus created may be filled, at such
meeting, by the affirmative vote of holders of shares constituting a majority of
the voting power of the Corporation.
SECTION 5. COMMITTEES -- The Board of Directors may, by resolution or
resolutions passed by a majority of the whole Board of Directors, designate one
or more committees, each committee to consist of one or more directors of the
Corporation.
Any such committee, to the extent provided in the resolution of the
Board of Directors, or in these By-Laws, shall have and may exercise all the
powers and authority of the Board of Directors 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.
SECTION 6. MEETINGS -- The newly elected directors may hold their first
meeting for the purpose of organization and the transaction of business, if a
quorum be present, immediately after the annual meeting of the stockholders; or
the time and place of such meeting may be fixed by consent of all the Directors.
Regular meetings of the Board of Directors may be held without notice
at such places and times as shall be determined from time to time by resolution
of the Board of Directors.
Special meetings of the Board of Directors may be called by the
Chairman of the Board or the President, or by the Secretary on the written
request of any director, on at least one day's notice to each director (except
that notice to any director may be waived in writing by such director) and shall
be held at such place or places as may be determined by the Board of Directors,
or as shall be stated in the call of the meeting.
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Unless otherwise restricted by the Certificate of Incorporation of the
Corporation or these By-Laws, members of the Board of Directors, or any
committee designated by the Board of Directors, may participate in any meeting
of the Board of Directors or any committee thereof by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation in a
meeting shall constitute presence in person at the meeting.
SECTION 7. QUORUM -- A majority of the Directors shall constitute a
quorum for the transaction of business. If at any meeting of the Board of
Directors there shall be less than a quorum present, a majority of those present
may adjourn the meeting from time to time until a quorum is obtained, and no
further notice thereof need be given other than by announcement at the meeting
which shall be so adjourned. The vote of the majority of the Directors present
at a meeting at which a quorum is present shall be the act of the Board of
Directors unless the Certificate of Incorporation of the Corporation or these
By-Laws shall require the vote of a greater number.
SECTION 8. COMPENSATION -- Directors shall not receive any stated
salary for their services as directors or as members of committees, but by
resolution of the Board of Directors a fixed fee and expenses of attendance may
be allowed for attendance at each meeting. Nothing herein contained shall be
construed to preclude any director from serving the Corporation in any other
capacity as an officer, agent or otherwise, and receiving compensation therefor.
SECTION 9. ACTION WITHOUT MEETING -- Any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting if a written consent thereto is signed by all
members of the Board of Directors or of such committee, as the case may be, and
such written consent is filed with the minutes of proceedings of the Board of
Directors or such committee.
ARTICLE IV
OFFICERS
SECTION 1. OFFICERS -- The officers of the Corporation shall be a
President, one or more Vice Presidents, a Treasurer and a Secretary, all of whom
shall be elected by the Board of Directors and shall hold office until their
successors are duly elected and qualified. In addition, the Board of Directors
may elect such Assistant Secretaries and Assistant
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Treasurers as they may deem proper. The Board of Directors may appoint such
other officers and agents as it may deem advisable, who shall hold their offices
for such terms and shall exercise such powers and perform such duties as shall
be determined from time to time by the Board of Directors.
SECTION 2. CHAIRMAN OF THE BOARD -- The Chairman of the Board shall not
be an officer of the corporation. He or she shall preside at all meetings of the
Board of Directors and shall have and perform such other duties as may be
assigned to him or her by the Board of Directors.
SECTION 3. PRESIDENT -- The President shall be the Chief Executive
Officer of the Corporation. He or she shall have the general powers and duties
of supervision and management usually vested in the office of President of a
corporation. The President shall have the power to execute bonds, mortgages and
other contracts on behalf of the Corporation, and to cause the seal to be
affixed to any instrument requiring it, and when so affixed the seal shall be
attested to by the signature of the Secretary or the Treasurer or an Assistant
Secretary or an Assistant Treasurer.
SECTION 4. VICE PRESIDENTS -- Each Vice President shall have such
powers and shall perform such duties as shall be assigned to him or her by the
Board of Directors.
SECTION 5. TREASURER -- The Treasurer shall be the Chief Financial
Officer of the Corporation. He or she shall have the custody of the Corporate
funds and securities and shall keep full and accurate account of receipts and
disbursements in books belonging to the Corporation. He or she shall deposit all
moneys and other valuables in the name and to the credit of the Corporation in
such depositaries as may be designated by the Board of Directors. He or she
shall disburse the funds of the Corporation as may be ordered by the Board of
Directors or the President, taking proper vouchers for such disbursements. He or
she shall render to the Chairman of the Board, the President and Board of
Directors at the regular meetings of the Board of Directors, or whenever they
may request it, an account of all his or her transactions as Treasurer and of
the financial condition of the Corporation. If required by the Board of
Directors, he or she shall give the Corporation a bond for the faithful
discharge of his or her duties in such amount and with such surety as the Board
of Directors shall prescribe.
SECTION 6. SECRETARY -- The Secretary shall give, or cause to be given,
notice of all meetings of stockholders and of the Board of Directors and all
other notices required by law
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or by these By-Laws, and in case of his or her absence or refusal or neglect so
to do, any such notice may be given by any person thereunto directed by the
Chairman of the Board or the President, or by the Board of Directors, upon whose
request the meeting is called as provided in these By-Laws. He or she shall
record all the proceedings of the meetings of the Board of Directors, any
committees thereof and the stockholders of the Corporation in a book to be kept
for that purpose, and shall perform such other duties as may be assigned to him
or her by the Board of Directors, the Chairman of the Board or the President. He
or she shall have the custody of the seal of the Corporation and shall affix the
same to all instruments requiring it, when authorized by the Board of Directors,
the Chairman of the Board or the President, and attest to the same.
SECTION 7. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES -- Assistant
Treasurers and Assistant Secretaries, if any, shall be elected and shall have
such powers and shall perform such duties as shall be assigned to them,
respectively, by the Board of Directors.
ARTICLE V
MISCELLANEOUS
SECTION 1. CERTIFICATES OF STOCK -- A certificate of stock shall be
issued to each stockholder certifying the number of shares owned by such
stockholder in the Corporation. Certificates of stock of the Corporation shall
be of such form and device as the Board of Directors may from time to time
determine.
SECTION 2. LOST CERTIFICATES -- A new certificate of stock may be
issued in the place of any certificate theretofore issued by the Corporation,
alleged to have been lost or destroyed, and the Board of Directors may, in its
discretion, require the owner of the lost or destroyed certificate, or such
owner's legal representatives, to give the Corporation a bond, in such sum as
they may direct, not exceeding double the value of the stock, to indemnify the
Corporation against any claim that may be made against it on account of the
alleged loss of any such certificate, or the issuance of any such new
certificate.
SECTION 3. TRANSFER OF SHARES -- The shares of stock of the Corporation
shall be transferable only upon its books by the holders thereof in person or by
their duly authorized attorneys or legal representatives, and upon such transfer
the old certificates shall be surrendered to the Corporation by the
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delivery thereof to the person in charge of the stock and transfer books and
ledgers, or to such other person as the Board of Directors may designate, by
whom they shall be cancelled, and new certificates shall thereupon be issued. A
record shall be made of each transfer and whenever a transfer shall be made for
collateral security, and not absolutely, it shall be so expressed in the entry
of the transfer.
SECTION 4. STOCKHOLDERS RECORD DATE -- In order that the Corporation
may determine 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 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 of Directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors and which
record date: (1) in the case of determination of stockholders entitled to vote
at any meeting of stockholders or adjournment thereof, shall, unless otherwise
required by law, not be more than sixty nor less than ten days before the date
of such meeting; (2) in the case of determination of stockholders entitled to
express consent to corporate action in writing without a meeting, shall not be
more than ten days from the date upon which the resolution fixing the record
date is adopted by the Board of Directors; and (3) in the case of any other
action, shall not be more than sixty days prior to such other action. If no
record date is fixed: (1) the record date for determining stockholders entitled
to notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held; (2) the record date for determining stockholders
entitled to express consent to corporate action in writing without a meeting
when no prior action of the Board of Directors is required by law, shall be the
first day on which a signed written consent setting forth the action taken or
proposed to be taken is delivered to the Corporation in accordance with
applicable law, or, if prior action by the Board of Directors is required by
law, shall be at the close of business on the day on which the Board of
Directors adopts the resolution taking such prior action; and (3) the record
date for determining stockholders for any other purpose shall be at the close of
business on the day on which the Board of Directors adopts the resolution
relating thereto. A determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply
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to any adjournment of the meeting; provided, however, that the Board of
Directors may fix a new record date for the adjourned meeting.
SECTION 5. DIVIDENDS -- Subject to the provisions of the Certificate of
Incorporation of the Corporation, the Board of Directors may, out of funds
legally available therefor at any regular or special meeting, declare dividends
upon stock of the Corporation as and when they deem appropriate. Before
declaring any dividend there may be set apart out of any funds of the
Corporation available for dividends, such sum or sums as the Board of Directors
from time to time in their discretion deem proper for working capital or as a
reserve fund to meet contingencies or for equalizing dividends or for such other
purposes as the Board of Directors shall deem conducive to the interests of the
Corporation.
SECTION 6. SEAL -- The corporate seal of the Corporation shall be in
such form as shall be determined by resolution of the Board of Directors. Said
seal may be used by causing it or a facsimile thereof to be impressed or affixed
or reproduced or otherwise imprinted upon the subject document or paper.
SECTION 7. FISCAL YEAR -- The fiscal year of the Corporation shall be
determined by resolution of the Board of Directors.
SECTION 8. CHECKS -- All checks, drafts or other orders for the payment
of money, notes or other evidences of indebtedness issued in the name of the
Corporation shall be signed by such officer or officers, or agent or agents, of
the Corporation, and in such manner as shall be determined from time to time by
resolution of the Board of Directors.
SECTION 9. NOTICE AND WAIVER OF NOTICE -- Whenever any notice is
required to be given under these By-Laws, personal notice is not required unless
expressly so stated, and any notice so required shall be deemed to be sufficient
if given by depositing the same in the United States mail, postage prepaid,
addressed to the person entitled thereto at his or her address as it appears on
the records of the Corporation, and such notice shall be deemed to have been
given on the day of such mailing. Stockholders not entitled to vote shall not be
entitled to receive notice of any meetings except as otherwise provided by law.
Whenever any notice is required to be given under the provisions of any law, or
under the provisions of the Certificate of Incorporation of the Corporation or
of these By-Laws, a waiver thereof, in writing and signed by the person or
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persons entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent to such required notice.
ARTICLE VI
AMENDMENTS
These By-Laws may be altered, amended or repealed at any annual meeting
of the stockholders (or at any special meeting thereof if notice of such
proposed alteration, amendment or repeal to be considered is contained in the
notice of such special meeting) by the affirmative vote of the holders of shares
constituting a majority of the voting power of the Corporation. Except as
otherwise provided in the Certificate of Incorporation of the Corporation, the
Board of Directors may by majority vote of those present at any meeting at which
a quorum is present alter, amend or repeal these By-Laws, or enact such other
By-Laws as in their judgment may be advisable for the regulation and conduct of
the affairs of the Corporation.
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EXHIBIT 3.5
CERTIFICATE OF INCORPORATION
OF
AMF BOWLING HOLDINGS INC.
I, the undersigned, for the purpose of incorporating and organizing a
corporation under the General Corporation Law of the State of Delaware, do
hereby execute this Certificate of Incorporation and do hereby certify as
follows:
ARTICLE I
The name of the corporation (which is hereinafter referred to as the
"Corporation") is:
AMF Bowling Holdings Inc.
ARTICLE II
The address of the Corporation's registered office in the State of
Delaware is The Corporation Trust Center, 1209 Orange Street in the City of
Wilmington, County of New Castle. The name of the Corporation's registered agent
at such address is The Corporation Trust Company.
ARTICLE III
The purpose of the Corporation shall be to engage in any lawful act or
activity for which corporations may be organized and incorporated under the
General Corporation Law of the State of Delaware.
<PAGE> 2
ARTICLE IV
Section 1. The Corporation shall be authorized to issue 1,000 shares of
capital stock, of which all shares shall be shares of Common Stock, $.01 par
value ("Common Stock").
Section 2. Except as otherwise provided by law, the Common Stock shall
have the exclusive right to vote for the election of directors and for all other
purposes. Each share of Common Stock shall have one vote, and the Common Stock
shall vote together as a single class.
ARTICLE V
Unless and except to the extent that the By-Laws of the Corporation
shall so require, the election of directors of the Corporation need not be by
written ballot.
ARTICLE VI
In furtherance and not in limitation of the powers conferred by law,
the Board of Directors of the Corporation (the "Board") is expressly authorized
and empowered to make, alter and repeal the By-Laws of the Corporation by a
majority vote at any regular or special meeting of the Board or by written
consent, subject to the power of the stockholders of the Corporation to alter or
repeal any By-Laws made by the Board.
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ARTICLE VII
The Corporation reserves the right at any time from time to time to
amend, alter, change or repeal any provision contained in this Certificate of
Incorporation, and any other provisions authorized by the laws of the State of
Delaware at the time in force may be added or inserted, in the manner now or
hereafter prescribed by law; and all rights, preferences and privileges of
whatsoever nature conferred upon stockholders, directors or any other persons
whomsoever by and pursuant to this Certificate of Incorporation in its present
form or as hereafter amended are granted subject to the right reserved in this
Article.
ARTICLE VIII
Section 1. Elimination of Certain Liability of Directors. A director of
the Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the General Corporation Law of the State of Delaware, or (iv) for
any transaction from which the director derived an improper personal benefit.
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<PAGE> 4
Section 2. Indemnification and Insurance.
(a) Right to Indemnification. Each person who was or is made a party or
is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director or officer
of the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged action
in an official capacity as a director, officer, employee or agent or in any
other capacity while serving as a director, officer, employee or agent, shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the General Corporation Law of the State of Delaware, as the same
exists or may hereafter be amended (but, in the case of any such amendment, only
to the extent that such amendment permits the Corporation to provide broader
indemnification rights than said law permitted the Corporation to provide prior
to such amendment), against all expense, liability and loss (including
attorneys, fees, judgments, fines, amounts paid or to be paid in settlement, and
excise taxes or penalties arising under
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<PAGE> 5
the Employee Retirement Income Security Act of 1974) reasonably incurred or
suffered by such person in connection therewith and such indemnification shall
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of his or her heirs, executors and
administrators; Provided, however, that, except as provided in paragraph (b)
hereof, the Corporation shall indemnify any such person seeking indemnification
in connection with a proceeding (or part thereof) initiated by such person only
if such proceeding (or part thereof) was authorized by the Board. The right to
indemnification conferred in this Section shall be a contract right and shall
include the right to be paid by the Corporation the expenses incurred in
defending any such proceeding in advance of its final disposition; provided,
however, that, if the General Corporation Law of the State of Delaware requires,
the payment of such expenses incurred by a director or officer in his or her
capacity as a director or officer (and not in any other capacity in which
service was or is rendered by such person while a director or officer,
including, without limitation, service to an employee benefit plan) in advance
of the final disposition of a proceeding, shall be made only upon delivery to
the Corporation of an undertaking, by or on behalf of such director or officer,
to repay all amounts so advanced if it shall ultimately be determined that such
director or officer is not entitled to be indemnified under this Section or
otherwise.
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The Corporation may, by action of the Board, provide indemnification to
employees and agents of the Corporation with the same scope and effect as the
foregoing indemnification of directors and officers.
(b) Right of Claimant to Bring Suit. If a claim under paragraph (a) of
this Section is not paid in full by the Corporation within thirty days after a
written claim has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant shall be entitled
to be paid also the expense of prosecuting such claim. It shall be a defense to
any such action (other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final disposition where
the required undertaking, if any is required, has been tendered to the
Corporation) that the claimant has not met the standards of conduct which make
it permissible under the General Corporation Law of the State of Delaware for
the Corporation to indemnify the claimant for the amount claimed, but the burden
of proving such defense shall be on the Corporation. Neither the failure of the
Corporation (including its Board, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set
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forth in the General Corporation Law of the State of Delaware, nor an actual
determination by the Corporation (including its Board, independent legal
counsel, or its stockholders) that the claimant has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that the claimant has not met the applicable standard of conduct.
(c) Non-Exclusivity of Rights. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Section shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, provision of
the Certificate of Incorporation, By-law, agreement, vote of stockholders or
disinterested directors or otherwise.
(d) Insurance. The Corporation may maintain insurance, at its expense,
to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the General Corporation Law of the State of Delaware.
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ARTICLE IX
The name and mailing address of the incorporator is Mitchell S.
Presser, Esq., c/o Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New
York, New York 10019.
IN WITNESS WHEREOF, I, the undersigned, being the incorporator
hereinbefore named, do hereby further certify that the facts hereinabove stated
are truly set forth and, accordingly, I have hereunto set my hand this 16th day
of January, 1996.
/s/ Mitchell S. Presser
-----------------------------
Mitchell S. Presser
Incorporator
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EXHIBIT 3.6
BY-LAWS
of
AMF BOWLING HOLDINGS INC.
(as of January 16, 1996)
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE -- The registered office of AMF Bowling
Holdings Inc. (the "Corporation") shall be established and maintained at the
office of The Corporation Trust Company at The Corporation Trust Center, 1209
Orange Street in the City of Wilmington, County of New Castle, State of
Delaware, and said Corporation Trust Company shall be the registered agent of
the Corporation in charge thereof.
SECTION 2. OTHER OFFICES -- The Corporation may have other offices,
either within or without the State of Delaware, at such place or places as the
Board of Directors may from time to time select or the business of the
Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. ANNUAL MEETINGS -- Annual meetings of stockholders for the
election of directors, and for such other business as may be stated in the
notice of the meeting, shall be held at such place, either within or without the
State of Delaware, and at such time and date as the Board of Directors, by
resolution, shall determine and as set forth in the notice of the meeting. If
the Board of Directors fails so to determine the time, date and place of
meeting, the annual meeting of stockholders shall be held at the registered
office of the Corporation on the first Tuesday in April. If the date of the
annual meeting shall fall upon a legal holiday, the meeting shall be held on the
next succeeding business day. At each
<PAGE> 2
annual meeting, the stockholders entitled to vote shall elect a Board of
Directors and they may transact such other corporate business as shall be stated
in the notice of the meeting.
SECTION 2. SPECIAL MEETINGS -- Special meetings of the stockholders for
any purpose or purposes may be called by the Chairman of the Board, the
President or the Secretary, or by resolution of the Board of Directors.
SECTION 3. VOTING -- Each stockholder entitled to vote in accordance
with the terms of the Certificate of Incorporation of the Corporation and these
By-Laws may vote in person or by proxy, but no proxy shall be voted after three
years from its date unless such proxy provides for a longer period. All
elections for directors shall be decided by plurality vote; all other questions
shall be decided by majority vote except as otherwise provided by the
Certificate of Incorporation or the laws of the State of Delaware.
A complete list of the stockholders entitled to vote at the meeting,
arranged in alphabetical order, with the address of each, and the number of
shares held by each, 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 in the notice of
the meeting, or, if not so specified, 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 any stockholder
who is entitled to be present.
SECTION 4. QUORUM -- Except as otherwise required by law, by the
Certificate of Incorporation of the Corporation or by these By-Laws, the
presence, in person or by proxy, of stockholders holding shares constituting a
majority of the voting power of the Corporation shall constitute a quorum at all
meetings of the stockholders. In case a quorum shall not be present at any
meeting, a majority in interest of the stockholders entitled to vote thereat,
present in person or by proxy, shall have the power to adjourn the meeting from
time to time, without notice other than announcement at the meeting, until the
requisite amount of stock entitled to vote shall be present. At any such
adjourned meeting at which the requisite amount of stock entitled to vote shall
be represented, any business may be transacted that might have been transacted
at the meeting as originally noticed; but only those stockholders entitled to
vote at the meeting as originally noticed shall be entitled to vote at any
adjournment or adjournments thereof.
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SECTION 5. NOTICE OF MEETINGS -- Written notice, stating the place,
date and time of the meeting, and the general nature of the business to be
considered, shall be given to each stockholder entitled to vote thereat, at his
or her address as it appears on the records of the Corporation, not less than
ten nor more than sixty days before the date of the meeting. No business other
than that stated in the notice shall be transacted at any meeting without the
unanimous consent of all the stockholders entitled to vote thereat.
SECTION 6. ACTION WITHOUT MEETING -- Unless otherwise provided by the
Certificate of Incorporation of the Corporation, any action required or
permitted to be taken at any annual or special meeting of 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 such 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 III
DIRECTORS
SECTION 1. NUMBER AND TERM -- The business and affairs of the
Corporation shall be managed under the direction of a Board of Directors which
shall consist of not less than two persons. The exact number of directors shall
initially be two and may thereafter be fixed from time to time by the Board of
Directors. Directors shall be elected at the annual meeting of stockholders and
each director shall be elected to serve until his or her successor shall be
elected and shall qualify. A director need not be a stockholder.
SECTION 2. RESIGNATIONS -- Any director may resign at any time. Such
resignation shall be made in writing, and shall take effect at the time
specified therein, and if no time be specified, at the time of its receipt by
the Chairman of the Board, the President or the Secretary. The acceptance of a
resignation shall not be necessary to make it effective.
SECTION 3. VACANCIES -- If the office of any director becomes vacant,
the remaining directors in the office, though less than a quorum, by a
majority vote, may appoint any qualified person to fill such vacancy, who shall
hold office
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for the unexpired term and until his or her successor shall be duly chosen. If
the office of any director becomes vacant and there are no remaining directors,
the stockholders, by the affirmative vote of the holders of shares constituting
a majority of the voting power of the Corporation, at a special meeting called
for such purpose, may appoint any qualified person to fill such vacancy.
SECTION 4. REMOVAL -- Except as hereinafter provided, any director or
directors may be removed either for or without cause at any time by the
affirmative vote of the holders of a majority of the voting power entitled to
vote for the election of directors, at an annual meeting or a special meeting
called for the purpose, and the vacancy thus created may be filled, at such
meeting, by the affirmative vote of holders of shares constituting a majority of
the voting power of the Corporation.
SECTION 5. COMMITTEES -- The Board of Directors may, by resolution or
resolutions passed by a majority of the whole Board of Directors, designate one
or more committees, each committee to consist of one or more directors of the
Corporation.
Any such committee, to the extent provided in the resolution of the
Board of Directors, or in these By-Laws, shall have and may exercise all the
powers and authority of the Board of Directors 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.
SECTION 6. MEETINGS -- The newly elected directors may hold their first
meeting for the purpose of organization and the transaction of business, if a
quorum be present, immediately after the annual meeting of the stockholders; or
the time and place of such meeting may be fixed by consent of all the Directors.
Regular meetings of the Board of Directors may be held without notice
at such places and times as shall be determined from time to time by resolution
of the Board of Directors.
Special meetings of the Board of Directors may be called by the
Chairman of the Board or the President, or by the Secretary on the written
request of any director, on at least one day's notice to each director (except
that notice to any director may be waived in writing by such director) and shall
be held at such place or places as may be determined by the Board of Directors,
or as shall be stated in the call of the meeting.
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Unless otherwise restricted by the Certificate of Incorporation of the
Corporation or these By-Laws, members of the Board of Directors, or any
committee designated by the Board of Directors, may participate in any meeting
of the Board of Directors or any committee thereof by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation in a
meeting shall constitute presence in person at the meeting.
SECTION 7. QUORUM -- A majority of the Directors shall constitute a
quorum for the transaction of business. If at any meeting of the Board of
Directors there shall be less than a quorum present, a majority of those present
may adjourn the meeting from time to time until a quorum is obtained, and no
further notice thereof need be given other than by announcement at the meeting
which shall be so adjourned. The vote of the majority of the Directors present
at a meeting at which a quorum is present shall be the act of the Board of
Directors unless the Certificate of Incorporation of the Corporation or these
By-Laws shall require the vote of a greater number.
SECTION 8. COMPENSATION -- Directors shall not receive any stated
salary for their services as directors or as members of committees, but by
resolution of the Board of Directors a fixed fee and expenses of attendance may
be allowed for attendance at each meeting. Nothing herein contained shall be
construed to preclude any director from serving the Corporation in any other
capacity as an officer, agent or otherwise, and receiving compensation therefor.
SECTION 9. ACTION WITHOUT MEETING -- Any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting if a written consent thereto is signed by all
members of the Board of Directors or of such committee, as the case may be, and
such written consent is filed with the minutes of proceedings of the Board of
Directors or such committee.
ARTICLE IV
OFFICERS
SECTION 1. OFFICERS -- The officers of the Corporation shall be a
President, one or more Vice Presidents, a Treasurer and a Secretary, all of whom
shall be elected by the Board of Directors and shall hold office until their
successors are duly elected and qualified. In addition, the Board of Directors
may elect such Assistant Secretaries and Assistant
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Treasurers as they may deem proper. The Board of Directors may appoint such
other officers and agents as it may deem advisable, who shall hold their offices
for such terms and shall exercise such powers and perform such duties as shall
be determined from time to time by the Board of Directors.
SECTION 2. CHAIRMAN OF THE BOARD -- The Chairman of the Board shall not
be an officer of the corporation. He or she shall preside at all meetings of the
Board of Directors and shall have and perform such other duties as may be
assigned to him or her by the Board of Directors.
SECTION 3. PRESIDENT -- The President shall be the Chief Executive
Officer of the Corporation. He or she shall have the general powers and duties
of supervision and management usually vested in the office of President of a
corporation. The President shall have the power to execute bonds, mortgages and
other contracts on behalf of the Corporation, and to cause the seal to be
affixed to any instrument requiring it, and when so affixed the seal shall be
attested to by the signature of the Secretary or the Treasurer or an Assistant
Secretary or an Assistant Treasurer.
SECTION 4. VICE PRESIDENTS -- Each Vice President shall have such
powers and shall perform such duties as shall be assigned to him or her by the
Board of Directors.
SECTION 5. TREASURER -- The Treasurer shall be the Chief Financial
Officer of the Corporation. He or she shall have the custody of the Corporate
funds and securities and shall keep full and accurate account of receipts and
disbursements in books belonging to the Corporation. He or she shall deposit all
moneys and other valuables in the name and to the credit of the Corporation in
such depositaries as may be designated by the Board of Directors. He or she
shall disburse the funds of the Corporation as may be ordered by the Board of
Directors or the President, taking proper vouchers for such disbursements. He or
she shall render to the Chairman of the Board, the President and Board of
Directors at the regular meetings of the Board of Directors, or whenever they
may request it, an account of all his or her transactions as Treasurer and of
the financial condition of the Corporation. If required by the Board of
Directors, he or she shall give the Corporation a bond for the faithful
discharge of his or her duties in such amount and with such surety as the Board
of Directors shall prescribe.
SECTION 6. SECRETARY -- The Secretary shall give, or cause to be given,
notice of all meetings of stockholders and of the Board of Directors and all
other notices required by law
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or by these By-Laws, and in case of his or her absence or refusal or neglect so
to do, any such notice may be given by any person thereunto directed by the
Chairman of the Board or the President, or by the Board of Directors, upon whose
request the meeting is called as provided in these By-Laws. He or she shall
record all the proceedings of the meetings of the Board of Directors, any
committees thereof and the stockholders of the Corporation in a book to be kept
for that purpose, and shall perform such other duties as may be assigned to him
or her by the Board of Directors, the Chairman of the Board or the President. He
or she shall have the custody of the seal of the Corporation and shall affix the
same to all instruments requiring it, when authorized by the Board of Directors,
the Chairman of the Board or the President, and attest to the same.
SECTION 7. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES -- Assistant
Treasurers and Assistant Secretaries, if any, shall be elected and shall have
such powers and shall perform such duties as shall be assigned to them,
respectively, by the Board of Directors.
ARTICLE V
MISCELLANEOUS
SECTION 1. CERTIFICATES OF STOCK -- A certificate of stock shall be
issued to each stockholder certifying the number of shares owned by such
stockholder in the Corporation. Certificates of stock of the Corporation shall
be of such form and device as the Board of Directors may from time to time
determine.
SECTION 2. LOST CERTIFICATES -- A new certificate of stock may be
issued in the place of any certificate theretofore issued by the Corporation,
alleged to have been lost or destroyed, and the Board of Directors may, in its
discretion, require the owner of the lost or destroyed certificate, or such
owner's legal representatives, to give the Corporation a bond, in such sum as
they may direct, not exceeding double the value of the stock, to indemnify the
Corporation against any claim that may be made against it on account of the
alleged loss of any such certificate, or the issuance of any such new
certificate.
SECTION 3. TRANSFER OF SHARES -- The shares of stock of the Corporation
shall be transferable only upon its books by the holders thereof in person or by
their duly authorized attorneys or legal representatives, and upon such transfer
the old certificates shall be surrendered to the Corporation by the
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delivery thereof to the person in charge of the stock and transfer books and
ledgers, or to such other person as the Board of Directors may designate, by
whom they shall be cancelled, and new certificates shall thereupon be issued. A
record shall be made of each transfer and whenever a transfer shall be made for
collateral security, and not absolutely, it shall be so expressed in the entry
of the transfer.
SECTION 4. STOCKHOLDERS RECORD DATE -- In order that the Corporation
may determine 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 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 of Directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors and which
record date: (1) in the case of determination of stockholders entitled to vote
at any meeting of stockholders or adjournment thereof, shall, unless otherwise
required by law, not be more than sixty nor less than ten days before the date
of such meeting; (2) in the case of determination of stockholders entitled to
express consent to corporate action in writing without a meeting, shall not be
more than ten days from the date upon which the resolution fixing the record
date is adopted by the Board of Directors; and (3) in the case of any other
action, shall not be more than sixty days prior to such other action. If no
record date is fixed: (1) the record date for determining stockholders entitled
to notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held; (2) the record date for determining stockholders
entitled to express consent to corporate action in writing without a meeting
when no prior action of the Board of Directors is required by law, shall be the
first day on which a signed written consent setting forth the action taken or
proposed to be taken is delivered to the Corporation in accordance with
applicable law, or, if prior action by the Board of Directors is required by
law, shall be at the close of business on the day on which the Board of
Directors adopts the resolution taking such prior action; and (3) the record
date for determining stockholders for any other purpose shall be at the close of
business on the day on which the Board of Directors adopts the resolution
relating thereto. A determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply
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to any adjournment of the meeting; provided, however, that the Board of
Directors may fix a new record date for the adjourned meeting.
SECTION 5. DIVIDENDS -- Subject to the provisions of the Certificate of
Incorporation of the Corporation, the Board of Directors may, out of funds
legally available therefor at any regular or special meeting, declare dividends
upon stock of the Corporation as and when they deem appropriate. Before
declaring any dividend there may be set apart out of any funds of the
Corporation available for dividends, such sum or sums as the Board of Directors
from time to time in their discretion deem proper for working capital or as a
reserve fund to meet contingencies or for equalizing dividends or for such other
purposes as the Board of Directors shall deem conducive to the interests of the
Corporation.
SECTION 6. SEAL -- The corporate seal of the Corporation shall be in
such form as shall be determined by resolution of the Board of Directors. Said
seal may be used by causing it or a facsimile thereof to be impressed or affixed
or reproduced or otherwise imprinted upon the subject document or paper.
SECTION 7. FISCAL YEAR -- The fiscal year of the Corporation shall be
determined by resolution of the Board of Directors.
SECTION 8. CHECKS -- All checks, drafts or other orders for the payment
of money, notes or other evidences of indebtedness issued in the name of the
Corporation shall be signed by such officer or officers, or agent or agents, of
the Corporation, and in such manner as shall be determined from time to time by
resolution of the Board of Directors.
SECTION 9. NOTICE AND WAIVER OF NOTICE -- Whenever any notice is
required to be given under these By-Laws, personal notice is not required unless
expressly so stated, and any notice so required shall be deemed to be sufficient
if given by depositing the same in the United States mail, postage prepaid,
addressed to the person entitled thereto at his or her address as it appears on
the records of the Corporation, and such notice shall be deemed to have been
given on the day of such mailing. Stockholders not entitled to vote shall not be
entitled to receive notice of any meetings except as otherwise provided by law.
Whenever any notice is required to be given under the provisions of any law, or
under the provisions of the Certificate of Incorporation of the Corporation or
of these By-Laws, a waiver thereof, in writing and signed by the person or
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persons entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent to such required notice.
ARTICLE VI
AMENDMENTS
These By-Laws may be altered, amended or repealed at any annual meeting
of the stockholders (or at any special meeting thereof if notice of such
proposed alteration, amendment or repeal to be considered is contained in the
notice of such special meeting) by the affirmative vote of the holders of shares
constituting a majority of the voting power of the Corporation. Except as
otherwise provided in the Certificate of Incorporation of the Corporation, the
Board of Directors may by majority vote of those present at any meeting at which
a quorum is present alter, amend or repeal these By-Laws, or enact such other
By-Laws as in their judgment may be advisable for the regulation and conduct of
the affairs of the Corporation.
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EXHIBIT 3.7
CERTIFICATE OF INCORPORATION
OF
AMF BOWLING CENTERS HOLDINGS INC.
I, the undersigned, for the purpose of incorporating and organizing a
corporation under the General Corporation Law of the State of Delaware, do
hereby execute this Certificate of Incorporation and do hereby certify as
follows:
ARTICLE I
The name of the corporation (which is hereinafter referred to as the
"Corporation") is:
AMF Bowling Centers Holdings Inc.
ARTICLE II
The address of the Corporation's registered office in the State of
Delaware is The Corporation Trust Center, 1209 Orange Street in the City of
Wilmington, County of New Castle. The name of the Corporation's registered agent
at such address is The Corporation Trust Company.
ARTICLE III
The purpose of the Corporation shall be to engage in any lawful act or
activity for which corporations may be organized and incorporated under the
General Corporation Law of the State of Delaware.
<PAGE> 2
ARTICLE IV
Section 1. The Corporation shall be authorized to issue 1,000 shares of
capital stock, of which all shares shall be shares of Common Stock, $.01 par
value ("Common Stock").
Section 2. Except as otherwise provided by law, the Common Stock shall
have the exclusive right to vote for the election of directors and for all other
purposes. Each share of Common Stock shall have one vote, and the Common Stock
shall vote together as a single class.
ARTICLE V
Unless and except to the extent that the By-Laws of the Corporation
shall so require, the election of directors of the Corporation need not be by
written ballot.
ARTICLE VI
In furtherance and not in limitation of the powers conferred by law,
the Board of Directors of the Corporation (the "Board") is expressly authorized
and empowered to make, alter and repeal the By-Laws of the Corporation by a
majority vote at any regular or special meeting of the Board or by written
consent, subject to the power of the stockholders of the Corporation to alter or
repeal any By-Laws made by the Board.
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ARTICLE VII
The Corporation reserves the right at any time from time to time to
amend, alter, change or repeal any provision contained in this Certificate of
Incorporation, and any other provisions authorized by the laws of the State of
Delaware at the time in force may be added or inserted, in the manner now or
hereafter prescribed by law; and all rights, preferences and privileges of
whatsoever nature conferred upon stockholders, directors or any other persons
whomsoever by and pursuant to this Certificate of Incorporation in its present
form or as hereafter amended are granted subject to the right reserved in this
Article.
ARTICLE VIII
Section 1. Elimination of Certain Liability of Directors. A director of
the Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the General Corporation Law of the State of Delaware, or (iv) for
any transaction from which the director derived an improper personal benefit.
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<PAGE> 4
Section 2. Indemnification and Insurance.
(a) Right to Indemnification. Each person who was or is made a party or
is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director or officer
of the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged action
in an official capacity as a director, officer, employee or agent or in any
other capacity while serving as a director, officer, employee or agent, shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the General Corporation Law of the State of Delaware, as the same
exists or may hereafter be amended (but, in the case of any such amendment, only
to the extent that such amendment permits the Corporation to provide broader
indemnification rights than said law permitted the Corporation to provide prior
to such amendment), against all expense, liability and loss (including
attorneys' fees, judgments, fines, amounts paid or to be paid in settlement, and
excise taxes or penalties arising under
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<PAGE> 5
the Employee Retirement Income Security Act of 1974) reasonably incurred or
suffered by such person in connection therewith and such indemnification shall
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of his or her heirs, executors and
administrators; provided, however, that, except as provided in paragraph (b)
hereof, the Corporation shall indemnify any such person seeking indemnification
in connection with a proceeding (or part thereof) initiated by such person only
if such proceeding (or part thereof) was authorized by the Board. The right to
indemnification conferred in this Section shall be a contract right and shall
include the right to be paid by the Corporation the expenses incurred in
defending any such proceeding in advance of its final disposition; provided,
however, that, if the General Corporation Law of the State of Delaware requires,
the payment of such expenses incurred by a director or officer in his or her
capacity as a director or officer (and not in any other capacity in which
service was or is rendered by such person while a director or officer,
including, without limitation, service to an employee benefit plan) in advance
of the final disposition of a proceeding, shall be made only upon delivery to
the Corporation of an undertaking, by or on behalf of such director or officer,
to repay all amounts so advanced if it shall ultimately be determined that such
director or officer is not entitled to be indemnified under this Section or
otherwise.
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The Corporation may, by action of the Board, provide indemnification to
employees and agents of the Corporation with the same scope and effect as the
foregoing indemnification of directors and officers.
(b) Right of Claimant to Bring Suit. If a claim under paragraph (a) of
this Section is not paid in full by the Corporation within thirty days after a
written claim has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant shall be entitled
to be paid also the expense of prosecuting such claim. It shall be a defense to
any such action (other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final disposition where
the required undertaking, if any is required, has been tendered to the
Corporation) that the claimant has not met the standards of conduct which make
it permissible under the General Corporation Law of the State of Delaware for
the Corporation to indemnify the claimant for the amount claimed, but the burden
of proving such defense shall be on the Corporation. Neither the failure of the
Corporation (including its Board, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set
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forth in the General Corporation Law of the State of Delaware, nor an actual
determination by the Corporation (including its Board, independent legal
counsel, or its stockholders) that the claimant has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that the claimant has not met the applicable standard of conduct.
(c) Non-Exclusivity of Rights. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Section shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, provision of
the Certificate of Incorporation, By-law, agreement, vote of stockholders or
disinterested directors or otherwise.
(d) Insurance. The Corporation may maintain insurance, at its expense,
to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the General Corporation Law of the State of Delaware.
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ARTICLE IX
The name and mailing address of the incorporator is Mitchell S.
Presser, Esq., c/o Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New
York, New York 10019.
IN WITNESS WHEREOF, I, the undersigned, being the incorporator
hereinbefore named, do hereby further certify that the facts hereinabove stated
are truly set forth and, accordingly, I have hereunto set my hand this 16th day
of January, 1996.
/s/ Mitchell S. Presser
--------------------------
Mitchell S. Presser
Incorporator
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EXHIBIT 3.8
BY-LAWS
of
AMF BOWLING CENTERS HOLDINGS INC.
(as of January 16, 1996)
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE -- The registered office of AMF Bowling
Centers Holdings Inc. (the "Corporation") shall be established and maintained at
the office of The Corporation Trust Company at The Corporation Trust Center,
1209 Orange Street in the City of Wilmington, County of New Castle, State of
Delaware, and said Corporation Trust Company shall be the registered agent of
the Corporation in charge thereof.
SECTION 2. OTHER OFFICES -- The Corporation may have other offices,
either within or without the State of Delaware, at such place or places as the
Board of Directors may from time to time select or the business of the
Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. ANNUAL MEETINGS -- Annual meetings of stockholders for the
election of directors, and for such other business as may be stated in the
notice of the meeting, shall be held at such place, either within or without the
State of Delaware, and at such time and date as the Board of Directors, by
resolution, shall determine and as set forth in the notice of the meeting. If
the Board of Directors fails so to determine the time, date and place of
meeting, the annual meeting of stockholders shall be held at the registered
office of the Corporation on the first Tuesday in April. If the date of the
annual meeting shall fall upon a legal holiday, the meeting shall be held on the
next succeeding business day. At each annual meeting, the stockholders entitled
to vote shall elect a
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Board of Directors and they may transact such other corporate business as shall
be stated in the notice of the meeting.
SECTION 2. SPECIAL MEETINGS -- Special meetings of the stockholders for
any purpose or purposes may be called by the Chairman of the Board, the
President or the Secretary, or by resolution of the Board of Directors.
SECTION 3. VOTING -- Each stockholder entitled to vote in accordance
with the terms of the Certificate of Incorporation of the Corporation and these
By-Laws may vote in person or by proxy, but no proxy shall be voted after three
years from its date unless such proxy provides for a longer period. All
elections for directors shall be decided by plurality vote; all other questions
shall be decided by majority vote except as otherwise provided by the
Certificate of Incorporation or the laws of the State of Delaware.
A complete list of the stockholders entitled to vote at the meeting,
arranged in alphabetical order, with the address of each, and the number of
shares held by each, 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 in the notice of
the meeting, or, if not so specified, 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 any stockholder
who is entitled to be present.
SECTION 4. QUORUM -- Except as otherwise required by law, by the
Certificate of Incorporation of the Corporation or by these By-Laws, the
presence, in person or by proxy, of stockholders holding shares constituting a
majority of the voting power of the Corporation shall constitute a quorum at all
meetings of the stockholders. In case a quorum shall not be present at any
meeting, a majority in interest of the stockholders entitled to vote thereat,
present in person or by proxy, shall have the power to adjourn the meeting from
time to time, without notice other than announcement at the meeting, until the
requisite amount of stock entitled to vote shall be present. At any such
adjourned meeting at which the requisite amount of stock entitled to vote shall
be represented, any business may be transacted that might have been transacted
at the meeting as originally noticed; but only those stockholders entitled to
vote at the meeting as originally noticed shall be entitled to vote at any
adjournment or adjournments thereof.
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SECTION 5. NOTICE OF MEETINGS -- Written notice, stating the place,
date and time of the meeting, and the general nature of the business to be
considered, shall be given to each stockholder entitled to vote thereat, at his
or her address as it appears on the records of the Corporation, not less than
ten nor more than sixty days before the date of the meeting. No business other
than that stated in the notice shall be transacted at any meeting without the
unanimous consent of all the stockholders entitled to vote thereat.
SECTION 6. ACTION WITHOUT MEETING -- Unless otherwise provided by the
Certificate of Incorporation of the Corporation, any action required or
permitted to be taken at any annual or special meeting of 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 such 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 III
DIRECTORS
SECTION 1. NUMBER AND TERM -- The business and affairs of the
Corporation shall be managed under the direction of a Board of Directors which
shall consist of not less than one person. The exact number of directors shall
initially be two and may thereafter be fixed from time to time by the Board of
Directors. Directors shall be elected at the annual meeting of stockholders and
each director shall be elected to serve until his or her successor shall be
elected and shall qualify. A director need not be a stockholder.
SECTION 2. RESIGNATIONS -- Any director may resign at any time. Such
resignation shall be made in writing, and shall take effect at the time
specified therein, and if no time be specified, at the time of its receipt by
the Chairman of the Board, the President or the Secretary. The acceptance of a
resignation shall not be necessary to make it effective.
SECTION 3. VACANCIES -- If the office of any director becomes vacant,
the remaining directors in the office, though less than a quorum, by a majority
vote, may appoint any qualified person to fill such vacancy, who shall hold
office
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for the unexpired term and until his or her successor shall be duly chosen. If
the office of any director becomes vacant and there are no remaining directors,
the stockholders, by the affirmative vote of the holders of shares constituting
a majority of the voting power of the Corporation, at a special meeting called
for such purpose, may appoint any qualified person to fill such vacancy.
SECTION 4. REMOVAL -- Except as hereinafter provided, any director or
directors may be removed either for or without cause at any time by the
affirmative vote of the holders of a majority of the voting power entitled to
vote for the election of directors, at an annual meeting or a special meeting
called for the purpose, and the vacancy thus created may be filled, at such
meeting, by the affirmative vote of holders of shares constituting a majority of
the voting power of the Corporation.
SECTION 5. COMMITTEES -- The Board of Directors may, by resolution or
resolutions passed by a majority of the whole Board of Directors, designate one
or more committees, each committee to consist of one or more directors of the
Corporation.
Any such committee, to the extent provided in the resolution of the
Board of Directors, or in these By-Laws, shall have and may exercise all the
powers and authority of the Board of Directors 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.
SECTION 6. MEETINGS -- The newly elected directors may hold their first
meeting for the purpose of organization and the transaction of business, if a
quorum be present, immediately after the annual meeting of the stockholders; or
the time and place of such meeting may be fixed by consent of all the Directors.
Regular meetings of the Board of Directors may be held without notice
at such places and times as shall be determined from time to time by resolution
of the Board of Directors.
Special meetings of the Board of Directors may be called by the
Chairman of the Board or the President, or by the Secretary on the written
request of any director, on at least one day's notice to each director (except
that notice to any director may be waived in writing by such director) and shall
be held at such place or places as may be determined by the Board of Directors,
or as shall be stated in the call of the meeting.
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Unless otherwise restricted by the Certificate of Incorporation of the
Corporation or these By-Laws, members of the Board of Directors, or any
committee designated by the Board of Directors, may participate in any meeting
of the Board of Directors or any committee thereof by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation in a
meeting shall constitute presence in person at the meeting.
SECTION 7. QUORUM -- A majority of the Directors shall constitute a
quorum for the transaction of business. If at any meeting of the Board of
Directors there shall be less than a quorum present, a majority of those present
may adjourn the meeting from time to time until a quorum is obtained, and no
further notice thereof need be given other than by announcement at the meeting
which shall be so adjourned. The vote of the majority of the Directors present
at a meeting at which a quorum is present shall be the act of the Board of
Directors unless the Certificate of Incorporation of the Corporation or these
By-Laws shall require the vote of a greater number.
SECTION 8. COMPENSATION -- Directors shall not receive any stated
salary for their services as directors or as members of committees, but by
resolution of the Board of Directors a fixed fee and expenses of attendance may
be allowed for attendance at each meeting. Nothing herein contained shall be
construed to preclude any director from serving the Corporation in any other
capacity as an officer, agent or otherwise, and receiving compensation therefor.
SECTION 9. ACTION WITHOUT MEETING -- Any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting if a written consent thereto is signed by all
members of the Board of Directors or of such committee, as the case may be, and
such written consent is filed with the minutes of proceedings of the Board of
Directors or such committee.
ARTICLE IV
OFFICERS
SECTION 1. OFFICERS -- The officers of the Corporation shall be a
President, a Treasurer and a Secretary, all of whom shall be elected by the
Board of Directors and shall hold office until their successors are duly elected
and qualified. In addition, the Board of Directors may elect such Vice
Presidents, Assistant Secretaries and Assistant Treasurers as
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they may deem proper. The Board of Directors may appoint such other officers and
agents as it may deem advisable, who shall hold their offices for such terms and
shall exercise such powers and perform such duties as shall be determined from
time to time by the Board of Directors.
SECTION 2. CHAIRMAN OF THE BOARD -- The Chairman of the Board shall not
be an officer of the corporation. He or she shall preside at all meetings of the
Board of Directors and shall have and perform such other duties as may be
assigned to him or her by the Board of Directors.
SECTION 3. PRESIDENT -- The President shall be the Chief Executive
Officer of the Corporation. He or she shall have the general powers and duties
of supervision and management usually vested in the office of President of a
corporation. The President shall have the power to execute bonds, mortgages and
other contracts on behalf of the Corporation, and to cause the seal to be
affixed to any instrument requiring it, and when so affixed the seal shall be
attested to by the signature of the Secretary or the Treasurer or an Assistant
Secretary or an Assistant Treasurer.
SECTION 4. VICE PRESIDENTS -- Each Vice President shall have such
powers and shall perform such duties as shall be assigned to him or her by the
Board of Directors.
SECTION 5. TREASURER -- The Treasurer shall be the Chief Financial
Officer of the Corporation. He or she shall have the custody of the Corporate
funds and securities and shall keep full and accurate account of receipts and
disbursements in books belonging to the Corporation. He or she shall deposit all
moneys and other valuables in the name and to the credit of the Corporation in
such depositaries as may be designated by the Board of Directors. He or she
shall disburse the funds of the Corporation as may be ordered by the Board of
Directors or the President, taking proper vouchers for such disbursements. He or
she shall render to the Chairman of the Board, the President and Board of
Directors at the regular meetings of the Board of Directors, or whenever they
may request it, an account of all his or her transactions as Treasurer and of
the financial condition of the Corporation. If required by the Board of
Directors, he or she shall give the Corporation a bond for the faithful
discharge of his or her duties in such amount and with such surety as the Board
of Directors shall prescribe.
SECTION 6. SECRETARY -- The Secretary shall give, or cause to be given,
notice of all meetings of stockholders and of the Board of Directors and all
other notices required by law
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or by these By-Laws, and in case of his or her absence or refusal or neglect so
to do, any such notice may be given by any person thereunto directed by the
Chairman of the Board or the President, or by the Board of Directors, upon
whose request the meeting is called as provided in these By-Laws. He or she
shall record all the proceedings of the meetings of the Board of Directors, any
committees thereof and the stockholders of the Corporation in a book to be kept
for that purpose, and shall perform such other duties as may be assigned to him
or her by the Board of Directors, the Chairman of the Board or the President.
He or she shall have the custody of the seal of the Corporation and shall affix
the same to all instruments requiring it, when authorized by the Board of
Directors, the Chairman of the Board or the President, and attest to the same.
SECTION 7. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES -- Assistant
Treasurers and Assistant Secretaries, if any, shall be elected and shall have
such powers and shall perform such duties as shall be assigned to them,
respectively, by the Board of Directors.
ARTICLE V
MISCELLANEOUS
SECTION 1. CERTIFICATES OF STOCK -- A certificate of stock shall be
issued to each stockholder certifying the number of shares owned by such
stockholder in the Corporation. Certificates of stock of the Corporation shall
be of such form and device as the Board of Directors may from time to time
determine.
SECTION 2. LOST CERTIFICATES -- A new certificate of stock may be
issued in the place of any certificate theretofore issued by the Corporation,
alleged to have been lost or destroyed, and the Board of Directors may, in its
discretion, require the owner of the lost or destroyed certificate, or such
owner's legal representatives, to give the Corporation a bond, in such sum as
they may direct, not exceeding double the value of the stock, to indemnify the
Corporation against any claim that may be made against it on account of the
alleged loss of any such certificate, or the issuance of any such new
certificate.
SECTION 3. TRANSFER OF SHARES -- The shares of stock of the
Corporation shall be transferable only upon its books by the holders therof in
person or by their duly authorized attorneys or legal representatives, and upon
such transfer the old certificates shall be surrendered to the Corporation by
the
-7-
<PAGE> 8
delivery thereof to the person in charge of the stock and transfer books and
ledgers, or to such other person as the Board of Directors may designate, by
whom they shall be cancelled, and new certificates shall thereupon be issued.
A record shall be made of each transfer and whenever a transfer shall be made
for collateral security, and not absolutely, it shall be so expressed in the
entry of the transfer.
SECTION 4. STOCKHOLDERS RECORD DATE -- In order that the Corporation
may determine 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 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 of Directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors and
which record date: (1) in the case of determination of stockholders entitled
to vote at any meeting of stockholders or adjournment thereof, shall, unless
otherwise required by law, not be more than sixty nor less than ten days before
the date of such meeting; (2) in the case of determination of stockholders
entitled to express consent to corporate action in writing without a meeting,
shall not be more than ten days from the date upon which the resolution fixing
the record date is adopted by the Board of Directors; and (3) in the case of
any other action, shall not be more than sixty days prior to such other action.
If no record date is fixed: (1) the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be at the
close of business on the day next preceding the day on which notice is given,
or, if notice is waived, at the close of business on the day next preceding the
day on which the meeting is held; (2) the record date for determining
stockholders entitled to express consent to corporate action in writing without
a meeting when no prior action of the Board of Directors is required by law,
shall be the first day on which a signed written consent setting forth the
action taken or proposed to be taken is delivered to the Corporation in
accordance with applicable law, or, if prior action by the Board of Directors
is required by law, shall be at the close of business on the day on which the
Board of Directors adopts the resolution taking such prior action; and (3) the
record date for determining stockholders for any other purpose shall be at the
close of business on the day on which the Board of Directors adopts the
resolution relating thereto. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply to
any adjournment of the meeting; provided, however, that the
-8-
<PAGE> 9
Board of Directors may fix a new record date for the adjourned meeting.
SECTION 5. DIVIDENDS -- Subject to the provisions of the Certificate of
Incorporation of the Corporation, the Board of Directors may, out of funds
legally available therefor at any regular or special meeting, declare dividends
upon stock of the Corporation as and when they deem appropriate. Before
declaring any dividend there may be set apart out of any funds of the
Corporation available for dividends, such sum or sums as the Board of Directors
from time to time in their discretion deem proper for working capital or as a
reserve fund to meet contingencies or for equalizing dividends or for such
other purposes as the Board of Directors shall deem conducive to the interests
of the Corporation.
SECTION 6. SEAL -- The corporate seal of the Corporation shall be in
such form as shall be determined by resolution of the Board of Directors. Said
seal may be used by causing it or a facsimile thereof to be impressed or
affixed or reproduced or otherwise imprinted upon the subject document or
paper.
SECTION 7. FISCAL YEAR -- The fiscal year of the Corporation shall be
determined by resolution of the Board of Directors.
SECTION 8. CHECKS -- All checks, drafts or other orders for the payment
of money, notes or other evidences of indebtedness issued in the name of the
Corporation shall be signed by such officer or officers, or agent or agents, of
the Corporation, and in such manner as shall be determined from time to time by
resolution of the Board of Directors.
SECTION 9. NOTICE AND WAIVER OF NOTICE -- Whenever any notice is
required to be given under these By-Laws, personal notice is not required
unless expressly so stated, and any notice so required shall be deemed to be
sufficient if given by depositing the same in the United States mail, postage
prepaid, addressed to the person entitled thereto at his or her address as it
appears on the records of the Corporation, and such notice shall be deemed to
have been given on the day of such mailing. Stockholders not entitled to vote
shall not be entitled to receive notice of any meetings except as otherwise
provided by law. Whenever any notice is required to be given under the
provisions of any law, or under the provisions of the Certificate of
Incorporation of the Corporation or of these By-Laws, a waiver thereof, in
writing and signed by the person or persons entitled to said notice, whether
before or after the
-9-
<PAGE> 10
time stated therein, shall be deemed equivalent to such required notice.
ARTICLE VI
AMENDMENTS
These By-Laws may be altered, amended or repealed at any annual meeting
of the stockholders (or at any special meeting thereof if notice of such
proposed alteration, amendment or repeal to be considered is contained in the
notice of such special meeting) by the affirmative vote of the holders of
shares constituting a majority of the voting power of the Corporation. Except
as otherwise provided in the Certificate of Incorporation of the Corporation,
the Board of Directors may by majority vote of those present at any meeting at
which a quorum is present alter, amend or repeal these By-Laws, or enact such
other By-Laws as in their judgment may be advisable for the regulation and
conduct of the affairs of the Corporation.
-10-
<PAGE> 1
EXHIBIT 3.9
ARTICLES OF MERGER
MERGING
THE REECE CORPORATION
INTO
AMF BOWLING, INC.
Pursuant to the provisions of the Code of Virginia, THE REECE
CORPORATION ("Reece"), a Massachusetts corporation, and AMF Bowling, Inc.
("AMF"), a Virginia corporation, execute, certify and file these Articles of
Merger. Reece and AMF agree that Reece shall be merged with and into AMF and
that AMF shall be the surviving corporation (the "Merger").
FIRST: The terms and conditions of the Merger are as set forth in the
Agreement and Plan of Merger (the "Agreement of Merger") attached hereto as
Exhibit A and incorporated herein by reference. An executed copy of the
Agreement of Merger is on file at the principal place of business of AMF, the
address of which is 8800 AMF Drive, Richmond, Virginia 23111.
SECOND: As of December 27, 1994, the Agreement of Merger was duly and
unanimously approved, adopted, executed and acknowledged at meetings of the
Boards of Directors of Reece and AMF by unanimous written consents in accordance
with applicable corporate laws and the charters of each corporation and was
recommended and submitted for approval to the shareholders of Reece and AMF.
THIRD: As of December 27, 1994, when the Merger was approved by
unanimous vote of the shareholders of each corporation, the authorized capital
stock of all classes, the number of shares of such stock of each corporation
outstanding and entitled to vote on the Merger and the number of shares voted to
approve the Merger were as follows:
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
SHARES SHARES
AUTHORIZED OUTSTANDING VOTING TO
CAPITAL & ENTITLED APPROVE THE
NAME STOCK BY CLASS TO VOTE MERGER
- ---- -------------- ------- ------
<S> <C> <C> <C>
AMF 10,000 Common 958.579873 958.579873
Reece 7,000,000 Common 1048.053 1048.053
1,000,000 Preferred 0 0
</TABLE>
FOURTH: There are no dissenting shareholders.
FIFTH: AMF shall be the surviving corporation of the Merger and shall
continue under the name AMF Bowling, Inc. The Articles of Incorporation,
By-laws, and officers and directors of AMF, in effect immediately prior to the
Merger, shall continue to be the Articles of Incorporation, By-laws and officers
and directors of AMF after the Merger.
<PAGE> 2
SIXTH: AMF shall possess all the rights, privileges, immunities,
powers, franchises and authority, as well of a public as of a private nature, of
Reece and property of every description and every interest therein and all
obligations of Reece shall thereafter be taken and deemed to be transferred to
and vested in AMF in complete liquidation and redemption of all the issued and
outstanding shares of Reece.
SEVENTH: The Merger is permitted under the laws of the Commonwealth of
Virginia and the Commonwealth of Massachusetts and all such laws have been
complied with to effect this Merger. The Merger shall become effective at 11:59
p.m. on December 31, 1994.
IN WITNESS WHEREOF, Reece and AMF have caused these Articles of Merger
to be signed and executed in their respective corporate names and on their
behalf by their respective duly authorized officers as of the 27th day of
December, 1994.
AMF Bowling, Inc.
By: /s/ Daniel M. McCormack
---------------------------
Daniel M. McCormack
Vice President
The Reece Corporation
By: /s/ Daniel M. McCormack
---------------------------
Daniel M. McCormack
Vice President
<PAGE> 3
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
THE REECE CORPORATION
WITH AND INTO
AMF BOWLING, INC.
This is an Agreement and Plan of Merger of THE REECE CORPORATION
("Reece"), a Massachusetts corporation, with and into AMF Bowling, Inc., a
Virginia corporation ("AMF").
RECITAL
A. AMF is a corporation organized and existing under the laws of the
Commonwealth of Virginia. Its authorized capital stock consists of 10,000 shares
of common stock of which 958.579873 shares have been issued and are outstanding.
Reece is a corporation organized and existing under the laws of the Commonwealth
of Massachusetts. Its authorized capital stock consists of 7,000,000 shares of
common stock of which 1048.053 shares have been issued and are outstanding and
1,000,000 shares of preferred stock of which zero have been issued and are
outstanding.
B. AMF and Reece desire that their respective businesses and properties
be combined to form a single enterprise and, to that end, that Reece be merged
with and into AMF.
ARTICLE I
Reece shall be merged with and into AMF (herein sometimes called the
"Surviving Corporation") in accordance with applicable law and upon the filing
of the Articles of Merger and the issuance of a Certificate of Merger.
<PAGE> 4
ARTICLE II
The merger shall become effective at 11:59 p.m. on December 31, 1994
(the "Effective Date").
ARTICLE III
On the Effective Date, each of the outstanding shares of the capital
stock of Reece shall be exchanged for .01111 share of the common stock of AMF
and fractional shares shall be issued. The stock transfer books of Reece shall
be closed and no further transfer of common stock of Reece shall be permitted.
The shares of capital stock of AMF shall not be affected by this Agreement and
Plan of Merger and shall be the common stock of the Surviving Corporation.
Furthermore, all of the certificates theretofore representing the common stock
of Reece shall be surrendered to Daniel M. McCormack of Richmond, Virginia and
shall, upon such surrender, be canceled.
ARTICLE IV
The Articles of Incorporation of the Surviving Corporation shall be the
Articles of Incorporation of AMF existing on the Effective Date and the By-laws
and directors and officers of AMF shall be the By-laws and directors and
officers of the Surviving Corporation.
ARTICLE V
The shareholders of AMF desire to acquire assets that will generate
income in AMF and thereby provide funds for working capital. Reece, which is
owned by the same shareholders, is in the business of holding notes for
investment and equipment leasing and generates income that could be available
for working capital needs.
2
<PAGE> 5
ARTICLE VI
Following the approval of this Agreement and Plan of Merger by the
respective Boards of Directors of AMF and Reece, Articles of Merger, duly
executed by the proper officers of AMF and Reece, shall be filed with the State
Corporation Commission of Virginia and the Secretary of State of Massachusetts.
IN WITNESS WHEREOF, this Agreement and Plan of Merger is made as of
December 27, 1994.
The Reece Corporation
By: /s/ Daniel M. McCormack
-----------------------------
Daniel M. McCormack
Vice President
AMF BOWLING, INC.
By: /s/ Daniel M. McCormack
-----------------------------
Daniel M. McCormack
Vice President
3
<PAGE> 6
ARTICLES OF MERGER
MERGING
AMF BOWLING (AUST) INC.
INTO
AMF BOWLING, INC.
Pursuant to the provisions of Section 13.1-720 of the Code of Virginia,
AMF Bowling (Aust) Inc. ("Aust"), a Virginia corporation, and AMF Bowling, Inc.
("AMF"), a Virginia corporation, execute and certify the following Articles of
Merger. The corporations agree that Aust shall be merged with and into AMF and
that AMF shall be the surviving corporation.
FIRST: The terms and conditions of the Merger and the mode of carrying
the same into effect are as set forth in the Plan of Merger (the "Agreement")
attached hereto as Exhibit A and incorporated herein by reference. An executed
copy of the Agreement is on file at the principal place of business of the
Surviving Corporation, the address of which is 8800 AMF Drive, Mechanicsville,
Virginia 23111.
SECOND: As of April 15, 1990, when the Merger was approved by unanimous
consent of the shareholders, the authorized capital stock of all classes, par
value of such stock, aggregate par value of such stock and number of shares of
such stock of each corporation outstanding and entitled to vote on the Merger
were as follows:
<TABLE>
<CAPTION>
NUMBER OF
SHARES
AUTHORIZED OUTSTANDING
CAPITAL AGGREGATE & ENTITLED
NAME STOCK PAR VALUE TO VOTE
- ---- -------------- ------- ------
<S> <C> <C> <C>
AMF 10,000 Common Shares $10,000 1,000
$1.00 par value
</TABLE>
<PAGE> 7
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Aust 10,000 Common Shares $10,000 1,000
$1.00 par value
</TABLE>
THIRD: There are no dissenting shareholders.
FOURTH: As of April 15, 1990, the Agreement was duly advised,
authorized, approved, adopted, certified, executed and acknowledged by the board
of directors of each Corporation by unanimous written consents in accordance
with and in the manner prescribed by the aforementioned corporate laws and the
charters of each Corporation.
FIFTH: AMF shall survive the Merger, shall continue under the name AMF
Bowling, Inc., and shall be governed by the laws of the Commonwealth of
Virginia. The Articles of Incorporation and By-laws of AMF in effect immediately
prior to the Merger shall continue to be the Articles of Incorporation and
By-laws of the Surviving Corporation.
SIXTH: AMF shall possess all the rights, privileges, immunities,
powers, franchises and authority, as well of a public as of a private nature, of
Aust and property of every description and every interest therein and all
obligations of Aust shall thereafter be taken and deemed to be transferred to
and vested in AMF in complete liquidation and redemption of all the issued and
outstanding shares of Aust.
SEVENTH: The Merger shall become effective at the close of business on
April 30, 1990 as provided in the Agreement.
IN WITNESS WHEREOF, Aust and AMF have caused these Articles of Merger
to be signed and executed in their respective corporate names and on their
behalf by their respective vice presidents,
2
<PAGE> 8
each of whom declare and affirm, under the penalties of perjury, that
the facts stated herein are true on and as of the 23 day of April, 1990.
AMF BOWLING, INC.
By: /s/ Daniel M. McCormack
------------------------------
Daniel M. McCormack
Vice President
AMF BOWLING
(AUST) INC.
By: /s/ Daniel M. McCormack
------------------------------
Daniel M. McCormack
Vice President
3
<PAGE> 9
PLAN OF MERGER
AMF BOWLING (AUST) INC.
WITH AND INTO
AMF BOWLING, INC.
This is a Plan of Merger of AMF Bowling (Aust) Inc., a Virginia
corporation ("Aust"), with and into AMF Bowling, Inc., a Virginia corporation
("AMF").
RECITAL
A. AMF is a corporation organized and existing under the laws of the
Commonwealth of Virginia. Its authorized capital stock consists of 10,000 shares
of common stock of which 1,000 shares have been issued and are outstanding. Aust
is a corporation organized and existing under the laws of the Commonwealth of
Virginia. Its authorized capital stock consists of 10,000 shares of common stock
of which 1,000 shares have been issued and is outstanding.
B. The same shareholders own the outstanding common stock of Aust
and AMF in exactly the same percentages.
C. AMF and Aust desire that their respective businesses and properties
be combined to form a single enterprise and, to that end, that Aust be merged
with and into AMF upon the terms and conditions hereinafter set forth.
ARTICLE I
Aust shall be merged with and into AMF (herein sometimes called the
"Surviving Corporation") in accordance with the applicable provisions of the
Virginia Stock Corporation Act and upon such filing of the Articles of Merger,
the State Corporation Commission of Virginia shall issue a Certificate of
Merger.
<PAGE> 10
ARTICLE II
The merger shall become effective at the close of business on April 30,
1990 (the "Effective Date").
ARTICLE III
On the Effective Date, all of the outstanding shares of the capital
stock of Aust shall be cancelled, the stock transfer books of Aust shall be
closed and no further transfer of common stock of Aust shall be permitted. The
shares of capital stock of AMF shall not be affected by this Plan of Merger and
shall be the common stock of the Surviving Corporation.
ARTICLE IV
After the Effective Date, all of the certificates theretofore
representing the common stock of Aust shall be surrendered to Daniel M.
McCormack of Richmond, Virginia, as exchange agent and shall, upon such
surrender, be cancelled in accordance with the provisions of Article II above.
ARTICLE V
The Articles of Incorporation of the Surviving Corporation shall be the
Articles of Incorporation of AMF existing on the Effective Date and the By-laws,
Board of Directors and officers of AMF shall be the By-laws, Board of Directors
and officers of the Surviving Corporation.
ARTICLE VI
Following the approval of this Plan of Merger by the respective Boards
of Directors of AMF and Aust, Articles of Merger, duly executed by the proper
officers of AMF and Aust shall be filed with the State Corporation Commission of
Virginia.
<PAGE> 11
ARTICLE VII
Upon the Effective Date, the merger shall have the effect provided by
Section 13.1-721 of the Code of Virginia of 1950, as amended.
IN WITNESS WHEREOF, this Plan of Merger is made as of April 23, 1990.
AMF BOWLING (AUST) INC.
By: /s/ Daniel M. McCormack
----------------------------------
Daniel M. McCormack
Vice President
AMF BOWLING, INC.
By: /s/ Daniel M. McCormack
----------------------------------
Daniel M. McCormack
Vice President
<PAGE> 12
ARTICLES OF AMENDMENT
TO THE ARTICLES OF INCORPORATION
OF AMF BOWLING COMPANIES INC.
1. Article I of the Articles of Incorporation of AMF Bowling Companies
Inc. is amended to provide that the new name of the corporation
as of July 1, 1988 is: AMF Bowling, Inc.
2. This Amendment does not provide for an exchange reclassification or
cancellation of shares.
3. Action by Directors. By written consent of directors in lieu of a
special meeting dated June 21, 1988, all of the directors of the
Corporation found that the proposed amendment was in the best interest
of the Corporation and directed that it be submitted to the
stockholders of the Corporation with the request that they approve and
adopt the same by signing a written consent.
4. Action by Stockholders. By a written consent of all of the stockholders
in lieu of a special meeting dated June 21, 1988, the stockholders of
the Corporation approved and adopted the proposed amendment.
IN WITNESS WHEREOF, the undersigned President and Secretary of AMF
Bowling Companies Inc. have executed these Articles of Amendment this 1st day of
July, 1988.
AMF BOWLING COMPANIES INC.
BY: /s/ Frank E. Genovese
-----------------------------------------
Frank E. Genovese, President
BY: /s/ Daniel M. McCormack
-----------------------------------------
Daniel M. McCormack, Secretary
<PAGE> 13
ARTICLES OF INCORPORATION
OF
AMF BOWLING COMPANIES INC.
I.
The name of the Corporation is AMF Bowling Companies Inc.
II.
The purpose for which the Corporation is formed is to transact any or
all lawful business, not required to be specifically stated in these Articles,
for which corporations may be incorporated under the Virginia Stock Corporation
Act, as amended from time to time.
III.
The number of shares which the Corporation shall have authority to
issue shall be 10,000 shares of the par value of $1.00 each.
IV.
The initial registered office shall be located at 707 E. Main Street,
P.O. Box 1535, in the City of Richmond, and the initial registered agent shall
be C. Porter Vaughan, III, who is a resident of Virginia and a member of the
Virginia State Bar, and whose business address is the same as the address of the
initial registered office.
<PAGE> 14
V.
The number of Directors constituting the initial Board of Directors
shall be three, and the names and addresses of the persons who are to serve as
the initial Directors are as follows:
William H. Goodwin, Jr. Frank E. Genovese
President President
Commonwealth Computer AMF Union Machinery, Inc.
Advisors, Inc. 2115 W. Laburnum Avenue
707 E. Main Street Richmond, Virginia 23221
Suite 1650
Richmond, Virginia 23219
James B. Farinholt, Jr.
President
Galleher & Company, Inc.
9 South Twelfth Street
Third Floor
Richmond, Virginia 23219
VI.
(1) In this Article:
"Applicant" means the person seeking indemnification pursuant to
this Article.
"Expenses" includes counsel fees.
"Liability" means the obligation to pay a judgment, settlement,
penalty, fine, including any excise tax assessed with respect to an employee
benefit plan, or reasonable expenses incurred with respect to a proceeding.
-2-
<PAGE> 15
"Official capacity" means, (i) when used with respect to a
director, the office of director in the Corporation; or (ii) when used with
respect to an individual other than a director, the office in the Corporation
held by the officer or the employment or agency relationship undertaken by the
employee or agent on behalf of the Corporation. "Official capacity" does not
include service for any other foreign or domestic corporation or any
partnership, joint venture, trust, employee benefit plan, or other enterprise.
"Party" includes an individual who was, is, or is threatened to be
made a named defendant or respondent in a proceeding.
"Proceeding" means any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative or investigative
and whether formal or informal.
(2) The Corporation shall indemnify any person who was or is a party to
any proceeding, including a proceeding by or in the right of the Corporation to
procure a judgment in its favor, by reason of the fact that he is or was a
director or officer of the Corporation, or is or was serving at the request of
the Corporation as a director, trustee, partner or officer of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, against any liability incurred by him in
-3-
<PAGE> 16
connection with such proceeding if (i) he believed, in the case of
conduct in his official capacity, that his conduct was in the best interests of
the Corporation, and in all other cases that his conduct was at least not
opposed to its best interests, and, in the case of any criminal proceeding, had
no reasonable cause to believe his conduct was unlawful, and (ii) he was not
guilty of gross negligence or willful misconduct. A person is considered to be
serving an employee benefit plan at the Corporation's request if his duties to
the Corporation also impose duties on, or otherwise involve services by, him to
the plan or to participants in or beneficiaries of the plan. A person's conduct
with respect to an employee benefit plan for a purpose he believed to be in the
interests of the participants and beneficiaries of the plan is conduct that
satisfies the requirements of this section.
(3) The termination of any proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not of
itself create a presumption that the applicant did not meet the standard of
conduct described in Section (2) of this Article.
(4) Notwithstanding the provisions of section (2) of this Article: no
indemnification shall be made in connection with any proceeding charging the
applicant with improper benefit to himself, whether or not involving action in
his official capacity,
<PAGE> 17
in which he was adjudged liable on the basis that personal benefit was
improperly received by him.
(5) To the extent that the applicant has been successful on the merits
or otherwise in defense of any proceeding referred to in section (2) of this
Article, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses actually and reasonably incurred by him in
connection therewith.
(6) Any indemnification under section (2) of this Article (unless
ordered by a court) shall be made by the Corporation only as authorized in the
specific case upon a determination that indemnification of the applicant is
proper in the circumstances because he has met the applicable standard of
conduct set forth in sections (2) and (4).
The determination shall be made:
(a) By the Board of Directors by a majority vote of a quorum
consisting of Directors not at the time parties to the proceeding;
(b) If a quorum cannot be obtained under subsection (a) of
this section, by majority vote of a committee duly designated by the Board of
Directors (in which designation Directors who are parties may participate),
consisting solely of two or more Directors not at the time parties to the
proceeding;
-5-
<PAGE> 18
(c) By Special legal counsel:
(i) Selected by the Board of Directors or its
committee in the manner prescribed in subsection (a) or (b) of this section; or
(ii) If a quorum of the Board of Directors cannot be
obtained under subsection (a) of this section and a committee cannot be
designated under subsection (b) of this section, selected by majority vote of
the full Board of Directors, in which selection Directors who are parties may
participate; or
(d) By the shareholders, but shares owned by or voted under
the control of Directors who are at the time parties to the proceeding may not
be voted on the determination.
Authorization of indemnification and evaluation as to
reasonableness of expenses shall be made in the same manner as the determination
that indemnification is permissible, except that if the determination is made by
special legal counsel, authorization of indemnification and evaluation as to
reasonableness of expenses shall be made by those entitled under subsection (c)
of this section to select counsel.
(7) (a) The Corporation may pay for or reimburse the
reasonable expenses incurred by any applicant who is a party to a proceeding in
advance of final disposition of the proceeding if:
-6-
<PAGE> 19
(i) The applicant furnishes the Corporation a written
statement of his good faith belief that he has met the standard of conduct
described in sections (2) and (4);
(ii) The applicant furnishes the Corporation a
written undertaking, executed personally or on his behalf, to repay the advance
if it is ultimately determined that he did not meet the standard of conduct; and
(iii) A determination is made that the facts then
known to those making the determination would not preclude indemnification under
this Article.
(b) The undertaking required by paragraph (ii) of subsection
(a) of this section shall be an unlimited general obligation of the applicant
but need not be secured and may be accepted without reference to financial
ability to make repayment.
(c) Determinations and authorizations of payments under this
section shall be made in the manner specified in section (6).
(8) The Board of Directors is hereby empowered, by majority vote of
a quorum of disinterested Directors, to cause the Corporation to indemnify or
contract in advance to indemnify any person not specified in section (2) of this
Article who was or is a party to any proceeding, by reason of the fact that he
is or
-7-
<PAGE> 20
was an employee or agent of the Corporation, or is or was serving at the
request of the Corporation as an employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise, to
the same extent as if such person were specified as one to whom indemnification
is granted in section (2). The provisions of sections (3) through (7) of this
Article shall be applicable to any indemnification provided hereafter pursuant
to this section (8).
(9) The Corporation may purchase and maintain insurance to
indemnify it against the whole or any portion of the liability assumed by it in
accordance with this Article and may also procure insurance, in such amounts as
the Board of Directors may determine, on behalf of any person who is or was a
director, officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise, against any liability asserted against or incurred by him in
any such capacity or arising from his status as such, whether or not the
Corporation would have power to indemnify him against such liability under the
provisions of this Article.
(10) Every reference herein to directors, officers, employees or agents
shall include former directors, officers, employees and agents and their
respective heirs, executors and
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<PAGE> 21
administrators. The indemnification hereby provided and provided hereafter
pursuant to the power hereby conferred on the Board of Directors shall not be
exclusive of any other rights to which any person may be entitled, including any
right under policies of insurance that may be purchased and maintained by the
Corporation or others, with respect to claims, issues or matters in relation to
which the Corporation would not have the power to indemnify such person under
the provisions of this Article.
Dated: August 26, 1986 /s/ Laurel C. Williams
---------------------------------
Incorporator
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<PAGE> 1
EXHIBIT 3.10
RESTATED
BY-LAWS
OF
AMF BOWLING, INC.*
ARTICLE I
Meetings of Shareholders
1.1 Places of Meetings. All meetings of the shareholders shall be held
at such place, either inside or outside the State of Virginia, as from time to
time may be fixed by the Board of Directors.
1.2 Annual Meetings. The annual meeting of the shareholders, for the
election of Directors and transaction of such other business as may come
before the meetings, shall be held in each year on the second Tuesday in
April, at 10 a.m., if that day is not a legal holiday in the Commonwealth of
Virginia. If that day is a legal holiday, the annual meeting shall be held on
the next succeeding day not such a legal holiday.
1.3 Special Meetings. A special meeting of the shareholders for any
purpose or purposes may be called at any time by the Chairman of the Board,
the President, or by a majority of the Board of Directors. At a special
meeting no business shall be transacted and no corporate action shall be taken
other than that stated in the notice of the meeting.
1.4 Notice of Meetings. Written or printed notice stating the place, day
and hour of every meeting of the shareholders and, in case of a special
meeting, the purpose or purposes for which the
*After Name Change
<PAGE> 2
meeting is called, shall be mailed not less than ten nor more than sixty days
before the date of the meeting to each shareholder of record entitled to vote
at such meeting, at his address which appears in the share transfer books of
the Corporation. Such further notice shall be given as may be required by
law, but meetings may be held without notice if all the shareholders entitled
to vote at the meeting are present in person or by proxy or if notice is
waived in writing by those not present, either before or after the meeting.
1.5 Quorum. Any number of shareholders together holding at least a
majority of the outstanding shares of capital stock entitled to vote with
respect to the business to be transacted, who shall be present in person or
represented by proxy at any meeting duly called, shall constitute a quorum for
the transaction of business. If less than a quorum shall be in attendance at
the time for which a meeting shall have been called, the meeting may be
adjourned from time to time by a majority of the shareholders present or
represented by proxy without notice other than by announcement at the meeting.
1.6 Voting. At any meeting of the shareholders each shareholder of a
class entitled to vote on any matter coming before the meeting shall, as to
such matter, have one vote, in person or by proxy, for each share of capital
stock of such class standing in his name on the books of the Corporation on
the date, not more than seventy days prior to such meeting, fixed by the Board
of Directors as the record date for the purpose of determining shareholders
2
<PAGE> 3
entitled to vote. Every proxy shall be in writing, dated and signed by the
shareholder entitled to vote or his duly authorized attorney-in-fact.
1.7 Inspectors. An appropriate number of inspectors for any meeting of
shareholders may be appointed by the Chairman of such meeting. Inspectors so
appointed will open and close the polls, will receive and take charge of
proxies and ballots, and will decide all questions as to the qualifications of
voters, validity of proxies and ballots, and the number of votes properly
cast.
ARTICLE II
Directors
2.1 General Powers. The property, affairs and business of the
Corporation shall be managed by the Board of Directors, and, except as
otherwise expressly provided by law, the Articles of Incorporation or these
By-laws, all of the powers of the Corporation shall be vested in such Board.
2.2 Number of Directors. The number of Directors constituting the Board
of Directors shall be at least one and not more than three. The number of
Directors may be increased or decreased from time to time by amendment to
these By-laws, but no decrease shall have the effect of shortening the term of
an incumbent Director.
2.3 Election and Removal of Directors; Quorum.
(a) Directors shall be elected at each annual meeting of shareholders to
succeed those Directors whose terms have expired
3
<PAGE> 4
and to fill any vacancies then existing.
(b) Directors shall hold their offices for terms of one year and until
their successors are elected. Any Director may be removed from office at a
meeting called expressly for that purpose by the vote of shareholders holding
a majority of the shares entitled to vote at an election of Directors.
(c) Any vacancy occurring in the Board of Directors may be filled by the
affirmative vote of the majority of the remaining Directors though less than a
quorum of the Board, and the term of office of any Director so elected shall
expire at the next shareholders' meeting at which Directors are elected.
(d) A majority of the number of Directors elected and serving at the
time of any meeting shall constitute a quorum for the transaction of business.
The act of a majority of Directors present at a meeting at which a quorum is
present shall be the act of the Board of Directors. Less than a quorum may
adjourn any meeting.
2.4 Meetings of Directors. An annual meeting of the Board of Directors
shall be held as soon as practicable after the adjournment of the annual
meeting of shareholders at such place as the Board may designate. Other
meetings of the Board of Directors shall be held at places inside or outside
the State of Virginia and at times fixed by resolution of the Board, or upon
call of the Chairman of the Board, the President or any two of the Directors.
The Secretary or officer performing the Secretary's duties shall give not less
than twenty-four hours' notice either in person or by
4
<PAGE> 5
letter, telegraph or telephone of all meetings of the Board of Directors,
provided that notice need not be given of the annual meeting or of regular
meetings held at times and places fixed by resolution of the Board. Meetings
may be held at any time without notice if all of the Directors are present, or
if those not present waive notice in writing either before or after the
meeting. The notice of meetings of the Board need not state the purpose of
the meeting.
2.5 Duties. The Board of Directors shall designate depositories for the
corporation and shall designate and authorize the officers or other persons to
sign checks and bank drafts.
2.6 Compensation. By resolution of the Board, Directors may be allowed
a fee and expenses for attendance at all meetings, but nothing herein shall
preclude Directors from serving the Corporation in other capacities and
receiving compensation for such other services.
ARTICLE III
Committees
3.1 Executive Committee. The Board of Directors, by resolution adopted
by a majority of the number of Directors fixed by these By-laws, may elect an
Executive Committee which shall consist of not less than two Directors,
including the President. When the Board of Directors is not in session, the
Executive Committee shall have all power vested in the Board of Directors by
law, by the Articles of Incorporation, or by these By-laws, provided that the
Executive Committee shall not have power to (i)
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<PAGE> 6
approve or recommend to shareholders action that the Virginia Stock
Corporation Act requires to be approved by shareholders; (ii) fill vacancies
on the Board or on any of its committees; (iii) amend the Articles of
Incorporation pursuant to Section 13.1-706 of the Virginia Code; (iv) adopt,
amend, or repeal the By-laws; (v) approve a plan of merger or share exchange not
requiring shareholder approval; (vi) authorize or approve a distribution,
except according to a general formula or method prescribed by the Board of
Directors; or (vii) authorize or approve the issuance or sale or contract for
sale of shares, or determine the designation and relative rights, preferences,
and limitations of a class or series of shares, other than within limits
specifically prescribed by the Board of Directors. The Executive Committee
shall report at the next regular or special meeting of the Board of Directors
all action which the Executive Committee may have taken on behalf of the Board
since the last regular or special meeting of the Board of Directors.
3.2 Finance Committee. The Board of Directors, by resolution adopted by
a majority of the number of Directors fixed by these By-laws, may elect a
Finance Committee which shall consist of not less than two Directors. The
Finance Committee shall consider and report to the Board with respect to plans
for corporate expansion, capital structure and long-range financial
requirements. The Committee shall also consider and report to the Board with
respect to such other matters relating to the financial affairs of the
Corporation as may be requested by the Board or the appropriate
6
<PAGE> 7
officers of the Corporation. The Committee shall report periodically to
the Board of Directors on all action which it may have taken.
3.3 Other Committees. The Board of Directors, by resolution adopted by
a majority of the number of Directors fixed by these By-laws, may establish
such other standing or special committees of the Board as it may deem
advisable, consisting of not less than two Directors; and the members, terms
and authority of such committees shall be as set forth in the resolutions
establishing the same.
3.4 Meetings. Regular and special meetings of any Committee established
pursuant to this Article may be called and held subject to the same
requirements with respect to time, place and notice as are specified in these
By-laws for regular and special meetings of the Board of Directors.
3.5 Quorum and Manner of Acting. A majority of the members of any
Committee serving at the time of any meeting thereof shall constitute a quorum
for the transaction of business at such meeting. The action of a majority of
those members present at a Committee meeting at which a quorum is present
shall constitute the act of the Committee.
3.6 Terms of Office. Members of any Committee shall be elected as above
provided and shall hold office until their successors are elected by the Board
of Directors or until such Committee is dissolved by the Board of Directors.
3.7 Resignation and Removal. Any member of a Committee may resign at
any time by giving written notice of his intention to do
7
<PAGE> 8
so to the President or the Secretary of the Corporation, or may be removed,
with or without cause, at any time by such vote of the Board of Directors as
would suffice for his election.
3.8 Vacancies. Any vacancy occurring in a Committee resulting from any
cause whatever may be filled by a majority of the number of Directors fixed by
these By-laws.
ARTICLE IV
Officers
4.1 Election of Officers; Terms. The Officers of the Corporation shall
consist of a President, a Secretary and a Treasurer. Other officers,
including a Chairman of the Board, one or more Vice Presidents (whose
seniority and titles, including Executive Vice Presidents and Senior Vice
Presidents, may be specified by the Board of Directors), and assistant and
subordinate officers, may from time to time be elected by the Board of
Directors. All officers shall hold office until the next annual meeting of
the Board of Directors and until their successors are elected. The President
shall be chosen from among the Directors. Any two officers may be combined in
the same person as the Board of Directors may determine.
4.2 Removal of Officers; Vacancies. Any officer of the Corporation may
be removed summarily with or without cause, at any time, by the Board of
Directors provided however that the removal of the Chairman of the Board shall
require the vote of two-thirds of the Directors. Vacancies may be filled by
the Board of Directors.
8
<PAGE> 9
4.3 Duties. The officers of the Corporation shall have such duties as
generally pertain to their offices, respectively, as well as such powers and
duties as are prescribed by law or are hereinafter provided or as from time to
time shall be conferred by the Board of Directors. The Board of Directors may
require any officer to give such bond for the faithful performance of his
duties as the Board may see fit.
4.4 Duties of the President. The President shall be the chief executive
officer of the Corporation and shall be primarily responsible for the
implementation of policies of the Board of Directors. He shall have authority
over the general management and direction of the business and operations of
the Corporation and its divisions, if any, subject only to the ultimate
authority of the Board of Directors. He shall be a Director, and, except as
otherwise provided in these By-laws or in the resolutions establishing such
committees, he shall be ex officio a member of all Committees of the Board.
In the absence of the Chairman of the Board or if there is no such officer,
the President shall preside at all corporate meetings. He may sign and
execute in the name of the Corporation share certificates, deeds, mortgages,
bonds, contracts or other instruments except in cases where the signing and
the execution thereof shall be expressly delegated by the Board of Directors
or by these By-laws to some other officer or agent of the Corporation or shall
be required by law otherwise to be signed or executed. In addition, he shall
perform all duties incident to
9
<PAGE> 10
the office of the President and such other duties as from time to time may be
assigned to him by the Board of Directors.
4.5 Duties of the Vice-Presidents. Each Vice-President, if any, shall
have such powers and duties as may from time to time be assigned to him by the
President or the Board of Directors. Any Vice-President may sign and execute
in the name of the Corporation deeds, mortgages, bonds, contracts or other
instruments authorized by the Board of Directors, except where the signing and
execution of such documents shall be expressly delegated by the Board of
Directors or the President to some other officer or agent of the Corporation
or shall be required by law or otherwise to be signed or executed.
4.6 Duties of the Treasurer. The Treasurer shall have charge of and be
responsible for all funds, securities, receipts and disbursements of the
Corporation, and shall deposit all monies and securities of the Corporation in
such banks and depositories as shall be designated by the Board of Directors.
He shall be responsible (i) for maintaining adequate financial accounts and
records in accordance with generally accepted accounting practices; (ii) for
the preparation of appropriate operating budgets and financial statements;
(iii) for the preparation and filing of all tax returns required by law; and
(iv) for the performance of all duties incident to the office of Treasurer and
such other duties as from time to time may be assigned to him by the Board of
Directors, the Finance Committee or the Managing Director/President. The
treasurer may sign and execute in the name of the Corporation share
10
<PAGE> 11
certificates, deeds, mortgages, bonds, contracts or other instruments, except
in cases where the signing and the execution thereof shall be expressly
delegated by the Board of Directors or by these By-laws to some other officer
or agent of the Corporation or shall be required by law or otherwise to be
signed or executed.
4.7 Duties of the Secretary. The Secretary shall act as secretary of
all meetings of the Board of Directors and shareholders of the Corporation.
When requested, he shall also act as secretary of the meetings of the
committees of the Board. He shall keep and preserve the minutes of all such
meetings in permanent books. He shall see that all notices required to be
given by the Corporation are duly given and served; shall have custody of the
seal of the Corporation and shall affix the seal or cause it to be affixed to
all share certificates of the Corporation and to all documents the execution
of which on behalf of the Corporation under its corporate seal is duly
authorized in accordance with law or the provisions of these By-laws; shall
have custody of all deeds, leases, contracts and other important corporate
documents; shall have charge of the books, records and papers of the
Corporation relating to its organization and management as a Corporation;
shall see that all reports, statements and other documents required by law
(except tax returns) are properly 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 of Directors or the President.
11
<PAGE> 12
4.8 Compensation. The Board of Directors shall have authority to fix
the compensation of all officers of the Corporation.
ARTICLE V
Capital Stock
5.1 Certificates. The shares of capital stock of the Corporation shall
be evidenced by certificates in forms prescribed by the Board of Directors and
executed in any manner permitted by law and stating thereon the information
required by law. Transfer agents and/or registrars for one or more classes of
shares of the Corporation may be appointed by the Board of Directors and may
be required to countersign certificates representing shares of such class or
classes. If any officer whose signature or facsimile thereof shall have been
used on a share certificate shall for any reason cease to be an officer of the
Corporation and such certificate shall not then have been delivered by the
Corporation, the Board of Directors may nevertheless adopt such certificate
and it may then be issued and delivered as though such person had not ceased
to be an officer of the Corporation.
5.2 Lost, Destroyed and Mutilated Certificates. Holders of the shares
of the Corporation shall immediately notify the Corporation of any loss,
destruction or mutilation of the certificate therefor, and the Board of
Directors may in its discretion cause one or more new certificates for the
same number of shares in the aggregate to be issued to such shareholder upon
the surrender of the mutilated certificate or upon satisfactory proof of such
loss or destruction, and the deposit of a bond in
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<PAGE> 13
such form and amount and with such surety as the Board of Directors may
require.
5.3 Transfer of Shares. The shares of the Corporation shall be
transferable or assignable only on the books of the Corporation by the holder
in person or by attorney on surrender of the certificate for such shares duly
endorsed and, if sought to be transferred by attorney, accompanied by a
written power of attorney to have the same transferred on the books of the
Corporation. The Corporation will recognize, however, the exclusive right of
the person registered on its books as the owner of shares to receive dividends
and to vote as such owner.
5.4 Fixing Record Date. For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, or entitled to receive payment of any dividend, or in
order to make a determination of shareholders for any other proper purpose,
the Board of Directors may fix in advance a date as the record date for any
such determination of shareholders, such date in any case to be not more than
seventy days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If no record date is fixed for
the determination of shareholders entitled to notice of or to vote at a
meeting of shareholders, or of shareholders entitled to receive payment of a
dividend, the date on which notices of the meeting are mailed or the date on
which the resolution of the Board of Directors declaring such dividend is
adopted, as the case may be, shall be the record date for such
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<PAGE> 14
determination of shareholders. When a determination of shareholders entitled
to vote at any meeting of shareholders has been made as provided in this
section, such determination shall apply to any adjournment thereof unless the
Board of Directors fixes a new record date, which it shall do if the meeting
is adjourned to a date more than 120 days after the date fixed for the
original meeting.
ARTICLE VI
Miscellaneous Provisions
6.1 Seal. The seal of the Corporation shall consist of a flat-faced
circular die, of which there may be any number of counterparts, on which there
shall be engraved the word "Seal".
6.2 Fiscal Year. The fiscal year of the Corporation shall end on such
date and shall consist of such accounting periods as may be fixed by the Board
of Directors.
6.3 Checks, Notes and Drafts. Checks, notes, drafts and other orders
for the payment of money shall be signed by such persons as the Board of
Directors from time to time may authorize. When the Board of Directors so
authorizes, however, the signature of any such person may be a facsimile.
6.4 Amendment of By-Laws. Unless proscribed by the Articles of
Incorporation, these By-laws may be amended or altered at any meeting of the
Board of Directors by affirmative vote of a majority of the number of
Directors fixed by these By-laws. The
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<PAGE> 15
shareholders entitled to vote in respect of the election of Directors,
however, shall have the power to rescind, amend, alter or repeal any By-laws
and to enact By-laws which, if expressly so provided, may not be amended,
altered or repealed by the Board of Directors.
6.5 Voting of Shares Held. Unless otherwise provided by resolution of
the Board of Directors or of the Executive Committee, if any, the President
may from time to time appoint an attorney or attorneys or agent or agents of
the Corporation, in the name and on behalf of the Corporation, to cast the
vote which the Corporation may be entitled to cast as a shareholder or
otherwise in any other corporation, any of whose securities may be held by the
Corporation, at meetings of the holders of the shares or other securities of
such other corporation, or to consent in writing to any action by any such
other corporation; and the President shall instruct the person or persons so
appointed as to the manner of casting such votes or giving such consent and
may execute or cause to be executed on behalf of the Corporation, and under
its corporate seal or otherwise, such written proxies, consents, waivers or
other instruments as may be necessary or proper in the premises. In lieu of
such appointment the President may himself attend any meetings of the holders
of shares or other securities of any such other corporation and there vote or
exercise any or all power of the Corporation as the holder of such shares or
other securities of such other corporation.
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<PAGE> 16
ARTICLE VII
Emergency By-laws
The Emergency By-laws provided in this Article VII shall be operative
during any emergency, notwithstanding any different provision in the preceding
Articles of these By-laws or in the Articles of Incorporation of the
Corporation or in the Virginia Stock Corporation Act (other than those
provisions relating to emergency by-laws). An emergency exists if a quorum of
the Corporation's Board of Directors cannot readily be assembled because of
some catastrophic event. To the extent not inconsistent with these Emergency
By-laws, the By-laws provided in the preceding Articles shall remain in effect
during such emergency and upon the termination of such emergency the Emergency
By-laws shall cease to be operative unless and until another such emergency
shall occur.
During any such emergency:
(a) Any meeting of the Board of Directors may be called by any officer
of the Corporation or by any Director. The notice thereof shall specify the
time and place of the meeting. To the extent feasible, notice shall be given
in accord with Section 2.4 above, but notice may be given only to such of the
Directors as it may be feasible to reach at the time, by such means as may be
feasible at the time, including publication or radio, and at a time less than
twenty-four hours before the meeting if deemed necessary by the person giving
notice. Notice shall be similarly given, to the extent feasible, to the other
persons referred to in (b) below.
(b) At any meeting of the Board of Directors, a quorum shall
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<PAGE> 17
consist of a majority of the number of Directors fixed at the time by Article
II of the By-laws. If the Directors present at any particular meeting shall be
fewer than the number required for such quorum, other persons present as
referred to below, to the number necessary to make up such quorum, shall be
deemed Directors for such particular meeting as determined by the following
provisions and in the following order of priority:
(i) Vice-Presidents not already serving as Directors, in the order
of their seniority of first election to such offices, or if two or more shall
have been first elected to such offices on the same day, in the order of their
seniority in age;
(ii) All other officers of the Corporation in the order of their
seniority of first election to such offices, or if two or more shall have been
first elected to such offices on the same day, in the order of their seniority
in age; and
(iii) Any other persons that are designated on a list that shall have
been approved by the Board of Directors before the emergency, such persons to
be taken in such order of priority and subject to such conditions as may be
provided in the resolution approving the list.
(c) The Board of Directors, during, as well as before, any such emergency,
may provide, and from time to time modify, lines of succession in the event
that during such an emergency any or all officers or agents of the Corporation
shall for any reason be rendered incapable of discharging their duties.
(d) The Board of Directors, during, as well as before, any
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<PAGE> 18
such emergency, may, effective in the emergency, change the principal office,
or designate several alternative offices, or authorize the officers so to do.
No officer, Director or employee shall be liable for action taken in
good faith in accordance with these Emergency By-laws.
These Emergency By-laws shall be subject to repeal or change by further
action of the Board of Directors or by action of the shareholders, except that
no such repeal or change shall modify the provisions of the next preceding
paragraph with regard to action or inaction prior to the time of such repeal or
change. Any such amendment of these Emergency By-laws may make any further or
different provision that may be practical and necessary for the circumstances
of the emergency.
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<PAGE> 1
EXHIBIT 3.11
CERTIFICATE OF INCORPORATION
OF
AMF WORLDWIDE BOWLING CENTERS HOLDINGS INC.
I, the undersigned, for the purpose of incorporating and organizing a
corporation under the General Corporation Law of the State of Delaware, do
hereby execute this Certificate of Incorporation and do hereby certify as
follows:
ARTICLE I
The name of the corporation (which is hereinafter referred to as the
"Corporation") is:
AMF Worldwide Bowling Centers Holdings Inc.
ARTICLE II
The address of the Corporation's registered office in the State of
Delaware is The Corporation Trust Center, 1209 Orange Street in the City of
Wilmington, County of New Castle. The name of the Corporation's registered agent
at such address is The Corporation Trust Company.
ARTICLE III
The purpose of the Corporation shall be to engage in any lawful act or
activity for which corporations may be organized and incorporated under the
General Corporation Law of the State of Delaware.
<PAGE> 2
ARTICLE IV
Section 1. The Corporation shall be authorized to issue 1,000 shares of
capital stock, of which all shares shall be shares of Common Stock, $.01 par
value ("Common Stock").
Section 2. Except as otherwise provided by law, the Common Stock shall
have the exclusive right to vote for the election of directors and for all other
purposes. Each share of Common Stock shall have one vote, and the Common Stock
shall vote together as a single class.
ARTICLE V
Unless and except to the extent that the By-Laws of the Corporation
shall so require, the election of directors of the Corporation need not be by
written ballot.
ARTICLE VI
In furtherance and not in limitation of the powers conferred by law,
the Board of Directors of the Corporation (the "Board") is expressly authorized
and empowered to make, alter and repeal the By-Laws of the Corporation by a
majority vote at any regular or special meeting of the Board or by written
consent, subject to the power of the stockholders of the Corporation to alter or
repeal any By-Laws made by the Board.
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<PAGE> 3
ARTICLE VII
The Corporation reserves the right at any time from time to time to
amend, alter, change or repeal any provision contained in this Certificate of
Incorporation, and any other provisions authorized by the laws of the State of
Delaware at the time in force may be added or inserted, in the manner now or
hereafter prescribed by law; and all rights, preferences and privileges of
whatsoever nature conferred upon stockholders, directors or any other persons
whomsoever by and pursuant to this Certificate of Incorporation in its present
form or as hereafter amended are granted subject to the right reserved in this
Article.
ARTICLE VIII
Section 1. Elimination of Certain Liability of Directors. A director of
the Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the General Corporation Law of the State of Delaware, or (iv) for
any transaction from which the director derived an improper personal benefit.
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<PAGE> 4
Section 2. Indemnification and Insurance.
(a) Right to Indemnification. Each person who was or is made a party or
is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "Proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director or officer
of the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged action
in an official capacity as a director, officer, employee or agent or in any
other capacity while serving as a director, officer, employee or agent, shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the General Corporation Law of the State of Delaware, as the same
exists or may hereafter be amended (but, in the case of any such amendment, only
to the extent that such amendment permits the Corporation to provide broader
indemnification rights than said law permitted the Corporation to provide prior
to such amendment), against all expense, liability and loss (including
attorneys, fees, judgments, fines, amounts paid or to be paid in settlement, and
excise taxes or penalties arising under
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<PAGE> 5
the Employee Retirement Income Security Act of 1974) reasonably incurred or
suffered by such person in connection therewith and such indemnification shall
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of his or her heirs, executors and
administrators; provided, however, that, except as provided in paragraph (b)
hereof, the Corporation shall indemnify any such person seeking indemnification
in connection with a proceeding (or part thereof) initiated by such person only
if such proceeding (or part thereof) was authorized by the Board. The right to
indemnification conferred in this Section shall be a contract right and shall
include the right to be paid by the Corporation the expenses incurred in
defending any such proceeding in advance of its final disposition; provided,
however, that, if the General Corporation Law of the State of Delaware requires,
the payment of such expenses incurred by a director or officer in his or her
capacity as a director or officer (and not in any other capacity in which
service was or is rendered by such person while a director or officer,
including, without limitation, service to an employee benefit plan) in advance
of the final disposition of a proceeding, shall be made only upon delivery to
the Corporation of an undertaking, by or on behalf of such director or officer,
to repay all amounts so advanced if it shall ultimately be determined that such
director or officer is not entitled to be indemnified under this Section or
otherwise.
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<PAGE> 6
The Corporation may, by action of the Board, provide indemnification to
employees and agents of the Corporation with the same scope and effect as the
foregoing indemnification of directors and officers.
(b) Right of Claimant to Bring Suit. If a claim under paragraph (a) of
this Section is not paid in full by the Corporation within thirty days after a
written claim has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant shall be entitled
to be paid also the expense of prosecuting such claim. It shall be a defense to
any such action (other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final disposition where
the required undertaking, if any is required, has been tendered to the
Corporation) that the claimant has not met the standards of conduct which make
it permissible under the General Corporation Law of the State of Delaware for
the Corporation to indemnify the claimant for the amount claimed, but the burden
of proving such defense shall be on the Corporation. Neither the failure of the
Corporation (including its Board, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set
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<PAGE> 7
forth in the General Corporation Law of the State of Delaware, nor an actual
determination by the Corporation (including its Board, independent legal
counsel, or its stockholders) that the claimant has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that the claimant has not met the applicable standard of conduct.
(c) Non-Exclusivity of Rights. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Section shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, provision of
the Certificate of Incorporation, By-law, agreement, vote of stockholders or
disinterested directors or otherwise.
(d) Insurance. The Corporation may maintain insurance, at its expense,
to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the General Corporation Law of the State of Delaware.
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<PAGE> 8
ARTICLE IX
The name and mailing address of the incorporator is Mitchell S.
Presser, Esq., c/o Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New
York, New York 10019.
IN WITNESS WHEREOF, I, the undersigned, being the incorporator
hereinbefore named, do hereby further certify that the facts hereinabove stated
are truly set forth and, accordingly, I have hereunto set my hand this 16th day
of January, 1996.
/s/ Mitchell S. Presser
---------------------------
Mitchell S. Presser
Incorporator
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<PAGE> 1
EXHIBIT 3.12
BY-LAWS
of
AMF WORLDWIDE BOWLING CENTERS HOLDINGS INC.
(as of January 16, 1996)
----------------------------------------
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE -- The registered office of AMF Worldwide
Bowling Centers Holdings Inc. (the "Corporation") shall be established and
maintained at the office of The Corporation Trust Company at The Corporation
Trust Center, 1209 Orange Street in the City of Wilmington, County of New
Castle, State of Delaware, and said Corporation Trust Company shall be the
registered agent of the Corporation in charge thereof.
SECTION 2. OTHER OFFICES -- The Corporation may have other offices,
either within or without the State of Delaware, at such place or places as the
Board of Directors may from time to time select or the business of the
Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. ANNUAL MEETINGS -- Annual meetings of stockholders for the
election of directors, and for such other business as may be stated in the
notice of the meeting, shall be held at such place, either within or without
the State of Delaware, and at such time and date as the Board of Directors, by
resolution, shall determine and as set forth in the notice of the meeting. If
the Board of Directors fails so to determine the time, date and place of
meeting, the annual meeting of stockholders shall be held at the registered
office of the Corporation on the first Tuesday in April. If the date of the
annual meeting shall fall upon a legal holiday, the meeting shall be held on
the next succeeding business day. At each annual meeting, the stockholders
entitled to vote shall elect a
<PAGE> 2
Board of Directors and they may transact such other corporate business as
shall be stated in the notice of the meeting.
SECTION 2. SPECIAL MEETINGS -- Special meetings of the stockholders for
any purpose or purposes may be called by the Chairman of the Board, the
President or the Secretary, or by resolution of the Board of Directors.
SECTION 3. VOTING -- Each stockholder entitled to vote in accordance with
the terms of the Certificate of Incorporation of the Corporation and these By-
Laws may vote in person or by proxy, but no proxy shall be voted after three
years from its date unless such proxy provides for a longer period. All
elections for directors shall be decided by plurality vote; all other
questions shall be decided by majority vote except as otherwise provided by
the Certificate of Incorporation or the laws of the State of Delaware.
A complete list of the stockholders entitled to vote at the meeting,
arranged in alphabetical order, with the address of each, and the number of
shares held by each, 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 in the
notice of the meeting, or, if not so specified, 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 any
stockholder who is entitled to be present.
SECTION 4. QUORUM -- Except as otherwise required by law, by the
Certificate of Incorporation of the Corporation or by these By-Laws, the
presence, in person or by proxy, of stockholders holding shares constituting a
majority of the voting power of the Corporation shall constitute a quorum at
all meetings of the stockholders. In case a quorum shall not be present at
any meeting, a majority in interest of the stockholders entitled to vote
thereat, present in person or by proxy, shall have the power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until the requisite amount of stock entitled to vote shall be
present. At any such adjourned meeting at which the requisite amount of stock
entitled to vote shall be represented, any business may be transacted that
might have been transacted at the meeting as originally noticed; but only
those stockholders entitled to vote at the meeting as originally noticed shall
be entitled to vote at any adjournment or adjournments thereof.
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<PAGE> 3
SECTION 5. NOTICE OF MEETINGS -- Written notice, stating the place, date
and time of the meeting, and the general nature of the business to be
considered, shall be given to each stockholder entitled to vote thereat, at
his or her address as it appears on the records of the Corporation, not less
than ten nor more than sixty days before the date of the meeting. No business
other than that stated in the notice shall be transacted at any meeting
without the unanimous consent of all the stockholders entitled to vote
thereat.
SECTION 6. ACTION WITHOUT MEETING -- Unless otherwise provided by the
Certificate of Incorporation of the Corporation, any action required or
permitted to be taken at any annual or special meeting of 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 such 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 III
DIRECTORS
SECTION 1. NUMBER AND TERM -- The business and affairs of the Corporation
shall be managed under the direction of a Board of Directors which shall
consist of not less than two persons. The exact number of directors shall
initially be two and may thereafter be fixed from time to time by the Board of
Directors. Directors shall be elected at the annual meeting of stockholders
and each director shall be elected to serve until his or her successor shall
be elected and shall qualify. A director need not be a stockholder.
SECTION 2. RESIGNATIONS -- Any director may resign at any time. Such
resignation shall be made in writing, and shall take effect at the time
specified therein, and if no time be specified, at the time of its receipt by
the Chairman of the Board, the President or the Secretary. The acceptance of
a resignation shall not be necessary to make it effective.
SECTION 3. VACANCIES -- If the office of any director becomes vacant, the
remaining directors in the office, though less than a quorum, by a majority
vote, may appoint any qualified person to fill such vacancy, who shall hold
office
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<PAGE> 4
for the unexpired term and until his or her successor shall be duly chosen.
If the office of any director becomes vacant and there are no remaining
directors, the stockholders, by the affirmative vote of the holders of shares
constituting a majority of the voting power of the Corporation, at a special
meeting called for such purpose, may appoint any qualified person to fill such
vacancy.
SECTION 4. REMOVAL -- Except as hereinafter provided, any director or
directors may be removed either for or without cause at any time by the
affirmative vote of the holders of a majority of the voting power entitled to
vote for the election of directors, at an annual meeting or a special meeting
called for the purpose, and the vacancy thus created may be filled, at such
meeting, by the affirmative vote of holders of shares constituting a majority
of the voting power of the Corporation.
SECTION 5. COMMITTEES -- The Board of Directors may, by resolution or
resolutions passed by a majority of the whole Board of Directors, designate
one or more committees, each committee to consist of one or more directors of
the Corporation.
Any such committee, to the extent provided in the resolution of the Board
of Directors, or in these By-Laws, shall have and may exercise all the powers
and authority of the Board of Directors 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.
SECTION 6. MEETINGS -- The newly elected directors may hold their first
meeting for the purpose of organization and the transaction of business, if a
quorum be present, immediately after the annual meeting of the stockholders;
or the time and place of such meeting may be fixed by consent of all the
Directors.
Regular meetings of the Board of Directors may be held without notice at
such places and times as shall be determined from time to time by resolution
of the Board of Directors.
Special meetings of the Board of Directors may be called by the Chairman
of the Board or the President, or by the Secretary on the written request of
any director, on at least one day's notice to each director (except that
notice to any director may be waived in writing by such director) and shall be
held at such place or places as may be determined by the Board of Directors,
or as shall be stated in the call of the meeting.
-4-
<PAGE> 5
Unless otherwise restricted by the Certificate of Incorporation of the
Corporation or these By-Laws, members of the Board of Directors, or any
committee designated by the Board of Directors, may participate in any meeting
of the Board of Directors or any committee thereof by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation in a
meeting shall constitute presence in person at the meeting.
SECTION 7. QUORUM -- A majority of the Directors shall constitute a
quorum for the transaction of business. If at any meeting of the Board of
Directors there shall be less than a quorum present, a majority of those
present may adjourn the meeting from time to time until a quorum is obtained,
and no further notice thereof need be given other than by announcement at the
meeting which shall be so adjourned. The vote of the majority of the
Directors present at a meeting at which a quorum is present shall be the act
of the Board of Directors unless the Certificate of Incorporation of the
Corporation or these By-Laws shall require the vote of a greater number.
SECTION 8. COMPENSATION -- Directors shall not receive any stated salary
for their services as directors or as members of committees, but by resolution
of the Board of Directors a fixed fee and expenses of attendance may be
allowed for attendance at each meeting. Nothing herein contained shall be
construed to preclude any director from serving the Corporation in any other
capacity as an officer, agent or otherwise, and receiving compensation
therefor.
SECTION 9. ACTION WITHOUT MEETING -- Any action required or permitted to
be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting if a written consent thereto is signed by all
members of the Board of Directors or of such committee, as the case may be,
and such written consent is filed with the minutes of proceedings of the Board
of Directors or such committee.
ARTICLE IV
OFFICERS
SECTION 1. OFFICERS -- The officers of the Corporation shall be a
President, a Treasurer and a Secretary, all of whom shall be elected by the
Board of Directors and shall hold office until their successors are duly
elected and qualified. In addition, the Board of Directors may elect such
Vice Presidents, Assistant Secretaries and Assistant Treasurers as
-5-
<PAGE> 6
they may deem proper. The Board of Directors may appoint such other officers
and agents as it may deem advisable, who shall hold their offices for such
terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the Board of Directors.
SECTION 2. CHAIRMAN OF THE BOARD -- The Chairman of the Board shall not
be an officer of the corporation. He or she shall preside at all meetings of
the Board of Directors and shall have and perform such other duties as may be
assigned to him or her by the Board of Directors.
SECTION 3. PRESIDENT -- The President shall be the Chief Executive
Officer of the Corporation. He or she shall have the general powers and
duties of supervision and management usually vested in the office of President
of a corporation. The President shall have the power to execute bonds,
mortgages and other contracts on behalf of the Corporation, and to cause the
seal to be affixed to any instrument requiring it, and when so affixed the
seal shall be attested to by the signature of the Secretary or the Treasurer
or an Assistant Secretary or an Assistant Treasurer.
SECTION 4. VICE PRESIDENTS -- Each Vice President shall have such powers
and shall perform such duties as shall be assigned to him or her by the Board
of Directors.
SECTION 5. TREASURER -- The Treasurer shall be the Chief Financial
Officer of the Corporation. He or she shall have the custody of the Corporate
funds and securities and shall keep full and accurate account of receipts and
disbursements in books belonging to the Corporation. He or she shall deposit
all moneys and other valuables in the name and to the credit of the
Corporation in such depositories as may be designated by the Board of
Directors. He or she shall disburse the funds of the Corporation as may be
ordered by the Board of Directors or the President, taking proper vouchers for
such disbursements. He or she shall render to the Chairman of the Board, the
President and Board of Directors at the regular meetings of the Board of
Directors, or whenever they may request it, an account of all his or her
transactions as Treasurer and of the financial condition of the Corporation.
If required by the Board of Directors, he or she shall give the Corporation a
bond for the faithful discharge of his or her duties in such amount and with
such surety as the Board of Directors shall prescribe.
SECTION 6. SECRETARY -- The Secretary shall give, or cause to be given,
notice of all meetings of stockholders and of the Board of Directors and all
other notices required by law
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<PAGE> 7
or by these By-Laws, and in case of his or her absence or refusal or neglect
so to do, any such notice may be given by any person thereunto directed by the
Chairman of the Board or the President, or by the Board of Directors, upon
whose request the meeting is called as provided in these By-Laws. He or she
shall record all the proceedings of the meetings of the Board of Directors,
any committees thereof and the stockholders of the Corporation in a book to be
kept for that purpose, and shall perform such other duties as may be assigned
to him or her by the Board of Directors, the Chairman of the Board or the
President. He or she shall have the custody of the seal of the Corporation
and shall affix the same to all instruments requiring it, when authorized by
the Board of Directors, the Chairman of the Board or the President, and attest
to the same.
SECTION 7. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES -- Assistant
Treasurers and Assistant Secretaries, if any, shall be elected and shall have
such powers and shall perform such duties as shall be assigned to them,
respectively, by the Board of Directors.
ARTICLE V
MISCELLANEOUS
SECTION 1. CERTIFICATES OF STOCK -- A certificate of stock shall be
issued to each stockholder certifying the number of shares owned by such
stockholder in the Corporation. Certificates of stock of the Corporation
shall be of such form and device as the Board of Directors may from time to
time determine.
SECTION 2. LOST CERTIFICATES -- A new certificate of stock may be issued
in the place of any certificate theretofore issued by the Corporation, alleged
to have been lost or destroyed, and the Board of Directors may, in its
discretion, require the owner of the lost or destroyed certificate, or such
owner's legal representatives, to give the Corporation a bond, in such sum as
they may direct, not exceeding double the value of the stock, to indemnify the
Corporation against any claim that may be made against it on account of the
alleged loss of any such certificate, or the issuance of any such new
certificate.
SECTION 3. TRANSFER OF SHARES -- The shares of stock of the Corporation
shall be transferable only upon its books by the holders thereof in person or
by their duly authorized attorneys or legal representatives, and upon such
transfer the old certificates shall be surrendered to the Corporation by the
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<PAGE> 8
delivery thereof to the person in charge of the stock and transfer books and
ledgers, or to such other person as the Board of Directors may designate, by
whom they shall be cancelled, and new certificates shall thereupon be issued.
A record shall be made of each transfer and whenever a transfer shall be made
for collateral security, and not absolutely, it shall be so expressed in the
entry of the transfer.
SECTION 4. STOCKHOLDERS RECORD DATE -- In order that the Corporation may
determine 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 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 of Directors may fix
a record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors and
which record date: (1) in the case of determination of stockholders entitled
to vote at any meeting of stockholders or adjournment thereof, shall, unless
otherwise required by law, not be more than sixty nor less than ten days
before the date of such meeting; (2) in the case of determination of
stockholders entitled to express consent to corporate action in writing
without a meeting, shall not be more than ten days from the date upon which
the resolution fixing the record date is adopted by the Board of Directors;
and (3) in the case of any other action, shall not be more than sixty days
prior to such other action. If no record date is fixed: (1) the record date
for determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the
day on which notice is given, or, if notice is waived, at the close of
business on the day next preceding the day on which the meeting is held; (2)
the record date for determining stockholders entitled to express consent to
corporate action in writing without a meeting when no prior action of the
Board of Directors is required by law, shall be the first day on which a
signed written consent setting forth the action taken or proposed to be taken
is delivered to the Corporation in accordance with applicable law, or, if
prior action by the Board of Directors is required by law, shall be at the
close of business on the day on which the Board of Directors adopts the
resolution taking such prior action; and (3) the record date for determining
stockholders for any other purpose shall be at the close of business on the
day on which the Board of Directors adopts the resolution relating thereto. A
determination of stockholders.of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the
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<PAGE> 9
Board of Directors may fix a new record date for the adjourned meeting.
SECTION 5. DIVIDENDS -- Subject to the provisions of the Certificate of
Incorporation of the Corporation, the Board of Directors may, out of funds
legally available therefor at any regular or special meeting, declare
dividends upon stock of the Corporation as and when they deem appropriate.
Before declaring any dividend there may be set apart out of any funds of the
Corporation available for dividends, such sum or sums as the Board of
Directors from time to time in their discretion deem proper for working
capital or as a reserve fund to meet contingencies or for equalizing dividends
or for such other purposes as the Board of Directors shall deem conducive to
the interests of the Corporation.
SECTION 6. SEAL -- The corporate seal of the Corporation shall be in such
form as shall be determined by resolution of the Board of Directors. Said
seal may be used by causing it or a facsimile thereof to be impressed or
affixed or reproduced or otherwise imprinted upon the subject document or
paper.
SECTION 7. FISCAL YEAR -- The fiscal year of the Corporation shall be
determined by resolution of the Board of Directors.
SECTION 8. CHECKS -- All checks, drafts or other orders for the payment
of money, notes or other evidences of indebtedness issued in the name of the
Corporation shall be signed by such officer or officers, or agent or agents,
of the Corporation, and in such manner as shall be determined from time to
time by resolution of the Board of Directors.
SECTION 9. NOTICE AND WAIVER OF NOTICE -- Whenever any notice is required
to be given under these By-Laws, personal notice is not required unless
expressly so stated, and any notice so required shall be deemed to be
sufficient if given by depositing the same in the United States mail, postage
prepaid, addressed to the person entitled thereto at his or her address as it
appears on the records of the Corporation, and such notice shall be deemed to
have been given on the day of such mailing. Stockholders not entitled to vote
shall not be entitled to receive notice of any meetings except as otherwise
provided by law. Whenever any notice is required to be given under the
provisions of any law, or under the provisions of the Certificate of
Incorporation of the Corporation or of these By-Laws, a waiver thereof, in
writing and signed by the person or persons entitled to said notice, whether
before or after the
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<PAGE> 10
time stated therein, shall be deemed equivalent to such required notice.
ARTICLE VI
AMENDMENTS
These By-Laws may be altered, amended or repealed at any annual meeting
of the stockholders (or at any special meeting thereof if notice of such
proposed alteration, amendment or repeal to be considered is contained in the
notice of such special meeting) by the affirmative vote of the holders of
shares constituting a majority of the voting power of the Corporation. Except
as otherwise provided in the Certificate of Incorporation of the Corporation,
the Board of Directors may by majority vote of those present at any meeting at
which a quorum is present alter, amend or repeal these By-Laws, or enact such
other By-Laws as in their judgment may be advisable for the regulation and
conduct of the affairs of the Corporation.
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<PAGE> 1
EXHIBIT 3.13
ARTICLES OF MERGER
MERGING
AMF BOWLING CENTERS I, INC.
INTO
AMF BOWLING CENTERS, INC.
Pursuant to the provisions of the Code of Virginia, AMF Bowling Centers
I, Inc. ("AMF I"), an Alabama corporation and AMF Bowling Centers, Inc. ("AMF"),
a Virginia corporation, execute, certify and file these Articles of Merger. AMF
I and AMF agree that AMF I shall be merged with and into AMF and that AMF shall
be the surviving corporation (the "Merger").
FIRST: The terms and conditions of the Merger are as set forth in the
Agreement and Plan of Merger (the "Agreement of Merger") attached hereto as
Exhibit A and incorporated herein by reference. An executed copy of the
Agreement of Merger is on file at the principal place of business of AMF, the
address of which is 7275 Glen Forest Drive, Richmond, Virginia 23226.
SECOND: As of December 15, 1992, the Agreement of Merger was duly and
unanimously approved, adopted, executed and acknowledged at meetings of the
Boards of Directors of AMF I and AMF by unanimous written consents in accordance
with applicable corporate laws and the charters of each corporation and was
recommended and submitted for approval to the shareholders of AMF I and AMF.
THIRD: As of December 15, 1992, when the Merger was approved by
unanimous vote of the shareholders for each corporation, the authorized capital
stock of all classes, the number of shares of such stock of each corporation
outstanding and entitled to vote on the Merger and the number of shares voted to
approve the Merger were as follows:
<TABLE>
<CAPTION>
Number of Number of
Shares Shares
Authorized Outstanding Voting to
Capital & Entitled Approve the
Name Stock by Class To Vote Merger
- ---- -------------- ----------- -----------
<S> <C> <C> <C>
AMF 15,000 9,581.89 9,581.89
AMF I 10,000 95.8189 95.8189
</TABLE>
FOURTH: There are no dissenting shareholders.
FIFTH: AMF shall be the surviving corporation of the Merger and shall
continue under the name AMF Bowling Centers, Inc. The Articles of Incorporation,
By-Laws, and officers and directors of AMF, in effect immediately prior to the
Merger, shall continue to be the Articles of Incorporation, By-Laws and officers
and directors of AMF after the Merger.
<PAGE> 2
SIXTH: AMF shall possess all the rights, privileges, immunities,
powers, franchises and authority, as well of a public as of a private nature, of
AMF I and property of every description and every interest therein and all
obligations of AMF I shall thereafter be taken and deemed to be transferred to
and vested in AMF in complete liquidation and redemption of all the issued and
outstanding shares of AMF I.
SEVENTH: The Merger is permitted under the laws of the Commonwealth of
Virginia and all such laws have been complied with to effect this Merger. The
Merger shall become effective at 11:59 p.m. on December 27, 1992.
IN WITNESS WHEREOF, AMF I and AMF have caused these Articles of Merger
to be signed and executed in their respective corporate names and on their
behalf by their respective duly authorized officers as of the 15th day of
December, 1992.
AMF Bowling Centers, Inc.
By: /s/ Beverley W. Armstrong
-----------------------------
Beverley W. Armstrong
President
AMF Bowling Centers I, Inc.
By: /s/ Beverley W. Armstrong
-----------------------------
Beverley W. Armstrong
President
<PAGE> 3
EXHIBIT A
AGREEMENT AND PLAN OF MERGER
AMF BOWLING CENTERS I, INC.
WITH AND INTO
AMF BOWLING CENTERS, INC.
This is an Agreement and Plan of Merger of AMF Bowling Centers I, Inc.
("AMF I"), an Alabama corporation, with and into AMF Bowling Centers, Inc., a
Virginia corporation ("AMF").
RECITAL
A. AMF is a corporation organized and existing under the laws of
the Commonwealth of Virginia. Its authorized capital stock consists of 15,000
shares of common stock of which 9,581.89 shares have been issued and are
outstanding. AMF I is a corporation organized and existing under the laws of the
State of Alabama. Its authorized capital stock consists of 10,000 shares of
common stock of which 95.8189 shares have been issued and are outstanding.
B. AMF and AMF I desire that their respective businesses and
properties be combined to form a single enterprise and, to that end, that AMF I
be merged with and into AMF.
ARTICLE I
AMF I shall be merged with and into AMF (herein sometimes called the
"Surviving Corporation") in accordance with applicable law and upon the filing
of the Articles of Merger and the issuance of a Certificate of Merger.
<PAGE> 4
ARTICLE II
The merger shall become effective at 11:59 p.m. on December 27, 1992
(the "Effective Date").
ARTICLE III
On the Effective Date, all of the outstanding shares of the capital
stock of AMF I shall be canceled, the stock transfer books of AMF I shall be
closed and no further transfer of common stock of AMF I shall be permitted. The
shares of capital stock of AMF shall not be affected by this Agreement and Plan
of Merger and shall be the common stock of the Surviving Corporation.
Furthermore, all of the certificates theretofore representing the common stock
of AMF I shall be surrendered to Daniel M. McCormack of Richmond, Virginia and
shall, upon such surrender, be canceled.
ARTICLE IV
The Articles of Incorporation of the Surviving Corporation shall be the
Articles of Incorporation of AMF existing on the Effective Date and the By-laws
and directors and officers of AMF shall be the By-laws and directors and
officers of the Surviving Corporation.
ARTICLE V
Following the approval of this Agreement and Plan of Merger by the
respective Boards of Directors of AMF and AMF I, Articles of Merger, duly
executed by the proper officers of AMF and AMF I, shall be filed with the State
Corporation Commission of Virginia and the Secretary of State of Alabama.
2
<PAGE> 5
IN WITNESS WHEREOF, this Agreement and Plan of Merger is made as of
December 15, 1992.
AMF Bowling Centers I, Inc.
By:/s/Beverley W. Armstrong
------------------------------
Beverley W. Armstrong
President
AMF Bowling Centers, Inc.
By:/s/Beverley W. Armstrong
------------------------------
Beverley W. Armstrong
President
3
<PAGE> 6
[VIRGINIA]
ARTICLES OF MERGER
OF
AMF LEISURELAND CENTERS, INC.
(Delaware)
Into
AMF BOWLING CENTERS, INC.
(Virginia)
Pursuant to the provisions of Section 252 of the General Corporation
Law of the State of Delaware and Section 13.1-722 of the Code of Virginia, AMF
Leisureland Centers, Inc., a Delaware corporation ("Leisureland"), and AMF
Bowling Centers, Inc., a Virginia corporation ("Bowling Centers" or the
"Surviving Corporation") (collectively, the "Constituent Corporations"),
approve, adopt, certify, execute and acknowledge the following Articles of
Merger. The Constituent Corporations agree that Leisureland shall be merged into
Bowling Centers.
FIRST: The terms and conditions of the Merger and the mode of carrying
the same into effect and the manner and basis of cancelling or retiring the
issued stock of Leisureland is set forth in the Plan and Agreement of Merger
(the "Agreement") attached hereto as Exhibit A and incorporated herein by
reference. An executed copy of the Agreement is on file at the principal place
of business of the Surviving Corporation, the address of which is 8037 Shrader
Road, Richmond, Virginia 23229. A copy of the Agreement will be furnished by the
Surviving Corporation, on request and without cost, to any stockholder of any
Constituent Corporation.
SECOND: The authorized capital stock of each of the Constituent
Corporations is as follows:
<PAGE> 7
<TABLE>
<CAPTION>
No. of
Name Class Shares Par Value
---- ----- ------ ---------
<S> <C> <C> <C>
AMF Leisureland Centers, Inc. Common 1,000 $100
AMF Bowling Centers, Inc. Common 15,000 1
</TABLE>
THIRD: Bowling Centers shall survive the merger and shall continue
under the name "AMF Bowling Centers, Inc." and shall be governed by the laws of
the Commonwealth of Virginia.
FOURTH: As of December 18, 1987, the Agreement was duly advised,
authorized, approved, adopted, certified, executed and acknowledged by the
Boards of Directors of both of the Constituent Corporations by unanimous written
consents in accordance with and in the manner prescribed by the aforementioned
corporate laws and the characters of each of the Constituent Corporations.
As of December 18, 1987, the Agreement was approved by the unanimous
written consents of the shareholders of both of the Constituent Corporations.
FIFTH: The Merger is permitted by the laws of the State of Delaware and
the Commonwealth of Virginia and all conditions required by the laws thereof
have been satisfied.
SIXTH: Bowling Centers agrees (i) that it may be served with process of
the State of Delaware in any proceeding for enforcement of any obligation of
Leisureland as well as for enforcement of any obligation of Bowling Centers
arising from the Merger, including any suit or other proceeding to enforce the
right of any stockholder as determined in appraisal proceedings pursuant to the
provisions of Section 262 of Title 8 of the Delaware Code of 1953, and (ii) that
the Secretary of State of
<PAGE> 8
the State of Delaware shall be and hereby is irrevocably appointed as its agent
to accept service of process in any such suit or other proceeding. The address
to which a copy of such process shall be mailed by the Secretary of State of
Delaware is 8037 Shrader Road, Richmond, Virginia 23229, until Bowling Centers
shall have hereafter designated in writing to the Delaware Secretary of State a
different address for such purpose.
SEVENTH: There are no dissenting shareholders.
EIGHTH: Bowling Centers shall possess all the rights, privileges,
immunities, powers, franchises and authority, of a public as well as of a
private nature, of the Merging Corporation and property of every description and
every interest therein and all obligations of the Merging Corporation shall
thereafter be taken and deemed to be transferred to and vested in Bowling
Centers in complete liquidation and redemption of all the issued and outstanding
shares of the Merging Corporation.
NINTH: The mailing of the Agreement to the sole shareholder of the
Merging Corporation was waived by such sole shareholder.
TENTH: The merger shall become effective on December 30, 1987, at 4:30
p.m., Eastern Standard Time, as provided in the Agreement.
IN WITNESS WHEREOF, each of the Constituent Corporations has caused
these Articles of Merger to be signed and executed in their respective corporate
names and on their behalf by their respective presidents and witnessed or
attested by their respective secretaries, each of whom declare and affirm, under
the
-3-
<PAGE> 9
penalties of perjury, that the facts stated herein are true on and as of the
30th day of December, 1987.
AMF LEISURELAND CENTERS, INC.
By /s/Beverley W. Armstrong
--------------------------------
Beverley W. Armstrong
(Corporate Seal) President
ATTEST:
/s/H. D. Shepherd, Jr.
- ----------------------------
H. D. Shepherd, Jr.
Secretary
AMF BOWLING CENTERS, INC.
By /s/Beverley W. Armstrong
--------------------------------
Beverley W. Armstrong
(Corporate Seal) President
ATTEST:
/s/H. D. Shepherd, Jr.
- ----------------------------
H. D. Shepherd, Jr.
Secretary
-4-
<PAGE> 10
Exhibit A
PLAN AND AGREEMENT OF MERGER
THIS PLAN AND AGREEMENT OF MERGER (the "Agreement") is made as of the
30th day of December, 1987, between AMF Leisureland Centers, Inc., a Delaware
corporation ("Leisureland"), and AMF Bowling Centers, Inc. ("Bowling Centers" or
the "Surviving Corporation"), a Virginia corporation. Leisureland and Bowling
Centers are sometimes collectively referred to herein as the "Constituent
Corporations."
RECITALS OF THE PARTIES
A. The Constituents Corporations are each duly organized, validly
existing and in good standing under the laws of their respective states of
incorporation. Each outstanding share of common stock of the Constituent
Corporations will, immediately before the Effective Time (as defined in Section
1.5 hereof), be duly authorized and validly issued, fully paid and
nonassessable, and will be owned free and clear of all liens, charges, pledges,
security interests or other encumbrances.
B. The Constituent Corporations desire to combine the operations of the
Constituent Corporations into a single legal entity, thereby simplifying
corporate administration and, accordingly, deem the merger of Leisureland into
Bowling Centers (the "Merger") advisable and in the best interests of the
Constituent Corporations.
NOW, THEREFORE, in order to set forth the terms and conditions of the
Merger, the mode of carrying the Merger into effect, the manner and basis of
converting or cancelling the
<PAGE> 11
outstanding shares of common stock of the Constituent Corporations, and such
other details and provisions of the Merger as are deemed necessary or desirable,
the parties hereto agree as follows:
ARTICLE ONE
THE MERGER
1.1 Merger of Leisureland into Bowling Centers. In accordance with the
provisions of this Agreement and the laws of the State of Delaware and the
Commonwealth of Virginia, at the Effective Time, Leisureland shall be merged
into Bowling Centers. After the Effective Time, Bowling Centers shall continue
its corporate existence as a Virginia corporation under the name "AMF Bowling
Centers, Inc." At the Effective Time, the separate existence of Leisureland
shall cease.
1.2 Effect of the Merger. (a) At any time after the Effective Time, (i)
the Surviving Corporation shall possess all the rights, privileges, powers and
franchises, of a public or private nature, and be subject to all the
restrictions, disabilities and duties of Leisureland; (ii) the rights,
privileges, powers and franchises of Leisureland, and all property, real,
personal and mixed, and all debts due to Leisureland on whatever account,
including all things in action or belonging to Leisureland, shall be vested in
the Surviving Corporation; (iii) all property, rights and privileges, powers and
franchises, and all and every other interest shall be thereafter as effectually
the property of the Surviving Corporation as they were of Leisureland and the
title to any real estate, if any, vested by
-2-
<PAGE> 12
deed or otherwise in either of the Constituent Corporations, shall not revert or
be in any way impaired by reason of the Merger; (iv) all rights of creditors and
all liens upon any property of either of the Constituent Corporations shall be
preserved unimpaired, and all debts, liabilities and duties of Leisureland shall
thenceforth attach to the Surviving Corporation and may be enforced against it
to the same extent as if such debts, liabilities and duties had been
incurred or contracted by it; and (v) any action or proceeding, whether civil,
criminal or administrative, pending by or against either of the Constituent
Corporations may be prosecuted as if the Merger had not taken place, or the
Surviving Corporation may be substituted in such action or proceeding.
(b) From any time after the Effective Time and until further amended in
accordance with the Virginia Stock Corporation Act, the name of Bowling Centers
shall be "AMF Bowling Centers, Inc." and the Articles of Incorporation of
Bowling Centers as in effect at the Effective Time shall be the Articles of
Incorporation of the Surviving Corporation.
(C) The Bylaws of Bowling Centers as in effect immediately before the
Effective Time shall be the Bylaws of the Surviving Corporation until amended or
repealed as therein provided or otherwise in accordance with the Virginia Stock
Corporation Act.
(d) The officers and directors of Bowling Centers in office immediately
before the Effective Time shall remain officers and directors of the Surviving
Corporation after the
-3-
<PAGE> 13
Effective Time until their successors are duly elected or appointed and
qualified in accordance with the Bylaws and the Articles of Incorporation of the
Surviving Corporation.
1.3 Further Assurances. If at any time after the Effective Time the
Surviving Corporation shall consider or be advised that any further deeds,
assignments or assurances in law or any other acts are necessary or desirable to
vest, perfect or confirm, of record or otherwise, in the Surviving Corporation
title to and possession of any property or right of Leisureland acquired or to
be acquired by reason of, or as a result of, the Merger, or otherwise to carry
out the purposes of this Agreement, Leisureland and its proper officers and
directors shall be deemed to have granted to the Surviving Corporation an
irrevocable power of attorney to execute and deliver all such deeds, assignments
and assurances in law and to do all acts necessary or desirable to vest, perfect
or confirm title to and possession of such property or rights in the Surviving
Corporation and otherwise to carry out the purposes of this Agreement,
Leisureland its proper officers and directors shall be deemed to have granted to
the Surviving Corporation an irrevocable power of attorney to execute and
deliver all such deeds, assignments and assurances in law and to do all acts
necessary or desirable to vest, perfect or confirm title to and possession of
such property or rights in the Surviving Corporation and otherwise to carry out
the purposes of this Agreement; and the proper officers and directors of the
Surviving Corporation are fully authorized in the name of Leisureland or
otherwise to take any and all such action.
1.4 Merger Documents. In order to effect the Merger, the Constituent
Corporations shall (i) file a property executed Certificate of Merger with
respect to the Merger in the Office of the Secretary of State of Delaware in
accordance with the General Corporation Law of the State of Delaware; and (ii)
file properly executed Articles of Merger with the State Corporation Commission
-4-
<PAGE> 14
of the Commonwealth of Virginia in accordance with the Virginia Stock
Corporation Act and such State Corporation Commission shall issue a Certificate
of Merger with respect to the Merger in accordance with the Virginia Stock
Corporation Act.
1.5 Effective Time. The Merger shall become effective on December 30,
1987, at 4:30 p.m., Eastern Standard Time (the "Effective Time").
1.6 Qualification of the Surviving Corporation. The Surviving
Corporation desires to transact business as a foreign corporation in the State
of Delaware upon the Merger becoming effective and has filed with the
appropriate Delaware authorities all applications to qualify to do business as a
foreign corporation in such state.
ARTICLE TWO
SECURITIES AFTER THE MERGER
2.1 Leisureland Common Stock. (a) Each share of Leisureland common
stock issued and outstanding immediately before the Effective Time shall be
cancelled and retired and shall cease to exist.
(b) Each share of common stock of Leisureland authorized but
not issued or, if any, held in the treasury immediately before the Effective
Time shall, by virtue of the Merger and without action on the part of
Leisureland, be cancelled and retired and shall cease exist, without any
conversion thereof into the right to receive consideration therefor.
2.2 Bowling Centers Common Stock. Each pre-merger issued and
outstanding share of Bowling Centers common stock shall continue as such,
unaffected.
-5-
<PAGE> 15
ARTICLE THREE
AMENDMENT AND TERMINATION
3.1 Amendment. This Agreement may not be amended except by an
instrument in writing signed and delivered on behalf of each of the Constituent
Corporations.
3.2 Termination. This Agreement may be terminated and abandoned at
any time by action of the boards of directors of either of the Constituent
Corporations by an instrument in writing signed and delivered on behalf of both
of the Constituent Corporations.
IN WITNESS WHEREOF, this Plan and Agreement of Merger is made as of
December 30, 1987.
AMF LEISURELAND CENTERS, INC.
By:/s/Beverley W. Armstrong
--------------------------------
Beverley W. Armstrong
(Corporate Seal) President
ATTEST:
By:/s/H.D. Shepherd, Jr.
-----------------------------------
H.D. Shepherd, Jr.
Secretary
AMF BOWLING CENTERS, INC.
By:/s/Beverley W. Armstrong
--------------------------------
Beverley W. Armstrong
(Corporate Seal) President
ATTEST:
By:/s/H.D. Shepherd, Jr.
-----------------------------------
H.D. Shepherd, Jr.
Secretary
-6-
<PAGE> 16
ARTICLES OF MERGER
MERGING
AZALEA RECREATION, INC. (Virginia)
BOWLING PROPERTIES, INC. (Virginia)
COMMONWEALTH LEASING COMPANY OF RICHMOND, INC. (Virginia)
FREDERICKSBURG LANES, INC. (Virginia)
GOLDSBORO RECREATION, INC. (Virginia)
JACKSON PARK LANES, INC. (Virginia)
MAJOR LEAGUE OF GREENVILLE, INC. (Virginia)
PETERSBURG RECREATION, INC. (Virginia)
PFG, INC. (Virginia)
RALEIGH RECREATION, INC. (Virginia)
RALEIGH SPORTS, INC. (Virginia)
SUNSET RECREATION, INC. (Virginia)
WILLIAMSBURG RECREATION, INC. (Virginia)
WILLOW RECREATION, INC. (Virginia)
WILSON SPORTS, INC. (Virginia)
MAJOR LEAGUE BOWLING ASSOCIATION OF OCALA, INC. (Florida)
MAJOR LEAGUE OF CLEARWATER, INC. (Florida)
MAJOR LEAGUE OF TAMPA EAST, INC. (Florida)
VICTORY RECREATION CENTERS, INC. (Georgia)
MAJOR LEAGUE BOWLING ASSOCIATION OF GASTONIA, INC.
(North Carolina)
MAJOR LEAGUE BOWLING ASSOCIATION OF WINSTON-SALEM, INC.
(North Carolina)
MAJOR LEAGUE BOWLING ASSOCIATION OF SPARTANBURG, INC.
(South Carolina)
MAJOR LEAGUE OF COLUMBIA, INC. (South Carolina)
MAJOR LEAGUE BOWLING & RECREATION OF WHEELING, INC.
(West Virginia)
INTO
AMF BOWLING CENTERS, INC.
(Virginia)
Pursuant to the provisions of Section 13.1-720 of the Code of Virginia,
Section 607.227 of the Florida General Corporation Act, Sections 14-2-214 and
14-2-217 of Title 14 of the Official Code of Georgia, Section 55-111 of the
North Carolina Business Corporation Act, Section 33-17-50 of the South Carolina
Business Corporation Act, and Section 31-1-38 of the West Virginia Corporation
Act, Azalea Recreation, Inc. ("Azalea"), Bowling
<PAGE> 17
Properties, Inc. ("Properties"), Commonwealth Leasing Company of Richmond, Inc.
("Commonwealth"), Fredericksburg Lanes, Inc. ("Fredericksburg"), Goldsboro
Recreation, Inc. ("Goldsboro"), Jackson Park Lanes, Inc. ("Jackson Park"), Major
League of Greenville, Inc. ("Greenville"), Petersburg Recreation, Inc.
("Petersburg"), PFG, Inc. ("PFG"), Raleigh Recreation, Inc. ("Raleigh
Recreation"), Raleigh Sports, Inc. ("Raleigh Sports"), Sunset Recreation, Inc.
("Sunset"), Williamsburg Recreation, Inc. ("Williamsburg"), Willow Recreation,
Inc. ("Willow"), and Wilson Sports, Inc. ("Wilson"), all being Virginia
corporations; Major League Bowling Association of Ocala, Inc. ("Ocala"), Major
League of Clearwater, Inc. ("Clearwater"), and Major League of Tampa East, Inc.
("Tampa East"), all being Florida corporations; Victory Recreation Centers, Inc.
("Victory"), a Georgia corporation; Major League Bowling Association of
Gastonia, Inc. ("Gastonia") and Major League Bowling Association of
Winston-Salem, Inc. ("Winston-Salem"), both being North Carolina corporations;
Major League Bowling Association of Spartanburg, Inc. ("Spartanburg") and Major
League of Columbia, Inc. ("Columbia"), both being South Carolina corporations;
and Major League Bowling & Recreation of Wheeling, Inc. ("Wheeling"), a West
Virginia corporation (collectively, the "Merging Corporations"), and AMF Bowling
Centers, Inc. ("AMF or the "Surviving Corporation"), a Virginia corporation
(collectively, the "Constituent Corporations"), adopt, execute and certify the
following Articles of Merger. The Constituent Corporations agree that Azalea,
Properties, Commonwealth, Fredericksburg, Goldsboro Jackson
-2-
<PAGE> 18
Park, Greenville, Petersburg, PFG, Raleigh Recreation, Raleigh Sports, Sunset,
Williamsburg, Willow, Wilson, Ocala, Clearwater, Tampa East, Victory, Gastonia,
Winston-Salem, Spartanburg, Columbia and Wheeling shall be merged into AMF.
FIRST: The terms and conditions of the Merger and the mode of carrying
the same into effect are as set forth in the Plan and Agreement of Merger (the
"Agreement") attached hereto as Exhibit A and incorporated herein by reference.
An executed copy of the Agreement is on file at the principal place of business
of the Surviving Corporation, the address of which is 8037 Shrader Road,
Richmond, Virginia 23229.
SECOND: The name, state and date of incorporation of each of the
Constituent Corporations are as follows:
<TABLE>
<CAPTION>
Date of
Name State Incorporation
---- ----- -------------
<S> <C> <C>
AMF Bowling Centers, Inc. Virginia December 27, 1982
Azalea Recreation, Inc. Virginia December 11, 1959
Bowling Properties, Inc. Virginia` March 20, 1959
Commonwealth Leasing Virginia July 6, 1984
Company of Richmond, Inc.
Fredericksburg Lanes, Inc. Virginia October 18, 1976
Goldsboro Recreation, Inc. Virginia December 9, 1960
Jackson Park Lanes, Inc. Virginia March 24, 1961
Major League of Greenville, Inc. Virginia June 8, 1961
Petersburg Recreation, Inc. Virginia May 16, 1960
PFG, Inc. Virginia December 27, 1982
Raleigh Recreation, Inc. Virginia December 9, 1960
Raleigh Sports, Inc. Virginia December 9, 1960
</TABLE>
-3-
<PAGE> 19
<TABLE>
<S> <C> <C>
Sunset Recreation, Inc. Virginia May 18, 1959
Williamsburg Recreation, Inc. Virginia February 9, 1961
Willow Recreation, Inc. Virginia July 12, 1962
Wilson Sports, Inc. Virginia July 11, 1960
Major League Bowling Florida October 18, 1960
Association of Ocala, Inc.
Major League of Clearwater, Inc. Florida April 1, 1977
Major League of Tampa East, Inc. Florida October 21, 1980
Victory Recreation Centers, Inc. Georgia December 21, 1976
Major League Bowling North Carolina July 24, 1959
Association of Gastonia, Inc.
Major League Bowling North Carolina March 26, 1959
Association of Winston-Salem, Inc.
Major League Bowling South Carolina May 3, 1960
Association of Spartanburg, Inc.
Major League of Columbia, Inc. South Carolina June 6, 1973
Major League Bowling & Recreation West Virginia January 5, 1961
of Wheeling, Inc.
</TABLE>
Each of the Constituent Corporations was incorporated under the general laws of
the jurisdiction of its incorporation.
THIRD: As of September 15, 1987, when the Merger was approved by
unanimous consent of the shareholders, the authorized capital stock of all
classes, par value of such stock, aggregate par value of such stock and number
of shares of such stock of each of the Constituent Corporations outstanding and
entitled to vote on the Merger were as follows:
-4-
<PAGE> 20
<TABLE>
<CAPTION>
Number of
Shares
Authorized Outstanding
Capital Aggregate & Entitled
Name Stock Par Value to Vote
- ---- ---------- --------- -----------
<S> <C> <C> <C>
AMF 15,000 Common Shares $15,000 10,000
$1.00 par value
Azalea 250 Common Shares $25,000 1
$100 par value
Properties 250 Common Shares $25,000 250
$100 par value
Commonwealth 15,000 Common Shares $15,000 1
$1.00 par value
Fredericksburg 500 Common Shares $175,000 100
$350 par value
Goldsboro 250 Common Shares $25,000 1
$100 par value
Jackson Park 500 Common Shares $50,000 400
$100 par value
Greenville 500 Common Shares $50,000 400
$100 par value
Petersburg 250 Common Shares $25,000 1
$100 par value
PFG 15,000 Common Shares $15,000 1
$1.00 par value
Raleigh Recreation 250 Common Shares $25,000 1
$100 par value
Raleigh Sports 250 Common Shares $25,000 1
$100 par value
Sunset 250 Common Shares $25,000 1
$100 par value
Williamsburg 250 Common Shares $25,000 250
$100 par value
Willow 500 Common Shares $50,000 500
$100 par value
Wilson 250 Common Shares $25,000 1
$100 par value
</TABLE>
-5-
<PAGE> 21
<TABLE>
<S> <C> <C> <C>
Ocala 5,000 Common Shares $5,000 1,000
$1.00 par value
Clearwater 5,000 Common Shares $5,000 1,000
$1.00 par value
Tampa East 7,500 Common Shares $7,500 500
$1.00 par value
Victory 2,500 Common Shares $250,000 900
$100 par value
Gastonia 1,000 Common Shares $100,000 10
$100 par value
Winston-Salem 1,000 Common Shares $100,000 10
$100 par value
Spartanburg 10,000 Common Shares $10,000 1,000
$1.00 par value
Columbia 1,000 Common Shares $100,000 10
$100 par value
Wheeling 250 Common Shares $25,000 10
$100 par value
</TABLE>
FOURTH: AMF shall survive the Merger, shall continue under the name AMF
Bowling Centers, Inc., and shall be governed by the laws of the Commonwealth of
Virginia. The Articles of Incorporation and Bylaws of AMF in effect immediately
prior to the Merger shall continue to be the Articles of Incorporation and
Bylaws of the Surviving Corporation.
FIFTH: The manner and basis of converting or exchanging issued stock of
the merged corporations into different stock or other consideration and the
manner of dealing with any issued stock of the merged corporations not to be
so converted or exchanged shall be as specified in the Agreement attached
hereto as Exhibit A.
SIXTH: As of September 15, 1987, the Agreement was duly advised,
authorized, approved, adopted, certified, executed and
-6-
<PAGE> 22
acknowledged by the boards of directors of each of the Constituent Corporations
by unanimous written consents in accordance with and in the manner prescribed by
the aforementioned corporate laws and the charters of each of the Constituent
Corporations.
As of September 15, 1987, the Agreement was approved by unanimous
written consent of AMF, the sole shareholder of each of the Merging
Corporations. As of September 15, 1987, the Agreement was approved by unanimous
written consent of the sole shareholder of AMF.
SEVENTH: The Merger is permitted by the laws of the States of Florida,
Georgia, North Carolina, South Carolina and West Virginia and of the
Commonwealth of Virginia and all conditions required by the laws thereof have
been satisfied.
EIGHTH: AMF agrees (a) that it may be served with process in the States
of Florida, Georgia, North Carolina, South Carolina, and West Virginia in any
proceeding for the enforcement of any obligation of any Constituent Corporation
domiciled in such states and in any proceeding for the enforcement of the rights
of any dissenting shareholders of the Merging Corporations against AMF; (b) that
the Secretaries of State of the states of Georgia, South Carolina and West
Virginia shall be and hereby are irrevocably appointed as the agent of the
Surviving Corporation to accept service of process in any such proceeding, and
the address to which a copy of such process shall be mailed is 8037 Shrader
Road, Richmond, Virginia 23229 until AMF shall have hereafter designated in
writing a different address for such purpose; and (c) that it will promptly
pay to the dissenting
-7-
<PAGE> 23
shareholders of the Merging Corporations the amount, if any, to which they shall
be entitled under the provisions of the laws of the respective states with
respect to the rights of dissenting shareholders.
NINTH: There are no dissenting shareholders.
TENTH: AMF shall possess all the rights, privileges, immunities,
powers, franchises and authority, as well of a public as of a private nature, of
each of the Merging Corporations and property of every description and every
interest therein and all obligations of the Merging Corporations shall
thereafter be taken and deemed to be transferred to and vested in AMF in
complete liquidation and redemption of all the issued an outstanding shares of
the Merging Corporations.
ELEVENTH: The mailing of the Plan and Agreement of Merger to AMF, the
sole shareholder of the Merging Corporations, was waived by AMF.
TWELFTH: The Merger shall become effective on September 30, 1987, as
provided in the Agreement.
THIRTEENTH: A copy of the Agreement will be furnished by the Surviving
Corporation, on request and without cost, to any shareholder of any Constituent
Corporation.
IN WITNESS WHEREOF, each of the Constituent Corporations has caused
these Articles of Merger to be signed and executed in their respective corporate
names and on their behalf by their respective presidents and witnessed or
attested by their respective secretaries, each of whom declare and affirm, under
the
-8-
<PAGE> 24
penalties of perjury, that the facts stated herein are true on and as of the
15th day of September, 1987.
AMF BOWLING CENTERS, INC.
AZALEA RECREATION, INC.
BOWLING PROPERTIES, INC.
COMMONWEALTH LEASING COMPANY OF
RICHMOND, INC.
FREDERICKSBURG LANES, INC.
GOLDSBORO RECREATION, INC.
JACKSON PARK LANES, INC.
MAJOR LEAGUE OF GREENVILLE, INC.
PETERSBURG RECREATION, INC.
RALEIGH RECREATION, INC.
SUNSET RECREATION, INC
WILLIAMSBURG RECREATION, INC.
WILLOW RECREATION, INC.
WILSON SPORTS, INC.
MAJOR LEAGUE BOWLING ASSOCIATION
OF OCALA, INC.
MAJOR LEAGUE OF CLEARWATER, INC.
MAJOR LEAGUE OF TAMPA EAST, INC.
VICTORY RECREATION CENTERS, INC.
MAJOR LEAGUE BOWLING ASSOCIATION
OF GASTONIA, INC.
MAJOR LEAGUE BOWLING ASSOCIATION
OF WINSTON-SALEM, INC.
MAJOR LEAGUE BOWLING ASSOCIATION
OF SPARTANBURG, INC.
MAJOR LEAGUE OF COLUMBIA, INC.
MAJOR LEAGUE BOWLING & RECREATION
OF WHEELING, INC.
By:/s/Beverley W. Armstrong
--------------------------------
Beverley W. Armstrong
President of each of the
above-named corporations
ATTEST: (WITNESS)
By:/s/H.D. Shepherd, Jr.
-----------------------------
H.D. Shepherd, Jr.
Secretary of each of the
above-named corporations
-9-
<PAGE> 25
PFG, INC.
By:/s/E. Bryson Powell
-------------------------------
E. Bryson Powell
President
ATTEST: (WITNESS)
By:/s/William H. Goodwin, Jr.
------------------------------
William H. Goodwin, Jr.
Secretary
STATE OF VIRGINIA
COUNTY OF HENRICO
The undersigned, Beverly W. Armstrong and H.D. Shepherd, Jr., certify
that they are the President and Secretary, respectively, of all of the foregoing
corporations (except PFG, Inc.) and are authorized to execute this verification;
that each of the undersigned for himself does further certify that he has read
the foregoing document, understands the meaning and purport of the statements
therein contained and the same are true to the best of his information and
belief.
Dated at Richmond, Virginia, as of this 15th day of September, 1987.
/s/Beverley W. Armstrong
--------------------------------------
Beverley W. Armstrong, President
/s/H.D. Shepherd, Jr.
--------------------------------------
H.D. Shepherd, Jr., Secretary
-10-
<PAGE> 26
STATE OF VIRGINIA
COUNTY OF HENRICO
I, Shirley F. Small, a Notary Public, certify that on this 23rd
day of September, 1987, personally appeared before me Beverley W. Armstrong and
H.D. Shepherd, Jr., who, being by me first duly sworn declared that they were
the President and Secretary, respectively, of all of the foregoing corporations
(except PFG, Inc.), that they signed the foregoing document as such President
and Secretary, and that the statements therein contained are true.
/s/ Shirley F. Small
_____________________________________
Notary Public
[SEAL]
My commission expires: June 3, 1991
STATE OF VIRGINIA
COUNTY OF HENRICO
The undersigned, E. Bryson Powell and William H. Goodwin, Jr., certify
that they are the President and Secretary, respectively, of PFG, Inc., and are
authorized to execute this verification; that each of the undersigned for
himself does further certify that he has read the foregoing document,
understands the meaning and purport of the statements therein contained and the
same are true to the best of his information and belief.
Dated at Richmond, Virginia, as of this 15th day of September, 1987.
/s/E. Bryson Powell
----------------------------------------
E. Bryson Powell, President
/s/William H. Goodwin, Jr.
-----------------------------------------
William H. Goodwin, Jr., Secretary
-11-
<PAGE> 27
STATE OF VIRGINIA
COUNTY OF HENRICO
I, Shirley F. Small, a Notary Public, certify that on this
23rd day of September, 1987, personally appeared before me E. Bryson Powell and
William H. Goodwin, Jr., who, being by me first fully sworn declared that they
were the President and Secretary, respectively, of PFG, Inc., that they signed
the foregoing document as such President and Secretary, and that the statements
therein contained are true.
/s/ Shirley F. Small
______________________________________
Notary Public
[SEAL]
My commission expires: June 3, 1991
-12-
<PAGE> 28
Exhibit A
PLAN AND AGREEMENT OF MERGER
THIS PLAN AND AGREEMENT OF MERGER (the "Agreement") is made as of the
15th day of September, 1987, among Azalea Recreation, Inc. ("Azalea"), Bowling
Properties, Inc. ("Properties"), Commonwealth Leasing Company of Richmond, Inc.
("Commonwealth"), Fredericksburg Lanes, Inc. ("Fredericksburg"), Goldsboro
Recreation, Inc. ("Goldsboro"), Jackson Park Lanes, Inc. ("Jackson Park"), Major
League of Greenville, Inc. ("Greenville"), Petersburg Recreation, Inc.
("Petersburg"), PFG, Inc. ("PFG"), Raleigh Recreation, Inc. ("Raleigh
Recreation"), Raleigh Sports, Inc. ("Raleigh Sports"), Sunset Recreation, Inc.
("Sunset"), Williamsburg Recreation, Inc. ("Williamsburg"), Willow Recreation,
Inc. ("Willow"), and Wilson Sports, Inc. ("Wilson"), all being Virginia
corporations; Major League Bowling Association of Ocala, Inc. ("Ocala"), Major
League of Clearwater, Inc. ("Clearwater"), and Major League of Tampa East, Inc.
("Tampa East"), all being Florida corporations; Victory Recreation Centers, Inc.
("Victory"), a Georgia corporation; Major League Bowling Association of
Gastonia, Inc. ("Gastonia") and Major League Bowling Association of
Winston-Salem, Inc. ("Winston-Salem"), both being North Carolina corporations;
Major League Bowling Association of Spartanburg, Inc. ("Spartanburg") and Major
League of Columbia, Inc. ("Columbia"), both being South Carolina corporations;
and Major League Bowling & Recreation of
<PAGE> 29
Wheeling, Inc. ("Wheeling"), a West Virginia corporation; and AMF Bowling
Centers, Inc. ("AMF" or the "Surviving Corporation"), a Virginia corporation.
Azalea, Properties, Commonwealth, Fredericksburg, Goldsboro, Jackson Park,
Greenville, Petersburg, PFG, Raleigh Recreation, Raleigh Sports, Sunset,
Williamsburg, Willow, Wilson, Ocala, Clearwater, Tampa East, Victory, Gastonia,
Winston-Salem, Spartanburg, Columbia, and Wheeling are sometimes collectively
referred to herein as the "Merging Corporations." The Merging Corporations and
AMF are sometimes collectively referred to herein as the "Constituent
Corporations."
RECITALS OF THE PARTIES
A. The Constituent Corporations are each duly organized, validly
existing and in good standing under the laws of their respective states of
incorporation. AMF owns all of the issued and outstanding shares of capital
stock of the Merging Corporations. Each outstanding share of common stock of the
Constituent Corporations will, immediately before the Effective Date (as defined
in Section 1.5 hereof), be duly authorized and validly issued, fully paid and
nonassessable, and will be owned free and clear of all liens, charges, pledges,
security interests or other encumbrances.
B. The Constituent Corporations desire to combine the operations of the
Constituent Corporations into a single legal entity, thereby simplifying
corporate administration and, accordingly, deem the merger of each of the
Merging Corporations
-2-
<PAGE> 30
into AMF (the "Merger") advisable and in the best interests of the Constituent
Corporations.
NOW, THEREFORE, in order to set forth the terms and conditions of the
Merger, the mode of carrying the Merger into effect, the manner and basis of
converting or cancelling the outstanding common shares of the Merging
Corporations, and such other details and provisions of the Merger as are deemed
necessary or desirable, the parties hereto agree as follows:
ARTICLE ONE
THE MERGER
1.1 Merger of the Merging Corporations into AMF. In accordance with the
provisions of this Agreement and the laws of the states of Florida, Georgia,
North Carolina, South Carolina and West Virginia and of the Commonwealth of
Virginia, at the Effective Date, each of the Merging Corporations shall be
merged into AMF. After the Effective Date, AMF shall continue its corporate
existence as a Virginia corporation under the name AMF Bowling Centers, Inc.
At the Effective Date, the separate existence of each of the Merging
Corporations shall cease.
1.2 Effect of the Merger. (a) At any time after the Effective Date, (i)
the Surviving Corporation shall possess all the rights, privileges, powers and
franchises, of a public or private nature, and be subject to all the
restrictions, disabilities and duties of each of the Constituent Corporations;
(ii) the rights, privileges, powers and franchises of each of the Constituent
Corporations, and all property, real, personal and mixed, and all debts due to
each of the Constituent Corporations
-3-
<PAGE> 31
on whatever account, including all things in action or belonging to each of the
Constituent Corporations, shall be vested in the Surviving Corporation; (iii)
all property, rights and privileges, powers and franchises, and all and every
other interest shall be thereafter as effectually the property of the Surviving
Corporation as they were of each of the Constituent Corporations, and the title
to any real estate, if any, vested by deed or otherwise in any of the
Constituent Corporations, shall not revert or be in any way impaired by reason
of the Merger; (iv) all rights of creditors and all liens upon any property of
any of the Constituent Corporations shall be preserved unimpaired, and all
debts, liabilities and duties of each of the Constituent Corporations shall
thenceforth attach to the Surviving Corporation and may be enforced against it
to the same extent as if such debts, liabilities and duties had been incurred or
contracted by it; and (v) any action or proceeding, whether civil, criminal or
administrative, pending by or against any of the Constituent Corporations may be
prosecuted as if the Merger had not taken place, or the Surviving Corporation
may be substituted in such action or proceeding.
(b) From any time after the Effective Date and until further
amended in accordance with the Virginia Stock Corporation Act, the Articles of
Incorporation and Bylaws of AMF shall be as in effect at the Effective Date.
(c) The officers and directors of AMF in office immediately
before the Effective Date shall remain oficers and directors of the Surviving
Corporation after the Effective Date
-4-
<PAGE> 32
until their successors are duly elected or appointed and qualified in accordance
with the Bylaws and the Articles of Incorporation of the Surviving Corporation.
1.3 Further Assurances. If at any time after the Effective Date the
Surviving Corporation shall consider or be advised that any further deeds,
assignments or assurances in law or any other acts are necessary or desirable to
vest, perfect or confirm, of record or otherwise, in the Surviving Corporation
title to and possession of any property or right of any of the Merging
Corporations acquired or to be acquired by reason of, or as a result of, the
Merger, or otherwise to carry out the purposes of this Agreement, each of the
Merging Corporations and their proper officers and directors shall be deemed to
have granted to the Surviving Corporation an irrevocable power of attorney to
execute and deliver all such deeds, assignments and assurances in law and to do
all acts necessary or desirable to vest, perfect or confirm title to and
possession of such property or rights in the Surviving Corporation and otherwise
to carry out the purposes of this Agreement; and the proper officers and
directors of the Surviving Corporation are fully authorized in the name of each
of the Merging corporations or otherwise to take any and all such action.
1.4 Articles of Merger. In order to effect the Merger, the Constituent
Corporations shall (i) file properly executed Articles of Merger in the Office
of the Secretary of State of the State of Florida in accordance with the Florida
General Corporation Act and such Articles of Merger shall become effective in
accordance
-5-
<PAGE> 33
with the Florida General Corporation Act; (ii) file properly executed Articles
of Merger in the Office of the Secretary of State of the State of Georgia in
accordance with the Georgia Business Corporation Code and such Articles of
Merger shall become effective in accordance with the Georgia Business
Corporation Code; (iii) file properly executed Articles of Merger in the Office
of the Secretary of State of the State of North Carolina in accordance with the
North Carolina Business Corporation Act and such Articles of Merger shall become
effective in accordance with the North Carolina Business Corporation Act; (iv)
file properly executed Articles of Merger in the Office of the Secretary of
State of the State of South Carolina in accordance with the South Carolina
Business Corporation Act and such Articles of Merger shall become effective in
accordance with the South Carolina Business Corporation Act; (v) file properly
executed Articles of Merger in the Office of the Secretary of State of the State
of West Virginia in accordance with the West Virginia Corporation Act and such
Articles of Merger shall become effective in accordance with the West Virginia
Corporation Act; and (vi) file properly executed Articles of Merger with the
State Corporation Commission of the Commonwealth of Virginia in accordance
with the Virginia Stock Corporation Act and such Articles of Merger shall become
effective when the State Corporation Commission issues a Certificate of Merger
with respect to each Merger in accordance with the Virginia Stock Corporation
Act.
-6-
<PAGE> 34
1.5 Effective Time. Each Merger shall become effective on September 30,
1987 (the "Effective Date").
1.6 Qualification of the Surviving Corporation. The Surviving
Corporation desires to transact business as a foreign corporation in the States
of Florida, Georgia, North Carolina, South Carolina and West Virginia upon the
Merger becoming effective and has filed with the appropriate Florida, Georgia,
North Carolina, South Carolina and West Virginia authorities all applications to
qualify to do business as a foreign corporation in such states.
ARTICLE TWO
SECURITIES AFTER THE MERGER
2.1 Common Stock of the Merging Corporations. (a) The common shares of
the Merging Corporations issued and outstanding immediately before the Effective
Date and shown in Column A below, by virtue of the Merger, shall be cancelled
and retired.
<TABLE>
<CAPTION>
Corporation Column A
----------- --------
<S> <C>
Azalea 1
Properties 250
Commonwealth 1
Fredericksburg 100
Goldsboro 1
Jackson Park 400
Greenville 400
Petersburg 1
PFG 1
Raleigh Recreation 1
Raleigh Sports 1
Sunset 1
Williamsburg 250
Willow 500
Wilson 1
Ocala 1,000
Clearwater 1,000
Tampa East 500
Victory 900
Gastonia 10
</TABLE>
-7-
<PAGE> 35
<TABLE>
<S> <C>
Winston-Salem 10
Spartanburg 1,000
Columbia 10
Wheeling 10
</TABLE>
(b) Each common share of each Merging Corporation authorized
but not issued or, if any, held in the treasury of any of such corporations
immediately before the Effective Date shall, by virtue of each Merger and
without action on the part of any of the Merging Corporations, be cancelled and
retired and shall cease to exist, without any conversion thereof into the right
to receive consideration therefor.
ARTICLE THREE
AMENDMENT AND TERMINATION
3.1 This Agreement may not be amended except by an instrument in
writing signed and delivered on behalf of each of the Constituent Corporations.
3.2 Termination. This Agreement may be terminated and abandoned at any
time by action of the boards of directors of each of the Constituent
Corporations by an instrument in writing signed and delivered on behalf of each
of the Constituent Corporations.
IN WITNESS WHEREOF, this Plan and Agreement of Merger is made as of
September 15, 1987.
AMF BOWLING CENTERS, INC.
AZALEA RECREATION, INC.
BOWLING PROPERTIES, INC.
COMMONWEALTH LEASING COMPANY OF
RICHMOND, INC.
FREDERICKSBURG LANES, INC.
GOLDSBORO RECREATION, INC.
JACKSON PARK LANES, INC.
MAJOR LEAGUE OF GREENVILLE, INC.
PETERSBURG RECREATION, INC.
RALEIGH RECREATION, INC.
-8-
<PAGE> 36
RALEIGH SPORTS, INC.
SUNSET RECREATION, INC.
WILLIAMSBURG RECREATION, INC.
WILLOW RECREATION, INC.
WILSON SPORTS, INC.
MAJOR LEAGUE BOWLING ASSOCIATION
OF OCALA, INC.
MAJOR LEAGUE OF CLEARWATER, INC.
MAJOR LEAGUE OF TAMPA EAST, INC.
VICTORY RECREATION CENTERS, INC.
MAJOR LEAGUE BOWLING ASSOCIATION
OF GASTONIA, INC.
MAJOR LEAGUE BOWLING ASSOCIATION
OF WINSTON-SALEM, INC.
MAJOR LEAGUE BOWLING ASSOCIATION
OF SPARTANBURG, INC.
MAJOR LEAGUE OF COLUMBIA, INC.
MAJOR LEAGUE BOWLING & RECREATION
OF WHEELING, INC.
By:/s/Beverley W. Armstrong
------------------------------
Beverley W. Armstrong
President of each of the
above-named corporations
ATTEST:(WITNESS)
By:/s/H.D. Shepherd, Jr.
----------------------------------
H.D. Shepherd, Jr.
Secretary of each of the
above-named corporations
PFG, INC.
By:/s/E. Bryson Powell
--------------------------------
E. Bryson Powell
President
ATTEST:(WITNESS)
By:/s/William H. Goodwin, Jr.
----------------------------------
William H. Goodwin, Jr.
Secretary
-9-
<PAGE> 37
MLB CORPORATION
ARTICLES OF AMENDMENT TO THE
ARTICLES OF INCORPORATION
1. Name. The name of the corporation is MLB Corporation.
2. The Amendment. The amendment deletes paragraph A of the
Articles of Incorporation and substitutes in lieu thereof the following:
"A. Corporate Name The name of the Corporation is:
AMF Bowling Centers, Inc."
3. Board Action. The board of directors approved the amendment by
unanimous consent dated as of September 9, 1987.
4. Shareholder Action. The shareholders approved the amendment by
written consent dated as of September 9, 1987.
Dated: September 9, 1987
MLB CORPORATION
By:/s/Beverley W. Armstrong
---------------------------------
Beverley W. Armstrong, President
<PAGE> 38
ARTICLES OF AMENDMENT
OF THE ARTICLES OF INCORPORATION OF
GFP, INC.
1. Name. The name of the corporation of GFP, Inc.
2. Amendment. The proposed amendment is the deletion of Paragraph
A of the Articles of Incorporation of the corporation in its entirety and the
substitution therefor of the following Paragraph A:
"A. Corporate Name
The name of the Corporation is:
MLB Corporation"
3. Action by Directors. At a meeting held on November 12, 1986,
all of the directors of the corporation found that the proposed amendment was
in the best interest of the corporation and directed that it be submitted to the
stockholders of the corporation with the request that they approve and adopt the
same by signing a consent in writing.
4. Action by Stockholders. On November 13, 1986, following the
action of the directors, the stockholders of the corporation, by signing a
consent in writing that set forth the proposed amendment, unanimously approved
and adopted the same. The number of shares outstanding and entitled to vote on
the proposed was 10,000.
5. Stated Capital. The proposed amendment does not effect a
change in the amount of state capital of the corporation.
<PAGE> 39
IN WITNESS WHEREOF, the undersigned President and Secretary of GFP,
Inc. have executed these articles of amendment this 13th day of November, 1986.
GFP, INC.
By /s/E. Bryson Powell
------------------------------
E. Bryson Powell
Vice President
<PAGE> 40
ARTICLES OF MERGER
MLB CORPORATION WITH AND
INTO
GFP, INC.
1. Attached hereto and incorporated herein by the reference is
the Plan of Merger of MLB Corporation ("MLB") into GFP, Inc. ("GFP") (the "Plan
of Merger") by which MLB, a Virginia corporation, shall be merged with and into
GFP, a Virginia corporation. GFP owns all of the issued and outstanding shares
of capital stock of MLB.
2. On November 12, 1986, the Board of Directors of GFP and the
Board of Directors of MLB approved the Plan of Merger at a joint meeting of such
Boards of Directors by adopting a resolution approving the Plan of Merger.
3. Pursuant to Section 13.1-719 of the Code of Virginia of 1950,
as amended, the shareholders of MLB and GFP are not required to approve the
merger.
IN WITNESS WHEREOF, the undersigned have executed these Articles of
Merger as of August 25, 1986.
MLB CORPORATION
By /s/James B. Farinholt, Jr.
-----------------------------
James B. Farinholt, Jr.
Vice President
GFP, INC.
By /s/E. Bryson Powell
-----------------------------
E. Bryson Powell
Vice President
<PAGE> 41
PLAN OF MERGER
MLB CORPORATION WITH AND
INTO
GFP, INC.
This is a Plan of Merger of MLB Corporation, a Virginia corporation
("MLB"), with and into GFP, Inc., a Virginia corporation ("GFP").
RECITAL
A. GFP is a corporation organized and existing under the laws of the
Commonwealth of Virginia. Its authorized capital stock consists of 15,000 shares
of common stock of which 10,000 shares have been issued and are outstanding. MLB
is a corporation organized and existing under the laws of the Commonwealth of
Virginia. Its authorized capital stock consists of 1,000,000 shares of common
stock of which 104,715 share have been issued and is outstanding. GFP owns all
of the issued and outstanding capital stock of MLB.
B. GFP and MLB desire that their respective businesses and properties
be combined to form a single enterprise and, to that end, that MLB be merged
with and into GFP upon the terms and conditions hereinafter set forth.
ARTICLE I
MLB shall be merged with and into GFP (herein sometimes called the
"Surviving Corporation") in accordance with the applicable provisions of the
Virginia Stock Corporation Act upon the date that the State Corporation
Commission of Virginia issues a Certificate of Merger (the "Effective Date").
<PAGE> 42
ARTICLE II
On the Effective Date, all of the outstanding shares of the capital
stock of MLB shall be cancelled, the stock transfer books of MLB shall be closed
and no further transfer of common stock of MLB shall be permitted. The shares of
capital stock of GFP shall not be affected by this Plan of Merger and shall be
the common stock of the Surviving Corporation.
ARTICLE III
After the Effective Date, all of the certificates theretofore
representing the common stock of MLB shall be surrendered to Daniel M. McCormack
of Richmond, Virginia, as exchange agent and shall, upon such surrender, be
cancelled in accordance with the provisions of Article II above.
ARTICLE IV
The Articles of Incorporation of the Surviving Corporation shall be the
Articles of Incorporation of GFP existing on the Effective Date and Bylaws,
Board of Directors and officers of GFP shall be the Bylaws, Board of Directors
and officers of the Surviving Corporation.
ARTICLE V
Following the approval of this Plan of Merger by the respective Boards
of Directors of GFP and MLB, Articles of Merger, duly executed by the proper
officers of GFP and MLB, shall be filed with the State Corporation Commission of
Virginia.
ARTICLE VI
Upon the Effective Date, the merger shall have the effect provided by
Section 13.1-721 of the Code of Virginia of 1950, as amended.
Dated: November 12, 1986
<PAGE> 43
ARTICLES OF INCORPORATION
OF
GFP, INC.
I hereby form a stock corporation under the provisions of Chapter 1 of
Title 13.1 of the Code of Virginia, and to that end, set forth the following:
A. Corporate Name
The name of the Corporation is: GFP, Inc.
B. Purposes
The Corporation shall have all of the corporate powers of any
character not prohibited by law or required to be stated in the Articles of
Incorporation.
C. Authorized Stock
The aggregate number of shares which the Corporation shall
have authority to issue and the par value per share are as follows:
<TABLE>
<CAPTION>
CLASS NUMBER PAR VALUE PER
AND SERIES OF SHARES SHARE
- ---------- --------- -------------
<S> <C> <C>
Common 15,000 $1.00
</TABLE>
Each share of Common Stock shall have full voting rights.
D. Registered Office and Registered Agent
The address of the initial registered office is 629 East Main
Street, Richmond, Virginia 23219. The name of the city in which the initial
registered office is located is the City of Richmond. The name of its initial
registered agent is Daniel M. McCormack who is a resident of the State of
Virginia, a member of the Virginia State Bar, and whose business office is the
same as the registered office of the Corporation.
E. Directors
The number of Directors constituting the initial Board of
Directors is three and the names and addresses of the persons who are to serve
as the initial Directors are:
<PAGE> 44
Name Address
- ---- -------
William F. Goodwin, Jr. 707 East Main Street
Richmond, Virginia 23219
E. Bryson Powell 707 East Main Street
Richmond, Virginia 23219
James B. Farinholt 9 South 12th Street
Richmond, Virginia 23219
DATED:
/s/ Daniel M. McCormack
---------------------------------------
Incorporator
<PAGE> 1
EXHIBIT 3.14
RESTATED AND AMENDED BY-LAWS
OF
AMF BOWLING CENTERS, INC.
ARTICLE I
Meetings of Shareholders
1.1 Places of Meetings. All meetings of the shareholders shall be held
at such place, either inside or outside the State of Virginia, as from time to
time may be fixed by the Board of Directors.
1.2 Annual Meetings. The annual meeting of the shareholders, for the
election of Directors and transaction of such other business as may come
before the meetings, shall be held in each year on the second Tuesday in
April, at 10 a.m., if that day is not a legal holiday in the Commonwealth of
Virginia. If that day is a legal holiday, the annual meeting shall be held on
the next succeeding day not such a legal holiday.
1.3 Special Meetings. A special meeting of the shareholders for any
purpose or purposes may be called at any time by the Chairman of the Board,
the President, or by a majority of the Board of Directors. At a special
meeting no business shall be transacted and no corporate action shall be taken
other than that stated in the notice of the meeting.
1.4 Notice of Meetings. Written or printed notice stating the
place, day and hour of every meeting of the shareholders and, in case of a
special meeting, the purpose or purposes for which
<PAGE> 2
the meeting is called, shall be mailed not less than ten nor more than sixty
days before the date of the meeting to each shareholder of record entitled to
vote at such meeting, at his address which appears in the share transfer books
of the Corporation. Such further notice shall be given as may be required by
law, but meetings may be held without notice if all the shareholders entitled
to vote at the meeting are present in person or by proxy or if notice is
waived in writing by those not present, either before or after the meeting.
1.5 Quorum. Any number of shareholders together holding at least a
majority of the outstanding shares of capital stock entitled to vote with
respect to the business to be transacted, who shall be present in person or
represented by proxy at any meeting duly called, shall constitute a quorum for
the transaction of business. If less than a quorum shall be in attendance at
the time for which a meeting shall have been called, the meeting may be
adjourned from time to time by a majority of the shareholders present or
represented by proxy without notice other than by announcement at the meeting.
1.6 Voting. At any meeting of the shareholders each shareholder of a
class entitled to vote on any matter coming before the meeting shall, as to
such matter, have one vote, in person or by proxy, for each share of capital
stock of such class standing in his name on the books of the Corporation on
the date, not more than seventy days prior to such meeting, fixed by the Board
of Directors as the record date for the purpose of determining shareholders
entitled to vote. Every proxy shall be
<PAGE> 3
in writing, dated and signed by the shareholder entitled to vote or his duly
authorized attorney-in-fact.
1.7 Inspectors. An appropriate number of inspectors for any meeting of
shareholders may be appointed by the Chairman of such meeting. Inspectors so
appointed will open and close the polls, will receive and take charge of
proxies and ballots, and will decide all questions as to the qualifications of
voters, validity of proxies and ballots, and the number of votes properly
cast.
ARTICLE II
Directors
2.1 General Powers. The property, affairs and business of the
Corporation shall be managed by the Board of Directors, and, except as
otherwise expressly provided by law, the Articles of Incorporation or these
By-laws, all of the powers of the Corporation shall be vested in such Board.
2.2 Number of Directors. The number of Directors constituting the Board
of Directors shall be at least one and not more than three. The number of
Directors may be increased or decreased from time to time by amendment to
these By-laws, but no decrease shall have the effect of shortening the term of
an incumbent Director.
2.3 Election and Removal of Directors; Quorum.
(a) Directors shall be elected at each annual meeting of shareholders to
succeed those Directors whose terms have expired and to fill any vacancies
then existing.
(b) Directors shall hold their offices for terms of one
<PAGE> 4
one year and until their successors are elected. Any Director may be removed
from office at a meeting called expressly for that purpose by the vote of
shareholders holding a majority of the shares entitled to vote at an election
of Directors.
(c) Any vacancy occurring in the Board of Directors may be filled by the
affirmative vote of the majority of the remaining Directors though less than a
quorum of the Board, and the term of office of any Director so elected shall
expire at the next shareholders' meeting at which Directors are elected.
(d) A majority of the number of Directors elected and serving at the
time of any meeting shall constitute a quorum for the transaction of business.
The act of a majority of Directors present at a meeting at which a quorum is
present shall be the act of the Board of Directors. Less than a quorum may
adjourn any meeting.
2.4 Meetings of Directors. An annual meeting of the Board of Directors
shall be held as soon as practicable after the adjournment of the annual
meeting of shareholders at such place as the Board may designate. Other
meetings of the Board of Directors shall be held at places inside or outside
the State of Virginia and at times fixed by resolution of the Board, or upon
call of the Chairman of the Board, the President or any two of the Directors.
The Secretary or officer performing the Secretary's duties shall give not less
than twenty-four hours' notice either in person or by letter, telegraph or
telephone of all meetings of the Board of Directors, provided that notice need
not be given of the annual meeting or of regular meetings held at
<PAGE> 5
times and places fixed by resolution of the Board. Meetings may be held at
any time without notice if all of the Directors are present, or if those not
present waive notice in writing either before or after the meeting. The
notice of meetings of the Board need not state the purpose of the meeting.
2.5 Duties. The Board of Directors shall designate depositories for the
corporation and shall designate and authorize the officers or other persons to
sign checks and bank drafts.
2.6 Compensation. By resolution of the Board, Directors may be allowed
a fee and expenses for attendance at all meetings, but nothing herein shall
preclude Directors from serving the Corporation in other capacities and
receiving compensation for such other services.
ARTICLE III
Committees
3.1 Executive Committee. The Board of Directors, by resolution adopted
by a majority of the number of Directors fixed by these By-laws, may elect an
Executive Committee which shall consist of not less than two Directors,
including the President. When the Board of Directors is not in session, the
Executive Committee shall have all power vested in the Board of Directors by
law, by the Articles of Incorporation, or by these By-laws, provided that the
Executive Committee shall not have power to (i) approve or recommend to
shareholders action that the Virginia Stock Corporation Act requires to be
approved by shareholders; (ii) fill vacancies on the Board or on any of its
committees;
<PAGE> 6
(iii) amend the Articles of Incorporation pursuant to Section 13.1-706 of the
Virginia Code; (iv) adopt, amend, or repeal the By-laws; (v) approve a plan of
merger or share exchange not requiring shareholder approval; (vi) authorize or
approve a distribution, except according to a general formula or method
prescribed by the Board of Directors; or (vii) authorize or approve the
issuance or sale or contract for sale of shares, or determine the designation
and relative rights, preferences, and limitations of a class or series of
shares, other than within limits specifically prescribed by the Board of
Directors. The Executive Committee shall report at the next regular or
special meeting of the Board of Directors all action which the Executive
Committee may have taken on behalf of the Board since the last regular or
special meeting of the Board of Directors.
3.2 Finance Committee. The Board of Directors, by resolution adopted by
a majority of the number of Directors fixed by these By-laws, may elect a
Finance Committee which shall consist of not less than two Directors. The
Finance Committee shall consider and report to the Board with respect to plans
for corporate expansion, capital structure and long-range financial
requirements. The Committee shall also consider and report to the Board with
respect to such other matters relating to the financial affairs of the
Corporation as may be requested by the Board or the appropriate officers of
the Corporation. The Committee shall report periodically to the Board of
Directors on all action which it may have taken.
<PAGE> 7
3.3 Other Committees. The Board of Directors, by resolution adopted by
a majority of the number of Directors fixed by these By-laws, may establish
such other standing or special committees of the Board as it may deem
advisable, consisting of not less than two Directors; and the members, terms
and authority of such committees shall be as set forth in the resolutions
establishing the same.
3.4 Meetings. Regular and special meetings of any Committee established
pursuant to this Article may be called and held subject to the same
requirements with respect to time, place and notice as are specified in these
By-laws for regular and special meetings of the Board of Directors.
3.5 Quorum and Manner of Acting. A majority of the members of any
Committee serving at the time of any meeting thereof shall constitute a quorum
for the transaction of business at such meeting. The action of a majority of
those members present at a Committee meeting at which a quorum is present
shall constitute the act of the Committee.
3.6 Terms of Office. Members of any Committee shall be elected as above
provided and shall hold office until their successors are elected by the Board
of Directors or until such Committee is dissolved by the Board of Directors.
3.7 Resignation and Removal. Any member of a Committee may resign at
any time by giving written notice of his intention to do so to the President
or the Secretary of the Corporation, or may be removed, with or without cause,
at any time by such vote of the Board of Directors as would suffice for his
election.
<PAGE> 8
3.8 Vacancies. Any vacancy occurring in a Committee resulting from any
cause whatever may be filled by a majority of the number of Directors fixed by
these By-laws.
ARTICLE IV
Officers
4.1 Election of Officers; Terms. The Officers of the Corporation shall
consist of a President, a Secretary and a Treasurer. Other officers,
including a Chairman of the Board, one or more Vice Presidents (whose
seniority and titles, including Executive Vice Presidents and Senior Vice
Presidents, may be specified by the Board of Directors), and assistant and
subordinate officers, may from time to time be elected by the Board of
Directors. All officers shall hold office until the next annual meeting of
the Board of Directors and until their successors are elected. The President
shall be chosen from among the Directors. Any two officers may be combined in
the same person as the Board of Directors may determine.
4.2 Removal of Officers; Vacancies. Any officer of the Corporation may
be removed summarily with or without cause, at any time, by the Board of
Directors provided however that the removal of the Chairman of the Board shall
require the vote of two-thirds of the Directors. Vacancies may be filled by
the Board of Directors.
4.3 Duties. The officers of the Corporation shall have such duties as
generally pertain to their offices, respectively, as well as such powers and
duties as are prescribed by law or are hereinafter provided or as from time to
time shall be conferred
<PAGE> 9
by the Board of Directors. The Board of Directors may require any officer to
give such bond for the faithful performance of his duties as the Board may see
fit.
4.4 Duties of the President. The President shall be the chief executive
officer of the Corporation and shall be primarily responsible for the
implementation of policies of the Board of Directors. He shall have authority
over the general management and direction of the business and operations of
the Corporation and its divisions, if any, subject only to the ultimate
authority of the Board of Directors. He shall be a Director, and, except as
otherwise provided in these By-laws or in the resolutions establishing such
committees, he shall be ex officio a member of all Committees of the Board.
In the absence of the Chairman of the Board or if there is no such officer,
the President shall preside at all corporate meetings. He may sign and
execute in the name of the Corporation share certificates, deeds, mortgages,
bonds, contracts or other instruments except in cases where the signing and
the execution thereof shall be expressly delegated by the Board of Directors
or by these By-laws to some other officer or agent of the Corporation or shall
be required by law otherwise to be signed or executed. In addition, he shall
perform all duties incident to the office of the President and such other
duties as from time to time may be assigned to him by the Board of Directors.
4.5 Duties of the Vice-Presidents. Each Vice-President, if any, shall
have such powers and duties as may from time to time be assigned to him by the
President or the Board of
<PAGE> 10
Directors. Any Vice-President may sign and execute in the name of the
Corporation deeds, mortgages, bonds, contracts or other instruments authorized
by the Board of Directors, except where the signing and execution of such
documents shall be expressly delegated by the Board of Directors or the
President to some other officer or agent of the Corporation or shall be
required by law or otherwise to be signed or executed.
4.6 Duties of the Treasurer. The Treasurer shall have charge of and be
responsible for all funds, securities, receipts and disbursements of the
Corporation, and shall deposit all monies and securities of the Corporation in
such banks and depositories as shall be designated by the Board of Directors.
He shall be responsible (i) for maintaining adequate financial accounts and
records in accordance with generally accepted accounting practices; (ii) for
the preparation of appropriate operating budgets and financial statements;
(iii) for the preparation and filing of all tax returns required by law; and
(iv) for the performance of all duties incident to the office of Treasurer and
such other duties as from time to time may be assigned to him by the Board of
Directors, the Finance Committee or the Managing Director/President. The
treasurer may sign and execute in the name of the Corporation share
certificates, deeds, mortgages, bonds, contracts or other instruments, except
in cases where the signing and the execution thereof shall be expressly
delegated by the Board of Directors or by these By-laws to some other officer
or agent of the Corporation or shall be required by law or otherwise to be
signed or executed.
<PAGE> 11
4.7 Duties of the Secretary. The Secretary shall act as secretary of
all meetings of the Board of Directors and shareholders of the Corporation.
When requested, he shall also act as secretary of the meetings of the
committees of the Board. He shall keep and preserve the minutes of all such
meetings in permanent books. He shall see that all notices required to be
given by the Corporation are duly given and served; shall have custody of the
seal of the Corporation and shall affix the seal or cause it to be affixed to
all share certificates of the Corporation and to all documents the execution
of which on behalf of the Corporation under its corporate seal is duly
authorized in accordance with law or the provisions of these By-laws; shall
have custody of all deeds, leases, contracts and other important corporate
documents; shall have charge of the books, records and papers of the
Corporation relating to its organization and management as a Corporation;
shall see that all reports, statements and other documents required by law
(except tax returns) are properly 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 of Directors or the President.
4.8 Compensation. The Board of Directors shall have authority to fix
the compensation of all officers of the Corporation.
ARTICLE V
Capital Stock
5.1 Certificates. The shares of capital stock of the Corporation shall
be evidenced by certificates in forms
<PAGE> 12
prescribed by the Board of Directors and executed in any manner permitted by
law and stating thereon the information required by law. Transfer agents
and/or registrars for one or more classes of shares of the Corporation may be
appointed by the Board of Directors and may be required to countersign
certificates representing shares of such class or classes. If any officer
whose signature or facsimile thereof shall have been used on a share
certificate shall for any reason cease to be an officer of the Corporation and
such certificate shall not then have been delivered by the Corporation, the
Board of Directors may nevertheless adopt such certificate and it may then be
issued and delivered as though such person had not ceased to be an officer of
the Corporation.
5.2 Lost, Destroyed and Mutilated Certificates. Holders of the shares
of the Corporation shall immediately notify the Corporation of any loss,
destruction or mutilation of the certificate therefor, and the Board of
Directors may in its discretion cause one or more new certificates for the
same number of shares in the aggregate to be issued to such shareholder upon
the surrender of the mutilated certificate or upon satisfactory proof of such
loss or destruction, and the deposit of a bond in such form and amount and
with such surety as the Board of Directors may require.
5.3 Transfer of Shares. The shares of the Corporation shall be
transferable or assignable only on the books of the Corporation by the holder
in person or by attorney on surrender of the certificate for such shares duly
endorsed and, if sought
<PAGE> 13
to be transferred by attorney, accompanied by a written power of attorney to
have the same transferred on the books of the Corporation. The Corporation
will recognize, however, the exclusive right of the person registered on its
books as the owner of shares to receive dividends and to vote as such owner.
5.4 Fixing Record Date. For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, or entitled to receive payment of any dividend, or in
order to make a determination of shareholders for any other proper purpose,
the Board of Directors may fix in advance a date as the record date for any
such determination of shareholders, such date in any case to be not more than
seventy days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If no record date is fixed for
the determination of shareholders entitled to notice of or to vote at a
meeting of shareholders, or of shareholders entitled to receive payment of a
dividend, the date on which notices of the meeting are mailed or the date on
which the resolution of the Board of Directors declaring such dividend is
adopted, as the case may be, shall be the record date for such determination
of shareholders. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this section, such
determination shall apply to any adjournment thereof unless the Board of
Directors fixes a new record date, which it shall do if the meeting is
adjourned to a date more than 120 days after the date fixed for the original
meeting.
<PAGE> 14
ARTICLE VI
Miscellaneous Provisions
6.1 Seal. The seal of the Corporation shall consist of a flat-faced
circular die, of which there may be any number of counterparts, on which there
shall be engraved the word "Seal".
6.2 Fiscal Year. The fiscal year of the Corporation shall end on such
date and shall consist of such accounting periods as may be fixed by the Board
of Directors.
6.3 Checks, Notes and Drafts. Checks, notes, drafts and other orders
for the payment of money shall be signed by such persons as the Board of
Directors from time to time may authorize. When the Board of Directors so
authorizes, however, the signature of any such person may be a facsimile.
6.4 Amendment of By-Laws. Unless proscribed by the Articles of
Incorporation, these By-laws may be amended or altered at any meeting of the
Board of Directors by affirmative vote of a majority of the number of
Directors fixed by these By-laws. The shareholders entitled to vote in respect
of the election of Directors, however, shall have the power to rescind, amend,
alter or repeal any By-laws and to enact By-laws which, if expressly so
provided, may not be amended, altered or repealed by the Board of Directors.
6.5 Voting of Shares Held. Unless otherwise provided by resolution of
the Board of Directors or of the Executive Committee, if any, the President
may from time to time appoint an attorney or attorneys or agent or agents of
the Corporation, in the name and on behalf of the Corporation, to cast the
vote which
<PAGE> 15
the Corporation may be entitled to cast as a shareholder or otherwise in any
other corporation, any of whose securities may be held by the Corporation, at
meetings of the holders of the shares or other securities of such other
corporation, or to consent in writing to any action by any such other
corporation; and the President shall instruct the person or persons so
appointed as to the manner of casting such votes or giving such consent and
may execute or cause to be executed on behalf of the Corporation, and under
its corporate seal or otherwise, such written proxies, consents, waivers or
other instruments as may be necessary or proper in the premises. In lieu of
such appointment the President may himself attend any meetings of the holders
of shares or other securities of any such other corporation and there vote or
exercise any or all power of the Corporation as the holder of such shares or
other securities of such other corporation.
ARTICLE VII
Emergency By-laws
The Emergency By-laws provided in this Article VII shall be operative
during any emergency, notwithstanding any different provision in the preceding
Articles of these By-laws or in the Articles of Incorporation of the
Corporation or in the Virginia Stock Corporation Act (other than those
provisions relating to emergency by-laws). An emergency exists if a quorum of
the Corporation's Board of Directors cannot readily be assembled because of
some catastrophic event. To the extent not inconsistent with these Emergency
By-laws, the By-laws provided
<PAGE> 16
in the preceding Articles shall remain in effect during such emergency and
upon the termination of such emergency the Emergency By-laws shall cease to be
operative unless and until another such emergency shall occur.
During any such emergency:
(a) Any meeting of the Board of Directors may be called by any officer
of the Corporation or by any Director. The notice thereof shall specify the
time and place of the meeting. To the extent feasible, notice shall be given
in accord with Section 2.4 above, but notice may be given only to such of the
Directors as it may be feasible to reach at the time, by such means as may be
feasible at the time, including publication or radio, and at a time less than
twenty-four hours before the meeting if deemed necessary by the person giving
notice. Notice shall be similarly given, to the extent feasible, to the other
persons referred to in (b) below.
(b) At any meeting of the Board of Directors, a quorum shall consist of
a majority of the number of Directors fixed at the time by Article II of the
By-laws. If the Directors present at any particular meeting shall be fewer
than the number required for such quorum, other persons present as referred to
below, to the number necessary to make up such quorum, shall be deemed
Directors for such particular meeting as determined by the following
provisions and in the following order of priority:
(i) Vice-Presidents not already serving as Directors, in the
order of their seniority of first election to such offices, or if two or more
shall have been first elected to such
<PAGE> 17
offices on the same day, in the order of their seniority in age;
(ii) All other officers of the Corporation in the order of their
seniority of first election to such offices, or if two or more shall have been
first elected to such offices on the same day, in the order of their seniority
in age; and
(iii) Any other persons that are designated on a list that shall
have been approved by the Board of Directors before the emergency, such
persons to be taken in such order of priority and subject to such conditions
as may be provided in the resolution approving the list.
(c) The Board of Directors, during, as well as before, any such
emergency, may provide, and from time to time modify, lines of succession in
the event that during such an emergency any or all officers or agents of the
Corporation shall for any reason be rendered incapable of discharging their
duties.
(d) The Board of Directors, during, as well as before, any such
emergency, may, effective in the emergency, change the principal office, or
designate several alternative offices, or authorize the officers so to do.
No officer, Director or employee shall be liable for action taken in good
faith in accordance with these Emergency By-laws.
These Emergency By-laws shall be subject to repeal or change by further
action of the Board of Directors or by action of the shareholders, except that
no such repeal or change shall modify the provisions of the next preceding
paragraph with regard to action or inaction prior to the time of such repeal
or change. Any such amendment of these Emergency By-laws may make any
<PAGE> 18
further or different provision that may be practical and necessary for the
circumstances of the emergency.
<PAGE> 1
EXHIBIT 3.15
STATE OF SOUTH CAROLINA
SECRETARY OF STATE
ARTICLES OF INCORPORATION
OF
BUSH RIVER CORPORATION
For Use By (File This Form in This Space For Use By
The Secretary of State Duplicate Originals) The Secretary of State
File No. D45769
------
Fee Paid $45.00
------
R.N. 6725
-------
Date 8-29-80
-------
(Sect. 12-14.3 of 1962 Code)
1. The name of the proposed corporation is Bush River Corporation.
------------------------------
2. The initial registered office of the corporation is
1733 Bush River Road
------------------------------
Street and Number
located in the city of Columbia , county of
------------------------------------
Lexington and the State of South Carolina and the
------------------------------
name of its initial registered agent at such address is
J.C. Williamson.
----------------------------------------------------------------------
3. The period of duration of the corporation shall be perpetual.
4. The corporation is authorized to issue shares of stock as follows:
<TABLE>
<CAPTION>
Class of Shares Authorized No. of each Class Par Value
--------------- ---------------------------- ---------
<S> <C> <C>
Common 100,000 1.00
- ---------------------- ---------------------------- ---------
- ---------------------- ---------------------------- ---------
- ---------------------- ---------------------------- ---------
- ---------------------- ---------------------------- ---------
- ---------------------- ---------------------------- ---------
- ---------------------- ---------------------------- ---------
</TABLE>
If shares are divided into two or more classes or if any class of
shares is divided into series within a class, the relative rights, preferences,
and limitations of the shares of each class, and of each series within a class,
are as follows:
5. Total authorized capital stock $100,000.00.
----------------------------
6. It is represented that the corporation will not begin business until
there has been paid into the corporation the minimum consideration for
the issue of shares, which is $1,000.00 of which at least $500.00 is in
cash.
7. The number of directors constituting the initial board of directors of
the corporation is 1, and the names and addresses of the persons who
are to serve as directors until the first annual meeting of
shareholders or until their successors be elected and qualify are:
William S. Nelson, II 1310 Lady Street, Columbia, SC 29201
----------------------- ------------------------------------
Name Address
<PAGE> 2
8. The general nature of the business for which the corporation is
organized is (it is not necessary to set forth in the purposes powers
enumerated in Section 2.2) (12-12.2 Supplemental Code 1962).
To own and operate a snack bar and lounge located at or in the Columbia Bowling
Center at 1733 Bush River Road near Columbia, South Carolina, or at any other
location and to sell any and all types of food and drink including alcoholic
beverages of all types and nature. To engage in such other types and kinds of
business as the Board of Directors of the corporation may from time to time deem
advisable; and, to do any and all other such things necessary and incidental in
order to accomplish the foregoing purposes.
9. Provisions which the incorporators elect to include in the articles of
incorporation are as follows:
None
10. The name and address of each incorporator is:
<TABLE>
<CAPTION>
Name Street & Box No. City County State
<S> <C> <C> <C> <C>
William S. Nelson, II 1310 Lady Street Columbia Richland South Carolina
P.O. Box 11070 29201
Columbia, SC 29211
</TABLE>
Date August 28, 1980 /s/ William S. Nelson, II
------------------------ ---------------------------
(Signature of Incorporator)
---------------------------
William S. Nelson, II
---------------------------
(Type or Print Name)
<PAGE> 3
STATE OF SOUTH CAROLINA )
ss:
COUNTY OF RICHLAND )
The undersigned William S. Nelson, II do hereby certify that they are
the incorporators of Bush River Corporation and are authorized to execute this
verification; that each of the undersigned for himself does hereby further
certify that he has read the foregoing document, understands the meaning and
purport of the statements therein contained and the same are true to the best of
his information and belief.
/s/ William S. Nelson, II
----------------------------
(Signature of Incorporator)
(Each Incorporator Must Sign)
CERTIFICATE OF ATTORNEY
11. I, Ralston B. Vanzant, II, an attorney licensed to practice in the
State of South Carolina, certify that the corporation, to whose
articles of incorporation this certificate is attached, has complied
with the requirements of chapter 4 of the South Carolina Business
Corporation Act of 1962, relating to the organization of corporations,
and that in my opinion, the corporation is organized for a lawful
purpose.
Date August 28, 1980 /s/ Ralston B. Vanzant, II
------------------------------
(Signature)
Ralston B. Vanzant, II
------------------------------
(Type or Print Name)
Address Post Office Box 11070
------------------------------
Columbia, South Carolina 29211
------------------------------
SCHEDULE OF FEES
(Payable at time of filing Articles of With Secretary of State)
Fee for filing Articles $ 5.00
In addition to the above, $.40 for each,
$1,000.00 of the aggregate value of shares
which the Corporation is authorized to
issue, but in no case less than 40.00
nor more than 1,000.00
NOTE: THIS FORM MUST BE COMPLETED IN ITS ENTIRETY BEFORE IT WILL BE ACCEPTED
FOR FILING.
<PAGE> 1
EXHIBIT 3.16
AMENDED AND RESTATED
BY-LAWS
OF
BUSH RIVER CORPORATION
ARTICLE I
Meetings of Shareholders
1.1 Places of Meetings. All meetings of the shareholders shall be held
at such place, either inside or outside the State of Virginia, as from time to
time may be fixed by the Board of Directors.
1.2 Annual Meetings. The annual meeting of the shareholders, for the
election of Directors and transaction of such other business as may come
before the meetings, shall be held in each year on the second Tuesday in
April, at 10 a.m., if that day is not a legal holiday in the Commonwealth of
Virginia. If that day is a legal holiday, the annual meeting shall be held on
the next succeeding day not such a legal holiday.
1.3 Special Meetings. A special meeting of the shareholders for any
purpose or purposes may be called at any time by the Chairman of the Board,
the President, or by a majority of the Board of Directors. At a special
meeting no business shall be transacted and no corporate action shall be taken
other than that stated in the notice of the meeting.
1.4 Notice of Meetings. Written or printed notice stating the place,
day and hour of every meeting of the shareholders and, in case of a special
meeting, the purpose or purposes for which the meeting is called, shall be
mailed not less than ten nor more than sixty days before the date
<PAGE> 2
of the meeting to each shareholder of record entitled to vote at such meeting,
at his address which appears in the share transfer books of the Corporation.
Such further notice shall be given as may be required by law, but meetings may
be held without notice if all the shareholders entitled to vote at the meeting
are present in person or by proxy or if notice is waived in writing by those
not present, either before or after the meeting.
1.5 Quorum. Any number of shareholders together holding at least a
majority of the outstanding shares of capital stock entitled to vote with
respect to the business to be transacted, who shall be present in person or
represented by proxy at any meeting duly called, shall constitute a quorum for
the transaction of business. If less than a quorum shall be in attendance at
the time for which a meeting shall have been called, the meeting may be
adjourned from time to time by a majority of the shareholders present or
represented by proxy without notice other than by announcement at the meeting.
1.6 Voting. At any meeting of the shareholders each shareholder of a
class entitled to vote on any matter coming before the meeting shall, as to
such matter, have one vote, in person or by proxy, for each share of capital
stock of such class standing in his name on the books of the Corporation on
the date, not more than seventy days prior to such meeting, fixed by the Board
of Directors as the record date for the purpose of determining shareholders
entitled to vote. Every proxy shall be in writing, dated and signed by the
shareholder entitled to vote or his duly authorized attorney-in-fact.
1.7 Inspectors. An appropriate number of inspectors for any meeting
of shareholders may be appointed by the Chairman of such meeting. Inspectors
so appointed will open and close the polls, will receive and take charge of
proxies and ballots, and will decide all questions as to the
2
<PAGE> 3
qualifications of voters, validity of proxies and ballots, and the number of
votes properly cast.
ARTICLE II
Directors
2.1 General Powers. The property, affairs and business of the
Corporation shall be managed by the Board of Directors, and, except as
otherwise expressly provided by law, the Articles of Incorporation or these
By-laws, all of the powers of the Corporation shall be vested in such Board.
2.2 Number of Directors. The number of Directors constituting the
Board of Directors shall be at least one and not more than three. The number
of Directors may be increased or decreased from time to time by amendment to
these By-laws, but no decrease shall have the effect of shortening the term of
an incumbent Director.
2.3 Election and Removal of Directors; Quorum.
(a) Directors shall be elected at each annual meeting of
shareholders to succeed those Directors whose terms have expired and to fill
any vacancies then existing.
(b) Directors shall hold their offices for terms of one year and
until their successors are elected. Any Director may be removed from office
at a meeting called expressly for that purpose by the vote of shareholders
holding a majority of the shares entitled to vote at an election of Directors.
(c) Any vacancy occurring in the Board of Directors may be filled
by the affirmative vote of the majority of the remaining Directors though less
than a quorum of the Board, and the term of office of any Director so elected
shall expire at the next shareholders' meeting at which Directors are elected.
(d) A majority of the number of Directors elected and serving at
the time of any
3
<PAGE> 4
meeting shall constitute a quorum for the transaction of business. The act of
a majority of Directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors. Less than a quorum may adjourn
any meeting.
2.4 Meetings of Directors. An annual meeting of the Board of Directors
shall be held as soon as practicable after the adjournment of the annual
meeting of shareholders at such place as the Board may designate. Other
meetings of the Board of Directors shall be held at places inside or outside
the State of Virginia and at times fixed by resolution of the Board, or upon
call of the Chairman of the Board, the President or any two of the Directors.
The Secretary or officer performing the Secretary's duties shall give not less
than twenty-four hours' notice either in person or by letter, telegraph or
telephone of all meetings of the Board of Directors, provided that notice need
not be given of the annual meeting or of regular meetings held at times and
places fixed by resolution of the Board. Meetings may be held at any time
without notice if all of the Directors are present, or if those not present
waive notice in writing either before or after the meeting. The notice of
meetings of the Board need not state the purpose of the meeting.
2.5 Duties. The Board of Directors shall designate depositories for
the corporation and shall designate and authorize the officers or other
persons to sign checks and bank drafts.
2.6 Compensation. By resolution of the Board, Directors may be allowed
a fee and expenses for attendance at all meetings, but nothing herein shall
preclude Directors from serving the Corporation in other capacities and
receiving compensation for such other services.
ARTICLE III
Committees
3.1 Executive Committee. The Board of Directors, by resolution
adopted by a
4
<PAGE> 5
majority of the number of Directors fixed by these By-laws, may elect an
Executive Committee which shall consist of not less than two Directors,
including the President. When the Board of Directors is not in session, the
Executive Committee shall have all power vested in the Board of Directors by
law, by the Articles of Incorporation, or by these By-laws, provided that the
Executive Committee shall not have power to (i) approve or recommend to
shareholders action that the Virginia Stock Corporation Act requires to be
approved by shareholders; (ii) fill vacancies on the Board or on any of its
committees; (iii) amend the Articles of Incorporation pursuant to Section
13.1-706 of the Virginia Code; (iv) adopt, amend, or repeal the By-laws; (v)
approve a plan of merger or share exchange not requiring shareholder approval;
(vi) authorize or approve a distribution, except according to a general
formula or method prescribed by the Board of Directors; or (vii) authorize or
approve the issuance or sale or contract for sale of shares, or determine the
designation and relative rights, preferences, and limitations of a class or
series of shares, other than within limits specifically prescribed by the
Board of Directors. The Executive Committee shall report at the next regular
or special meeting of the Board of Directors all action which the Executive
Committee may have taken on behalf of the Board since the last regular or
special meeting of the Board of Directors.
3.2 Finance Committee. The Board of Directors, by resolution adopted by
a majority of the number of Directors fixed by these By-laws, may elect a
Finance Committee which shall consist of not less than two Directors. The
Finance Committee shall consider and report to the Board with respect to plans
for corporate expansion, capital structure and long-range financial
requirements. The Committee shall also consider and report to the Board with
respect to such other matters relating to the financial affairs of the
Corporation as may be requested by the Board or the appropriate officers of
the Corporation. The Committee shall report periodically to the Board of
5
<PAGE> 6
Directors on all action which it may have taken.
3.3 Other Committees. The Board of Directors, by resolution adopted by
a majority of the number of Directors fixed by these By-laws, may establish
such other standing or special committees of the Board as it may deem
advisable, consisting of not less than two Directors; and the members, terms
and authority of such committees shall be as set forth in the resolutions
establishing the same.
3.4 Meetings. Regular and special meetings of any Committee established
pursuant to this Article may be called and held subject to the same
requirements with respect to time, place and notice as are specified in these
By-laws for regular and special meetings of the Board of Directors.
3.5 Quorum and Manner of Acting. A majority of the members of any
Committee serving at the time of any meeting thereof shall constitute a quorum
for the transaction of business at such meeting. The action of a majority of
those members present at a Committee meeting at which a quorum is present
shall constitute the act of the Committee.
3.6 Terms of Office. Members of any Committee shall be elected as
above provided and shall hold office until their successors are elected by the
Board of Directors or until such Committee is dissolved by the Board of
Directors.
3.7 Resignation and Removal. Any member of a Committee may resign at
any time by giving written notice of his intention to do so to the President
or the Secretary of the Corporation, or may be removed, with or without cause,
at any time by such vote of the Board of Directors as would suffice for his
election.
3.8 Vacancies. Any vacancy occurring in a Committee resulting from any
cause
6
<PAGE> 7
whatever may be filled by a majority of the number of Directors fixed by
these By-laws.
ARTICLE IV
Officers
4.1 Election of Officers; Terms. The Officers of the Corporation shall
consist of a President, a Secretary and a Treasurer. Other officers,
including a Chairman of the Board, one or more Vice Presidents (whose
seniority and titles, including Executive Vice Presidents and Senior Vice
Presidents, may be specified by the Board of Directors), and assistant and
subordinate officers, may from time to time be elected by the Board of
Directors. All officers shall hold office until the next annual meeting of
the Board of Directors and until their successors are elected. The President
shall be chosen from among the Directors. Any two officers may be combined in
the same person as the Board of Directors may determine.
4.2 Removal of Officers; Vacancies. Any officer of the Corporation may
be removed summarily with or without cause, at any time, by the Board of
Directors provided however that the removal of the Chairman of the Board shall
require the vote of two-thirds of the Directors. Vacancies may be filled by
the Board of Directors.
4.3 Duties. The officers of the Corporation shall have such duties as
generally pertain to their offices, respectively, as well as such powers and
duties as are prescribed by law or are hereinafter provided or as from time to
time shall be conferred by the Board of Directors. The Board of Directors may
require any officer to give such bond for the faithful performance of his
duties as the Board may see fit.
4.4 Duties of the President. The President shall be the chief executive
officer of the Corporation and shall be primarily responsible for the
implementation of policies of the Board of
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Directors. He shall have authority over the general management and direction
of the business and operations of the Corporation and its divisions, if any,
subject only to the ultimate authority of the Board of Directors. He shall be
a Director, and, except as otherwise provided in these By-laws or in the
resolutions establishing such committees, he shall be ex officio a member of
all Committees of the Board. In the absence of the Chairman of the Board or
if there is no such officer, the President shall preside at all corporate
meetings. He may sign and execute in the name of the Corporation share
certificates, deeds, mortgages, bonds, contracts or other instruments except
in cases where the signing and the execution thereof shall be expressly
delegated by the Board of Directors or by these By-laws to some other officer
or agent of the Corporation or shall be required by law otherwise to be signed
or executed. In addition, he shall perform all duties incident to the office
of the President and such other duties as from time to time may be assigned to
him by the Board of Directors.
4.5 Duties of the Vice-Presidents. Each Vice-President, if any, shall
have such powers and duties as may from time to time be assigned to him by the
President or the Board of Directors. Any Vice-President may sign and execute
in the name of the Corporation deeds, mortgages, bonds, contracts or other
instruments authorized by the Board of Directors, except where the signing and
execution of such documents shall be expressly delegated by the Board of
Directors or the President to some other officer or agent of the Corporation
or shall be required by law or otherwise to be signed or executed.
4.6 Duties of the Treasurer. The Treasurer shall have charge of and be
responsible for all funds, securities, receipts and disbursements of the
Corporation, and shall deposit all monies and securities of the Corporation in
such banks and depositories as shall be designated by the Board of Directors.
He shall be responsible (i) for maintaining adequate financial accounts and
records in
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<PAGE> 9
accordance with generally accepted accounting practices; (ii) for the
preparation of appropriate operating budgets and financial statements; (iii)
for the preparation and filing of all tax returns required by law; and (iv)
for the performance of all duties incident to the office of Treasurer and such
other duties as from time to time may be assigned to him by the Board of
Directors, the Finance Committee or the Managing Director/President. The
treasurer may sign and execute in the name of the Corporation share
certificates, deeds, mortgages, bonds, contracts or other instruments, except
in cases where the signing and the execution thereof shall be expressly
delegated by the Board of Directors or by these By-laws to some other officer
or agent of the Corporation or shall be required by law or otherwise to be
signed or executed.
4.7 Duties of the Secretary. The Secretary shall act as secretary of
all meetings of the Board of Directors and shareholders of the Corporation.
When requested, he shall also act as secretary of the meetings of the
committees of the Board. He shall keep and preserve the minutes of all such
meetings in permanent books. He shall see that all notices required to be
given by the Corporation are duly given and served; shall have custody of the
seal of the Corporation and shall affix the seal or cause it to be affixed to
all share certificates of the Corporation and to all documents the execution
of which on behalf of the Corporation under its corporate seal is duly
authorized in accordance with law or the provisions of these By-laws; shall
have custody of all deeds, leases, contracts and other important corporate
documents; shall have charge of the books, records and papers of the
Corporation relating to its organization and management as a Corporation;
shall see that all reports, statements and other documents required by law
(except tax returns) are properly 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 of Directors or the President.
9
<PAGE> 10
4.8 Compensation. The Board of Directors shall have authority to fix
the compensation of all officers of the Corporation.
ARTICLE V
Capital Stock
5.1 Certificates. The shares of capital stock of the Corporation shall be
evidenced by certificates in forms prescribed by the Board of Directors and
executed in any manner permitted by law and stating thereon the information
required by law. Transfer agents and/or registrars for one or more classes of
shares of the Corporation may be appointed by the Board of Directors and may
be required to countersign certificates representing shares of such class or
classes. If any officer whose signature or facsimile thereof shall have been
used on a share certificate shall for any reason cease to be an officer of the
Corporation and such certificate shall not then have been delivered by the
Corporation, the Board of Directors may nevertheless adopt such certificate
and it may then be issued and delivered as though such person had not ceased
to be an officer of the Corporation.
5.2 Lost, Destroyed and Mutilated Certificates. Holders of the shares
of the Corporation shall immediately notify the Corporation of any loss,
destruction or mutilation of the certificate therefor, and the Board of
Directors may in its discretion cause one or more new certificates for the
same number of shares in the aggregate to be issued to such shareholder upon
the surrender of the mutilated certificate or upon satisfactory proof of such
loss or destruction, and the deposit of a bond in such form and amount and
with such surety as the Board of Directors may require.
5.3 Transfer of Shares. The shares of the Corporation shall be
transferable or assignable only on the books of the Corporation by the holder
in person or by attorney on surrender of the certi
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<PAGE> 11
accompanied by a written power of attorney to have the same transferred on the
books of the Corporation. The Corporation will recognize, however, the
exclusive right of the person registered on its books as the owner of shares
to receive dividends and to vote as such owner.
5.4 Fixing Record Date. For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, or entitled to receive payment of any dividend, or in
order to make a determination of shareholders for any other proper purpose,
the Board of Directors may fix in advance a date as the record date for any
such determination of shareholders, such date in any case to be not more than
seventy days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If no record date is fixed for
the determination of shareholders entitled to notice of or to vote at a
meeting of shareholders, or of shareholders entitled to receive payment of a
dividend, the date on which notices of the meeting are mailed or the date on
which the resolution of the Board of Directors declaring such dividend is
adopted, as the case may be, shall be the record date for such determination
of shareholders. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this section, such
determination shall apply to any adjournment thereof unless the Board of
Directors fixes a new record date, which it shall do if the meeting is
adjourned to a date more than 120 days after the date fixed for the original
meeting.
ARTICLE VI
Miscellaneous Provisions
6.1 Seal. The seal of the Corporation shall consist of a flat-faced
circular die, of which there may be any number of counterparts, on which there
shall be engraved the word "Seal".
6.2 Fiscal Year. The fiscal year of the Corporation shall end on such
date and shall
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<PAGE> 12
consist of such accounting periods as may be fixed by the Board of Directors.
6.3 Checks, Notes and Drafts. Checks, notes, drafts and other orders
for the payment of money shall be signed by such persons as the Board of
Directors from time to time may authorize. When the Board of Directors so
authorizes, however, the signature of any such person may be a facsimile.
6.4 Amendment of By-Laws. Unless proscribed by the Articles of
Incorporation, these By-laws may be amended or altered at any meeting of the
Board of Directors by affirmative vote of a majority of the number of
Directors fixed by these By-laws. The shareholders entitled to vote in
respect of the election of Directors, however, shall have the power to
rescind, amend, alter or repeal any By-laws and to enact By-laws which, if
expressly so provided, may not be amended, altered or repealed by the Board of
Directors.
6.5 Voting of Shares Held. Unless otherwise provided by resolution of
the Board of Directors or of the Executive Committee, if any, the President
may from time to time appoint an attorney or attorneys or agent or agents of
the Corporation, in the name and on behalf of the Corporation, to cast the
vote which the Corporation may be entitled to cast as a shareholder or
otherwise in any other corporation, any of whose securities may be held by the
Corporation, at meetings of the holders of the shares or other securities of
such other corporation, or to consent in writing to any action by any such
other corporation; and the President shall instruct the person or persons so
appointed as to the manner of casting such votes or giving such consent and
may execute or cause to be executed on behalf of the Corporation, and under
its corporate seal or otherwise, such written proxies, consents, waivers or
other instruments as may be necessary or proper in the premises. In lieu of
such appointment the President may himself attend any meetings of the holders
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<PAGE> 13
of shares or other securities of any such other corporation and there vote or
exercise any or all power of the Corporation as the holder of such shares or
other securities of such other corporation.
ARTICLE VII
Emergency By-laws
The Emergency By-laws provided in this Article VII shall be operative
during any emergency, notwithstanding any different provision in the preceding
Articles of these By-laws or in the Articles of Incorporation of the
Corporation or in the Virginia Stock Corporation Act (other than those
provisions relating to emergency by-laws). An emergency exists if a quorum of
the Corporation's Board of Directors cannot readily be assembled because of
some catastrophic event. To the extent not inconsistent with these Emergency
By-laws, the By-laws provided in the preceding Articles shall remain in effect
during such emergency and upon the termination of such emergency the Emergency
By-laws shall cease to be operative unless and until another such emergency
shall occur.
During any such emergency:
(a) Any meeting of the Board of Directors may be called by any officer
of the Corporation or by any Director. The notice thereof shall specify the
time and place of the meeting. To the extent feasible, notice shall be given
in accord with Section 2.4 above, but notice may be given only to such of the
Directors as it may be feasible to reach at the time, by such means as may be
feasible at the time, including publication or radio, and at a time less than
twenty-four hours before the meeting if deemed necessary by the person giving
notice. Notice shall be similarly given, to the extent feasible, to the other
persons referred to in (b) below.
(b) At any meeting of the Board of Directors, a quorum shall consist of
a majority of the
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number of Directors fixed at the time by Article II of the By-laws. If the
Directors present at any particular meeting shall be fewer than the number
required for such quorum, other persons present as referred to below, to the
number necessary to make up such quorum, shall be deemed Directors for such
particular meeting as determined by the following provisions and in the
following order of priority:
(i) Vice-Presidents not already serving as Directors, in the order
of their seniority of first election to such offices, or if two or more
shall have been first elected to such offices on the same day, in the
order of their seniority in age;
(ii) All other officers of the Corporation in the order of their
seniority of first election to such offices, or if two or more shall have
been first elected to such offices on the same day, in the order of their
seniority in age; and
(iii) Any other persons that are designated on a list that shall have
been approved by the Board of Directors before the emergency, such persons
to be taken in such order of priority and subject to such conditions as
may be provided in the resolution approving the list.
(c) The Board of Directors, during, as well as before, any such
emergency, may provide, and from time to time modify, lines of succession in
the event that during such an emergency any or all officers or agents of the
Corporation shall for any reason be rendered incapable of discharging their
duties.
(d) The Board of Directors, during, as well as before, any such
emergency, may, effective in the emergency, change the principal office, or
designate several alternative offices, or authorize the officers so to do.
No officer, Director or employee shall be liable for action taken in good
faith in accordance
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with these Emergency By-laws.
These Emergency By-laws shall be subject to repeal or change by further
action of the Board of Directors or by action of the shareholders, except that
no such repeal or change shall modify the provisions of the next preceding
paragraph with regard to action or inaction prior to the time of such repeal
or change. Any such amendment of these Emergency By-laws may make any further
or different provision that may be practical and necessary for the
circumstances of the emergency.
15
<PAGE> 1
EXHIBIT 3.17
Submit the Original STATE OF OREGON THIS SPACE FOR OFFICE USE ONLY
And One True Copy CORPORATION DIVISION FILED
(831.115) $40.00 158 12th Street NE JUN 24 1992
Salem, OR 97310 SECRETARY OF STATE
Registry Number:
ARTICLES OF INCORPORATION
301746-84 BUSINESS CORPORATION
- -----------------
(Office Use Only)
PLEASE TYPE OR PRINT LEGIBLY IN BLACK INK
Article 1: Name of the corporation: AMF BEVERAGE COMPANY OF OREGON, INC.
-----------------------------------------
Note: The name must contain the word "Corporation," "Company,"
"Incorporated," or "Limited" or an abbreviation of one of such
words.
Article 2: Number of shares the corporation will have authority to issue:
10,000
------------------------------------------------------------------
Class or classes which will receive the net assets upon dissolution:
------------------------------------------------------------------
Article 3: Name of the initial registered agent: C T CORPORATION SYSTEM
---------------------------
Address of initial registered office (Must be a street address in
Oregon which is identical to the registered agent's business
office):
800 Pacific Building, Portland, OREGON 97204
------------------------------------------------------------------
Street and Number City Zip Code
Mailing address of registered agent (if different from the
registered office):
------------------------------------------------------------------
Street & Number or PO Box City State Zip Code
(C/O:)
Article 4: Address where the Division may mail notices: (Attn:)
---------------------
7275 Glen Forest Dr., Ste. 100, Richmond, Virginia 23226
------------------------------------------------------------------
Street & Number or PO Box City State Zip Code
Article 5: Name and address of each incorporator:
Ruben Rodriguez 1025 Vermont Avenue, N.W.
----------------------------- --------------------------------
Washington, D.C. 20005
----------------------------- --------------------------------
----------------------------- --------------------------------
Article 6: Name and address of each director (optional):
Beverley W. Armstrong 6319 Ridgeway Rd.
----------------------------- --------------------------------
Richmond, Virginia 23226
----------------------------- --------------------------------
----------------------------- --------------------------------
BC-1 (3/88) 831.115 ($40.00) Page 1 of 2
(ORE. - 559 - 5/6/88)
<PAGE> 2
BUSINESS CORPORATION'S
ARTICLES OF INCORPORATION
Page 2
Name of corporation: AMF BEVERAGE COMPANY OF OREGON, INC.
---------------------------------------------------------
Article 7: Other optional provisions (attach additional sheets, if necessary):
To the fullest extent permissible under the Oregon Business Corporation Act, a
director of the corporation shall not be personally liable to the corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
director.
Execution: /s/ Ruben Rodriguez Ruben Rodriguez INCORPORATOR
-----------------------------------------------------------------
Signature Printed Name Title
INCORPORATOR
-----------------------------------------------------------------
Signature Printed Name Title
Person to contact about this filing: Ruben Rodriguez 800-336-3376
-----------------------------------------
Name Daytime Phone Number
Submit the original and the true copy to the Corporation Division, 158 12th
Street NE, Salem, Oregon 97310, with the fee of $30.00 and the surcharge of
$10.00 -- Total $40.00. PLEASE DO NOT SEND CASH. If you have questions, call
(503) 378-4166.
BC-1 (3/88) 831.115 ($40.00) Page 2 of 2
<PAGE> 1
EXHIBIT 3.18
BY-LAWS
OF
AMF BEVERAGE COMPANY OF OREGON, INC.
ARTICLE I
Meetings of Shareholders
1.1 Places of Meetings. All meetings of the shareholders shall be held
at such place, either inside or outside the State of Virginia, as from time to
time may be fixed by the Board of Directors.
1.2 Annual Meetings. The annual meeting of the shareholders, for the
election of Directors and transaction of such other business as may come
before the meetings, shall be held in each year on the second Tuesday in
April, at 10 a.m., if that day is not a legal holiday in the Commonwealth of
Virginia. If that day is a legal holiday, the annual meeting shall be held on
the next succeeding day not such a legal holiday.
1.3 Special Meetings. A special meeting of the shareholders for any
purpose or purposes may be called at any time by the Chairman of the Board,
the President, or by a majority of the Board of Directors. At a special
meeting no business shall be transacted and no corporate action shall be taken
other than that stated in the notice of the meeting.
1.4 Notice of Meetings. Written or printed notice stating the place, day
and hour of every meeting of the shareholders and, in case of a special
meeting, the purpose or purposes for which the meeting is called, shall be
mailed not less than ten nor more than sixty days before the date
<PAGE> 2
of the meeting to each shareholder of record entitled to vote at such meeting,
at his address which appears in the share transfer books of the Corporation.
Such further notice shall be given as may be required by law, but meetings may
be held without notice if all the shareholders entitled to vote at the meeting
are present in person or by proxy or if notice is waived in writing by those
not present, either before or after the meeting.
1.5 Quorum. Any number of shareholders together holding at least a
majority of the outstanding shares of capital stock entitled to vote with
respect to the business to be transacted, who shall be present in person or
represented by proxy at any meeting duly called, shall constitute a quorum for
the transaction of business. If less than a quorum shall be in attendance at
the time for which a meeting shall have been called, the meeting may be
adjourned from time to time by a majority of the shareholders present or
represented by proxy without notice other than by announcement at the meeting.
1.6 Voting. At any meeting of the shareholders each shareholder of a
class entitled to vote on any matter coming before the meeting shall, as to
such matter, have one vote, in person or by proxy, for each share of capital
stock of such class standing in his name on the books of the Corporation on
the date, not more than seventy days prior to such meeting, fixed by the Board
of Directors as the record date for the purpose of determining shareholders
entitled to vote. Every proxy shall be in writing, dated and signed by the
shareholder entitled to vote or his duly authorized attorney-in-fact.
1.7 Inspectors. An appropriate number of inspectors for any meeting of
shareholders may be appointed by the Chairman of such meeting. Inspectors so
appointed will open and close the polls, will receive and take charge of
proxies and ballots, and will decide all questions as to the
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qualifications of voters, validity of proxies and ballots, and the number of
votes properly cast.
ARTICLE II
Directors
2.1 General Powers. The property, affairs and business of the
Corporation shall be managed by the Board of Directors, and, except as
otherwise expressly provided by law, the Articles of Incorporation or these
By-laws, all of the powers of the Corporation shall be vested in such Board.
2.2 Number of Directors. The number of Directors constituting the Board of
Directors shall be at least one and not more than three. The number of
Directors may be increased or decreased from time to time by amendment to
these By-laws, but no decrease shall have the effect of shortening the term of
an incumbent Director.
2.3 Election and Removal of Directors; Quorum.
(a) Directors shall be elected at each annual meeting of
shareholders to succeed those Directors whose terms have expired and to fill
any vacancies then existing.
(b) Directors shall hold their offices for terms of one year and
until their successors are elected. Any Director may be removed from office
at a meeting called expressly for that purpose by the vote of shareholders
holding a majority of the shares entitled to vote at an election of Directors.
(c) Any vacancy occurring in the Board of Directors may be filled
by the affirmative vote of the majority of the remaining Directors though less
than a quorum of the Board, and the term of office of any Director so elected
shall expire at the next shareholders' meeting at which Directors are elected.
(d) A majority of the number of Directors elected and serving at
the time of any
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meeting shall constitute a quorum for the transaction of business. The act of
a majority of Directors present at a meeting at which a quorum is present
shall be the act of the Board of Directors. Less than a quorum may adjourn
any meeting.
2.4 Meetings of Directors. An annual meeting of the Board of Directors
shall be held as soon as practicable after the adjournment of the annual
meeting of shareholders at such place as the Board may designate. Other
meetings of the Board of Directors shall be held at places inside or outside
the State of Virginia and at times fixed by resolution of the Board, or upon
call of the Chairman of the Board, the President or any two of the Directors.
The Secretary or officer performing the Secretary's duties shall give not less
than twenty-four hours' notice either in person or by letter, telegraph or
telephone of all meetings of the Board of Directors, provided that notice need
not be given of the annual meeting or of regular meetings held at times and
places fixed by resolution of the Board. Meetings may be held at any time
without notice if all of the Directors are present, or if those not present
waive notice in writing either before or after the meeting. The notice of
meetings of the Board need not state the purpose of the meeting.
2.5 Duties. The Board of Directors shall designate depositories for the
corporation and shall designate and authorize the officers or other persons to
sign checks and bank drafts.
2.6 Compensation. By resolution of the Board, Directors may be allowed a
fee and expenses for attendance at all meetings, but nothing herein shall
preclude Directors from serving the Corporation in other capacities and
receiving compensation for such other services.
ARTICLE III
Committees
3.1 Executive Committee. The Board of Directors, by resolution adopted
by a
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majority of the number of Directors fixed by these By-laws, may elect an
Executive Committee which shall consist of not less than two Directors,
including the President. When the Board of Directors is not in session, the
Executive Committee shall have all power vested in the Board of Directors by
law, by the Articles of Incorporation, or by these By-laws, provided that the
Executive Committee shall not have power to (i) approve or recommend to
shareholders action that the Virginia Stock Corporation Act requires to be
approved by shareholders; (ii) fill vacancies on the Board or on any of its
committees; (iii) amend the Articles of Incorporation pursuant to Section
13.1-706 of the Virginia Code; (iv) adopt, amend, or repeal the By-laws; (v)
approve a plan of merger or share exchange not requiring shareholder approval;
(vi) authorize or approve a distribution, except according to a general
formula or method prescribed by the Board of Directors; or (vii) authorize or
approve the issuance or sale or contract for sale of shares, or determine the
designation and relative rights, preferences, and limitations of a class or
series of shares, other than within limits specifically prescribed by the
Board of Directors. The Executive Committee shall report at the next regular
or special meeting of the Board of Directors all action which the Executive
Committee may have taken on behalf of the Board since the last regular or
special meeting of the Board of Directors.
3.2 Finance Committee. The Board of Directors, by resolution adopted by
a majority of the number of Directors fixed by these By-laws, may elect a
Finance Committee which shall consist of not less than two Directors. The
Finance Committee shall consider and report to the Board with respect to plans
for corporate expansion, capital structure and long-range financial
requirements. The Committee shall also consider and report to the Board with
respect to such other matters relating to the financial affairs of the
Corporation as may be requested by the Board or the appropriate officers of
the Corporation. The Committee shall report periodically to the Board of
5
<PAGE> 6
Directors on all action which it may have taken.
3.3 Other Committees. The Board of Directors, by resolution adopted by
a majority of the number of Directors fixed by these By-laws, may establish
such other standing or special committees of the Board as it may deem
advisable, consisting of not less than two Directors; and the members, terms
and authority of such committees shall be as set forth in the resolutions
establishing the same.
3.4 Meetings. Regular and special meetings of any Committee established
pursuant to this Article may be called and held subject to the same
requirements with respect to time, place and notice as are specified in these
By-laws for regular and special meetings of the Board of Directors.
3.5 Quorum and Manner of Acting. A majority of the members of any
Committee serving at the time of any meeting thereof shall constitute a quorum
for the transaction of business at such meeting. The action of a majority of
those members present at a Committee meeting at which a quorum is present
shall constitute the act of the Committee.
3.6 Terms of Office. Members of any Committee shall be elected as above
provided and shall hold office until their successors are elected by the Board
of Directors or until such Committee is dissolved by the Board of Directors.
3.7 Resignation and Removal. Any member of a Committee may resign at
any time by giving written notice of his intention to do so to the President
or the Secretary of the Corporation, or may be removed, with or without cause,
at any time by such vote of the Board of Directors as would suffice for his
election.
3.8 Vacancies. Any vacancy occurring in a Committee resulting from any
cause
6
<PAGE> 7
whatever may be filled by a majority of the number of Directors fixed by these
By-laws.
ARTICLE IV
Officers
4.1 Election of Officers; Terms. The Officers of the Corporation shall
consist of a President, a Secretary and a Treasurer. Other officers,
including a Chairman of the Board, one or more Vice Presidents (whose
seniority and titles, including Executive Vice Presidents and Senior Vice
Presidents, may be specified by the Board of Directors), and assistant and
subordinate officers, may from time to time be elected by the Board of
Directors. All officers shall hold office until the next annual meeting of
the Board of Directors and until their successors are elected. The President
shall be chosen from among the Directors. Any two officers may be combined in
the same person as the Board of Directors may determine.
4.2 Removal of Officers; Vacancies. Any officer of the Corporation may
be removed summarily with or without cause, at any time, by the Board of
Directors provided however that the removal of the Chairman of the Board shall
require the vote of two-thirds of the Directors. Vacancies may be filled by
the Board of Directors.
4.3 Duties. The officers of the Corporation shall have such duties as
generally pertain to their offices, respectively, as well as such powers and
duties as are prescribed by law or are hereinafter provided or as from time to
time shall be conferred by the Board of Directors. The Board of Directors may
require any officer to give such bond for the faithful performance of his
duties as the Board may see fit.
4.4 Duties of the President. The President shall be the chief executive
officer of the Corporation and shall be primarily responsible for the
implementation of policies of the Board of
7
<PAGE> 8
Directors. He shall have authority over the general management and direction
of the business and operations of the Corporation and its divisions, if any,
subject only to the ultimate authority of the Board of Directors. He shall be
a Director, and, except as otherwise provided in these By-laws or in the
resolutions establishing such committees, he shall be ex officio a member of
all Committees of the Board. In the absence of the Chairman of the Board or
if there is no such officer, the President shall preside at all corporate
meetings. He may sign and execute in the name of the Corporation share
certificates, deeds, mortgages, bonds, contracts or other instruments except
in cases where the signing and the execution thereof shall be expressly
delegated by the Board of Directors or by these By-laws to some other officer
or agent of the Corporation or shall be required by law otherwise to be signed
or executed. In addition, he shall perform all duties incident to the office
of the President and such other duties as from time to time may be assigned to
him by the Board of Directors.
4.5 Duties of the Vice-Presidents. Each Vice-President, if any, shall
have such powers and duties as may from time to time be assigned to him by the
President or the Board of Directors. Any Vice-President may sign and execute
in the name of the Corporation deeds, mortgages, bonds, contracts or other
instruments authorized by the Board of Directors, except where the signing and
execution of such documents shall be expressly delegated by the Board of
Directors or the President to some other officer or agent of the Corporation
or shall be required by law or otherwise to be signed or executed.
4.6 Duties of the Treasurer. The Treasurer shall have charge of and be
responsible for all funds, securities, receipts and disbursements of the
Corporation, and shall deposit all monies and securities of the Corporation in
such banks and depositories as shall be designated by the Board of Directors.
He shall be responsible (i) for maintaining adequate financial accounts and
records in
8
<PAGE> 9
accordance with generally accepted accounting practices; (ii) for the
preparation of appropriate operating budgets and financial statements; (iii)
for the preparation and filing of all tax returns required by law; and (iv)
for the performance of all duties incident to the office of Treasurer and such
other duties as from time to time may be assigned to him by the Board of
Directors, the Finance Committee or the Managing Director/President. The
treasurer may sign and execute in the name of the Corporation share
certificates, deeds, mortgages, bonds, contracts or other instruments, except
in cases where the signing and the execution thereof shall be expressly
delegated by the Board of Directors or by these By-laws to some other officer
or agent of the Corporation or shall be required by law or otherwise to be
signed or executed.
4.7 Duties of the Secretary. The Secretary shall act as secretary of all
meetings of the Board of Directors and shareholders of the Corporation. When
requested, he shall also act as secretary of the meetings of the committees of
the Board. He shall keep and preserve the minutes of all such meetings in
permanent books. He shall see that all notices required to be given by the
Corporation are duly given and served; shall have custody of the seal of the
Corporation and shall affix the seal or cause it to be affixed to all share
certificates of the Corporation and to all documents the execution of which on
behalf of the Corporation under its corporate seal is duly authorized in
accordance with law or the provisions of these By-laws; shall have custody of
all deeds, leases, contracts and other important corporate documents; shall
have charge of the books, records and papers of the Corporation relating to
its organization and management as a Corporation; shall see that all reports,
statements and other documents required by law (except tax returns) are
properly 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 of Directors or the President.
9
<PAGE> 10
4.8 Compensation. The Board of Directors shall have authority to fix the
compensation of all officers of the Corporation.
ARTICLE V
Capital Stock
5.1 Certificates. The shares of capital stock of the Corporation shall
be evidenced by certificates in forms prescribed by the Board of Directors and
executed in any manner permitted by law and stating thereon the information
required by law. Transfer agents and/or registrars for one or more classes of
shares of the Corporation may be appointed by the Board of Directors and may
be required to countersign certificates representing shares of such class or
classes. If any officer whose signature or facsimile thereof shall have been
used on a share certificate shall for any reason cease to be an officer of the
Corporation and such certificate shall not then have been delivered by the
Corporation, the Board of Directors may nevertheless adopt such certificate
and it may then be issued and delivered as though such person had not ceased
to be an officer of the Corporation.
5.2 Lost, Destroyed and Mutilated Certificates. Holders of the shares of
the Corporation shall immediately notify the Corporation of any loss,
destruction or mutilation of the certificate therefor, and the Board of
Directors may in its discretion cause one or more new certificates for the
same number of shares in the aggregate to be issued to such shareholder upon
the surrender of the mutilated certificate or upon satisfactory proof of such
loss or destruction, and the deposit of a bond in such form and amount and
with such surety as the Board of Directors may require.
5.3 Transfer of Shares. The shares of the Corporation shall be
transferable or assignable only on the books of the Corporation by the holder
in person or by attorney on surrender of the certificate for such shares duly
endorsed and, if sought to be transferred by attorney,
10
<PAGE> 11
accompanied by a written power of attorney to have the same transferred on the
books of the Corporation. The Corporation will recognize, however, the
exclusive right of the person registered on its books as the owner of shares
to receive dividends and to vote as such owner.
5.4 Fixing Record Date. For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, or entitled to receive payment of any dividend, or in
order to make a determination of shareholders for any other proper purpose,
the Board of Directors may fix in advance a date as the record date for any
such determination of shareholders, such date in any case to be not more than
seventy days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If no record date is fixed for
the determination of shareholders entitled to notice of or to vote at a
meeting of shareholders, or of shareholders entitled to receive payment of a
dividend, the date on which notices of the meeting are mailed or the date on
which the resolution of the Board of Directors declaring such dividend is
adopted, as the case may be, shall be the record date for such determination
of shareholders. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this section, such
determination shall apply to any adjournment thereof unless the Board of
Directors fixes a new record date, which it shall do if the meeting is
adjourned to a date more than 120 days after the date fixed for the original
meeting.
ARTICLE VI
Miscellaneous Provisions
6.1 Seal. The seal of the Corporation shall consist of a flat-faced
circular die, of which there may be any number of counterparts, on which there
shall be engraved the word "Seal".
6.2 Fiscal Year. The fiscal year of the Corporation shall end on such
date and shall
11
<PAGE> 12
consist of such accounting periods as may be fixed by the Board of Directors.
6.3 Checks, Notes and Drafts. Checks, notes, drafts and other orders for
the payment of money shall be signed by such persons as the Board of Directors
from time to time may authorize. When the Board of Directors so authorizes,
however, the signature of any such person may be a facsimile.
6.4 Amendment of By-Laws. Unless proscribed by the Articles of
Incorporation, these By-laws may be amended or altered at any meeting of the
Board of Directors by affirmative vote of a majority of the number of
Directors fixed by these By-laws. The shareholders entitled to vote in
respect of the election of Directors, however, shall have the power to
rescind, amend, alter or repeal any By-laws and to enact By-laws which, if
expressly so provided, may not be amended, altered or repealed by the Board of
Directors.
6.5 Voting of Shares Held. Unless otherwise provided by resolution of the
Board of Directors or of the Executive Committee, if any, the President may
from time to time appoint an attorney or attorneys or agent or agents of the
Corporation, in the name and on behalf of the Corporation, to cast the vote
which the Corporation may be entitled to cast as a shareholder or otherwise in
any other corporation, any of whose securities may be held by the Corporation,
at meetings of the holders of the shares or other securities of such other
corporation, or to consent in writing to any action by any such other
corporation; and the President shall instruct the person or persons so
appointed as to the manner of casting such votes or giving such consent and
may execute or cause to be executed on behalf of the Corporation, and under
its corporate seal or otherwise, such written proxies, consents, waivers or
other instruments as may be necessary or proper in the premises. In lieu of
such appointment the President may himself attend any meetings of the holders
12
<PAGE> 13
of shares or other securities of any such other corporation and there vote or
exercise any or all power of the Corporation as the holder of such shares or
other securities of such other corporation.
ARTICLE VII
Emergency By-laws
The Emergency By-laws provided in this Article VII shall be operative
during any emergency, notwithstanding any different provision in the preceding
Articles of these By-laws or in the Articles of Incorporation of the
Corporation or in the Virginia Stock Corporation Act (other than those
provisions relating to emergency by-laws). An emergency exists if a quorum of
the Corporation's Board of Directors cannot readily be assembled because of
some catastrophic event. To the extent not inconsistent with these Emergency
By-laws, the By-laws provided in the preceding Articles shall remain in effect
during such emergency and upon the termination of such emergency the Emergency
By-laws shall cease to be operative unless and until another such emergency
shall occur.
During any such emergency:
(a) Any meeting of the Board of Directors may be called by any officer of
the Corporation or by any Director. The notice thereof shall specify the time
and place of the meeting. To the extent feasible, notice shall be given in
accord with Section 2.4 above, but notice may be given only to such of the
Directors as it may be feasible to reach at the time, by such means as may be
feasible at the time, including publication or radio, and at a time less than
twenty-four hours before the meeting if deemed necessary by the person giving
notice. Notice shall be similarly given, to the extent feasible, to the other
persons referred to in (b) below.
(b) At any meeting of the Board of Directors, a quorum shall consist of a
majority of the
13
<PAGE> 14
number of Directors fixed at the time by Article II of the By-laws. If the
Directors present at any particular meeting shall be fewer than the number
required for such quorum, other persons present as referred to below, to the
number necessary to make up such quorum, shall be deemed Directors for such
particular meeting as determined by the following provisions and in the
following order of priority:
(i) Vice-Presidents not already serving as Directors, in the order of
their seniority of first election to such offices, or if two or more shall
have been first elected to such offices on the same day, in the order of their
seniority in age;
(ii) All other officers of the Corporation in the order of their
seniority of first election to such offices, or if two or more shall have been
first elected to such offices on the same day, in the order of their seniority
in age; and
(iii) Any other persons that are designated on a list that shall have
been approved by the Board of Directors before the emergency, such persons to
be taken in such order of priority and subject to such conditions as may be
provided in the resolution approving the list.
(c) The Board of Directors, during, as well as before, any such
emergency, may provide, and from time to time modify, lines of succession in
the event that during such an emergency any or all officers or agents of the
Corporation shall for any reason be rendered incapable of discharging their
duties.
(d) The Board of Directors, during, as well as before, any such
emergency, may, effective in the emergency, change the principal office, or
designate several alternative offices, or authorize the officers so to do.
No officer, Director or employee shall be liable for action taken in good
faith in accordance
14
<PAGE> 15
with these Emergency By-laws.
These Emergency By-laws shall be subject to repeal or change by further
action of the Board of Directors or by action of the shareholders, except that
no such repeal or change shall modify the provisions of the next preceding
paragraph with regard to action or inaction prior to the time of such repeal
or change. Any such amendment of these Emergency By-laws may make any further
or different provision that may be practical and necessary for the
circumstances of the emergency.
15
<PAGE> 1
EXHIBIT 3.19
ARTICLES OF INCORPORATION
of
KING LOUIE LENEXA, INC.
The undersigned, incorporator, hereby forms and establishes a
corporation for profit under the laws of the State of Kansas.
ARTICLE ONE
The name of the corporation is KING LOUIE LENEXA, INC.
ARTICLE TWO
The address of the corporation's initial registered office in this
state is 4400 West 109th Street, Suite 105, Overland Park, Johnson County,
Kansas 66211, and the name of its initial registered agent at such address is
William Stivers.
ARTICLE THREE
The corporation shall have authority to issue Thirty Thousand (30,000)
shares of common stock having a par value of One Dollar ($1.00) per share,
aggregating Thirty Thousand Dollars ($30,000.00).
There shall be no preferences, qualifications, limitations,
restrictions, or special or relative rights, including convertible rights, in
respect of the shares herein authorized.
ARTICLE FOUR
The name and mailing address of the incorporator is as follows:
<TABLE>
<CAPTION>
Name Street City
---- ------ ----
<S> <C> <C>
Richard H. Hertel 9401 Indian Creek Parkway Overland Park, Kansas 66210
Suite 500
</TABLE>
ARTICLE FIVE
The names and mailing addresses of the persons who are to serve as
directors until the first annual meeting of the
<PAGE> 2
stockholders or until their successors are elected and qualify are:
Robert V. Palan 4400 West 109th Street, Ste. 105
Overland Park, KS 66212
Richard Stern 2675 Paces Ferry Road, Ste. 300
Atlanta, GA 30339
Scott Stern 2675 Paces Ferry Road, Ste. 300
Atlanta, GA 30339
Thereafter, the number of directors to constitute the whole Board of
Directors shall be fixed by, or in the manner provided in, the Bylaws of the
corporation. If the number of directors shall be increased in the manner set
forth in the Bylaws, such increase shall be deemed to create vacancies in the
Board, to be filled in the manner provided in the Bylaws. Any director or any
officer elected or appointed by the stockholders or by the Board of Directors
may be removed at any time, in such manner as shall be provided in the Bylaws.
ARTICLE SIX
The corporation is organized for profit, and the nature of its business
or purposes to be conducted or promoted is to engage in any lawful act or
activity for which corporations may be organized under the Kansas General
Corporation Code.
ARTICLE SEVEN
Except as otherwise specifically provided by statute or the Bylaws, all
powers of management and direct control of the corporation shall be vested in
the Board of Directors, and the Board of Directors shall have power to exercise
all the powers of the corporation without any action of or by the stockholders.
-2-
<PAGE> 3
The Board of Directors shall have concurrent power with the shareholders to
make, and from time to time repeal, amend and alter, the Bylaws of the
corporation, subject to such restrictions upon the exercise of such power as may
be imposed by statute or the stockholders in any Bylaws adopted by them from
time to time.
ARTICLE EIGHT
A director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under the provisions of K.S.A. 17-6424 and amendments
thereto, or (iv) for any transaction from which the director derived an improper
personal benefit.
IN WITNESS WHEREOF, these Articles of Incorporation have been signed
this 24th day of February, 1989.
/s/ Richard H. Hertel
--------------------------
Richard H. Hertel
STATE OF KANSAS )
) ss.
COUNTY OF JOHNSON )
On this 24th day of February, 1989, before me personally appeared
Richard H. Hertel, to me known to be the person described in and who executed
the foregoing instrument and acknowledged that he executed the same as his own
free act and deed.
-3-
<PAGE> 4
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my
notarial seal the day and year last above mentioned.
/s/ Donna L. Shell
-----------------------------
Notary Public
My Appointment Expires:
-4-
<PAGE> 5
CHANGE OF LOCATION OF REGISTERED OFFICE
AND/OR
CHANGE OF RESIDENT AGENT
We, Beverly W. Armstrong , President and H.D. Shepherd, Jr.
------------------------------ ----------------------
Secretary of KING LOUIE LENEXA, INC. , a corporation organized
-------------------------------------
and existing under and by virtue of the laws of the state of Kansas ,
-------------------
do hereby certify that at a meeting of the board of directors of said
corporation the following resolution was duly adopted:
Be it resolved that the Registered Office in the state of Kansas of
said corporation be changed to c/o THE CORPORATION COMPANY, INC., 515 So. Kansas
Avenue, Topeka, Shawnee, Kansas 66603.
Be it further resolved that the Resident Agent of said corporation in
the state of Kansas be changed to
THE CORPORATION COMPANY,
- -------------------------------------------------------------------------------
The President and Secretary are hereby authorized to file and record
the same in the manner as required by law.
/s/ Beverly W. Armstrong
---------------------------------
Beverly W. Armstrong
/s/ H.D. Shepherd, Jr.
---------------------------------
H.D. Shepherd, Jr.
State of Virginia }
} ss.
City of Richmond }
Before me, a Notary Public, came Beverly W. Armstrong President, and
-----------------------
H.D.Shepherd, Jr. Secretary, of the above-named corporation, who are
- ------------------------
known to me to be the persons who executed the foregoing certificate in their
official capacities and duly acknowledged the execution of the same this 27th
-------
day of April , 1990.
-------------------------- -- -----------------------
Notary Public
My commission or appointment expires July 8 , 1991.
-------------------------- --
PLEASE SUBMIT THIS FORM IN DUPLICATE,
WITH $20 FILING FEE, TO:
Secretary of State
2nd Floor, State Capitol
Topeka, KS 6612-1594
(913) 296-2236
<PAGE> 6
Office of the Secretary of State/Corporations Division
CERTIFICATE OF REINSTATEMENT
We, Beverly W. Armstrong ,and Kevin A. Moss being the last
-------------------------------- ------------------------
acting President or Vice President and Secretary or Assistant
Secretary of KING LOUIE LENEXA, INC. , file in behalf of said corporation
----------------------------
this certificate for REINSTATEMENT, RENEWAL, REVIVAL, RESTORATION AND EXTENSION
of its corporate existence or authority to engage in business in the state of
Kansas and certify the following:
(A) Correct name of the corporation is:
----------------------------------
KING LOUIE LENEXA, INC.
---------------------------------------------------------------------
---------------------------------------------------------------------
(B) Location of the corporate registered office in the state of Kansas is:
8788 Metcalf
---------------------------------------------------------------------
Street and Number
---------------------------------------------------------------------
Overland Park
---------------------------------------------------------------------
City
Johnson 66212
---------------------------------------------------------------------
County Zip Code
and the name of the resident agent in charge thereof at such address
is:
Martha Bredehoeft
--------------------------------------------------------------------
(C) Corporation was duly organized under the laws of the
state of: Kansas
--------------------------------------
(D) Corporate existence or authority to engage in business in the state
of Kansas: (Select One)
Has been forfeited for failure to timely file annual report(s)
------
and pay its annual fee.
Has expired or will expire, by reason of time, on the
------ -------
day of , 19 , and said corporate existence,
---------------- ----
or authority to engage in business, is hereby extended
------------------------------------------------------
State whether extended perpetually or to a given date
This certificate is filed by authority of duly elected directors or
members of the governing body of the corporation in compliance with the
provisions of the Kansas Corporation Code.
In testimony whereof, we have
hereunto set our hands this 15th
------
day of April , 1992
----------------------- --
State of Virginia }
} ss.
-------------------------------------
City of Richmond } President or Vice President
-------------------------------------
The foregoing instrument was Secretary or Assistant Secretary
acknowledged before me this
15th day of April , 1992.
- ------- ------------ --
- ------------------------------
Notary Public
My appointment or commission expires December 31 , 1993.
---------------------- --
Submit document in duplicate with $20 filing fee to: Bill Graves, Secretary of
State, 2nd Floor, State Capitol, Topeka, KS 66612-1594, (913) 296-4564.
<PAGE> 1
EXHIBIT 3.20
AMENDED AND RESTATED BY-LAWS
OF
KING LOUIE LENEXA, INC.
ARTICLE I
Meetings of Shareholders
1.1 Places of Meetings. All meetings of the shareholders shall be held
at such place, either inside or outside the State of Virginia, as from time to
time may be fixed by the Board of Directors.
1.2 Annual Meetings. The annual meeting of the shareholders, for the
election of Directors and transaction of such other business as may come
before the meetings, shall be held in each year on the second Tuesday in
April, at 10 a.m., if that day is not a legal holiday in the Commonwealth of
Virginia. If that day is a legal holiday, the annual meeting shall be held on
the next succeeding day not such a legal holiday.
1.3 Special Meetings. A special meeting of the shareholders for any
purpose or purposes may be called at any time by the Chairman of the Board,
the President, or by a majority of the Board of Directors. At a special
meeting no business shall be transacted and no corporate action shall be taken
other than that stated in the notice of the meeting.
1.4 Notice of Meetings. Written or printed notice stating the place, day
and hour of every meeting of the shareholders and, in case of a special
meeting, the purpose or purposes for which the
<PAGE> 2
meeting is called, shall be mailed not less than ten nor more than sixty days
before the date of the meeting to each shareholder of record entitled to vote
at such meeting, at his address which appears in the share transfer books of
the Corporation. Such further notice shall be given as may be required by
law, but meetings may be held without notice if all the shareholders entitled
to vote at the meeting are present in person or by proxy or if notice is
waived in writing by those not present, either before or after the meeting.
1.5 Quorum. Any number of shareholders together holding at least a
majority of the outstanding shares of capital stock entitled to vote with
respect to the business to be transacted, who shall be present in person or
represented by proxy at any meeting duly called, shall constitute a quorum for
the transaction of business. If less than a quorum shall be in attendance at
the time for which a meeting shall have been called, the meeting may be
adjourned from time to time by a majority of the shareholders present or
represented by proxy without notice other than by announcement at the meeting.
1.6 Voting. At any meeting of the shareholders each shareholder of a
class entitled to vote on any matter coming before the meeting shall, as to
such matter, have one vote, in person or by proxy, for each share of capital
stock of such class standing in his name on the books of the Corporation on
the date, not more than seventy days prior to such meeting, fixed by the Board
of Directors as the record date for the purpose of determining shareholders
2
<PAGE> 3
entitled to vote. Every proxy shall be in writing, dated and signed by the
shareholder entitled to vote or his duly authorized attorney-in-fact.
1.7 Inspectors. An appropriate number of inspectors for any meeting of
shareholders may be appointed by the Chairman of such meeting. Inspectors so
appointed will open and close the polls, will receive and take charge of
proxies and ballots, and will decide all questions as to the qualifications of
voters, validity of proxies and ballots, and the number of votes properly
cast.
ARTICLE II
Directors
2.1 General Powers. The property, affairs and business of the
Corporation shall be managed by the Board of Directors, and, except as
otherwise expressly provided by law, the Articles of Incorporation or these
By-laws, all of the powers of the Corporation shall be vested in such Board.
2.2 Number of Directors. The number of Directors constituting the
Board of Directors shall be at least one and not more than three. The number
of Directors may be increased or decreased from time to time by amendment to
these By-laws, but no decrease shall have the effect of shortening the term of
an incumbent Director.
2.3 Election and Removal of Directors; Quorum.
(a) Directors shall be elected at each annual meeting of
shareholders to succeed those Directors whose terms have expired
3
<PAGE> 4
and to fill any vacancies then existing.
(b) Directors shall hold their offices for terms of one year and until
their successors are elected. Any Director may be removed from office at a
meeting called expressly for that purpose by the vote of shareholders holding
a majority of the shares entitled to vote at an election of Directors.
(c) Any vacancy occurring in the Board of Directors may be filled by the
affirmative vote of the majority of the remaining Directors though less than a
quorum of the Board, and the term of office of any Director so elected shall
expire at the next shareholders' meeting at which Directors are elected.
(d) A majority of the number of Directors elected and serving at the time
of any meeting shall constitute a quorum for the transaction of business. The
act of a majority of Directors present at a meeting at which a quorum is
present shall be the act of the Board of Directors. Less than a quorum may
adjourn any meeting.
2.4 Meetings of Directors. An annual meeting of the Board of Directors
shall be held as soon as practicable after the adjournment of the annual
meeting of shareholders at such place as the Board may designate. Other
meetings of the Board of Directors shall be held at places inside or outside
the State of Virginia and at times fixed by resolution of the Board, or upon
call of the Chairman of the Board, the President or any two of the Directors.
The Secretary or officer performing the Secretary's duties shall give not less
than twenty-four hours' notice either in person or by
4
<PAGE> 5
letter, telegraph or telephone of all meetings of the Board of Directors,
provided that notice need not be given of the annual meeting or of regular
meetings held at times and places fixed by resolution of the Board. Meetings
may be held at any time without notice if all of the Directors are present, or
if those not present waive notice in writing either before or after the
meeting. The notice of meetings of the Board need not state the purpose of
the meeting.
2.5 Duties. The Board of Directors shall designate depositories for the
corporation and shall designate and authorize the officers or other persons to
sign checks and bank drafts.
2.6 Compensation. By resolution of the Board, Directors may be allowed a
fee and expenses for attendance at all meetings, but nothing herein shall
preclude Directors from serving the Corporation in other capacities and
receiving compensation for such other services.
ARTICLE III
Committees
3.1 Executive Committee. The Board of Directors, by resolution adopted
by a majority of the number of Directors fixed by these By-laws, may elect an
Executive Committee which shall consist of not less than two Directors,
including the President. When the Board of Directors is not in session, the
Executive Committee shall have all power vested in the Board of Directors by
law, by the Articles of Incorporation, or by these By-laws, provided that the
Executive Committee shall not have power to (i)
5
<PAGE> 6
approve or recommend to shareholders action that the Virginia Stock
Corporation Act requires to be approved by shareholders; (ii) fill vacancies
on the Board or on any of its committees; (iii) amend the Articles of
Incorporation pursuant to Section 13.1-706 of the Virginia Code; (iv) adopt,
amend, or repeal the By-laws; (v) approve a plan of merger or share exchange
not requiring shareholder approval; (vi) authorize or approve a distribution,
except according to a general formula or method prescribed by the Board of
Directors; or (vii) authorize or approve the issuance or sale or contract for
sale of shares, or determine the designation and relative rights, preferences,
and limitations of a class or series of shares, other than within limits
specifically prescribed by the Board of Directors. The Executive Committee
shall report at the next regular or special meeting of the Board of Directors
all action which the Executive committee may have taken on behalf of the Board
since the last regular or special meeting of the Board of Directors.
3.2 Finance Committee. The Board of Directors, by resolution
adopted by a majority of the number of Directors fixed by these By-laws, may
elect a Finance Committee which shall consist of not less than two Directors.
The Finance Committee shall consider and report to the Board with respect to
plans for corporate expansion, capital structure and long-range financial
requirements. The Committee shall also consider and report to the Board with
respect to such other matters relating to the financial affairs of the
Corporation as may be requested by the Board or the appropriate
6
<PAGE> 7
officers of the Corporation. The Committee shall report periodically to the
Board of Directors on all action which it may have taken.
3.3 Other Committees. The Board of Directors, by resolution adopted by a
majority of the number of Directors fixed by these Bylaws, may establish such
other standing or special committees of the Board as it may deem advisable,
consisting of not less than two Directors; and the members, terms and
authority of such committees shall be as set forth in the resolutions
establishing the same.
3.4 Meetings. Regular and special meetings of any Committee established
pursuant to this Article may be called and held subject to the same
requirements with respect to time, place and notice as are specified in these
By-laws for regular and special meetings of the Board of Directors.
3.5 Quorum and Manner of Acting. A majority of the members of any
Committee serving at the time of any meeting thereof shall constitute a quorum
for the transaction of business at such meeting. The action of a majority of
those members present at a Committee meeting at which a quorum is present
shall constitute the act of the Committee.
3.6 Terms of Office. Members of any Committee shall be elected as above
provided and shall hold office until their successors are elected by the Board
of Directors or until such Committee is dissolved by the Board of Directors.
3.7 Resignation and Removal. Any member of a Committee may resign at any
time by giving written notice of his intention to do
7
<PAGE> 8
so to the President or the Secretary of the Corporation, or may be removed,
with or without cause, at any time by such vote of the Board of Directors as
would suffice for his election.
3.8 Vacancies. Any vacancy occurring in a Committee resulting from any
cause whatever may be filled by a majority of the number of Directors fixed by
these By-laws.
ARTICLE IV
Officers
4.1 Election of Officers; Terms. The Officers of the Corporation shall
consist of a President, a Secretary and a Treasurer. Other officers,
including a Chairman of the Board, one or more Vice Presidents (whose
seniority and titles, including Executive Vice Presidents and Senior Vice
Presidents, may be specified by the Board of Directors), and assistant and
subordinate officers, may from time to time be elected by the Board of
Directors. All officers shall hold office until the next annual meeting of
the Board of Directors and until their successors are elected. The President
shall be chosen from among the Directors. Any two of officers may be combined
in the same person as the Board of Directors may determine.
4.2 Removal of Officers; Vacancies. Any officer of the Corporation may
be removed summarily with or without cause, at any time, by the Board of
Directors provided however that the removal of the Chairman of the Board shall
require the vote of two-thirds of the Directors. Vacancies may be filled by
the Board of Directors.
8
<PAGE> 9
4.3 Duties. The officers of the Corporation shall have such duties as
generally pertain to their offices, respectively, as well as such powers and
duties as are prescribed by law or are hereinafter provided or as from time to
time shall be conferred by the Board of Directors. The Board of Directors may
require any officer to give such bond for the faithful performance of his
duties as the Board may see fit.
4.4 Duties of the President. The President shall be the chief executive
officer of the Corporation and shall be primarily responsible for the
implementation of policies of the Board of Directors. He shall have authority
over the general management and direction of the business and operations of
the Corporation and its divisions, if any, subject only to the ultimate
authority of the Board of Directors. He shall be a Director, and, except as
otherwise provided in these By-laws or in the resolutions establishing such
committees, he shall be ex officio a member of all Committees of the Board.
In the absence of the Chairman of the Board or if there is no such officer,
the President shall preside at all corporate meetings. He may sign and
execute in the name of the Corporation share certificates, deeds, mortgages,
bonds, contracts or other instruments except in cases where the signing and
the execution thereof shall be expressly delegated by the Board of Directors
or by these By-laws to some other officer or agent of the Corporation or shall
be required by law otherwise to be signed or executed. In addition, he shall
perform all duties incident to
9
<PAGE> 10
the office of the President and such other duties as from time to time may be
assigned to him by the Board of Directors.
4.5 Duties of the Vice-Presidents. Each Vice-President, if any, shall
have such powers and duties as may from time to time be assigned to him by the
President or the Board of Directors. Any Vice-President may sign and execute
in the name of the Corporation deeds, mortgages, bonds, contracts or other
instruments authorized by the Board of Directors, except where the signing and
execution of such documents shall be expressly delegated by the Board of
Directors or the President to some other officer or agent of the Corporation
or shall be required by law or otherwise to be signed or executed.
4.6 Duties of the Treasurer. The Treasurer shall have charge of and be
responsible for all funds, securities, receipts and disbursements of the
Corporation, and shall deposit all monies and securities of the Corporation in
such banks and depositories as shall be designated by the Board of Directors.
He shall be responsible (i) for maintaining adequate financial accounts and
records in accordance with generally accepted accounting practices; (ii) for
the preparation of appropriate operating budgets and financial statements;
(iii) for the preparation and filing of all tax returns required by law; and
(iv) for the performance of all duties incident to the office of Treasurer and
such other duties as from time to time may be assigned to him by the Board of
Directors, the Finance Committee or the Managing Director/President. The
treasurer may sign and execute in the name of the Corporation share
10
<PAGE> 11
certificates, deeds, mortgages, bonds, contracts or other instruments, except
in cases where the signing and the execution thereof shall be expressly
delegated by the Board of Directors or by these By-laws to some other officer
or agent of the Corporation or shall be required by law or otherwise to be
signed or executed.
4.7 Duties of the Secretary. The Secretary shall act as secretary of all
meetings of the Board of Directors and shareholders of the Corporation. When
requested, he shall also act as secretary of the meetings of the committees of
the Board. He shall keep and preserve the minutes of all such meetings in
permanent books. He shall see that all notices required to be given by the
Corporation are duly given and served; shall have custody of the seal of the
Corporation and shall affix the seal or cause it to be affixed to all share
certificates of the Corporation and to all documents the execution of which on
behalf of the Corporation under its corporate seal is duly authorized in
accordance with law or the provisions of these By-laws; shall have custody of
all deeds, leases, contracts and other important corporate documents; shall
have charge of the books, records and papers of the Corporation relating to
its organization and management as a Corporation; shall see that all reports,
statements and other documents required by law (except tax returns) are
properly 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 of Directors or the President.
11
<PAGE> 12
4.8 Compensation. The Board of Directors shall have authority to fix the
compensation of all officers of the Corporation.
ARTICLE V
Capital Stock
5.1 Certificates. The shares of capital stock of the Corporation shall
be evidenced by certificates in forms prescribed by the Board of Directors and
executed in any manner permitted by law and stating thereon the information
required by law. Transfer agents and/or registrars for one or more classes of
shares of the Corporation may be appointed by the Board of Directors and may
be required to countersign certificates representing shares of such class or
classes. If any officer whose signature or facsimile thereof shall have been
used on a share certificate shall for any reason cease to be an officer of the
Corporation and such certificate shall not then have been delivered by the
Corporation, the Board of Directors may nevertheless adopt such certificate
and it may then be issued and delivered as though such person had not ceased
to be an officer of the Corporation.
5.2 Lost, Destroyed and Mutilated Certificates. Holders of the shares of
the Corporation shall immediately notify the Corporation of any loss,
destruction or mutilation of the certificate therefor, and the Board of
Directors may in its discretion cause one or more new certificates for the
same number of shares in the aggregate to be issued to such shareholder upon
the surrender of the mutilated certificate or upon satisfactory proof of such
loss or destruction, and the deposit of a bond in
12
<PAGE> 13
such form and amount and with such surety as the Board of Directors may
require.
5.3 Transfer of Shares. The shares of the Corporation shall be
transferable or assignable only on the books of the Corporation by the holder
in person or by attorney on surrender of the certificate for such shares duly
endorsed and, if sought to be transferred by attorney, accompanied by a
written power of attorney to have the same transferred on the books of the
Corporation. The Corporation will recognize, however, the exclusive right of
the person registered on its books as the owner of shares to receive dividends
and to vote as such owner.
5.4 Fixing Record Date. For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, or entitled to receive payment of any dividend, or in
order to make a determination of shareholders for any other proper purpose,
the Board of Directors may fix in advance a date as the record date for any
such determination of shareholders, such date in any case to be not more than
seventy days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If no record date is fixed for
the determination of shareholders entitled to notice of or to vote at a
meeting of shareholders, or of shareholders entitled to receive payment of a
dividend, the date on which notices of the meeting are nailed or the date on
which the resolution of the Board of Directors declaring such dividend is
adopted, as the case may be, shall be the record date for such
13
<PAGE> 14
determination of shareholders. When a determination of shareholders entitled
to vote at any meeting of shareholders has been made as provided in this
section, such determination shall apply to any adjournment thereof unless the
Board of Directors fixes a new record date, which it shall do if the meeting
is adjourned to a date more than 120 days after the date fixed for the
original meeting.
ARTICLE VI
Miscellaneous Provisions
6.1 Seal. The seal of the Corporation shall consist of a flat-faced
circular die, of which there may be any number of counterparts, on which there
shall be engraved the word "Seal".
6.2 Fiscal Year. The fiscal year of the Corporation shall end on such
date and shall consist of such accounting periods as may be fixed by the Board
of Directors.
6.3 Checks, Notes and Drafts. Checks, notes, drafts and other orders for
the payment of money shall be signed by such persons as the Board of Directors
from time to time may authorize. When the Board of Directors so authorizes,
however, the signature of any such person may be a facsimile.
6.4 Amendment of By-Laws. Unless proscribed by the Articles of
Incorporation, these By-laws may be amended or altered at any meeting of the
Board of Directors by affirmative vote of a majority of the number of
Directors fixed by these By-laws. The
14
<PAGE> 15
shareholders entitled to vote in respect of the election of Directors,
however, shall have the power to rescind, amend, alter or repeal any By-laws
and to enact By-laws which, if expressly so provided, may not be amended,
altered or repealed by the Board of Directors.
6.5 Voting of Shares Held. Unless otherwise provided by resolution of
the Board of Directors or of the Executive Committee, if any, the President
may from time to time appoint an attorney or attorneys or agent or agents of
the Corporation, in the name and on behalf of the Corporation, to cast the
vote which the Corporation may be entitled to cast as a shareholder or
otherwise in any other corporation, any of whose securities may be held by the
Corporation, at meetings of the holders of the shares or other securities of
such other corporation, or to consent in writing to any action by any such
other corporation; and the President shall instruct the person or persons so
appointed as to the manner of casting such votes or giving such consent and
may execute or cause to be executed on behalf of the Corporation, and under
its corporate seal or otherwise, such written proxies, consents, waivers or
other instruments as may be necessary or proper in the premises. In lieu of
such appointment the President may himself attend any meetings of the holders
of shares or other securities of any such other corporation and there vote or
exercise any or all power of the Corporation as the holder of such shares or
other securities of such other corporation.
15
<PAGE> 16
ARTICLE VII
Emergency By-laws
The Emergency By-laws provided in this Article VII shall be operative
during any emergency, notwithstanding any different provision in the preceding
Articles of these By-laws or in the Articles of Incorporation of the
Corporation or in the Virginia Stock Corporation Act (other than those
provisions relating to emergency by-laws). An emergency exists if a quorum of
the Corporation's Board of Directors cannot readily be assembled because of
some catastrophic event. To the extent not inconsistent with these Emergency
By-laws, the By-laws provided in the preceding Articles shall remain in effect
during such emergency and upon the termination of such emergency the Emergency
By-laws shall cease to be operative unless and until another such emergency
shall occur.
During any such emergency:
(a) Any meeting of the Board of Directors may be called by any officer of
the Corporation or by any Director. The notice thereof shall specify the time
and place of the meeting. To the extent feasible, notice shall be given in
accord with Section 2.4 above, but notice may be given only to such of the
Directors as it may be feasible to reach at the time, by such means as may be
feasible at the time, including publication or radio, and at a time less than
twenty-four hours before the meeting if deemed necessary by the person giving
notice. Notice shall be similarly given, to the extent feasible, to the other
persons referred to in (b) below.
(b) At any meeting of the Board of Directors, a quorum shall
16
<PAGE> 17
consist of a majority of the number of Directors fixed at the time by Article
II of the By-laws. If the Directors present at any particular meeting shall
be fewer than the number required for such quorum, other persons present as
referred to below, to the number necessary to make up such quorum, shall be
deemed Directors for such particular meeting as determined by the following
provisions and in the following order of priority:
(i) Vice-Presidents not already serving as Directors, in the order of
their seniority of first election to such offices, or if two or more shall
have been first elected to such offices on the same day, in the order of their
seniority in age;
(ii) All other officers of the Corporation in the order of their
seniority of first election to such offices, or if two or more shall have been
first elected to such offices on the same day, in the order of their seniority
in age; and
(iii) Any other persons that are designated on a list that shall have
been approved by the Board of Directors before the emergency, such persons to
be taken in such order of priority and subject to such conditions as may be
provided in the resolution approving the list.
(c) The Board of Directors, during, as well as before, any such
emergency, may provide, and from time to time modify, lines of succession in
the event that during such an emergency any or all officers or agents of the
Corporation shall for any reason be rendered incapable of discharging their
duties.
(d) The Board of Directors, during, as well as before, any
17
<PAGE> 18
such emergency, may, effective in the emergency, change the principal office,
or designate several alternative offices, or authorize the officers so to do.
No officer, Director or employee shall be liable for action taken in good
faith in accordance with these Emergency By-laws.
These Emergency By-laws shall be subject to repeal or change by further
action of the Board of Directors or by action of the shareholders, except that
no such repeal or change shall modify the provisions of the next preceding
paragraph with regard to action or inaction prior to the time of such repeal
or change. Any such amendment of these Emergency By-laws may make any further
or different provision that may be practical and necessary for the
circumstances of the emergency.
18
<PAGE> 1
EXHIBIT 3.21
KEN HECHLER FILE IN DUPLICATE ORIGINALS
Secretary of State FEE: AS PER SCHEDULE ON PAGE 4
State Capitol, W-139 --BUSINESS CORPORATION
Charleston, WV 25305 (stock, for profit):
(304) 342-8000 Complete all items except 3.A.
--NON-PROFIT CORPORATION
(membership, nonstock):
Complete all items except 3.B & 7
[STATE OF WEST VIRGINIA SEAL]
FILED
WEST VIRGINIA MAR 18 1996
IN THE OFFICE OF
ARTICLES OF INCORPORATION SECRETARY OF STATE
WEST VIRGINIA
of
AMF BEVERAGE COMPANY OF W. VA., INC.
- -------------------------------------------------------------------------------
The undersigned, acting as incorporator(s) of a corporation under Chapter 31,
Article I, Section 27 of the West Virginia Code, adopt(s) the following
Articles of Incorporation for such corporation:
1. The undersigned agree to become a West Virginia corporation by the
name of
AMF BEVERAGE COMPANY OF W. VA., INC.
---------------------------------------------------------------------.
(The name of the corporation shall contain one of the words
"corporation," "company," "incorporated," "limited" or shall contain an
abbreviation of one of such words. (Section 31-1-11, W. Va. Code)
2. A. The address at the physical location of the principal office
of the corporation will be
----------------
7313 Bell Creek Road street, in the
----------------------------------------------
city, town or village of Mechanicsville , county of Hanover ,
---------------- --------
State of Virginia , Zip Code 23111 .
----------------------- ----------
The mailing address of the above location, if different, will
be
-------------------------------------------------------------
-------------------------------------------------------------
B. The address at the physical location of the principal place of
business in West Virginia of the corporation, if different than the
c/o Elm Grove Lanes
above address, will be East Cove Avenue , in the city,
------------------------
town or village of WHEELING , OHIO County, West Virginia,
----------- -------
Zip Code 26003.
------
The mailing address of the above location, if different, will be
----------------------------------------------------------------.
3. This corporation is organized as:
A. Non-stock, non-profit .
-------------
or
B. Stock, for profit X , and the aggregate value of the
------
authorized capital stock of said profit corporation will be
5,000 dollars, which shall be divided into 200
----------- ----------
shares of the par value of without par value
-----------------------------------------
(or state "without par value," if applicable)
dollars each. (If the shares are to be divided into more than one
class or if the corporation is to issue shares in any preferred or
special class in series, additional statements are required within
the articles of incorporation.)
4. The period of duration of the corporation, which may be perpetual, is
perpetual .
-------------
1
<PAGE> 2
PLEASE DOUBLE SPACE; IF MORE SPACE IS NEEDED, USE ADDITIONAL SPACE OR PAGE 4
AND ADD PAGES:
5. The purpose(s) for which this corporation is formed (which may
be stated to be, or to include, the transaction of any or all
lawful business for which corporations may be incorporated in
West Virginia), is(are) as follows:
To engage in any and all business activities which are lawful
under the laws of the State of West Virginia and of the United States,
or which may hereafter become lawful under such laws; to conduct its
business within and without the State of West Virginia and to exercise
in any other state, territory, district or possession of the United
States, or in any foreign country, the powers granted hereunder; and
to do any and all of the things hereinabove set forth to the same
extent as natural persons might or could do.
6. The provisions for the regulation of the internal affairs of
the corporation, which the incorporators elect to set forth
in the articles of incorporation, are as follows:
(1) As shall be set forth in the By-Laws of this Corporation; and
(2) the Board of Directors of this Corporation shall have the power to
make, amend, alter and supplement By-Laws for this Corporation, but
any By-Laws or amendments to By-Laws made by the Board of Directors
may be amended, altered or repealed by the stockholders.
7. The provisions granting, limiting or denying preemptive rights
to shareholders, if any, are as follows:
As shall be set forth in the By-Laws of this yCorporation.
2
<PAGE> 3
8. The full name(s) and address(es) of the incorporator(s),
including street and street numbers, if any, and the city,
town or village, including the zip code, and the number of
shares subscribed for by each is(are) as follows:
NUMBER OF SHARES
NAME ADDRESS (OPTIONAL)
Gene Hal Williams 401 Highland Avenue
--------------------------------------------------------------------
So. Chas., WV 25303
--------------------------------------------------------------------
--------------------------------------------------------------------
9. The number of directors constituting the initial board of directors of
the corporation is and the names and addresses of the
-----------------
persons who are to serve as directors until the first annual meeting of
shareholders/members, or until their successors are elected and shall
qualify, are as follows:
NAME ADDRESS
Douglas J. Stanard AMF Bowling Center Holdings, Inc.
--------------------------------------------------------------------
7313 Bell Creek Road
--------------------------------------------------------------------
Mechanicsville, VA 23111
--------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
10. The name and address of the appointed person to whom notice or process
may be sent is Douglas J. Stanard, 7313 Bell Creek Road,
-----------------------------------------------------
Mechanicsville, VA 23111.
-------------------------------------------------------------------.
ACKNOWLEDGEMENT
I(We), the undersigned, for the purpose of forming a corporation under the laws
of the State of West Virginia, do make and file this "Articles of
Incorporation."
In witness whereof, I(we) have accordingly hereunto set my(our)
respective hands this 17th day of March , 1996.
------ ----------- --
(All incorporators must sign below. Names and signatures must appear the same
throughout the Articles of Incorporation.)
PHOTOCOPIES OF THE SIGNATURES OF THE INCORPORATORS AND THE NOTARY PUBLIC CANNOT
BE ACCEPTED.
- ---------------------------------
/s/ Gene Hal Williams
- --------------------------------- ---------------------------------
STATE OF WEST VIRGINIA
---------------------------
COUNTY OF KANAWHA
--------------------------
I, Jean A. Wood , a Notary Public, in and for the county and state
-------------------
aforesaid, hereby certify that (names of all incorporators as shown in item 8
must be inserted in this space by official taking acknowledgement)
GENE HAL WILLIAMS
- --------------------------------
- -------------------------------- --------------------------------,
whose name(s) is(are) signed to the foregoing Articles of Incorporation, this
day personally appeared before me in my said county and acknowledged
his(her)(their) signature(s).
My commission expires April 1, 2001
----------------
[NOTARY PUBLIC SEAL]
/s/ Jean A. Wood
--------------------------------------
(Notary Public)
ARTICLES OF INCORPORATION PREPARED BY Gene Hal Williams
----------------------------------------.
whose mailing address is P.O. Box 8553, South Charleston, WV 25303
-----------------------------------------------------.
Official Form 101
3
<PAGE> 1
EXHIBIT 3.22
BY-LAWS
OF
AMF BEVERAGE COMPANY OF W. VA., INC.
ARTICLE I
Meetings of Shareholders
1.1 Place of Meetings: All meetings of the shareholders shall be held at
such place, either inside or outside the State of West Virginia, as from time
to time may be fixed by the Board of Directors.
1.2 Annual Meetings: The annual meeting of the shareholders, for the
election of Directors and transaction of such other business as may come
before the meetings, shall be held in each year on the second Tuesday in April
at 10 a.m., if that day is not a legal holiday in the State of West Virginia.
If that day is a legal holiday, the annual meeting shall be held on the next
succeeding day not such a legal holiday.
1.3 Special Meetings: A special meeting of the shareholders for any
purpose or purposes may be called at any time by the Chairman of the Board,
the President, or by a majority of the Board of Directors. At a special
meeting, no business shall be transacted and no corporate action shall be
taken other than that stated in the notice of the meeting.
<PAGE> 2
1.4 Notice of Meetings: Written or printed notice stating the place, day
and hour of every meeting of the shareholders and, in case of a special
meeting, the purpose or purposes for which the meeting is called, shall be
mailed not less than ten nor more than sixty days before the date of the
meeting to each shareholder of record entitled to vote at such meeting, at his
address which appears in the share transfer books of the Corporation. Such
further notice shall be given as may be required by law, but meetings may be
held without notice if all the shareholders entitled to vote at the meeting
are present in person or by proxy or if notice is waived in writing by those
not present, either before or after the meeting.
1.5 Quorum: Any number of shareholders together holding at least a
majority of the outstanding shares of capital stock entitled to vote with
respect to the business to be transacted, who shall be present in person or
represented by proxy at any meeting duly called, shall constitute a quorum for
the transaction of business. If less than a quorum shall be in attendance at
the time for which a meeting shall have been called, the meeting may be
adjourned from time to time by a majority of the shareholders present or
represented by proxy without notice other than by announcement at the meeting.
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<PAGE> 3
1.6 Voting: (a) At any meeting of the shareholders each shareholder of a
class entitled to vote on any matter coming before the meeting shall, as to
such matter, have one vote, in person or by proxy, for each share of capital
stock of such class standing in his name on the books of the Corporation on
that date, not more than seventy days prior to such meeting, fixed by the
Board of Directors as the record date for the purpose of determining
shareholders entitled to vote. Every proxy shall be in writing, dated and
signed by the shareholder entitled to vote or his duly authorized
attorney-in-fact. The Corporation may, to the full extent permitted by
the provisions of Section 73, Article 1, Chapter 31 of the Official
Code of West Virginia of 1931, as amended (the "West Virginia Code"), act by
its stockholders without a meeting if all stockholders entitled to vote agree
in writing to so act.
(b) One or more shareholders may participate in a meeting of the
shareholders by means of conference telephone or similar electronic
communications equipment by means of which all persons participating in the
meeting can hear each other.
Whenever a vote of the shareholders is required or permitted in
connection with any corporate action, such vote may be taken orally during
such electronic conference. The agreement thus reached shall have like effect
and validity as
-3-
<PAGE> 4
though the action were duly taken by the action of the shareholders at a
meeting of shareholders if the agreement is reduced to writing and approved by
the shareholders at the next regular meeting of the shareholders after the
conference.
1.7 Inspectors: An appropriate number of inspectors for any meeting of
shareholders may be appointed by the Chairman of such meeting. Inspectors so
appointed will open and close the polls, will receive and take charge of
proxies and ballots, and will decide all questions as to the qualifications of
voters, validity of proxies and ballots, and the number of votes properly
cast.
ARTICLE II
Directors
2.1 General Powers: The property, affairs and business of the
Corporation shall be managed by the Board of Directors, and, except as
otherwise expressly provided by law, the Articles of Incorporation or these
By-laws, all of the powers of the Corporation shall be vested in such Board of
Directors.
2.2 Number of Directors: The number of Directors constituting the Board
of Directors shall be at least one and not more than three. The number of
Directors may be increased or decreased from time to time by amendment to
these By-laws,
-4-
<PAGE> 5
but no decrease shall have the effect of shortening the term of an incumbent
Director.
2.3 Election and Removal of Directors; Quorum:
(a) Directors shall be elected at each annual meeting of shareholders to
succeed those Directors whose terms have expired and to fill any vacancies
then existing.
(b) Directors shall hold their offices for terms of one year and until
their successors are elected. Any Director may be removed from office at a
meeting called expressly for that purpose by the vote of shareholders holding
a majority of the shares entitled to vote at an election of Directors.
(c) Any vacancy occurring in the Board of Directors may be filled by the
affirmative vote of the majority of the remaining Directors though less than a
quorum of the Board, and the term of office of any Director so elected shall
expire at the next shareholder's meeting at which Directors are elected.
(d) A majority of the number of Directors elected and serving at the
time of any meeting shall constitute a quorum for the transaction of business.
The act of a majority of Directors present at a meeting at which a quorum is
present
-5-
<PAGE> 6
shall be the act of the Board of Directors. Less than a quorum may adjourn
any meeting.
2.4 Meetings of Directors: (a) An annual meeting of the Board of
Directors shall be held as soon as practicable after the adjournment of the
annual meeting of shareholders at such place as the Board may designate.
Other meetings of the Board of Directors shall be held at places inside or
outside the State of West Virginia and at times fixed by resolution of the
Board, or upon call of the Chairman of the Board, the President or by a
majority of the Directors. The Secretary or officer performing the
Secretary's duties shall give not less than twenty-four hours' notice either
in person or by letter, telegraph or telephone of all meetings of the Board of
Directors, provided that notice need not be given of the annual meeting or of
regular meetings held at times and places fixed by resolution of the Board.
Meetings may be held at any time without notice if all of the Directors are
present, or if those not present waive notice in writing either before or
after the meeting. The notice of meetings of the Board need not state the
purpose of the meeting. The Corporation may, to the full extent permitted by
Section 73, Article 1, Chapter 31 of the West Virginia Code, act by its
Directors without a meeting if all of its Directors agree in writing to so
act.
-6-
<PAGE> 7
(b) One or more directors may participate in a meeting of the Board or a
committee of the Board by means of conference telephone or similar electronic
communications equipment by means of which all persons participating in the
meeting can hear each other.
Whenever a vote of the directors is required or permitted in connection
with any corporate action, such vote may be taken orally during such
electronic conference. The agreement thus reached shall have like effect and
validity as though the action were duly taken by the action of the directors
at a meeting of directors if the agreement is reduced to writing and approved
by the directors at the next regular meeting of the directors after the
conference.
2.5 Duties: The Board of Directors shall designate depositories for the
Corporation and shall designate and authorize the officers or other persons to
sign checks and bank drafts.
2.6 Compensation: By resolution of the Board, Directors may be allowed a
fee and expenses for attendance at all meetings, but nothing herein shall
preclude Directors from serving the Corporation in other capacities and
receiving compensation for such other services.
-7-
<PAGE> 8
ARTICLE III
Committees
3.1 Executive Committee: The Board of Directors, by resolution adopted
by a majority of the number of Directors fixed by these By-laws, may elect an
Executive Committee which shall consist of not less than two Directors,
including the President. When the Board of Directors is not in session, the
Executive Committee shall have all power vested in the Board of Directors by
law, by the Articles of Incorporation, or by these By-laws, provided that the
Executive Committee shall not have power to (i) approve or recommend to
shareholders action that the West Virginia Code requires to be approved by
shareholders; (ii) fill vacancies on the Board or on any of its committees;
(iii) amend the Articles of Incorporation; (iv) adopt, amend, or repeal the
By-laws; (v) approve a plan of merger or share exchange not requiring
shareholder approval; (vi) authorize or approve a distribution, except
according to a general formula or method prescribed by the Board of Directors;
or (vii) authorize or approve the issuance or sale or contract for sale of
shares, or determine the designation and relative rights, preferences, and
limitations of a class or series of shares, other than within limits
specifically prescribed by the Board of Directors. The Executive Committee
shall report at the next regular or special meeting of the Board of Directors
all action
-8-
<PAGE> 9
which the Executive Committee may have taken on behalf of the Board since the
last regular or special meeting of the Board of Directors.
3.2 Finance Committee: The Board of Directors, by resolution adopted by
a majority of the number of Directors fixed by these By-laws, may elect a
Finance Committee which shall consist of not less than two Directors. The
Finance Committee shall consider and report to the Board with respect to plans
for corporate expansion, capital structure and long-range financial
requirements. The Committee shall also consider and report to the Board with
respect to such other matters relating to the financial affairs of the
Corporation as may be requested by the Board or the appropriate officers of
the Corporation. The Committee shall report periodically to the Board of
Directors on all action which it may have taken.
3.3 Other Committees: The Board of Directors, by resolution adopted by a
majority of the number of Directors fixed by these By-laws, may establish such
other standing or special committees of the Board as it may deem advisable,
consisting of not less than two Directors; and the members, terms and
authority of such committees shall be as set forth in the resolutions
establishing the same.
3.4 Meetings: Regular and special meetings of any Committee established
pursuant to this Article may be called
-9-
<PAGE> 10
and held subject to the same requirements with respect to time, place and
notice as are specified in these By-laws for regular and special meetings of
the Board of Directors.
3.5 Quorum and Manner of Acting: A majority of the members of any
Committee serving at the time of any meeting thereof shall constitute a quorum
for the transaction of business at such meeting. The action of a majority of
those members present at a Committee meeting at which a quorum is present
shall constitute the act of the Committee.
3.6 Terms of Office: Members of any Committee shall be elected as above
provided and shall hold office until their successors are elected by the Board
of Directors or until such Committee is dissolved by the Board of Directors.
3.7 Resignation and Removal: Any member of a Committee may resign at any
time by giving written notice of his intention to do so to the President or
the Secretary of the Corporation, or may be removed, with or without cause, at
any time by such vote of the Board of Directors as would suffice for his
election.
3.8 Vacancies: Any vacancy occurring in a Committee resulting from any
cause whatever may be filled by a majority of the number of Directors fixed by
these By-laws.
-10-
<PAGE> 11
ARTICLE IV
Officers
4.1 Election of Officers; Terms: The Officers of the Corporation shall
consist of a President, a Secretary and a Treasurer. Other officers,
including a Chairman of the Board, one or more Vice Presidents (whose
seniority and titles, including Executive Vice Presidents and Senior Vice
Presidents, may be specified by the Board of Directors), and assistant and
subordinate officers, may from time to time be elected by the Board of
Directors. All officers shall hold office until the next annual meeting of
the Board of Directors and until their successors are elected. Any two
officers may be combined in the same person as the Board of Directors may
determine except that the same person can not serve simultaneously as the
President and the Secretary.
4.2 Removal of Officers; Vacancies: Any officer of the Corporation may
be removed summarily with or without cause, at any time, by the Board of
Directors provided however that the removal of the Chairman of the Board shall
require the vote of two-thirds of the Directors. Vacancies may be filled by
the Board of Directors.
-11-
<PAGE> 12
4.3 Duties: The officers of the Corporation shall have such duties as
generally pertain to their offices, respectively, as well as such powers and
duties as are prescribed by law or are hereinafter provided or as from time to
time shall be conferred by the Board of Directors. The Board of Directors may
require any officer to give such bond for the faithful performance of his
duties as the Board may see fit.
4.4 Duties of the President: The President shall be the chief executive
of the Corporation and shall be primarily responsible for the implementation
of policies of the Board of Directors. He shall have authority over the
general management and direction of the business and operations of the
Corporation and its divisions, if any, subject only to the ultimate authority
of the Board of Directors. He shall be a Director, and, except as otherwise
provided in these By-laws or in the resolutions establishing such committees,
he shall be ex officio a member of all Committees of the Board. In the
absence of the Chairman of the Board or if there is no such officer, the
President shall preside at all corporate meetings. He may sign and execute in
the name of the Corporation share certificates, deeds, mortgages, bonds,
contracts or other instruments except in cases where the signing and the
execution thereof shall be expressly delegated by the Board of Directors or by
these Bylaws to some other officer or agent of the Corporation or shall
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be required by law otherwise to be signed or executed. In addition, he shall
perform all duties incident to the office of the President and such other
duties as from time to time may be assigned to him by the Board of Directors.
4.5 Duties of the Vice-Presidents: Each Vice President, if any, shall
have such powers and duties as may from time to time be assigned to him by the
President or the Board of Directors. Any Vice-President may sign and execute
in the name of the Corporation deeds, mortgages, bonds, contracts or other
instruments authorized by the Board of Directors, except where the signing and
execution of such documents shall be expressly delegated by the Board of
Directors or the President to some other officer or agent of the Corporation
or shall be required by law or otherwise to be signed or executed.
4.6 Duties of the Treasurer: The Treasurer shall have charge of and be
responsible for all funds, securities, receipts and disbursements of the
Corporation, and shall deposit all monies and securities of the Corporation in
such banks and depositories as shall be designated by the Board of Directors.
He shall be responsible (i) for maintaining adequate financial accounts and
records in accordance with general accepted accounting practices; (ii) for the
preparation of appropriate operating budgets and financial statements; (iii)
for the preparation and filing of all tax returns required by law;
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and (iv) for the performance of all duties incident to the office of Treasurer
and such other duties as from time to time may be assigned to him by the Board
of Directors, the Finance Committee or the Managing Director/President. The
treasurer may sign and execute in the name of the Corporation share
certificates, deeds, mortgages, bonds, contracts or other instruments, except
in cases where the signing and the execution thereof shall be expressly
delegated by the Board of Directors or by these By-laws to some other officer
or agent of the Corporation or shall be required by law or otherwise to be
signed or executed.
4.7 Duties of the Secretary: The Secretary shall act as secretary of all
meetings of the Board of Directors and shareholders of the Corporation. When
requested, he shall also act as secretary of the meetings of the committees of
the Board. He shall keep and preserve the minutes of all such meetings in
permanent books. He shall see that all notices required to be given by the
Corporation are duly given and served; shall have custody of the seal of the
Corporation and shall affix the seal or cause it to be affixed to all share
certificates of the Corporation and to all documents the execution of which on
behalf of the Corporation under its corporate seal is duly authorized in
accordance with law or the provisions of these By-laws; shall have custody of
all deeds, leases, contracts and other important corporate documents;
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<PAGE> 15
shall have charge of the books, records and papers of the Corporation relating
to its organization and management as a Corporation; shall see that all
reports, statements and other documents required by law (except tax returns)
are properly 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 of Directors or the President.
4.8 Compensation: The Board of Directors shall have authority to fix the
compensation of all officers of the Corporation.
ARTICLE V
Capital Stock
5.1 Certificates: The shares of capital stock of the Corporation shall
be evidenced by certificates in forms prescribed by the Board of Directors and
executed in any manner permitted by law and stating thereon the information
required by law. Transfer agents and/or registrars for one or more classes of
shares of the Corporation may be appointed by the Board of Directors and may
be required to countersign certificates representing shares of such class or
classes. If any officer whose signature or facsimile thereof shall have been
used on a share certificate shall for any reason cease to be an officer of the
Corporation and such certificate shall not then
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<PAGE> 16
have been delivered by the Corporation, the Board of Directors may
nevertheless adopt such certificate and it may then be issued and delivered as
though such person had not ceased to be an officer of the Corporation.
5.2 Lost, Destroyed and Mutilated Certificates: Holders of the shares
of the Corporation shall immediately notify the Corporation of any loss,
destruction or mutilation of the certificate therefor, and the Board of
Directors may in its discretion cause one or more new certificates for the
same number of shares in the aggregate to be issued to such shareholder upon
the surrender of the mutilated certificate or upon satisfactory proof of such
loss or destruction, and the deposit of a bond in such form and amount and
with such surety as the Board of Directors may require.
5.3 Transfer of Shares: The shares of the Corporation shall be
transferable or assignable only on the books of the Corporation by the holder
in person or by attorney on surrender of the certificate for such shares duly
endorsed and, if sought to be transferred by attorney, accompanied by a
written power of attorney to have the same transferred on the books of the
Corporation. The Corporation will recognize, however, the exclusive right of
the person registered on its books as the owner of shares to receive dividends
and to vote as such owner.
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5.4 Fixing Record Date: For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, or entitled to receive payment of any dividend, or in
order to make a determination of shareholders for any other proper purpose,
the Board of Directors may fix in advance a date as the record date for any
such determination of shareholders, such date in any case to be not more than
seventy days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If no record date is fixed for
the determination of shareholders entitled to notice of or to vote at a
meeting of shareholders, or of shareholders entitled to receive payment of a
dividend, the date on which notices of the meeting are mailed or the date on
which the resolution of the Board of Directors declaring such dividend is
adopted, as the case may be, shall be the record date for such determination
of shareholders. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this Section 5.4, such
determination shall apply to any adjournment thereof unless the Board of
Directors fixes a new record date, which it shall do if the meeting is
adjourned to a date more than 120 days after the date fixed for the original
meeting.
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ARTICLE VI
Miscellaneous Provisions
6.1 Seal: The seal of the Corporation shall consist of a flat-faced
circular die, of which there may be any number of counterparts, on which there
shall be engraved the word "Seal".
6.2 Fiscal Year: The fiscal year of the Corporation shall end on such
date and shall consist of such accounting periods as may be fixed by the Board
of Directors.
6.3 Checks, Notes and Drafts: Checks, notes, drafts and other orders for
the payment of money shall be signed by such persons as the Board of Directors
from time to time may authorize. When the Board of Directors so authorizes,
however, the signature of any such person may be a facsimile.
6.4 Amendment of By-laws: Unless proscribed by the Articles of
Incorporation, these By-laws may be amended or altered at any meeting of the
Board of Directors by affirmative vote of a majority of the number of
Directors fixed by these By-laws. The shareholders entitled to vote in
respect of the election of Directors, however, shall have the power to
rescind, amend, alter or repeal any By-laws and to enact By-laws which, if
expressly so provided, may not be amended, altered or repealed by the Board of
Directors.
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6.5 Voting of Shares Held: Unless otherwise provided by resolution of
the Board of Directors or of the Executive Committee, if any, the President
may from time to time appoint an attorney or attorneys or agent or agents of
the Corporation, in the name and on behalf of the Corporation, to cast the
vote which the Corporation may be entitled to cast as a shareholder or
otherwise in any other corporation, any of whose securities may be held by the
Corporation, at meetings of the holders of the shares or other securities of
such other corporation, or to consent in writing to any action by any such
other corporation, and the President shall instruct the person or persons so
appointed as to the manner of casting such votes or giving such consent and
may execute or cause to be executed on behalf of the Corporation, and under
its corporate seal or otherwise, such written proxies, consents, waivers or
other instruments as may be necessary or proper in the premises. In lieu of
such appointment the President may himself attend any meetings of the holders
of shares or other securities of any such other corporation and there vote or
exercise any or all power of the Corporation as the holder of such shares or
other securities of such other corporation.
6.6 Indemnification: The Corporation shall, to the fullest extent
permitted under Section 9, Article 1, Chapter 31
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of the West Virginia Code, indemnify all persons who it may have the power to
indemnify pursuant thereto.
ARTICLE VII
Emergency By-laws
The Emergency By-laws provided in this Article VII shall be operative
during any emergency, notwithstanding any different provision in the preceding
Articles of these By-laws or in the Articles of Incorporation of the
Corporation or in the West Virginia Code (other than those provisions relating
to emergency by-laws). An emergency exists if a quorum of the Corporation's
Board of Directors cannot readily be assembled because of some catastrophic
event. To the extent not inconsistent with these Emergency By-laws, the
By-laws provided in the preceding Articles shall remain in effect during such
emergency and upon the termination of such emergency the Emergency By-laws
shall cease to be operative unless and until another, such emergency shall
occur.
During any such emergency:
(a) Any meeting of the Board of Directors may be called by any officer
of the Corporation or by any Director. The notice thereof shall specify the
time and place of the meeting. To the extent feasible, notice shall be given
in accord with Section 2.4 above, but notice may be given only to
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such of the Directors as it may be feasible to reach at the time, by such
means as may be feasible at the time, including publication or radio, and at a
time less than twenty-four hours before the meeting if deemed necessary by the
person giving notice. Notice shall be similarly given, to the extent
feasible, to the other persons referred to in (b) below.
(b) At any meeting of the Board of Directors, a quorum shall consist of
a majority of the number of Directors fixed at the time by Article II of the
By-laws. If the Directors present at any particular meeting shall be fewer
than the number of required for such quorum, other persons present as referred
to below, to the number necessary to make up such quorum, shall be deemed
Directors for such particular meeting as determined by the following
provisions and in the following order of priority:
(i) Vice-Presidents not already serving as Directors, in the order of
their seniority of first election to such offices, or if two or more shall
have been first elected to such offices on the same day, in the order of their
seniority in age;
(ii) All other officers of the Corporation in
the order of their seniority of first election to such offices,
or if two or more shall have been first elected to such offices
on the same day, in the order of their seniority in age; and
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(iii) Any other persons that are designated on a list that shall have
been approved by the Board of Directors before the emergency, such persons to
be taken in such order of priority and subject to such conditions as may be
provided in the resolution approving the list.
(c) The Board of Directors, during, as well as before, any such
emergency, may provide, and from time to time modify, lines of succession in
the event that during such an emergency any or all officers or agents of the
Corporation shall for any reasons be rendered incapable of discharging their
duties.
(d) The Board of Directors, during, as well as before, any such
emergency, may, effective in the emergency, change the principal office, or
designate several alternative offices, or authorize the officers so to do.
No officer, Director or employee shall be liable for action taken in good
faith in accordance with these Emergency By-laws.
These Emergency By-laws shall be subject to repeal or change by further
action of the Board of Directors or by action of the shareholders, except that
no such repeal or change shall modify the provisions of the next preceding
paragraph with regard to action or inaction prior to the time of such repeal or
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change. Any such amendment of these Emergency By-laws may make any further or
different provision that may be practical and necessary for the circumstances
of the emergency.
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EXHIBIT 3.23
CERTIFICATE OF INCORPORATION
OF
AMF BOWLING CENTERS SWITZERLAND INC.
I, the undersigned, for the purpose of incorporating and organizing a
corporation under the General Corporation Law of the State of Delaware, do
hereby execute this Certificate of Incorporation and do hereby certify as
follows:
ARTICLE I
The name of the corporation (which is hereinafter referred to as the
"Corporation") is:
AMF Bowling Centers Switzerland Inc.
ARTICLE II
The address of the Corporation's registered office in the State of
Delaware is The Corporation Trust Center, 1209 Orange Street in the City of
Wilmington, County of New Castle. The name of the Corporation's registered agent
at such address is The Corporation Trust Company.
ARTICLE III
The purpose of the Corporation shall be to engage in any lawful act or
activity for which corporations may be organized and incorporated under the
General Corporation Law of the State of Delaware.
<PAGE> 2
ARTICLE IV
Section 1. The Corporation shall be authorized to issue 1,000 shares of
capital stock, of which all shares shall be shares of Common Stock, $.01 par
value ("Common Stock").
Section 2. Except as otherwise provided by law, the Common Stock shall
have the exclusive right to vote for the election of directors and for all other
purposes. Each share of Common Stock shall have one vote, and the Common Stock
shall vote together as a single class.
ARTICLE V
Unless and except to the extent that the By-Laws of the Corporation
shall so require, the election of directors of the Corporation need not be by
written ballot.
ARTICLE VI
In furtherance and not in limitation of the powers conferred by law,
the Board of Directors of the Corporation (the "Board") is expressly authorized
and empowered to make, alter and repeal the By-Laws of the Corporation by a
majority vote at any regular or special meeting of the Board or by written
consent, subject to the power of the stockholders of the Corporation to alter or
repeal any By-Laws made by the Board.
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ARTICLE VII
The Corporation reserves the right at any time from time to time to
amend, alter, change or repeal any provision contained in this Certificate of
Incorporation, and any other provisions authorized by the laws of the State of
Delaware at the time in force may be added or inserted, in the manner now or
hereafter prescribed by law; and all rights, preferences and privileges of
whatsoever nature conferred upon stockholders, directors or any other persons
whomsoever by and pursuant to this Certificate of Incorporation in its present
form or as hereafter amended are granted subject to the right reserved in this
Article.
ARTICLE VIII
Section 1. Elimination of Certain Liability of Directors. A director of
the Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the General Corporation Law of the State of Delaware, or (iv) for
any transaction from which the director derived an improper personal benefit.
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<PAGE> 4
Section 2. Indemnification and Insurance.
(a) Right to Indemnification. Each person who was or is made a party or
is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director or officer
of the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged action
in an official capacity as a director, officer, employee or agent or in any
other capacity while serving as a director, officer, employee or agent, shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the General Corporation Law of the State of Delaware, as the same
exists or may hereafter be amended (but, in the case of any such amendment, only
to the extent that such amendment permits the Corporation to provide broader
indemnification rights than said law permitted the Corporation to provide prior
to such amendment), against all expense, liability and loss (including
attorneys' fees, judgments, fines, amounts paid or to be paid in settlement, and
excise taxes or penalties arising under
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the Employee Retirement Income Security Act of 1974) reasonably incurred or
suffered by such person in connection therewith and such indemnification shall
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of his or her heirs, executors and
administrators; provided, however, that, except as provided in paragraph (b)
hereof, the Corporation shall indemnify any such person seeking indemnification
in connection with a proceeding (or part thereof) initiated by such person only
if such proceeding (or part thereof) was authorized by the Board. The right to
indemnification conferred in this Section shall be a contract right and shall
include the right to be paid by the Corporation the expenses incurred in
defending any such proceeding in advance of its final disposition; provided,
however, that, if the General Corporation Law of the State of Delaware requires,
the payment of such expenses incurred by a director or officer in his or her
capacity as a director or officer (and not in any other capacity in which
service was or is rendered by such person while a director or officer,
including, without limitation, service to an employee benefit plan) in advance
of the final disposition of a proceeding, shall be made only upon delivery to
the Corporation of an undertaking, by or on behalf of such director or officer,
to repay all amounts so advanced if it shall ultimately be determined that such
director or officer is not entitled to be indemnified under this Section or
otherwise.
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The Corporation may, by action of the Board, provide indemnification to
employees and agents of the Corporation with the same scope and effect as the
foregoing indemnification of directors and officers.
(b) Right of Claimant to Bring Suit. If a claim under paragraph (a) of
this Section is not paid in full by the Corporation within thirty days after a
written claim has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant shall be entitled
to be paid also the expense of prosecuting such claim. It shall be a defense to
any such action (other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final disposition where
the required undertaking, if any is required, has been tendered to the
Corporation) that the claimant has not met the standards of conduct which make
it permissible under the General Corporation Law of the State of Delaware for
the Corporation to indemnify the claimant for the amount claimed, but the burden
of proving such defense shall be on the Corporation. Neither the failure of the
Corporation (including its Board, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set
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forth in the General Corporation Law of the State of Delaware, nor an actual
determination by the Corporation (including its Board, independent legal
counsel, or its stockholders) that the claimant has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that the claimant has not met the applicable standard of conduct.
(c) Non-Exclusivity of Rights. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Section shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, provision of
the Certificate of Incorporation, By-law, agreement, vote of stockholders or
disinterested directors or otherwise.
(d) Insurance. The Corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the General Corporation Law of the State of Delaware.
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ARTICLE IX
The name and mailing address of the incorporator is Mitchell S.
Presser, Esq., c/o Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New
York, New York 10019.
IN WITNESS WHEREOF, I, the undersigned, being the incorporator
hereinbefore named, do hereby further certify that the facts hereinabove stated
are truly set forth and, accordingly, I have hereunto set my hand this 27th day
of February, 1996.
/s/ Mitchell S. Presser
-----------------------
Mitchell S. Presser
Incorporator
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EXHIBIT 3.24
BY-LAWS
of
AMF BOWLING CENTERS SWITZERLAND INC.
(as of February 27, 1996)
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE -- The registered office of AMF Bowling
Centers Switzerland Inc. (the "Corporation") shall be established and maintained
at the office of The Corporation Trust Company at The Corporation Trust Center,
1209 Orange Street in the City of Wilmington, County of New Castle, State of
Delaware, and said Corporation Trust Company shall be the registered agent of
the Corporation in charge thereof.
SECTION 2. OTHER OFFICES -- The Corporation may have other offices,
either within or without the State of Delaware, at such place or places as the
Board of Directors may from time to time select or the business of the
Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. ANNUAL MEETINGS -- Annual meetings of stockholders for the
election of directors, and for such other business as may be stated in the
notice of the meeting, shall be held at such place, either within or without the
State of Delaware, and at such time and date as the Board of Directors, by
resolution, shall determine and as set forth in the notice of the meeting. If
the Board of Directors fails so to determine the time, date and place of
meeting, the annual meeting of stockholders shall be held at the registered
office of the Corporation on the first Tuesday in April. If the date of the
annual meeting shall fall upon a legal holiday, the meeting shall be held on the
next succeeding business day. At each annual meeting, the stockholders entitled
to vote shall elect a
<PAGE> 2
Board of Directors and they may transact such other corporate business as shall
be stated in the notice of the meeting.
SECTION 2. SPECIAL MEETINGS -- Special meetings of the stockholders for
any purpose or purposes may be called by the Chairman of the Board, the
President or the Secretary, or by resolution of the Board of Directors.
SECTION 3. VOTING -- Each stockholder entitled to vote in accordance
with the terms of the Certificate of Incorporation of the Corporation and these
By-Laws may vote in person or by proxy, but no proxy shall be voted after three
years from its date unless such proxy provides for a longer period. All
elections for directors shall be decided by plurality vote; all other questions
shall be decided by majority vote except as otherwise provided by the
Certificate of Incorporation or the laws of the State of Delaware.
A complete list of the stockholders entitled to vote at the meeting,
arranged in alphabetical order, with the address of each, and the number of
shares held by each, 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 in the notice of
the meeting, or, if not so specified, 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 any stockholder
who is entitled to be present.
SECTION 4. QUORUM -- Except as otherwise required by law, by the
Certificate of Incorporation of the Corporation or by these By-Laws, the
presence, in person or by proxy, of stockholders holding shares constituting a
majority of the voting power of the Corporation shall constitute a quorum at all
meetings of the stockholders. In case a quorum shall not be present at any
meeting, a majority in interest of the stockholders entitled to vote thereat,
present in person or by proxy, shall have the power to adjourn the meeting from
time to time, without notice other than announcement at the meeting, until the
requisite amount of stock entitled to vote shall be present. At any such
adjourned meeting at which the requisite amount of stock entitled to vote shall
be represented, any business may be transacted that might have been transacted
at the meeting as originally noticed; but only those stockholders entitled to
vote at the meeting as originally noticed shall be entitled to vote at any
adjournment or adjournments thereof.
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SECTION 5. NOTICE OF MEETINGS -- Written notice, stating the place,
date and time of the meeting, and the general nature of the business to be
considered, shall be given to each stockholder entitled to vote thereat, at his
or her address as it appears on the records of the Corporation, not less than
ten nor more than sixty days before the date of the meeting. No business other
than that stated in the notice shall be transacted at any meeting without the
unanimous consent of all the stockholders entitled to vote thereat.
SECTION 6. ACTION WITHOUT MEETING -- Unless otherwise provided by the
Certificate of Incorporation of the Corporation, any action required or
permitted to be taken at any annual or special meeting of 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 such 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 III
DIRECTORS
SECTION 1. NUMBER AND TERM -- The business and affairs of the
Corporation shall be managed under the direction of a Board of Directors which
shall consist of not less than two persons. The exact number of directors shall
initially be two and may thereafter be fixed from time to time by the Board of
Directors. Directors shall be elected at the annual meeting of stockholders and
each director shall be elected to serve until his or her successor shall be
elected and shall qualify. A director need not be a stockholder.
SECTION 2. RESIGNATIONS -- Any director may resign at any time. Such
resignation shall be made in writing, and shall take effect at the time
specified therein, and if no time be specified, at the time of its receipt by
the Chairman of the Board, the President or the Secretary. The acceptance of a
resignation shall not be necessary to make it effective.
SECTION 3. VACANCIES -- If the office of any director becomes vacant,
the remaining directors in the office, though less than a quorum, by a majority
vote, may appoint any qualified person to fill such vacancy, who shall hold
office
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for the unexpired term and until his or her successor shall be duly chosen. If
the office of any director becomes vacant and there are no remaining directors,
the stockholders, by the affirmative vote of the holders of shares constituting
a majority of the voting power of the Corporation, at a special meeting called
for such purpose, may appoint any qualified person to fill such vacancy.
SECTION 4. REMOVAL -- Except as hereinafter provided, any director or
directors may be removed either for or without cause at any time by the
affirmative vote of the holders of a majority of the voting power entitled to
vote for the election of directors, at an annual meeting or a special meeting
called for the purpose, and the vacancy thus created may be filled, at such
meeting, by the affirmative vote of holders of shares constituting a majority of
the voting power of the Corporation.
SECTION 5. COMMITTEES -- The Board of Directors may, by resolution or
resolutions passed by a majority of the whole Board of Directors, designate one
or more committees, each committee to consist of one or more directors of the
Corporation.
Any such committee, to the extent provided in the resolution of the
Board of Directors, or in these By-Laws, shall have and may exercise all the
powers and authority of the Board of Directors 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.
SECTION 6. MEETINGS -- The newly elected directors may hold their first
meeting for the purpose of organization and the transaction of business, if a
quorum be present, immediately after the annual meeting of the stockholders; or
the time and place of such meeting may be fixed by consent of all the Directors.
Regular meetings of the Board of Directors may be held without notice
at such places and times as shall be determined from time to time by resolution
of the Board of Directors.
Special meetings of the Board of Directors may be called by the
Chairman of the Board or the President, or by the Secretary on the written
request of any director, on at least one day's notice to each director (except
that notice to any director may be waived in writing by such director) and shall
be held at such place or places as may be determined by the Board of Directors,
or as shall be stated in the call of the meeting.
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Unless otherwise restricted by the Certificate of Incorporation of the
Corporation or these By-Laws, members of the Board of Directors, or any
committee designated by the Board of Directors, may participate in any meeting
of the Board of Directors or any committee thereof by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation in a
meeting shall constitute presence in person at the meeting.
SECTION 7. QUORUM -- A majority of the Directors shall constitute a
quorum for the transaction of business. If at any meeting of the Board of
Directors there shall be less than a quorum present, a majority of those present
may adjourn the meeting from time to time until a quorum is obtained, and no
further notice thereof need be given other than by announcement at the meeting
which shall be so adjourned. The vote of the majority of the Directors present
at a meeting at which a quorum is present shall be the act of the Board of
Directors unless the Certificate of Incorporation of the Corporation or these
By-Laws shall require the vote of a greater number.
SECTION 8. COMPENSATION -- Directors shall not receive any stated
salary for their services as directors or as members of committees, but by
resolution of the Board of Directors a fixed fee and expenses of attendance may
be allowed for attendance at each meeting. Nothing herein contained shall be
construed to preclude any director from serving the Corporation in any other
capacity as an officer, agent or otherwise, and receiving compensation therefor.
SECTION 9. ACTION WITHOUT MEETING -- Any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting if a written consent thereto is signed by all
members of the Board of Directors or of such committee, as the case may be, and
such written consent is filed with the minutes of proceedings of the Board of
Directors or such committee.
ARTICLE IV
OFFICERS
SECTION 1. OFFICERS -- The officers of the Corporation shall be a
President, a Treasurer and a Secretary, all of whom shall be elected by the
Board of Directors and shall hold office until their successors are duly elected
and qualified. In addition, the Board of Directors may elect such Vice
Presidents, Assistant Secretaries and Assistant Treasurers as
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<PAGE> 6
they may deem proper. The Board of Directors may appoint such other officers and
agents as it may deem advisable, who shall hold their offices for such terms and
shall exercise such powers and perform such duties as shall be determined from
time to time by the Board of Directors.
SECTION 2. CHAIRMAN OF THE BOARD -- The Chairman of the Board shall not
be an officer of the corporation. He or she shall preside at all meetings of the
Board of Directors and shall have and perform such other duties as may be
assigned to him or her by the Board of Directors.
SECTION 3. PRESIDENT -- The President shall be the Chief Executive
Officer of the Corporation. He or she shall have the general powers and duties
of supervision and management usually vested in the office of President of a
corporation. The President shall have the power to execute bonds, mortgages and
other contracts on behalf of the Corporation, and to cause the seal to be
affixed to any instrument requiring it, and when so affixed the seal shall be
attested to by the signature of the Secretary or the Treasurer or an Assistant
Secretary or an Assistant Treasurer.
SECTION 4. VICE PRESIDENTS -- Each Vice President shall have such
powers and shall perform such duties as shall be assigned to him or her by the
Board of Directors.
SECTION 5. TREASURER -- The Treasurer shall be the Chief Financial
Officer of the Corporation. He or she shall have the custody of the Corporate
funds and securities and shall keep full and accurate account of receipts and
disbursements in books belonging to the Corporation. He or she shall deposit all
moneys and other valuables in the name and to the credit of the Corporation in
such depositaries as may be designated by the Board of Directors. He or she
shall disburse the funds of the Corporation as may be ordered by the Board of
Directors or the President, taking proper vouchers for such disbursements. He or
she shall render to the Chairman of the Board, the President and Board of
Directors at the regular meetings of the Board of Directors, or whenever they
may request it, an account of all his or her transactions as Treasurer and of
the financial condition of the Corporation. If required by the Board of
Directors, he or she shall give the Corporation a bond for the faithful
discharge of his or her duties in such amount and with such surety as the Board
of Directors shall prescribe.
SECTION 6. SECRETARY -- The Secretary shall give, or cause to be given,
notice of all meetings of stockholders and of the Board of Directors and all
other notices required by law
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or by these By-Laws, and in case of his or her absence or refusal or neglect so
to do, any such notice may be given by any person thereunto directed by the
Chairman of the Board or the President, or by the Board of Directors, upon whose
request the meeting is called as provided in these By-Laws. He or she shall
record all the proceedings of the meetings of the Board of Directors, any
committees thereof and the stockholders of the Corporation in a book to be kept
for that purpose, and shall perform such other duties as may be assigned to him
or her by the Board of Directors, the Chairman of the Board or the President. He
or she shall have the custody of the seal of the Corporation and shall affix the
same to all instruments requiring it, when authorized by the Board of Directors,
the Chairman of the Board or the President, and attest to the same.
SECTION 7. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES -- Assistant
Treasurers and Assistant Secretaries, if any, shall be elected and shall have
such powers and shall perform such duties as shall be assigned to them,
respectively, by the Board of Directors.
ARTICLE V
MISCELLANEOUS
SECTION 1. CERTIFICATES OF STOCK -- A certificate of stock shall be
issued to each stockholder certifying the number of shares owned by such
stockholder in the Corporation. Certificates of stock of the Corporation shall
be of such form and device as the Board of Directors may from time to time
determine.
SECTION 2. LOST CERTIFICATES -- A new certificate of stock may be
issued in the place of any certificate theretofore issued by the Corporation,
alleged to have been lost or destroyed, and the Board of Directors may, in its
discretion, require the owner of the lost or destroyed certificate, or such
owner's legal representatives, to give the Corporation a bond, in such sum as
they may direct, not exceeding double the value of the stock, to indemnify the
Corporation against any claim that may be made against it on account of the
alleged loss of any such certificate, or the issuance of any such new
certificate.
SECTION 3. TRANSFER OF SHARES -- The shares of stock of the Corporation
shall be transferable only upon its books by the holders thereof in person or by
their duly authorized attorneys or legal representatives, and upon such transfer
the old certificates shall be surrendered to the Corporation by the
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<PAGE> 8
delivery thereof to the person in charge of the stock and transfer books and
ledgers, or to such other person as the Board of Directors may designate, by
whom they shall be cancelled, and new certificates shall thereupon be issued. A
record shall be made of each transfer and whenever a transfer shall be made for
collateral security, and not absolutely, it shall be so expressed in the entry
of the transfer.
SECTION 4. STOCKHOLDERS RECORD DATE -- In order that the Corporation
may determine 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 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 of Directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors and which
record date: (1) in the case of determination of stockholders entitled to vote
at any meeting of stockholders or adjournment thereof, shall, unless otherwise
required by law, not be more than sixty nor less than ten days before the date
of such meeting; (2) in the case of determination of stockholders entitled to
express consent to corporate action in writing without a meeting, shall not be
more than ten days from the date upon which the resolution fixing the record
date is adopted by the Board of Directors; and (3) in the case of any other
action, shall not be more than sixty days prior to such other action. If no
record date is fixed: (1) the record date for determining stockholders entitled
to notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held; (2) the record date for determining stockholders
entitled to express consent to corporate action in writing without a meeting
when no prior action of the Board of Directors is required by law, shall be the
first day on which a signed written consent setting forth the action taken or
proposed to be taken is delivered to the Corporation in accordance with
applicable law, or, if prior action by the Board of Directors is required by
law, shall be at the close of business on the day on which the Board of
Directors adopts the resolution taking such prior action; and (3) the record
date for determining stockholders for any other purpose shall be at the close of
business on the day on which the Board of Directors adopts the resolution
relating thereto. A determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the
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<PAGE> 9
Board of Directors may fix a new record date for the adjourned meeting.
SECTION 5. DIVIDENDS -- Subject to the provisions of the Certificate of
Incorporation of the Corporation, the Board of Directors may, out of funds
legally available therefor at any regular or special meeting, declare dividends
upon stock of the Corporation as and when they deem appropriate. Before
declaring any dividend there may be set apart out of any funds of the
Corporation available for dividends, such sum or sums as the Board of Directors
from time to time in their discretion deem proper for working capital or as a
reserve fund to meet contingencies or for equalizing dividends or for such other
purposes as the Board of Directors shall deem conducive to the interests of the
Corporation.
SECTION 6. SEAL -- The corporate seal of the Corporation shall be in
such form as shall be determined by resolution of the Board of Directors. Said
seal may be used by causing it or a facsimile thereof to be impressed or affixed
or reproduced or otherwise imprinted upon the subject document or paper.
SECTION 7. FISCAL YEAR -- The fiscal year of the Corporation shall be
determined by resolution of the Board of Directors.
SECTION 8. CHECKS -- All checks, drafts or other orders for the payment
of money, notes or other evidences of indebtedness issued in the name of the
Corporation shall be signed by such officer or officers, or agent or agents, of
the Corporation, and in such manner as shall be determined from time to time by
resolution of the Board of Directors.
SECTION 9. NOTICE AND WAIVER OF NOTICE -- Whenever any notice is
required to be given under these By-Laws, personal notice is not required unless
expressly so stated, and any notice so required shall be deemed to be sufficient
if given by depositing the same in the United States mail, postage prepaid,
addressed to the person entitled thereto at his or her address as it appears on
the records of the Corporation, and such notice shall be deemed to have been
given on the day of such mailing. Stockholders not entitled to vote shall not
be entitled to receive notice of any meetings except as otherwise provided by
law. Whenever any notice is required to be given under the provisions of any
law, or under the provisions of the Certificate of Incorporation of the
Corporation or of these By-Laws, a waiver thereof, in writing and signed by the
person or persons entitled to said notice, whether before or after the
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time stated therein, shall be deemed equivalent to such required notice.
ARTICLE VI
AMENDMENTS
These By-Laws may be altered, amended or repealed at any annual meeting
of the stockholders (or at any special meeting thereof if notice of such
proposed alteration, amendment or repeal to be considered is contained in the
notice of such special meeting) by the affirmative vote of the holders of
shares constituting a majority of the voting power of the Corporation. Except as
otherwise provided in the Certificate of Incorporation of the Corporation, the
Board of Directors may by majority vote of those present at any meeting at which
a quorum is present alter, amend or repeal these By-Laws, or enact such other
By-Laws as in their judgment may be advisable for the regulation and conduct of
the affairs of the Corporation.
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<PAGE> 1
EXHIBIT 3.25
AMF BOWLING CENTERS INTERNATIONAL INC.
AMENDMENT
1. Name. The name of the corporation is AMF Bowling Centers
International Inc.
2. Amendment. The Amendment is to change the name of the
corporation from AMF Bowling Centers International Inc. to AMF Bowling Centers
(Aust) International Inc.
3. Action by Directors. On December 27, 1988, all of the
directors of the corporation, by signing a consent in writing that sets forth
the proposed amendment, found that the proposed amendment was in the best
interest of the corporation and directed that it be submitted to the
shareholders of the corporation with the request that they approve and adopt the
same by signing a consent in writing.
4. Action by Shareholders. On December 27, 1988, following the
action of the directors, the shareholders of the corporation, by signing a
consent in writing that sets forth the proposed amendment, approved and adopted
the same. The number of shares outstanding and entitled to vote on the proposed
amendment, being of a single class, was 1.
IN WITNESS WHEREOF, the undersigned Vice President of AMF Bowling
Centers International Inc. has executed these Articles of Amendment this 1st day
of March, 1989.
AMF BOWLING CENTERS INTERNATIONAL INC.
By: /s/ Daniel M. McCormack
----------------------------------------
Vice President
<PAGE> 2
ARTICLES OF CORRECTION
OF
AMF BOWLING USA INC.
The undersigned corporation, as authorized by its Board of Directors
and pursuant to Section 13.1-607 of the Code of Virginia, hereby executes the
following articles and sets forth:
1. The name of the corporation is AMF Bowling USA Inc.
2. The articles to be corrected are Articles of Amendment, which
became effective on December 30, 1988.
3. The aforesaid articles contain the following incorrect
statement: The number of shares outstanding and entitled to vote on the proposed
amendment, being of a single class, was 10,000. This incorrect statement is
found in Paragraph 4 at the end of line 4 of the articles, and is corrected by
inserting in lieu of such statement the following: the number of shares
outstanding and entitled to vote on the proposed amendment, being of single
class, was 1.
The undersigned President declares that the facts herein stated are
true as of January 6, 1989.
AMF BOWLING USA INC.
By:/s/Beverley W. Armstrong
----------------------------
Beverley W. Armstrong
President
<PAGE> 3
ARTICLES OF INCORPORATION
OF
AMF BOWLING USA INC.
AMENDMENT
1. Name. The name of the corporation is AMF Bowling USA Inc.
2. Amendment. The Amendment is to change the name of the
corporation from AMF Bowling USA Inc. to AMF Bowling Centers International Inc.
3. Action by Directors. On December 23, 1988, all of the
directors of the corporation, by signing a consent in writing that set forth the
proposed amendment, found that the proposed amendment was in the best interests
of the corporation and directed that it be submitted to the sole shareholder of
the corporation with the request that it approves and adopts the same by signing
a consent in writing.
4. Action by Sole Shareholder. On December 23, 1988, following
the action of the directors, the sole shareholder of the corporation, by signing
a consent in writing that set forth the proposed amendment, approved and adopted
the same. The number of shares outstanding and entitled to vote on the proposed
amendment, being of a single class, was 10,000.
IN WITNESS WHEREOF, the undersigned Vice President of AMF Bowling USA
Inc. have executed these Articles of Amendment this 28th day of December, 1988.
AMF BOWLING USA INC.
By: /s/ Daniel M. McCormack
-------------------------
President
<PAGE> 4
ARTICLES OF INCORPORATION
OF
AMF BOWLING USA INC.
I.
The name of the Corporation is AMF Bowling USA Inc.
II.
The purpose for which the Corporation is formed is to transact any or
all lawful business, not required to be specifically stated in these Articles,
for which corporations may be incorporated under the Virginia Stock Corporation
Act, as amended from time to time.
III.
The number of shares which the Corporation shall have authority to
issue shall be 10,000 shares of the par value of $1.00 each.
IV.
The initial registered office shall be located at 707 E. Main Street,
P.O. Box 1535, in the City of Richmond, and the initial registered agent shall
be C. Porter Vaughan, III, who is a resident of Virginia and a member of the
Virginia State Bar, and whose business address is the same as the address of the
initial registered office.
<PAGE> 5
V.
The number of Directors constituting the initial Board of Directors
shall be three, and the names and addresses of the persons who are to serve as
the initial Directors are as follows:
William H. Goodwin, Jr. Frank E. Genovese
President President
Commonwealth Computer AMF Union Machinery, Inc.
Advisors, Inc. 2115 W. Laburnum Avenue
707 E. Main Street Richmond, Virginia 23221
Suite 1650
Richmond, Virginia 23219
James B. Farinholt, Jr.
President
Galleher & Company, Inc.
9 South Twelfth Street
Third Floor
Richmond, Virginia 23219
VI.
(1) In this Article:
"Applicant" means the person seeking indemnification pursuant
to this Article.
"Expenses" includes counsel fees.
"Liability" means the obligation to pay a judgment,
settlement, penalty, fine, including any excise tax assessed with respect to an
employee benefit plan, or reasonable expenses incurred with respect to a
proceeding.
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"Official capacity" means, (i) when used with respect to a
director, the office of director in the Corporation; or (ii) when used with
respect to an individual other than a director, the office in the Corporation
held by the officer or the employment or agency relationship undertaken by the
employee or agent on behalf of the Corporation. "Official capacity" does not
include service for any other foreign or domestic corporation or any
partnership, joint venture, trust, employee benefit plan, or other enterprise.
"Party" includes an individual who was, is, or is threatened
to be made a named defendant or respondent in a proceeding.
"Proceeding" means any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal, administrative or
investigative and whether formal or informal.
(2) The Corporation shall indemnify any person who was or is a party to
any proceeding, including a proceeding by or in the right of the Corporation to
procure a judgment in its favor, by reason of the fact that he is or was a
director or officer of the Corporation, or is or was serving at the request of
the Corporation as a director, trustee, partner or officer of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, against any liability incurred by him in
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connection with such proceeding if (i) he believed, in the case of conduct in
his official capacity, that his conduct was in the best interests of the
Corporation, and in all other cases that his conduct was at least not opposed to
its best interests, and, in the case of any criminal proceeding, had no
reasonable cause to believe his conduct was unlawful, and (ii) he was not guilty
of gross negligence or willful misconduct. A person is considered to be serving
an employee benefit plan at the Corporation's request if his duties to the
Corporation also impose duties on, or otherwise involve services by, him to the
plan or to participants in or beneficiaries of the plan. A person's conduct with
respect to an employee benefit plan for a purpose he believed to be in the
interests of the participants and beneficiaries of the plan is conduct that
satisfies the requirements of this section.
(3) The termination of any proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent, shall not of
itself create a presumption that the applicant did not meet the standard of
conduct described in Section (2) of this Article.
(4) Notwithstanding the provisions of section (2) of this Article: no
indemnification shall be made in connection with any proceeding charging the
applicant with improper benefit to himself, whether or not involving action in
his official capacity,
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<PAGE> 8
in which he was adjudged liable on the basis that personal benefit was
improperly received by him.
(5) To the extent that the applicant has been successful on the merits
or otherwise in defense of any proceeding referred to in section (2) of this
Article, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses actually and reasonably incurred by him in
connection therewith.
(6) Any indemnification under section (2) of this Article (unless
ordered by a court) shall be made by the Corporation only as authorized in the
specific case upon a determination that indemnification of the applicant is
proper in the circumstances because he has met the applicable standard of
conduct set forth in sections (2) and (4).
The determination shall be made:
(a) By the Board of Directors by a majority vote of a quorum consisting
of Directors not at the time parties to the proceeding;
(b) If a quorum cannot be obtained under subsection (a) of this
section, by majority vote of a committee duly designated by the Board of
Directors (in which designation Directors who are parties may participate),
consisting solely of two or more Directors not at the time parties to the
proceeding;
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(c) By special legal counsel:
(i) Selected by the Board of Directors or its committee in the
manner prescribed in subsection (a) or (b) of this section; or
(ii) If a quorum of the Board of Directors or its committee in
the manner prescribed in subsection (a) or (b) of this section; or
(d) By the shareholders, but shares owned by or voted under the control
of Directors who are at the time parties to the proceeding may not be voted on
the determination.
Authorization of indemnification and evaluation as to reasonableness of
expenses shall be made in the same manner as the determination that
indemnification is permissible, except that if the determination is made by
special legal counsel, authorization of indemnification and evaluation as to
reasonableness of expenses shall be made by those entitled under subsection (C)
of this section to section to select counsel.
(7) (a) The Corporation may pay for or reimburse the reasonable
expenses incurred by any applicant who is a party to a proceeding in advance of
final disposition of the proceeding if:
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<PAGE> 10
(i) The applicant furnishes the Corporation a written
statement of his good faith belief that he has met the standard of conduct
described in section (2) and (4);
(ii) The applicant furnishes the Corporation a written
undertaking, executed personally or on his behalf, to repay the advance if it is
ultimately determined that he did not meet the standard of conduct; and
(iii) A determination is made that the facts then known to
those making the determination would not preclude indemnification under this
Article.
(b) The undertaking required by paragraph (ii) of subsection (a) of
this section shall be an unlimited general obligation of the applicant but need
not be secured and may be accepted without reference to financial ability to
make repayment.
(c) Determinations and authorizations of payments under this section
shall be made in the manner specified in section (6).
(8) The Board of Directors is hereby empowered, by majority vote of a
quorum of disinterested Directors, to cause the Corporation to indemnify or
contract in advance to indemnify any person not specified in section (2) of this
Article who was or is a party to any proceeding, by reason of the fact that he
is or
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was an employee or agent of the Corporation, or is or was serving at the request
of the Corporation as an employee or agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise, to the same
extent as if such person were specified as one to whom indemnification is
granted in section (2). The provisions of sections (3) through (7) of this
Article shall be applicable to any indemnification provided hereafter pursuant
to this section (8).
(9) The Corporation may purchase and maintain insurance to indemnify it
against the whole or any portion of the liability assumed by it in accordance
with this Article and may also procure insurance, in such amounts as the Board
of Directors may determine, on behalf of any person who is or was a director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, against any liability asserted against or incurred by him in any
such capacity or arising from his status as such, whether or not the Corporation
would have power to indemnify him against such liability under the provisions of
this Article.
(10) Every reference herein to directors, officers, employees or agents
shall include former directors, officers, employees and agents and their
respective heirs, executors
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<PAGE> 12
and administrators. The indemnification hereby provided and provided hereafter
pursuant to the power hereby conferred on the Board of Directors shall not be
exclusive of any other rights to which any person may be entitled, including any
right under policies of insurance that may be purchased and maintained by the
Corporation or others, with respect to claims, issues or matters in relation to
which the Corporation would not have the power to indemnify such person under
the provisions of this Article.
Dated: August 26, 1986
/s/ Laurel C. Williams
-------------------------------------
Incorporator
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EXHIBIT 3.26
BY-LAWS
OF
AMF BOWLING CENTERS (AUST) INTERNATIONAL, INC.
ARTICLE I
Meetings of Shareholders
1.1 Places of Meetings. All meetings of the shareholders shall be held
at such place, either inside or outside the State of Virginia, as from time to
time may be fixed by the Board of Directors.
1.2 Annual Meetings. The annual meeting of the shareholders, for the
election of Directors and transaction of such other business as may come
before the meetings, shall be held in each year on the second Tuesday in
April, at 10 a.m., if that day is not a legal holiday in the Commonwealth of
Virginia. If that day is a legal holiday, the annual meeting shall be held on
the next succeeding day not such a legal holiday.
1.3 Special Meetings. A special meeting of the shareholders for any
purpose or purposes may be called at any time by the Chairman of the Board,
the President, or by a majority of the Board of Directors. At a special
meeting no business shall be transacted and no corporate action shall be taken
other than that stated in the notice of the meeting.
1.4 Notice of Meetings. Written or printed notice stating the place,
day and hour of every meeting of the shareholders and, in case of a special
meeting, the purpose or purposes for which
<PAGE> 2
the meeting is called, shall be mailed not less than ten nor more than sixty
days before the date of the meeting to each shareholder of record entitled to
vote at such meeting, at his address which appears in the share transfer books
of the Corporation. Such further notice shall be given as may be required by
law, but meetings may be held without notice if all the shareholders entitled
to vote at the meeting are present in person or by proxy or if notice is
waived in writing by those not present, either before or after the meeting.
1.5 Quorum. Any number of shareholders together holding at least a
majority of the outstanding shares of capital stock entitled to vote with
respect to the business to be transacted, who shall be present in person or
represented by proxy at any meeting duly called, shall constitute a quorum for
the transaction of business. If less than a quorum shall be in attendance at
the time for which a meeting shall have been called, the meeting may be
adjourned from time to time by a majority of the shareholders present or
represented by proxy without notice other than by announcement at the meeting.
1.6 Voting. At any meeting of the shareholders each shareholder of a
class entitled to vote on any matter coming before the meeting shall, as to
such matter, have one vote, in person or by proxy, for each share of capital
stock of such class standing in his name on the books of the Corporation on
the date, not more than seventy days prior to such meeting, fixed by the Board
of Directors as the record date for the purpose of
<PAGE> 3
determining shareholders entitled to vote. Every proxy shall be in writing,
dated and signed by the shareholder entitled to vote or his duly authorized
attorney-in-fact.
1.7 Inspectors. An appropriate number of inspectors for any meeting of
shareholders may be appointed by the Chairman of such meeting. Inspectors so
appointed will open and close the polls, will receive and take charge of
proxies and ballots, and will decide all questions as to the qualifications of
voters, validity of proxies and ballots, and the number of votes properly
cast.
ARTICLE II
Directors
2.1 General Powers. The property, affairs and business of the
Corporation shall be managed by the Board of Directors, and, except as
otherwise expressly provided by law, the Articles of Incorporation or these
By-laws, all of the powers of the Corporation shall be vested in such Board.
2.2 Number of Directors. The number of Directors constituting the Board
of Directors shall be at least one and not more than three. The number of
Directors may be increased or decreased from time to time by amendment to
these By-laws, but no decrease shall have the effect of shortening the term of
an incumbent Director.
2.3 Election and Removal of Directors; Quorum.
(a) Directors shall be elected at each annual meeting of shareholders to
succeed those Directors whose terms have expired and to fill any vacancies
then existing.
<PAGE> 4
(b) Directors shall hold their offices for terms of one year and until
their successors are elected. Any Director may be removed from office at a
meeting called expressly for that purpose by the vote of shareholders holding
a majority of the shares entitled to vote at an election of Directors.
(c) Any vacancy occurring in the Board of Directors may be filled by the
affirmative vote of the majority of the remaining Directors though less than a
quorum of the Board, and the term of office of any Director so elected shall
expire at the next shareholders' meeting at which Directors are elected.
(d) A majority of the number of Directors elected and serving at the
time of any meeting shall constitute a quorum for the transaction of business.
The act of a majority of Directors present at a meeting at which a quorum is
present shall be the act of the Board of Directors. Less than a quorum may
adjourn any meeting.
2.4 Meetings of Directors. An annual meeting of the Board of Directors
shall be held as soon as practicable after the adjournment of the annual
meeting of shareholders at such place as the Board may designate. Other
meetings of the Board of Directors shall be held at places inside or outside
the State of Virginia and at times fixed by resolution of the Board, or upon
call of the Chairman of the Board, the President or any two of the Directors.
The Secretary or officer performing the Secretary's duties shall give not less
than twenty-four hours' notice either in person or by letter, telegraph or
telephone of all meetings of the Board of Directors, provided that notice need
not be given of the annual
<PAGE> 5
meeting or of regular meetings held at times and places fixed by resolution of
the Board. Meetings may be held at any time without notice if all of the
Directors are present, or if those not present waive notice in writing either
before or after the meeting. The notice of meetings of the Board need not
state the purpose of the meeting.
2.5 Duties. The Board of Directors shall designate depositories for the
corporation and shall designate and authorize the officers or other persons to
sign checks and bank drafts.
2.6 Compensation. By resolution of the Board, Directors may be allowed
a fee and expenses for attendance at all meetings, but nothing herein shall
preclude Directors from serving the Corporation in other capacities and
receiving compensation for such other services.
ARTICLE III
Committees
3.1 Executive Committee. The Board of Directors, by resolution adopted
by a majority of the number of Directors fixed by these By-laws, may elect an
Executive Committee which shall consist of not less than two Directors,
including the President. When the Board of Directors is not in session, the
Executive Committee shall have all power vested in the Board of Directors by
law, by the Articles of Incorporation, or by these By-laws, provided that the
Executive Committee shall not have power to (i) approve or recommend to
shareholders action that the Virginia Stock Corporation Act requires to be
approved by shareholders; (ii) fill vacancies on the Board or on any of its
committees; (iii) amend the
<PAGE> 6
Articles of Incorporation pursuant to Section 13.1-706 of the Virginia Code;
(iv) adopt, amend, or repeal the By-laws; (v) approve a plan of merger or
share exchange not requiring shareholder approval; (vi) authorize or approve a
distribution, except according to a general formula or method prescribed by
the Board of Directors; or (vii) authorize or approve the issuance or sale or
contract for sale of shares, or determine the designation and relative rights,
preferences, and limitations of a class or series of shares, other than within
limits specifically prescribed by the Board of Directors. The Executive
Committee shall report at the next regular or special meeting of the Board of
Directors all action which the Executive Committee may have taken on behalf of
the Board since the last regular or special meeting of the Board of Directors.
3.2 Finance Committee. The Board of Directors, by resolution adopted by
a majority of the number of Directors fixed by these By-laws, may elect a
Finance Committee which shall consist of not less than two Directors. The
Finance Committee shall consider and report to the Board with respect to plans
for corporate expansion, capital structure and long-range financial
requirements. The Committee shall also consider and report to the Board with
respect to such other matters relating to the financial affairs of the
Corporation as may be requested by the Board or the appropriate officers of
the Corporation. The Committee shall report periodically to the Board of
Directors on all action which it may have taken.
<PAGE> 7
3.3 Other Committees. The Board of Directors, by resolution adopted by
a majority of the number of Directors fixed by these By-laws, may establish
such other standing or special committees of the Board as it may deem
advisable, consisting of not less than two Directors; and the members, terms
and authority of such committees shall be as set forth in the resolutions
establishing the same.
3.4 Meetings. Regular and special meetings of any Committee established
pursuant to this Article may be called and held subject to the same
requirements with respect to time, place and notice as are specified in these
By-laws for regular and special meetings of the Board of Directors.
3.5 Quorum and Manner of Acting. A majority of the members of any
Committee serving at the time of any meeting thereof shall constitute a quorum
for the transaction of business at such meeting. The action of a majority of
those members present at a Committee meeting at which a quorum is present
shall constitute the act of the Committee.
3.6 Terms of Office. Members of any Committee shall be elected as above
provided and shall hold office until their successors are elected by the Board
of Directors or until such Committee is dissolved by the Board of Directors.
3.7 Resignation and Removal. Any member of a Committee may resign at
any time by giving written notice of his intention to do so to the President
or the Secretary of the Corporation, or may be removed, with or without cause,
at any time by such vote of the Board of Directors as would suffice for his
election.
3.8 Vacancies. Any vacancy occurring in a Committee
<PAGE> 8
resulting from any cause whatever may be filled by a majority of the number of
Directors fixed by these By-laws.
ARTICLE IV
Officers
4.1 Election of Officers; Terms. The Officers of the Corporation shall
consist of a President, a Secretary and a Treasurer. Other officers,
including a Chairman of the Board, one or more Vice Presidents (whose
seniority and titles, including Executive Vice Presidents and Senior Vice
Presidents, may be specified by the Board of Directors), and assistant and
subordinate officers, may from time to time be elected by the Board of
Directors. All officers shall hold office until the next annual meeting of
the Board of Directors and until their successors are elected. The President
shall be chosen from among the Directors. Any two officers may be combined in
the same person as the Board of Directors may determine.
4.2 Removal of Officers; Vacancies. Any officer of the Corporation may
be removed summarily with or without cause, at any time, by the Board of
Directors provided however that the removal of the Chairman of the Board shall
require the vote of two-thirds of the Directors. Vacancies may be filled by
the Board of Directors.
4.3 Duties. The officers of the Corporation shall have such duties as
generally pertain to their offices, respectively, as well as such powers and
duties as are prescribed by law or are hereinafter provided or as from time to
time shall be conferred by the Board of Directors. The Board of Directors may
require any
<PAGE> 9
officer to give such bond for the faithful performance of his duties as the
Board may see fit.
4.4 Duties of the President. The President shall be the chief executive
officer of the Corporation and shall be primarily responsible for the
implementation of policies of the Board of Directors. He shall have authority
over the general management and direction of the business and operations of
the Corporation and its divisions, if any, subject only to the ultimate
authority of the Board of Directors. He shall be a Director, and, except as
otherwise provided in these By-laws or in the resolutions establishing such
committees, he shall be ex officio a member of all Committees of the Board.
In the absence of the Chairman of the Board or if there is no such officer,
the President shall preside at all corporate meetings. He may sign and
execute in the name of the Corporation share certificates, deeds, mortgages,
bonds, contracts or other instruments except in cases where the signing and
the execution thereof shall be expressly delegated by the Board of Directors
or by these By-laws to some other officer or agent of the Corporation or shall
be required by law otherwise to be signed or executed. In addition, he shall
perform all duties incident to the office of the President and such other
duties as from time to time may be assigned to him by the Board of Directors.
4.5 Duties of the Vice-Presidents. Each Vice-President, if any, shall
have such powers and duties as may from time to time be assigned to him by the
President or the Board of Directors. Any Vice-President may sign and execute
in the name of the Corporation deeds, mortgages, bonds, contracts or other
instruments authorized
<PAGE> 10
by the Board of Directors, except where the signing and execution of such
documents shall be expressly delegated by the Board of Directors or the
President to some other officer or agent of the Corporation or shall be
required by law or otherwise to be signed or executed.
4.6 Duties of the Treasurer. The Treasurer shall have charge of and be
responsible for all funds, securities, receipts and disbursements of the
Corporation, and shall deposit all monies and securities of the Corporation in
such banks and depositories as shall be designated by the Board of Directors.
He shall be responsible (i) for maintaining adequate financial accounts and
records in accordance with generally accepted accounting practices; (ii) for
the preparation of appropriate operating budgets and financial statements;
(iii) for the preparation and filing of all tax returns required by law; and
(iv) for the performance of all duties incident to the office of Treasurer and
such other duties as from time to time may be assigned to him by the Board of
Directors, the Finance Committee or the Managing Director/President. The
treasurer may sign and execute in the name of the Corporation share
certificates, deeds, mortgages, bonds, contracts or other instruments, except
in cases where the signing and the execution thereof shall be expressly
delegated by the Board of Directors or by these By-laws to some other officer
or agent of the Corporation or shall be required by law or otherwise to be
signed or executed.
4.7 Duties of the Secretary. The Secretary shall act as secretary of
all meetings of the Board of Directors and shareholders of the Corporation.
When requested, he shall also act
<PAGE> 11
as secretary of the meetings of the committees of the Board. He shall keep
and preserve the minutes of all such meetings in permanent books. He shall
see that all notices required to be given by the Corporation are duly given
and served; shall have custody of the seal of the Corporation and shall affix
the seal or cause it to be affixed to all share certificates of the
Corporation and to all documents the execution of which on behalf of the
Corporation under its corporate seal is duly authorized in accordance with law
or the provisions of these By-laws; shall have custody of all deeds, leases,
contracts and other important corporate documents; shall have charge of the
books, records and papers of the Corporation relating to its organization and
management as a Corporation; shall see that all reports, statements and other
documents required by law (except tax returns) are properly 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 of
Directors or the President.
4.8 Compensation. The Board of Directors shall have authority to fix
the compensation of all officers of the Corporation.
ARTICLE V
Capital Stock
5.1 Certificates. The shares of capital stock of the Corporation shall
be evidenced by certificates in forms prescribed by the Board of Directors and
executed in any manner permitted by law and stating thereon the information
required by law. Transfer agents and/or registrars for one or more classes of
shares of the
<PAGE> 12
Corporation may be appointed by the Board of Directors and may be required to
countersign certificates representing shares of such class or classes. If any
officer whose signature or facsimile thereof shall have been used on a share
certificate shall for any reason cease to be an officer of the Corporation and
such certificate shall not then have been delivered by the Corporation, the
Board of Directors may nevertheless adopt such certificate and it may then be
issued and delivered as though such person had not ceased to be an officer of
the Corporation.
5.2 Lost, Destroyed and Mutilated Certificates. Holders of the shares
of the Corporation shall immediately notify the Corporation of any loss,
destruction or mutilation of the certificate therefor, and the Board of
Directors may in its discretion cause one or more new certificates for the
same number of shares in the aggregate to be issued to such shareholder upon
the surrender of the mutilated certificate or upon satisfactory proof of such
loss or destruction, and the deposit of a bond in such form and amount and
with such surety as the Board of Directors may require.
5.3 Transfer of Shares. The shares of the Corporation shall be
transferable or assignable only on the books of the Corporation by the holder
in person or by attorney on surrender of the certificate for such shares duly
endorsed and, if sought to be transferred by attorney, accompanied by a
written power of attorney to have the same transferred on the books of the
Corporation. The Corporation will recognize, however, the exclusive right of
the person registered on its books as the owner of shares to receive
<PAGE> 13
dividends and to vote as such owner.
5.4 Fixing Record Date. For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, or entitled to receive payment of any dividend, or in
order to make a determination of shareholders for any other proper purpose,
the Board of Directors may fix in advance a date as the record date for any
such determination of shareholders, such date in any case to be not more than
seventy days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If no record date is fixed for
the determination of shareholders entitled to notice of or to vote at a
meeting of shareholders, or of shareholders entitled to receive payment of a
dividend, the date on which notices of the meeting are mailed or the date on
which the resolution of the Board of Directors declaring such dividend is
adopted, as the case may be, shall be the record date for such determination
of shareholders. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this section, such
determination shall apply to any adjournment thereof unless the Board of
Directors fixes a new record date, which it shall do if the meeting is
adjourned to a date more than 120 days after the date fixed for the original
meeting.
ARTICLE VI
Miscellaneous Provisions
6.1 Seal. The seal of the Corporation shall consist of a flat-faced
circular die, of which there may be any number of
<PAGE> 14
counterparts, on which there shall be engraved the word "Seal".
6.2 Fiscal Year. The fiscal year of the Corporation shall end on such
date and shall consist of such accounting periods as may be fixed by the Board
of Directors.
6.3 Checks, Notes and Drafts. Checks, notes, drafts and other orders
for the payment of money shall be signed by such persons as the Board of
Directors from time to time may authorize. When the Board of Directors so
authorizes, however, the signature of any such person may be a facsimile.
6.4 Amendment of By-Laws. Unless proscribed by the Articles of
Incorporation, these By-laws may be amended or altered at any meeting of the
Board of Directors by affirmative vote of a majority of the number of
Directors fixed by these By-laws. The shareholders entitled to vote in
respect of the election of Directors, however, shall have the power to
rescind, amend, alter or repeal any By-laws and to enact By-laws which, if
expressly so provided, may not be amended, altered or repealed by the Board of
Directors.
6.5 Voting of Shares Held. Unless otherwise provided by resolution of
the Board of Directors or of the Executive Committee, if any, the President
may from time to time appoint an attorney or attorneys or agent or agents of
the Corporation, in the name and on behalf of the Corporation, to cast the
vote which the Corporation may be entitled to cast as a shareholder or
otherwise in any other corporation, any of whose securities may be held by the
Corporation, at meetings of the holders of the shares or other securities of
such other corporation, or to consent in writing to
<PAGE> 15
any action by any such other corporation; and the President shall instruct the
person or persons so appointed as to the manner of casting such votes or
giving such consent and may execute or cause to be executed on behalf of the
Corporation, and under its corporate seal or otherwise, such written proxies,
consents, waivers or other instruments as may be necessary or proper in the
premises. In lieu of such appointment the President may himself attend any
meetings of the holders of shares or other securities of any such other
corporation and there vote or exercise any or all power of the Corporation as
the holder of such shares or other securities of such other corporation.
ARTICLE VII
Emergency By-laws
The Emergency By-laws provided in this Article VII shall be operative
during any emergency, notwithstanding any different provision in the preceding
Articles of these By-laws or in the Articles of Incorporation of the
Corporation or in the Virginia Stock Corporation Act (other than those
provisions relating to emergency by-laws). An emergency exists if a quorum of
the Corporation's Board of Directors cannot readily be assembled because of
some catastrophic event. To the extent not inconsistent with these Emergency
By-laws, the By-laws provided in the preceding Articles shall remain in effect
during such emergency and upon the termination of such emergency the Emergency
By-laws shall cease to be operative unless and until another such emergency
shall occur.
During any such emergency:
(a) Any meeting of the Board of Directors may be called by
<PAGE> 16
any officer of the Corporation or by any Director. The notice thereof shall
specify the time and place of the meeting. To the extent feasible, notice
shall be given in accord with Section 2.4 above, but notice may be given only
to such of the Directors as it may be feasible to reach at the time, by such
means as may be feasible at the time, including publication or radio, and at a
time less than twenty-four hours before the meeting if deemed necessary by the
person giving notice. Notice shall be similarly given, to the extent
feasible, to the other persons referred to in (b) below.
(b) At any meeting of the Board of Directors, a quorum shall consist of
a majority of the number of Directors fixed at the time by Article II of the
By-laws. If the Directors present at any particular meeting shall be fewer
than the number required for such quorum, other persons present as referred to
below, to the number necessary to make up such quorum, shall be deemed
Directors for such particular meeting as determined by the following
provisions and in the following order of priority:
(i) Vice-Presidents not already serving as Directors, in the order of
their seniority of first election to such offices, or if two or more shall
have been first elected to such offices on the same day, in the order of their
seniority in age;
(ii) All other officers of the Corporation in the order of their
seniority of first election to such offices, or if two or more shall have been
first elected to such offices on the same day, in the order of their seniority
in age; and
(iii) Any other persons that are designated on a list that shall have
been approved by the Board of Directors before the
<PAGE> 17
emergency, such persons to be taken in such order of priority and subject to
such conditions as may be provided in the resolution approving the list.
(c) The Board of Directors, during, as well as before, any such
emergency, may provide, and from time to time modify, lines of succession in
the event that during such an emergency any or all officers or agents of the
Corporation shall for any reason be rendered incapable of discharging their
duties.
(d) The Board of Directors, during, as well as before, any such
emergency, may, effective in the emergency, change the principal office, or
designate several alternative offices, or authorize the officers so to do.
No officer, Director or employee shall be liable for action taken in good
faith in accordance with these Emergency By-laws.
These Emergency By-laws shall be subject to repeal or change by further
action of the Board of Directors or by action of the shareholders, except that
no such repeal or change shall modify the provisions of the next preceding
paragraph with regard to action or inaction prior to the time of such repeal
or change. Any such amendment of these Emergency By-laws may make any further
or different provision that may be practical and necessary for the
circumstances of the emergency.
<PAGE> 1
EXHIBIT 3.27
ARTICLES OF RESTATEMENT
OF
SCH, INC.
1. The new name of the Company is AMF Bowling Centers (Canada)
International Inc.
2. The attached Restated Articles and all amendments to the
Articles were adopted by unanimous consent of the shareholders.
3. The attached Restated Articles and all amendments to the
Articles were adopted by unanimous consent of the Board of Directors.
I, Teri Scott Lovelace, Assistant Secretary of AMF Bowling Centers
(Canada) International Inc. do hereby certify as to the above.
/s/ Teri Scott Lovelace
------------------------------------
Teri Scott Lovelace
Sworn and subscribed to before me this 2nd day of March, 1989.
/s/ Cheryle L. Kitchen
-------------------------------------
Notary Public
My Commission Expires: 7/8/91
<PAGE> 2
RESTATED
ARTICLES
OF
SCH, INC.
I.
The new name of the Corporation is AMF Bowling Centers (Canada
International Inc.
II.
The purpose for which the Corporation is formed is to transact any or
all lawful business, not required to be specifically stated in these Articles,
for which corporations may be incorporated under the Virginia Stock Corporation
Act, as amended from time to time.
III.
The number of shares which the Corporation shall have authority to
issue shall be 10,000 shares of the par value of $1.00 each. No holder of shares
of any class of the Corporation shall have any preemptive or preferential right
to purchase or subscribe to (i) any shares of any class of the corporation,
whether now or hereafter authorized; (ii) any warrants, rights or options to
purchase any such shares; or (iii) any securities or obligations convertible
into any such shares or into warrants, rights, or options to purchase any such
shares.
IV.
The registered office shall be located at 901 East Cary Street, Suite
1400, in the City Richmond, and the registered agent shall be Teri Scott
Lovelace, who is a resident of Virginia
<PAGE> 3
and a member of the Virginia State Bar, and whose business address is the same
as the address of the initial registered office.
V.
1. In every instance permitted by the Virginia Stock Corporation
Act, as it exists on the date hereof or may hereafter be amended, the liability
of a director or officer of the Corporation to the Corporation or its
shareholders arising out of a single transaction, occurrence or course of
conduct shall be limited to one dollar.
2. To the full extent permitted and in the manner prescribed by
the Virginia Stock Corporation Act and any other applicable law, the Corporation
shall indemnify a Director or officer of the Corporation who is or was a party
to any proceeding by reason of the fact that he is or was such a Director or
officer 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, employee benefit plan or other enterprise. The Board of Directors is
hereby empowered, by majority vote of a quorum of disinterested Directors, to
contract in advance to indemnify any Director or officer.
3. The Board of Directors is hereby empowered, by majority vote
of a quorum of disinterested Directors, to cause the Corporation to indemnify or
contract in advance to indemnify any person not specified in Section 2 of this
Article who was or is a party to any proceeding, by reason of the fact that he
is or was an employee or agent of the corporation, or is or was serving at
<PAGE> 4
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise, to the same extent as if such person were specified as one to
whom indemnification is granted in Section 2.
4. The Corporation may purchase and maintain insurance to
indemnify it against the whole or any portion of the liability assumed by it in
accordance with this Article and may also procure insurance, in such amounts as
the Board of Directors may determine, on behalf of any person who is or was a
Director, officer, employee or agent of another corporation, partnership, joint
venture, trust employee benefit plan or other enterprise, against any liability
asserted against or incurred by any such person in any such capacity or arising
from his status as such, whether or not the Corporation would have power to
indemnify him against such liability under the provisions of this Article.
5. In the event there has been a change in the composition of a
majority of the Board of Directors after the date of the alleged act or omission
with respect to which indemnification is claimed, any determination as to
indemnification and advancement of expenses with respect to any claim for
indemnification made pursuant to Section 2 of this Article VI shall be made by
special legal counsel agreed upon by the Board of Directors and the proposed
indemnitee. If the Board of Directors and the proposed indemnitee are unable to
agree upon such special legal counsel, the Board of Directors and the proposed
indemnitee each shall select a nominee, and the nominees shall select such
special legal counsel.
<PAGE> 5
6. The provisions of this Article VI shall be applicable to all
actions, claims, suits or proceedings commenced after the adoption hereof,
whether arising from any action taken or failure to act before or after such
adoption. No amendment, modification or repeal of this Article shall diminish
the rights provided hereby or diminish the right to indemnification with respect
to any claim, issue or matter in any then pending or subsequent proceeding that
is based in any material respect on any alleged action or failure to act prior
to such amendment, modification or repeal.
7. Reference herein to Directors, officers, employees or agents
shall include former Directors, officers, employees and agents and their
respective heirs, executors and administrators.
VI.
The Board of Directors shall have the power to make, amend or repeal
bylaws of the Corporation.
<PAGE> 6
ARTICLES OF INCORPORATION
OF
SCH, INC.
The undersigned, desiring to form a stock corporation under the
provisions of Chapter 9 of Title 13.1 of the Code of Virginia of 1950, as
amended, hereby sets forth the following:
A. Corporate Name
The name of the Corporation is:
SCH, Inc.
B. Purposes and Powers
The purpose for which the corporation is formed is to engage
in any lawful business. In addition, the corporation shall have the same powers
as an individual to do all things necessary or convenient to carry out its
business and affairs.
C. Authorized Stock
The aggregate number of shares which the corporation shall
have authority to issue and the par value per share are as follows:
<TABLE>
<CAPTION>
Class Number Par Value Per
and Series of Shares Share
---------- --------- -------------
<S> <C> <C>
Common 5,000 $1.00
</TABLE>
The holders of the Common Stock shall have unlimited voting
rights and be entitled to receive the net assets of the corporation upon
dissolution. The holders of any class or series of stock shall not have the
preemptive right to acquire unissued shares of any class or series of stock of
the corporation.
<PAGE> 7
D. Registered Office and Registered Agent
The address of the corporation's initial registered office is
Main Street Centre, 629 East Main Street, 7th Floor, P.O. Box 1Q, Richmond,
Virginia 23202. The name of the city in which the initial registered office is
located is the City of Richmond. The name of the initial registered agent is
Alexander C. Graham, Jr. who is a resident of the Commonwealth of Virginia, a
member of the Virginia State Bar and whose business office is identical with the
registered office of the corporation.
E. Limitation on Liability
In any proceeding brought in the right of the corporation or
by or on behalf of stockholders of the corporation, the damages assessed against
an officer or director arising out of a single transaction, occurrence, or
course of conduct shall not exceed one dollar, unless the officer or director
engaged in willful misconduct or a knowing violation of the criminal law or any
federal or state securities law, including without limitation, any claim of
unlawful insider trading or manipulation of the market for any security.
F. Indemnification of Directors, Officer and Others
1. Indemnification: The corporation shall indemnify an
individual who is, was or is threatened to be made a party to a proceeding
(including a proceeding by or in the right of the corporation) because he is or
was a director against liability incurred in the proceeding and against expenses
incurred by him in connection therewith except such liabilities and expenses
incurred because of his willful misconduct or knowing violation of the criminal
law.
2. Advance for Expenses: The corporation shall pay for
or reimburse the reasonable expenses incurred by a director
-2-
<PAGE> 8
who is a party to a proceeding in advance of final disposition of the proceeding
if:
(a) the director furnishes the corporation a
written statement of his good faith belief that he has met the standard of
conduct described in Section 1;
(b) the director furnishes the corporation a written
undertaking, executed personally or on his behalf, to repay the advance if it is
ultimately determined that he did not meet the standard of conduct (which
undertaking shall be an unlimited general obligation of the director but need
not be secured and may be accepted without reference to financial ability to
make repayment); and
(c) a determination is made that the facts then known to those
making the determination would not preclude indemnification under Article 10 of
the Virginia Stock Corporation Act or Section 1 hereof.
3. Determination and Authorization of Indemnification: The
corporation shall not indemnify a director under Section 1 unless authorized in
the specific case after a determination has been made that indemnification of
the director is permissible in the circumstances because he has met the standard
of conduct set forth in Section 1. The determination shall be made:
(a) by the Board of Directors by a majority vote of a quorum
consisting of directors not at the time parties to the proceeding;
(b) if such a quorum cannot be obtained, by majority vote of a
committee duly designated by the Board of Directors (in which directors who are
parties may participate in such designation), consisting solely of two or more
directors not at the time parties to the proceeding;
-3-
<PAGE> 9
(c) by special legal counsel:
(i) selected by the Board of Directors or its
committee in the manner prescribed in subsection (a) or (b) above;
(ii) if such a quorum of the Board of Directors
cannot be obtained and such a committee cannot be designated, selected by a
majority vote of the full Board of Directors, in which directors who are
parties may participate in such selection; or
(d) by the stockholders, but shares owned by or voted
under the control of directors who are at the time parties to the proceeding may
not be voted on the determination.
Authorization of indemnification and evaluation as to
reasonableness of expenses shall be made in the same manner as the determination
that indemnification is permissible, except that if the determination is made by
special legal counsel, authorization of indemnification and evaluation as to
reasonableness of expenses shall be made by those entitled under subsection (c)
of this Section 3 to select counsel.
4. Indemnification of Officers, Employees, Agents and Others:
Each officer and employee of the corporation shall be entitled to
indemnification and advance expenses to the same extent as a director.
5. Insurance: The corporation may purchase and maintain
insurance on behalf of an individual who is or was a director, officer, employee
or agent of the corporation, or who, while a director, officer, employee or
agent of the corporation, is or was serving at the request of the corporation as
a director, officer, partner, trustee, employee or agent of another foreign or
domestic corporation, partnership, joint venture, trust, employee
-4-
<PAGE> 10
benefit plan or other enterprise, against liability asserted against or incurred
by him in that capacity or arising from his status as a director, officer,
employee or agent, whether or not the corporation would have power to indemnify
him against the same liability under Section 1.
6. Application: Indemnity hereunder shall continue as to a person who
has ceased to have the capacity referred to above and shall inure to the benefit
of the heirs, executors and administrators of such a person.
DATED: November 17, 1988
/s/ Alexander C. Graham, Jr.
-----------------------------------
Alexander C. Graham, Jr.,
Incorporator
-5-
<PAGE> 1
EXHIBIT 3.28
AMENDED AND RESTATED
BY-LAWS
OF
AMF BOWLING CENTERS (CANADA) INTERNATIONAL INC.
MARCH 21, 1996
ARTICLE I
Meetings of Shareholders
1.1 Places of Meetings. All meetings of the shareholders shall be held
at such place, either inside or outside the State of Virginia, as from time to
time may be fixed by the Board of Directors.
1.2 Annual Meetings. The annual meeting of the shareholders, for the
election of Directors and transaction of such other business as may come
before the meetings, shall be held in each year on the second Tuesday in
April, at 10 a.m., if that day is not a legal holiday in the Commonwealth of
Virginia. If that day is a legal holiday, the annual meeting shall be held on
the next succeeding day not such a legal holiday.
1.3 Special Meetings. A special meeting of the shareholders for any
purpose or purposes may be called at any time by the Chairman of the Board,
the President, or by a majority of the Board of Directors. At a special
meeting no business shall be transacted and no corporate action shall be taken
other than that stated in the notice of the meeting.
1
<PAGE> 2
1.4 Notice of Meetings. Written or printed notice stating the place,
day and hour of every meeting of the shareholders and, in case of a special
meeting, the purpose or purposes for which the meeting is called, shall be
mailed not less than ten nor more than sixty days before the date of the
meeting to each shareholder of record entitled to vote at such meeting, at his
address which appears in the share transfer books of the Corporation. Such
further notice shall be given as may be required by law, but meetings may be
held without notice if all the shareholders entitled to vote at the meeting
are present in person or by proxy or if notice is waived in writing by those
not present, either before or after the meeting.
1.5 Quorum. Any number of shareholders together holding at least a
majority of the outstanding shares of capital stock entitled to vote with
respect to the business to be transacted, who shall be present in person or
represented by proxy at any meeting duly called, shall constitute a quorum for
the transaction of business. If less than a quorum shall be in attendance at
the time for which a meeting shall have been called, the meeting may be
adjourned from time to time by a majority of the shareholders present or
represented by proxy without notice other than by announcement at the meeting.
1.6 Voting. At any meeting of the shareholders each shareholder of a
class entitled to vote on any matter coming before the meeting shall, as to
such matter, have one vote, in person or by proxy, for each share of capital
stock of such class standing in his name on the books of the Corporation on
the date, not more than seventy days prior to such meeting, fixed by the Board
of Directors as the record date for the purpose of determining shareholders
entitled to vote. Every proxy shall be in writing, dated and signed by the
shareholder entitled to vote or his duly authorized attorney-in-fact.
2
<PAGE> 3
1.7 Inspectors. An appropriate number of inspectors for any meeting of
shareholders may be appointed by the Chairman of such meeting. Inspectors so
appointed will open and close the polls, will receive and take charge of
proxies and ballots, and will decide all questions as to the qualifications of
voters, validity of proxies and ballots, and the number of votes properly
cast.
ARTICLE II
Directors
2.1 General Powers. The property, affairs and business of the
Corporation shall be managed by the Board of Directors, and, except as
otherwise expressly provided by law, the Articles of Incorporation or these
By-laws, all of the powers of the Corporation shall be vested in such Board.
2.2 Number of Directors. The number of Directors constituting the Board
of Directors shall be at least one and not more than three. The number of
Directors may be increased or decreased from time to time by amendment to
these By-laws, but no decrease shall have the effect of shortening the term of
an incumbent Director.
2.3 Election and Removal of Directors; Quorum.
(a) Directors shall be elected at each annual meeting of shareholders to
succeed those Directors whose terms have expired and to fill any vacancies
then existing.
(b) Directors shall hold their offices for terms of one year and until
their successors are elected. Any Director may be removed from office at a
meeting called expressly for that purpose by the vote of shareholders holding
a majority of the shares entitled to vote at an election of Directors.
(c) Any vacancy occurring in the Board of Directors may be filled by the
affirmative vote of the majority of the remaining Directors though less than a
quorum of the Board,
3
<PAGE> 4
and the term of office of any Director so elected shall expire at the next
shareholders' meeting at which Directors are elected.
(d) A majority of the number of Directors elected and serving at the
time of any meeting shall constitute a quorum for the transaction of business.
The unanimous act of all Directors present at a meeting at which a quorum is
present shall be the act of the Board of Directors. Less than a quorum may
adjourn any meeting.
2.4 Meetings of Directors. An annual meeting of the Board of Directors
shall be held as soon as practicable after the adjournment of the annual
meeting of shareholders at such place as the Board may designate. Other
meetings of the Board of Directors shall be held at places inside or outside
the State of Virginia and at times fixed by resolution of the Board, or upon
call of the Chairman of the Board or the President. The Secretary or officer
performing the Secretary's duties shall give not less than twenty-four hours'
notice either in person or by letter, telegraph or telephone of all meetings
of the Board of Directors, provided that notice need not be given of the
annual meeting or of regular meetings held at times and places fixed by
resolution of the Board. Meetings may be held at any time without notice if
all of the Directors are present, or if those not present waive notice in
writing either before or after the meeting. The notice of meetings of the
Board need not state the purpose of the meeting.
2.5 Duties. The Board of Directors shall designate depositories for the
corporation and shall designate and authorize the officers or other persons to
sign checks and bank drafts.
2.6 Compensation. By resolution of the Board, Directors may be allowed
a fee and expenses for attendance at all meetings, but nothing herein shall
preclude Directors from serving the Corporation in other capacities and
receiving compensation for such other services.
4
<PAGE> 5
ARTICLE III
Officers
3.1 Election of Officers; Terms. The Officers of the Corporation shall
consist of a President, a Secretary and a Treasurer. Other officers,
including a Chairman of the Board, one or more Vice Presidents (whose
seniority and titles, including Executive Vice Presidents and Senior Vice
Presidents, may be specified by the Board of Directors), and assistant and
subordinate officers, may from time to time be elected by the Board of
Directors. All officers shall hold office until the next annual meeting of
the Board of Directors and until their successors are elected. Any two
officers may be combined in the same person as the Board of Directors may
determine.
3.2 Removal of Officers; Vacancies. Any officer of the Corporation may
be removed summarily with or without cause, at any time, by the Board of
Directors provided however that the removal of the Chairman of the Board shall
require the vote of two-thirds of the Directors. Vacancies may be filled by
the Board of Directors.
3.3 Duties. The officers of the Corporation shall have such duties as
generally pertain to their offices, respectively, as well as such powers and
duties as are prescribed by law or are hereinafter provided or as from time to
time shall be conferred by the Board of Directors. The Board of Directors may
require any officer to give such bond for the faithful performance of his
duties as the Board may see fit.
3.4 Duties of the President. The President shall be the chief executive
officer of the Corporation and shall be primarily responsible for the
implementation of policies of the Board of Directors. He shall have authority
over the general management and direction of the
5
<PAGE> 6
business and operations of the Corporation and its divisions, if any, subject
only to the ultimate authority of the Board of Directors. In the absence of
the Chairman of the Board or if there is no such officer, the President shall
preside at all corporate meetings. He may sign and execute in the name of the
Corporation share certificates, deeds, mortgages, bonds, contracts or other
instruments except in cases where the signing and the execution thereof shall
be expressly delegated by the Board of Directors or by these By-laws to some
other officer or agent of the Corporation or shall be required by law
otherwise to be signed or executed. In addition, he shall perform all duties
incident to the office of the President and such other duties as from time to
time may be assigned to him by the Board of Directors.
3.5 Duties of the Vice-Presidents. Each Vice-President, if any, shall
have such powers and duties as may from time to time be assigned to him by the
President or the Board of Directors. Any Vice-President may sip and execute in
the name of the Corporation deeds, mortgages, bonds, contracts or other
instruments authorized by the Board of Directors, except where the signing and
execution of such documents shall be expressly delegated by the Board of
Directors or the President to some other officer or agent of the Corporation
or shall be required by law or otherwise to be signed or executed.
3.6 Duties of the Treasurer. The Treasurer shall have charge of and be
responsible for all funds, securities, receipts and disbursements of the
Corporation, and shall deposit all monies and securities of the Corporation in
such banks and depositories as shall be designated by the Board of Directors.
He shall be responsible (I) for maintaining adequate financial accounts and
records in accordance with generally accepted accounting practices; (ii) for
the preparation of appropriate operating budgets and financial statements;
(iii) for the
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<PAGE> 7
preparation and filing of all tax returns required by law; and (iv) for the
performance of all duties incident to the office of Treasurer and such other
duties as from time to time may be assigned to him by the Board of Directors,
the Finance Committee or the Managing Director/President. The treasurer may
sign and execute in the name of the Corporation share certificates, deeds,
mortgages, bonds, contracts or other instruments, except in cases where the
signing and the execution thereof shall be expressly delegated by the Board of
Directors or by these By-laws to some other officer or agent of the
Corporation or shall be required by law or otherwise to be signed or executed.
3.7 Duties of the Secretary. The Secretary shall act as secretary of
all meetings of the Board of Directors and shareholders of the Corporation.
When requested, he shall also act as secretary of the meetings of the
committees of the Board. He shall keep and preserve the minutes of all such
meetings in permanent books. He shall see that all notices required to be
given by the Corporation are duly given and served; shall have custody of the
seal of the Corporation and shall affix the seal or cause it to be affixed to
all share certificates of the Corporation and to all documents the execution
of which on behalf of the Corporation under its corporate seal is duly
authorized in accordance with law or the provisions of these By-laws; shall
have custody of all deeds, leases, contracts and other important corporate
documents; shall have charge of the books, records and papers of the
Corporation relating to its organization and management as a Corporation;
shall see that all reports, statements and other documents required by law
(except tax returns) are properly 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 of Directors or the President.
7
<PAGE> 8
3.8 Compensation. The Board of Directors shall have authority to fix
the compensation of all officers of the Corporation.
ARTICLE IV
Capital Stock
4.1 Certificates. The shares of capital stock of the Corporation shall
be evidenced by certificates in forms prescribed by the Board of Directors and
executed in any matter permitted by law and stating thereon the information
required by law. Transfer agents and/or registrars for one or more classes of
shares of the Corporation may be appointed by the Board of Directors and may
be required to countersign certificates representing shares of such class or
classes. If any officer whose signature or facsimile thereof shall have been
used on a share certificate shall for any reason cease to be an officer of the
Corporation and such certificate shall not then have been delivered by the
Corporation, the Board of Directors may nevertheless adopt such certificate
and it may then be issued and delivered as though such person had not ceased
to be an officer of the Corporation.
4.2 Lost, Destroyed and Mutilated Certificates. Holders of the shares
of the Corporation shall immediately notify the Corporation of any loss,
destruction or mutilation of the certificate therefor, and the Board of
Directors may in its discretion cause one or more new certificates for the
same number of shares in the aggregate to be issued to such shareholder upon
the surrender of the mutilated certificate or upon satisfactory proof of such
loss or destruction, and the deposit of a bond in such form and amount and
with such surety as the Board of Directors may require.
4.3 Transfer of Shares. The shares of the Corporation shall be
transferable or
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<PAGE> 9
assignable only on the books of the Corporation by the holder in person or by
attorney on surrender of the certificate for such shares duly endorsed and, if
sought to be transferred by attorney, accompanied by a written power of
attorney to have the same transferred on the books of the Corporation. The
Corporation will recognize, however, the exclusive right of the person
registered on its books as the owner of shares to receive dividends and to
vote as such owner.
4.4 Fixing Record Date. For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, or entitled to receive payment of any dividend, or in
order to make a determination of shareholders for any other proper purpose,
the Board of Directors may fix in advance a date as the record date for any
such determination of shareholders, such date in any case to be not more than
seventy days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If no record date is fixed for
the determination of shareholders entitled to notice of or to vote at a
meeting of shareholders, or of shareholders entitled to receive payment of a
dividend, the date on which notices of the meeting are mailed or the date on
which the resolution of the Board of Directors declaring such dividend is
adopted, as the case may be, shall be the record date for such determination
of shareholders. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this section, such
determination shall apply to any adjournment thereof unless the Board of
Directors fixes a new record date, which it shall do if the meeting is
adjourned to a date more than 120 days after the date fixed for the original
meeting.
ARTICLE V
Miscellaneous Provisions
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<PAGE> 10
5.1 Seal. The seal of the Corporation shall consist of a flat-faced
circular die, of which there may be any number of counterparts, on which there
shall be engraved the word "Seal".
5.2 Fiscal Year. The fiscal year of the Corporation shall end on such
date and shall consist of such accounting periods as may be fixed by the Board
of Directors.
5.3 Checks, Notes and Drafts. Checks, notes, drafts and other orders
for the payment of money shall be signed by such persons as the Board of
Directors from time to time may authorize. When the Board of Directors so
authorizes, however, the signature of any such person may be a facsimile.
5.4 Amendment of By-Laws. Unless proscribed by the Articles of
Incorporation, these By-laws may be amended or altered at any meeting of the
Board of Directors by the affirmative, unanimous vote of the Directors. The
shareholders entitled to vote in respect of the election of Directors,
however, shall have the power to rescind, amend, alter or repeal any By-laws
and to enact By-laws which, if expressly so provided, may not be amended,
altered or repealed by the Board of Directors.
5.5 Voting of Shares Held. Unless otherwise provided by resolution of
the Board of Directors or of the Executive Committee, if any, the President
may from time to time appoint an attorney or attorneys or agent or agents of
the Corporation, in the name and on behalf of the Corporation, to cast the
vote which the Corporation may be entitled to cast as a shareholder or
otherwise in any other corporation, any of whose securities may be held by the
Corporation, at meetings of the holders of the shares or other securities of
such other corporation, or to consent in writing to any action by any such
other corporation; and the President shall
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<PAGE> 11
instruct the person or persons so appointed as to the manner of casting such
votes or giving such consent and may execute or cause to be executed on behalf
of the Corporation, and under its corporate seal or otherwise, such written
proxies, consents, waivers or other instruments as may be necessary or proper
in the premises. In lieu of such appointment the President may himself attend
any meetings of the holders of shares or other securities of any such other
corporation and there vote or exercise any or all power of the Corporation as
the holder of such shares or other securities of such other corporation.
ARTICLE VI
Emergency By-laws
The Emergency By-laws provided in this Article VII shall be operative
during any emergency, notwithstanding any different provision in the preceding
Articles of these By-laws or in the Articles of Incorporation of the
Corporation or in the Virginia Stock Corporation Act (other than those
provisions relating to emergency by-laws). An emergency exists if a quorum of
the Corporation's Board of Directors cannot readily be assembled because of
some catastrophic event. To the extent not inconsistent with these Emergency
By-laws, the By-laws provided in the preceding Articles shall remain in effect
during such emergency and upon the termination of such emergency the Emergency
By-laws shall cease to be operative unless and until another such emergency
shall occur.
During any such emergency:
(a) Any meeting of the Board of Directors may be called by any officer
of the Corporation or by any Director. The notice thereof shall specify the
time and place of the meeting. To the extent feasible, notice shall be given
in accord with Section 2.4 above, but
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<PAGE> 12
notice may be given only to such of the Directors as it may be feasible to
reach at the time, by such means as may be feasible at the time, including
publication or radio, and at a time less than twenty-four hours before the
meeting if deemed necessary by the person giving notice. Notice shall be
similarly given, to the extent feasible, to the other persons referred to in
(b) below.
(b) At any meeting of the Board of Directors, a quorum shall consist of
a majority of the number of Directors fixed at the time by Article II of the
By-laws. If the Directors present at any particular meeting shall be fewer
than the number required for such quorum, other persons present as referred to
below, to the number necessary to make up such quorum, shall be deemed
Directors for such particular meeting as determined by the following
provisions and in the following order of priority:
(I) Vice-Presidents not already serving as Directors, in the order of
their seniority of first election to such offices, or if two or more shall
have been first elected to such offices on the same day, in the order of their
seniority in age;
(ii) All other officers of the Corporation in the order of their
seniority of first election to such offices, or if two or more shall have been
first elected to such offices on the same day, in the order of their seniority
in age; and
(iii) Any other persons that are designated on a list that shall have
been approved by the Board of Directors before the emergency, such persons to
be taken in such order of priority and subject to such conditions as may be
provided in the resolution approving the list.
(c) The Board of Directors, during, as well as before, any such
emergency, may provide, and from time to time modify, lines of succession in
the event that during such an emergency any or all officers or agents of the
Corporation shall for any reason be rendered
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<PAGE> 13
incapable of discharging their duties.
(d) The Board of Directors, during, as well as before, any such
emergency, may, effective in the emergency, change the principal office, or
designate several alternative offices, or authorize the officers so to do.
No officer, Director or employee shall be liable for action taken in good
faith in accordance with these Emergency By-laws.
These Emergency By-laws shall be subject to repeal or change by further
action of the Board of Directors or by action of the shareholders, except that
no such repeal or change shall modify the provisions of the next preceding
paragraph with regard to action or inaction prior to the time of such repeal
or change. Any such amendment of these Emergency By-laws may make any further
or different provision that may be practical and necessary for the
circumstances of the emergency.
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<PAGE> 1
EXHIBIT 3.29
ARTICLES OF RESTATEMENT
OF
R H, INC.
1. The new name of the Company is AMF Bowling Centers (Hong Kong)
International Inc.
2. The attached Restated Articles and all amendments to the
Articles were adopted by unanimous consent of the shareholders.
3. The attached Restated Articles and all amendments to the
Articles were adopted by unanimous consent of the Board of Directors.
I, Teri Scott Lovelace, Assistant Secretary of AMF Bowling Centers
(Hong Kong) International Inc. do hereby certify as to the above.
/s/Teri Scott Lovelace
--------------------------------
Teri Scott Lovelace
Sworn and subscribed to before me this 2nd day of March, 1989.
/s/Cheryle L. Kitchen
--------------------------------
Notary Public
My Commission Expires: 7/8/91
<PAGE> 2
RESTATED
ARTICLES
OF
R H, INC.
I.
The new name of the Corporation is AMF Bowling Centers (Hong Kong)
International Inc.
II.
The purpose for which the Corporation is formed is to transact any or
all lawful business, not required to be specifically stated in these Articles,
for which corporations may be incorporated under the Virginia Stock Corporation
Act, as amended from time to time.
III.
The number of shares which the Corporation shall have authority to
issue shall be 10,000 shares of the par value of $1.00 each. No holder of
shares of any class of the Corporation shall have any preemptive or preferential
right to purchase or subscribe to (i) any shares of any class of the
corporation, whether now or hereafter authorized; (ii) any warrants, rights or
options to purchase any such shares; or (iii) any securities or obligations
convertible into any such shares or into warrants, rights, or options to
purchase any such shares.
IV.
The registered office shall be located at 901 East Cary Street, Suite
1400, in the City of Richmond, and the registered agent shall be Teri Scott
Lovelace, who is a resident of Virginia
<PAGE> 3
and a member of the Virginia State Bar, and whose business address is the same
as the address of the initial registered office.
V.
1. In every instance permitted by the Virginia Stock Corporation
Act, as its exists on the date hereof or may hereafter be amended, the liability
of a director or officer of the Corporation to the Corporation or its
shareholders arising out of a single transaction, occurrence or course of
conduct shall be limited to one dollar.
2. To the full extent permitted and in the manner prescribed by
the Virginia Stock Corporation Act and any other applicable law, the Corporation
shall indemnify a Director or officer of the Corporation who is or was a party
to any proceeding by reason of the fact that he is or was such a Director or
officer 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, employee benefit plan or other enterprise. The Board of Directors is
hereby empowered, by majority vote of a quorum of disinterested Directors, to
contract in advance to indemnify any Director or officer.
3. The Board of Directors is hereby empowered, by majority vote
of a quorum of disinterested Directors, to cause the Corporation to indemnify or
contract in advance to indemnify any person not specified in Section 2 of this
Article who was or is a party to any proceeding, by reason of the fact that he
is or was an employee or agent of the corporation, or is or was serving at
<PAGE> 4
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise, to the same extent as if such person were specified as one to
whom indemnification is granted in Section 2.
4. The Corporation may purchase and maintain insurance to
indemnify it against the whole or any portion of the liability assumed by it in
accordance with this Article and may also procure insurance, in such amounts as
the Board of Directors may determine, on behalf of any person who is or was a
Director, officer, employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise, against any
liability asserted against or incurred by any such person in any such capacity
or arising from his status as such, whether or not the Corporation would have
power to indemnify him against such liability under the provisions of this
Article.
5. In the event there has been a change in the composition of a
majority of the Board of Directors after the date of the alleged act or omission
with respect to which indemnification is claimed, any determination as to
indemnification and advancement of expenses with respect to any claim for
indemnification and advancement of expenses with respect to any claim for
indemnification made pursuant to Section 2 of this Article VI shall be made by
special legal counsel agreed upon by the Board of Directors and the proposed
indemnitee. If the Board of Directors and the proposed indemnitee are unable to
agree upon such special legal counsel, the Board of Directors and the proposed
indemnitee each shall select a nominee, and the nominees shall select such
special legal counsel.
<PAGE> 5
6. The provisions of this Article VI shall be applicable to all
actions, claims, suits or proceedings commenced after the adoption hereof,
whether arising from any action taken or failure to act before or after such
adoption. No amendment, modification or repeal of this Article shall diminish
the rights provided hereby or diminish the right to indemnification with respect
to any claim, issue or matter in any then pending or subsequent proceeding that
is based in any material respect on any alleged action or failure to act prior
to such amendment, modification or repeal.
7. Reference herein to Directors, officers, employees or agents
shall include former Directors, officers, employees and agents and their
respective heirs, executors and administrators.
VI.
The Board of Directors shall have the power to make, amend or repeal
bylaws of the Corporation.
<PAGE> 1
EXHIBIT 3.30
BY-LAWS
OF
AMF BOWLING CENTERS (HONG KONG) INTERNATIONAL INC.
ARTICLE I
Meetings of Shareholders
1.1 Places of Meetings. All meetings of the shareholders shall be held
at such place, either inside or outside the State of Virginia, as from time to
time may be fixed by the Board of Directors.
1.2 Annual Meetings. The annual meeting of the shareholders, for the
election of Directors and transaction of such other business as may come
before the meetings, shall be held in each year on the second Tuesday in
April, at 10 a.m., if that day is not a legal holiday in the Commonwealth of
Virginia. If that day is a legal holiday, the annual meeting shall be held on
the next succeeding day not such a legal holiday.
1.3 Special Meetings. A special meeting of the shareholders for any
purpose or purposes may be called at any time by the Chairman of the Board,
the Managing Director/President, or by a majority of the Board of Directors.
At a special meeting no business shall be transacted and no corporate action
shall be taken other than that stated in the notice of the meeting.
1.4 Notice of Meetings. Written or printed notice stating the place, day
and hour of every meeting of the shareholders and,
<PAGE> 2
in case of a special meeting, the purpose or purposes for which the meeting is
called, shall be mailed not less than ten nor more than sixty days before the
date of the meeting to each shareholder of record entitled to vote at such
meeting, at his address which appears in the share transfer books of the
Corporation. Such further notice shall be given as may be required by law,
but meetings may be held without notice if all the shareholders entitled to
vote at the meeting are present in person or by proxy or if notice is waived
in writing by those not present, either before or after the meeting.
1.5 Quorum. Any number of shareholders together holding at least a
majority of the outstanding shares of capital stock entitled to vote with
respect to the business to be transacted, who shall be present in person or
represented by proxy at any meeting duly called, shall constitute a quorum for
the transaction of business. If less than a quorum shall be in attendance at
the time for which a meeting shall have been called, the meeting may be
adjourned from time to time by a majority of the shareholders present or
represented by proxy without notice other than by announcement at the meeting.
1.6 Voting. At any meeting of the shareholders each shareholder of a
class entitled to vote on any matter coming before the meeting shall, as to
such matter, have one vote, in person or by proxy, for each share of capital
stock of such class standing in his name on the books of the Corporation on
the date, not more than seventy days prior to such meeting, fixed by the Board
of Directors as the record date for the purpose of
<PAGE> 3
determining shareholders entitled to vote. Every proxy shall be in writing,
dated and signed by the shareholder entitled to vote or his duly authorized
attorney-in-fact.
1.7 Inspectors. An appropriate number of inspectors for any meeting of
shareholders may be appointed by the Chairman of such meeting. Inspectors so
appointed will open and close the polls, will receive and take charge of
proxies and ballots, and will decide all questions as to the qualifications of
voters, validity of proxies and ballots, and the number of votes properly
cast.
ARTICLE II
Directors
2.1 General Powers. The property, affairs and business of the
Corporation shall be managed by the Board of Directors, and, except as
otherwise expressly provided by law, the Articles of Incorporation or these
By-laws, all of the powers of the Corporation shall be vested in such Board.
2.2 Number of Directors. The number of Directors constituting the Board
of Directors shall be at least one and not more than three. The number of
Directors may be increased or decreased from time to time by amendment to
these By-laws, but no decrease shall have the effect of shortening the term of
an incumbent Director.
2.3 Election and Removal of Directors; Quorum.
(a) Directors shall be elected at each annual meeting of shareholders to
succeed those Directors whose terms have expired and to fill any vacancies
then existing.
<PAGE> 4
(b) Directors shall hold their offices for terms of one year and until
their successors are elected. Any Director may be removed from office at a
meeting called expressly for that purpose by the vote of shareholders holding
a majority of the shares entitled to vote at an election of Directors.
(c) Any vacancy occurring in the Board of Directors may be filled by the
affirmative vote of the majority of the remaining Directors though less than a
quorum of the Board, and the term of office of any Director so elected shall
expire at the next shareholders' meeting at which Directors are elected.
(d) A majority of the number of Directors elected and serving at the
time of any meeting shall constitute a quorum for the transaction of business.
The act of a majority of Directors present at a meeting at which a quorum is
present shall be the act of the Board of Directors. Less than a quorum may
adjourn any meeting.
2.4 Meetings of Directors. An annual meeting of the Board of Directors
shall be held as soon as practicable after the adjournment of the annual
meeting of shareholders at such place as the Board may designate. Other
meetings of the Board of Directors shall be held at places inside or outside
the State of Virginia and at times fixed by resolution of the Board, or upon
call of the Chairman of the Board, the Managing Director/President or any two
of the Directors. The Secretary or officer performing the Secretary's duties
shall give not less than twenty-four hours' notice either in person or by
letter, telegraph or telephone of all meetings of the Board of Directors,
<PAGE> 5
provided that notice need not be given of the annual meeting or of regular
meetings held at times and places fixed by resolution of the Board. Meetings
may be held at any time without notice if all of the Directors are present, or
if those not present waive notice in writing either before or after the
meeting. The notice of meetings of the Board need not state the purpose of
the meeting.
2.5 Compensation. By resolution of the Board, Directors may be allowed
a fee and expenses for attendance at all meetings, but nothing herein shall
preclude Directors from serving the Corporation in other capacities and
receiving compensation for such other services.
ARTICLE III
Committees
3.1 Executive Committee. The Board of Directors, by resolution adopted
by a majority of the number of Directors fixed by these By-laws, may elect an
Executive Committee which shall consist of not less than two Directors,
including the Managing Director/President. When the Board of Directors is not
in session, the Executive Committee shall have all power vested in the Board
of Directors by law, by the Articles of Incorporation, or by these By-laws,
provided that the Executive Committee shall not have power to (i) approve or
recommend to shareholders action that the Virginia Stock Corporation Act
requires to be approved by shareholders; (ii) fill vacancies on the Board or on
any of its committees; (iii) amend the Articles of Incorporation pursuant to
Section 13.1-706 of the Virginia Code; (iv) adopt, amend,
<PAGE> 6
or repeal the By-laws; (v) approve a plan of merger or share exchange not
requiring shareholder approval; (vi) authorize or approve a distribution,
except according to a general formula or method prescribed by the Board of
Directors; or (vii) authorize or approve the issuance or sale or contract for
sale of shares, or determine the designation and relative rights, preferences,
and limitations of a class or series of shares, other than within limits
specifically prescribed by the Board of Directors. The Executive Committee
shall report at the next regular or special meeting of the Board of
Directors all action which the Executive Committee may have taken on behalf
of the Board since the last regular or special meeting of the Board of
Directors.
3.2 Finance Committee. The Board of Directors, by resolution adopted by
a majority of the number of Directors fixed by these By-laws, may elect a
Finance Committee which shall consist of not less than two Directors. The
Finance Committee shall consider and report to the Board with respect to plans
for corporate expansion, capital structure and long-range financial
requirements. The Committee shall also consider and report to the Board with
respect to such other matters relating to the financial affairs of the
Corporation as may be requested by the Board or the appropriate officers of
the Corporation. The Committee shall report periodically to the Board of
Directors on all action which it may have taken.
3.3 Other Committees. The Board of Directors, by resolution adopted by
a majority of the number of Directors fixed
<PAGE> 7
by these By-laws, may establish such other standing or special committees of
the Board as it may deem advisable, consisting of not less than two Directors;
and the members, terms and authority of such committees shall be as set forth
in the resolutions establishing the same.
3.4 Meetings. Regular and special meetings of any Committee established
pursuant to this Article may be called and held subject to the same
requirements with respect to time, place and notice as are specified in these
By-laws for regular and special meetings of the Board of Directors.
3.5 Quorum and Manner of Acting. A majority of the members of any
Committee serving at the time of any meeting thereof shall constitute a quorum
for the transaction of business at such meeting. The action of a majority of
those members present at a Committee meeting at which a quorum is present
shall constitute the act of the Committee.
3.6 Terms of Office. Members of any Committee shall be elected as above
provided and shall hold office until their successors are elected by the Board
of Directors or until such Committee is dissolved by the Board of Directors.
3.7 Resignation and Removal. Any member of a Committee may resign at
any time by giving written notice of his intention to do so to the Managing
Director/President or the Secretary of the Corporation, or may be removed,
with or without cause, at any time by such vote of the Board of Directors as
would suffice for his election.
3.8 Vacancies. Any vacancy occurring in a Committee
<PAGE> 8
resulting from any cause whatever may be filled by a majority of the number of
Directors fixed by these By-laws.
ARTICLE IV
Officers
4.1 Election of Officers; Terms. The Officers of the Corporation shall
consist of a Chief Executive Officer, Managing Director/President, an
Assistant Managing Director/Vice President, Vice President, a Secretary and a
Treasurer. Other officers, including a Chairman of the Board, one or more Vice
Presidents (whose seniority and titles, including Executive Vice Presidents
and Senior Vice Presidents, may be specified by the Board of Directors), and
assistant and subordinate officers, may from time to time be elected by the
Board of Directors. All officers shall hold office until the next annual
meeting of the Board of Directors and until their successors are elected. Any
two officers may be combined in the same person as the Board of Directors may
determine.
4.2 Removal of Officers; Vacancies. Any officer of the Corporation may
be removed summarily with or without cause, at any time, by the Board of
Directors provided however that the removal of the Chairman of the Board shall
require the vote of two-thirds of the Directors. Vacancies may be filled by
the Board of Directors.
4.3 Duties. The officers of the Corporation shall have such duties as
generally pertain to their offices, respectively, as well as such powers and
duties as are prescribed by law or are hereinafter provided or as from time to
time shall be conferred
<PAGE> 9
by the Board of Directors. The Board of Directors may require any officer to
give such bond for the faithful performance of his duties as the Board may see
fit.
4.4 Duties of the Managing Director/President. The Managing
Director/President shall be primarily responsible for the implementation of
policies of the Board of Directors. He shall have authority over the general
management and direction of the business and operations of the Corporation and
its divisions, if any, subject only to the ultimate authority of the Board of
Directors. He shall be ex officio a member of all Committees of the Board.
In the absence of the Chairman of the Board or if there is no such officer,
the Managing Director/President shall preside at all corporate meetings. He
may sign and execute in the name of the Corporation share certificates, deeds,
mortgages, bonds, contracts or other instruments except in cases where the
signing and the execution thereof shall be expressly delegated by the Board of
Directors or by these By-laws to some other officer or agent of the
Corporation or shall be required by law otherwise to be signed or executed.
In addition, he shall perform all duties incident to the office of the
Managing Director/President and such other duties as from time to time may be
assigned to him by the Board of Directors.
4.5 Duties of the Assistant Managing Director/Vice President. The
Assistant Managing Director/Vice President shall have such powers and duties
as may from time to time be assigned to him by the Managing Director/President
or the Board of Directors. The Assistant Managing Director/Vice President may
<PAGE> 10
sign and execute in the name of the Corporation deeds, mortgages, bonds,
contracts or other instruments authorized by the Board of Directors, except
where the signing and execution of such documents shall be expressly delegated
by the Board of Directors or the Managing Director/President to some other
officer or agent of the Corporation or shall be required by law or otherwise
to be signed or executed.
4.6 Duties of the Treasurer. The Treasurer shall have charge of and be
responsible for all funds, securities, receipts and disbursements of the
Corporation, and shall deposit all monies and securities of the Corporation in
such banks and depositories as shall be designated by the Board of Directors.
He shall be responsible (i) for maintaining adequate financial accounts and
records in accordance with generally accepted accounting practices; (ii) for
the preparation of appropriate operating budgets and financial statements;
(iii) for the preparation and filing of all tax returns required by law; and
(iv) for the performance of all duties incident to the office of Treasurer and
such other duties as from time to time may be assigned to him by the Board of
Directors, the Finance Committee or the Managing Director/President. The
treasurer may sign and execute in the name of the Corporation share
certificates, deeds, mortgages, bonds, contracts or other instruments, except
in cases where the signing and the execution thereof shall be expressly
delegated by the Board of Directors or by these By-laws to some other officer
or agent of the Corporation or shall be required by law or otherwise to be
signed or executed.
<PAGE> 11
4.7 Duties of the Secretary. The Secretary shall act as secretary of
all meetings of the Board of Directors and shareholders of the Corporation.
When requested, he shall also act as secretary of the meetings of the
committees of the Board. He shall keep and preserve the minutes of all such
meetings in permanent books. He shall see that all notices required to be
given by the Corporation are duly given and served; shall have custody of the
seal of the Corporation and shall affix the seal or cause it to be affixed to
all share certificates of the Corporation and to all documents the execution
of which on behalf of the Corporation under its corporate seal is duly
authorized in accordance with law or the provisions of these By-laws; shall
have custody of all deeds, leases, contracts and other important corporate
documents; shall have charge of the books, records and papers of the
Corporation relating to its organization and management as a Corporation;
shall see that all reports, statements and other documents required by law
(except tax returns) are properly 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 of Directors or the Managing
Director/President.
4.8 Compensation. The Board of Directors shall have authority to fix
the compensation of all officers of the Corporation.
ARTICLE V
Capital Stock
5.1 Certificates. The shares of capital stock of the
<PAGE> 12
Corporation shall be evidenced by certificates in forms prescribed by the
Board of Directors and executed in any manner permitted by law and stating
thereon the information required by law. Transfer agents and/or registrars
for one or more classes of shares of the Corporation may be appointed by the
Board of Directors and may be required to countersign certificates
representing shares of such class or classes. If any officer whose signature
or facsimile thereof shall have been used on a share certificate shall for any
reason cease to be an officer of the Corporation and such certificate shall
not then have been delivered by the Corporation, the Board of Directors may
nevertheless adopt such certificate and it may then be issued and delivered as
though such person had not ceased to be an officer of the Corporation.
5.2 Lost, Destroyed and Mutilated Certificates. Holders of the shares
of the Corporation shall immediately notify the Corporation of any loss,
destruction or mutilation of the certificate therefor, and the Board of
Directors may in its discretion cause one or more new certificates for the
same number of shares in the aggregate to be issued to such shareholder upon
the surrender of the mutilated certificate or upon satisfactory proof of such
loss or destruction, and the deposit of a bond in such form and amount and
with such surety as the Board of Directors may require.
5.3 Transfer of Shares. The shares of the Corporation shall be
transferable or assignable only on the books of the Corporation by the holder
in person or by attorney on surrender
<PAGE> 13
of the certificate for such shares duly endorsed and, if sought to be
transferred by attorney, accompanied by a written power of attorney to have
the same transferred on the books of the Corporation. The Corporation will
recognize, however, the exclusive right of the person registered on its books
as the owner of shares to receive dividends and to vote as such owner.
5.4 Fixing Record Date. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of shareholders
or any adjournment thereof, or entitled to receive payment of any dividend, or
in order to make a determination of shareholders for any other proper purpose,
the Board of Directors may fix in advance a date as the record date for any
such determination of shareholders, such date in any case to be not more than
seventy days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If no record date is fixed for
the determination of shareholders entitled to notice of or to vote at a
meeting of shareholders, or of shareholders entitled to receive payment of a
dividend, the date on which notices of the meeting are mailed or the date on
which the resolution of the Board of Directors declaring such dividend is
adopted, as the case may be, shall be the record date for such determination
of shareholders. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this section, such
determination shall apply to any adjournment thereof unless the Board of
Directors fixes a new record date, which it shall do if the meeting is
adjourned to a date more than 120 days after the
<PAGE> 14
date fixed for the original meeting.
ARTICLE VI
Miscellaneous Provisions
6.1 Seal. The seal of the Corporation shall consist of a flat-faced
circular die, of which there may be any number of counterparts, on which there
shall be engraved the word "Seal".
6.2 Fiscal Year. The fiscal year of the Corporation shall end on such
date and shall consist of such accounting periods as may be fixed by the Board
of Directors.
6.3 Checks, Notes and Drafts. Checks, notes, drafts and other orders
for the payment of money shall be signed by such persons as the Board of
Directors from time to time may authorize. When the Board of Directors so
authorizes, however, the signature of any such person may be a facsimile.
6.4 Amendment of By-Laws. Unless proscribed by the Articles of
Incorporation, these By-laws may be amended or altered at any meeting of the
Board of Directors by affirmative vote of a majority of the number of
Directors fixed by these By-laws. The shareholders entitled to vote in respect
of the election of Directors, however, shall have the power to rescind, amend,
alter or repeal any By-laws and to enact By-laws which, if expressly so
provided, may not be amended, altered or repealed by the Board of Directors.
6.5 Voting of Shares Held. Unless otherwise provided by resolution of
the Board of Directors or of the Executive Committee, if any, the Managing
Director/President may from time to time appoint an attorney or attorneys or
agent or agents of
<PAGE> 15
the Corporation, in the name and on behalf of the Corporation, to cast the
vote which the Corporation may be entitled to cast as a shareholder or
otherwise in any other corporation, any of whose securities may be held by the
Corporation, at meetings of the holders of the shares or other securities of
such other corporation, or to consent in writing to any action by any such
other corporation; and the Managing Director/President shall instruct the
person or persons so appointed as to the manner of casting such votes or
giving such consent and may execute or cause to be executed on behalf of the
Corporation, and under its corporate seal or otherwise, such written proxies,
consents, waivers or other instruments as may be necessary or proper in the
premises. In lieu of such appointment the Managing Director/President may
himself attend any meetings of the holders of shares or other securities of
any such other corporation and there vote or exercise any or all power of the
Corporation as the holder of such shares or other securities of such other
corporation.
ARTICLE VII
Emergency By-laws
The Emergency By-laws provided in this Article VII shall be operative
during any emergency, notwithstanding any different provision in the preceding
Articles of these By-laws or in the Articles of Incorporation of the
Corporation or in the Virginia Stock Corporation Act (other than those
provisions relating to emergency by-laws). An emergency exists if a quorum of
the Corporation's Board of Directors cannot readily be assembled
<PAGE> 16
because of some catastrophic event. To the extent not inconsistent with these
Emergency By-laws, the By-laws provided in the preceding Articles shall remain
in effect during such emergency and upon the termination of such emergency the
Emergency By-laws shall cease to be operative unless and until another such
emergency shall occur.
During any such emergency:
(a) Any meeting of the Board of Directors may be called by any officer
of the Corporation or by any Director. The notice thereof shall specify the
time and place of the meeting. To the extent feasible, notice shall be given
in accord with Section 2.4 above, but notice may be given only to such of the
Directors as it may be feasible to reach at the time, by such means as may be
feasible at the time, including publication or radio, and at a time less than
twenty-four hours before the meeting if deemed necessary by the person giving
notice. Notice shall be similarly given, to the extent feasible, to the other
persons referred to in (b) below.
(b) At any meeting of the Board of Directors, a quorum shall consist of
a majority of the number of Directors fixed at the time by Article II of the
By-laws. If the Directors present at any particular meeting shall be fewer
than the number required for such quorum, other persons present as referred to
below, to the number necessary to make up such quorum, shall be deemed
Directors for such particular meeting as determined by the following
provisions and in the following order of priority:
(i) Assistant Managing Director/Vice Presidents not
<PAGE> 17
already serving as Directors, in the order of their seniority of first
election to such offices, or if two or more shall have been first elected to
such offices on the same day, in the order of their seniority in age;
(ii) All other officers of the Corporation in the order of their
seniority of first election to such offices, or if two or more shall have been
first elected to such offices on the same day, in the order of their seniority
in age; and
(iii) Any other persons that are designated on a list that shall have
been approved by the Board of Directors before the emergency, such persons to
be taken in such order of priority and subject to such conditions as may be
provided in the resolution approving the list.
(c) The Board of Directors, during, as well as before, any such
emergency, may provide, and from time to time modify, lines of succession in
the event that during such an emergency any or all officers or agents of the
Corporation shall for any reason be rendered incapable of discharging their
duties.
(d) The Board of Directors, during, as well as before, any such
emergency, may, effective in the emergency, change the principal office, or
designate several alternative offices, or authorize the officers so to do.
No officer, Director or employee shall be liable for action taken in good
faith in accordance with these Emergency By-laws.
These Emergency By-laws shall be subject to repeal or change by further
action of the Board of Directors or by action of the shareholders, except that
no such repeal or change shall modify
<PAGE> 18
the provisions of the next preceding paragraph with regard to action or
inaction prior to the time of such repeal or change. Any such amendment of
these Emergency By-laws may make any further or different provision that may
be practical and necessary for the circumstances of the emergency.
<PAGE> 1
EXHIBIT 3.31
ARTICLES OF RESTATEMENT
OF
POMPANETTE, INC.
1. The new name of the Company is AMF Bowling Centers
International Inc.
2. The attached Restated Articles and all amendments to the
Articles were adopted by unanimous consent of the shareholders.
3. The attached Restated Articles and all amendments to the
Articles were adopted by unanimous consent of the Board of Directors.
I, Teri Scott Lovelace, Assistant Secretary of AMF Bowling Centers
International Inc. do hereby certify as to the above.
/s/ Teri Scott Lovelace
-----------------------------
Teri Scott Lovelace
Sworn and subscribed to before me this 2nd day of March, 1989.
/s/ Cheryle L. Kitchen
------------------------------
Notary Public
My Commission Expires:
<PAGE> 2
RESTATED
ARTICLES
OF
POMPANETTE, INC.
I.
The new name of the Corporation is AMF Bowling Centers International
Inc.
II.
The purpose for which the Corporation is formed is to transact any or
all lawful business, not required to be specifically stated in these Articles,
for which corporations may be incorporated under the Virginia Stock Corporation
Act, as amended from time to time.
III.
The number of shares which the Corporation shall have authority to
issue shall be 10,000 shares of the par value of $1.00 each. No holder of
shares of any class of the Corporation shall have any preemptive or preferential
right to purchase or subscribe to (i) any shares of any class of the
corporation, whether now or hereafter authorized; (ii) any warrants, rights or
options to purchase any such shares; or (iii) any securities or obligations
convertible into any such shares or into warrants, rights, or options to
purchase any such shares.
IV.
The registered office shall be located at 901 East Cary Street, Suite
1400, in the City of Richmond, and the registered agent shall be Teri Scott
Lovelace, who is a resident of Virginia
<PAGE> 3
and a member of the Virginia State Bar, and whose business address is the same
as the address of the initial registered office.
V.
1. In every instance permitted by the Virginia Stock Corporation
Act, as it exists on the date hereof or may hereafter be amended, the liability
of a director or officer of the Corporation to the Corporation or its
shareholders arising out of a single transaction, occurrence or course of
conduct shall be limited to one dollar.
2. To the full extent permitted and in the manner prescribed by
the Virginia Stock Corporation Act and any other applicable law, the Corporation
shall indemnify a Director or officer of the Corporation who is or was a party
to any proceeding by reason of the fact that he is or was such a Director or
officer 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, employee benefit plan or enterprise. The Board of Directors is hereby
empowered, by majority vote of a quorum of disinterested Directors, to contract
in advance to indemnify any Director or officer.
3. The Board of Directors is hereby empowered, by majority vote
of a quorum of disinterested Directors, to cause the Corporation to indemnify or
contract in advance to indemnify any person not specified in Section 2 of this
Article who was or is a party to any proceeding, by reason of the fact that he
is or was an employee or agent of the corporation, or is or was serving at
<PAGE> 4
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise, to the same extent as if such person were specified as one to
whom indemnification is granted in Section 2.
4. The Corporation may purchase and maintain insurance to
indemnify it against the whole or any portion of the liability assumed by it in
accordance with this Article and may also procure insurance, in such amounts as
the Board of Directors may determine, on behalf of any person who is or was a
Director, officer, employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise, against any liability
asserted against or incurred by any such person in any such capacity or arising
from his status as such, whether or not the Corporation would have power to
indemnify him against such liability under the provisions of this Article.
5. In the event there has been a change in the composition of a
majority of the Board of Directors after the date of the alleged act or omission
with respect to which indemnification is claimed, any determination as to
indemnification and advancement of expenses with respect to any claim for
indemnification made pursuant to Section 2 of this Article VI shall be made by
special legal counsel agreed upon by the Board of Directors and the proposed
indemnitee. If the Board of Directors and the proposed indemnitee are unable to
agree upon such legal counsel, the Board of Directors and the proposed
indemnitee each shall select a nominee, and the nominees shall select such
special legal counsel.
<PAGE> 5
6. The provisions of this Article VI shall be applicable to all
actions, claims, suits or proceedings commenced after the adoption hereof,
whether arising from any action taken or failure to act before or after such
adoption. No amendment, modification or repeal of this Article shall diminish
the rights provided hereby or diminish the right to indemnification with respect
to any claim, issue or matter in any material respect on any alleged action or
failure to act prior to such amendment, modification or repeal.
7. Reference herein to Directors, officers, employees or agents
shall include former Directors, officers, employees and agents and their
respective heirs, executors and administrators.
VI.
The Board of Directors shall have the power to make, amend or repeal
bylaws of the Corporation.
<PAGE> 6
ARTICLES OF INCORPORATION
OF
POMPANETTE, INC.
I hereby form a stock corporation under the provisions of Chapter 1 of
Title 13.1 of the Code of Virginia, and to that end, set forth the following:
A. Corporate Name
The name of the Corporation is:
Pompanette, Inc.
B. Purposes
The purpose for which the Corporation is formed is:
1. The Corporation shall have all of the corporate
powers of any character not prohibited by law or required to be stated in the
Articles of Incorporation.
C. Authorized Stock
The aggregate number of shares which the Corporation shall
have authority to issue and the par value per share are as follows:
<TABLE>
<CAPTION>
CLASS NUMBER PAR VALUE PER
AND SERIES OF SHARES SHARE
- ---------- --------- -------------
<S> <C> <C>
Common 15,000 $1.00
</TABLE>
Each share of Common Stock shall have full voting rights.
D. Denial of Preemptive Right
No holder of shares of the capital stock of any class of the
Corporation shall have any preemptive or preferential right of
<PAGE> 7
subscription to any shares of any class of the Corporation, whether now or
hereafter authorized, or to any obligations convertible into stock of the
Corporation issued or sold, nor any right of subscription to any thereof other
than such, if any, the Board of Directors in its discretion may from time to
time determine and at such price as the Board of Directors may from time to time
fix.
E. Registered Office and Registered Agent
The address of the initial registered office is 629 East Main
Street, Richmond, Virginia 23219. The name of the city in which the initial
registered office is located is the City of Richmond. The name of its initial
registered agent is Daniel M. McCormack who is a resident of the State of
Virginia, a member of the Virginia State Bar, and whose business office is the
same as the registered office of the Corporation.
F. Directors
The number of Directors constituting the initial Board of
Directors is three (3) and the names and addresses of the persons who are to
serve as the initial Directors are:
<TABLE>
<CAPTION>
Name Address
- ---- -------
<S> <C>
William H. Goodwin, Jr. 707 East Main Street
Richmond, Virginia 23219
L. F. Loree, III 707 East Main Street
Richmond, Virginia 23219
Robert L. Byrd 190 Bryan Road
Dania, Florida 33004
</TABLE>
G. Indemnification of Directors and Officers
1. The Corporation shall indemnify any person who was
-2-
<PAGE> 8
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,
arbitrative or investigative (other than an action by or in the right of the
Corporation) by reason of the fact that he is or was a director, officer,
employee or agent of the Corporation, or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in the manner he reasonably believed to
be in or not opposed to the best interests of the Corporation, and, with respect
to any criminal action or proceeding had nor reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding had no
reasonable by judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not of itself create a presumption that the
person did not act in good faith and in a manner which he reasonably believed to
be in or not opposed to the best interests of the Corporation, and, with respect
to any criminal action or proceeding, had reasonable cause to believe that his
conduct was unlawful.
2. 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 or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact
-3-
<PAGE> 9
that he is or was a director, officer, employee or agent of the Corporation, or
is or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with defense or settlement of such
action or suit if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interests of the Corporation and except that
no indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the Corporation unless and only to
the extent that the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all circumstances of the case, such person is fairly and reasonably
entitled to indemnify for such expenses which such court shall deem proper.
3. To the extent that a director, officer, employee or
agent of the Corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in subsections (1) and
(2), or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
4. Any indemnification under subsections (1) and (2)
(unless ordered by court) shall be made by the Corporation only as
-4-
<PAGE> 10
authorized in the specific case upon a determination that indemnification of the
director, officer, employee or agent is proper in the circumstances because he
has met the applicable standard of conduct set forth in subsections (1) and (2).
Such determination shall be made (a) by the board of directors by a majority
vote of a quorum consisting of directors who were not parties to such action,
suit or proceeding, or (b) if such a quorum is not obtainable, or, even if
obtainable a quorum of disinterested directors so directs, by independent legal
counsel in a written opinion, or (c) by the shareholders.
5. Expenses (including attorneys' fees) incurred in
defending an action, suit or proceeding, whether civil, criminal,
administrative, arbitrative or investigative, may be paid by the corporation in
advance of the final disposition of such action, suit or proceeding as
authorized in the manner provided in subsection (4) upon receipt of an
undertaking by or on behalf of the director, officer, employee or agent to repay
such amount unless it shall ultimately be determined that he is entitled to be
indemnified by the Corporation as authorized in this section.
6. The Corporation may make any other or further
indemnity, including in criminal proceedings, to any person referred to in this
section that may be authorized herein or in any bylaw made by the stockholders
or in any resolution adopted, before or after the event, by the stockholders,
except an indemnity against his gross negligence or willful misconduct. Each
such indemnity may continue as to
-5-
<PAGE> 11
a person who has ceased to have the capacity referred to above and may inure to
the benefit of the heirs, executors and administrators of such a person.
7. The Corporation may purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability under the provisions of this section.
DATED: April 14, 1982
/s/ Daniel M. McCormack
-------------------------
Incorporator
-6-
<PAGE> 1
EXHIBIT 3.32
BY-LAWS
OF
AMF BOWLING CENTERS INTERNATIONAL INC.
ARTICLE I
Meetings of Shareholders
1.1 Places of Meetings. All meetings of the shareholders shall
be held at such place, either inside or outside the State of Virginia, as from
time to time may be fixed by the Board of Directors.
1.2 Annual Meetings. The annual meeting of the shareholders, for
the election of Directors and transaction of such other business as may come
before the meetings, shall be held in each year on the second Tuesday in April,
at 10 a.m., if that day is not a legal holiday in the Commonwealth of Virginia.
If that day is a legal holiday, the annual meeting shall be held on the next
succeeding day not such a legal holiday.
1.3 Special Meetings. A special meeting of the shareholders for
any purpose or purposes may be called at any time by the Chairman of the Board,
the Managing Director/President, or by a majority of the Board of Directors. At
a special meeting no business shall be transacted and no corporate action shall
be taken other than that stated in the notice of the meeting.
1.4 Notice of Meetings. Written or printed notice stating the
place, day and hour of every meeting of the shareholders and,
<PAGE> 2
in case of a special meeting, the purpose or purposes for which the meeting is
called, shall be mailed not less than ten nor more than sixty days before the
date of the meeting to each shareholder of record entitled to vote at such
meeting, at his address which appears in the share transfer books of the
Corporation. Such further notice shall be given as may be required by law, but
meetings may be held without notice if all the shareholders entitled to vote at
the meeting are present in person or by proxy or if notice is waived in writing
by those not present, either before or after the meeting.
1.5 Quorum. Any number of shareholders together holding at least
a majority of the outstanding shares of capital stock entitled to vote with
respect to the business to be transacted, who shall be present in person or
represented by proxy at any meeting duly called, shall constitute a quorum for
the transaction of business. If less than a quorum shall be in attendance at
the time for which a meeting shall have been called, the meeting may be
adjourned from time to time by a majority of the shareholders present or
represented by proxy without notice other than by announcement at the meeting.
1.6 Voting. At any meeting of the shareholders each shareholder
of a class entitled to vote on any matter coming before the meeting shall, as to
such matter, have one vote, in person or by proxy, for each share of captial
stock of such class standing in his name on the books of the Corporation on the
date, not more than seventy days prior to such meeting, fixed by the Board of
Directors as the record date for the purpose of
<PAGE> 3
determining shareholders entitled to vote. Every proxy shall be in writing,
dated and signed by the shareholder entitled to vote or his duly authorized
attorney-in-fact.
1.7 Inspectors. An appropriate number of inspectors for any
meeting of shareholders may be appointed by the Chairman of such meeting.
Inspectors so appointed will open and close the polls, will receive and take
charge of proxies and ballots, and will decide all questions as to the
qualifications of voters, validity of proxies and ballots, and the number of
votes properly cast.
ARTICLE II
Directors
2.1 General Powers. The property, affairs and business of the
Corporation shall be managed by the Board of Directors, and, except as otherwise
expressly provided by law, the Articles of Incorporation or these By-laws, all
of the powers of the Corporation shall be vested in such Board.
2.2 Number of Directors. The number of Directors constituting
the Board of Directors shall be at least one and not more than three. The
number of Directors may be increased or decreased from time to time by amendment
to these By-laws, but no decrease shall have the effect of shortening the term
of an incumbent Director.
2.3 Election and Removal of Directors; Quorum.
(a) Directors shall be elected at each annual meeting of
shareholders to succeed those Directors whose terms have expired and to fill any
vacancies then existing.
<PAGE> 4
(b) Directors shall hold their offices for terms of one year
and until their successors are elected. Any Director may be removed from office
at a meeting called expressly for that purpose by the vote of shareholders
holding a majority of the shares entitled to vote at an election of Directors.
(c) Any vacancy occurring in the Board of Directors may be
filled by the affirmative vote of the majority of the remaining Directors though
less than a quorum of the Board, and the term of office of any Director so
elected shall expire at the next shareholders' meeting at which Directors are
elected.
(d) A majority of the number of Directors elected and
serving at the time of any meeting shall constitute a quorum for the transaction
of business. The act of a majority of Directors present at a meeting at which a
quorum is present shall be the act of the Board of Directors. Less than a
quorum may adjourn any meeting.
2.4 Meetings of Directors. An annual meeting of the Board of
Directors shall be held as soon as practicable after the adjournment of the
annual meeting of shareholders at such place as the Board may designate. Other
meetings of the Board of Directors shall be held at places inside or outside the
State of Virginia and at times fixed by resolution of the Board, or upon call of
the Chairman of the Board, the Managing Director/President or any two of the
Directors. The Secretary or officer performing the Secretary's duties shall
give not less than twenty-four hours' notice either in person or by letter,
telegraph or telephone of all meetings of the Board of Directors,
<PAGE> 5
provided that notice need not be given of the annual meeting or of regular
meetings held at times and places fixed by resolution of the Board. Meetings
may be held at any time without notice if all of the Directors are present, or
if those not present waive notice in writing either before or after the
meeting. The notice of meetings of the Board need not state the purpose of the
meeting.
2.5 Compensation. By resolution of the Board, Directors may be
allowed a fee and expenses for attendance at all meetings, but nothing herein
shall preclude Directors from serving the Corporation in other capacities and
receiving compensation for such other services.
ARTICLE III
Committees
3.1 Executive Committee. The Board of Directors, by resolution
adopted by a majority of the number of Directors fixed by these By-laws, may
elect an Executive Committee which shall consist of not less than two Directors,
including the Managing Director/President. When the Board of Directors is not
in session, the Executive Committee shall have all power vested in the Board of
Directors by law, by the Articles of Incorporation, or by these By-laws,
provided that the Executive Committee shall not have power to (i) approve or
recommend to shareholders action that the Virginia Stock Corporation Act
requires to be approved by shareholders; (ii) fill vacancies on the Board or on
any of its committees; (iii) amend the Articles of Incorporation pursuant to
Section 13.1-706 of the Virginia Code; (iv) adopt, amend,
<PAGE> 6
or repeal the By-laws; (v) approve a plan of merger or share exchange not
requiring shareholder approval; (vi) authorize or approve a distribution, except
according to a general formula or method prescribed by the Board of Directors;
or (vii) authorize or approve the issuance or sale or contract for sale of
shares, or determine the designation and relative rights, preferences, and
limitations of a class or
series of shares, other than within limits specifically prescribed by the Board
of Directors. The Executive Committee shall report at the next regular or
special meeting of the Board of Directors all action which the Executive
Committee may have taken on behalf of the Board since the last regular or
special meeting of the Board of Directors.
3.2 Finance Committee. The Board of Directors, by resolution
adopted by a majority of the number of Directors fixed by these By-laws, may
elect a Finance Committee which shall consist of not less than two Directors.
The Finance Committee shall consider and report to the Board with respect to
plans for corporate expension, capital structure and long-range financial
requirements. The Committee shall also consider and report to the Board with
respect to such other matters relating to the financial affairs of the
Corporation as may be requested by the Board or the appropriate officers of the
Corporation. The Committee shall report periodically to the Board of Directors
on all action which it may have taken.
3.3 Other Committees. The Board of Directors, by resolution
adopted by a majority of the number of Directors fixed
<PAGE> 7
by these By-laws, may establish such other standing or special committees of the
Board as it may deem advisable, consisting of not less than two Directors; and
the members, terms and authority of such committees shall be as set forth in the
resolutions establishing the same.
3.4 Meetings. Regular and special meetings of any Committee
established pursuant to this Article may be called and held subject to the same
requirements with respect to time, place and notice as are specified in these
By-laws for regular and special meetings of the Board of Directors.
3.5 Quorum and Manner of Acting. A majority of the members of
any Committee serving at the time of any meeting thereof shall constitute a
quorum for the transaction of business at such meeting. The action of a
majority of those members present at a Committee meeting at which a quorum is
present shall constitute the act of the Committee.
3.6 Terms of Office. Members of any Committee shall be elected
as above provided and shall hold office until their successors are elected by
the Board of Directors or until such Committee is dissolved by the Board of
Directors.
3.7 Resignation and Removal. Any member of a Committee may
resign at any time by giving written notice of his intention to do so to the
Managing Director/President or the Secretary of the Corporation, or may be
removed, with or without cause, at any time by such vote of the Board of
Directors as would suffice for his election.
3.8 Vacancies. Any vacancy occurring in a Committee
<PAGE> 8
resulting from any cause whatever may be filled by a majority of the number of
Directors fixed by these By-laws.
ARTICLE IV
Officers
4.1 Election of Officers; Terms. The Officers of the Corporation
shall consist of a Chief Executive Officer, Managing Director/President, an
Assistant Managing Director/Vice President, Vice President, a Secretary and a
Treasurer. Other officers, including a Chairman of the Board, one or more Vice
Presidents (whose seniority and titles, including Executive Vice Presidents and
Senior Vice Presidents, may be specified by the Board of Directors), and
assistant and subordinate officers, may from time to time be elected by the
Board of Directors. All officers shall hold office until the next annual
meeting of the Board of Directors and until their successors are elected. Any
two officers may be combined in the same person as the Board of Directors may
determine.
4.2 Removal of Officers; Vacancies. Any officer of the
Corporation may be removed summarily with or without cause, at any time, by the
Board of Directors provided however that the removal of the Chairman of the
Board shall require the vote of two-thirds of the Directors. Vacancies may be
filled by the Board of Directors.
4.3 Duties. The officers of the Corporation shall have such
duties as generally pertain to their offices, respectively, as well as such
powers and duties as are prescribed by law or are hereinafter provided or as
from time to time shall be conferred
<PAGE> 9
by the Board of Directors. The Board of Directors may require any officer to
give such bond for the faithful performance of his duties as the Board may see
fit.
4.4 Duties of the Managing Director/President. The
Managing Director/President shall be primarily responsible for the
implementation of policies of the Board of Directors. He shall have authority
over the general management and direction of the business and operations of the
Corporation and its divisions, if any, subject only to the ultimate authority of
the Board of Directors. He shall be ex officio a member of all Committees of
the Board. In the absence of the Chairman of the Board or if there is no such
officer, the Managing Director/President shall preside at all corporate
meetings. He may sign and execute in the name of the Corporation share
certificates, deeds, mortgages, bonds, contracts or other instruments except in
cases where the signing and the execution thereof shall be expressly delegated
by the Board of Directors or by these By-laws to some other officer or agent of
the Corporation or shall be required by law otherwise to be signed or executed.
In addition, he shall perform all duties incident to the office of the Managing
Director/President and such other duties as from time to time may be assigned to
him by the Board of Directors.
4.5 Duties of the Assistant Managing Director/Vice
President. The Assistant Managing Director/Vice President shall have such powers
and duties as may from time to time be assigned to him by the Managing
Director/President or the Board of Directors. The Assistant Managing
Director/Vice President may
<PAGE> 10
sign and execute in the name of the Corporation deeds, mortgages, bonds,
contracts or other instruments authorized by the Board of Directors, except
where the signing and execution of such documents shall be expressly delegated
by the Board of Directors or the Managing Director/President to some other
officer or agent of the Corporation or shall be required by law or otherwise to
be signed or executed.
4.6 Duties of the Treasurer. The Treasurer shall have charge of
and be responsible for all funds, securities, receipts and disbursements of the
Corporation, and shall deposit all monies and securities of the Corporation in
such banks and depositories as shall be designated by the Board of Directors.
He shall be responsible (i) for maintaining adequate financial accounts and
records in accordance with generally accepted accounting practices; (ii) for the
preparation of appropriate operating budgets and financial statements; (iii) for
the preparation and filing of all tax returns required by law; and (iv) for the
performance of all duties incident to the office of Treasurer and such other
duties as from time to time may be assigned to him by the Board of Directors,
the Finance Committee or the Managing Director/President. The treasurer may
sign and execute in the name of the Corporation share certificates, deeds,
mortgages, bonds, contracts or other instruments, except in cases where the
signing and the execution thereof shall be expressly delegated by the Board of
Directors or by these By-laws to some other officer or agent of the Corporation
or shall be required by law or otherwise to be signed or executed.
<PAGE> 11
4.7 Duties of the Secretary. The Secretary shall act as
secretary of all meetings of the Board of Directors and shareholders of the
Corporation. When requested, he shall also act as secretary of the meetings of
the committees of the Board. He shall keep and preserve the minutes of all such
meetings in permanent books. He shall see that all notices required to be given
by the Corporation are duly given and served; shall have custody of the seal of
the Corporation and shall affix the seal or cause it to be affixed to all share
certificates of the Corporation and to all documents the execution of which on
behalf of the Corporation under its corporate seal is duly authorized in
accordance with law or the provisions of these By-laws; shall have custody of
all deeds, leases, contracts and other important corporate documents; shall have
charge of the books, records and papers of the Corporation relating to its
organization and management as a Corporation; shall see that all reports,
statements and other documents required by law (except tax returns) are properly
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 of Directors or the Managing Director/President.
4.8 Compensation. The Board of Directors shall have authority to
fix the compensation of all officers of the Corporation.
ARTICLE V
Capital Stock
5.1 Certificates. The shares of capital stock of the
<PAGE> 12
Corporation shall be evidenced by certificates in forms prescribed by the Board
of Directors and executed in any manner permitted by law and stating thereon the
information required by law. Transfer agents and/or registrars for one or more
classes of shares of the Corporation may be appointed by the Board of Directors
and may be required to countersign certificates representing shares of such
class or classes. If any officer whose signature or facsimile thereof shall
have been used on a share certificate shall for any reason cease to be an
officer of the Corporation and such certificate shall not then have been
delivered by the Corporation, the Board of Directors may nevertheless adopt such
certificate and it may then be issued and delivered as though such person had
not ceased to be an officer of the Corporation.
5.2 Lost, Destroyed and Mutilated Certificates. Holders of the
shares of the Corporation shall immediately notify the Corporation of any loss,
destruction or mutilation of the certificate therefor, and the Board of
Directors may in its discretion cause one or more new certificates for the same
number of shares in the aggregate to be issued to such shareholder upon the
surrender of the mutilated certificate or upon satisfactory proof of such loss
or destruction, and the deposit of a bond in such form and amount and with such
surety as the Board of Directors may require.
5.3 Transfer of Shares. The shares of the Corporation shall be
transferable or assignable only on the books of the Corporation by the holder in
person or by attorney on surrender
<PAGE> 13
of the certificate for such shares duly endorsed and, if sought to be
transferred by attorney, accompanied by a written power of attorney to have the
same transferred on the books of the Corporation. The Corporation will
recognize, however, the exclusive right of the person registered on its books as
the owner of shares to receive dividends and to vote as such owner.
5.4 Fixing Record Date. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof, or entitled to receive payment of any dividend, or in
order to make a determination of shareholders for any other proper purpose, the
Board of Directors may fix in advance a date as the record date for any such
determination of shareholders, such date in any case to be not more than seventy
days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If no record date is fixed for
the determination of shareholders entitled to notice of or to vote at a meeting
of shareholders, or of shareholders entitled to receive payment of a dividend,
the date on which notices of the meeting are mailed or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination shall
apply to any adjournment thereof unless the Board of Directors fixes a new
record date, which it shall do if the meeting is adjourned to a date more than
120 days after the
<PAGE> 14
date fixed for the original meeting.
ARTICLE VI
Miscellaneous Provisions
6.1 Seal. The seal of the Corporation shall consist of a flat-
faced circular die, of which there may be any number of counterparts, on which
there shall be engraved the word "Seal".
6.2 Fiscal Year. The fiscal year of the Corporation shall end on
such date and shall consist of such accounting periods as may be fixed by the
Board of Directors.
6.3 Checks, Notes and Drafts. Checks, notes, drafts and other
orders for the payment of money shall be signed by such persons as the Board of
Directors from time to time may authorize. When the Board of Directors so
authorizes, however, the signature of any such person may be a facsimile.
6.4 Amendment of By-Laws. Unless proscribed by the Articles of
Incorporation, these By-laws may be amended or altered at any meeting of the
Board of Directors by affirmative vote of a majority of the number of Directors
fixed by these By-laws. The shareholders entitled to vote in respect of the
election of Directors, however, shall have the power to rescind, amend, alter or
repeal any By-laws and to enact By-laws which, if expressly so provided, may not
be amended, altered or repealed by the Board of Directors.
6.5 Voting of Shares Held. Unless otherwise provided by
resolution of the Board of Directors or of the Executive Committee, if any, the
managing Director/President may from time to time appoint an attorney or
attorneys or agent or agents of
<PAGE> 15
the Corporation, in the name and on behalf of the Corporation, to cast the vote
which the Corporation may be entitled to cast as a shareholder or otherwise in
any other corporation, any of whose securities may be held by the Corporation,
at meetings of the holders of the shares or other securities of such other
corporation, or to consent in writing to any action by any such other
corporation; and the Managing Director/President shall instruct the person or
persons so appointed as to the manner of casting such votes or giving such
consent and may execute or cause to be executed on behalf of the Corporation,
and under its corporate seal or otherwise, such written proxies, consents,
waivers or other instruments as may be necessary or proper in the premises. In
lieu of such appointment the Managing Director/President may himself attend any
meetings of the holders of shares or other securities of any such other
corporation and there vote or exercise any or all power of the Corporation as
the holder of such shares or other securities of such other corporation.
ARTICLE VII
Emergency By-laws
The Emergency By-laws provided in this Article VII shall be operative
during any emergency, notwithstanding any different provision in the preceding
Articles of these By-laws or in the Articles of Incorporation of the Corporation
or in the Virginia Stock Corporation Act (other than those provisions relating
to emergency by-laws). An emergency exists if a quorum of the Corporation's
Board of Directors cannot readily be assembled
<PAGE> 16
because of some catastrophic event. To the extent not inconsistent with these
Emergency By-laws, the By-laws provided in the preceding Articles shall remain
in effect during such emergency and upon the termination of such emergency the
Emergency By-laws shall cease to be operative unless and until another such
emergency shall occur.
During any such emergency:
(a) Any meeting of the Board of Directors may be called by any
officer of the Corporation or by any Director. The notice thereof shall specify
the time and place of the meeting. To the extent feasible, notice shall be
given in accord with Section 2.4 above, but notice may be given only to such of
the Directors as it may be feasible to reach at the time, by such means as may
be feasible at the time, including publication or radio, and at a time less than
twenty-four hours before the meeting if deemed necessary by the person giving
notice. Notice shall be similarly given, to the extent feasible, to the other
persons referred to in (b) below.
(b) At any meeting of the Board of Directors, a quorum shall
consist of a majority of the number of Directors fixed at the time by Article II
of the By-laws. If the Directors present at any particular meeting shall be
fewer than the number required for such quorum, other persons present as
referred to below, to the number necessary to make up such quorum, shall be
deemed Directors for such particular meeting as determined by the following
provisions and in the following order of priority:
(i) Assistant Managing Director/Vice Presidents not
<PAGE> 17
already serving as Directors, in the order of their seniority of first election
to such offices, or if two or more shall have been first elected to such offices
on the same day, in the order of their seniority in age;
(ii) All other officers of the Corporation in the order of
their seniority of first election to such offices, or if two or more shall have
been first elected to such offices on the same day, in the order of their
seniority in age; and
(iii) Any other persons that are designated on a list that
shall have been approved by the Board of Directors before the emergency, such
persons to be taken in such order of priority and subject to such conditions as
may be provided in the resolution approving the list.
(c) The Board of Directors, during, as well as before, any such
emergency, may provide, and from time to time modify, lines of succession in the
event that during such an emergency any or all officers or agents of the
Corporation shall for any reason be rendered incapable of discharging their
duties.
(d) The Board of Directors, during, as well as before, any such
emergency, may, effective in the emergency, change the principal office, or
designate several alternative offices, or authorize the officers so to do.
No officer, Director or employee shall be liable for action taken in
good faith in accordance with these Emergency By-laws.
These Emergency By-laws shall be subject to repeal or change by
further action of the Board of Directors or by action of the shareholders,
except that no such repeal or change shall modify
<PAGE> 18
the provisions of the next preceding paragraph with regard to action or inaction
prior to the time of such repeal or change. Any such amendment of these
Emergency By-laws may make any further or different provision that may be
practical and necessary for the circumstances of the emergency.
<PAGE> 1
EXHIBIT 3.33
AMF BOWLING THREE, INC.
AMENDMENT
1. Name. The name of the corporation is AMF Bowling Three, Inc.
2. Amendment. The Amendment is to change the name of the
corporation from AMF Bowling Three, Inc. to AMF BCO-UK One, Inc.
3. Action by Directors. On June 7, 1989, all of the directors of
the corporation, by signing a consent in writing that sets forth the proposed
amendment, found that the proposed amendment was in the best interest of the
corporation and directed that it be submitted to the shareholders of the
corporation with the request that it approve and adopt the same by signing a
consent in writing.
4. Action by Shareholders. On June 7, 1989, following the action
of the directors, the shareholders of the corporation, by signing a consent in
writing that sets forth the proposed amendment, approved and adopted the same.
The number of shares outstanding and entitled to vote on the proposed amendment,
being of a single class, was 26.8292.
IN WITNESS WHEREOF, the undersigned President of AMF Bowling Three,
Inc. has executed these Articles of Amendment this 8th day of June, 1989.
AMF BOWLING THREE, INC.
By: /s/ Beverley W. Armstrong
_______________________
President
<PAGE> 2
ARTICLES OF INCORPORATION
OF
AMF BOWLING THREE, INC.
I.
The name of the Corporation is AMF Bowling Three, Inc.
II.
The purpose for which the Corporation is formed is to transact any or
all lawful business, not required to be specifically stated in these Articles,
for which corporations may be incorporated under the Virginia Stock Corporation
Act, as amended from time to time.
III.
The number of shares which the Corporation shall have authority to
issue shall be 10,000 shares of the par value of $1.00 each. No holder of shares
of any class of the Corporation shall have any preemptive or preferential right
to purchase or subscribe to (i) any shares of any class of the corporation,
whether now or hereafter authorized; (ii) any warrants, rights or options to
purchase any such shares; of (iii) any securities or obligations convertible
into any such shares or into warrants, rights, or options to purchase any such
shares.
IV.
The initial registered office shall be located at 901 East Cary Street,
Suite 1400, Richmond, VA 23219, and the initial registered agent shall be Teri
Scott Lovelace, who is a resident of Virginia and a member of the Virginia State
Bar, and whose
<PAGE> 3
business address is the same as the address of the initial registered office.
The registered office is located in the City of Richmond.
V.
The number of Directors constituting the initial Board of Directors
shall be one, and the name address of the person who is to serve as the initial
Director is as follows:
William H. Goodwin, Jr.
901 E. Cary Street
Suite 1400
Richmond, Virginia 23219
VI.
1. In every instance permitted by the Virginia Stock Corporation
Act, as it exists on the date hereof or may hereafter be amended, the liability
of a director or officer of the Corporation to the Corporation or its
shareholders arising out of a single transaction, occurrence or course of
conduct shall be limited to one dollar.
2. To the full extent permitted and in the manner prescribed by
the Virginia Stock Corporation Act and any other applicable law, the Corporation
shall indemnify a Director or officer of the Corporation who is or was a party
to any proceeding by reason of the fact that he is or was such a Director or
officer 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, employee benefit plan or other enterprise. The Board of Directors is
hereby empowered, by majority vote of a quorum of disinterested Directors, to
contract in advance to indemnify any Director or officer.
3. The Board of Directors is hereby empowered, by majority
<PAGE> 4
vote of a quorum of disinterested Directors, to cause the Corporation to
indemnify or contract in advance to indemnify any person not specified in
Section 2 of this Article who was or is a party to any proceeding by reason of
the fact that he is or was an 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, employee
benefit plan or other enterprise, to the same extent as if such person were
specified as one to whom indemnification is granted in Section 2.
4. The Corporation may purchase and maintain insurance to
indemnify it against the whole or any portion of the liability assumed by it in
accordance with this Article and may also procure insurance, in such amounts as
the Board of Directors may determine, on behalf of any person who is or was a
Director, officer, employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise, against any liability
asserted against or incurred by any such person in any such capacity or arising
from his status as such, whether or not the Corporation would have power to
indemnify him against such liability under the provisions of this Article.
5. In the event there has been a change in the composition of a
majority of the Board of Directors after the date of the alleged act or omission
with respect to which indemnification is claimed, any determination as to
indemnification and advancement of expenses with respect to any claim for
indemnification made pursuant to Section 2 of this Article VI shall be made by
special legal counsel agreed upon by the Board of Directors and the
<PAGE> 5
proposed indemnitee. If the Board of Directors and the proposed indemnitee are
unable to agree upon such special legal counsel, the Board of Directors and the
proposed indemnitee each shall select a nominee, and the nominees shall select
such special legal counsel.
6. The provisions of this Article VI shall be applicable to all
actions, claims, suits or proceedings commenced after the adoption hereof,
whether arising from any action taken or failure to act before or after such
adoption. No amendment, modification or repeal of this Article shall diminish
the rights provided hereby or diminish the right to indemnification with respect
to any claim, issue or matter in any then pending or subsequent proceeding that
is based in any material respect on any alleged action or failure to act prior
to such amendment, modification or repeal.
7. Reference herein to Directors, officers, employees or agents
shall include former Directors, officers, employees and agents and their
respective heirs, executors and administrators.
VII.
The Board of Directors shall have the power to make, amend or repeal
bylaws of the Corporation.
Dated: April 6, 1989.
/s/ Teri Scott Lovelace
-----------------------------------
Teri Scott Lovelace
Incorporator
<PAGE> 1
EXHIBIT 3.34
BY-LAWS
OF
AMF BCO-UK ONE, INC.
ARTICLE I
Meetings of Shareholders
1.1 Places of Meetings. All meetings of the shareholders shall
be held at such place, either inside or outside the State of Virginia, as from
time to time may be fixed by the Board of Directors.
1.2 Annual Meetings. The annual meeting of the shareholders, for
the election of Directors and transaction of such other business as may come
before the meetings, shall be held in each year on the second Tuesday in April,
at 10 a.m., if that day is not a legal holiday in the Commonwealth of Virginia.
If that day is a legal holiday, the annual meeting shall be held on the next
succeeding day not such a legal holiday.
1.3 Special Meetings. A special meeting of the shareholders for
any purpose or purposes may be called at any time by the Chairman of the Board,
the President, or by a majority of the Board of Directors. At a special meeting
no business shall be transacted and no corporate action shall be taken other
than that stated in the notice of the meeting.
1.4 Notice of Meetings. Written or printed notice stating the
place, day and hour of every meeting of the shareholders and, in case of a
special meeting, the purpose or purposes for which the
<PAGE> 2
the meeting is called, shall be mailed not less than ten nor more than sixty
days before the date of the meeting to each shareholder of record entitled to
vote at such meeting, at his address which appears in the share transfer books
of the Corporation. Such further notice shall be given as may be required by
law, but meetings may be held without notice if all the shareholders entitled to
vote at the meeting are present in person or by proxy or if notice is waived in
writing by those not present, either before or after the meeting.
1.5 Quorum. Any number of shareholders together holding at least
a majority of the outstanding shares of capital stock entitled to vote with
respect to the business to be transacted, who shall be present in person or
represented by proxy at any meeting duly called, shall constitute a quorum for
the transaction of business. If less than a quorum shall be in attendance at
the time for which a meeting shall have been called, the meeting may be
adjourned from time to time by a majority of the shareholders present or
represented by proxy without notice other than by announcement at the meeting.
1.6 Voting. At any meeting of the shareholders each shareholder
of a class entitled to vote on any matter coming before the meeting shall, as to
such matter, have one vote, in person or by proxy, for each share of captial
stock of such class standing in his name on the books of the Corporation on the
date, not more than seventy days prior to such meeting, fixed by the Board of
Directors as the record date for the purpose of determining shareholders
entitled to vote. Every proxy shall be
<PAGE> 3
in writing, dated and signed by the shareholder entitled to vote or his duly
authorized attorney-in-fact.
1.7 Inspectors. An appropriate number of inspectors for any
meeting of shareholders may be appointed by the Chairman of such meeting.
Inspectors so appointed will open and close the polls, will receive and take
charge of proxies and ballots, and will decide all questions as to the
qualifications of voters, validity of proxies and ballots, and the number of
votes properly cast.
ARTICLE II
Directors
2.1 General Powers. The property, affairs and business of the
Corporation shall be managed by the Board of Directors, and, except as otherwise
expressly provided by law, the Articles of Incorporation or these By-laws, all
of the powers of the Corporation shall be vested in such Board.
2.2 Number of Directors. The number of Directors constituting
the Board of Directors shall be at least one and not more than three. The
number of Directors may be increased or decreased from time to time by amendment
to these By-laws, but no decrease shall have the effect of shortening the term
of an incumbent Director.
2.3 Election and Removal of Directors; Quorum.
(a) Directors shall be elected at each annual meeting of
shareholders to succeed those Directors whose terms have expired and to fill any
vacancies then existing.
(b) Directors shall hold their offices for terms of one
<PAGE> 4
one year and until their successors are elected. Any Director may be removed
from office at a meeting called expressly for that purpose by the vote of
shareholders holding a majority of the shares entitled to vote at an election of
Directors.
(c) Any vacancy occurring in the Board of Directors may be
filled by the affirmative vote of the majority of the remaining Directors though
less than a quorum of the Board, and the term of office of any Director so
elected shall expire at the next shareholders' meeting at which Directors are
elected.
(d) A majority of the number of Directors elected and
serving at the time of any meeting shall constitute a quorum for the transaction
of business. The act of a majority of Directors present at a meeting at which a
quorum is present shall be the act of the Board of Directors. Less than a
quorum may adjourn any meeting.
2.4 Meetings of Directors. An annual meeting of the Board of
Directors shall be held as soon as practicable after the adjournment of the
annual meeting of shareholders at such place as the Board may designate. Other
meetings of the Board of Directors shall be held at places within or without the
State of Virginia and at times fixed by resolution of the Board, or upon call of
the Chairman of the Board, the President or any two of the Directors. The
Secretary or officer performing the Secretary's duties shall give not less than
twenty-four hours' notice either in person or by letter, telegraph or telephone
of all meetings of the Board of Directors, provided that notice need not be
given of the annual meeting or of regular meetings held at
<PAGE> 5
times and places fixed by resolution of the Board. Meetings may be held at any
time without notice if all of the Directors are present, or if those not present
waive notice in writing either before or after the meeting. The notice of
meetings of the Board need not state the purpose of the meeting.
2.5 Compensation. By resolution of the Board, Directors may be
allowed a fee and expenses for attendance at all meetings, but nothing herein
shall preclude Directors from serving the Corporation in other capacities and
receiving compensation for such other services.
ARTICLE III
Committees
3.1 Executive Committee. The Board of Directors, by resolution
adopted by a majority of the number of Directors fixed by these By-laws, may
elect an Executive Committee which shall consist of not less than two Directors,
including the President. When the Board of Directors is not in session, the
Executive Committee shall have all power vested in the Board of Directors by
law, by the Articles of Incorporation, or by these By-laws, provided that the
Executive Committee shall not have power to (i) approve or recommend to
shareholders action that the Virginia Stock Corporation Act requires to be
approved by shareholders; (ii) fill vacancies on the Board or on any of its
committees; (iii) amend the Articles of Incorporation pursuant to Section
13.1-706 of the Virginia Code; (iv) adopt, amend, or repeal the By-laws; (v)
approve a plan of merger or share exchange not requiring shareholder approval;
(vi) authorize or approve a distribution,
<PAGE> 6
except according to a general formula or method prescribed by the Board of
Directors; or (vii) authorize or approve the issuance or sale or contract for
sale of shares, or determine the designation and relative rights, preferences,
and limitations of a class or series of shares, other than within limits
specifically prescribed by the Board of Directors. The Executive Committee
shall report at the next regular or special meeting of the Board of Directors
all action which the Executive Committee may have taken on behalf of the Board
since the last regular or special meeting of the Board of Directors.
3.2 Finance Committee. The Board of Directors, by resolution
adopted by a majority of the number of Directors fixed by these By-laws, may
elect a Finance Committee which shall consist of not less than two Directors.
The Finance Committee shall consider and report to the Board with respect to
plans for corporate expansion, capital structure and long-range financial
requirements. The Committee shall also consider and report to the Board with
respect to such other matters relating to the financial affairs of the
Corporation as may be requested by the Board or the appropriate officers of the
Corporation. The Committee shall report periodically to the Board of Directors
on all action which it may have taken.
3.3 Other Committees. The Board of Directors, by resolution
adopted by a majority of the number of Directors fixed by these By-laws, may
establish such other standing or special committees of the Board as it may deem
advisable, consisting of not less than two Directors; and the members, terms and
authority
<PAGE> 7
of such committees shall be as set forth in the resolutions establishing the
same.
3.4 Meetings. Regular and special meetings of any Committee
established pursuant to this Article may be called and held subject to the same
requirements with respect to time, place and notice as are specified in these
By-laws for regular and special meetings of the Board of Directors.
3.5 Quorum and Manner of Acting. A majority of the members of
any Committee serving at the time of any meeting thereof shall constitute a
quorum for the transaction of business at such meeting. The action of a
majority of those members present at a Committee meeting at which a quorum is
present shall constitute the act of the Committee.
3.6 Terms of Office. Members of any Committee shall be elected
as above provided and shall hold office until their successors are elected by
the Board of Directors or until such Committee is dissolved by the Board of
Directors.
3.7 Resignation and Removal. Any member of a Committee may
resign at any time by giving written notice of his intention to do so to the
President or the Secretary of the Corporation, or may be removed, with or
without cause, at any time by such vote of the Board of Directors as would
suffice for his election.
3.8 Vacancies. Any vacancy occurring in a Committee resulting
from any cause whatever may be filled by a majority of the number of Directors
fixed by these By-laws.
ARTICLE IV
Officers
<PAGE> 8
4.1 Election of Officers; Terms. The Officers of the Corporation
shall consist of a President, a Secretary and a Treasurer. Other officers,
including a Chairman of the Board, one or more Vice-Presidents (whose seniority
and titles, including Executive Vice-Presidents and Senior Vice-Presidents, may
be specified by the Board of Directors), and assistant and subordinate officers,
may from time to time be elected by the Board of Directors. All officers shall
hold office until the next annual meeting of the Board of Directors and until
their successors are elected. The President shall be chosen from among the
Directors. Any two officers may be combined in the same person as the Board of
Directors may determine.
4.2 Removal of Officers; Vacancies. Any officer of the
Corporation may be removed summarily with or without cause, at any time, by the
Board of Directors provided however that the removal of the Chairman of the
Board shall require the vote of two-thirds of the Directors. Vacancies may be
filled by the Board of Directors.
4.3 Duties. The officers of the Corporation shall have such
duties as generally pertain to their offices, respectively, as well as such
powers and duties as are prescribed by law or are hereinafter provided or as
from time to time shall be conferred by the Board of Directors. The Board of
Directors may require any officer to give such bond for the faithful performance
of his duties as the Board may see fit.
4.4 Duties of the President. The President shall be the chief
executive officer of the Corporation and shall be primarily
<PAGE> 9
responsible for the implementation of policies of the Board of Directors. He
shall have authority over the general management and direction of the business
and operations of the Corporation and its divisions, if any, subject only to the
ultimate authority of the Board of Directors. He shall be a Director, and,
except as otherwise provided in these By-laws or in the resolutions establishing
such committees, he shall be ex officio a member of all Committees of the
Board. In the absence of the Chairman of the Board or if there is no such
officer, the President shall preside at all corporate meetings. He may sign
and execute in the name of the Corporation share certificates, deeds,
mortgages, bonds, contreacts or other instruments except in cases where the
signing and the execution thereof shall be expressly delegated by the Board of
Directors or by these By-laws to some other officer or agent of the Corporation
or shall be required by law otherwise to be signed or executed. In addition,
he shall perform all duties incident to the office of the President and such
other duties as from time to time may be assigned to him by the Board of
Directors.
4.5 Duties of the Vice-Presidents. Each Vice-President, if any,
shall have such powers and duties as may from time to time be assigned to him by
the President or the Board of Directors. Any Vice-President may sign and
execute in the name of the Corporation deeds, mortgages, bonds, contracts or
other instruments authorized by the Board of Directors, except where the signing
and execution of such documents shall be expressly delegated by the Board of
Directors or the President to some
<PAGE> 10
other officer or agent of the Corporation or shall be required by law or
otherwise to be signed or executed.
4.6 Duties of the Treasurer. The Treasurer shall have charge of
and be responsible for all funds, securities, receipts and disbursements of the
Corporation, and shall deposit all monies and securities of the Corporation in
such banks and depositories as shall be designated by the Board of Directors.
He shall be responsible (i) for maintaining adequate financial accounts and
records in accordance with generally accepted accounting practices; (ii) for the
preparation of appropriate operating budgets and financial statements; (iii) for
the preparation and filing of all tax returns required by law; and (iv) for the
performance of all duties incident to the office of Treasurer and such other
duties as from time to time may be assigned to him by the Board of Directors,
the Finance Committee or the President. The treasurer may sign and execute in
the name of the Corporation share certificates, deeds, mortgages, bonds,
contracts or other instruments, except in cases where the signing and the
execution thereof shall be expressly delegated by the Board of Directors or by
these By-laws to some other officer or agent of the Corporation or shall be
required by law or otherwise to be signed or executed.
4.7 Duties of the Secretary. The Secretary shall act as
secretary of all meetings of the Board of Directors and shareholders of the
Corporation. When requested, he shall also act as secretary of the meetings of
the committees of the Board. He shall keep and preserve the minutes of all such
meetings in
<PAGE> 11
permanent books. He shall see that all notices required to be given by the
Corporation are duly given and served; shall have custody of the seal of the
Corporation and shall affix the seal or cause it to be affixed to all share
certificates of the Corporation and to all documents the execution of which on
behalf of the Corporation under its corporate seal is duly authorized in
accordance with law or the provisions of these By-laws; shall have custody of
all deeds, leases, contracts and other important corporate documents; shall have
charge of the books, records and papers of the Corporation relating to its
organization and management as a Corporation; shall see that all reports,
statements and other documents required by law (except tax returns) are properly
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 of Directors or the President.
4.8 Compensation. The Board of Directors shall have authority to
fix the compensation of all officers of the corporation.
ARTICLE V
Capital Stock
5.1 Certificates. The shares of capital stock of the Corporation
shall be evidenced by certificates in forms prescribed by the Board of Directors
and executed in any manner permitted by law and stating thereon the information
required by law. Transfer agents and/or registrars for one or more classes of
shares of the Corporation may be appointed by the Board of
<PAGE> 12
Directors and may be required to countersign certificates representing shares of
such class or classes. If any officer whose signature or facsimile thereof
shall have been used on a share certificate shall for any reason cease to be an
officer of the Corporation and such certificate shall not then have been
delivered by the Corporation, the Board of Directors may nevertheless adopt such
certificate and it may then be issued and delivered as though such person had
not ceased to be an officer of the Corporation.
5.2 Lost, Destroyed and Mutilated Certificates. Holders of the
shares of the Corporation shall immediately notify the Corporation of any loss,
destruction or mutilation of the certificate therefor, and the Board of
Directors may in its discretion cause one or more new certificates for the same
number of shares in the aggregate to be issued to such shareholder upon the
surrender of the mutilated certificate or upon satisfactory proof of such loss
or destruction, and the deposit of a bond in such form and amount and with such
surety as the Board of Directors may require.
5.3 Transfer of Shares. The shares of the Corporation shall be
transferable or assignable only on the books of the Corporation by the holder in
person or by attorney on surrender of the certificate for such shares duly
endorsed and, if sought to be transferred by attorney, accompanied by a written
power of attorney to have the same transferred on the books of the Corporation.
The Corporation will recognize, however, the exclusive right of the person
registered on its books as the
<PAGE> 13
owner of shares to receive dividends and to vote as such owner.
5.4 Fixing Record Date. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof, or entitled to receive payment of any dividend, or in
order to make a determination of shareholders for any other proper purpose, the
Board of Directors may fix in advance a date as the record date for any such
determination of shareholders, such date in any case to be not more than seventy
days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If no record date is fixed for
the determination of shareholders entitled to notice of or to vote at a meeting
of shareholders, or of shareholders entitled to receive payment of a dividend,
the date on which notices of the meeting are mailed or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination shall
apply to any adjournment thereof unless the Board of Directors fixes a new
record date, which it shall do if the meeting is adjourned to a date more than
120 days after the date fixed for the original meeting.
ARTICLE VI
Miscellaneous Provisions
6.1 Seal. The seal of the Corporation shall consist of a flat-
faced circular die, of which there may be any number of
<PAGE> 14
counterparts, on which there shall be engraved the word "Seal".
6.2 Fiscal Year. The fiscal year of the Corporation shall end on
such date and shall consist of such accounting periods as may be fixed by the
Board of Directors.
6.3 Checks, Notes and Drafts. Checks, notes, drafts and other
orders for the payment of money shall be signed by such persons as the Board of
Directors from time to time may authorize. When the Board of Directors so
authorizes, however, the signature of any such person may be a facsimile.
6.4 Amendment of By-Laws. Unless proscribed by the Articles of
Incorporation, these By-laws may be amended or altered at any meeting of the
Board of Directors by affirmative vote of a majority of the number of Directors
fixed by these By-laws. The shareholders entitled to vote in respect of the
election of Directors, however, shall have the power to rescind, amend, alter or
repeal any By-laws and to enact By-laws which, if expressly so provided, may not
be amended, altered or repealed by the Board of Directors.
6.5 Voting of Shares Held. Unless otherwise provided by
resolution of the Board of Directors or of the Executive Committee, if any, the
President may from time to time appoint an attorney or attorneys or agent or
agents of the Corporation, in the name and on behalf of the Corporation, to cast
the vote which the Corporation may be entitled to cast as a shareholder or
otherwise in any other corporation, any of whose securities may be held by the
Corporation, at meetings of the holders of the shares or other securities of
such other corporation, or to
<PAGE> 15
consent in writing to any action by any such other corporation; and the
President shall instruct the person or persons so appointed as to the manner of
casting such votes or giving such consent and may execute or cause to be
executed on behalf of the Corporation, and under its corporate seal or
otherwise, such written proxies, consents, waivers or other instruments as may
be necessary or proper in the premises. In lieu of such appointment the
President may himself attend any meetings of the holders of shares or other
securities of any such other corporation and there vote or exercise any or all
power of the Corporation as the holder of such shares or other securities of
such other corporation.
ARTICLE VII
Emergency By-laws
The Emergency By-laws provided in this Article VII shall be operative
during any emergency, notwithstanding any different provision in the preceding
Articles of these By-laws or in the Articles of Incorporation of the Corporation
or in the Virginia Stock Corporation Act (other than those provisions relating
to emergency by-laws). An emergency exists if a quorum of the Corporation's
Board of Directors cannot readily be assembled because of some catastrophic
event. To the extent not inconsistent with these Emergency By-laws, the By-laws
provided in the preceding Articles shall remain in effect during such emergency
and upon the termination of such emergency the Emergency By-laws shall cease to
be operative unless and until another such emergency shall occur.
<PAGE> 16
During any such emergency:
(a) Any meeting of the Board of Directors may be called by any
officer of the Corporation or by any Director. The notice thereof shall specify
the time and place of the meeting. To the extent feasible, notice shall be
given in accord with Section 2.4 above, but notice may be given only to such of
the Directors as it may be feasible to reach at the time, by such means as may
be feasible at the time, including publication or radio, and at a time less than
twenty-four hours before the meeting if deemed necessary by the person giving
notice. Notice shall be similarly given, to the extent feasible, to the other
persons referred to in (b) below.
(b) At any meeting of the Board of Directors, a quorum shall
consist of a majority of the number of Directors fixed at the time by Article II
of the By-laws. If the Directors present at any particular meeting shall be
fewer than the number required for such quorum, other persons present as
referred to below, to the number necessary to make up such quorum, shall be
deemed Directors for such particular meeting as determined by the following
provisions and in the following order of priority:
(i) Vice-Presidents not already serving as Directors, in the
order of their seniority of first election to such offices, or if two or more
shall have been first elected to such offices on the same day, in the order of
their seniority in age;
(ii) All other officers of the Corporation in the order of
their seniority of first election to such offices, or if two or more shall have
been first elected to such offices on the same
<PAGE> 17
day, in the order of their seniority in age; and
(iii) Any other persons that are designated on a list that
shall have been approved by the Board of Directors before the emergency, such
persons to be taken in such order of priority and subject to such conditions as
may be provided in the resolution approving the list.
(c) The Board of Directors, during, as well as before, any such
emergency, may provide, and from time to time modify, lines of succession in the
event that during such an emergency any or all officers or agents of the
Corporation shall for any reason be rendered incapable of discharging their
duties.
(d) The Board of Directors, during, as well as before, any such
emergency, may, effective in the emergency, change the principal office, or
designate several alternative offices, or authorize the officers so to do.
No officer, Director or employee shall be liable for action taken in
good faith in accordance with these Emergency By-laws.
These Emergency By-laws shall be subject to repeal or change by
further action of the Board of Directors or by action of the shareholders,
except that no such repeal or change shall modify the provisions of the next
preceding paragraph with regard to action or inaction prior to the time of such
repeal or change. Any such amendment of these Emergency By-laws may make any
further or different provision that may be practical and necessary for the
circumstances of the emergency.
<PAGE> 1
EXHIBIT 3.35
AMF BOWLING FOUR, INC.
AMENDMENT
1. Name. The name of the corporation is AMF Bowling Four, Inc.
2. Amendment. The Amendment is to change the name of the corporation
from AMF Bowling Four, Inc. to AMF BCO-UK Two, Inc.
3. Action by Directors. On June 7, 1989, all of the directors of the
corporation, by signing a consent in writing that sets forth the proposed
amendment, found that the proposed amendment was in the best interest of the
corporation and directed that it be submitted to the shareholders of the
corporation with the request that it approve and adopt the same by signing a
consent in writing.
4. Action by Shareholders. On June 7, 1989, following the action of
the directors, the shareholders of the corporation, by signing a consent in
writing that sets forth the proposed amendment, approved and adopted the same.
The number of shares outstanding and entitled to vote on the proposed amendment,
being of a single class, was 73.1708.
IN WITNESS WHEREOF, the undersigned President of AMF Bowling Four, Inc.
has executed these Articles of Amendment this 8th day of June, 1989.
AMF BOWLING FOUR, INC.
By: /s/ Beverley W. Armstrong
----------------------
President
<PAGE> 2
ARTICLES OF INCORPORATION
OF
AMF BOWLING FOUR, INC.
I.
The name of the Corporation is AMF Bowling Four, Inc.
II.
The purpose for which the Corporation is formed is to transact any or
all lawful business, not required to be specifically stated in these Articles,
for which corporations may be incorporated under the Virginia Stock Corporation
Act, as amended from time to time.
III.
The number of shares which the Corporation shall have authority to
issue shall be 10,000 shares of the par value of $1.00 each. No holder of shares
of any class of the Corporation shall have any preemptive or preferential right
to purchase or subscribe to (i) any shares of any class of the corporation,
whether now or hereafter authorized; (ii) any warrants, rights or options to
purchase any such shares; of (iii) any securities or obligations convertible
into any such shares or into warrants, rights, or options to purchase any such
shares.
IV.
The initial registered office shall be located at 901 East Cary Street,
Suite 1400, Richmond, VA 23219, and the initial registered agent shall be Teri
Scott Lovelace, who is a resident of Virginia and a member of the Virginia State
Bar, and whose
<PAGE> 3
business address is the same as the address of the initial registered office.
The registered office is located in the City of Richmond.
V.
The number of Directors constituting the initial Board of Directors
shall be one, and the name and address of the person who is to serve as the
initial Director is as follows:
William H. Goodwin, Jr.
901 E. Cary Street
Suite 1400
Richmond, Virginia 23219
VI.
1. In every instance permitted by the Virginia Stock Corporation Act,
as it exists on the date hereof or may hereafter be amended, the liability of a
director or officer of the Corporation to the Corporation or its shareholders
arising out of a single transaction, occurrence or course of conduct shall be
limited to one dollar.
2. To the full extent permitted and in the manner prescribed by the
Virginia Stock Corporation Act and any other applicable law, the Corporation
shall indemnify a Director or officer of the Corporation who is or was a party
to any proceeding by reason of the fact that he is or was such a Director or
officer 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, employee benefit plan or other enterprise. The Board of Directors is
hereby empowered, by majority vote of a quorum of disinterested Directors, to
contract in advance to indemnify any Director or officer.
3. The Board of Directors is hereby empowered, by majority
<PAGE> 4
vote of a quorum of disinterested Directors, to cause the corporation to
indemnify or contract in advance to indemnify any person not specified in
Section 2 of this Article who was or is a party to any proceeding, by reason of
the fact that he is or was an 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, employee
benefit plan or other enterprise, to the same extent as if such person were
specified as one to whom indemnification is granted in Section 2.
4. The Corporation may purchase and maintain insurance to indemnify it
against the whole or any portion of the liability assumed by it in accordance
with this Article and may also procure insurance, in such amounts as the Board
of Directors may determine, on behalf of any person who is or was a Director,
officer, employee or agent of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise, against any liability asserted
against or incurred by any such person in any such capacity or arising from his
status as such, whether or not the Corporation would have power to indemnify him
against such liability under the provisions of this Article.
5. In the event there has been a change in the composition of a
majority of the Board of Directors after the date of the alleged act or omission
with respect to which indemnification is claimed, any determination as to
indemnification and advancement of expenses with respect to any claim for
indemnification made pursuant to Section 2 of this Article VI shall be made by
special legal counsel agreed upon by the Board of Directors and the
<PAGE> 5
proposed indemnitee. If the Board of Directors and the proposed indemnitee are
unable to agree upon such special legal counsel, the Board of Directors and the
proposed indemnitee each shall select a nominee, and the nominees shall select
such special legal counsel.
6. The provisions of this Article VI shall be applicable to all
actions, claims, suits or proceedings commenced after the adoption hereof,
whether arising from any action taken or failure to act before or after such
adoption. No amendment, modification or repeal of this Article shall diminish
the rights provided hereby or diminish the right to indemnification with respect
to any claim, issue or matter on any then pending or subsequent proceeding that
is based in any material respect on any alleged action or failure to act prior
to such amendment, modification or repeal.
7. Reference herein to Directors, officers, employees or agents shall
include former Directors, officers, employees and agents and their respective
heirs, executors and administrators.
VII.
The Board of Directors shall have the power to make, amend or repeal
bylaws of the Corporation.
Dated: April 6, 1989.
/s/ Teri Scott Lovelace
-----------------------
Teri Scott Lovelace
Incorporator
<PAGE> 1
EXHIBIT 3.36
BY-LAWS
OF
AMF BCO-UK TWO, INC.
ARTICLE I
Meetings of Shareholders
1.1 Places of Meetings. All meetings of the shareholders shall be
held at such place, either inside or outside the State of Virginia, as from time
to time may be fixed by the Board of Directors.
1.2 Annual Meetings. The annual meeting of the shareholders, for the
election of Directors and transaction of such other business as may come before
the meetings, shall be held in each year on the second Tuesday in April, at 10
a.m., if that day is not a legal holiday in the Commonwealth of Virginia. If
that day is a legal holiday, the annual meeting shall be held on the next
succeeding day not such a legal holiday.
1.3 Special Meetings. A special meeting of the shareholders for any
purpose or purposes may be called at any time by the Chairman of the Board, the
President, or by a majority of the Board of Directors. At a special meeting no
business shall be transacted and no corporate action shall be taken other than
that stated in the notice of the meeting.
1.4 Notice of Meetings. Written or printed notice stating the place,
day and hour of every meeting of the shareholders and, in case of a special
meeting, the purpose or purposes for which the
<PAGE> 2
the meeting is called, shall be mailed not less than ten nor more than sixty
days before the date of the meeting to each shareholder of record entitled to
vote at such meeting, at his address which appears in the share transfer books
of the Corporation. Such further notice shall be given as may be required by
law, but meetings may be held without notice if all the shareholders entitled to
vote at the meeting are present in person or by proxy or if notice is waived in
writing by those not present, either before or after the meeting.
1.5 Quorum. Any number of shareholders together holding at least a
majority of the outstanding shares of capital stock entitled to vote with
respect to the business to be transacted, who shall be present in person or
represented by proxy at any meeting duly called, shall constitute a quorum for
the transaction of business. If less than a quorum shall be in attendance at
the time for which a meeting shall have been called, the meeting may be
adjourned from time to time by a majority of the shareholders present or
represented by proxy without notice other than by announcement at the meeting.
1.6 Voting. At any meeting of the shareholders each shareholder of a
class entitled to vote on any matter coming before the meeting shall, as to such
matter, have one vote, in person or by proxy, for each share of captial stock of
such class standing in his name on the books of the Corporation on the date, not
more than seventy days prior to such meeting, fixed by the Board of Directors as
the record date for the purpose of determining shareholders entitled to vote.
Every proxy shall be
<PAGE> 3
in writing, dated and signed by the shareholder entitled to vote or his duly
authorized attorney-in-fact.
1.7 Inspectors. An appropriate number of inspectors for any meeting
of shareholders may be appointed by the Chairman of such meeting. Inspectors so
appointed will open and close the polls, will receive and take charge of proxies
and ballots, and will decide all questions as to the qualifications of voters,
validity of proxies and ballots, and the number of votes properly cast.
ARTICLE II
Directors
2.1 General Powers. The property, affairs and business of the
Corporation shall be managed by the Board of Directors, and, except as otherwise
expressly provided by law, the Articles of Incorporation or these By-laws, all
of the powers of the Corporation shall be vested in such Board.
2.2 Number of Directors. The number of Directors constituting the
Board of Directors shall be at least one and not more than three. The number of
Directors may be increased or decreased from time to time by amendment to these
By-laws, but no decrease shall have the effect of shortening the term of an
incumbent Director.
2.3 Election and Removal of Directors; Quorum.
(a) Directors shall be elected at each annual meeting of
shareholders to succeed those Directors whose terms have expired and to fill any
vacancies then existing.
(b) Directors shall hold their offices for terms of one
<PAGE> 4
one year and until their successors are elected. Any Director may be removed
from office at a meeting called expressly for that purpose by the vote of
shareholders holding a majority of the shares entitled to vote at an election of
Directors.
(c) Any vacancy occurring in the Board of Directors may be filled
by the affirmative vote of the majority of the remaining Directors though less
than a quorum of the Board, and the term of office of any Director so elected
shall expire at the next shareholders' meeting at which Directors are elected.
(d) A majority of the number of Directors elected and serving at
the time of any meeting shall constitute a quorum for the transaction of
business. The act of a majority of Directors present at a meeting at which a
quorum is present shall be the act of the Board of Directors. Less than a quorum
may adjourn any meeting.
2.4 Meetings of Directors. An annual meeting of the Board of
Directors shall be held as soon as practicable after the adjournment of the
annual meeting of shareholders at such place as the Board may designate. Other
meetings of the Board of Directors shall be held at places within or without the
State of Virginia and at times fixed by resolution of the Board, or upon call of
the Chairman of the Board, the President or any two of the Directors. The
Secretary or officer performing the Secretary's duties shall give not less than
twenty-four hours' notice either in person or by letter, telegraph or telephone
of all meetings of the Board of Directors, provided that notice need not be
given of the annual meeting or of regular meetings held at
<PAGE> 5
times and places fixed by resolution of the Board. Meetings may be held at any
time without notice if all of the Directors are present, or if those not present
waive notice in writing either before or after the meeting. The notice of
meetings of the Board need not state the purpose of the meeting.
2.5 Compensation. By resolution of the Board, Directors may be
allowed a fee and expenses for attendance at all meetings, but nothing herein
shall preclude Directors from serving the Corporation in other capacities and
receiving compensation for such other services.
ARTICLE III
Committees
3.1 Executive Committee. The Board of Directors, by resolution
adopted by a majority of the number of Directors fixed by these By-laws, may
elect an Executive Committee which shall consist of not less than two Directors,
including the President. When the Board of Directors is not in session, the
Executive Committee shall have all power vested in the Board of Directors by
law, by the Articles of Incorporation, or by these By-laws, provided that the
Executive Committee shall not have power to (i) approve or recommend to
shareholders action that the Virginia Stock Corporation Act requires to be
approved by shareholders; (ii) fill vacancies on the Board or on any of its
committees; (iii) amend the Articles of Incorporation pursuant to Section
13.1-706 of the Virginia Code; (iv) adopt, amend, or repeal the By-laws; (v)
approve a plan of merger or share exchange not requiring shareholder approval;
(vi) authorize or approve a distribution,
<PAGE> 6
except according to a general formula or method prescribed by the Board of
Directors; or (vii) authorize or approve the issuance or sale or contract for
sale of shares, or determine the designation and relative rights, preferences,
and limitations of a class or series of shares, other than within limits
specifically prescribed by the Board of Directors. The Executive Committee
shall report at the next regular or special meeting of the Board of Directors
all action which the Executive Committee may have taken on behalf of the Board
since the last regular or special meeting of the Board of Directors.
3.2 Finance Committee. The Board of Directors, by resolution adopted
by a majority of the number of Directors fixed by these By-laws, may elect a
Finance Committee which shall consist of not less than two Directors. The
Finance Committee shall consider and report to the Board with respect to plans
for corporate expension, capital structure and long-range financial
requirements. The Committee shall also consider and report to the Board with
respect to such other matters relating to the financial affairs of the
Corporation as may be requested by the Board or the appropriate officers of the
Corporation. The Committee shall report periodically to the Board of Directors
on all action which it may have taken.
3.3 Other Committees. The Board of Directors, by resolution adopted
by a majority of the number of Directors fixed by these By-laws, may establish
such other standing or special committees of the Board as it may deem advisable,
consisting of not less than two Directors; and the members, terms and authority
<PAGE> 7
of such committees shall be as set forth in the resolutions establishing the
same.
3.4 Meetings. Regular and special meetings of any Committee
established pursuant to this Article may be called and held subject to the same
requirements with respect to time, place and notice as are specified in these
By-laws for regular and special meetings of the Board of Directors.
3.5 Quorum and Manner of Acting. A majority of the members of any
Committee serving at the time of any meeting thereof shall constitute a quorum
for the transaction of business at such meeting. The action of a majority of
those members present at a Committee meeting at which a quorum is present shall
constitute the act of the Committee.
3.6 Terms of Office. Members of any Committee shall be elected as
above provided and shall hold office until their successors are elected by the
Board of Directors or until such Committee is dissolved by the Board of
Directors.
3.7 Resignation and Removal. Any member of a Committee may resign at
any time by giving written notice of his intention to do so to the President or
the Secretary of the Corporation, or may be removed, with or without cause, at
any time by such vote of the Board of Directors as would suffice for his
election.
3.8 Vacancies. Any vacancy occurring in a Committee resulting from
any cause whatever may be filled by a majority of the number of Directors fixed
by these By-laws.
ARTICLE IV
Officers
<PAGE> 8
4.1 Election of Officers; Terms. The Officers of the Corporation
shall consist of a President, a Secretary and a Treasurer. Other officers,
including a Chairman of the Board, one or more Vice-Presidents (whose seniority
and titles, including Executive Vice-Presidents and Senior Vice-Presidents, may
be specified by the Board of Directors), and assistant and subordinate officers,
may from time to time be elected by the Board of Directors. All officers shall
hold office until the next annual meeting of the Board of Directors and until
their successors are elected. The President shall be chosen from among the
Directors. Any two officers may be combined in the same person as the Board of
Directors may determine.
4.2 Removal of Officers; Vacancies. Any officer of the Corporation
may be removed summarily with or without cause, at any time, by the Board of
Directors provided however that the removal of the Chairman of the Board shall
require the vote of two-thirds of the Directors. Vacancies may be filled by the
Board of Directors.
4.3 Duties. The officers of the Corporation shall have such duties as
generally pertain to their offices, respectively, as well as such powers and
duties as are prescribed by law or are hereinafter provided or as from time to
time shall be conferred by the Board of Directors. The Board of Directors may
require any officer to give such bond for the faithful performance of his duties
as the Board may see fit.
4.4 Duties of the President. The President shall be the chief
executive officer of the Corporation and shall be primarily
<PAGE> 9
responsible for the implementation of policies of the Board of Directors. He
shall have authority over the general management and direction of the business
and operations of the Corporation and its divisions, if any, subject only to the
ultimate authority of the Board of Directors. He shall be a Director, and,
except as otherwise provided in these By-laws or in the resolutions establishing
such committees, he shall be ex officio a member of all Committees of the Board.
In the absence of the Chairman of the Board or if there is no such officer, the
President shall preside at all corporate meetings. He may sign and execute in
the name of the Corporation share certificates, deeds, mortgages, bonds,
contreacts or other instruments except in cases where the signing and the
execution thereof shall be expressly delegated by the Board of Directors or by
these By-laws to some other officer or agent of the Corporation or shall be
required by law otherwise to be signed or executed. In addition, he shall
perform all duties incident to the office of the President and such other duties
as from time to time may be assigned to him by the Board of Directors.
4.5 Duties of the Vice-Presidents. Each Vice-President, if any, shall
have such powers and duties as may from time to time be assigned to him by the
President or the Board of Directors. Any Vice-President may sign and execute in
the name of the Corporation deeds, mortgages, bonds, contracts or other
instruments authorized by the Board of Directors, except where the signing and
execution of such documents shall be expressly delegated by the Board of
Directors or the President to some
<PAGE> 10
other officer or agent of the Corporation or shall be required by law or
otherwise to be signed or executed.
4.6 Duties of the Treasurer. The Treasurer shall have charge of and
be responsible for all funds, securities, receipts and disbursements of the
Corporation, and shall deposit all monies and securities of the Corporation in
such banks and depositories as shall be designated by the Board of Directors.
He shall be responsible (i) for maintaining adequate financial accounts and
records in accordance with generally accepted accounting practices; (ii) for the
preparation of appropriate operating budgets and financial statements; (iii) for
the preparation and filing of all tax returns required by law; and (iv) for the
performance of all duties incident to the office of Treasurer and such other
duties as from time to time may be assigned to him by the Board of Directors,
the Finance Committee or the President. The treasurer may sign and execute in
the name of the Corporation share certificates, deeds, mortgages, bonds,
contracts or other instruments, except in cases where the signing and the
execution thereof shall be expressly delegated by the Board of Directors or by
these By-laws to some other officer or agent of the Corporation or shall be
required by law or otherwise to be signed or executed.
4.7 Duties of the Secretary. The Secretary shall act as secretary of
all meetings of the Board of Directors and shareholders of the Corporation.
When requested, he shall also act as secretary of the meetings of the committees
of the Board. He shall keep and preserve the minutes of all such meetings in
<PAGE> 11
permanent books. He shall see that all notices required to be given by the
Corporation are duly given and served; shall have custody of the seal of the
Corporation and shall affix the seal or cause it to be affixed to all share
certificates of the Corporation and to all documents the execution of which on
behalf of the Corporation under its corporate seal is duly authorized in
accordance with law or the provisions of these By-laws; shall have custody of
all deeds, leases, contracts and other important corporate documents; shall have
charge of the books, records and papers of the Corporation relating to its
organization and management as a Corporation; shall see that all reports,
statements and other documents required by law (except tax returns) are properly
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 of Directors or the President.
4.8 Compensation. The Board of Directors shall have authority to fix
the compensation of all officers of the Corporation.
ARTICLE V
Capital Stock
5.1 Certificates. The shares of capital stock of the Corporation
shall be evidenced by certificates in forms prescribed by the Board of Directors
and executed in any manner permitted by law and stating thereon the information
required by law. Transfer agents and/or registrars for one or more classes of
shares of the Corporation may be appointed by the Board of
<PAGE> 12
Directors and may be required to countersign certificates representing shares of
such class or classes. If any officer whose signature or facsimile thereof
shall have been used on a share certificate shall for any reason cease to be an
officer of the Corporation and such certificate shall not then have been
delivered by the Corporation, the Board of Directors may nevertheless adopt such
certificate and it may then be issued and delivered as though such person had
not ceased to be an officer of the Corporation.
5.2 Lost, Destroyed and Mutilated Certificates. Holders of the shares
of the Corporation shall immediately notify the Corporation of any loss,
destruction or mutilation of the certificate therefor, and the Board of
Directors may in its discretion cause one or more new certificates for the same
number of shares in the aggregate to be issued to such shareholder upon the
surrender of the mutilated certificate or upon satisfactory proof of such loss
or destruction, and the deposit of a bond in such form and amount and with such
surety as the Board of Directors may require.
5.3 Transfer of Shares. The shares of the Corporation shall be
transferable or assignable only on the books of the Corporation by the holder in
person or by attorney on surrender of the certificate for such shares duly
endorsed and, if sought to be transferred by attorney, accompanied by a written
power of attorney to have the same transferred on the books of the Corporation.
The Corporation will recognize, however, the exclusive right of the person
registered on its books as the
<PAGE> 13
owner of shares to receive dividends and to vote as such owner.
5.4 Fixing Record Date. For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, or entitled to receive payment of any dividend, or in order
to make a determination of shareholders for any other proper purpose, the Board
of Directors may fix in advance a date as the record date for any such
determination of shareholders, such date in any case to be not more than seventy
days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If no record date is fixed for
the determination of shareholders entitled to notice of or to vote at a meeting
of shareholders, or of shareholders entitled to receive payment of a dividend,
the date on which notices of the meeting are mailed or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination shall
apply to any adjournment thereof unless the Board of Directors fixes a new
record date, which it shall do if the meeting is adjourned to a date more than
120 days after the date fixed for the original meeting.
ARTICLE VI
Miscellaneous Provisions
6.1 Seal. The seal of the Corporation shall consist of a flat-faced
circular die, of which there may be any number of
<PAGE> 14
counterparts, on which there shall be engraved the word "Seal".
6.2 Fiscal Year. The fiscal year of the Corporation shall end on such
date and shall consist of such accounting periods as may be fixed by the Board
of Directors.
6.3 Checks, Notes and Drafts. Checks, notes, drafts and other orders
for the payment of money shall be signed by such persons as the Board of
Directors from time to time may authorize. When the Board of Directors so
authorizes, however, the signature of any such person may be a facsimile.
6.4 Amendment of By-Laws. Unless proscribed by the Articles of
Incorporation, these By-laws may be amended or altered at any meeting of the
Board of Directors by affirmative vote of a majority of the number of Directors
fixed by these By-laws. The shareholders entitled to vote in respect of the
election of Directors, however, shall have the power to rescind, amend, alter or
repeal any By-laws and to enact By-laws which, if expressly so provided, may not
be amended, altered or repealed by the Board of Directors.
6.5 Voting of Shares Held. Unless otherwise provided by resolution of
the Board of Directors or of the Executive Committee, if any, the President may
from time to time appoint an attorney or attorneys or agent or agents of the
Corporation, in the name and on behalf of the Corporation, to cast the vote
which the Corporation may be entitled to cast as a shareholder or otherwise in
any other corporation, any of whose securities may be held by the Corporation,
at meetings of the holders of the shares or other securities of such other
corporation, or to
<PAGE> 15
consent in writing to any action by any such other corporation; and the
President shall instruct the person or persons so appointed as to the manner of
casting such votes or giving such consent and may execute or cause to be
executed on behalf of the Corporation, and under its corporate seal or
otherwise, such written proxies, consents, waivers or other instruments as may
be necessary or proper in the premises. In lieu of such appointment the
President may himself attend any meetings of the holders of shares or other
securities of any such other corporation and there vote or exercise any or all
power of the Corporation as the holder of such shares or other securities of
such other corporation.
ARTICLE VII
Emergency By-laws
The Emergency By-laws provided in this Article VII shall be operative
during any emergency, notwithstanding any different provision in the preceding
Articles of these By-laws or in the Articles of Incorporation of the Corporation
or in the Virginia Stock Corporation Act (other than those provisions relating
to emergency by-laws). An emergency exists if a quorum of the Corporation's
Board of Directors cannot readily be assembled because of some catastrophic
event. To the extent not inconsistent with these Emergency By-laws, the By-laws
provided in the preceding Articles shall remain in effect during such emergency
and upon the termination of such emergency the Emergency By-laws shall cease to
be operative unless and until another such emergency shall occur.
<PAGE> 16
During any such emergency:
(a) Any meeting of the Board of Directors may be called by any officer
of the Corporation or by any Director. The notice thereof shall specify the
time and place of the meeting. To the extent feasible, notice shall be given in
accord with Section 2.4 above, but notice may be given only to such of the
Directors as it may be feasible to reach at the time, by such means as may be
feasible at the time, including publication or radio, and at a time less than
twenty-four hours before the meeting if deemed necessary by the person giving
notice. Notice shall be similarly given, to the extent feasible, to the other
persons referred to in (b) below.
(b) At any meeting of the Board of Directors, a quorum shall consist
of a majority of the number of Directors fixed at the time by Article II of the
By-laws. If the Directors present at any particular meeting shall be fewer than
the number required for such quorum, other persons present as referred to below,
to the number necessary to make up such quorum, shall be deemed Directors for
such particular meeting as determined by the following provisions and in the
following order of priority:
(i) Vice-Presidents not already serving as Directors,in the order
of their seniority of first election to such offices, or if two or more shall
have been first elected to such offices on the same day, in the order of their
seniority in age;
(ii) All other officers of the Corporation in the order of their
seniority of first election to such offices, or if two or more shall have been
first elected to such offices on the same
<PAGE> 17
day, in the order of their seniority in age; and
(iii) Any other persons that are designated on a list that shall
have been approved by the Board of Directors before the emergency, such persons
to be taken in such order of priority and subject to such conditions as may be
provided in the resolution approving the list.
(c) The Board of Directors, during, as well as before, any such
emergency, may provide, and from time to time modify, lines of succession in the
event that during such an emergency any or all officers or agents of the
Corporation shall for any reason be rendered incapable of discharging their
duties.
(d) The Board of Directors, during, as well as before, any such
emergency, may, effective in the emergency, change the principal office, or
designate several alternative offices, or authorize the officers so to do.
No officer, Director or employee shall be liable for action taken in
good faith in accordance with these Emergency By-laws.
These Emergency By-laws shall be subject to repeal or change by further
action of the Board of Directors or by action of the shareholders, except that
no such repeal or change shall modify the provisions of the next preceding
paragraph with regard to action or inaction prior to the time of such repeal or
change. Any such amendment of these Emergency By-laws may make any further or
different provision that may be practical and necessary for the circumstances of
the emergency.
<PAGE> 1
EXHIBIT 3.37
AMF BOWLING FIVE, INC.
AMENDMENT
1. Name. The name of the corporation is AMF BOWLING FIVE, INC.
2. Amendment. The Amendment is to change the name of the corporation
from AMF BOWLING FIVE, INC. to AMF BCO-FRANCE ONE, INC.
3. Action by Directors. On June 1, 1989, all of the directors of the
corporation, by signing a consent in writing that sets forth the proposed
amendment, found that the proposed amendment was in the best interest of the
corporation and directed that it be submitted to the shareholders of the
corporation with the request that they approve and adopt the same by signing a
consent in writing.
4. Action by Shareholders. On June 1, 1989, following the action of the
directors, the shareholders of the corporation, by signing a consent in writing
that sets forth the proposed amendment, approved and adopted the same. The
number of shares outstanding and entitled to vote on the proposed amendment,
being of a single class, was 100.
IN WITNESS WHEREOF, the undersigned Assistant Secretary of AMF Bowling
Five, Inc. has executed this Amendment to the Articles of Incorporation, this
19th day of June, 1989.
AMF BOWLING FIVE, INC.
By:/s/Teri Scott Lovelace
----------------------
Assistant Secretary
<PAGE> 2
ARTICLES OF INCORPORATION
OF
AMF BOWLING FIVE, INC.
I.
The name of the Corporation is AMF Bowling Five, Inc.
II.
The purpose for which the Corporation is formed is to transact any or
all lawful business, not required to be specifically stated in these Articles,
for which corporations may be incorporated under the Virginia Stock Corporation
Act, as amended from time to time.
III.
The number of shares which the Corporation shall have authority to
issue shall be 10,000 shares of the par value of $1.00 each. No holder of shares
of any class of the Corporation shall have any preemptive or preferential right
to purchase or subscribe to (i) any shares of any class of the corporation,
whether now or hereafter authorized; (ii) any warrants, rights or options to
purchase any such shares; of (iii) any securities or obligations convertible
into any such shares or into warrants, rights, or options to purchase any such
shares.
IV.
The initial registered office shall be located at 901 East Cary Street,
Suite 1400, Richmond, VA 23219, which is located in the City of Richmond and the
initial registered agent shall be Teri Scott Lovelace, who is a resident of
Virginia and a member of the Virginia State Bar, and whose
<PAGE> 3
business address is the same as the address of the initial registered office.
V.
The number of Directors constituting the initial Board of Directors
shall be one, and the name and address of the person who is to serve as the
initial Director is as follows:
William H. Goodwin, Jr.
901 E. Cary Street
Suite 1400
Richmond, Virginia 23219
VI.
1. In every instance permitted by the Virginia Stock Corporation Act,
as it exists on the date hereof or may hereafter be amended, the liability of a
director or officer of the Corporation to the Corporation or its shareholders
arising out of a single transaction, occurrence or course of conduct shall be
limited to one dollar.
2. To the full extent permitted and in the manner prescribed by the
Virginia Stock Corporation Act and any other applicable law, the Corporation
shall indemnify a Director or officer of the Corporation who is or was a party
to any proceeding by reason of the fact that he is or was such a Director or
officer 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, employee benefit plan or other enterprise. The Board of Directors is
hereby empowered, by majority vote of a quorum of disinterested Directors, to
contract in advance to indemnify any Director or officer.
3. The Board of Directors is hereby empowered, by majority
<PAGE> 4
vote of a quorum of disinterested Directors, to cause the Corporation to
indemnify or contract in advance to indemnify any person not specified in
Section 2 of this Article who was or is a party to any proceeding, by reason of
the fact that he is or was an 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, employee
benefit plan or other enterprise, to the same extent as if such person were
specified as one to whom indemnification is granted in Section 2.
4. The Corporation may purchase and maintain insurance to indemnify it
against the whole or any portion of the liability assumed by it in accordance
with this Article and may also procure insurance, in such amounts as the Board
of Directors may determine, on behalf of any person who is or was a Director,
officer, employee or agent of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise, against any liability asserted
against or incurred by any such person in any such capacity or arising from his
status as such, whether or not the Corporation would have power to indemnify him
against such liability under the provisions of this Article.
5. In the event there has been a change in the composition of a
majority of the Board of Directors after the date of the alleged act or omission
with respect to which indemnification is claimed, any determination as to
indemnification and advancement of expenses with respect to any claim for
indemnification made pursuant to Section 2 of this Article VI shall be made by
special legal counsel agreed upon by the Board of Directors and the
<PAGE> 5
proposed indemnitee. If the Board of Directors and the proposed indemnitee are
unable to agree upon such special legal counsel, the Board of Directors and the
proposed indemnitee each shall select a nominee, and the nominees shall select
such special legal counsel.
6. The provisions of this Article VI shall be applicable to all
actions, claims, suits or proceedings commenced after the adoption hereof,
whether arising from any action taken or failure to act before or after such
adoption. No amendment, modification or repeal of this Article shall diminish
the rights provided hereby or diminish the right to indemnification with respect
to any claim, issue or matter in any then pending or subsequent proceeding that
is based in any material respect on any alleged action or failure to act prior
to such amendment, modification or repeal.
7. Reference herein to Directors, officers, employees or agents shall
include former Directors, officers, employees and agents and their respective
heirs, executors and administrators.
VII.
The Board of Directors shall have the power to make, amend or repeal
bylaws of the Corporation.
Dated: May 9, 1989
/s/ Teri Scott Lovelace
-----------------------
Teri Scott Lovelace
Incorporator
<PAGE> 1
EXHIBIT 3.38
BY-LAWS
OF
AMF BCO-FRANCE ONE, INC.
ARTICLE I
Meetings of Shareholders
1.1 Places of Meetings. All meetings of the shareholders shall be held
at such place, either inside or outside the State of Virginia, as from time to
time may be fixed by the Board of Directors.
1.2 Annual Meetings. The annual meeting of the shareholders, for the
election of Directors and transaction of such other business as may come before
the meetings, shall be held in each year on the second Tuesday in April, at 10
a.m., if that day is not a legal holiday in the Commonwealth of Virginia. If
that day is a legal holiday, the annual meeting shall be held on the next
succeeding day not such a legal holiday.
1.3 Special Meetings. A special meeting of the shareholders for any
purpose or purposes may be called at any time by the Chairman of the Board, the
President, or by a majority of the Board of Directors. At a special meeting no
business shall be transacted and no corporate action shall be taken other than
that stated in the notice of the meeting.
1.4 Notice of Meetings. Written or printed notice stating the place,
day and hour of every meeting of the shareholders and, in case of a special
meeting, the purpose or purposes for which the meeting is called, shall be
mailed not less than ten nor more than sixty days before the date
<PAGE> 2
of the meeting to each shareholder of record entitled to vote at such meeting,
at his address which appears in the share transfer books of the Corporation.
Such further notice shall be given as may be required by law, but meetings may
be held without notice if all the shareholders entitled to vote at the meeting
are present in person or by proxy or if notice is waived in writing by those not
present, either before or after the meeting.
1.5 Quorum. Any number of shareholders together holding at least a
majority of the outstanding shares of capital stock entitled to vote with
respect to the business to be transacted, who shall be present in person or
represented by proxy at any meeting duly called, shall constitute a quorum for
the transaction of business. If less than a quorum shall be in attendance at the
time for which a meeting shall have been called, the meeting may be adjourned
from time to time by a majority of the shareholders present or represented by
proxy without notice other than by announcement at the meeting.
1.6 Voting. At any meeting of the shareholders each shareholder of a
class entitled to vote on any matter coming before the meeting shall, as to such
matter, have one vote, in person or by proxy, for each share of capital stock of
such class standing in his name on the books of the Corporation on the date, not
more than seventy days prior to such meeting, fixed by the Board of Directors as
the record date for the purpose of determining shareholders entitled to vote.
Every proxy shall be in writing, dated and signed by the shareholder entitled to
vote or his duly authorized attorney-in-fact.
1.7 Inspectors. An appropriate number of inspectors for any meeting of
shareholders may be appointed by the Chairman of such meeting. Inspectors so
appointed will open and close the polls, will receive and take charge of proxies
and ballots, and will decide all questions as to the
2
<PAGE> 3
qualifications of voters, validity of proxies and ballots, and the number of
votes properly cast.
ARTICLE II
Directors
2.1 General Powers. The property, affairs and business of the
Corporation shall be managed by the Board of Directors, and, except as otherwise
expressly provided by law, the Articles of Incorporation or these By-laws, all
of the powers of the Corporation shall be vested in such Board.
2.2 Number of Directors. The number of Directors constituting the Board
of Directors shall be at least one and not more than three. The number of
Directors may be increased or decreased from time to time by amendment to these
By-laws, but no decrease shall have the effect of shortening the term of an
incumbent Director.
2.3 Election and Removal of Directors: Quorum.
(a) Directors shall be elected at each annual meeting of
shareholders to succeed those Directors whose terms have expired and to fill any
vacancies then existing.
(b) Directors shall hold their offices for terms of one year and
until their successors are elected. Any Director may be removed from office at a
meeting called expressly for that purpose by the vote of shareholders holding a
majority of the shares entitled to vote at an election of Directors.
(c) Any vacancy occurring in the Board of Directors may be filled
by the affirmative vote of the majority of the remaining Directors though less
than a quorum of the Board, and the term of office of any Director so elected
shall expire at the next shareholders' meeting at which Directors are elected.
(d) A majority of the number of Directors elected and serving at
the time of any
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meeting shall constitute a quorum for the transaction of business. The act of a
majority of Directors present at a meeting at which a quorum is present shall be
the act of the Board of Directors. Less than a quorum may adjourn any meeting.
2.4 Meetings of Directors. An annual meeting of the Board of Directors
shall be held as soon as practicable after the adjournment of the annual meeting
of shareholders at such place as the Board may designate. Other meetings of the
Board of Directors shall be held at places inside or outside the State of
Virginia and at times fixed by resolution of the Board, or upon call of the
Chairman of the Board, the President or any two of the Directors. The Secretary
or officer performing the Secretary's duties shall give not less than
twenty-four hours' notice either in person or by letter, telegraph or telephone
of all meetings of the Board of Directors, provided that notice need not be
given of the annual meeting or of regular meetings held at times and places
fixed by resolution of the Board. Meetings may be held at any time without
notice if all of the Directors are present, or if those not present waive notice
in writing either before or after the meeting. The notice of meetings of the
Board need not state the purpose of the meeting.
2.5 Duties. The Board of Directors shall designate depositories for the
corporation and shall designate and authorize the officers or other persons to
sign checks and bank drafts.
2.6 Compensation. By resolution of the Board, Directors may be allowed
a fee and expenses for attendance at all meetings, but nothing herein shall
preclude Directors from serving the Corporation in other capacities and
receiving compensation for such other services.
ARTICLE III
Committees
3.1 Executive Committee. The Board of Directors, by resolution adopted
by a
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majority of the number of Directors fixed by these By-laws, may elect an
Executive Committee which shall consist of not less than two Directors,
including the President. When the Board of Directors is not in session, the
Executive Committee shall have all power vested in the Board of Directors by
law, by the Articles of Incorporation, or by these By-laws, provided that the
Executive Committee shall not have power to (i) approve or recommend to
shareholders action that the Virginia Stock Corporation Act requires to be
approved by shareholders; (ii) fill vacancies on the Board or on any of its
committees; (iii) amend the Articles of Incorporation pursuant to Section
13.1-706 of the Virginia Code; (iv) adopt, amend, or repeal the By-laws; (v)
approve a plan of merger or share exchange not requiring shareholder approval;
(vi) authorize or approve a distribution, except according to a general formula
or method prescribed by the Board of Directors; or (vii) authorize or approve
the issuance or sale or contract for sale of shares, or determine the
designation and relative rights, preferences, and limitations of a class or
series of shares, other than within limits specifically prescribed by the Board
of Directors. The Executive Committee shall report at the next regular or
special meeting of the Board of Directors all action which the Executive
Committee may have taken on behalf of the Board since the last regular or
special meeting of the Board of Directors.
3.2 Finance Committee. The Board of Directors, by resolution adopted by
a majority of the number of Directors fixed by these By-laws, may elect a
Finance Committee which shall consist of not less than two Directors. The
Finance Committee shall consider and report to the Board with respect to plans
for corporate expansion, capital structure and long-range financial
requirements. The Committee shall also consider and report to the Board with
respect to such other matters relating to the financial affairs of the
Corporation as may be requested by the Board or the appropriate officers of the
Corporation. The Committee shall report periodically to the Board of
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<PAGE> 6
Directors on all action which it may have taken.
3.3 Other Committees. The Board of Directors, by resolution adopted by
a majority of the number of Directors fixed by these By-laws, may establish such
other standing or special committees of the Board as it may deem advisable,
consisting of not less than two Directors; and the members, terms and authority
of such committees shall be as set forth in the resolutions establishing the
same.
3.4 Meetings. Regular and special meetings of any Committee established
pursuant to this Article may be called and held subject to the same requirements
with respect to time, place and notice as are specified in these By-laws for
regular and special meetings of the Board of Directors.
3.5 Quorum and Manner of Acting. A majority of the members of any
Committee serving at the time of any meeting thereof shall constitute a quorum
for the transaction of business at such meeting. The action of a majority of
those members present at a Committee meeting at which a quorum is present shall
constitute the act of the Committee.
3.6 Terms of Office. Members of any Committee shall be elected as above
provided and shall hold office until their successors are elected by the Board
of Directors or until such Committee is dissolved by the Board of Directors.
3.7 Resignation and Removal. Any member of a Committee may resign at
any time by giving written notice of his intention to do so to the President or
the Secretary of the Corporation, or may be removed, with or without cause, at
any time by such vote of the Board of Directors as would suffice for his
election.
3.8 Vacancies. Any vacancy occurring in a Committee resulting from any
cause
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whatever may be filled by a majority of the number of Directors fixed by these
By-laws.
ARTICLE IV
Officers
4.1 Election of Officers: Terms. The Officers of the Corporation shall
consist of a President, a Secretary and a Treasurer. Other officers, including a
Chairman of the Board, one or more Vice Presidents (whose seniority and titles,
including Executive Vice Presidents and Senior Vice Presidents, may be specified
by the Board of Directors), and assistant and subordinate officers, may from
time to time be elected by the Board of Directors. All officers shall hold
office until the next annual meeting of the Board of Directors and until their
successors are elected. The President shall be chosen from among the Directors.
Any two officers may be combined in the same person as the Board of Directors
may determine.
4.2 Removal of Officers: Vacancies. Any officer of the Corporation may
be removed summarily with or without cause, at any time, by the Board of
Directors provided however that the removal of the Chairman of the Board shall
require the vote of two-thirds of the Directors. Vacancies may be filled by the
Board of Directors.
4.3 Duties. The officers of the Corporation shall have such duties as
generally pertain to their offices, respectively, as well as such powers and
duties as are prescribed by law or are hereinafter provided or as from time to
time shall be conferred by the Board of Directors. The Board of Directors may
require any officer to give such bond for the faithful performance of his duties
as the Board may see fit.
4.4 Duties of the President. The President shall be the chief executive
officer of the Corporation and shall be primarily responsible for the
implementation of policies of the Board of
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Directors. He shall have authority over the general management and direction of
the business and operations of the Corporation and its divisions, if any,
subject only to the ultimate authority of the Board of Directors. He shall be a
Director, and, except as otherwise provided in these By-laws or in the
resolutions establishing such committees, he shall be ex officio a member of all
Committees of the Board. In the absence of the Chairman of the Board or if there
is no such officer, the President shall preside at all corporate meetings. He
may sign and execute in the name of the Corporation share certificates, deeds,
mortgages, bonds, contracts or other instruments except in cases where the
signing and the execution thereof shall be expressly delegated by the Board of
Directors or by these By-laws to some other officer or agent of the Corporation
or shall be required by law otherwise to be signed or executed. In addition, he
shall perform all duties incident to the office of the President and such other
duties as from time to time may be assigned to him by the Board of Directors.
4.5 Duties of the Vice-Presidents. Each Vice-President, if any, shall
have such powers and duties as may from time to time be assigned to him by the
President or the Board of Directors. Any Vice-President may sign and execute in
the name of the Corporation deeds, mortgages, bonds, contracts or other
instruments authorized by the Board of Directors, except where the signing and
execution of such documents shall be expressly delegated by the Board of
Directors or the President to some other officer or agent of the Corporation or
shall be required by law or otherwise to be signed or executed.
4.6 Duties of the Treasurer. The Treasurer shall have charge of and be
responsible for all funds, securities, receipts and disbursements of the
Corporation, and shall deposit all monies and securities of the Corporation in
such banks and depositories as shall be designated by the Board of Directors. He
shall be responsible (i) for maintaining adequate financial accounts and records
in
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accordance with generally accepted accounting practices; (ii) for the
preparation of appropriate operating budgets and financial statements; (iii) for
the preparation and filing of all tax returns required by law; and (iv) for the
performance of all duties incident to the office of Treasurer and such other
duties as from time to time may be assigned to him by the Board of Directors,
the Finance Committee or the Managing Director/President. The treasurer may sign
and execute in the name of the Corporation share certificates, deeds, mortgages,
bonds, contracts or other instruments, except in cases where the signing and the
execution thereof shall be expressly delegated by the Board of Directors or by
these By-laws to some other officer or agent of the Corporation or shall be
required by law or otherwise to be signed or executed.
4.7 Duties of the Secretary. The Secretary shall act as secretary of
all meetings of the Board of Directors and shareholders of the Corporation. When
requested, he shall also act as secretary of the meetings of the committees of
the Board. He shall keep and preserve the minutes of all such meetings in
permanent books. He shall see that all notices required to be given by the
Corporation are duly given and served; shall have custody of the seal of the
Corporation and shall affix the seal or cause it to be affixed to all share
certificates of the Corporation and to all documents the execution of which on
behalf of the Corporation under its corporate seal is duly authorized in
accordance with law or the provisions of these By-laws; shall have custody of
all deeds, leases, contracts and other important corporate documents; shall have
charge of the books, records and papers of the Corporation relating to its
organization and management as a Corporation; shall see that all reports,
statements and other documents required by law (except tax returns) are properly
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 of Directors or the President.
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4.8 Compensation. The Board of Directors shall have authority to fix
the compensation of all officers of the Corporation.
ARTICLE V
Capital Stock
5.1 Certificates. The shares of capital stock of the Corporation shall
be evidenced by certificates in forms prescribed by the Board of Directors and
executed in any manner permitted by law and stating thereon the information
required by law. Transfer agents and/or registrars for one or more classes of
shares of the Corporation may be appointed by the Board of Directors and may be
required to countersign certificates representing shares of such class or
classes. If any officer whose signature or facsimile thereof shall have been
used on a share certificate shall for any reason cease to be an officer of the
Corporation and such certificate shall not then have been delivered by the
Corporation, the Board of Directors may nevertheless adopt such certificate and
it may then be issued and delivered as though such person had not ceased to be
an officer of the Corporation.
5.2 Lost, Destroyed and Mutilated Certificates. Holders of the shares
of the Corporation shall immediately notify the Corporation of any loss,
destruction or mutilation of the certificate therefor, and the Board of
Directors may in its discretion cause one or more new certificates for the same
number of shares in the aggregate to be issued to such shareholder upon the
surrender of the mutilated certificate or upon satisfactory proof of such loss
or destruction, and the deposit of a bond in such form and amount and with such
surety as the Board of Directors may require.
5.3 Transfer of Shares. The shares of the Corporation shall be
transferable or assignable only on the books of the Corporation by the holder in
person or by attorney on surrender of the certificate for such shares duly
endorsed and, if sought to be transferred by attorney,
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<PAGE> 11
accompanied by a written power of attorney to have the same transferred on the
books of the Corporation. The Corporation will recognize, however, the exclusive
right of the person registered on its books as the owner of shares to receive
dividends and to vote as such owner.
5.4 Fixing Record Date. For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, or entitled to receive payment of any dividend, or in order
to make a determination of shareholders for any other proper purpose, the Board
of Directors may fix in advance a date as the record date for any such
determination of shareholders, such date in any case to be not more than seventy
days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If no record date is fixed for
the determination of shareholders entitled to notice of or to vote at a meeting
of shareholders, or of shareholders entitled to receive payment of a dividend,
the date on which notices of the meeting are mailed or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination shall
apply to any adjournment thereof unless the Board of Directors fixes a new
record date, which it shall do if the meeting is adjourned to a date more than
120 days after the date fixed for the original meeting.
ARTICLE VI
Miscellaneous Provisions
6.1 Seal. The seal of the Corporation shall consist of a flat-faced
circular die, of which there may be any number of counterparts, on which there
shall be engraved the word "Seal".
6.2 Fiscal Year. The fiscal year of the Corporation shall end on such
date and shall
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consist of such accounting periods as may be fixed by the Board of Directors.
6.3 Checks, Notes and Drafts. Checks, notes, drafts and other orders
for the payment of money shall be signed by such persons as the Board of
Directors from time to time may authorize. When the Board of Directors so
authorizes, however, the signature of any such person may be a facsimile.
6.4 Amendment of By-Laws. Unless proscribed by the Articles of
Incorporation, these By-laws may be amended or altered at any meeting of the
Board of Directors by affirmative vote of a majority of the number of Directors
fixed by these Bylaws. The shareholders entitled to vote in respect of the
election of Directors, however, shall have the power to rescind, amend, alter or
repeal any By-laws and to enact By-laws which, if expressly so provided, may not
be amended, altered or repealed by the Board of Directors.
6.5 Voting of Shares Held. Unless otherwise provided by resolution of
the Board of Directors or of the Executive Committee, if any, the President may
from time to time appoint an attorney or attorneys or agent or agents of the
Corporation, in the name and on behalf of the Corporation, to cast the vote
which the Corporation may be entitled to cast as a shareholder or otherwise in
any other corporation, any of whose securities may be held by the Corporation,
at meetings of the holders of the shares or other securities of such other
corporation, or to consent in writing to any action by any such other
corporation; and the President shall instruct the person or persons so appointed
as to the manner of casting such votes or giving such consent and may execute or
cause to be executed on behalf of the Corporation, and under its corporate seal
or otherwise, such written proxies, consents, waivers or other instruments as
may be necessary or proper in the premises. In lieu of such appointment the
President may himself attend any meetings of the holders
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of shares or other securities of any such other corporation and there vote or
exercise any or all power of the Corporation as the holder of such shares or
other securities of such other corporation.
ARTICLE VII
Emergency By-laws
The Emergency By-laws provided in this Article VII shall be operative
during any emergency, notwithstanding any different provision in the preceding
Articles of these By-laws or in the Articles of Incorporation of the Corporation
or in the Virginia Stock Corporation Act (other than those provisions relating
to emergency by-laws). An emergency exists if a quorum of the Corporation's
Board of Directors cannot readily be assembled because of some catastrophic
event. To the extent not inconsistent with these Emergency By-laws, the By-laws
provided in the preceding Articles shall remain in effect during such emergency
and upon the termination of such emergency the Emergency By-laws shall cease to
be operative unless and until another such emergency shall occur.
During any such emergency:
(a) Any meeting of the Board of Directors may be called by any officer
of the Corporation or by any Director. The notice thereof shall specify the time
and place of the meeting. To the extent feasible, notice shall be given in
accord with Section 2.4 above, but notice may be given only to such of the
Directors as it may be feasible to reach at the time, by such means as may be
feasible at the time, including publication or radio, and at a time less than
twenty-four hours before the meeting if deemed necessary by the person giving
notice. Notice shall be similarly given, to the extent feasible, to the other
persons referred to in (b) below.
(b) At any meeting of the Board of Directors, a quorum shall consist of
a majority of the
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number of Directors fixed at the time by Article II of the By-laws. If the
Directors present at any particular meeting shall be fewer than the number
required for such quorum, other persons present as referred to below, to the
number necessary to make up such quorum, shall be deemed Directors for such
particular meeting as determined by the following provisions and in the
following order of priority:
(i) Vice-Presidents not already serving as Directors, in the order
of their seniority of first election to such offices, or if two or more shall
have been first elected to such offices on the same day, in the order of their
seniority in age;
(ii) All other officers of the Corporation in the order of their
seniority of first election to such offices, or if two or more shall have been
first elected to such offices on the same day, in the order of their seniority
in age; and
(iii) Any other persons that are designated on a list that shall
have been approved by the Board of Directors before the emergency, such persons
to be taken in such order of priority and subject to such conditions as may be
provided in the resolution approving the list.
(c) The Board of Directors, during, as well as before, any such
emergency, may provide, and from time to time modify, lines of succession in the
event that during such an emergency any or all officers or agents of the
Corporation shall for any reason be rendered incapable of discharging their
duties.
(d) The Board of Directors, during, as well as before, any such
emergency, may, effective in the emergency, change the principal office, or
designate several alternative offices, or authorize the officers so to do.
No officer, Director or employee shall be liable for action taken in
good faith in accordance
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with these Emergency By-laws.
These Emergency By-laws shall be subject to repeal or change by further
action of the Board of Directors or by action of the shareholders, except that
no such repeal or change shall modify the provisions of the next preceding
paragraph with regard to action or inaction prior to the time of such repeal or
change. Any such amendment of these Emergency By-laws may make any further or
different provision that may be practical and necessary for the circumstances of
the emergency.
15
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EXHIBIT 3.39
AMF BOWLING SIX, INC.
AMENDMENT
1. Name. The name of the corporation is AMF BOWLING SIX, INC.
2. Amendment. The Amendment is to change the name of the
corporation from AMF BOWLING SIX, INC. to AMF BCO-FRANCE TWO INC.
3. Action by Directors. On June 1, 1989, all of the directors of
the corporation, by signing a consent in writing that sets forth the proposed
amendment, found that the proposed amendment was in the best interest of the
corporation and directed that it be submitted to the shareholders of the
corporation with the request that it approve and adopt the same by signing a
consent in writing.
4. Action by Shareholders. On June 7, 1989, following the action
of the directors, the shareholders of the corporation, by signing a consent in
writing that sets forth the proposed amendment, approved and adopted the same.
The number of shares outstanding and entitled to vote on the proposed amendment,
being of a single class, was 100.
IN WITNESS WHEREOF, the undersigned Assistant Secretary of AMF Bowling
Six, Inc. has executed this Amendment to the Articles of Incorporation, this
19th day of June, 1989.
AMF BOWLING SIX, INC.
By: /s/ Teri Scott Lovelace
______________________________
Assistant Secretary
<PAGE> 2
ARTICLES OF INCORPORATION
OF
AMF BOWLING SIX, INC.
I.
The name of the Corporation is AMF Bowling Six, Inc.
II.
The purpose for which the Corporation is formed is to transact any or
all lawful business, not required to be specifically stated in these Articles,
for which corporations may be incorporated under the Virginia Stock Corporation
Act, as amended from time to time.
III.
The number of shares which the Corporation shall have authority to
issue shall be 10,000 shares of the par value of $1.00 each. No holder of shares
of any class of the Corporation shall have any preemptive or preferential right
to purchase or subscribe to (i) any shares of any class of the corporation,
whether now or hereafter authorized; (ii) any warrants, rights or options to
purchase any such shares; of (iii) any securities or obligations convertible
into any such shares or into warrants, rights, or options to purchase any such
shares.
IV.
The initial registered office shall be located at 901 East Cary Street,
Suite 1400, Richmond, VA 23219 which is located in the City of Richmond and the
initial registered agent shall be Teri Scott Lovelace, who is a resident of
Virginia and a member of the Virginia State Bar, and whose
<PAGE> 3
business address is the same as the address of the initial registered office.
V.
The number of Directors constituting the initial Board of Directors
shall be one, and the name and address of the person who is to serve as the
initial Director is as follows:
William H. Goodwin, Jr.
901 E. Cary Street
Suite 1400
Richmond, Virginia 23219
VI.
1. In every instance permitted by the Virginia Stock Corporation
Act, as it exists on the date hereof or may hereafter be amended, the liability
of a director or officer of the Corporation OT the Corporation or its
shareholders arising out of a single transaction, occurrence or course of
conduct shall be limited to one dollar.
2. To the full extent permitted and in the manner prescribed by
the Virginia Stock Corporation Act and any other applicable law, the Corporation
shall indemnify a Director or officer of the Corporation who is or was a party
to any proceeding by reason of the fact that he is or was such a Director or
officer 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, employee benefit plan or other enterprise. The Board of Directors is
hereby empowered, by majority vote of a quorum of disinterested Directors, to
contract in advance to indemnify any Director or officer.
3. The Board of Directors is hereby empowered, by majority
<PAGE> 4
vote of a quorum of disinterested Directors, to cause the Corporation to
indemnify or contract in advance to indemnify any person not specified in
Section 2 of this Article who was or is a party to any proceeding, by reason of
the fact that he is or was an 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, employee
benefit plan or other enterprise, to the same extent as if such person were
specified as one to whom indemnification is granted in Section 2.
4. The Corporation may purchase and maintain insurance to
indemnify it against the whole or any portion of the liability assumed by it in
accordance with this Article and may also procure insurance, in such amounts as
the Board of Directors may determine, on behalf of any person who is or was a
Director, officer, employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise, against any liability
asserted against or incurred by any such person in any such capacity or arising
from his status as such, whether or not the Corporation would have power to
indemnify him against such liability under the provisions of this Article.
5. In the event there has been a change in the composition of a
majority of the Board of Directors after the date of the alleged act or omission
with respect to which indemnification is claimed, any determination as to
indemnification and advancement of expenses with respect to any claim for
indemnification made pursuant to section 2 of this Article VI shall be made by
special legal counsel agreed upon by the Board of Directors and the
<PAGE> 5
proposed indemnitee. If the Board of Directors and the proposed indemnitee are
unable to agree upon such special legal counsel, the Board of Directors and the
proposed indemnitee each shall select a nominee, and the nominees shall select
such special legal counsel.
6. The provisions of this Article VI shall be applicable to all
actions, claims, suits or proceedings commenced after the adoption hereof,
whether arising from any action taken or failure to act before or after such
adoption. No amendment, modification or repeal of this Article shall diminish
the rights provided hereby or diminish the right to indemnification with respect
to any claim, issue or matter in any then pending or subsequent proceeding that
is based in any material respect on any alleged action or failure to act prior
to such amendment, modification or repeal.
7. Reference herein to Directors, officers, employees or agents
shall include former Directors, officers, employees and agents and their
respective heirs, executors and administrators.
VII.
The Board of Directors shall have the power to make, amend or repeal
bylaws of the Corporation.
Dated: May 9, 1989
/s/ Teri Scott Lovelace
-----------------------------------
Teri Scott Lovelace
Incorporator
<PAGE> 1
EXHIBIT 3.40
BY-LAWS
OF
AMF BCO-FRANCE TWO, INC.
ARTICLE I
Meetings of Shareholders
1.1 Places of Meetings. All meetings of the shareholders shall be held
at such place, either inside or outside the State of Virginia, as from time to
time may be fixed by the Board of Directors.
1.2 Annual Meetings. The annual meeting of the shareholders, for the
election of Directors and transaction of such other business as may come before
the meetings, shall be held in each year on the second Tuesday in April, at 10
a.m., if that day is not a legal holiday in the Commonwealth of Virginia. If
that day is a legal holiday, the annual meeting shall be held on the next
succeeding day not such a legal holiday.
1.3 Special Meetings. A special meeting of the shareholders for any
purpose or purposes may be called at any time by the Chairman of the Board, the
President, or by a majority of the Board of Directors. At a special meeting no
business shall be transacted and no corporate action shall be taken other than
that stated in the notice of the meeting.
1.4 Notice of Meetings. Written or printed notice stating the place,
day and hour of every meeting of the shareholders and, in case of a special
meeting, the purpose or purposes for which the meeting is called, shall be
mailed not less than ten nor more than sixty days before the date
<PAGE> 2
of the meeting to each shareholder of record entitled to vote at such meeting,
at his address which appears in the share transfer books of the Corporation.
Such further notice shall be given as may be required by law, but meetings may
be held without notice if all the shareholders entitled to vote at the meeting
are present in person or by proxy or if notice is waived in writing by those not
present, either before or after the meeting.
1.5 Quorum. Any number of shareholders together holding at least a
majority of the outstanding shares of capital stock entitled to vote with
respect to the business to be transacted, who shall be present in person or
represented by proxy at any meeting duly called, shall constitute a quorum for
the transaction of business. If less than a quorum shall be in attendance at the
time for which a meeting shall have been called, the meeting may be adjourned
from time to time by a majority of the shareholders present or represented by
proxy without notice other than by announcement at the meeting.
1.6 Voting. At any meeting of the shareholders each shareholder of a
class entitled to vote on any matter coming before the meeting shall, as to such
matter, have one vote, in person or by proxy, for each share of capital stock of
such class standing in his name on the books of the Corporation on the date, not
more than seventy days prior to such meeting, fixed by the Board of Directors as
the record date for the purpose of determining shareholders entitled to vote.
Every proxy shall be in writing, dated and signed by the shareholder entitled to
vote or his duly authorized attorney-in-fact.
1.7 Inspectors. An appropriate number of inspectors for any meeting of
shareholders may be appointed by the Chairman of such meeting. Inspectors so
appointed will open and close the polls, will receive and take charge of proxies
and ballots, and will decide all questions as to the
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qualifications of voters, validity of proxies and ballots, and the number of
votes properly cast.
ARTICLE II
Directors
2.1 General Powers. The property, affairs and business of the
Corporation shall be managed by the Board of Directors, and, except as otherwise
expressly provided by law, the Articles of Incorporation or these By-laws, all
of the powers of the Corporation shall be vested in such Board.
2.2 Number of Directors. The number of Directors constituting the Board
of Directors shall be at least one and not more than three. The number of
Directors may be increased or decreased from time to time by amendment to these
By-laws, but no decrease shall have the effect of shortening the term of an
incumbent Director.
2.3 Election and Removal of Directors: Quorum.
(a) Directors shall be elected at each annual meeting of
shareholders to succeed those Directors whose terms have expired and to fill any
vacancies then existing.
(b) Directors shall hold their offices for terms of one year and
until their successors are elected. Any Director may be removed from office at a
meeting called expressly for that purpose by the vote of shareholders holding a
majority of the shares entitled to vote at an election of Directors.
(c) Any vacancy occurring in the Board of Directors may be filled
by the affirmative vote of the majority of the remaining Directors though less
than a quorum of the Board, and the term of office of any Director so elected
shall expire at the next shareholders' meeting at which Directors are elected.
(d) A majority of the number of Directors elected and serving at
the time of any
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meeting shall constitute a quorum for the transaction of business. The act of a
majority of Directors present at a meeting at which a quorum is present shall be
the act of the Board of Directors. Less than a quorum may adjourn any meeting.
2.4 Meetings of Directors. An annual meeting of the Board of Directors
shall be held as soon as practicable after the adjournment of the annual meeting
of shareholders at such place as the Board may designate. Other meetings of the
Board of Directors shall be held at places inside or outside the State of
Virginia and at times fixed by resolution of the Board, or upon call of the
Chairman of the Board, the President or any two of the Directors. The Secretary
or officer performing the Secretary's duties shall give not less than
twenty-four hours' notice either in person or by letter, telegraph or telephone
of all meetings of the Board of Directors, provided that notice need not be
given of the annual meeting or of regular meetings held at times and places
fixed by resolution of the Board. Meetings may be held at any time without
notice if all of the Directors are present, or if those not present waive notice
in writing either before or after the meeting. The notice of meetings of the
Board need not state the purpose of the meeting.
2.5 Duties. The Board of Directors shall designate depositories for the
corporation and shall designate and authorize the officers or other persons to
sign checks and bank drafts.
2.6 Compensation. By resolution of the Board, Directors may be allowed
a fee and expenses for attendance at all meetings, but nothing herein shall
preclude Directors from serving the Corporation in other capacities and
receiving compensation for such other services.
ARTICLE III
Committees
3.1 Executive Committee. The Board of Directors, by resolution adopted
by a
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majority of the number of Directors fixed by these By-laws, may elect an
Executive Committee which shall consist of not less than two Directors,
including the President. When the Board of Directors is not in session, the
Executive Committee shall have all power vested in the Board of Directors by
law, by the Articles of Incorporation, or by these By-laws, provided that the
Executive Committee shall not have power to (i) approve or recommend to
shareholders action that the Virginia Stock Corporation Act requires to be
approved by shareholders; (ii) fill vacancies on the Board or on any of its
committees; (iii) amend the Articles of Incorporation pursuant to Section
13.1-706 of the Virginia Code; (iv) adopt, amend, or repeal the By-laws; (v)
approve a plan of merger or share exchange not requiring shareholder approval;
(vi) authorize or approve a distribution, except according to a general formula
or method prescribed by the Board of Directors; or (vii) authorize or approve
the issuance or sale or contract for sale of shares, or determine the
designation and relative rights, preferences, and limitations of a class or
series of shares, other than within limits specifically prescribed by the Board
of Directors. The Executive Committee shall report at the next regular or
special meeting of the Board of Directors all action which the Executive
Committee may have taken on behalf of the Board since the last regular or
special meeting of the Board of Directors.
3.2 Finance Committee. The Board of Directors, by resolution adopted by
a majority of the number of Directors fixed by these By-laws, may elect a
Finance Committee which shall consist of not less than two Directors. The
Finance Committee shall consider and report to the Board with respect to plans
for corporate expansion, capital structure and long-range financial
requirements. The Committee shall also consider and report to the Board with
respect to such other matters relating to the financial affairs of the
Corporation as may be requested by the Board or the appropriate officers of the
Corporation. The Committee shall report periodically to the Board of
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<PAGE> 6
Directors on all action which it may have taken.
3.3 Other Committees. The Board of Directors, by resolution adopted by
a majority of the number of Directors fixed by these By-laws, may establish such
other standing or special committees of the Board as it may deem advisable,
consisting of not less than two Directors; and the members, terms and authority
of such committees shall be as set forth in the resolutions establishing the
same.
3.4 Meetings. Regular and special meetings of any Committee established
pursuant to this Article may be called and held subject to the same requirements
with respect to time, place and notice as are specified in these By-laws for
regular and special meetings of the Board of Directors.
3.5 Quorum and Manner of Acting. A majority of the members of any
Committee serving at the time of any meeting thereof shall constitute a quorum
for the transaction of business at such meeting. The action of a majority of
those members present at a Committee meeting at which a quorum is present shall
constitute the act of the Committee.
3.6 Terms of Office. Members of any Committee shall be elected as above
provided and shall hold office until their successors are elected by the Board
of Directors or until such Committee is dissolved by the Board of Directors.
3.7 Resignation and Removal. Any member of a Committee may resign at
any time by giving written notice of his intention to do so to the President or
the Secretary of the Corporation, or may be removed, with or without cause, at
any time by such vote of the Board of Directors as would suffice for his
election.
3.8 Vacancies. Any vacancy occurring in a Committee resulting from any
cause
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whatever may be filled by a majority of the number of Directors fixed by these
By-laws.
ARTICLE IV
Officers
4.1 Election of Officers: Terms. The Officers of the Corporation shall
consist of a President, a Secretary and a Treasurer. Other officers, including a
Chairman of the Board, one or more Vice Presidents (whose seniority and titles,
including Executive Vice Presidents and Senior Vice Presidents, may be specified
by the Board of Directors), and assistant and subordinate officers, may from
time to time be elected by the Board of Directors. All officers shall hold
office until the next annual meeting of the Board of Directors and until their
successors are elected. The President shall be chosen from among the Directors.
Any two officers may be combined in the same person as the Board of Directors
may determine.
4.2 Removal of Officers: Vacancies. Any officer of the Corporation may
be removed summarily with or without cause, at any time, by the Board of
Directors provided however that the removal of the Chairman of the Board shall
require the vote of two-thirds of the Directors. Vacancies may be filled by the
Board of Directors.
4.3 Duties. The officers of the Corporation shall have such duties as
generally pertain to their offices, respectively, as well as such powers and
duties as are prescribed by law or are hereinafter provided or as from time to
time shall be conferred by the Board of Directors. The Board of Directors may
require any officer to give such bond for the faithful performance of his duties
as the Board may see fit.
4.4 Duties of the President. The President shall be the chief executive
officer of the Corporation and shall be primarily responsible for the
implementation of policies of the Board of
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Directors. He shall have authority over the general management and direction of
the business and operations of the Corporation and its divisions, if any,
subject only to the ultimate authority of the Board of Directors. He shall be a
Director, and, except as otherwise provided in these By-laws or in the
resolutions establishing such committees, he shall be ex officio a member of all
Committees of the Board. In the absence of the Chairman of the Board or if there
is no such officer, the President shall preside at all corporate meetings. He
may sign and execute in the name of the Corporation share certificates, deeds,
mortgages, bonds, contracts or other instruments except in cases where the
signing and the execution thereof shall be expressly delegated by the Board of
Directors or by these By-laws to some other officer or agent of the Corporation
or shall be required by law otherwise to be signed or executed. In addition, he
shall perform all duties incident to the office of the President and such other
duties as from time to time may be assigned to him by the Board of Directors.
4.5 Duties of the Vice-Presidents. Each Vice-President, if any, shall
have such powers and duties as may from time to time be assigned to him by the
President or the Board of Directors. Any Vice-President may sign and execute in
the name of the Corporation deeds, mortgages, bonds, contracts or other
instruments authorized by the Board of Directors, except where the signing and
execution of such documents shall be expressly delegated by the Board of
Directors or the President to some other officer or agent of the Corporation or
shall be required by law or otherwise to be signed or executed.
4.6 Duties of the Treasurer. The Treasurer shall have charge of and be
responsible for all funds, securities, receipts and disbursements of the
Corporation, and shall deposit all monies and securities of the Corporation in
such banks and depositories as shall be designated by the Board of Directors. He
shall be responsible (i) for maintaining adequate financial accounts and records
in
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accordance with generally accepted accounting practices; (ii) for the
preparation of appropriate operating budgets and financial statements; (iii) for
the preparation and filing of all tax returns required by law; and (iv) for the
performance of all duties incident to the office of Treasurer and such other
duties as from time to time may be assigned to him by the Board of Directors,
the Finance Committee or the Managing Director/President. The treasurer may sign
and execute in the name of the Corporation share certificates, deeds, mortgages,
bonds, contracts or other instruments, except in cases where the signing and the
execution thereof shall be expressly delegated by the Board of Directors or by
these By-laws to some other officer or agent of the Corporation or shall be
required by law or otherwise to be signed or executed.
4.7 Duties of the Secretary. The Secretary shall act as secretary of
all meetings of the Board of Directors and shareholders of the Corporation. When
requested, he shall also act as secretary of the meetings of the committees of
the Board. He shall keep and preserve the minutes of all such meetings in
permanent books. He shall see that all notices required to be given by the
Corporation are duly given and served; shall have custody of the seal of the
Corporation and shall affix the seal or cause it to be affixed to all share
certificates of the Corporation and to all documents the execution of which on
behalf of the Corporation under its corporate seal is duly authorized in
accordance with law or the provisions of these By-laws; shall have custody of
all deeds, leases, contracts and other important corporate documents; shall have
charge of the books, records and papers of the Corporation relating to its
organization and management as a Corporation; shall see that all reports,
statements and other documents required by law (except tax returns) are properly
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 of Directors or the President.
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<PAGE> 10
4.8 Compensation. The Board of Directors shall have authority to fix
the compensation of all officers of the Corporation.
ARTICLE V
Capital Stock
5.1 Certificates. The shares of capital stock of the Corporation shall
be evidenced by certificates in forms prescribed by the Board of Directors and
executed in any manner permitted by law and stating thereon the information
required by law. Transfer agents and/or registrars for one or more classes of
shares of the Corporation may be appointed by the Board of Directors and may be
required to countersign certificates representing shares of such class or
classes. If any officer whose signature or facsimile thereof shall have been
used on a share certificate shall for any reason cease to be an officer of the
Corporation and such certificate shall not then have been delivered by the
Corporation, the Board of Directors may nevertheless adopt such certificate and
it may then be issued and delivered as though such person had not ceased to be
an officer of the Corporation.
5.2 Lost, Destroyed and Mutilated Certificates. Holders of the shares
of the Corporation shall immediately notify the Corporation of any loss,
destruction or mutilation of the certificate therefor, and the Board of
Directors may in its discretion cause one or more new certificates for the same
number of shares in the aggregate to be issued to such shareholder upon the
surrender of the mutilated certificate or upon satisfactory proof of such loss
or destruction, and the deposit of a bond in such form and amount and with such
surety as the Board of Directors may require.
5.3 Transfer of Shares. The shares of the Corporation shall be
transferable or assignable only on the books of the Corporation by the holder in
person or by attorney on surrender of the certificate for such shares duly
endorsed and, if sought to be transferred by attorney,
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<PAGE> 11
accompanied by a written power of attorney to have the same transferred on the
books of the Corporation. The Corporation will recognize, however, the exclusive
right of the person registered on its books as the owner of shares to receive
dividends and to vote as such owner.
5.4 Fixing Record Date. For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, or entitled to receive payment of any dividend, or in order
to make a determination of shareholders for any other proper purpose, the Board
of Directors may fix in advance a date as the record date for any such
determination of shareholders, such date in any case to be not more than seventy
days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If no record date is fixed for
the determination of shareholders entitled to notice of or to vote at a meeting
of shareholders, or of shareholders entitled to receive payment of a dividend,
the date on which notices of the meeting are mailed or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination shall
apply to any adjournment thereof unless the Board of Directors fixes a new
record date, which it shall do if the meeting is adjourned to a date more than
120 days after the date fixed for the original meeting.
ARTICLE VI
Miscellaneous Provisions
6.1 Seal. The seal of the Corporation shall consist of a flat-faced
circular die, of which there may be any number of counterparts, on which there
shall be engraved the word "Seal".
6.2 Fiscal Year. The fiscal year of the Corporation shall end on such
date and shall
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consist of such accounting periods as may be fixed by the Board of Directors.
6.3 Checks, Notes and Drafts. Checks, notes, drafts and other orders
for the payment of money shall be signed by such persons as the Board of
Directors from time to time may authorize. When the Board of Directors so
authorizes, however, the signature of any such person may be a facsimile.
6.4 Amendment of By-Laws. Unless proscribed by the Articles of
Incorporation, these By-laws may be amended or altered at any meeting of the
Board of Directors by affirmative vote of a majority of the number of Directors
fixed by these By-laws. The shareholders entitled to vote in respect of the
election of Directors, however, shall have the power to rescind, amend, alter or
repeal any By-laws and to enact By-laws which, if expressly so provided, may not
be amended, altered or repealed by the Board of Directors.
6.5 Voting of Shares Held. Unless otherwise provided by resolution of
the Board of Directors or of the Executive Committee, if any, the President may
from time to time appoint an attorney or attorneys or agent or agents of the
Corporation, in the name and on behalf of the Corporation, to cast the vote
which the Corporation may be entitled to cast as a shareholder or otherwise in
any other corporation, any of whose securities may be held by the Corporation,
at meetings of the holders of the shares or other securities of such other
corporation, or to consent in writing to any action by any such other
corporation; and the President shall instruct the person or persons so appointed
as to the manner of casting such votes or giving such consent and may execute or
cause to be executed on behalf of the Corporation, and under its corporate seal
or otherwise, such written proxies, consents, waivers or other instruments as
may be necessary or proper in the premises. In lieu of such appointment the
President may himself attend any meetings of the holders
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of shares or other securities of any such other corporation and there vote or
exercise any or all power of the Corporation as the holder of such shares or
other securities of such other corporation.
ARTICLE VII
Emergency By-laws
The Emergency By-laws provided in this Article VII shall be operative
during any emergency, notwithstanding any different provision in the preceding
Articles of these By-laws or in the Articles of Incorporation of the Corporation
or in the Virginia Stock Corporation Act (other than those provisions relating
to emergency by-laws). An emergency exists if a quorum of the Corporation's
Board of Directors cannot readily be assembled because of some catastrophic
event. To the extent not inconsistent with these Emergency By-laws, the By-laws
provided in the preceding Articles shall remain in effect during such emergency
and upon the termination of such emergency the Emergency By-laws shall cease to
be operative unless and until another such emergency shall occur.
During any such emergency:
(a) Any meeting of the Board of Directors may be called by any officer
of the Corporation or by any Director. The notice thereof shall specify the time
and place of the meeting. To the extent feasible, notice shall be given in
accord with Section 2.4 above, but notice may be given only to such of the
Directors as it may be feasible to reach at the time, by such means as may be
feasible at the time, including publication or radio, and at a time less than
twenty-four hours before the meeting if deemed necessary by the person giving
notice. Notice shall be similarly given, to the extent feasible, to the other
persons referred to in (b) below.
(b) At any meeting of the Board of Directors, a quorum shall consist of
a majority of the
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number of Directors fixed at the time by Article II of the By-laws. If the
Directors present at any particular meeting shall be fewer than the number
required for such quorum, other persons present as referred to below, to the
number necessary to make up such quorum, shall be deemed Directors for such
particular meeting as determined by the following provisions and in the
following order of priority:
(i) Vice-Presidents not already serving as Directors, in the order
of their seniority of first election to such offices, or if two or more shall
have been first elected to such offices on the same day, in the order of their
seniority in age;
(ii) All other officers of the Corporation in the order of their
seniority of first election to such offices, or if two or more shall have been
first elected to such offices on the same day, in the order of their seniority
in age; and
(iii) Any other persons that are designated on a list that shall
have been approved by the Board of Directors before the emergency, such persons
to be taken in such order of priority and subject to such conditions as may be
provided in the resolution approving the list.
(c) The Board of Directors, during, as well as before, any such
emergency, may provide, and from time to time modify, lines of succession in the
event that during such an emergency any or all officers or agents of the
Corporation shall for any reason be rendered incapable of discharging their
duties.
(d) The Board of Directors, during, as well as before, any such
emergency, may, effective in the emergency, change the principal office, or
designate several alternative offices, or authorize the officers so to do.
No officer, Director or employee shall be liable for action taken in
good faith in accordance
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with these Emergency By-laws.
These Emergency By-laws shall be subject to repeal or change by further
action of the Board of Directors or by action of the shareholders, except that
no such repeal or change shall modify the provisions of the next preceding
paragraph with regard to action or inaction prior to the time of such repeal or
change. Any such amendment of these Emergency By-laws may make any further or
different provision that may be practical and necessary for the circumstances of
the emergency.
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EXHIBIT 3.41
CERTIFICATE OF INCORPORATION
OF
AMF BOWLING CENTERS SPAIN INC.
I, the undersigned, for the purpose of incorporating and organizing a
corporation under the General Corporation Law of the State of Delaware, do
hereby execute this Certificate of Incorporation and do hereby certify as
follows:
ARTICLE I
The name of the corporation (which is hereinafter referred to as the
"Corporation") is:
AMF Bowling Centers Spain Inc.
ARTICLE II
The address of the Corporation's registered office in the State of
Delaware is The Corporation Trust Center, 1209 Orange Street in the City of
Wilmington, County of New Castle. The name of the Corporation's registered agent
at such address is The Corporation Trust Company.
ARTICLE III
The purpose of the Corporation shall be to engage in any lawful act or
activity for which corporations may be organized and incorporated under the
General Corporation Law of the State of Delaware.
<PAGE> 2
ARTICLE IV
Section 1. The Corporation shall be authorized to issue 1,000 shares of
capital stock, of which all shares shall be shares of Common Stock, $.01 par
value ("Common Stock").
Section 2. Except as otherwise provided by law, the Common Stock shall
have the exclusive right to vote for the election of directors and for all other
purposes. Each share of Common Stock shall have one vote, and the Common Stock
shall vote together as a single class.
ARTICLE V
Unless and except to the extent that the By-Laws of the Corporation
shall so require, the election of directors of the Corporation need not be by
written ballot.
ARTICLE VI
In furtherance and not in limitation of the powers conferred by law,
the Board of Directors of the Corporation (the "Board") is expressly authorized
and empowered to make, alter and repeal the By-Laws of the Corporation by a
majority vote at any regular or special meeting of the Board or by written
consent, subject to the power of the stockholders of the Corporation to alter or
repeal any By-Laws made by the Board.
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ARTICLE VII
The Corporation reserves the right at any time from time to time to
amend, alter, change or repeal any provision contained in this Certificate of
Incorporation, and any other provisions authorized by the laws of the State of
Delaware at the time in force may be added or inserted, in the manner now or
hereafter prescribed by law; and all rights, preferences and privileges of
whatsoever nature conferred upon stockholders, directors or any other persons
whomsoever by and pursuant to this Certificate of Incorporation in its present
form or as hereafter amended are granted subject to the right reserved in this
Article.
ARTICLE VIII
Section 1. Elimination of Certain Liability of Directors. A director of
the Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the General Corporation Law of the State of Delaware, or (iv) for
any transaction from which the director derived an improper personal benefit.
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<PAGE> 4
Section 2. Indemnification and Insurance.
(a) Right to Indemnification. Each person who was or is made a party or
is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she, or a person
of whom he or she is the legal representative, is or was a director or officer
of the Corporation or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged action
in an official capacity as a director, officer, employee or agent or in any
other capacity while serving as a director, officer, employee or agent, shall be
indemnified and held harmless by the Corporation to the fullest extent
authorized by the General Corporation Law of the State of Delaware, as the same
exists or may hereafter be amended (but, in the case of any such amendment, only
to the extent that such amendment permits the Corporation to provide broader
indemnification rights than said law permitted the Corporation to provide prior
to such amendment), against all expense, liability and loss (including
attorneys' fees, judgments, fines, amounts paid or to be paid in settlement, and
excise taxes or penalties arising under
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<PAGE> 5
the Employee Retirement Income Security Act of 1974) reasonably incurred or
suffered by such person in connection therewith and such indemnification shall
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of his or her heirs, executors and
administrators; provided, however, that, except as provided in paragraph (b)
hereof, the Corporation shall indemnify any such person seeking indemnification
in connection with a proceeding (or part thereof) initiated by such person only
if such proceeding (or part thereof) was authorized by the Board. The right to
indemnification conferred in this Section shall be a contract right and shall
include the right to be paid by the Corporation the expenses incurred in
defending any such proceeding in advance of its final disposition; provided,
however, that, if the General Corporation Law of the State of Delaware requires,
the payment of such expenses incurred by a director or officer in his or her
capacity as a director or officer (and not in any other capacity in which
service was or is rendered by such person while a director or officer,
including, without limitation, service to an employee benefit plan) in advance
of the final disposition of a proceeding, shall be made only upon delivery to
the Corporation of an undertaking, by or on behalf of such director or officer,
to repay all amounts so advanced if it shall ultimately be determined that such
director or officer is not entitled to be indemnified under this Section or
otherwise.
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<PAGE> 6
The Corporation may, by action of the Board, provide indemnification to
employees and agents of the Corporation with the same scope and effect as the
foregoing indemnification of directors and officers.
(b) Right of Claimant to Bring Suit. If a claim under paragraph (a) of
this Section is not paid in full by the Corporation within thirty days after a
written claim has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant shall be entitled
to be paid also the expense of prosecuting such claim. It shall be a defense to
any such action (other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final disposition where
the required undertaking, if any is required, has been tendered to the
Corporation) that the claimant has not met the standards of conduct which make
it permissible under the General Corporation Law of the State of Delaware for
the Corporation to indemnify the claimant for the amount claimed, but the burden
of proving such defense shall be on the Corporation. Neither the failure of the
Corporation (including its Board, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set
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<PAGE> 7
forth in the General Corporation Law of the State of Delaware, nor an actual
determination by the Corporation (including its Board, independent legal
counsel, or its stockholders) that the claimant has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that the claimant has not met the applicable standard of conduct.
(c) Non-Exclusivity of Rights. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Section shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, provision of
the Certificate of Incorporation, By-law, agreement, vote of stockholders or
disinterested directors or otherwise.
(d) Insurance. The Corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the General Corporation Law of the State of Delaware.
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ARTICLE IX
The name and mailing address of the incorporator is Mitchell S.
Presser, Esq., c/o Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New
York, New York 10019.
IN WITNESS WHEREOF, I, the undersigned, being the incorporator
hereinbefore named, do hereby further certify that the facts hereinabove stated
are truly set forth and, accordingly, I have hereunto set my hand this 27th day
of February, 1996.
/s/ Mitchell S. Presser
-----------------------
Mitchell S. Presser
Incorporator
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<PAGE> 1
EXHIBIT 3.42
BY-LAWS
of
AMF BOWLING CENTERS SPAIN INC.
(as of February 27, 1996)
ARTICLE I
OFFICES
SECTION 1. REGISTERED OFFICE -- The registered office of AMF Bowling
Centers Spain Inc. (the "Corporation") shall be established and maintained at
the office of The Corporation Trust Company at The Corporation Trust Center,
1209 Orange Street in the City of Wilmington, County of New Castle, State of
Delaware, and said Corporation Trust Company shall be the registered agent of
the Corporation in charge thereof.
SECTION 2. OTHER OFFICES -- The Corporation may have other
offices, either within or without the State of Delaware, at such place or places
as the Board of Directors may from time to time select or the business of the
Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. ANNUAL MEETINGS -- Annual meetings of stockholders for the
election of directors, and for such other business as may be stated in the
notice of the meeting, shall be held at such place, either within or without the
State of Delaware, and at such time and date as the Board of Directors, by
resolution, shall determine and as set forth in the notice of the meeting. If
the Board of Directors fails so to determine the time, date and place of
meeting, the annual meeting of stockholders shall be held at the registered
office of the Corporation on the first Tuesday in April. If the date of the
annual meeting shall fall upon a legal holiday, the meeting shall be held on the
next succeeding business day. At each annual meeting, the stockholders entitled
to vote shall elect a
<PAGE> 2
Board of Directors and they may transact such other corporate business as shall
be stated in the notice of the meeting.
SECTION 2. SPECIAL MEETINGS -- Special meetings of the stockholders for
any purpose or purposes may be called by the Chairman of the Board, the
President or the Secretary, or by resolution of the Board of Directors.
SECTION 3. VOTING -- Each stockholder entitled to vote in accordance
with the terms of the Certificate of Incorporation of the Corporation and these
By-Laws may vote in person or by proxy, but no proxy shall be voted after three
years from its date unless such proxy provides for a longer period. All
elections for directors shall be decided by plurality vote; all other questions
shall be decided by majority vote except as otherwise provided by the
Certificate of Incorporation or the laws of the State of Delaware.
A complete list of the stockholders entitled to vote at the meeting,
arranged in alphabetical order, with the address of each, and the number of
shares held by each, 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 in the notice of
the meeting, or, if not so specified, 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 any stockholder
who is entitled to be present.
SECTION 4. QUORUM -- Except as otherwise required by law, by the
Certificate of Incorporation of the Corporation or by these By-Laws, the
presence, in person or by proxy, of stockholders holding shares constituting a
majority of the voting power of the Corporation shall constitute a quorum at all
meetings of the stockholders. In case a quorum shall not be present at any
meeting, a majority in interest of the stockholders entitled to vote thereat,
present in person or by proxy, shall have the power to adjourn the meeting from
time to time, without notice other than announcement at the meeting, until the
requisite amount of stock entitled to vote shall be present. At any such
adjourned meeting at which the requisite amount of stock entitled to vote shall
be represented, any business may be transacted that might have been transacted
at the meeting as originally noticed; but only those stockholders entitled to
vote at the meeting as originally noticed shall be entitled to vote at any
adjournment or adjournments thereof.
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<PAGE> 3
SECTION 5. NOTICE OF MEETINGS -- Written notice, stating the place,
date and time of the meeting, and the general nature of the business to be
considered, shall be given to each stockholder entitled to vote thereat, at his
or her address as it appears on the records of the Corporation, not less than
ten nor more than sixty days before the date of the meeting. No business other
than that stated in the notice shall be transacted at any meeting without the
unanimous consent of all the stockholders entitled to vote thereat.
SECTION 6. ACTION WITHOUT MEETING -- Unless otherwise provided by the
Certificate of Incorporation of the Corporation, any action required or
permitted to be taken at any annual or special meeting of 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 such 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 III
DIRECTORS
SECTION 1. NUMBER AND TERM -- The business and affairs of the
Corporation shall be managed under the direction of a Board of Directors which
shall consist of not less than two persons. The exact number of directors shall
initially be two and may thereafter be fixed from time to time by the Board of
Directors. Directors shall be elected at the annual meeting of stockholders and
each director shall be elected to serve until his or her successor shall be
elected and shall qualify. A director need not be a stockholder.
SECTION 2. RESIGNATIONS -- Any director may resign at any time. Such
resignation shall be made in writing, and shall take effect at the time
specified therein, and if no time be specified, at the time of its receipt by
the Chairman of the Board, the President or the Secretary. The acceptance of a
resignation shall not be necessary to make it effective.
SECTION 3. VACANCIES -- If the office of any director becomes vacant,
the remaining directors in the office, though less than a quorum, by a majority
vote, may appoint any qualified person to fill such vacancy, who shall hold
office
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for the unexpired term and until his or her successor shall be duly chosen. If
the office of any director becomes vacant and there are no remaining directors,
the stockholders, by the affirmative vote of the holders of shares constituting
a majority of the voting power of the Corporation, at a special meeting called
for such purpose, may appoint any qualified person to fill such vacancy.
SECTION 4. REMOVAL -- Except as hereinafter provided, any director or
directors may be removed either for or without cause at any time by the
affirmative vote of the holders of a majority of the voting power entitled to
vote for the election of directors, at an annual meeting or a special meeting
called for the purpose, and the vacancy thus created may be filled, at such
meeting, by the affirmative vote of holders of shares constituting a majority of
the voting power of the Corporation.
SECTION 5. COMMITTEES -- The Board of Directors may, by resolution or
resolutions passed by a majority of the whole Board of Directors, designate one
or more committees, each committee to consist of one or more directors of the
Corporation.
Any such committee, to the extent provided in the resolution of the
Board of Directors, or in these By-Laws, shall have and may exercise all the
powers and authority of the Board of Directors 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.
SECTION 6. MEETINGS -- The newly elected directors may hold their first
meeting for the purpose of organization and the transaction of business, if a
quorum be present, immediately after the annual meeting of the stockholders; or
the time and place of such meeting may be fixed by consent of all the Directors.
Regular meetings of the Board of Directors may be held without notice
at such places and times as shall be determined from time to time by resolution
of the Board of Directors.
Special meetings of the Board of Directors may be called by the
Chairman of the Board or the President, or by the Secretary on the written
request of any director, on at least one day's notice to each director (except
that notice to any director may be waived in writing by such director) and shall
be held at such place or places as may be determined by the Board of Directors,
or as shall be stated in the call of the meeting.
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<PAGE> 5
Unless otherwise restricted by the Certificate of Incorporation of the
Corporation or these By-Laws, members of the Board of Directors, or any
committee designated by the Board of Directors, may participate in any meeting
of the Board of Directors or any committee thereof by means of a conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation in a
meeting shall constitute presence in person at the meeting.
SECTION 7. QUORUM -- A majority of the Directors shall constitute a
quorum for the transaction of business. If at any meeting of the Board of
Directors there shall be less than a quorum present, a majority of those present
may adjourn the meeting from time to time until a quorum is obtained, and no
further notice thereof need be given other than by announcement at the meeting
which shall be so adjourned. The vote of the majority of the Directors present
at a meeting at which a quorum is present shall be the act of the Board of
Directors unless the Certificate of Incorporation of the Corporation or these
By-Laws shall require the vote of a greater number.
SECTION 8. COMPENSATION -- Directors shall not receive any stated
salary for their services as directors or as members of committees, but by
resolution of the Board of Directors a fixed fee and expenses of attendance may
be allowed for attendance at each meeting. Nothing herein contained shall be
construed to preclude any director from serving the Corporation in any other
capacity as an officer, agent or otherwise, and receiving compensation therefor.
SECTION 9. ACTION WITHOUT MEETING -- Any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting if a written consent thereto is signed by all
members of the Board of Directors or of such committee, as the case may be, and
such written consent is filed with the minutes of proceedings of the Board of
Directors or such committee.
ARTICLE IV
OFFICERS
SECTION 1. OFFICERS -- The officers of the Corporation shall be a
President, a Treasurer and a Secretary, all of whom shall be elected by the
Board of Directors and shall hold office until their successors are duly elected
and qualified. In addition, the Board of Directors may elect such Vice
Presidents, Assistant Secretaries and Assistant Treasurers as
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<PAGE> 6
they may deem proper. The Board of Directors may appoint such other officers and
agents as it may deem advisable, who shall hold their offices for such terms and
shall exercise such powers and perform such duties as shall be determined from
time to time by the Board of Directors.
SECTION 2. CHAIRMAN OF THE BOARD -- The Chairman of the Board shall not
be an officer of the corporation. He or she shall preside at all meetings of the
Board of Directors and shall have and perform such other duties as may be
assigned to him or her by the Board of Directors.
SECTION 3. PRESIDENT -- The President shall be the Chief Executive
Officer of the Corporation. He or she shall have the general powers and duties
of supervision and management usually vested in the office of President of a
corporation. The President shall have the power to execute bonds, mortgages and
other contracts on behalf of the Corporation, and to cause the seal to be
affixed to any instrument requiring it, and when so affixed the seal shall be
attested to by the signature of the Secretary or the Treasurer or an Assistant
Secretary or an Assistant Treasurer.
SECTION 4. VICE PRESIDENTS -- Each Vice President shall have such
powers and shall perform such duties as shall be assigned to him or her by the
Board of Directors.
SECTION 5. TREASURER -- The Treasurer shall be the Chief Financial
Officer of the Corporation. He or she shall have the custody of the Corporate
funds and securities and shall keep full and accurate account of receipts and
disbursements in books belonging to the Corporation. He or she shall deposit all
moneys and other valuables in the name and to the credit of the Corporation in
such depositaries as may be designated by the Board of Directors. He or she
shall disburse the funds of the Corporation as may be ordered by the Board of
Directors or the President, taking proper vouchers for such disbursements. He or
she shall render to the Chairman of the Board, the President and Board of
Directors at the regular meetings of the Board of Directors, or whenever they
may request it, an account of all his or her transactions as Treasurer and of
the financial condition of the Corporation. If required by the Board of
Directors, he or she shall give the Corporation a bond for the faithful
discharge of his or her duties in such amount and with such surety as the Board
of Directors shall prescribe.
SECTION 6. SECRETARY -- The Secretary shall give, or cause to be given,
notice of all meetings of stockholders and of the Board of Directors and all
other notices required by law
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or by these By-Laws, and in case of his or her absence or refusal or neglect so
to do, any such notice may be given by any person thereunto directed by the
Chairman of the Board or the President, or by the Board of Directors, upon whose
request the meeting is called as provided in these By-Laws. He or she shall
record all the proceedings of the meetings of the Board of Directors, any
committees thereof and the stockholders of the Corporation in a book to be kept
for that purpose, and shall perform such other duties as may be assigned to him
or her by the Board of Directors, the Chairman of the Board or the President. He
or she shall have the custody of the seal of the Corporation and shall affix the
same to all instruments requiring it, when authorized by the Board of Directors,
the Chairman of the Board or the President, and attest to the same.
SECTION 7. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES -- Assistant
Treasurers and Assistant Secretaries, if any, shall be elected and shall have
such powers and shall perform such duties as shall be assigned to them,
respectively, by the Board of Directors.
ARTICLE V
MISCELLANEOUS
SECTION 1. CERTIFICATES OF STOCK -- A certificate of stock shall be
issued to each stockholder certifying the number of shares owned by such
stockholder in the Corporation. Certificates of stock of the Corporation shall
be of such form and device as the Board of Directors may from time to time
determine.
SECTION 2. LOST CERTIFICATES -- A new certificate of stock may be
issued in the place of any certificate theretofore issued by the Corporation,
alleged to have been lost or destroyed, and the Board of Directors may, in its
discretion, require the owner of the lost or destroyed certificate, or such
owner's legal representatives, to give the Corporation a bond, in such sum as
they may direct, not exceeding double the value of the stock, to indemnify the
Corporation against any claim that may be made against it on account of the
alleged loss of any such certificate, or the issuance of any such new
certificate.
SECTION 3. TRANSFER OF SHARES -- The shares of stock of the Corporation
shall be transferable only upon its books by the holders thereof in person or by
their duly authorized attorneys or legal representatives, and upon such transfer
the old certificates shall be surrendered to the Corporation by the
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<PAGE> 8
delivery thereof to the person in charge of the stock and transfer books and
ledgers, or to such other person as the Board of Directors may designate, by
whom they shall be cancelled, and new certificates shall thereupon be issued. A
record shall be made of each transfer and whenever a transfer shall be made for
collateral security, and not absolutely, it shall be so expressed in the entry
of the transfer.
SECTION 4. STOCKHOLDERS RECORD DATE -- In order that the Corporation
may determine 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 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 of Directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors and which
record date: (1) in the case of determination of stockholders entitled to vote
at any meeting of stockholders or adjournment thereof, shall, unless otherwise
required by law, not be more than sixty nor less than ten days before the date
of such meeting; (2) in the case of determination of stockholders entitled to
express consent to corporate action in writing without a meeting, shall not be
more than ten days from the date upon which the resolution fixing the record
date is adopted by the Board of Directors; and (3) in the case of any other
action, shall not be more than sixty days prior to such other action. If no
record date is fixed: (1) the record date for determining stockholders entitled
to notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held; (2) the record date for determining stockholders
entitled to express consent to corporate action in writing without a meeting
when no prior action of the Board of Directors is required by law, shall be the
first day on which a signed written consent setting forth the action taken or
proposed to be taken is delivered to the Corporation in accordance with
applicable law, or, if prior action by the Board of Directors is required by
law, shall be at the close of business on the day on which the Board of
Directors adopts the resolution taking such prior action; and (3) the record
date for determining stockholders for any other purpose shall be at the close of
business on the day on which the Board of Directors adopts the resolution
relating thereto. A determination of stockholders of record entitled to notice
of or to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the
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<PAGE> 9
Board of Directors may fix a new record date for the adjourned meeting.
SECTION 5. DIVIDENDS -- Subject to the provisions of the Certificate of
Incorporation of the Corporation, the Board of Directors may, out of funds
legally available therefor at any regular or special meeting, declare dividends
upon stock of the Corporation as and when they deem appropriate. Before
declaring any dividend there may be set apart out of any funds of the
Corporation available for dividends, such sum or sums as the Board of Directors
from time to time in their discretion deem proper for working capital or as a
reserve fund to meet contingencies or for equalizing dividends or for such other
purposes as the Board of Directors shall deem conducive to the interests of the
Corporation.
SECTION 6. SEAL -- The corporate seal of the Corporation shall be in
such form as shall be determined by resolution of the Board of Directors. Said
seal may be used by causing it or a facsimile thereof to be impressed or affixed
or reproduced or otherwise imprinted upon the subject document or paper.
SECTION 7. FISCAL YEAR -- The fiscal year of the Corporation shall be
determined by resolution of the Board of Directors.
SECTION 8. CHECKS -- All checks, drafts or other orders for the payment
of money, notes or other evidences of indebtedness issued in the name of the
Corporation shall be signed by such officer or officers, or agent or agents, of
the Corporation, and in such manner as shall be determined from time to time by
resolution of the Board of Directors.
SECTION 9. NOTICE AND WAIVER OF NOTICE -- Whenever any notice is
required to be given under these By-Laws, personal notice is not required unless
expressly so stated, and any notice so required shall be deemed to be sufficient
if given by depositing the same in the United States mail, postage prepaid,
addressed to the person entitled thereto at his or her address as it appears on
the records of the Corporation, and such notice shall be deemed to have been
given on the day of such mailing. Stockholders not entitled to vote shall not be
entitled to receive notice of any meetings except as otherwise provided by law.
Whenever any notice is required to be given under the provisions of any law, or
under the provisions of the Certificate of Incorporation of the Corporation or
of these By-Laws, a waiver thereof, in writing and signed by the person or
persons entitled to said notice, whether before or after the
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time stated therein, shall be deemed equivalent to such required notice.
ARTICLE VI
AMENDMENTS
These By-Laws may be altered, amended or repealed at any annual meeting
of the stockholders (or at any special meeting thereof if notice of such
proposed alteration, amendment or repeal to be considered is contained in the
notice of such special meeting) by the affirmative vote of the holders of shares
constituting a majority of the voting power of the Corporation. Except as
otherwise provided in the Certificate of Incorporation of the Corporation, the
Board of Directors may by majority vote of those present at any meeting at which
a quorum is present alter, amend or repeal these By-Laws, or enact such other
By-Laws as in their judgment may be advisable for the regulation and conduct of
the affairs of the Corporation.
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<PAGE> 1
EXHIBIT 3.43
CERTIFICATE OF INCORPORATION
OF
AMF MEXICO INC.
FIRST: The name of the corporation is:
AMF Mexico Inc.
SECOND: The address of the corporation's registered office in
the State of Delaware is 229 South State Street, in the City of Dover, County of
Kent. The name of the registered agent of the corporation at such address is The
Prentice-Hall Corporation System, Inc.
THIRD: The purpose of the corporation is to engage in any
lawful act or activity for which corporations may be organized under the General
Corporation Law of Delaware.
FOURTH: The total number of shares of stock which the
corporation shall have authority to issue is one thousand (1,000) all of which
shall be Common Stock. The par value of the each of such shares is one cent
($0.01) per share.
FIFTH: The name and mailing address of the incorporator is
Ariel Amir, Esq., c/o Weil, Gotshal & Manges, 767 Fifth Avenue, New York, New
York 10153.
SIXTH: The corporation is to have perpetual existence.
<PAGE> 2
SEVENTH: Whenever a compromise or arrangement is proposed
between this corporation and its creditors or any class of them and/or between
this corporation and its stockholders or any class of them, any court of
equitable jurisdiction within the State of Delaware may, on the application in a
summary way of this corporation or of any creditor or stockholders thereof or on
the application of any receiver or receivers appointed for this corporation
under the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been
made, be binding on all the creditors or class of credi-
2
<PAGE> 3
tors, and/or on all the stockholders or class of stockholders, of this
corporation, as the case may be, and also on this corporation.
EIGHTH: In furtherance and not in limitation of the powers
conferred by statute, the board of directors is expressly authorized to make,
alter or repeal the by-laws of the corporation.
NINTH: The corporation shall indemnify, to the full extent
permitted by Section 145 of the General Corporation Law of Delaware, as amended
from time to time, all persons who it may indemnify pursuant thereto.
TENTH: No director of the corporation shall be personally
liable to the corporation or any stockholder for monetary damages for breach of
fiduciary duty as a director, except for any matter in respect of which such
director shall be liable under Section 174 of Title 8 of the Delaware Code
(relating to the Delaware General Corporation Law) or any amendment thereto or
successor provision thereto or shall be liable by reason that, in addition to
any and all other requirements for such liability, such director (i) shall have
breached the duty of loyalty to the corporation or its stockholders, (ii) shall
not have acted in good faith or, in failing to act, shall not have acted in good
faith or, (iii) shall have acted in a manner involving intentional misconduct
3
<PAGE> 4
or a knowing violation of law or, in failing to act, shall have acted in a
manner involving intentional misconduct or a knowing violation of law or (iv)
shall have derived an improper personal benefit. Neither the amendment nor
repeal of this Article TENTH, nor the adoption of any provision of the
Certificate of Incorporation inconsistent with this Article TENTH, shall
eliminate or reduce the effect of this Article TENTH in respect of any matter
occurring, or any cause of action, suit or claim that, but for this Article
TENTH, would accrue or arise, prior to such amendment, repeal or adoption of an
inconsistent provision.
ELEVENTH: Election of directors need not be by written ballot.
TWELFTH: The corporation reserves the right to amend, alter,
change or repeal any provision contained in this Certificate of Incorporation,
in the manner now or hereinafter prescribed by statute, and all rights conferred
by the stockholders herein are granted subject to this reservation.
IN WITNESS WHEREOF, the undersigned has duly executed this
Certificate of Incorporation, this 26th day of August, 1987.
/s/ Ariel Amir
---------------------------------
Ariel Amir,
Sole Incorporator
4
<PAGE> 5
CERTIFICATE OF AMENDMENT
OF CERTIFICATE OF INCORPORATION
OF AMF MEXICO INC.
AMF Mexico Inc., a corporation organized and existing under and by virtue of
the General Corporation Law of the State of Delaware.
THE UNDERSIGNED DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of AMF Mexico, Inc.
resolutions were duly adopted setting forth a proposed amendment of the
Certificate of Incorporation of said corporation, declaring said amendment to be
advisable and calling a meeting of the stockholders of said corporation for
consideration thereof. The resolution setting forth the proposed amendment is as
follows:
RESOLVED, that the Certificate of Incoporatin of this corporation be
amended by changing the Article thereof numbered "1" so that, as amended said
Article shall be and read as follows: "The name of this corporation shall be AMF
Bowling Mexico Holding, Inc.
SECOND: That thereafter, all of the stockholders of said corporation
duly consented to the aforesaid resolution in accordance with the General
Corporation law of the state of Delaware.
THIRD: That said amendment was duly adopted in accordance with the
provisions of the General Corporation Law of the State of Delaware.
FOURTH: That the capital of said corporation shall not be reduced under
or by reason of said amendment.
IN WITNESS WHEREOF, this certificate is signed by:
BEVERLY W. ARMSTRONG, its President
DANIEL M. McCORMACK, its Secretary
this 1st day of June, 1988.
BY : /s/Beverley W. Armstrong
------------------------------------
Beverley W. Armstrong
ATTEST : /s/Daniel M. McCormack
------------------------------------
Daniel M. McCormack, Secretary
<PAGE> 6
CERTIFICATE
FOR RENEWAL AND REVIVAL OF CERTIFICATE OF INCORPORATION
AMF Bowling Mexico Holding, Inc., a corporation organized under the
laws of Delaware, the Certificate of Incorporation of which was filed in the
office of the Secretary of State on the 27th day of August, 1987 and thereafter
voided for non-payment of taxes, now desiring to procure a revival of its
Certificate of Incorporation, hereby certifies as follows:
1. The name of the corporation is AMF Bowling Mexico Holding,
Inc.
2. Its registered office in the State of Delaware is located at
1013 Centre Road, City of Wilmington, County of New Castle and the name of its
registered agent at such address is he Prentice-Hall Corporation System.
3. The date when revival of the Certificate of Incorporation of
this corporation is to commence is the 28th day of February, 1990 same being
prior to the date the Certificate of Incorporation became void. Revival of the
Certificate of Incorporation is to be perpetual.
4. This corporation was duly organized under the laws of Deleware
and carried on the business authorized by its Certificate of Incorporation until
the 1st day of March, 1990, at which time its Certificate of Incorporation
became inoperative and void for non-payment of taxes and this Certificate for
Renewal and Revival is filed by authority of the duly elected directors of the
corporation in accordance with the laws of Delaware.
IN WITNESS WHEREOF, said AMF Bowling Mexico Holding, Inc. in compliance
with Section 312 of Title 8 of the Deleware Code has caused this Certificate to
be signed by Cheryle Toy, its Assistant Secretary, this 25th day of January,
1996.
AMF Bowling Mexico Holding, Inc.
By: /s/ Cheryle Toy
-----------------------------
Cheryle Toy
<PAGE> 1
EXHIBIT 3.44
AMENDED AND RESTATED BY-LAWS
OF
AMF BOWLING MEXICO HOLDING, INC.
ARTICLE I
Meetings of Shareholders
1.1 Places of Meetings. All meetings of the shareholders shall be
held at such place, either inside or outside the State of Virginia, as from
time to time may be fixed by the Board of Directors.
1.2 Annual Meetings. The annual meeting of the shareholders, for the
election of Directors and transaction of such other business as may come before
the meetings, shall be held in each year on the second Tuesday in April, at 10
a.m., if that day is not a legal holiday in the Commonwealth of Virginia. If
that day is a legal holiday, the annual meeting shall be held on the next
succeeding day not such a legal holiday.
1.3 Special Meetings. A special meeting of the shareholders for any
purpose or purposes may be called at any time by the Chairman of the Board, the
President, or by a majority of the Board of Directors. At a special meeting no
business shall be transacted and no corporate action shall be taken other than
that stated in the notice of the meeting.
1.4 Notice of Meetings. Written or printed notice stating the place,
day and hour of every meeting of the shareholders and, in case of a special
meeting, the purpose or purposes for which the
<PAGE> 2
meeting is called, shall be mailed not less than ten nor more than sixty days
before the date of the meeting to each shareholder of record entitled to vote at
such meeting, at his address which appears in the share transfer books of the
Corporation. Such further notice shall be given as may be required by law, but
meetings may be held without notice if all the shareholders entitled to vote at
the meeting are present in person or by proxy or if notice is waived in writing
by those not present, either before or after the meeting.
1.5 Quorum. Any number of shareholders together holding at least a
majority of the outstanding shares of capital stock entitled to vote with
respect to the business to be transacted, who shall be present in person or
represented by proxy at any meeting duly called, shall constitute a quorum for
the transaction of business. If less than a quorum shall be in attendance at
the time for which a meeting shall have been called, the meeting may be
adjourned from time to time by a majority of the shareholders present or
represented by proxy without notice other than by announcement at the meeting.
1.6 Voting. At any meeting of the shareholders each shareholder of a
class entitled to vote on any matter coming before the meeting shall, as to such
matter, have one vote, in person or by proxy, for each share of capital stock of
such class standing in his name on the books of the Corporation on the date, not
more than seventy days prior to such meeting, fixed by the Board of Directors as
the record date for the purpose of determining shareholders entitled to vote.
Every proxy shall be in writing, dated and
<PAGE> 3
signed by the shareholder entitled to vote or his duly authorized
attorney-in-fact.
1.7 Inspectors. An appropriate number of inspectors for any
meeting of shareholders may be appointed by the Chairman of such meeting.
Inspectors so appointed will open and close the polls, will receive and take
charge of proxies and ballots, and will decide all questions as to the
qualifications of voters, validity of proxies and ballots, and the number of
votes properly cast.
ARTICLE II
Directors
2.1 General Powers. The property, affairs and business of the
Corporation shall be managed by the Board of Directors, and, except as otherwise
expressly provided by law, the Articles of Incorporation or these By-laws, all
of the powers of the Corporation shall be vested in such Board.
2.2 Number of Directors. The number of Directors constituting the
Board of Directors shall be at least one and not more than three. The number of
Directors may be increased or decreased from time to time by amendment to these
By-laws, but no decrease shall have the effect of shortening the term of an
incumbent Director.
2.3 Election and Removal of Directors; Quorum.
(a) Directors shall be elected at each annual meeting of
shareholders to succeed those Directors whose terms have expired and to fill any
vacancies then existing.
(b) Directors shall hold their offices for terms of one
<PAGE> 4
year and until their successors are elected. Any Director may be removed from
office at a meeting called expressly for that purpose by the vote of
shareholders holding a majority of the shares entitled to vote at an election of
Directors.
(c) Any vacancy occurring in the Board of Directors may be filled
by the affirmative vote of the majority of the remaining Directors though less
than a quorum of the Board, and the term of office of any Director so elected
shall expire at the next shareholders' meeting at which Directors are elected.
(d) A majority of the number of Directors elected and serving at
the time of any meeting shall constitute a quorum for the transaction of
business. The act of a majority of Directors present at a meeting at which a
quorum is present shall be the act of the Board of Directors. Less than a
quorum may adjourn any meeting.
2.4 Meetings of Directors. An annual meeting of the Board of
Directors shall be held as soon as practicable after the adjournment of the
annual meeting of shareholders at such place as the Board may designate. Other
meetings of the Board of Directors shall be held at places inside or outside
the State of Virginia and at times fixed by resolution of the Board, or upon
call of the Chairman of the Board, the President or any two of the Directors.
The Secretary or officer performing the Secretary's duties shall give not less
than twenty-four hours' notice either in person or by letter, telegraph or
telephone of all meetings of the Board of Directors, provided that notice need
not be given of the annual meeting or of regular meetings held at times and
places fixed by
<PAGE> 5
resolution of the Board. Meetings may be held at any time without notice if all
of the Directors are present, or if those not present waive notice in writing
either before or after the meeting. The notice of meetings of the Board need
not state the purpose of the meeting.
2.5 Duties. The Board of Directors shall designate depositories for
the corporation and shall designate and authorize the officers or other persons
to sign checks and bank drafts.
2.6 Compensation. By resolution of the Board, Directors may be
allowed a fee and expenses for attendance at all meetings, but nothing herein
shall preclude Directors from serving the Corporation in other capacities and
receiving compensation for such other services.
ARTICLE III
Committees
3.1 Executive Committee. The Board of Directors, by resolution
adopted by a majority of the number of Directors fixed by these By-laws, may
elect an Executive Committee which shall consist of not less than two Directors,
including the President. When the Board of Directors is not in session, the
Executive Committee shall have all power vested in the Board of Directors by
law, by the Articles of Incorporation, or by these By-laws, provided that the
Executive Committee shall not have power to (i) approve or recommend to
shareholders action that the Virginia Stock Corporation Act requires to be
approved by shareholders; (ii) fill vacancies on the Board or on any of its
committees; (iii) amend the Articles of Incorporation pursuant to Section
13.1-706 of the Virginia
<PAGE> 6
Code; (iv) adopt, amend, or repeal the By-laws; (v) approve a plan of merger or
share exchange not requiring shareholder approval; (vi) authorize or approve a
distribution, except according to a general formula or method prescribed by the
Board of Directors; or (vii) authorize or approve the issuance or sale or
contract for sale of shares, or determine the designation and relative rights,
preferences, and limitations of a class or series of shares, other than within
limits specifically prescribed by the Board of Directors. The Executive
Committee shall report at the next regular or special meeting of the Board of
Directors all action which the Executive Committee may have taken on behalf of
the Board since the last regular or special meeting of the Board of Directors.
3.2 Finance Committee. The Board of Directors, by resolution adopted
by a majority of the number of Directors fixed by these By-laws, may elect a
Finance Committee which shall consist of not less than two Directors. The
Finance Committee shall consider and report to the Board with respect to plans
for corporate expansion, capital structure and long-range financial
requirements. The committee shall also consider and report to the Board with
respect to such other matters relating to the financial affairs of the
Corporation as may be requested by the Board or the appropriate officers of the
Corporation. The committee shall report periodically to the Board of Directors
on all action which it may have taken.
<PAGE> 7
3.3 Other Committees. The Board of Directors, by resolution adopted
by a majority of the number of Directors fixed by these By-laws, may establish
such other standing or special committees of the Board as it may deem advisable,
consisting of not less than two Directors; and the members, terms and authority
of such committees shall be as set forth in the resolutions establishing the
same.
3.4 Meetings. Regular and special meetings of any Committee
established pursuant to this Article may be called and held subject to the same
requirements with respect to time, place and notice as are specified in these
By-laws for regular and special meetings of the Board of Directors.
3.5 Quorum and Manner of Acting. A majority of the members of any
Committee serving at the time of any meeting thereof shall constitute a quorum
for the transaction of business at such meeting. The action of a majority of
those members present at a Committee meeting at which a quorum is present shall
constitute the act of the Committee.
3.6 Terms of Office. Members of any Committee shall be elected as
above provided and shall hold office until their successors are elected by the
Board of Directors or until such Committee is dissolved by the Board of
Directors.
3.7 Resignation and Removal. Any member of a Committee may resign at
any time by giving written notice of his intention to do so to the President or
the Secretary of the Corporation, or may be removed, with or without cause, at
any time by such vote of the Board of Directors as would suffice for his
election.
3.8 Vacancies. Any vacancy occurring in a Committee
<PAGE> 8
resulting from any cause whatever may be filled by a majority of the number of
Directors fixed by these By-laws.
ARTICLE IV
Officers
4.1 Election of Officers; Terms. The Officers of the Corporation
shall consist of a President, a Secretary and a Treasurer. Other officers,
including a Chairman of the Board, one or more Vice Presidents (whose seniority
and titles, including Executive Vice Presidents and Senior Vice Presidents, may
be specified by the Board of Directors), and assistant and subordinate officers,
may from time to time be elected by the Board of Directors. All officers shall
hold office until the next annual meeting of the Board of Directors and until
their successors are elected. The President shall be chosen from among the
Directors. Any two officers may be combined in the same person as the Board of
Directors may determine.
4.2 Removal of Officers; Vacancies. Any officer of the Corporation
may be removed summarily with or without cause, at any time, by the Board of
Directors provided however that the removal of the Chairman of the Board shall
require the vote of two-thirds of the Directors. Vacancies may be filled by the
Board of Directors.
4.3 Duties. The officers of the Corporation shall have such duties as
generally pertain to their offices, respectively, as well as such powers and
duties as are prescribed by law or are hereinafter provided or as from time to
time shall be conferred by the Board of Directors. The Board of Directors may
require any
<PAGE> 9
officer to give such bond for the faithful performance of his duties as the
Board may see fit.
4.4 Duties of the President. The President shall be the chief
executive officer of the Corporation and shall be primarily responsible for the
implementation of policies of the Board of Directors. He shall have authority
over the general management and direction of the business and operations of the
Corporation and its divisions, if any, subject only to the ultimate authority of
the Board of Directors. He shall be a Director, and, except as otherwise
provided in these By-laws or in the resolutions establishing such committees, he
shall be ex officio a member of all Committees of the Board. In the absence of
the Chairman of the Board or if there is no such officer, the President shall
preside at all corporate meetings. He may sign and execute in the name of the
Corporation share certificates, deeds, mortgages, bonds, contracts or other
instruments except in cases where the signing and the execution thereof shall be
expressly delegated by the Board of Directors or by these By-laws to some other
officer or agent of the Corporation or shall be required by law otherwise to be
signed or executed. In addition, he shall perform all duties incident to the
office of the President and such other duties as from time to time may be
assigned to him by the Board of Directors.
4.5 Duties of the Vice-Presidents. Each Vice-President, if any, shall
have such powers and duties as may from time to time be assigned to him by the
President or the Board of Directors. Any Vice-President may sign and execute in
the name of the Corporation deeds, mortgages, bonds, contracts or other
instruments authorized
<PAGE> 10
by the Board of Directors, except where the signing and execution of such
documents shall be expressly delegated by the Board of Directors or the
President to some other officer or agent of the Corporation or shall be required
by law or otherwise to be signed or executed.
4.6 Duties of the Treasurer. The Treasurer shall have charge of and
be responsible for all funds, securities, receipts and disbursements of the
Corporation, and shall deposit all monies and securities of the Corporation in
such banks and depositories as shall be designated by the Board of Directors.
He shall be responsible (i) for maintaining adequate financial accounts and
records in accordance with generally accepted accounting practices; (ii) for the
preparation of appropriate operating budgets and financial statements; (iii) for
the preparation and filing of all tax returns required by law; and (iv) for the
performance of all duties incident to the office of Treasurer and such other
duties as from time to time may be assigned to him by the Board of Directors,
the Finance Committee or the Managing Director/President. The treasurer may
sign and execute in the name of the Corporation share certificates, deeds,
mortgages, bonds, contracts or other instruments, except in cases where the
signing and the execution thereof shall be expressly delegated by the Board of
Directors or by these By-laws to some other officer or agent of the Corporation
or shall be required by law or otherwise to be signed or executed.
4.7 Duties of the Secretary. The Secretary shall act as secretary of
all meetings of the Board of Directors and shareholders of the Corporation.
When requested, he shall also act
<PAGE> 11
as secretary of the meetings of the committees of the Board. He shall keep and
preserve the minutes of all such meetings in permanent books. He shall see that
all notices required to be given by the Corporation are duly given and served;
shall have custody of the seal of the Corporation and shall affix the seal or
cause it to be affixed to all share certificates of the Corporation and to all
documents the execution of which on behalf of the Corporation under its
corporate seal is duly authorized in accordance with law or the provisions of
these By-laws; shall have custody of all deeds, leases, contracts and other
important corporate documents; shall have charge of the books, records and
papers of the Corporation relating to its organization and management as a
Corporation; shall see that all reports, statements and other documents required
by law (except tax returns) are properly 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 of Directors or the President.
4.8 Compensation. The Board of Directors shall have authority to fix
the compensation of all officers of the Corporation.
ARTICLE V
Capital Stock
5.1 Certificates. The shares of capital stock of the Corporation
shall be evidenced by certificates in forms prescribed by the Board of Directors
and executed in any manner permitted by law and stating thereon the information
required by law. Transfer agents and/or registrars for one or more classes of
shares of the
<PAGE> 12
Corporation may be appointed by the Board of Directors and may be required to
countersign certificates representing shares of such class or classes. If any
officer whose signature or facsimile thereof shall have been used on a share
certificate shall for any reason cease to be an officer of the Corporation and
such certificate shall not then have been delivered by the Corporation, the
Board of Directors may nevertheless adopt such certificate and it may then be
issued and delivered as though such person had not ceased to be an officer of
the Corporation.
5.2 Lost, Destroyed and Mutilated Certificates. Holders of the shares
of the Corporation shall immediately notify the Corporation of any loss,
destruction or mutilation of the certificate therefor, and the Board of
Directors may in its discretion cause one or more new certificates for the same
number of shares in the aggregate to be issued to such shareholder upon the
surrender of the mutilated certificate or upon satisfactory proof of such loss
or destruction, and the deposit of a bond in such form and amount and with such
surety as the Board of Directors may require.
5.3 Transfer of Shares. The shares of the Corporation shall be
transferable or assignable only on the books of the Corporation by the holder in
person or by attorney on surrender of the certificate for such shares duly
endorsed and, if sought to be transferred by attorney, accompanied by a written
power of attorney to have the same transferred on the books of the Corporation.
The Corporation will recognize, however, the exclusive right of the person
registered on its books as the owner of shares to receive
<PAGE> 13
dividends and to vote as such owner.
5.4 Fixing Record Date. For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, or entitled to receive payment of any dividend, or in order
to make a determination of shareholders for any other proper purpose, the Board
of Directors may fix in advance a date as the record date for any such
determination of shareholders, such date in any case to be not more than seventy
days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If no record date is fixed for
the determination of shareholders entitled to notice of or to vote at a meeting
of shareholders, or of shareholders entitled to receive payment of a dividend,
the date on which notices of the meeting are mailed or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination shall
apply to any adjournment thereof unless the Board of Directors fixes a new
record date, which it shall do if the meeting is adjourned to a date more than
120 days after the date fixed for the original meeting.
ARTICLE VI
Miscellaneous Provisions
6.1 Seal. The seal of the Corporation shall consist of a flat-faced
circular die, of which there may be any number of
<PAGE> 14
counterparts, on which there shall be engraved the word "Seal".
6.2 Fiscal Year. The fiscal year of the Corporation shall end on such
date and shall consist of such accounting periods as may be fixed by the Board
of Directors.
6.3 Checks, Notes and Drafts. Checks, notes, drafts and other orders
for the payment of money shall be signed by such persons as the Board of
Directors from time to time may authorize. When the Board of Directors so
authorizes, however, the signature of any such person may be a facsimile.
6.4 Amendment of By-Laws. Unless proscribed by the Articles of
Incorporation, these By-laws may be amended or altered at any meeting of the
Board of Directors by affirmative vote of a majority of the number of Directors
fixed by these By-laws. The shareholders entitled to vote in respect of the
election of Directors, however, shall have the power to rescind, amend, alter or
repeal any By-laws and to enact By-laws which, if expressly so provided, may not
be amended, altered or repealed by the Board of Directors.
6.5 Voting of Shares Held. Unless otherwise provided by resolution of
the Board of Directors or of the Executive Committee, if any, the President may
from time to time appoint an attorney or attorneys or agent or agents of the
Corporation, in the name and on behalf of the Corporation, to cast the vote
which the Corporation may be entitled to cast as a shareholder or otherwise in
any other corporation, any of whose securities may be held by the Corporation,
at meetings of the holders of the shares or other securities of such other
corporation, or to consent in writing to
<PAGE> 15
any action by any such other corporation; and the President shall instruct the
person or persons so appointed as to the manner of casting such votes or giving
such consent and may execute or cause to be executed on behalf of the
Corporation, and under its corporate seal or otherwise, such written proxies,
consents, waivers or other instruments as may be necessary or proper in the
premises. In lieu of such appointment the President may himself attend any
meetings of the holders of shares or other securities of any such other
corporation and there vote or exercise any or all power of the Corporation as
the holder of such shares or other securities of such other corporation.
ARTICLE VII
Emergency By-laws
The Emergency By-laws provided in this Article VII shall be operative
during any emergency, notwithstanding any different provision in the preceding
Articles of these By-laws or in the Articles of Incorporation of the Corporation
or in the Virginia Stock Corporation Act (other than those provisions relating
to emergency by-laws). An emergency exists if a quorum of the Corporation's
Board of Directors cannot readily be assembled because of some catastrophic
event. To the extent not inconsistent with these Emergency By-laws, the By-laws
provided in the preceding Articles shall remain in effect during such emergency
and upon the termination of such emergency the Emergency By-laws shall cease to
be operative unless and until another such emergency shall occur.
During any such emergency:
(a) Any meeting of the Board of Directors may be called by
<PAGE> 16
any officer of the Corporation or by any Director. The notice thereof shall
specify the time and place of the meeting. To the extent feasible, notice shall
be given in accord with Section 2.4 above, but notice may be given only to such
of the Directors as it may be feasible to reach at the time, by such means as
may be feasible at the time, including publication or radio, and at a time less
than twenty-four hours before the meeting if deemed necessary by the person
giving notice. Notice shall be similarly given, to the extent feasible, to the
other persons referred to in (b) below.
(b) At any meeting of the Board of Directors, a quorum shall consist
of a majority of the number of Directors fixed at the time by Article II of the
By-laws. If the Directors present at any particular meeting shall be fewer than
the number required for such quorum, other persons present as referred to below,
to the number necessary to make up such quorum, shall be deemed Directors for
such particular meeting as determined by the following provisions and in the
following order of priority:
(i) Vice-Presidents not already serving as Directors, in the order
of their seniority of first election to such offices, or if two or more shall
have been first elected to such offices on the same day, in the order of their
seniority in age;
(ii) All other officers of the corporation in the order of their
seniority of first election to such offices, or if two or more shall have been
first elected to such offices on the same day, in the order of their seniority
in age; and
(iii) Any other persons that are designated on a list that shall
have been approved by the Board of Directors before the
<PAGE> 17
emergency, such persons to be taken in such order of priority and subject to
such conditions as, may be provided in the resolution approving the list.
(c) The Board of Directors, during, as well as before, any such
emergency, may provide, and from time to time modify, lines of succession in the
event that during such an emergency any or all officers or agents of the
Corporation shall for any reason be rendered incapable of discharging their
duties.
(d) The Board of Directors, during, as well as before, any such
emergency, may, effective in the emergency, change the principal office, or
designate several alternative offices, or authorize the officers so to do.
No officer, Director or employee shall be liable for action taken in
good faith in accordance with these Emergency By-laws.
These Emergency By-laws shall be subject to repeal or change by further
action of the Board of Directors or by action of the shareholders, except that
no such repeal or change shall modify the provisions of the next preceding
paragraph with regard to action or inaction prior to the time of such repeal or
change. Any such amendment of these Emergency By-laws may make any further or
different provision that may be practical and necessary for the circumstances of
the emergency.
<PAGE> 1
EXHIBIT 3.45
AMF BOWLING EIGHT, INC.
AMENDMENT
1. Name. The name of the corporation is AMF Bowling Eight, Inc.
2. Amendment. The Amendment is to change the name of the corporation
from AMF Bowling Eight, Inc. to Boliches AMF, Inc.
3. Action by Directors. On November 1, 1991, all of the directors of
the corporation, by signing a consent in writing that set forth the proposed
amendment, found that the proposed amendment was in the best interest of the
corporation and directed that it be submitted to the shareholders of the
corporation with the request that they approve and adopt the same by signing a
consent in writing.
4. Action by Shareholders. On November 1, 1991, following the action of
the directors, the shareholders of the corporation, by signing a consent in
writing that set forth the proposed amendment, approved and adopted the same.
The number of shares outstanding and entitled to vote on the proposed amendment,
being of a single class, was 100.
IN WITNESS WHEREOF, the undersigned Secretary of AMF Bowling Eight,
Inc. has executed these Articles of Amendment as of this 5th day of November,
1991.
AMF BOWLING EIGHT, INC.
By: /s/ Daniel M. McCormack
--------------------------------
Daniel M. McCormack
Vice President and Secretary
<PAGE> 2
AMF BOWLING SEVEN, INC.
AMENDMENT
1. Name. The name of the corporation is AMF Bowling Seven, Inc.
2. Amendment. The amendment is to change the name of the corporation
from AMF Bowling Seven, Inc. to AMF Bowling Eight, Inc.
3. Action by Sole Director. On December 1, 1989, the sole director of
the corporation who is the sole director named in its Articles of Incorporation,
by signing a consent in writing that set forth the proposed amendment, found
that the proposed amendment was in the best interest of the corporation and
approved and adopted the amendment. There are no other directors or officers of
the corporation. The corporation has taken no action since the date of its
incorporation and, no shares having been issued, there are no shareholders to
vote on the proposed amendment.
IN WITNESS WHEREOF, the undersigned Chairman of the Board of AMP
Bowling Seven, Inc. has executed this Article of Amendment this 1st day of
December, 1989.
AMF BOWLING SEVEN, INC.
By: /s/ William H. Goodwin, Jr.
--------------------------
William H. Goodwin, Jr.
Chairman of the Board
<PAGE> 3
ARTICLES OF INCORPORATION
OF
AMF BOWLING SEVEN, INC.
I.
The name of the Corporation is AMF Bowling Seven, Inc.
II.
The purpose for which the Corporation is formed is to transact any or
all lawful business, not required to be specifically stated in these Articles,
for which corporations may be incorporated under the Virginia Stock Corporation
Act, as amended from time to time.
III.
The number of shares which the Corporation shall have authority to
issue shall be 10,000 shares of the par value of $1.00 each. No holder of shares
of any class of the Corporation shall have any preemptive or preferential right
to purchase or subscribe to (i) any shares of any class of the corporation,
whether now or hereafter authorized; (ii) any warrants, rights or options to
purchase any such shares, of (iii) any securities or obligations convertible
into any such shares or into warrants, rights, or options to purchase any such
shares.
IV.
The initial registered office shall be located at 901 East Cary Street,
Suite 1400, Richmond, VA 23219, which is located in the City of Richmond and the
initial registered agent shall be Teri Scott Lovelace, who is a resident of
Virginia and a member of the Virginia State Bar, and whose
<PAGE> 4
business address is the same as the address of the initial registered office.
V.
The number of Directors constituting the initial Board of Directors
shall be one, and the name and addressee of the person who is to serve as the
initial Director is as follows:
William H. Goodwin, Jr.
901 E. Cary Street
Suite 1400
Richmond, Virginia 23219
VI.
1. In every instance permitted by the Virginia Stock Corporation Act,
as it exists on the date hereof or may hereafter be amended, the liability of a
director or officer of the Corporation to the Corporation or its shareholders
arising out of a single transaction, occurrence or course of conduct shall be
limited to one dollar.
2. To the full extent permitted and in the manner prescribed by the
Virginia Stock Corporation Act and any other applicable law, the Corporation
shall indemnify a Director or officer of the Corporation who is or was a party
to any proceeding by reason of the fact that he is or was such a Director or
officer 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, employee benefit plan or other enterprise. The Board of Directors is
hereby empowered, by majority vote of a quorum of disinterested Directors, to
contract in advance to indemnify any Director or officer.
3. The Board of Directors is hereby empowered, by majority
<PAGE> 5
vote of a quorum of disinterested Directors, to cause the Corporation to
indemnify or contract in advance to indemnify any person not specified In
Section 2 of this Article who was or is a party to any proceeding, by reason of
the fact that he is or was an 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, employee
benefit plan or other enterprise, to the same extent as if such person were
specified as one to whom indemnification is granted in Section 2.
4. The Corporation may purchase and maintain insurance to indemnify it
against the whole or any portion of the liability assumed by it in accordance
with this Article and may also procure insurance, in such amounts as the Board
of Directors may determine, on behalf of any person who is or was a Director,
officer, employee or agent of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise, against any liability asserted
against or incurred by any such person in any such capacity or arising from his
status as such, whether or not the Corporation would have power to indemnify him
against such liability under the provisions of this Article.
5. In the event there has been a change in the composition of a
majority of the Board of Directors after the date of the alleged act or omission
with respect to which indemnification is claimed, any determination as to
indemnification and advancement of expenses with respect to any claim for
indemnification made pursuant to Section 2 of this Article VI shall be made by
special legal counsel agreed upon by the Board of Directors and the
<PAGE> 6
proposed indemnitee. If the Board of Directors and the proposed indemnitee are
unable to agree upon such special legal counsel, the Board of Directors and the
proposed indemnitee each shall select a nominee, and the nominees shall select
such special legal counsel.
6. The provisions of this Article VI shall be applicable to all
actions, claims, suits or proceedings commenced after the adoption hereof,
whether arising from any action taken or failure to act before or after such
adoption. No amendment, modification or repeal of this Article shall diminish
the rights provided hereby or diminish the right to indemnification with respect
to any claim, issue or matter in any then pending or subsequent proceeding that
is based in any material respect on any alleged action or failure to act prior
to such amendment, modification or repeal.
7. Reference herein to Directors, officers, employees or agents shall
include former Directors, officers, employees and agents and their respective
heirs, executors and administrators.
VII.
The Board of Directors shall have the power to make, amend or repeal
bylaws of the Corporation.
Dated: May 9, 1989
/s/ Teri Scott Lovelace
------------------------
Teri Scott Lovelace
Incorporator
<PAGE> 1
EXHIBIT 3.46
BY-LAWS
OF
AMF BOWLING EIGHT, INC.
ARTICLE I
Meetings of Shareholders
1.1 Places of Meetings. All meetings of the shareholders shall be held
at such place, either inside or outside the State of Virginia, as from time to
time may be fixed by the Board of Directors.
1.2 Annual Meetings. The annual meeting of the shareholders, for the
election of Directors and transaction of such other business as may come before
the meetings, shall be held in each year on the second Tuesday in April, at 10
a.m., if that day is not a legal holiday in the Commonwealth of Virginia. If
that day is a legal holiday, the annual meeting shall be held on the next
succeeding day not such a legal holiday.
1.3 Special Meetings. A special meeting of the shareholders for any
purpose or purposes may be called at any time by the Chairman of the Board, the
President, or by a majority of the Board of Directors. At a special meeting no
business shall be transacted and no corporate action shall be taken other than
that stated in the notice of the meeting.
1.4 Notice of Meetings. Written or printed notice stating the place,
day and hour of every meeting of the shareholders and, in case of a special
meeting, the purpose or purposes for which
<PAGE> 2
the meeting is called, shall be mailed not less than ten nor more than sixty
days before the date of the meeting to each shareholder of record entitled to
vote at such meeting, at his address which appears in the share transfer books
of the Corporation. Such further notice shall be given as may be required by
law, but meetings may be held without notice if all the shareholders entitled to
vote at the meeting are present in person or by proxy or if notice is waived in
writing by those not present, either before or after the meeting.
1.5 Quorum. Any number of shareholders together holding at least a
majority of the outstanding shares of capital stock entitled to vote with
respect to the business to be transacted, who shall be present in person or
represented by proxy at any meeting duly called, shall constitute a quorum for
the transaction of business. If less than a quorum shall be in attendance at the
time for which a meeting shall have been called, the meeting may be adjourned
from time to time by a majority of the shareholders present or represented by
proxy without notice other than by announcement at the meeting.
1.6 Voting. At any meeting of the shareholders each shareholder of a
class entitled to vote on any matter coming before the meeting shall, as to such
matter, have one vote, in person or by proxy, for each share of capital stock of
such class standing in his name on the books of the Corporation on the date, not
more than seventy days prior to such meeting, fixed by the Board of Directors as
the record date for the purpose of determining shareholders entitled to vote.
Every proxy shall be
<PAGE> 3
in writing, dated and signed by the shareholder entitled to vote or his duly
authorized attorney-in-fact.
1.7 Inspectors. An appropriate number of inspectors for any meeting of
shareholders may be appointed by the Chairman of such meeting. Inspectors so
appointed will open and close the polls, will receive and take charge of proxies
and ballots, and will decide all questions as to the qualifications of voters,
validity of proxies and ballots, and the number of votes properly cast.
ARTICLE II
Directors
2.1 General Powers. The property, affairs and business of the
Corporation shall be managed by the Board of Directors, and, except as otherwise
expressly provided by law, the Articles of Incorporation or these By-laws, all
of the powers of the Corporation shall be vested in such Board.
2.2 Number of Directors. The number of Directors constituting the Board
of Directors shall be at least one and not more than three. The number of
Directors may be increased or decreased from time to time by amendment to these
By-laws, but no decrease shall have the effect of shortening the term of an
incumbent Director.
2.3 Election and Removal of Directors; Quorum.
(a) Directors shall be elected at each annual meeting of
shareholders to succeed those Directors whose terms have expired and to fill any
vacancies then existing.
(b) Directors shall hold their offices for terms of one
<PAGE> 4
in writing, dated and signed by the shareholder entitled to vote or his duly
authorized attorney-in-fact.
1.7 Inspectors. An appropriate number of inspectors for any meeting of
shareholders may be appointed by the Chairman of such meeting. Inspectors so
appointed will open and close the polls, will receive and take charge of proxies
and ballots, and will decide all questions as to the qualifications of voters,
validity of proxies and ballots, and the number of votes properly cast.
ARTICLE II
Directors
2.1 General Powers. The property, affairs and business of the
Corporation shall be managed by the Board of Directors, and, except as otherwise
expressly provided by law, the Articles of Incorporation or these By-laws, all
of the powers of the Corporation shall be vested in such Board.
2.2 Number of Directors. The number of Directors constituting the Board
of Directors shall be not less than two or more than five. The number of
Directors may be increased or decreased from time to time by amendment to these
By-laws, but no decrease shall have the effect of shortening the term of an
incumbent Director.
2.3 Election and Removal of Directors; Quorum.
(a) Directors shall be elected at each annual meeting of
shareholders to succeed those Directors whose terms have expired and to fill any
vacancies then existing.
(b) Directors shall hold their offices for terms of
<PAGE> 5
one year and until their successors are elected. Any Director may be removed
from office at a meeting called expressly for that purpose by the vote of
shareholders holding a majority of the shares entitled to vote at an election of
Directors.
(c) Any vacancy occurring in the Board of Directors may be filled
by the affirmative vote of the majority of the remaining Directors though less
than a quorum of the Board, and the term of office of any Director so elected
shall expire at the next shareholders' meeting at which Directors are elected.
(d) A majority of the number of Directors elected and serving at
the time of any meeting shall constitute a quorum for the transaction of
business. The act of a majority of Directors present at a meeting at which a
quorum is present shall be the act of the Board of Directors. Less than a quorum
may adjourn any meeting.
2.4 Meetings of Directors. An annual meeting of the Board of Directors
shall be held as soon as practicable after the adjournment of the annual meeting
of shareholders at such place as the Board may designate. Other meetings of the
Board of Directors shall be held at places inside or outside the State of
Virginia and at times fixed by resolution of the Board, or upon call of the
Chairman of the Board, the President or any two of the Directors. The Secretary
or officer performing the Secretary's duties shall give not less than
twenty-four hours' notice either in person or by letter, telegraph or telephone
of all meetings of the Board of Directors, provided that notice need not be
given of the annual meeting or of regular meetings held at
<PAGE> 6
times and places fixed by resolution of the Board. Meetings may be held at any
time without notice if all of the Directors are present, or if those not present
waive notice in writing either before or after the meeting. The notice of
meetings of the Board need not state the purpose of the meeting.
2.5 Compensation. By resolution of the Board, Directors may be allowed
a fee and expenses for attendance at all meetings, but nothing herein shall
preclude Directors from serving the Corporation in other capacities and
receiving compensation for such other services.
ARTICLE III
Committees
3.1 Executive Committee. The Board of Directors, by resolution adopted
by a majority of the number of Directors fixed by these By-laws, may elect an
Executive Committee which shall consist of not less than two Directors,
including the President. When the Board of Directors is not in session, the
Executive Committee shall have all power vested in the Board of Directors by
law, by the Articles of Incorporation, or by these By-laws, provided that the
Executive Committee shall not have power to (i) approve or recommend to
shareholders action that the Virginia Stock Corporation Act requires to be
approved by shareholders; (ii) fill vacancies on the Board or on any of its
committees; (iii) amend the Articles of Incorporation pursuant to Section
13.1-706 of the Virginia Code; (iv) adopt, amend, or repeal the By-laws; (v)
approve a plan of merger or share exchange not requiring shareholder approval;
(vi) authorize or approve a distribution,
<PAGE> 7
except according to a general formula or method prescribed by the Board of
Directors; or (vii) authorize or approve the issuance or sale or contract for
sale of shares, or determine the designation and relative rights, preferences,
and limitations of a class or series of shares, other than within limits
specifically prescribed by the Board of Directors. The Executive Committee shall
report at the next regular or special meeting of the Board of Directors all
action which the Executive Committee may have taken on behalf of the Board since
the last regular or special meeting of the Board of Directors.
3.2 Finance Committee. The Board of Directors, by resolution adopted by
a majority of the number of Directors fixed by these By-laws, may elect a
Finance Committee which shall consist of not less than two Directors. The
Finance Committee shall consider and report to the Board with respect to plans
for corporate expansion, capital structure and long-range financial
requirements. The Committee shall also consider and report to the Board with
respect to such other matters relating to the financial affairs of the
Corporation as may be requested by the Board or the appropriate officers of the
Corporation. The Committee shall report periodically to the Board of Directors
on all action which it may have taken.
3.3 Other Committees. The Board of Directors, by resolution adopted by
a majority of the number of Directors fixed by these By-laws, may establish such
other standing or special committees of the Board as it may deem advisable,
consisting of not less than two Directors; and the members, terms and authority
<PAGE> 8
of such committees shall be as set forth in the resolutions establishing the
same.
3.4 Meetings. Regular and special meetings of any Committee established
pursuant to this Article may be called and held subject to the same requirements
with respect to time, place and notice as are specified in these By-laws for
regular and special meetings of the Board of Directors.
3.5 Quorum and Manner of Acting. A majority of the members of any
Committee serving at the time of any meeting thereof shall constitute a quorum
for the transaction of business at such meeting. The action of a majority of
those members present at a Committee meeting at which a quorum is present shall
constitute the act of the Committee.
3.6 Terms of Office. Members of any Committee shall be elected as above
provided and shall hold office until their successors are elected by the Board
of Directors or until such Committee is dissolved by the Board of Directors.
3.7 Resignation and Removal. Any member of a Committee may resign at
any time by giving written notice of his intention to do so to the President or
the Secretary of the Corporation, or may be removed, with or without cause, at
any time by such vote of the Board of Directors as would suffice for his
election.
3.8 Vacancies. Any vacancy occurring in a Committee resulting from any
cause whatever may be filled by a majority of the number of Directors fixed by
these By-laws.
ARTICLE IV
Officers
<PAGE> 9
4.1 Election of Officers; Terms. The Officers of the Corporation shall
consist of a President, a Secretary and a Treasurer. Other officers, including a
Chairman of the Board, one or more Vice Presidents (whose seniority and titles,
including Executive Vice Presidents and Senior Vice Presidents, may be specified
by the Board of Directors), and assistant and subordinate officers, may from
time to time be elected by the Board of Directors. All officers shall hold
office until the next annual meeting of the Board of Directors and until their
successors are elected. The President shall be chosen from among the Directors.
Any two officers may be combined in the same person as the Board of Directors
may determine.
4.2 Removal of Officers; Vacancies. Any officer of the Corporation may
be removed summarily with or without cause, at any time, by the Board of
Directors provided however that the removal of the Chairman of the Board shall
require the vote of two-thirds of the Directors. Vacancies may be filled by the
Board of Directors.
4.3 Duties. The officers of the Corporation shall have such duties as
generally pertain to their offices, respectively, as well as such powers and
duties as are prescribed by law or are hereinafter provided or as from time to
time shall be conferred by the Board of Directors. The Board of Directors may
require any officer to give such bond for the faithful performance of his duties
as the Board may see fit.
4.4 Duties of the President. The President shall be the chief executive
officer of the Corporation and shall be primarily
<PAGE> 10
responsible for the implementation of policies of the Board of Directors. He
shall have authority over the general management and direction of the business
and operations of the Corporation and its divisions, if any, subject only to the
ultimate authority of the Board of Directors. He shall be a Director, and,
except as otherwise provided in these By-laws or in the resolutions establishing
such committees, he shall be ex officio a member of all Committees of the Board.
In the absence of the Chairman of the Board or if there is no such officer, the
President shall preside at all corporate meetings. He may sign and execute in
the name of the Corporation share certificates, deeds, mortgages, bonds,
contracts or other instruments except in cases where the signing and the
execution thereof shall be expressly delegated by the Board of Directors or by
these By-laws to some other officer or agent of the Corporation or shall be
required by law otherwise to be signed or executed. In addition, he shall
perform all duties incident to the office of the President and such other duties
as from time to time may be assigned to him by the Board of Directors.
4.5 Duties of the Vice-Presidents. Each Vice-President, if any, shall
have such powers and duties as may from time to time be assigned to him by the
President or the Board of Directors. Any Vice-President may sign and execute in
the name of the Corporation deeds, mortgages, bonds, contracts or other
instruments authorized by the Board of Directors, except where the signing and
execution of such documents shall be expressly delegated by the Board of
Directors or the President to some
<PAGE> 11
other officer or agent of the Corporation or shall be required by law or
otherwise to be signed or executed.
4.6 Duties of the Treasurer. The Treasurer shall have charge of and be
responsible for all funds, securities, receipts and disbursements of the
Corporation, and shall deposit all monies and securities of the Corporation in
such banks and depositories as shall be designated by the Board of Directors. He
shall be responsible (i) for maintaining adequate financial accounts and records
in accordance with generally accepted accounting practices; (ii) for the
preparation of appropriate operating budgets and financial statements; (iii) for
the preparation and filing of all tax returns required by law; and (iv) for the
performance of all duties incident to the office of Treasurer and such other
duties as from time to time may be assigned to him by the Board of Directors,
the Finance Committee or the Managing Director/President. The treasurer may sign
and execute in the name of the Corporation share certificates, deeds, mortgages,
bonds, contracts or other instruments, except in cases where the signing and the
execution thereof shall be expressly delegated by the Board of Directors or by
these By-laws to some other officer or agent of the Corporation or shall be
required by law or otherwise to be signed or executed.
4.7 Duties of the Secretary. The Secretary shall act as secretary of
all meetings of the Board of Directors and shareholders of the Corporation. When
requested, he shall also act as secretary of the meetings of the committees of
the Board. He shall keep and preserve the minutes of all such meetings in
<PAGE> 12
permanent books. He shall see that all notices required to be given by the
Corporation are duly given and served; shall have custody of the seal of the
Corporation and shall affix the seal or cause it to be affixed to all share
certificates of the Corporation and to all documents the execution of which on
behalf of the Corporation under its corporate seal is duly authorized in
accordance with law or the provisions of these By-laws; shall have custody of
all deeds, leases, contracts and other important corporate documents; shall have
charge of the books, records and papers of the Corporation relating to its
organization and management as a Corporation; shall see that all reports,
statements and other documents required by law (except tax returns) are properly
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 of Directors or the President.
4.8 Compensation. The Board of Directors shall have authority to fix
the compensation of all officers of the Corporation.
ARTICLE V
Capital Stock
5.1 Certificates. The shares of capital stock of the Corporation shall
be evidenced by certificates in forms prescribed by the Board of Directors and
executed in any manner permitted by law and stating thereon the information
required by law. Transfer agents and/or registrars for one or more classes of
shares of the Corporation may be appointed by the Board of
<PAGE> 13
Directors and may be required to countersign certificates representing shares of
such class or classes. If any officer whose signature or facsimile thereof shall
have been used on a share certificate shall for any reason cease to be an
officer of the Corporation and such certificate shall not then have been
delivered by the Corporation, the Board of Directors may nevertheless adopt such
certificate and it may then be issued and delivered as though such person had
not ceased to be an officer of the Corporation.
5.2 Lost, Destroyed and Mutilated Certificates. Holders of the shares
of the Corporation shall immediately notify the Corporation of any loss,
destruction or mutilation of the certificate therefor, and the Board of
Directors may in its discretion cause one or more new certificates for the same
number of shares in the aggregate to be issued to such shareholder upon the
surrender of the mutilated certificate or upon satisfactory proof of such loss
or destruction, and the deposit of a bond in such form and amount and with such
surety as the Board of Directors may require.
5.3 Transfer of Shares. The shares of the Corporation shall be
transferable or assignable only on the books of the Corporation by the holder in
person or by attorney on surrender of the certificate for such shares duly
endorsed and, if sought to be transferred by attorney, accompanied by a written
power of attorney to have the same transferred on the books of the Corporation.
The Corporation will recognize, however, the exclusive right of the person
registered on its books as the
<PAGE> 14
owner of shares to receive dividends and to vote as such owner.
5.4 Fixing Record Date. For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, or entitled to receive payment of any dividend, or in order
to make a determination of shareholders for any other proper purpose, the Board
of Directors may fix in advance a date as the record date for any such
determination of shareholders, such date in any case to be not more than seventy
days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If no record date is fixed for
the determination of shareholders entitled to notice of or to vote at a meeting
of shareholders, or of shareholders entitled to receive payment of a dividend,
the date on which notices of the meeting are mailed or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination shall
apply to any adjournment thereof unless the Board of Directors fixes a new
record date, which it shall do if the meeting is adjourned to a date more than
120 days after the date fixed for the original meeting.
ARTICLE VI
Miscellaneous Provisions
6.1 Seal. The seal of the Corporation shall consist of a flat-faced
circular die, of which there may be any number of
<PAGE> 15
counterparts, on which there shall be engraved the word "Seal".
6.2 Fiscal Year. The fiscal year of the Corporation shall end on such
date and shall consist of such accounting periods as may be fixed by the Board
of Directors.
6.3 Checks, Notes and Drafts. Checks, notes, drafts and other orders
for the payment of money shall be signed by such persons as the Board of
Directors from time to time may authorize. When the Board of Directors so
authorizes, however, the signature of any such person may be a facsimile.
6.4 Amendment of By-Laws. Unless proscribed by the Articles of
Incorporation, these By-laws may be amended or altered at any meeting of the
Board of Directors by affirmative vote of a majority of the number of Directors
fixed by these By-laws. The shareholders entitled to vote in respect of the
election of Directors, however, shall have the power to rescind, amend, alter or
repeal any By-laws and to enact By-laws which, if expressly so provided, may not
be amended, altered or repealed by the Board of Directors.
6.5 Voting of Shares Held. Unless otherwise provided by resolution of
the Board of Directors or of the Executive Committee, if any, the President may
from time to time appoint an attorney or attorneys or agent or agents of the
Corporation, in the name and on behalf of the Corporation, to cast the vote
which the Corporation may be entitled to cast as a shareholder or otherwise in
any other corporation, any of whose securities may be held by the Corporation,
at meetings of the holders of the shares or other securities of such other
corporation, or to
<PAGE> 16
consent in writing to any action by any such other corporation; and the
President shall instruct the person or persons so appointed as to the manner of
casting such votes or giving such consent and may execute or cause to be
executed on behalf of the Corporation, and under its corporate seal or
otherwise, such written proxies, consents, waivers or other instruments as may
be necessary or proper in the premises. In lieu of such appointment the
President may himself attend any meetings of the holders of shares or other
securities of any such other corporation and there vote or exercise any or all
power of the Corporation as the holder of such shares or other securities of
such other corporation.
ARTICLE VII
Emergency By-laws
The Emergency By-laws provided in this Article VII shall be operative
during any emergency, notwithstanding any different provision in the preceding
Articles of these By-laws or in the Articles of Incorporation of the Corporation
or in the Virginia Stock Corporation Act (other than those provisions relating
to emergency by-laws). An emergency exists if a quorum of the Corporation's
Board of Directors cannot readily be assembled because of some catastrophic
event. To the extent not inconsistent with these Emergency By-laws, the By-laws
provided in the preceding Articles shall remain in effect during such emergency
and upon the termination of such emergency the Emergency By-laws shall cease to
be operative unless and until another such emergency shall occur.
<PAGE> 17
During any such emergency:
(a) Any meeting of the Board of Directors may be called by any officer
of the Corporation or by any Director. The notice thereof shall specify the time
and place of the meeting. To the extent feasible, notice shall be given in
accord with Section 2.4 above, but notice may be given only to such of the
Directors as it may be feasible to reach at the time, by such means as may be
feasible at the time, including publication or radio, and at a time less than
twenty-four hours before the meeting if deemed necessary by the person giving
notice. Notice shall be similarly given, to the extent feasible, to the other
persons referred to in (b) below.
(b) At any meeting of the Board of Directors, a quorum shall consist of
a majority of the number of Directors fixed at the time by Article II of the
By-laws. If the Directors present at any particular meeting shall be fewer than
the number required for such quorum, other persons present as referred to below,
to the number necessary to make up such quorum, shall be deemed Directors for
such particular meeting as determined by the following provisions and in the
following order of priority:
(i) Vice-Presidents not already serving as Directors, in the order
of their seniority of first election to such offices, or if two or more shall
have been first elected to such offices on the same day, in the order of their
seniority in age;
(ii) All other officers of the Corporation in the order of their
seniority of first election to such offices, or if two or more shall have been
first elected to such offices on the same
<PAGE> 18
day, in the order of their seniority in age; and
(iii) Any other persons that are designated on a list that shall
have been approved by the Board of Directors before the emergency, such persons
to be taken in such order of priority and subject to such conditions as may be
provided in the resolution approving the list.
(c) The Board of Directors, during, as well as before, any such
emergency, may provide, and from time to time modify, lines of succession in the
event that during such an emergency any or all officers or agents of the
Corporation shall for any reason be rendered incapable of discharging their
duties.
(d) The Board of Directors, during, as well as before, any such
emergency, may, effective in the emergency, change the principal office, or
designate several alternative offices, or authorize the officers so to do.
No officer, Director or employee shall be liable for action taken in
good faith in accordance with these Emergency By-laws.
These Emergency By-laws shall be subject to repeal or change by further
action of the Board of Directors or by action of the shareholders, except that
no such repeal or change shall modify the provisions of the next preceding
paragraph with regard to action or inaction prior to the time of such repeal or
change. Any such amendment of these Emergency By-laws may make any further or
different provision that may be practical and necessary for the circumstances of
the emergency.
<PAGE> 1
EXHIBIT 3.47
COMMONWEALTH FOUR CORPORATION
AMENDMENT TO ARTICLES OF INCORPORATION
1. Name. The name of the corporation is Commonwealth Four
Corporation.
2. Amendment. The Amendment is to change the name of the
corporation from Commonwealth Four Corporation to AMF BCO-China, Inc.
3. Action by Sole Director. On February 7, 1995, the sole
director of the corporation, who is the sole director named in the Articles of
Incorporation, by signing a consent in writing that sets forth the proposed
amendment, found that the proposed amendment was in the best interest of the
corporation and approved and adopted the amendment. There are no other directors
or officers of the corporation. The corporation has taken no action since the
date of its incorporation and, no shares having been issued, there are no
shareholders to vote on the proposed amendment.
IN WITNESS WHEREOF, the undersigned Chairman of the Board of
Commonwealth Four Corporation has executed this Article of Amendment this 8th
day of February, 1995.
Commonwealth Four Corporation
By: /s/ William H. Goodwin, Jr.
----------------------------------
William H. Goodwin, Jr.
Chairman of the Board
<PAGE> 2
ARTICLES OF INCORPORATION
OF
COMMONWEALTH FOUR CORPORATION
I.
The name of the Corporation is Commonwealth Four Corporation.
II.
The purpose for which the Corporation is formed is to transact any or
all lawful business, not required to be specifically stated in these Articles,
for which corporations may be incorporated under the Virginia Stock Corporation
Act, as amended from time to time.
III.
The number of shares which the Corporation shall have authority to
issue shall be 10,000 shares of the par value of $1.00 each. No holder of shares
of any class of the Corporation shall have any preemptive or preferential right
to purchase or subscribe to (i) any shares of any class of the corporation,
whether now or hereafter authorized; (ii) any warrants, rights or options to
purchase any such shares; of (iii) any securities or obligations
convertible into any such shares or into warrants, rights, or options to
purchase any such shares.
IV.
The initial registered office shall be located at 901 East Cary Street,
Suite 1400, in the City of Richmond, VA 23219, and the initial registered agent
shall be Daniel M. McCormack, who is a resident of Virginia and a member of the
Virginia State Bar, and whose business address is the same as the address of the
initial registered office.
<PAGE> 3
V.
The number of Directors constituting the initial Board of Directors
shall be one, and the name and address of the person who is to serve as the
initial Director is as follows:
William H. Goodwin, Jr.
901 East Cary Street
Suite 1400
Richmond, Virginia 23219
VI.
1. In every instance permitted by the Virginia Stock Corporation
Act, as it exists on the date hereof or may hereafter be amended, the liability
of a director or officer of the Corporation to the Corporation or its share-
holders arising out of a single transaction, occurrence or course of conduct
shall be limited to one dollar.
2. To the full extent permitted and in the manner prescribed by
the Virginia Stock Corporation Act and any other applicable law, the Corporation
shall indemnify a Director or officer of the Corporation who is or was a party
to any proceeding by reason of the fact that he is or was such a Director or
officer 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, employee benefit plan or other enterprise. The Board of Directors is
hereby empowered, by majority vote of a quorum of disinterested Directors, to
contract in advance to indemnify any Director or officer.
3. The Board of Directors is hereby empowered, by majority vote
of a quorum of disinterested Directors, to cause the Corporation to indemnify or
contract in advance to indemnify any person not specified in Section 2 of this
Article who was or is a
<PAGE> 4
party to any proceeding, by reason of the fact that he is or was an 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, employee benefit plan or other enterprise, to the same
extent as if such person were specified as one to whom indemnification is
granted in Section 2.
4. The Corporation may purchase and maintain insurance to
indemnify it against the whole or any portion of the liability assumed by it in
accordance with this Article and may also procure insurance, in such amounts as
the Board of Directors may determine, on behalf of any person who is or was a
Director, officer, employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise, against any liability
asserted against or incurred by any such person in any such capacity or arising
from his status as such, whether or not the Corporation would have power to
indemnify him against such liability under the provisions of this Article.
5. In the event there has been a change in the composition of a
majority of the Board of Directors after the date of the alleged act or omission
with respect to which indemnification is claimed, any determination as to
indemnification and advancement of expenses with respect to any claim for
indemnification made pursuant to Section 2 of this Article VI shall be made by
special legal counsel agreed upon by the Board of Directors and the proposed
indemnitee. If the Board of Directors and the proposed indemnitee are unable
to agree upon such special legal counsel, the Board of Directors and the
proposed indemnitee each shall select a
<PAGE> 5
nominee, and the nominees shall select special legal counsel.
6. The provisions of this Article VI shall be applicable to all
actions, claims, suits or proceedings commenced after the adoption hereof,
whether arising from any action taken or failure to act before or after such
adoption. No amendment, modification or repeal of this Article shall diminish
the rights provided hereby or diminish the right to indemnification with respect
to any claim, issue or matter in any then pending or subsequent proceeding that
is based in any material respect on any alleged action or failure to act prior
to such amendment, modification or repeal.
7. Reference herein to Directors, officers, employees or agents
shall include former Directors, officers, employees and agents and their
respective heirs, executors and administrators.
VII.
The Board of Directors shall have the power to make, amend or repeal
bylaws of the Corporation.
Dated: January 29, 19992
/s/ Daniel M. McCormack
------------------------------------
Daniel M. McCormack
Incorporator
<PAGE> 1
EXHIBIT 3.48
BY-LAWS
OF
AMF BCO-CHINA, INC.
ARTICLE I
Meetings of Shareholders
1.1 Places of Meetings. All meetings of the shareholders shall be held
at such place, either inside or outside the State of Virginia, as from time to
time may be fixed by the Board of Directors.
1.2 Annual Meetings. The annual meeting of the shareholders, for the
election of Directors and transaction of such other business as may come before
the meetings, shall be held in each year on the second Tuesday in April, at 10
a.m., if that day is not a legal holiday in the Commonwealth of Virginia. If
that day is a legal holiday, the annual meeting shall be held on the next
succeeding day not such a legal holiday.
1.3 Special Meetings. A special meeting of the shareholders for any
purpose or purposes may be called at any time by the Chairman of the Board, the
President, or by a majority of the Board of Directors. At a special meeting no
business shall be transacted and no corporate action shall be taken other than
that stated in the notice of the meeting.
1.4 Notice of Meetings. Written or printed notice stating the place,
day and hour of every meeting of the shareholders and, in case of a special
meeting, the purpose or purposes for which the meeting is called, shall be
mailed not less than ten nor more than sixty days before the date
<PAGE> 2
of the meeting to each shareholder of record entitled to vote at such meeting,
at his address which appears in the share transfer books of the Corporation.
Such further notice shall be given as may be required by law, but meetings may
be held without notice if all the shareholders entitled to vote at the meeting
are present in person or by proxy or if notice is waived in writing by those not
present, either before or after the meeting.
1.5 Quorum. Any number of shareholders together holding at least a
majority of the outstanding shares of capital stock entitled to vote with
respect to the business to be transacted, who shall be present in person or
represented by proxy at any meeting duly called, shall constitute a quorum for
the transaction of business. If less than a quorum shall be in attendance at the
time for which a meeting shall have been called, the meeting may be adjourned
from time to time by a majority of the shareholders present or represented by
proxy without notice other than by announcement at the meeting.
1.6 Voting. At any meeting of the shareholders each shareholder of a
class entitled to vote on any matter coming before the meeting shall, as to such
matter, have one vote, in person or by proxy, for each share of capital stock of
such class standing in his name on the books of the Corporation on the date, not
more than seventy days prior to such meeting, fixed by the Board of Directors as
the record date for the purpose of determining shareholders entitled to vote.
Every proxy shall be in writing, dated and signed by the shareholder entitled to
vote or his duly authorized attorney-in-fact.
1.7 Inspectors. An appropriate number of inspectors for any meeting of
shareholders may be appointed by the Chairman of such meeting. Inspectors so
appointed will open and close the polls, will receive and take charge of proxies
and ballots, and will decide all questions as to the
2
<PAGE> 3
qualifications of voters, validity of proxies and ballots, and the number of
votes properly cast.
ARTICLE II
Directors
2.1 General Powers. The property, affairs and business of the
Corporation shall be managed by the Board of Directors, and, except as otherwise
expressly provided by law, the Articles of Incorporation or these By-laws, all
of the powers of the Corporation shall be vested in such Board.
2.2 Number of Directors. The number of Directors constituting the Board
of Directors shall be at least one and not more than three. The number of
Directors may be increased or decreased from time to time by amendment to these
By-laws, but no decrease shall have the effect of shortening the term of an
incumbent Director.
2.3 Election and Removal of Directors; Quorum.
(a) Directors shall be elected at each annual meeting of
shareholders to succeed those Directors whose terms have expired and to fill any
vacancies then existing.
(b) Directors shall hold their offices for terms of one year and
until their successors are elected. Any Director may be removed from office at a
meeting called expressly for that purpose by the vote of shareholders holding a
majority of the shares entitled to vote at an election of Directors.
(c) Any vacancy occurring in the Board of Directors may be filled
by the affirmative vote of the majority of the remaining Directors though less
than a quorum of the Board, and the term of office of any Director so elected
shall expire at the next shareholders' meeting at which Directors are elected.
(d) A majority of the number of Directors elected and serving at
the time of any
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meeting shall constitute a quorum for the transaction of business. The act of a
majority of Directors present at a meeting at which a quorum is present shall be
the act of the Board of Directors. Less than a quorum may adjourn any meeting.
2.4 Meetings of Directors. An annual meeting of the Board of Directors
shall be held as soon as practicable after the adjournment of the annual meeting
of shareholders at such place as the Board may designate. Other meetings of the
Board of Directors shall be held at places inside or outside the State of
Virginia and at times fixed by resolution of the Board, or upon call of the
Chairman of the Board, the President or any two of the Directors. The Secretary
or officer performing the Secretary's duties shall give not less than
twenty-four hours' notice either in person or by letter, telegraph or telephone
of all meetings of the Board of Directors, provided that notice need not be
given of the annual meeting or of regular meetings held at times and places
fixed by resolution of the Board. Meetings may be held at any time without
notice if all of the Directors are present, or if those not present waive notice
in writing either before or after the meeting. The notice of meetings of the
Board need not state the purpose of the meeting.
2.5 Duties. The Board of Directors shall designate depositories for the
corporation and shall designate and authorize the officers or other persons to
sign checks and bank drafts.
2.6 Compensation. By resolution of the Board, Directors may be allowed
a fee and expenses for attendance at all meetings, but nothing herein shall
preclude Directors from serving the Corporation in other capacities and
receiving compensation for such other services.
ARTICLE III
Committees
3.1 Executive Committee. The Board of Directors, by resolution adopted
by a
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majority of the number of Directors fixed by these By-laws, may elect an
Executive Committee which shall consist of not less than two Directors,
including the President. When the Board of Directors is not in session, the
Executive Committee shall have all power vested in the Board of Directors by
law, by the Articles of Incorporation, or by these By-laws, provided that the
Executive Committee shall not have power to (i) approve or recommend to
shareholders action that the Virginia Stock Corporation Act requires to be
approved by shareholders; (ii) fill vacancies on the Board or on any of its
committees; (iii) amend the Articles of Incorporation pursuant to Section
13.1-706 of the Virginia Code; (iv) adopt, amend, or repeal the By-laws; (v)
approve a plan of merger or share exchange not requiring shareholder approval;
(vi) authorize or approve a distribution, except according to a general formula
or method prescribed by the Board of Directors; or (vii) authorize or approve
the issuance or sale or contract for sale of shares, or determine the
designation and relative rights, preferences, and limitations of a class or
series of shares, other than within limits specifically prescribed by the Board
of Directors. The Executive Committee shall report at the next regular or
special meeting of the Board of Directors all action which the Executive
Committee may have taken on behalf of the Board since the last regular or
special meeting of the Board of Directors.
3.2 Finance Committee. The Board of Directors, by resolution adopted by
a majority of the number of Directors fixed by these By-laws, may elect a
Finance Committee which shall consist of not less than two Directors. The
Finance Committee shall consider and report to the Board with respect to plans
for corporate expansion, capital structure and long-range financial
requirements. The Committee shall also consider and report to the Board with
respect to such other matters relating to the financial affairs of the
Corporation as may be requested by the Board or the appropriate officers of the
Corporation. The Committee shall report periodically to the Board of
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<PAGE> 6
Directors on all action which it may have taken.
3.3 Other Committees. The Board of Directors, by resolution adopted by
a majority of the number of Directors fixed by these By-laws, may establish such
other standing or special committees of the Board as it may deem advisable,
consisting of not less than two Directors; and the members, terms and authority
of such committees shall be as set forth in the resolutions establishing the
same.
3.4 Meetings. Regular and special meetings of any Committee established
pursuant to this Article may be called and held subject to the same requirements
with respect to time, place and notice as are specified in these By-laws for
regular and special meetings of the Board of Directors.
3.5 Quorum and Manner of Acting. A majority of the members of any
Committee serving at the time of any meeting thereof shall constitute a quorum
for the transaction of business at such meeting. The action of a majority of
those members present at a Committee meeting at which a quorum is present shall
constitute the act of the Committee.
3.6 Terms of Office. Members of any Committee shall be elected as above
provided and shall hold office until their successors are elected by the Board
of Directors or until such Committee is dissolved by the Board of Directors.
3.7 Resignation and Removal. Any member of a Committee may resign at
any time by giving written notice of his intention to do so to the President or
the Secretary of the Corporation, or may be removed, with or without cause, at
any time by such vote of the Board of Directors as would suffice for his
election.
3.8 Vacancies. Any vacancy occurring in a Committee resulting from any
cause
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whatever may be filled by a majority of the number of Directors fixed by these
By-laws.
ARTICLE IV
Officers
4.1 Election of Officers; Terms. The Officers of the Corporation shall
consist of a President, a Secretary and a Treasurer. Other officers, including a
Chairman of the Board, one or more Vice Presidents (whose seniority and titles,
including Executive Vice Presidents and Senior Vice Presidents, may be specified
by the Board of Directors), and assistant and subordinate officers, may from
time to time be elected by the Board of Directors. All officers shall hold
office until the next annual meeting of the Board of Directors and until their
successors are elected. The President shall be chosen from among the Directors.
Any two officers may be combined in the same person as the Board of Directors
may determine.
4.2 Removal of Officers; Vacancies. Any officer of the Corporation may
be removed summarily with or without cause, at any time, by the Board of
Directors provided however that the removal of the Chairman of the Board shall
require the vote of two-thirds of the Directors. Vacancies may be filled by the
Board of Directors.
4.3 Duties. The officers of the Corporation shall have such duties as
generally pertain to their offices, respectively, as well as such powers and
duties as are prescribed by law or are hereinafter provided or as from time to
time shall be conferred by the Board of Directors. The Board of Directors may
require any officer to give such bond for the faithful performance of his duties
as the Board may see fit.
4.4 Duties of the President. The President shall be the chief executive
officer of the Corporation and shall be primarily responsible for the
implementation of policies of the Board of
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<PAGE> 8
Directors. He shall have authority over the general management and direction of
the business and operations of the Corporation and its divisions, if any,
subject only to the ultimate authority of the Board of Directors. He shall be a
Director, and, except as otherwise provided in these By-laws or in the
resolutions establishing such committees, he shall be ex officio a member of all
Committees of the Board. In the absence of the Chairman of the Board or if there
is no such officer, the President shall preside at all corporate meetings. He
may sign and execute in the name of the Corporation share certificates, deeds,
mortgages, bonds, contracts or other instruments except in cases where the
signing and the execution thereof shall be expressly delegated by the Board of
Directors or by these By-laws to some other officer or agent of the Corporation
or shall be required by law otherwise to be signed or executed. In addition, he
shall perform all duties incident to the office of the President and such other
duties as from time to time may be assigned to him by the Board of Directors.
4.5 Duties of the Vice-Presidents. Each Vice-President, if any, shall
have such powers and duties as may from time to time be assigned to him by the
President or the Board of Directors. Any Vice-President may sign and execute in
the name of the Corporation deeds, mortgages, bonds, contracts or other
instruments authorized by the Board of Directors, except where the signing and
execution of such documents shall be expressly delegated by the Board of
Directors or the President to some other officer or agent of the Corporation or
shall be required by law or otherwise to be signed or executed.
4.6 Duties of the Treasurer. The Treasurer shall have charge of and be
responsible for all funds, securities, receipts and disbursements of the
Corporation, and shall deposit all monies and securities of the Corporation in
such banks and depositories as shall be designated by the Board of Directors. He
shall be responsible (i) for maintaining adequate financial accounts and records
in
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<PAGE> 9
accordance with generally accepted accounting practices; (ii) for the
preparation of appropriate operating budgets and financial statements; (iii) for
the preparation and filing of all tax returns required by law; and (iv) for the
performance of all duties incident to the office of Treasurer and such other
duties as from time to time may be assigned to him by the Board of Directors,
the Finance Committee or the Managing Director/President. The treasurer may sign
and execute in the name of the Corporation share certificates, deeds,
mortgages, bonds, contracts or other instruments, except in cases where the
signing and the execution thereof shall be expressly delegated by the Board of
Directors or by these By-laws to some other officer or agent of the Corporation
or shall be required by law or otherwise to be signed or executed.
4.7 Duties of the Secretary. The Secretary shall act as secretary of
all meetings of the Board of Directors and shareholders of the Corporation. When
requested, he shall also act as secretary of the meetings of the committees of
the Board. He shall keep and preserve the minutes of all such meetings in
permanent books. He shall see that all notices required to be given by the
Corporation are duly given and served; shall have custody of the seal of the
Corporation and shall affix the seal or cause it to be affixed to all share
certificates of the Corporation and to all documents the execution of which on
behalf of the Corporation under its corporate seal is duly authorized in
accordance with law or the provisions of these By-laws; shall have custody of
all deeds, leases, contracts and other important corporate documents; shall have
charge of the books, records and papers of the Corporation relating to its
organization and management as a Corporation; shall see that all reports,
statements and other documents required by law (except tax returns) are properly
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 of Directors or the President.
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<PAGE> 10
4.8 Compensation. The Board of Directors shall have authority to fix
the compensation of all officers of the Corporation.
ARTICLE V
Capital Stock
5.1 Certificates. The shares of capital stock of the Corporation shall
be evidenced by certificates in forms prescribed by the Board of Directors and
executed in any manner permitted by law and stating thereon the information
required by law. Transfer agents and/or registrars for one or more classes of
shares of the Corporation may be appointed by the Board of Directors and may be
required to countersign certificates representing shares of such class or
classes. If any officer whose signature or facsimile thereof shall have been
used on a share certificate shall for any reason cease to be an officer of the
Corporation and such certificate shall not then have been delivered by the
Corporation, the Board of Directors may nevertheless adopt such certificate and
it may then be issued and delivered as though such person had not ceased to be
an officer of the Corporation.
5.2 Lost, Destroyed, and Mutilated Certificates. Holders of the shares
of the Corporation shall immediately notify the Corporation of any loss,
destruction or mutilation of the certificate therefor, and the Board of
Directors may in its discretion cause one or more new certificates for the same
number of shares in the aggregate to be issued to such shareholder upon the
surrender of the mutilated certificate or upon satisfactory proof of such loss
or destruction, and the deposit of a bond in such form and amount and with such
surety as the Board of Directors may require.
5.3 Transfer of Shares. The shares of the Corporation shall be
transferable or assignable only on the books of the Corporation by the holder in
person or by attorney on surrender of the certificate for such shares duly
endorsed and, if sought to be transferred by attorney,
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<PAGE> 11
accompanied by a written power of attorney to have the same transferred on the
books of the Corporation. The Corporation will recognize, however, the exclusive
right of the person registered on its books as the owner of shares to receive
dividends and to vote as such owner.
5.4 Fixing Record Date. For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, or entitled to receive payment of any dividend, or in order
to make a determination of shareholders for any other proper purpose, the Board
of Directors may fix in advance a date as the record date for any such
determination of shareholders, such date in any case to be not more than seventy
days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If no record date is fixed for
the determination of shareholders entitled to notice of or to vote at a meeting
of shareholders, or of shareholders entitled to receive payment of a dividend,
the date on which notices of the meeting are mailed or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination shall
apply to any adjournment thereof unless the Board of Directors fixes a new
record date, which it shall do if the meeting is adjourned to a date more than
120 days after the date fixed for the original meeting.
ARTICLE VI
Miscellaneous Provisions
6.1 Seal. The seal of the Corporation shall consist of a flat-faced
circular die, of which there may be any number of counterparts, on which there
shall be engraved the word "Seal".
6.2 Fiscal Year. The fiscal year of the Corporation shall end on such
date and shall
<PAGE> 12
consist of such accounting periods as may be fixed by the Board of Directors.
6.3 Checks, Notes and Drafts. Checks, notes, drafts and other orders
for the payment of money shall be signed by such persons as the Board of
Directors from time to time may authorize. When the Board of Directors so
authorizes, however, the signature of any such person may be a facsimile.
6.4 Amendment of By-Laws. Unless proscribed by the Articles of
Incorporation, these By-laws may be amended or altered at any meeting of the
Board of Directors by affirmative vote of a majority of the number of Directors
fixed by these Bylaws. The shareholders entitled to vote in respect of the
election of Directors, however, shall have the power to rescind, amend, alter or
repeal any By-laws and to enact By-laws which, if expressly so provided, may not
be amended, altered or repealed by the Board of Directors.
6.5 Voting of Shares Held. Unless otherwise provided by resolution of
the Board of Directors or of the Executive Committee, if any, the President may
from time to time appoint an attorney or attorneys or agent or agents of the
Corporation, in the name and on behalf of the Corporation, to cast the vote
which the Corporation may be entitled to cast as a shareholder or otherwise in
any other corporation, any of whose securities may be held by the Corporation,
at meetings of the holders of the shares or other securities of such other
corporation, or to consent in writing to any action by any such other
corporation; and the President shall instruct the person or persons so appointed
as to the manner of casting such votes or giving such consent and may execute or
cause to be executed on behalf of the Corporation, and under its corporate seal
or otherwise, such written proxies, consents, waivers or other instruments as
may be necessary or proper in the premises. In lieu of such appointment the
President may himself attend any meetings of the holders
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of shares or other securities of any such other corporation and there vote or
exercise any or all power of the Corporation as the holder of such shares or
other securities of such other corporation.
ARTICLE VII
Emergency By-laws
The Emergency By-laws provided in this Article VII shall be operative
during any emergency, notwithstanding any different provision in the preceding
Articles of these By-laws or in the Articles of Incorporation of the Corporation
or in the Virginia Stock Corporation Act (other than those provisions relating
to emergency by-laws). An emergency exists if a quorum of the Corporation's
Board of Directors cannot readily be assembled because of some catastrophic
event. To the extent not inconsistent with these Emergency By-laws, the By-laws
provided in the preceding Articles shall remain in effect during such emergency
and upon the termination of such emergency the Emergency By-laws shall cease to
be operative unless and until another such emergency shall occur.
During any such emergency:
(a) Any meeting of the Board of Directors may be called by any officer
of the Corporation or by any Director. The notice thereof shall specify the time
and place of the meeting. To the extent feasible, notice shall be given in
accord with Section 2.4 above, but notice may be given only to such of the
Directors as it may be feasible to reach at the time, by such means as may be
feasible at the time, including publication or radio, and at a time less than
twenty-four hours before the meeting if deemed necessary by the person giving
notice. Notice shall be similarly given, to the extent feasible, to the other
persons referred to in (b) below.
(b) At any meeting of the Board of Directors, a quorum shall consist of
a majority of the
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number of Directors fixed at the time by Article II of the By-laws. If the
Directors present at any particular meeting shall be fewer than the number
required for such quorum, other persons present as referred to below, to the
number necessary to make up such quorum, shall be deemed Directors for such
particular meeting as determined by the following provisions and in the
following order of priority:
(i) Vice-Presidents not already serving as Directors, in the
order of their seniority of first election to such offices, or if two or more
shall have been first elected to such offices on the same day, in the order of
their seniority in age;
(ii) All other officers of the Corporation in the order of their
seniority of first election to such offices, or if two or more shall have been
first elected to such offices on the same day, in the order of their seniority
in age; and
(iii) Any other persons that are designated on a list that shall
have been approved by the Board of Directors before the emergency, such persons
to be taken in such order of priority and subject to such conditions as may be
provided in the resolution approving the list.
(c) The Board of Directors, during, as well as before, any such
emergency, may provide, and from time to time modify, lines of succession in the
event that during such an emergency any or all officers or agents of the
Corporation shall for any reason be rendered incapable of discharging their
duties.
(d) The Board of Directors, during, as well as before, any such
emergency, may, effective in the emergency, change the principal office, or
designate several alternative offices, or authorize the officers so to do.
No officer, Director or employee shall be liable for action taken in
good faith in accordance
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with these Emergency By-laws.
These Emergency By-laws shall be subject to repeal or change by further
action of the Board of Directors or by action of the shareholders, except that
no such repeal or change shall modify the provisions of the next preceding
paragraph with regard to action or inaction prior to the time of such repeal or
change. Any such amendment of these Emergency By-laws may make any further or
different provision that may be practical and necessary for the circumstances of
the emergency.
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EXHIBIT 3.49
ARTICLES OF INCORPORATION
OF
AMF BOWLING CENTERS CHINA, INC.
I.
The name of the Corporation is AMF Bowling Centers China, Inc.
II.
The purpose for which the Corporation is formed is to transact any or
all lawful business, not required to be specifically stated in these Articles,
for which corporations may be incorporated under the Virginia Stock Corporation
Act, as amended from time to time.
III.
The number of shares which the Corporation shall have authority to
issue shall be 10,000 shares of the par value of $1.00 each. No holder of shares
of any class of the Corporation shall have any preemptive or preferential right
to purchase or subscribe to (i) any shares of any class of the corporation,
whether now or hereafter authorized; (ii) any warrants, rights or options to
purchase any such shares; or (iii) any securities or obligations convertible
into any such shares or into warrants, rights, or options to purchase any such
shares.
IV.
The initial registered office shall be located at 901 East Cary Street,
Suite 1400, in the City of Richmond, VA 23219, and the initial registered agent
shall be Daniel M. McCormack, who is a resident of Virginia and a member of the
Virginia State Bar, and whose business address is the same as the address of the
initial registered office.
<PAGE> 2
V.
The number of Directors constituting the initial Board of Directors
shall be one, and the name and address of the person who is to serve as the
initial Director is as follows:
Beverley W. Armstrong
901 East Cary Street
Suite 1400
Richmond, Virginia 23219
VI.
1. In every instance permitted by the Virginia Stock Corporation Act,
as it exists on the date hereof or may hereafter be amended, the liability of a
director or officer of the Corporation to the Corporation or its shareholders
arising out of a single transaction, occurrence or course of conduct shall be
limited to one dollar.
2. To the full extent permitted and in the manner prescribed by the
Virginia Stock Corporation Act and any other applicable law, the Corporation
shall indemnify a Director or officer of the Corporation who is or was a party
to any proceeding by reason of the fact that he is or was such a Director or
officer 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, employee benefit plan or other enterprise. The Board of Directors is
hereby empowered, by majority vote of a quorum of disinterested Directors, to
contract in advance to indemnify any Director or officer.
3. The Board of Directors is hereby empowered, by majority vote of a
quorum of disinterested Directors, to cause the Corporation to indemnify or
contract in advance to indemnify any person not specified in Section 2 of this
Article who was or is a party to any proceeding, by reason of the fact that he
is or was an employee or agent of the corporation, or is or was serving at the
request of the Corporation as a director, officer,
<PAGE> 3
employee or agent of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, to the same extent as if such person
were specified as one to whom indemnification is granted in Section 2.
4. The Corporation may purchase and maintain insurance to indemnify it
against the whole or any portion of the liability assumed by it in accordance
with this Article and may also procure insurance, in such amounts as the Board
of Directors may determine, on behalf of any person who is or was a Director,
officer, employee or agent of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise, against any liability asserted
against or incurred by any such person in any such capacity or arising from his
status as such, whether or not the Corporation would have power to indemnify him
against such liability under the provisions of this Article.
5. In the event there has been a change in the composition of a
majority of the Board of Directors after the date of the alleged act or omission
with respect to which indemnification is claimed, any determination as to
indemnification and advancement of expenses with respect to any claim for
indemnification made pursuant to Section 2 of this Article VI shall be made by
special legal counsel agreed upon by the Board of Directors and the proposed
indemnitee. If the Board of Directors and the proposed indemnitee are unable to
agree upon such special legal counsel, the Board of Directors and the proposed
indemnitee each shall select a nominee, and the nominees shall select such
special legal counsel.
6. The provisions of this Article VI shall be applicable to all
actions, claims, suits or proceedings commenced after the adoption hereof,
whether arising from any action taken or failure to act before or after such
adoption. No amendment, modification or repeal
<PAGE> 4
of this Article shall diminish the rights provided hereby or diminish the right
to indemnification with respect to any claim, issue or matter in any then
pending or subsequent proceeding that is based in any material respect on any
alleged action or failure to act prior to such amendment, modification or
repeal.
7. Reference herein to Directors, officers, employees or agents shall
include former Directors, officers, employees and agents and their respective
heirs, executors and administrators.
VII.
The Board of Directors shall have the power to make, amend or repeal
bylaws of the Corporation.
Dated: March 27, 1995
/s/ Daniel M. McCormack
--------------------------
Daniel M. McCormack
Incorporator
<PAGE> 1
EXHIBIT 3.50
BY-LAWS
OF
AMF BOWLING CENTERS CHINA, INC.
ARTICLE I
Meetings of Shareholders
1.1 Places of Meetings. All meetings of the shareholders shall be held
at such place, either inside or outside the State of Virginia, as from time to
time may be fixed by the Board of Directors.
1.2 Annual Meetings. The annual meeting of the shareholders, for the
election of Directors and transaction of such other business as may come before
the meetings, shall be held in each year on the second Tuesday in April, at 10
a.m., if that day is not a legal holiday in the Commonwealth of Virginia. If
that day is a legal holiday, the annual meeting shall be held on the next
succeeding day not such a legal holiday.
1.3 Special Meetings. A special meeting of the shareholders for any
purpose or purposes may be called at any time by the Chairman of the Board, the
President, or by a majority of the Board of Directors. At a special meeting no
business shall be transacted and no corporate action shall be taken other than
that stated in the notice of the meeting.
1.4 Notice of Meetings. Written or printed notice stating the place,
day and hour of every meeting of the shareholders and, in case of a special
meeting, the purpose or purposes for which the meeting is called, shall be
mailed not less than ten nor more than sixty days before the date
<PAGE> 2
of the meeting to each shareholder of record entitled to vote at such meeting,
at his address which appears in the share transfer books of the Corporation.
Such further notice shall be given as may be required by law, but meetings may
be held without notice if all the shareholders entitled to vote at the meeting
are present in person or by proxy or if notice is waived in writing by those not
present, either before or after the meeting.
1.5 Quorum. Any number of shareholders together holding at least a
majority of the outstanding shares of capital stock entitled to vote with
respect to the business to be transacted, who shall be present in person or
represented by proxy at any meeting duly called, shall constitute a quorum for
the transaction of business. If less than a quorum shall be in attendance at the
time for which a meeting shall have been called, the meeting may be adjourned
from time to time by a majority of the shareholders present or represented by
proxy without notice other than by announcement at the meeting.
1.6 Voting. At any meeting of the shareholders each shareholder of a
class entitled to vote on any matter coming before the meeting shall, as to such
matter, have one vote, in person or by proxy, for each share of capital stock of
such class standing in his name on the books of the Corporation on the date, not
more than seventy days prior to such meeting, fixed by the Board of Directors as
the record date for the purpose of determining shareholders entitled to vote.
Every proxy shall be in writing, dated and signed by the shareholder entitled to
vote or his duly authorized attorney-in-fact.
1.7 Inspectors. An appropriate number of inspectors for any meeting of
shareholders may be appointed by the Chairman of such meeting. Inspectors so
appointed will open and close the polls, will receive and take charge of proxies
and ballots, and will decide all questions as to the
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qualifications of voters, validity of proxies and ballots, and the number of
votes properly cast.
ARTICLE II
Directors
2.1 General Powers. The property, affairs and business of the
Corporation shall be managed by the Board of Directors, and, except as otherwise
expressly provided by law, the Articles of Incorporation or these By-laws, all
of the powers of the Corporation shall be vested in such Board.
2.2 Number of Directors. The number of Directors constituting the Board
of Directors shall be at least one and not more than three. The number of
Directors may be increased or decreased from time to time by amendment to these
By-laws, but no decrease shall have the effect of shortening the term of an
incumbent Director.
2.3 Election and Removal of Directors; Quorum.
(a) Directors shall be elected at each annual meeting of
shareholders to succeed those Directors whose terms have expired and to fill any
vacancies then existing.
(b) Directors shall hold their offices for terms of one year and
until their successors are elected. Any Director may be removed from office at a
meeting called expressly for that purpose by the vote of shareholders holding a
majority of the shares entitled to vote at an election of Directors.
(c) Any vacancy occurring in the Board of Directors may be filled
by the affirmative vote of the majority of the remaining Directors though less
than a quorum of the Board, and the term of office of any Director so elected
shall expire at the next shareholders' meeting at which Directors are elected.
(d) A majority of the number of Directors elected and serving at
the time of any
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meeting shall constitute a quorum for the transaction of business. The act of a
majority of Directors present at a meeting at which a quorum is present shall be
the act of the Board of Directors. Less than a quorum may adjourn any meeting.
2.4 Meetings of Directors. An annual meeting of the Board of
Directors shall be held as soon as practicable after the adjournment of the
annual meeting of shareholders at such place as the Board may designate. Other
meetings of the Board of Directors shall be held at places inside or outside the
State of Virginia and at times fixed by resolution of the Board, or upon call of
the Chairman of the Board, the President or any two of the Directors. The
Secretary or officer performing the Secretary's duties shall give not less than
twenty-four hours' notice either in person or by letter, telegraph or telephone
of all meetings of the Board of Directors, provided that notice need not be
given of the annual meeting or of regular meetings held at times and places
fixed by resolution of the Board. Meetings may be held at any time without
notice if all of the Directors are present, or if those not present waive notice
in writing either before or after the meeting. The notice of meetings of the
Board need not state the purpose of the meeting.
2.5 Duties. The Board of Directors shall designate depositories for
the corporation and shall designate and authorize the officers or other persons
to sign checks and bank drafts.
2.6 Compensation. By resolution of the Board, Directors may be
allowed a fee and expenses for attendance at all meetings, but nothing herein
shall preclude Directors from serving the Corporation in other capacities and
receiving compensation for such other services.
ARTICLE III
Committees
3.1 Executive Committee. The Board of Directors, by resolution
adopted by a
4
<PAGE> 5
majority of the number of Directors fixed by these By-laws, may elect an
Executive Committee which shall consist of not less than two Directors,
including the President. When the Board of Directors is not in session, the
Executive Committee shall have all power vested in the Board of Directors by
law, by the Articles of Incorporation, or by these By-laws, provided that the
Executive Committee shall not have power to (i) approve or recommend to
shareholders action that the Virginia Stock Corporation Act requires to be
approved by shareholders; (ii) fill vacancies on the Board or on any of its
committees; (iii) amend the Articles of Incorporation pursuant to Section
13.1-706 of the Virginia Code; (iv) adopt, amend, or repeal the By-laws; (v)
approve a plan of merger or share exchange not requiring shareholder approval;
(vi) authorize or approve a distribution, except according to a general formula
or method prescribed by the Board of Directors; or (vii) authorize or approve
the issuance or sale or contract for sale of shares, or determine the
designation and relative rights, preferences, and limitations of a class or
series of shares, other than within limits specifically prescribed by the Board
of Directors. The Executive Committee shall report at the next regular or
special meeting of the Board of Directors all action which the Executive
Committee may have taken on behalf of the Board since the last regular or
special meeting of the Board of Directors.
3.2 Finance Committee. The Board of Directors, by resolution
adopted by a majority of the number of Directors fixed by these By-laws, may
elect a Finance Committee which shall consist of not less than two Directors.
The Finance Committee shall consider and report to the Board with respect to
plans for corporate expansion, capital structure and long-range financial
requirements. The Committee shall also consider and report to the Board with
respect to such other matters relating to the financial affairs of the
Corporation as may be requested by the Board or the appropriate officers of the
Corporation. The Committee shall report periodically to the Board of
5
<PAGE> 6
Directors on all action which it may have taken.
3.3 Other Committees. The Board of Directors, by resolution adopted by
a majority of the number of Directors fixed by these By-laws, may establish such
other standing or special committees of the Board as it may deem advisable,
consisting of not less than two Directors; and the members, terms and authority
of such committees shall be as set forth in the resolutions establishing the
same.
3.4 Meetings. Regular and special meetings of any Committee established
pursuant to this Article may be called and held subject to the same requirements
with respect to time, place and notice as are specified in these By-laws for
regular and special meetings of the Board of Directors.
3.5 Quorum and Manner of Acting. A majority of the members of any
Committee serving at the time of any meeting thereof shall constitute a quorum
for the transaction of business at such meeting. The action of a majority of
those members present at a Committee meeting at which a quorum is present shall
constitute the act of the Committee.
3.6 Terms of Office. Members of any Committee shall be elected as above
provided and shall hold office until their successors are elected by the Board
of Directors or until such Committee is dissolved by the Board of Directors.
3.7 Resignation and Removal. Any member of a Committee may resign at
any time by giving written notice of his intention to do so to the President or
the Secretary of the Corporation, or may be removed, with or without cause, at
any time by such vote of the Board of Directors as would suffice for his
election.
3.8 Vacancies. Any vacancy occurring in a Committee resulting from any
cause
6
<PAGE> 7
whatever may be filled by a majority of the number of Directors fixed by these
By-laws.
ARTICLE IV
Officers
4.1 Election of Officers; Terms. The Officers of the Corporation shall
consist of a President, a Secretary and a Treasurer. Other officers, including a
Chairman of the Board, one or more Vice Presidents (whose seniority and titles,
including Executive Vice Presidents and Senior Vice Presidents, may be specified
by the Board of Directors), and assistant and subordinate officers, may from
time to time be elected by the Board of Directors. All officers shall hold
office until the next annual meeting of the Board of Directors and until their
successors are elected. The President shall be chosen from among the Directors.
Any two officers may be combined in the same person as the Board of Directors
may determine.
4.2 Removal of Officers; Vacancies. Any officer of the Corporation may
be removed summarily with or without cause, at any time, by the Board of
Directors provided however that the removal of the Chairman of the Board shall
require the vote of two-thirds of the Directors. Vacancies may be filled by the
Board of Directors.
4.3 Duties. The officers of the Corporation shall have such duties as
generally pertain to their offices, respectively, as well as such powers and
duties as are prescribed by law or are hereinafter provided or as from time to
time shall be conferred by the Board of Directors. The Board of Directors may
require any officer to give such bond for the faithful performance of his duties
as the Board may see fit.
4.4 Duties of the President. The President shall be the chief executive
officer of the Corporation and shall be primarily responsible for the
implementation of policies of the Board of
7
<PAGE> 8
Directors. He shall have authority over the general management and direction of
the business and operations of the Corporation and its divisions, if any,
subject only to the ultimate authority of the Board of Directors. He shall be a
Director, and, except as otherwise provided in these By-laws or in the
resolutions establishing such committees, he shall be ex officio a member of all
Committees of the Board. In the absence of the Chairman of the Board or if there
is no such officer, the President shall preside at all corporate meetings. He
may sign and execute in the name of the Corporation share certificates, deeds,
mortgages, bonds, contracts or other instruments except in cases where the
signing and the execution thereof shall be expressly delegated by the Board of
Directors or by these By-laws to some other officer or agent of the Corporation
or shall be required by law otherwise to be signed or executed. In addition, he
shall perform all duties incident to the office of the President and such other
duties as from time to time may be assigned to him by the Board of Directors.
4.5 Duties of the Vice-Presidents. Each Vice-President, if any, shall
have such powers and duties as may from time to time be assigned to him by the
President or the Board of Directors. Any Vice-President may sign and execute in
the name of the Corporation deeds, mortgages, bonds, contracts or other
instruments authorized by the Board of Directors, except where the signing and
execution of such documents shall be expressly delegated by the Board of
Directors or the President to some other officer or agent of the Corporation or
shall be required by law or otherwise to be signed or executed.
4.6 Duties of the Treasurer. The Treasurer shall have charge of and be
responsible for all funds, securities, receipts and disbursements of the
Corporation, and shall deposit all monies and securities of the Corporation in
such banks and depositories as shall be designated by the Board of Directors. He
shall be responsible (i) for maintaining adequate financial accounts and records
in
8
<PAGE> 9
accordance with generally accepted accounting practices; (ii) for the
preparation of appropriate operating budgets and financial statements; (iii) for
the preparation and filing of all tax returns required by law; and (iv) for the
performance of all duties incident to the office of Treasurer and such other
duties as from time to time may be assigned to him by the Board of Directors,
the Finance Committee or the Managing Director/President. The treasurer may sign
and execute in the name of the Corporation share certificates, deeds, mortgages,
bonds, contracts or other instruments, except in cases where the signing and the
execution thereof shall be expressly delegated by the Board of Directors or by
these By-laws to some other officer or agent of the Corporation or shall be
required by law or otherwise to be signed or executed.
4.7 Duties of the Secretary. The Secretary shall act as secretary of
all meetings of the Board of Directors and shareholders of the Corporation. When
requested, he shall also act as secretary of the meetings of the committees of
the Board. He shall keep and preserve the minutes of all such meetings in
permanent books. He shall see that all notices required to be given by the
Corporation are duly given and served; shall have custody of the seal of the
Corporation and shall affix the seal or cause it to be affixed to all share
certificates of the Corporation and to all documents the execution of which on
behalf of the Corporation under its corporate seal is duly authorized in
accordance with law or the provisions of these By-laws; shall have custody of
all deeds, leases, contracts and other important corporate documents; shall have
charge of the books, records and papers of the Corporation relating to its
organization and management as a Corporation; shall see that all reports,
statements and other documents required by law (except tax returns) are properly
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 of Directors or the President.
9
<PAGE> 10
4.8 Compensation. The Board of Directors shall have authority to fix
the compensation of all officers of the Corporation.
ARTICLE V
Capital Stock
5.1 Certificates. The shares of capital stock of the Corporation shall
be evidenced by certificates in forms prescribed by the Board of Directors and
executed in any manner permitted by law and stating thereon the information
required by law. Transfer agents and/or registrars for one or more classes of
shares of the Corporation may be appointed by the Board of Directors and may be
required to countersign certificates representing shares of such class or
classes. If any officer whose signature or facsimile thereof shall have been
used on a share certificate shall for any reason cease to be an officer of the
Corporation and such certificate shall not then have been delivered by the
Corporation, the Board of Directors may nevertheless adopt such certificate and
it may then be issued and delivered as though such person had not ceased to be
an officer of the Corporation.
5.2 Lost, Destroyed and Mutilated Certificates. Holders of the shares
of the Corporation shall immediately notify the Corporation of any loss,
destruction or mutilation of the certificate therefor, and the Board of
Directors may in its discretion cause one or more new certificates for the same
number of shares in the aggregate to be issued to such shareholder upon the
surrender of the mutilated certificate or upon satisfactory proof of such loss
or destruction, and the deposit of a bond in such form and amount and with such
surety as the Board of Directors may require.
5.3 Transfer of Shares. The shares of the Corporation shall be
transferable or assignable only on the books of the Corporation by the holder in
person or by attorney on surrender of the certificate for such shares duly
endorsed and, if sought to be transferred by attorney,
10
<PAGE> 11
accompanied by a written power of attorney to have the same transferred on the
books of the Corporation. The Corporation will recognize, however, the exclusive
right of the person registered on its books as the owner of shares to receive
dividends and to vote as such owner.
5.4 Fixing Record Date. For the purpose of determining shareholders
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, or entitled to receive payment of any dividend, or in order
to make a determination of shareholders for any other proper purpose, the Board
of Directors may fix in advance a date as the record date for any such
determination of shareholders, such date in any case to be not more than seventy
days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken. If no record date is fixed for
the determination of shareholders entitled to notice of or to vote at a meeting
of shareholders, or of shareholders entitled to receive payment of a dividend,
the date on which notices of the meeting are mailed or the date on which the
resolution of the Board of Directors declaring such dividend is adopted, as the
case may be, shall be the record date for such determination of shareholders.
When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination shall
apply to any adjournment thereof unless the Board of Directors fixes a new
record date, which it shall do if the meeting is adjourned to a date more than
120 days after the date fixed for the original meeting.
ARTICLE VI
Miscellaneous Provisions
6.1 Seal. The seal of the Corporation shall consist of a flat-faced
circular die, of which there may be any number of counterparts, on which there
shall be engraved the word "Seal".
6.2 Fiscal Year. The fiscal year of the Corporation shall end on such
date and shall
11
<PAGE> 12
consist of such accounting periods as may be fixed by the Board of Directors.
6.3 Checks, Notes and Drafts. Checks, notes, drafts and other orders
for the payment of money shall be signed by such persons as the Board of
Directors from time to time may authorize. When the Board of Directors so
authorizes, however, the signature of any such person may be a facsimile.
6.4 Amendment of By-Laws. Unless proscribed by the Articles of
Incorporation, these By-laws may be amended or altered at any meeting of the
Board of Directors by affirmative vote of a majority of the number of Directors
fixed by these By-laws. The shareholders entitled to vote in respect of the
election of Directors, however, shall have the power to rescind, amend, alter or
repeal any By-laws and to enact By-laws which, if expressly so provided, may not
be amended, altered or repealed by the Board of Directors.
6.5 Voting of Shares Held. Unless otherwise provided by resolution of
the Board of Directors or of the Executive Committee, if any, the President may
from time to time appoint an attorney or attorneys or agent or agents of the
Corporation, in the name and on behalf of the Corporation, to cast the vote
which the Corporation may be entitled to cast as a shareholder or otherwise in
any other corporation, any of whose securities may be held by the Corporation,
at meetings of the holders of the shares or other securities of such other
corporation, or to consent in writing to any action by any such other
corporation; and the President shall instruct the person or persons so appointed
as to the manner of casting such votes or giving such consent and may execute or
cause to be executed on behalf of the Corporation, and under its corporate seal
or otherwise, such written proxies, consents, waivers or other instruments as
may be necessary or proper in the premises. In lieu of such appointment the
President may himself attend any meetings of the holders
12
<PAGE> 13
of shares or other securities of any such other corporation and there vote or
exercise any or all power of the Corporation as the holder of such shares or
other securities of such other corporation.
ARTICLE VII
Emergency By-laws
The Emergency By-laws provided in this Article VII shall be operative
during any emergency, notwithstanding any different provision in the preceding
Articles of these By-laws or in the Articles of Incorporation of the Corporation
or in the Virginia Stock Corporation Act (other than those provisions relating
to emergency by-laws). An emergency exists if a quorum of the Corporation's
Board of Directors cannot readily be assembled because of some catastrophic
event. To the extent not inconsistent with these Emergency By-laws, the By-laws
provided in the preceding Articles shall remain in effect during such emergency
and upon the termination of such emergency the Emergency By-laws shall cease to
be operative unless and until another such emergency shall occur.
During any such emergency:
(a) Any meeting of the Board of Directors may be called by any officer
of the Corporation or by any Director. The notice thereof shall specify the time
and place of the meeting. To the extent feasible, notice shall be given in
accord with Section 2.4 above, but notice may be given only to such of the
Directors as it may be feasible to reach at the time, by such means as may be
feasible at the time, including publication or radio, and at a time less than
twenty-four hours before the meeting if deemed necessary by the person giving
notice. Notice shall be similarly given, to the extent feasible, to the other
persons referred to in (b) below.
(b) At any meeting of the Board of Directors, a quorum shall consist of
a majority of the
13
<PAGE> 14
number of Directors fixed at the time by Article II of the Bylaws. If the
Directors present at any particular meeting shall be fewer than the number
required for such quorum, other persons present as referred to below, to the
number necessary to make up such quorum, shall be deemed Directors for such
particular meeting as determined by the following provisions and in the
following order of priority:
(i) Vice-Presidents not already serving as Directors, in the
order of their seniority of first election to such offices, or if two or more
shall have been first elected to such offices on the same day, in the order of
their seniority in age;
(ii) All other officers of the Corporation in the order of their
seniority of first election to such offices, or if two or more shall have been
first elected to such offices on the same day, in the order of their seniority
in age; and
(iii) Any other persons that are designated on a list that shall
have been approved by the Board of Directors before the emergency, such persons
to be taken in such order of priority and subject to such conditions as may be
provided in the resolution approving the list.
(c) The Board of Directors, during, as well as before, any such
emergency, may provide, and from time to time modify, lines of succession in the
event that during such an emergency any or all officers or agents of the
Corporation shall for any reason be rendered incapable of discharging their
duties.
(d) The Board of Directors, during, as well as before, any such
emergency, may, effective in the emergency, change the principal office, or
designate several alternative offices, or authorize the officers so to do.
No officer, Director or employee shall be liable for action taken in
good faith in accordance
14
<PAGE> 15
with these Emergency By-laws.
These Emergency By-laws shall be subject to repeal or change by further
action of the Board of Directors or by action of the shareholders, except that
no such repeal or change shall modify the provisions of the next preceding
paragraph with regard to action or inaction prior to the time of such repeal or
change. Any such amendment of these Emergency By-laws may make any further or
different provision that may be practical and necessary for the circumstances of
the emergency.
15
<PAGE> 1
Exhibit 4.1
EXECUTION COPY
================================================================================
AMF GROUP INC.
AS ISSUER
THE PARTIES LISTED
ON EXHIBIT C HERETO
AS GUARANTORS
SERIES A AND SERIES B
10 7/8% SENIOR SUBORDINATED NOTES DUE 2006
-----------------
INDENTURE
Dated as of March 21, 1996
-----------------
-----------------
IBJ SCHRODER BANK & TRUST COMPANY
AS TRUSTEE
-----------------
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions.......................................... 1
Section 1.02. Other Definitions.................................... 15
Section 1.03. Incorporation by Reference of Trust Indenture Act.... 15
Section 1.04. Rules of Construction................................ 16
ARTICLE 2
THE SENIOR SUBORDINATED NOTES
Section 2.01. Form and Dating...................................... 16
Section 2.02. Execution and Authentication......................... 18
Section 2.03. Registrar and Paying Agent........................... 18
Section 2.04. Paying Agent to Hold Money in Trust.................. 19
Section 2.05. Holder Lists......................................... 19
Section 2.06. Transfer and Exchange................................ 19
Section 2.07. Replacement Senior Subordinated Notes................ 26
Section 2.08. Outstanding Senior Subordinated Notes................ 26
Section 2.09. Treasury Senior Subordinated Notes................... 27
Section 2.10. Temporary Senior Subordinated Notes.................. 27
Section 2.11. Cancellation......................................... 27
Section 2.12. Defaulted Interest................................... 27
ARTICLE 3
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee................................... 28
Section 3.02. Selection of Senior Subordinated Notes to
Be Redeemed.......................................... 28
Section 3.03. Notice of Redemption................................. 29
Section 3.04. Effect of Notice of Redemption....................... 29
Section 3.05. Deposit of Redemption Price.......................... 29
Section 3.06. Senior Subordinated Notes Redeemed in Part........... 30
Section 3.07. Optional Redemption.................................. 30
Section 3.08. Mandatory Redemption................................. 31
Section 3.09. Special Mandatory Redemption......................... 31
Section 3.10. Offer to Purchase by Application of Excess Proceeds.. 32
ARTICLE 4
COVENANTS
Section 4.01. Payment of Senior Subordinated Notes................. 33
Section 4.02. Maintenance of Office or Agency...................... 34
Section 4.03. Reports.............................................. 34
Section 4.04. Compliance Certificate............................... 35
Section 4.05. Taxes................................................ 35
Section 4.06. Stay, Extension and Usury Laws....................... 35
Section 4.07. Restricted Payments.................................. 36
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
Section 4.08. Dividend and Other Payment Restrictions Affecting
Subsidiaries............................................ 38
Section 4.09. Incurrence of Indebtedness and Issuance of
Disqualified Stock...................................... 39
Section 4.10. Asset Sales............................................. 41
Section 4.11. Transactions with Affiliates............................ 42
Section 4.12. Liens................................................... 43
Section 4.13. Offer to Repurchase Upon Change of Control.............. 43
Section 4.14. Issuances of Guarantees of Indebtedness................. 45
Section 4.15. Activities of Holdings.................................. 45
Section 4.16. Activities of the Company............................... 45
Section 4.17. Corporate Existence..................................... 46
Section 4.18. No Senior Subordinated Debt............................. 46
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of All or Substantially
All Assets.............................................. 46
Section 5.02. Successor Corporation Substituted....................... 47
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default....................................... 47
Section 6.02. Acceleration............................................ 49
Section 6.03. Other Remedies.......................................... 50
Section 6.04. Waiver of Past Defaults................................. 50
Section 6.05. Control by Majority..................................... 50
Section 6.06. Limitation on Suits..................................... 50
Section 6.07. Rights of Holders of Senior Subordinated
Notes to Receive Payment................................ 51
Section 6.08. Collection Suit by Trustee.............................. 51
Section 6.09. Trustee May File Proofs of Claim........................ 51
Section 6.10. Priorities.............................................. 52
Section 6.11. Undertaking for Costs................................... 52
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee....................................... 53
Section 7.02. Rights of Trustee....................................... 54
Section 7.03. Individual Rights of Trustee............................ 54
Section 7.04. Trustee's Disclaimer.................................... 54
Section 7.05. Notice of Defaults...................................... 55
Section 7.06. Reports by Trustee to Holders of the Senior
Subordinated Notes..................................... 55
Section 7.07. Compensation and Indemnity.............................. 55
Section 7.08. Replacement of Trustee.................................. 56
Section 7.09. Successor Trustee by Merger, etc........................ 57
Section 7.10. Eligibility; Disqualification........................... 57
Section 7.11. Preferential Collection of Claims Against Company....... 57
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant
Defeasance.............................................. 57
Section 8.02. Legal Defeasance and Discharge.......................... 58
Section 8.03. Covenant Defeasance..................................... 58
Section 8.04. Conditions to Legal or Covenant Defeasance.............. 59
Section 8.05. Deposited Money and Government Securities to be
Held in Trust; Other Miscellaneous Provisions........... 60
Section 8.06. Repayment to Company.................................... 60
Section 8.07. Reinstatement........................................... 61
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Senior Subordinated
Notes................................................... 61
Section 9.02. With Consent of Holders of Senior Subordinated
Notes................................................... 62
Section 9.03. Compliance with Trust Indenture Act..................... 63
Section 9.04. Revocation and Effect of Consents....................... 63
Section 9.05. Notation on or Exchange of Senior Subordinated
Notes................................................... 64
Section 9.06. Trustee to Sign Amendments, etc......................... 64
ARTICLE 10
SUBORDINATION
Section 10.01. Agreement to Subordinate................................ 64
Section 10.02. Certain Definitions..................................... 64
Section 10.03. Liquidation; Dissolution; Bankruptcy.................... 65
Section 10.04. Default on Designated Senior Debt....................... 66
Section 10.05. Acceleration of Senior Subordinated Notes............... 67
Section 10.06. When Distribution Must Be Paid Over..................... 67
Section 10.07. Notice by Company....................................... 68
Section 10.08. Subrogation............................................. 68
Section 10.09. Relative Rights......................................... 68
Section 10.10. Subordination May Not Be Impaired by Company............ 68
Section 10.11. Distribution or Notice to Representative................ 69
Section 10.12. Rights of Trustee and Paying Agent...................... 69
Section 10.13. Authorization to Effect Subordination................... 70
Section 10.14. Amendments.............................................. 70
ARTICLE 11
SENIOR SUBORDINATED GUARANTEES
Section 11.01. Senior Subordinated Guarantees.......................... 70
Section 11.02. Subordination of Senior Subordinated Guarantee.......... 71
Section 11.03. Limitation on Guarantor Liability....................... 71
Section 11.04. Execution and Delivery of Senior Subordinated
Guarantees.............................................. 72
Section 11.05. Guarantors May Consolidate, etc., on Certain Terms...... 72
Section 11.06. Releases of Senior Subordinated Guarantees.............. 73
Section 11.07. "Trustee" to Include Paying Agent....................... 73
</TABLE>
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<TABLE>
<CAPTION>
<S> <C>
ARTICLE 12
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls............................ 74
Section 12.02. Notices................................................. 74
Section 12.03. Communication by Holders of Senior Subordinated
Notes with Other Holders of Senior
Subordinated Notes...................................... 75
Section 12.04. Certificate and Opinion as to Conditions Precedent...... 75
Section 12.05. Statements Required in Certificate or Opinion........... 76
Section 12.06. Rules by Trustee and Agents............................. 76
Section 12.07. No Personal Liability of Directors, Officers,
Employees and Stockholders.............................. 76
Section 12.08. Governing Law........................................... 76
Section 12.09. No Adverse Interpretation of Other Agreements .......... 76
Section 12.10. Successors.............................................. 77
Section 12.11. Severability............................................ 77
Section 12.12. Counterpart Originals................................... 77
Section 12.13. Table of Contents, Headings, etc........................ 77
</TABLE>
EXHIBITS
Exhibit A-1 FORM OF SENIOR SUBORDINATED NOTE
Exhibit A-2 FORM OF REGULATION S TEMPORARY
GLOBAL NOTE
Exhibit B-1 FORM OF CERTIFICATE OF EXCHANGE OR
REGISTRATION OF TRANSFER FROM RULE 144A
GLOBAL NOTE TO REGULATION S GLOBAL NOTE
Exhibit B-2 FORM OF CERTIFICATE OF EXCHANGE OR
REGISTRATION OF TRANSFER FROM REGULATION S
GLOBAL NOTE TO RULE 144A GLOBAL NOTE
Exhibit B-3 FORM OF CERTIFICATE OF EXCHANGE OR
REGISTRATION OF TRANSFER OF CERTIFICATED
NOTES
Exhibit B-4 FORM OF CERTIFICATE OF EXCHANGE OR
REGISTRATION OF TRANSFER FROM RULE 144A
GLOBAL NOTE OR REGULATION S PERMANENT
GLOBAL NOTE TO CERTIFICATED NOTE
Exhibit C GUARANTORS
Exhibit D FORM OF SENIOR SUBORDINATED GUARANTEE
Exhibit E FORM OF SUPPLEMENTAL INDENTURE
Exhibit F DIVIDEND AND PAYMENT RESTRICTION TERMS OF
NEW BANK CREDIT AGREEMENT
Exhibit G FORM OF SENIOR SUBORDINATED NOTE
PLEDGE AND ESCROW AGREEMENT
iv
<PAGE> 6
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture Section
<S> <C>
310 (a)(1)........................................................... 7.10
(a)(2)........................................................... 7.10
(a)(3)........................................................... N.A.
(a)(4)........................................................... N.A.
(a)(5)........................................................... 7.10
(b) ............................................................. 7.10
(c) ............................................................. N.A.
311 (a) ............................................................. 7.11
(b) ............................................................. 7.11
(c) ............................................................. N.A.
312 (a).............................................................. 2.05
(b).............................................................. 12.03
(c) ............................................................. 12.03
313 (a) ............................................................. 7.06
(b)(1) .......................................................... 10.03
(b)(2) .......................................................... 7.07
(c) ............................................................. 7.06; 12.02
(d).............................................................. 7.06
314 (a) ............................................................. 4.03; 12.02
(b) ............................................................. 10.02
(c)(1) .......................................................... 12.04
(c)(2) .......................................................... 12.04
(c)(3) .......................................................... N.A.
(d) ............................................................. 10.03-10.05
(e) ............................................................ 12.05
(f).............................................................. N.A.
315 (a).............................................................. 7.01
(b).............................................................. 7.05; 12.02
(c).............................................................. 7.01
(d).............................................................. 7.01
(e).............................................................. 6.11
316 (a)(last sentence) .............................................. 2.09
(a)(1)(A)........................................................ 6.05
(a)(1)(B) ....................................................... 6.04
(a)(2) .......................................................... N.A.
(b) ............................................................. 6.07
(c) ............................................................. 2.12
317 (a)(1) .......................................................... 6.08
(a)(2)........................................................... 6.09
(b) ............................................................. 2.04
318(a).............................................................. 12.01
(b).............................................................. N.A.
(c).............................................................. 12.01
</TABLE>
- ----------------
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
<PAGE> 7
INDENTURE dated as of March 21, 1996 among AMF Group Inc., a Delaware
corporation (the "Company"), each of the Persons listed on Exhibit C hereto
(each, a "Guarantor" and, collectively, the "Guarantors") and IBJ Schroder Bank
& Trust Company, as trustee (the "Trustee").
The Company, the Guarantors and the Trustee agree as follows for the
benefit of each other and for the equal and ratable benefit of the Holders of
the 10 7/8% Series A Senior Subordinated Notes due 2006 of the Company (the
"Series A Senior Subordinated Notes") and the 10 7/8% Series B Senior
Subordinated Notes due 2006 of the Company (the "Series B Senior Subordinated
Notes" and, together with the Series A Senior Subordinated Notes, the
"Senior Subordinated Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.01. DEFINITIONS.
"Accrued Bankruptcy Interest" has the meaning set forth in Section
10.02 hereof.
"Acquired Debt" 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 Restricted 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
Restricted Subsidiary of such specified Person, and (ii) Indebtedness secured by
a Lien encumbering any asset acquired by such specified Person.
"Acquisition" means the acquisition by Holdings, through subsidiaries
of the Company, from the Sellers of the stock and assets contemplated by the
Stock Purchase Agreement.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For 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, shall 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 shall
be deemed to be control.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Agent Members" means any member of, or participant in, the
Depositary.
"AMF" means the AMF worldwide bowling businesses, including AMF
Bowling, Inc., AMF Bowling Centers, Inc., the AMF worldwide bowling centers and
their subsidiaries.
"Applicable Procedures" means, with respect to any transfer or
exchange of beneficial interests in a Global Note, the rules and procedures of
the Depositary, Euroclear and Cedel Bank that are applicable to such transfer or
exchange.
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"Asset Sale" means: (i) the sale, conveyance, transfer or other
disposition (whether in a single transaction or a series of related
transactions) of property or assets (including by way of a sale and leaseback)
of the Company or any Restricted Subsidiary (each referred to in this definition
as a "disposition") or (ii) the issuance or sale of Equity Interests of any
Restricted Subsidiary (whether in a single transaction or a series of related
transactions), in each case, other than: (a) a disposition of Cash Equivalents
or goods held for sale in the ordinary course of business or obsolete equipment
in the ordinary course of business consistent with past practices of the
Company; (b) the disposition of all or substantially all of the assets of the
Company in a manner permitted pursuant to the provisions of Section 5.01 hereof
or any disposition that constitutes a Change of Control pursuant to this
Indenture; (c) any disposition that is a Restricted Payment or Permitted
Investment that is permitted pursuant to Section 4.07 hereof; (d) any
disposition, or related series of dispositions, of assets with an aggregate fair
market value of less than $2.5 million; (e) any sale of Equity Interest in, or
Indebtedness or other securities of, an Unrestricted Subsidiary; and (f)
foreclosures on assets.
"Bankruptcy Law" has the meaning set forth in Section 10.02 hereof.
"Board of Directors" means the Board of Directors of the Company, or
any authorized committee of the Board of Directors.
"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 (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof, (iii) certificates of
deposit and eurodollar time deposits with maturities of one year or less from
the date of acquisition, bankers' acceptances with maturities not exceeding one
year and overnight bank deposits, in each case with any domestic bank having
capital and surplus in excess of $500.0 million and a Keefe Bank Watch Rating of
"B" or better, (iv) repurchase obligations with a term of not more than seven
days for underlying securities of the types described in clauses (ii) and (iii)
above entered into with any financial institution meeting the qualifications
specified in clause (iii) above and (v) commercial paper having the highest
rating obtainable from Moody's Investors Service, Inc. or Standard & Poor's
Corporation and in each case maturing within one year after the date of
acquisition.
"Cedel Bank" means Cedel Bank, societe anonyme.
"Certificated Notes" means Senior Subordinated Notes that are in the
form of the Senior Subordinated Notes attached hereto as Exhibit A-1, that do
not include the information called for by footnotes 1 and 2 thereof.
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"Change of Control" means the occurrence of any of the following:
(i) the sale, lease, transfer, conveyance or other disposition (other
than by way of merger or consolidation), in one or a series of transactions, of
all or substantially all of the assets of the Company and its Restricted
Subsidiaries, taken as a whole, to any "person" (as such term is used in Section
13(d)(3) of the Exchange Act) other than the Permitted Holders and their Related
Parties;
(ii) the Company becomes aware (by way of a report or any other filing
pursuant to Section 13(d) of the Exchange Act, proxy, vote, written notice or
otherwise) of the acquisition by any Person or group (within the meaning of
Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor
provision), including any group acting for the purpose of acquiring, holding or
disposing of securities (within the meaning of Rule 13d-5(b)(1) under the
Exchange Act), other than the Permitted Holders or any of their Related Parties,
in a single transaction or in a related series of transactions, by way of
merger, consolidation or other business combination or purchase of beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any
successor provision) of 50% or more of the aggregate voting power of the Voting
Stock of the Company or Holdings, and beneficially owns more of such Voting
Stock than the Permitted Holders and their Related Parties; or
(iii) a majority of the members of the Board of Directors of the
Company cease to be Continuing Directors.
"Consolidated Cash Flow" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period plus (i) an
amount equal to any extraordinary loss plus any net loss realized in connection
with an Asset Sale (to the extent such losses were deducted in computing such
Consolidated Net Income), plus (ii) provision for taxes based on income or
profits of such Person and its Restricted Subsidiaries for such period, to the
extent that such provision for taxes was deducted in computing such Consolidated
Net Income, plus (iii) consolidated interest expense of such Person and its
Restricted Subsidiaries for such period, whether paid or accrued and whether or
not capitalized (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), to the extent that any
such expense was deducted in computing such Consolidated Net Income, plus (iv)
depreciation, amortization (including amortization of goodwill and other
intangibles but excluding amortization of prepaid cash expenses that were paid
in a prior period) and other non-cash charges (excluding any such non-cash
charge to the extent that it represents an accrual of or reserve for cash
charges in any future period or amortization of a prepaid cash expense that was
paid in a prior period) of such Person and its Restricted Subsidiaries for such
period to the extent that such depreciation, amortization and other non-cash
charges were deducted in computing such Consolidated Net Income.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that (i) the Net Income (but not loss) for such period of
any Person that is not a Restricted Subsidiary or that is accounted for by the
equity method of accounting shall be included only to the extent of the amount
of dividends or distributions paid in cash to the referent Person or a Wholly
Owned Restricted Subsidiary thereof, (ii) the Net Income of any Restricted
Subsidiary shall be excluded to the extent that the declaration or payment of
dividends or similar distributions by that Restricted Subsidiary of that Net
Income is not at the date of determination permitted without any
prior
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governmental approval (that has not been obtained) or, directly or indirectly,
by operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to that
Restricted Subsidiary or its stockholders, (iii) the Net Income of any Person
acquired in a pooling of interests transaction for any period prior to the date
of such acquisition shall be excluded, (iv) the cumulative effect of a change in
accounting principles shall be excluded and (v) the Net Income of any
Unrestricted Subsidiary shall be excluded, whether or not distributed to the
Company or one of its Restricted Subsidiaries.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors who (i) was a member of such Board of Directors
on the date of this Indenture or (ii) was nominated for election or elected to
such Board of Directors with, or whose election to such Board of Directors was
approved by, the affirmative vote of a majority of the Continuing Directors who
were members of such Board of Directors at the time of such nomination or
election or (iii) is any designee of the Permitted Holders or their Affiliates
or was nominated by the Permitted Holders or their Affiliates or any designees
of the Permitted Holders or their Affiliates on the Board of Directors.
"Corporate Trust Office of the Trustee" 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.
"Depositary" means, with respect to the Senior Subordinated 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 Senior Subordinated
Notes, until a successor shall have been appointed and become such pursuant to
the applicable provision of this Indenture, and, thereafter, "Depositary" shall
mean or include such successor.
"Designated Senior Debt" has the meaning set forth in Section 10.02
hereof.
"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, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, on or prior to the date
on which the Senior Subordinated Notes mature.
"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).
"Escrow Account" has the meaning given in the Senior Subordinated Note
Pledge and Escrow Agreement.
"Escrow Funds" means the Company's net proceeds from the Senior
Subordinated Notes together with $50.0 million of equity contributions from the
Sponsors and a deposit, if any, from the Sellers, all held in the Escrow Account
pursuant to the Senior Subordinated Note Pledge and Escrow Agreement.
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
Office, as operator of the Euroclear System.
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"Event of Default" has the meaning set forth in Section 6.01 hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Offer" means the offer that may be made by the Company
pursuant to the Registration Rights Agreement to exchange Series B Senior
Subordinated Notes for Series A Senior Subordinated Notes.
"Existing Indebtedness" means Indebtedness of AMF and its Restricted
Subsidiaries (other than Indebtedness under the New Bank Credit Agreement) in
existence on the date of this Indenture, until such amounts are repaid.
"First-Tier Subsidiaries" means each of the Subsidiaries directly
owned by the Company.
"Fixed Charge Coverage Ratio" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person and its
Restricted Subsidiaries for such period to the Fixed Charges of such Person and
its Restricted Subsidiaries for such period. In the event that the Company or
any of its Restricted Subsidiaries incurs, assumes, Guarantees or redeems any
Indebtedness (other than revolving credit borrowings) or issues or redeems
Preferred Stock subsequent to the commencement of the period for which the Fixed
Charge Coverage Ratio is being calculated but 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 shall be calculated
giving pro forma effect to such incurrence, assumption, Guarantee or redemption
of Indebtedness, or such issuance or redemption of Preferred Stock, as if the
same had occurred at the beginning of the applicable four-quarter reference
period. In addition, for purposes of making the computation referred to above,
(i) acquisitions that have been made by the Company or any of its Restricted
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
shall be deemed to have occurred on the first day of the four-quarter reference
period and Consolidated Cash Flow for such reference period shall be calculated
(A) without giving effect to clause (iii) of the proviso set forth in the
definition of Consolidated Net Income and (B) subject to clause (ii) of the
definition of Consolidated Net Income, by treating a portion of the consolidated
revenue of any acquired entity that derives at least 90% of its revenues from
the ownership and operation of bowling centers as Consolidated Cash Flow of such
entity, regardless of the actual operating results of such entity, such portion
being the percentage of the consolidated revenues of the Company's domestic
bowling center operations that constituted Consolidated Cash Flow for the most
recently ended four full fiscal quarters for which internal financial statements
are available and (ii) the Consolidated Cash Flow attributable to discontinued
operations, as determined in accordance with GAAP, and operations or businesses
disposed of prior to the Calculation Date, shall be excluded, and (iii) the
Fixed Charges attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall 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 Restricted Subsidiaries following the Calculation Date.
"Fixed Charges" means, with respect to any Person for any period, the
sum of (i) the consolidated interest expense of such Person and its Restricted
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)
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and (ii) the consolidated interest expense of such Person and its Restricted
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 Restricted Subsidiaries or secured by a Lien on assets of such Person
or one of its Restricted Subsidiaries (whether or not such Guarantee or Lien is
called upon) and (iv) the product of (a) all cash dividend payments (and
non-cash dividend payments in the case of a Person that is a Restricted
Subsidiary) paid to any Person other than the Company or a Restricted Subsidiary
on any series of Preferred Stock of such Person, times (b) a fraction, the
numerator of which is one and the denominator of which is one minus the then
current combined federal, state and local statutory tax rate of such Person
paying the dividend, expressed as a decimal, in each case, on a consolidated
basis and in accordance with GAAP.
"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 date of this Indenture.
"Global Notes" means, individually and collectively, the Regulation S
Temporary Global Note, the Regulation S Permanent Global Note and the Rule 144A
Global Note.
"Government Securities" means securities that are (a) direct
obligations of the United States of America for the timely payment of which its
full faith and credit is pledged or (b) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the timely payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States of America, which, in either
case, are not callable or redeemable at the option of the issuer thereof, and
shall also include a depository receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act), as custodian with respect to any such Government
Security or a specific payment of principal of or interest on any such
Government Security held by such custodian for the account of the holder of such
depository receipt; provided, that (except as required by law) such custodian is
not authorized to make any deduction from the amount payable to the holder of
such depository receipt from any amount received by the custodian in respect of
the Government Security or the specific payment of principal of or interest on
the Government Security evidenced by such depository receipt.
"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.
"Guarantors" means each of (i) Holdings, (ii) each of the First-Tier
Subsidiaries, (iii) each of the Second-Tier Subsidiaries and (iv) any other
Restricted Subsidiary of the Company that executes a Senior Subordinated
Guarantee pursuant to a supplemental indenture, in the form of Exhibit E hereto,
in accordance with the provisions of this Indenture, and, in each case, their
respective successors and assigns.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) currency exchange or interest rate swap
agreements, currency exchange or interest rate cap agreements and currency
exchange or interest rate collar agreements and (ii) other agreements or
arrangements designed to protect such Person against fluctuations in currency
exchange or interest rates.
"Holder" means a holder of any of the Senior Subordinated Notes or
Senior Subordinated Discount Notes, as the case may be.
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"Holdings" means AMF Group Holdings Inc., a Delaware corporation.
"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 indebtedness of any other Person.
"Indenture" means this Indenture, as amended or supplemented from time
to time.
"Independent Financial Advisor" means an accounting, appraisal,
investment banking firm or consultant of nationally recognized standing that is
not an Affiliate of the Company and that is, in the judgment of the Company's
Board of Directors, qualified to perform the task for which it has been engaged.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
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 of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP; provided that
an acquisition of Equity Interests or other securities by the Company for
consideration consisting of common equity securities of the Company shall not be
deemed to be an Investment. If the Company or any Subsidiary of the Company
sells or otherwise disposes of any Equity Interests of any direct or indirect
Subsidiary of the Company such that, after giving effect to any such sale or
disposition, the Company no longer owns, directly or indirectly, greater than
50% of the outstanding Equity Interests of such Subsidiary, the Company shall be
deemed to have made an Investment on the date of any such sale or disposition
equal to the fair market value of the Equity Interests of such Subsidiary not
sold or disposed of.
"Joint Ventures" means all corporations, partnerships, associations or
other business entities (i) that are engaged in a Principal Business and (ii) of
which 50% of the total voting power of shares of Capital Stock entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by the Company or one or more Restricted Subsidiaries
(or a combination thereof).
"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 shall accrue
for the intervening period.
"Letter of Credit Obligations" means all Obligations in respect of
Indebtedness of the Company or any of its Restricted Subsidiaries with respect
to letters of credit issued pursuant to the New Bank Credit Agreement which
Indebtedness shall be deemed to consist of (a) the aggregate maximum amount then
available to be drawn under all such letters of credit (the determination of
such maximum amount to assume compliance
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with all conditions for drawing), and (b) the aggregate amount that has then
been paid by, and not reimbursed to, the issuers under such letters of credit.
"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 thereof, any option or other agreement to sell or give a security
interest in and 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 Section 5 of the Registration Rights Agreement.
"Mortgage Financing" means the incurrence by the Company or a
Restricted Subsidiary of the Company of any Indebtedness secured by a mortgage
or other Lien on real property acquired or improved by the Company or any
Restricted Subsidiary of the Company after the date of this Indenture.
"Mortgage Refinancing" means the incurrence by the Company or a
Restricted Subsidiary of the Company of any Indebtedness secured by a mortgage
or other Lien on real property subject to a mortgage or other Lien existing on
the date of this Indenture or created or incurred subsequent to the date of this
Indenture as permitted by the terms of this Indenture and owned by the Company
or any Restricted Subsidiary of the Company.
"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 Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted 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 received by the
Company or any of its Restricted 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 brokerage 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 Senior Bank Debt) secured
by a Lien on the asset or assets that were the subject of such Asset Sale and
any reserve for adjustment in respect of the sale price of such asset or assets
established in accordance with GAAP.
"New Bank Credit Agreement" means the credit agreement to be entered
into by and among the Company and the financial institutions party thereto
providing a portion of the financing for the Acquisition, including any related
notes, guarantees, collateral documents, instruments and agreements executed in
connection therewith, and in each case as amended, modified, renewed, refunded,
replaced or refinanced (in whole or in part) from time to time.
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"Non-Recourse Debt" means Indebtedness of an Unrestricted Subsidiary
(i) as to which neither the Company nor any of its Restricted 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 Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity; and (iii) as to which the lenders have been notified in
writing that they will not have any recourse to the stock or assets of the
Company or any of its Restricted Subsidiaries.
"Note Custodian" means the Trustee, as custodian with respect to the
Senior Subordinated Notes in global form, or any successor entity thereto.
"Notes" means the Senior Subordinated Notes and the Senior
Subordinated Discount Notes.
"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.
"Offering Circular" means the circular or memorandum, dated March 7,
1996, prepared in connection with and relating to the Offering.
"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 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
Section 12.05 hereof.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
12.05 hereof. The counsel may be an employee of or counsel to the Company, any
Guarantor or the Trustee.
"Pari Passu Indebtedness" means indebtedness which ranks pari passu in
right of payment to the Senior Subordinated Notes.
"Permitted Asset Swap" means any one or more transactions in which the
Company or any of its Restricted Subsidiaries exchanges assets for consideration
consisting of cash and/or assets that are used or useful in a Principal Business
and/or a controlling equity interest in a Person engaged in a Principal
Business.
"Permitted Holders" means Goldman, Sachs & Co. and any of its
Affiliates.
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"Permitted Investments" means (a) any Investment in the Company or in
a Restricted Subsidiary of the Company; (b) any Investment in cash and Cash
Equivalents; (c) any Investment by the Company or any Restricted Subsidiary of
the Company in a Person, if as a result of such Investment (A) such Person
becomes a Restricted Subsidiary of the Company or (B) such Person, in one
transaction or a series of related transactions, 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 Restricted Subsidiary of the
Company; (d) any Investment made as a result of the receipt of consideration not
constituting cash or Cash Equivalents from an Asset Sale that was made pursuant
to and in compliance with Section 4.10 hereof; (e) any Investment existing on
the date of this Indenture; (f) Permitted Asset Swaps; (g) any Investment by
Restricted Subsidiaries in other Restricted Subsidiaries and Investments by
Subsidiaries that are not Restricted Subsidiaries in other Subsidiaries that are
not Restricted Subsidiaries; (h) advances to employees not in excess of $5.0
million outstanding at any one time; (i) any Investment acquired by the Company
or any of its Restricted Subsidiaries (A) in exchange for any other Investment
or accounts receivable held by the Company or any such Restricted Subsidiary in
connection with or as a result of a bankruptcy, workout, reorganization or
recapitalization of the issuer of such other Investment or accounts receivable
or (B) as a result of a foreclosure by the Company or any of its Restricted
Subsidiaries with respect to any secured Investment or other transfer of title
with respect to any secured Investment in default; (j) Hedging Obligations; (k)
loans and advances to officers, directors and employees for business-related
travel expenses, moving expenses and other similar expenses, in each case
incurred in the ordinary course of business; (l) Investments the payment for
which consists exclusively of Equity Interests (exclusive of Disqualified Stock)
of the Company; and (m) additional Investments having an aggregate fair market
value, taken together with all other Investments made pursuant to this clause
(m) that are at that time outstanding, not to exceed 5% of Total Assets at the
time of such Investment (with the fair market value of each Investment being
measured at the time made and without giving effect to subsequent changes in
value).
"Permitted Refinancing Indebtedness" means any Indebtedness of the
Company or any of its Restricted 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 Restricted Subsidiaries
in whole or in part; provided that: (i) the principal amount (or accreted value,
if applicable) of such Permitted Refinancing Indebtedness does not exceed the
principal amount (or accreted value, if applicable) of the Indebtedness so
extended, refinanced, renewed, replaced, defeased or refunded (plus the amount
of reasonable expenses incurred in connection therewith); (ii) such Permitted
Refinancing Indebtedness has a final maturity date later than the final maturity
date of, and 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 Senior Subordinated Notes, such
Permitted Refinancing Indebtedness has a final maturity date later than the
final maturity date of, and is subordinated in right of payment to, the Senior
Subordinated Notes on terms at least as favorable to the Holders of Senior
Subordinated Notes as those contained in the documentation governing the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; and (iv) such Indebtedness is incurred either by the Company or by the
Restricted 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, government or any agency or political subdivision
thereof or any other entity.
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"Preferred Stock" means any Equity Interest with preferential right of
payment of dividends or upon liquidation, dissolution, or winding up.
"Principal Business" means (i) the design, manufacture and sale of
bowling and bowling center equipment and allied products, including without
limitation, pinspotters, scoring equipment, masking panels, seating, lane
maintenance machines, bumper bowling systems, electronic foul detectors, back
office support systems, bowling pins, wood and synthetic lanes, ball returns,
ball lifts, ball cleaners, other equipment used to equip or outfit a bowling
center, spare and replacement parts, maintenance equipment and supplies, bowling
balls, bags, shoes, shirts, pool and billiard tables and cues, shuffleboard and
other gaming tables, and any other equipment and products used or useful in the
operation of bowling centers, (ii) the ownership and operation of bowling
centers, in the United States and throughout the world, including without
limitation bowling operations, shoe rental, food and beverage sales and
services, operation of lounges and bars at or within a bowling center (including
without limitation sales and service of alcoholic beverages and provision of
music and cabaret activities), operation of pro shops (including without
limitation sales and service of merchandise), billiards and other table games,
video and arcade games, play centers, movie viewing, gaming activities, such as
Pull-Tab, lottery, video poker and keno, and any other activities which are or
may become associated with bowling centers, and (iii) any activity or business
incidental, directly related or similar to those set forth in clauses (i) or
(ii) of this definition, or any business or activity that is a reasonable
extension, development or expansion thereof or ancillary thereto.
"Registration Rights Agreement" means that certain Registration Rights
Agreement, dated as of March 21, 1996, 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.
"Regulation S" means Regulation S promulgated under the Securities
Act.
"Regulation S Global Note" means a Regulation S Temporary Global Note
or Regulation S Permanent Global Note, as appropriate.
"Regulation S Permanent Global Note" means a permanent global note
that contains the paragraph referred to in footnote 1 and the additional
schedule referred to in footnote 2 to the form of the Senior Subordinated Note
attached hereto as Exhibit A-1, and that is deposited with and registered in the
name of the Depositary, representing a series of Senior Subordinated Notes sold
in reliance on Regulation S.
"Regulation S Temporary Global Note" means a single temporary global
note in the form of the Senior Subordinated Note attached hereto as Exhibit A-2
that is deposited with and registered in the name of the Depositary,
representing a series of Senior Subordinated Notes sold in reliance on
Regulation S.
"Related Parties" means any Person controlled by the Permitted
Holders, including any partnership of which any of the Permitted Holders or
their Affiliates is a general partner.
"Representative" has the meaning set forth in Section 10.02 hereof.
"Repurchase Offer" means an offer made by the Company to purchase all
or any portion of a Holder's Senior Subordinated Notes pursuant to Section 4.10
or 4.13 hereof.
"Responsible Officer," when used with respect to the Trustee, means
any Officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other Officer of the
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<PAGE> 18
Trustee customarily performing functions similar to those performed by any of
the above designated Officers and also means, with respect to a particular
corporate trust matter, any other Officer to whom such matter is referred
because of his knowledge of and familiarity with the particular subject.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not (i) an Unrestricted Subsidiary or (ii) a direct or
indirect Subsidiary of an Unrestricted Subsidiary; provided, however, that upon
the occurrence of any Unrestricted Subsidiary ceasing to be an Unrestricted
Subsidiary, such Subsidiary shall be included in the definition of Restricted
Subsidiary.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 144A Global Note" means a permanent global note that contains
the paragraph referred to in footnote 1 and the additional schedule referred to
in footnote 2 to the form of the Senior Subordinated Note attached hereto as
Exhibit A-1, and that is deposited with and registered in the name of the
Depositary, representing a series of Senior Subordinated Notes sold to U.S.
Persons in reliance on Rule 144A or another exemption from the registration
requirements of the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Second-Tier Subsidiaries" means each of the Subsidiaries directly
owned by the First-Tier Subsidiaries.
"Securities Act" means the Securities Act of 1933, as amended.
"Sellers" means the selling stockholders of AMF who are listed on the
signature page of the Stock Purchase Agreement.
"Senior Bank Debt" has the meaning set forth in Section 10.02 hereof.
"Senior Bank Hedging Obligations" has the meaning set forth in Section
10.02 hereof.
"Senior Debt" has the meaning set forth in Section 10.02 hereof.
"Senior Guarantees" means the Guarantees by the Guarantors of
Obligations under the New Bank Credit Agreement.
"Senior Subordinated Discount Note Indenture" means that certain
indenture, dated as of the date hereof, among the Company, the Guarantors and
American Bank National Association, as trustee, as amended or supplemented from
time to time, relating to the Senior Subordinated Discount Notes.
"Senior Subordinated Discount Notes" means the Company's 12 1/4%
Senior Subordinated Discount Notes due 2006 issued pursuant to the Senior
Subordinated Discount Note Indenture.
"Senior Subordinated Guarantees" means the Guarantees by the
Guarantors of the Obligations under this Indenture and the Senior Subordinated
Notes.
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<PAGE> 19
"Senior Subordinated Note Pledge and Escrow Agreement" means that
certain Pledge, Escrow and Assignment Agreement dated as of March 21, 1996 by
and among the Company, the Trustee, as trustee, and the Trustee, as collateral
agent, substantially in the form of Exhibit G hereto.
"Significant Restricted Subsidiary" means any Restricted Subsidiary
that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of
Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation
is in effect on the date of this Indenture.
"Special Redemption Price" has the meaning set forth in Section 3.09
hereof.
"Sponsors" means GS Capital Partners II, L.P., The Goldman Sachs
Group, L.P., GS Capital Partners II Offshore, L.P., Goldman, Sachs & Co.
Verwaltungs GmbH, as nominee for GS Capital Partners II Germany, C.L.P., Stone
Street Fund 1995, L.P., Bridge Street Fund 1995, L.P., Stone Street Fund 1996,
L.P. and Bridge Street Fund 1996, L.P.
"Stock Purchase Agreement" means that certain Stock Purchase
Agreement, dated as of February 16, 1996, by and among Holdings and the Sellers.
"Subordinated Indebtedness" means any Indebtedness (other than the
Notes) of the Company or any of its Restricted Subsidiaries which is expressly
by its terms subordinated in right of payment to any other Indebtedness.
"Subsidiary" means, with respect to any Person, (i) 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) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or one or more Subsidiaries
of such Person (or any combination thereof).
"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.
"Total Assets" means, with respect to any Person, the total
consolidated assets of such Person and its Restricted Subsidiaries, as shown on
the most recent balance sheet of such Person.
"Transfer Restricted Securities" means securities that bear or are
required to bear the legend set forth in Section 2.06 hereof.
"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.
"Trustees" means the Trustee together with the trustee named under the
Senior Subordinated Discount Note Indenture.
"Unrestricted Subsidiary" means (i) any Subsidiary (other than the
Guarantors or any successor to any of them) 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
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<PAGE> 20
Debt; (b) is not party to any agreement, contract, arrangement or understanding
with the Company or any Restricted Subsidiary of the Company unless the terms of
any such agreement, contract, arrangement or understanding are no less favorable
to the Company or such Restricted 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 Restricted Subsidiaries
has any direct or indirect 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; (d) has
not guaranteed or otherwise directly or indirectly provided credit support for
any Indebtedness of the Company or any of its Restricted Subsidiaries; and (e)
has at least one director on its board of directors that is not a director or
executive officer of the Company or any of its Restricted Subsidiaries and has
at least one executive officer that is not a director or executive officer of
the Company or any of its Restricted Subsidiaries. Any such designation by the
Board of Directors shall 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 pursuant to Section 4.07 hereof. If, at
any time, any Unrestricted Subsidiary would fail to meet the foregoing
requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an
Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of
such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
Company as of such date (and, if such Indebtedness is not permitted to be
incurred as of such date pursuant to Section 4.09 hereof, the Company shall be
in default of such covenant). The Board of Directors of the Company may at any
time designate any Unrestricted Subsidiary to be a Restricted Subsidiary;
provided that such designation shall be deemed to be an incurrence of
Indebtedness by a Restricted Subsidiary of the Company of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if (i) such Indebtedness is permitted under the covenant described
under Section 4.09 hereof and (ii) no Default or Event of Default would be in
existence following such designation.
"U.S. Person" has the meaning specified in Regulation S.
"Voting Stock" means, with respect to any Person, any class or series
of capital stock of such Person that is ordinarily entitled to vote in the
election of directors thereof at a meeting of stockholders called for such
purpose, without the occurrence of any additional event or contingency.
"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.
"Wholly Owned Restricted Subsidiary" is any Wholly Owned Subsidiary
that is a Restricted Subsidiary.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such
Person all of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares) shall at the time be owned by
such Person or by one or more Wholly Owned Subsidiaries of such Person or by
such Person and one or more Wholly Owned Subsidiaries of such Person.
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<PAGE> 21
SECTION 1.02. OTHER DEFINITIONS.
<TABLE>
<CAPTION>
Defined in
Term Section
<S> <C>
"Accredited Investor" ..................... 2.01
"Affiliate Transaction" ................... 4.11
"Asset Sale Offer" ........................ 3.10
"Authentication Order" .................... 2.02
"Change of Control Offer" ................. 4.13
"Change of Control Payment" ............... 4.13
"Change of Control Payment Date" .......... 4.13
"Covenant Defeasance" ..................... 8.03
"Custodian" ............................... 6.01
"Event of Default" ........................ 6.01
"Excess Proceeds" ......................... 4.10
"incur" ................................... 4.09
"incurrence" .............................. 4.09
"Legal Defeasance" ........................ 8.02
"Offer Amount" ............................ 3.10
"Offer Period" ............................ 3.10
"Paying Agent" ............................ 2.03
"Payment Blockage Notice" ................. 10.04
"Purchase Date" ........................... 3.10
"QIB" ..................................... 2.01
"Registrar" ............................... 2.03
"Restricted Payments" ..................... 4.07
"Retired Capital Stock" ................... 4.07
"Refunding Capital Stock" ................. 4.07
"Subordinated Asset Sale Offer" ........... 4.10
</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 Senior Subordinated Notes;
"indenture security Holder" means a Holder of a Senior Subordinated
Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Senior Subordinated Notes and the Senior Subordinated
Guarantees means the Company and the Guarantors, respectively, and any successor
obligor upon the Senior Subordinated Notes and the Senior Subordinated
Guarantees, respectively.
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<PAGE> 22
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 shall
be deemed to include substitute, replacement of successor sections or rules
adopted by the SEC from time to time.
ARTICLE 2
THE SENIOR SUBORDINATED NOTES
SECTION 2.01. FORM AND DATING.
The Senior Subordinated Notes and the Trustee's certificate of
authentication shall be substantially in the form of Exhibits A-1 and A-2
attached hereto. The Senior Subordinated Guarantees shall be substantially in
the form of Exhibit D attached hereto, the terms of which are incorporated in
and made part of this Indenture. The Senior Subordinated Notes may have
notations, legends or endorsements required by law, stock exchange rule or
usage. Each Senior Subordinated Note shall be dated the date of its
authentication. The Senior Subordinated Notes shall be issued in minimum
denominations of $1,000 and integral multiples of $1,000 in excess thereof. The
terms and provisions contained in the Senior Subordinated Notes shall
constitute, and are hereby expressly made, a part of this Indenture and the
Company, the Guarantors and the Trustee, by their execution and delivery of this
Indenture, expressly agree to such terms and provisions and to be bound thereby.
(a) Global Notes. Senior Subordinated Notes offered and sold to (i)
qualified institutional buyers as defined in Rule 144A ("QIBs") in reliance on
Rule 144A and (ii) institutional accredited investors as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act ("Accredited Investors") who
are not QIBs, shall be issued initially in the form of Rule 144A Global Notes,
which shall be deposited on behalf of the purchasers of the Senior Subordinated
Notes represented thereby with the Depositary at its New York office, and
registered in the name of the Depositary or a nominee of the Depositary, duly
executed by the Company and authenticated by the Trustee as hereinafter
provided. The aggregate principal amount of the Rule 144A Global Notes may from
time to time be increased or decreased by adjustments made on the records of the
Trustee and the Depositary or its nominee as hereinafter provided.
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<PAGE> 23
Senior Subordinated Notes offered and sold in reliance on Regulation S
shall be issued initially in the form of the Regulation S Temporary Global Note,
which shall be deposited on behalf of the purchasers of the Senior Subordinated
Notes represented thereby with the Trustee, at its New York office, as custodian
for the Depositary, and registered in the name of the Depositary or the nominee
of the Depositary for the accounts of designated agents holding on behalf of
Euroclear or Cedel Bank, duly executed by the Company and authenticated by the
Trustee as hereinafter provided. The "40-day restricted period" (as defined in
Regulation S) shall be terminated upon the receipt by the Trustee of (i) a
written certificate from the Depositary, together with copies of certificates
from Euroclear and Cedel Bank certifying that they have received certification
of non-United States beneficial ownership of 100% of the aggregate principal
amount of the Regulation S Temporary Global Note (except to the extent of any
beneficial owners thereof who acquired an interest therein pursuant to another
exemption from registration under the Securities Act and who will take delivery
of a beneficial ownership interest in a Rule 144A Global Note, all as
contemplated by Section 2.06(a)(ii) hereof), and (ii) an Officers' Certificate
from the Company. Following the termination of the 40-day restricted period,
beneficial interests in the Regulation S Temporary Global Note shall be
exchanged for beneficial interests in Regulation S Permanent Global Notes
pursuant to the Applicable Procedures. Simultaneously with the authentication of
Regulation S Permanent Global Notes, the Trustee shall cancel the Regulation S
Temporary Global Note. The aggregate principal amount of the Regulation S
Temporary Global Note and the Regulation S Permanent Global Notes may from time
to time be increased or decreased by adjustments made on the records of the
Trustee and the Depositary or its nominee, as the case may be, in connection
with transfers of interest as hereinafter provided.
Each Global Note shall represent such of the outstanding Senior
Subordinated Notes as shall be specified therein and each shall provide that it
shall represent the aggregate amount of outstanding Senior Subordinated Notes
from time to time endorsed thereon and that the aggregate amount of outstanding
Senior Subordinated Notes represented thereby may from time to time be reduced
or increased, as appropriate, to reflect exchanges, redemptions and transfers of
interest. Any endorsement of a Global Note to reflect the amount of any increase
or decrease in the amount of outstanding Senior Subordinated Notes represented
thereby shall be made by the Trustee or the Note Custodian, at the direction of
the Trustee, in accordance with instructions given by the Holder thereof as
required by Section 2.06 hereof.
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 interests in the Regulation S Temporary Global Note and the
Regulation S Permanent Global Notes that are held by the Agent Members through
Euroclear or Cedel Bank.
Except as set forth in Section 2.06 hereof, the Global Notes may be
transferred, in whole and not in part, only to another nominee of the Depositary
or to a successor of the Depositary or its nominee.
(b) Book-Entry Provisions. This Section 2.01(b) shall apply only to
Rule 144A Global Notes and the Regulation S Permanent Global Notes deposited
with or on behalf of the Depositary.
The Company shall execute and the Trustee shall, in accordance with
this Section 2.01(b), authenticate and deliver the Global Notes that (i) shall
be registered in the name of the Depositary or the nominee of the Depositary and
(ii) shall be delivered by the Trustee to the Depositary or pursuant to the
Depositary's instructions or held by the Trustee as custodian for the
Depositary.
Agent Members shall have no rights either under this Indenture with
respect to any Global Note held on their behalf by the Depositary or by the
Trustee as custodian for the Depositary or under such
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<PAGE> 24
Global Note, and the Depositary may be treated by the Company, the Trustee and
any agent of the Company or the Trustee as the absolute owner of such Global
Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein
shall prevent the Company, the Trustee or any agent of the Company or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depositary or impair, as between the Depositary
and its Agent Members, the operation of customary practices of such Depositary
governing the exercise of the rights of an owner of a beneficial interest in any
Global Note.
(c) Certificated Notes. Senior Subordinated Notes issued in
certificated form shall be substantially in the form of Exhibit A-1 attached
hereto (but without including the text referred to in footnotes 1 and 2
thereto).
SECTION 2.02. EXECUTION AND AUTHENTICATION.
Two Officers of the Company shall sign the Senior Subordinated Notes
for the Company by manual or facsimile signature. The Company's seal shall be
reproduced on the Senior Subordinated Notes and may be in facsimile form.
If an Officer of the Company whose signature is on a Senior
Subordinated Note no longer holds that office at the time a Senior Subordinated
Note is authenticated, the Senior Subordinated Note shall nevertheless be valid.
A Senior Subordinated Note shall not be valid until authenticated by
the manual signature of the Trustee. The signature shall be conclusive evidence
that the Senior Subordinated Note has been authenticated under this Indenture.
The Trustee shall, upon receipt of a written order of the Company
signed by two Officers of the Company (the "Authentication Order"), authenticate
Senior Subordinated Notes for original issue up to the aggregate principal
amount stated in paragraph 4 of the Senior Subordinated Notes. The aggregate
principal amount of Senior Subordinated Notes outstanding at any time may not
exceed such amount except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Senior Subordinated Notes. An authenticating agent may
authenticate Senior Subordinated 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 the Company or an Affiliate of the Company.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency where Senior
Subordinated Notes may be presented for registration of transfer or for exchange
("Registrar") and an office or agency where Senior Subordinated Notes may be
presented for payment ("Paying Agent"). The Registrar shall keep a register of
the Senior Subordinated 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
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<PAGE> 25
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 the 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 Note Custodian with respect to the Global Notes. The
Company initially appoints the Trustee to act as the Registrar and Paying Agent
with respect to the Certificated 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, if any, or interest, including Liquidated Damages, if any,
on the Senior Subordinated Notes, and will notify the Trustee of any default by
the Company or any Guarantor 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 or a Guarantor, the Trustee shall serve as
Paying Agent for the Senior Subordinated 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 and/or the Guarantors shall furnish to the
Trustee at least 10 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 Senior Subordinated Notes and the Company and the Guarantors
shall otherwise comply with TIA Section 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Global Notes. The transfer and exchange
of Global Notes or beneficial interests therein shall be effected through the
Depositary, in accordance with this Indenture and the procedures of the
Depositary therefor, which shall include restrictions on transfer comparable to
those set forth herein to the extent required by the Securities Act. The Trustee
shall have no obligation to ascertain the Depositary's compliance with such
restrictions on transfer. Beneficial interests in a Global Note may be
transferred to Persons who take delivery thereof in the form of a beneficial
interest in the same Global Note in accordance with the transfer restrictions
set forth in the legend in subsection (g) of this Section 2.06. Transfers of
beneficial interests in the Global Notes to Persons required to take delivery
thereof in the form of an interest in another Global Note shall be permitted as
follows:
(i) Rule 144A Global Note to Regulation S Global Note. If, at
any time, an owner of a beneficial interest in a Rule 144A
Global Note deposited with the Depositary (or the
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Trustee as custodian for the Depositary) wishes to transfer
its beneficial interest in such Rule 144A Global Note to a
Person who is required or permitted to take delivery thereof
in the form of an interest in a Regulation S Global Note,
such owner shall, subject to the Applicable Procedures,
exchange or cause the exchange of such interest for an
equivalent beneficial interest in a Regulation S Global Note
as provided in this Section 2.06(a)(i). Upon receipt by the
Trustee of (1) instructions given in accordance with the
Applicable Procedures from an Agent Member directing the
Trustee to credit or cause to be credited a beneficial
interest in the Regulation S Global Note in an amount equal
to the beneficial interest in the Rule 144A Global Note to
be exchanged, (2) a written order given in accordance with
the Applicable Procedures containing information regarding
the participant account of the Depositary and the Euroclear
or Cedel Bank account to be credited with such increase and
(3) a certificate in the form of Exhibit B-1 hereto given by
the owner of such beneficial interest stating that the
transfer of such interest has been made in compliance with
the transfer restrictions applicable to the Global Notes and
pursuant to and in accordance with Rule 903 or Rule 904 of
Regulation S, then the Trustee, as Registrar, shall instruct
the Depositary to reduce or cause to be reduced the
aggregate principal amount at maturity of the applicable
Rule 144A Global Note and to increase or cause to be
increased the aggregate principal amount at maturity of the
applicable Regulation S Global Note by the principal amount
at maturity of the beneficial interest in the Rule 144A
Global Note to be exchanged or transferred, to credit or
cause to be credited to the account of the Person specified
in such instructions a beneficial interest in the Regulation
S Global Note equal to the reduction in the aggregate
principal amount at maturity of the Rule 144A Global Note,
and to debit, or cause to be debited, from the account of
the Person making such exchange or transfer the beneficial
interest in the Rule 144A Global Note that is being
exchanged or transferred.
(ii) Regulation S Global Note to Rule 144A Global Note. If, at
any time, an owner of a beneficial interest in a Regulation
S Global Note deposited with the Depositary (or with the
Trustee as custodian for the Depositary) wishes to transfer
its beneficial interest in such Regulation S Global Note to
a Person who is required or permitted to take delivery
thereof in the form of an interest in a Rule 144A Global
Note, such owner shall, subject to the Applicable
Procedures, exchange or cause the exchange of such interest
for an equivalent beneficial interest in a Rule 144A Global
Note as provided in this Section 2.06(a)(ii). Upon receipt
by the Trustee of (1) instructions from Euroclear or Cedel
Bank, if applicable, and the Depositary, directing the
Trustee, as Registrar, to credit or cause to be credited a
beneficial interest in the Rule 144A Global Note equal to
the beneficial interest in the Regulation S Global Note to
be exchanged, such instructions to contain information
regarding the participant account with the Depositary to be
credited with such increase, (2) a written order given in
accordance with the Applicable Procedures containing
information regarding the participant account of the
Depositary and (3) a certificate in the form of Exhibit B-2
attached hereto given by the owner of such beneficial
interest stating (A) if the transfer is pursuant to Rule
144A, that the Person transferring such interest in a
Regulation S Global Note reasonably believes that the Person
acquiring such interest in a Rule 144A Global Note is a QIB
and is obtaining such beneficial interest in a transaction
meeting the requirements of Rule 144A and any applicable
blue sky or securities laws of any state of the United
States, (B) that the transfer complies with the requirements
of Rule 144 under the Securities Act and any applicable blue
sky or securities laws of any state of the United States or
(C) if the transfer is pursuant to any
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other exemption from the registration requirements of the
Securities Act, that the transfer of such interest has been
made in compliance with the transfer restrictions applicable
to the Global Notes and pursuant to and in accordance with
the requirements of the exemption claimed, such statement to
be supported by an Opinion of Counsel from the transferee or
the transferor in form reasonably acceptable to the Company
and to the Registrar, then the Trustee, as Registrar, shall
instruct the Depositary to reduce or cause to be reduced the
aggregate principal amount at maturity of such Regulation S
Global Note and to increase or cause to be increased the
aggregate principal amount at maturity of the applicable
Rule 144A Global Note by the principal amount at maturity of
the beneficial interest in the Regulation S Global Note to
be exchanged or transferred, and the Trustee, as Registrar,
shall instruct the Depositary, concurrently with such
reduction, to credit or cause to be credited to the account
of the Person specified in such instructions a beneficial
interest in the applicable Rule 144A Global Note equal to
the reduction in the aggregate principal amount at maturity
of such Regulation S Global Note and to debit or cause to be
debited from the account of the Person making such transfer
the beneficial interest in the Regulation S Global Note that
is being exchanged or transferred.
(b) Transfer and Exchange of Certificated Notes. When Certificated
Notes are presented by a Holder to the Registrar with a request:
(x) to register the transfer of the Certificated Notes; or
(y) to exchange such Certificated Notes for an equal principal
amount of Certificated Notes of other authorized
denominations,
the Registrar shall register the transfer or make the exchange as requested;
provided, however, that the Certificated Notes presented or surrendered for
registration of transfer or exchange:
(i) shall be duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the
Registrar duly executed by such Holder or by his attorney,
duly authorized in writing; and
(ii) in the case of a Certificated Note that is a Transfer
Restricted Security, such request shall be accompanied by
the following additional information and documents, as
applicable:
(A) if such Transfer Restricted Security is being delivered
to the Registrar by a Holder for registration in the
name of such Holder, without transfer, or such Transfer
Restricted Security is being transferred to the Company,
a certification to that effect from such Holder (in
substantially the form of Exhibit B-3 hereto);
(B) if such Transfer Restricted Security is being
transferred to a QIB in accordance with Rule 144A under
the Securities Act or pursuant to an exemption from
registration in accordance with Rule 144 under the
Securities Act or pursuant to an effective registration
statement under the Securities Act, a certification to
that effect from such Holder (in substantially the form
of Exhibit B-3 hereto); or
(C) if such Transfer Restricted Security is being
transferred in reliance on any other exemption from the
registration requirements of the Securities Act, a
certification
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to that effect from such Holder (in substantially the
form of Exhibit B-3 hereto) and an Opinion of Counsel
from such Holder or the transferee reasonably acceptable
to the Company and to the Registrar to the effect that
such transfer is in compliance with the Securities Act.
(c) Transfer of a Beneficial Interest in a Rule 144A Global Note or
Regulation S Permanent Global Note for a Certificated Note.
(i) Any Person having a beneficial interest in a Rule 144A
Global Note or Regulation S Permanent Global Note may upon
request, subject to the Applicable Procedures, exchange such
beneficial interest for a Certificated Note. Upon receipt by
the Trustee of written instructions or such other form of
instructions as is customary for the Depositary (or
Euroclear or Cedel Bank, if applicable), from the Depositary
or its nominee on behalf of any Person having a beneficial
interest in a Rule 144A Global Note or Regulation S
Permanent Global Note, and, in the case of a Transfer
Restricted Security, the following additional information
and documents (all of which may be submitted by facsimile):
(A) if such beneficial interest is being transferred to the
Person designated by the Depositary as being the
beneficial owner, a certification to that effect from
such Person (in substantially the form of Exhibit B-4
hereto);
(B) if such beneficial interest is being transferred to a
QIB in accordance with Rule 144A under the Securities
Act or pursuant to an exemption from registration in
accordance with Rule 144 under the Securities Act or
pursuant to an effective registration statement under
the Securities Act, a certification to that effect from
the transferor (in substantially the form of Exhibit B-4
hereto); or
(C) if such beneficial interest is being transferred in
reliance on any other exemption from the registration
requirements of the Securities Act, a certification to
that effect from the transferor (in substantially the
form of Exhibit B-4 hereto) and an Opinion of Counsel
from the transferee or the transferor reasonably
acceptable to the Company and to the Registrar to the
effect that such transfer is in compliance with the
Securities Act,
in which case the Trustee or the Note Custodian, at the
direction of the Trustee, shall, in accordance with the
standing instructions and procedures existing between the
Depositary and the Note Custodian, cause the aggregate
principal amount of Rule 144A Global Notes or Regulation S
Permanent Global Notes, as applicable, to be reduced
accordingly and, following such reduction, the Company shall
execute and, the Trustee shall authenticate and deliver to
the transferee a Certificated Note in the appropriate
principal amount.
(ii) Certificated Notes issued in exchange for a beneficial
interest in a Rule 144A Global Note or Regulation S
Permanent Global Note, as applicable, pursuant to this
Section 2.06(c) shall be registered in such names and in
such authorized denominations as the Depositary, pursuant to
instructions from its direct or indirect participants or
otherwise, shall instruct the Trustee. The Trustee shall
deliver such Certificated Notes to the Persons in whose
names such Senior Subordinated Notes are so registered.
Following any such issuance of Certificated Notes, the
Trustee, as Registrar, shall instruct the Depositary
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to reduce or cause to be reduced the aggregate principal
amount at maturity of the applicable Global Note to reflect
the transfer.
(d) Restrictions on Transfer and Exchange of Global Notes.
Notwithstanding any other provision of this Indenture (other than the provisions
set forth in subsection (f) of this Section 2.06), a Global Note may not be
transferred as a whole except 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.
(e) Transfer and Exchange of a Certificated Note for a Beneficial
Interest in a Global Note. A Certificated Note may not be transferred or
exchanged for a beneficial interest in a Global Note.
(f) Authentication of Certificated Notes in Absence of Depositary. If
at any time:
(i) the Depositary for the Senior Subordinated Notes notifies
the Company that the Depositary is unwilling or unable to
continue as Depositary for the Global Notes and a successor
Depositary for the Global Notes is not appointed by the
Company within 90 days after delivery of such notice; or
(ii) the Company delivers to the Trustee an Officers' Certificate
or an order signed by two Officers of the Company notifying
the Trustee that it elects to cause the issuance of
Certificated Notes under this Indenture,
then the Company shall execute, and the Trustee shall, upon receipt of an
Authentication Order in accordance with Section 2.02 hereof, authenticate and
deliver, Certificated Notes in an aggregate principal amount equal to the
principal amount of the Global Notes in exchange for such Global Notes.
(g) Legends.
(i) Except as permitted by the following paragraphs (ii), (iii)
and (iv), each Senior Subordinated Note certificate
evidencing Global Notes and Certificated Notes (and all
Senior Subordinated Notes issued in exchange therefor or
substitution thereof) shall bear a legend in substantially
the following form:
"THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933 (THE "SECURITIES
ACT") AND (A) MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT (1) BY THE INITIAL INVESTOR (a) TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER
THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (b) IN AN OFFSHORE
TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF
REGULATION S UNDER THE SECURITIES ACT, (c) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (d) TO THE
COMPANY OR (e) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND (2) BY SUBSEQUENT
INVESTORS, AS SET FORTH IN
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(1) ABOVE AND, IN ADDITION, TO AN INSTITUTIONAL ACCREDITED
INVESTOR IN A TRANSACTION EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, AND, IN EACH CASE, IN
ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES
OF THE UNITED STATES AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM
IT OF THE NOTES EVIDENCED HEREBY OF THE RESALE RESTRICTIONS
SET FORTH IN (A) ABOVE. NO REPRESENTATION CAN BE MADE AS TO
THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 FOR
RESALES OF THE NOTES."
(ii) Upon any sale or transfer of a Transfer Restricted Security
(including any Transfer Restricted Security represented by a
Global Note) pursuant to Rule 144 under the Securities Act
or pursuant to an effective registration statement under the
Securities Act:
(A) in the case of any Transfer Restricted Security that is
a Certificated Note, the Registrar shall permit the
Holder thereof to exchange such Transfer Restricted
Security for a Certificated Note that does not bear the
legend set forth in (i) above and rescind any
restriction on the transfer of such Transfer Restricted
Security upon receipt of a certification from the
transferring Holder substantially in the form of Exhibit
B-4 hereto; and
(B) in the case of any Transfer Restricted Security
represented by a Global Note, such Transfer Restricted
Security shall not be required to bear the legend set
forth in (i) above, but shall continue to be subject to
the provisions of Section 2.06(a) and (b) hereof;
provided, however, that with respect to any request for
an exchange of a Transfer Restricted Security that is
represented by a Global Note for a Certificated Note
that does not bear the legend set forth in (i) above,
which request is made in reliance upon Rule 144, the
Holder thereof shall certify in writing to the Registrar
that such request is being made pursuant to Rule 144
(such certification to be substantially in the form of
Exhibit B-4 hereto).
(iii) Upon any sale or transfer of a Transfer Restricted Security
(including any Transfer Restricted Security represented by a
Global Note) in reliance on any exemption from the
registration requirements of the Securities Act (other than
exemptions pursuant to Rule 144A or Rule 144 under the
Securities Act) in which the Holder or the transferee
provides an Opinion of Counsel to the Company and the
Registrar in form and substance reasonably acceptable to the
Company and the Registrar (which Opinion of Counsel shall
also state that the transfer restrictions contained in the
legend are no longer applicable):
(A) in the case of any Transfer Restricted Security that is
a Certificated Note, the Registrar shall permit the
Holder thereof to exchange such Transfer Restricted
Security for a Certificated Note that does not bear the
legend set forth in (i) above and rescind any
restriction on the transfer of such Transfer Restricted
Security; and
(B) in the case of any Transfer Restricted Security
represented by a Global Note, such Transfer Restricted
Security shall not be required to bear the legend set
forth in (i) above, but shall continue to be subject to
the provisions of Section 2.06(a) and (b) hereof.
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(iv) Notwithstanding the foregoing, upon consummation 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 hereof,
the Trustee shall authenticate Series B Senior Subordinated
Notes in exchange for Series A Senior Subordinated Notes
accepted for exchange in the Exchange Offer, which Series B
Senior Subordinated Notes shall not bear the legend set
forth in (i) above, and the Registrar shall rescind any
restriction on the transfer of such Series B Senior
Subordinated Notes, in each case unless the Holder of such
Series A Senior Subordinated Notes is either (A) a
broker-dealer, (B) a Person participating in the
distribution of the Series A Senior Subordinated Notes or
(C) a Person who is an affiliate (as defined in Rule 144A)
of the Company.
(h) Cancellation and/or Adjustment of Global Notes. At such time as
all beneficial interests in Global Notes have been exchanged for Certificated
Notes, redeemed, repurchased or cancelled, all Global Notes 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 an interest in another Global Note or for Certificated
Notes, redeemed, repurchased or cancelled, the principal amount of Senior
Subordinated Notes represented by such Global Note shall be reduced accordingly
and an endorsement shall be made on such Global Note, by the Trustee or the Note
Custodian, at the direction of the Trustee, to reflect such reduction.
(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
Certificated Notes and Global Notes at the Registrar's
request.
(ii) No service charge shall be made to a Holder 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 3.07, 3.09, 4.10, 4.13 and 9.05
hereof).
(iii) The Registrar shall not be required to register the transfer
of or exchange any Senior Subordinated Note selected for
redemption in whole or in part, except the unredeemed
portion of any Senior Subordinated Note being redeemed in
part.
(iv) All Certificated Notes and Global Notes issued upon any
registration of transfer or exchange of Certificated Notes
or Global Notes shall be the valid obligations of the
Company, evidencing the same debt, and entitled to the same
benefits under this Indenture, as the Certificated Notes or
Global 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
Senior Subordinated Notes during a period beginning at
the opening of business 15 days before the day of any
selection of Senior Subordinated Notes for redemption
under Section 3.02 hereof and ending at the close of
business on the day of selection; or
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(B) to register the transfer of or to exchange any Senior
Subordinated Note so selected for redemption in whole
or in part, except the unredeemed portion of any Senior
Subordinated Note being redeemed in part; or
(C) to register the transfer of or to exchange a Senior
Subordinated 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 Senior Subordinated Note, the Trustee, any Agent and
the Company may deem and treat the Person in whose name any
Senior Subordinated Note is registered as the absolute owner
of such Senior Subordinated Note for the purpose of
receiving payment of principal of and interest on such
Senior Subordinated Notes, and neither the Trustee, any
Agent nor the Company shall be affected by notice to the
contrary.
(vii) The Trustee shall authenticate Certificated Notes and Global
Notes in accordance with the provisions of Section 2.02
hereof.
SECTION 2.07. REPLACEMENT SENIOR SUBORDINATED NOTES.
If any mutilated Senior Subordinated Note is surrendered to the
Trustee, or the Company and the Trustee receive evidence to their satisfaction
of the destruction, loss or theft of any Senior Subordinated Note, the Company
shall issue and the Trustee shall authenticate a replacement Senior Subordinated
Note if the conditions for replacement set forth herein have been 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 Senior Subordinated Note is replaced.
The Company and the Trustee may charge for their expenses in replacing a Senior
Subordinated Note.
Every replacement Senior Subordinated 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 Senior Subordinated Notes duly issued
hereunder.
SECTION 2.08. OUTSTANDING SENIOR SUBORDINATED NOTES.
The Senior Subordinated Notes outstanding at any time are all the
Senior Subordinated 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 Senior Subordinated Note does not
cease to be outstanding because the Company or an Affiliate of the Company holds
the Senior Subordinated Note.
If a Senior Subordinated 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 Senior Subordinated Note is held by a bona
fide purchaser.
If the principal amount of any Senior Subordinated Note is considered
paid under Section 4.01 hereof, it ceases to be outstanding and interest on it
ceases to accrue.
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If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Senior Subordinated Notes payable on that date, then on and
after that date such Senior Subordinated Notes shall be deemed to be no longer
outstanding and shall cease to accrue interest.
SECTION 2.09. TREASURY SENIOR SUBORDINATED NOTES.
In determining whether the Holders of the required principal amount of
Senior Subordinated Notes have concurred in any direction, waiver or consent,
Senior Subordinated Notes owned by the Company, any Guarantor, or by any Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company or any Guarantor (other than Senior Subordinated
Notes held by Goldman, Sachs & Co.), shall be considered as though not
outstanding, except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Senior Subordinated Notes shown on the Trustee's register as being so owned
shall be so disregarded.
SECTION 2.10. TEMPORARY SENIOR SUBORDINATED NOTES.
Until Certificated Notes are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Senior Subordinated Notes
upon a written order of the Company signed by two Officers of the Company.
Temporary Senior Subordinated Notes shall be substantially in the form of
Certificated Notes but may have variations that the Company considers
appropriate for temporary Senior Subordinated Notes and as shall be reasonably
acceptable to the Trustee. Without unreasonable delay, the Company shall prepare
and the Trustee shall authenticate Certificated Notes in exchange for temporary
Senior Subordinated Notes.
Holders of temporary Senior Subordinated Notes shall be entitled to
all of the benefits of this Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Senior Subordinated Notes to the
Trustee for cancellation. The Registrar and Paying Agent shall forward to the
Trustee any Senior Subordinated Notes surrendered to them for registration of
transfer, exchange or payment. The Trustee and no one else shall cancel all
Senior Subordinated Notes surrendered for registration of transfer, exchange,
payment, replacement or cancellation and shall retain or destroy, in accordance
with its normal practice, cancelled Senior Subordinated Notes (subject to the
record retention requirement of the Exchange Act). If such Senior Subordinated
Notes are destroyed, certification of the destruction of all cancelled Senior
Subordinated Notes shall be delivered to the Company. The Company may not issue
new Senior Subordinated Notes to replace Senior Subordinated 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 Senior
Subordinated 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 Senior Subordinated 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 Senior Subordinated Note and the date of the
proposed payment. The Company shall fix or cause to be fixed each such special
record
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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.
ARTICLE 3
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Senior Subordinated Notes pursuant to
the optional redemption provisions of Section 3.07 hereof, it shall furnish to
the Trustee, at least 30 days (or at least 45 days if the Company requests the
Trustee to give notice to the Holders pursuant to Section 3.03 hereof) 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 Senior
Subordinated Notes to be redeemed and (iv) the redemption price.
SECTION 3.02. SELECTION OF SENIOR SUBORDINATED NOTES TO BE REDEEMED.
If less than all of the Senior Subordinated Notes are to be redeemed
at any time, selection of the Senior Subordinated Notes for redemption shall be
made by the Trustee in compliance with the requirements of the principal
national securities exchange, if any, on which the Senior Subordinated Notes are
listed or, if the Senior Subordinated Notes are not so listed, on a pro rata
basis, by lot or by such method as the Trustee shall deem fair and appropriate;
provided that, subject to the limitations described above, the Company may, at
its option, elect to redeem either Senior Subordinated Notes, Senior
Subordinated Discount Notes, or both Senior Subordinated Notes and Senior
Subordinated Discount Notes; and provided further, that no Senior Subordinated
Notes of $1,000 or less shall be redeemed in part. In the event of partial
redemption by lot, the particular Senior Subordinated 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 Senior
Subordinated Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of the Senior
Subordinated Notes selected for redemption and, in the case of any Senior
Subordinated Note selected for partial redemption, the principal amount thereof
to be redeemed. Senior Subordinated Notes and portions of Senior Subordinated
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Senior Subordinated Notes of a Holder are to be
redeemed, the entire outstanding amount of Senior Subordinated Notes held by
such Holder, even if not a multiple of $1,000, shall be redeemed. If any Senior
Subordinated Note is to be redeemed in part only, a new Senior Subordinated 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 Senior
Subordinated Note. On and after the redemption date, unless the Company defaults
in payment of the redemption price, interest ceases to accrue on Senior
Subordinated Notes or portions of them called for redemption. Except as provided
in this Section 3.02, provisions of this Indenture that apply to Senior
Subordinated Notes called for redemption also apply to portions of Senior
Subordinated Notes called for redemption.
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SECTION 3.03. NOTICE OF REDEMPTION.
Subject to the provisions of Section 3.10 hereof, 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 of
Senior Subordinated Notes to be redeemed at such Holder's registered address.
The notice shall identify the Senior Subordinated Notes to be redeemed
and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Senior Subordinated Note is being redeemed in part, the
portion of the principal amount of such Senior Subordinated Note to be
redeemed and that, after the redemption date upon surrender of such Senior
Subordinated Note, a new Senior Subordinated Note or Senior Subordinated
Notes in principal amount equal to the unredeemed portion shall be issued
upon cancellation of the original Senior Subordinated Note;
(d) the name and address of the Paying Agent or the place or places
where such Senior Subordinated Notes are to be surrendered for payment;
(e) that Senior Subordinated 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 Senior Subordinated Notes called for redemption ceases
to accrue on and after the redemption date;
(g) the paragraph of the Senior Subordinated Notes and/or Section of
this Indenture pursuant to which the Senior Subordinated 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 Senior
Subordinated 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, Senior Subordinated 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.
At least one Business Day prior to the redemption date, the Company
shall deposit with the Trustee or with the Paying Agent money sufficient to pay
the redemption price of and accrued interest on all Senior
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<PAGE> 36
Subordinated Notes to be redeemed on that date. The Trustee or the Paying Agent
shall promptly return to the 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 Senior Subordinated 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 Senior Subordinated Notes or the portions of Senior Subordinated Notes
called for redemption. If a Senior Subordinated 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
Senior Subordinated Note was registered at the close of business on such record
date. If any Senior Subordinated 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 Senior Subordinated Notes and in Section 4.01 hereof.
SECTION 3.06. SENIOR SUBORDINATED NOTES REDEEMED IN PART.
Upon surrender of a Senior Subordinated Note that is redeemed in part,
the Company shall issue and the Trustee shall authenticate for the Holder at the
expense of the Company a new Senior Subordinated Note equal in principal amount
to the unredeemed portion of the Senior Subordinated Note surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
(a) Except as set forth in clause (b) of this Section 3.07, the
Company shall not have the option to redeem the Senior Subordinated Notes
pursuant to this Section 3.07 prior to March 15, 2001. From and after March 15,
2001, the Company shall have the option to redeem the Senior Subordinated Notes,
in whole or in part, upon not less than 30 nor more than 60 days' written notice
at the Senior Subordinated Note redemption prices (expressed as percentages of
principal amount) set forth below, plus accrued and unpaid interest (including
Liquidated Damages, if any) thereon to the applicable redemption date, if
redeemed during the twelve-month period beginning on March 15 of each of the
years indicated below:
<TABLE>
<CAPTION>
Percentage of
Year Principal Amount
---- ----------------
<S> <C>
2001....................... 105.438%
2002....................... 103.625%
2003....................... 101.813%
2004 and thereafter........ 100.000%
</TABLE>
(b) Notwithstanding the provisions of clause (a) of this Section 3.07,
at any time prior to March 15, 1999, the Company may, at its option, on any one
or more occasions, redeem up to $100.0 million in aggregate principal amount of
Senior Subordinated Notes at a redemption price equal to 110.875% of
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<PAGE> 37
the principal amount thereof, plus accrued and unpaid interest, including
Liquidated Damages, if any, with the net proceeds of public or private sales of
common stock of, or contributions to the common equity capital of, the Company;
provided that at least $150.0 million in aggregate principal amount of Senior
Subordinated Notes remains outstanding immediately after the occurrence of such
redemption; and provided, further, that such redemption shall occur within 60
days of the date of the closing of the related sale of common stock of, or
capital contribution to, the Company.
(c) Any redemption pursuant to this Section 3.07 shall be made
pursuant to the provisions of Sections 3.01 through 3.06 hereof.
SECTION 3.08. MANDATORY REDEMPTION.
Except as set forth under Sections 3.09, 4.10 and 4.13 hereof, the
Company shall not be required to make mandatory redemption or sinking fund
payments with respect to the Senior Subordinated Notes.
SECTION 3.09. SPECIAL MANDATORY REDEMPTION.
(a) The Escrow Funds, in the amount of the net proceeds of the
Offering, together with $50.0 million of equity contributions from the Sponsors
and one-half of the deposit, if any, from the Sellers, shall be held by the
Trustee in the Escrow Account pursuant to the Senior Subordinated Note Pledge
and Escrow Agreement. The Escrow Funds shall be invested in Cash Equivalents, as
directed from time to time by the Company.
(b) In addition to any payments required by Sections 4.10 and 4.13
hereof, if consummation of the Acquisition has not occurred on or prior to May
31, 1996, the Company shall redeem all of the outstanding Senior Subordinated
Notes upon seven days' prior written notice to the Holders with the Escrow Funds
delivered to the Paying Agent pursuant to the terms of the Senior Subordinated
Note Pledge and Escrow Agreement, at a redemption price equal to the Special
Redemption Price, plus accrued and unpaid interest, including Liquidated
Damages, if any, as of the date of redemption. Such redemption may be made prior
to May 31, 1996, in accordance with the provisions described in this Section
3.09 if the Company determines at such time that it will not consummate the
Acquisition.
(c) Immediately upon receipt by the Paying Agent of the Escrow Funds,
the Trustee shall set a date for redemption of all of the Senior Subordinated
Notes, which date shall not be more than 7 days from the receipt of such Escrow
Funds by the Paying Agent. Once a date for any such redemption has been publicly
announced, it shall not be changed. The Trustee shall promptly notify the
Holders of the date fixed for any redemption pursuant to this Section 3.09.
(d) "Special Redemption Price" means, with respect to any Senior
Subordinated Note as of any date of redemption with respect thereto, an amount
equal to (x) 101% of the principal amount thereof if such date is prior to April
18, 1996, (y) 102.5% of the principal amount thereof if such date is on or after
May 31, 1996, and (z) on any date that is on or after April 18, 1996, and prior
to May 31, 1996, a percentage of the principal amount thereof determined by
linear interpolation between 101% and 102.5% based on the number of days elapsed
since April 18, 1996, in the 43-day period between April 18, 1996, and May 31,
1996, including April 18, 1996, as the first day in such period.
(e) Other than as specifically provided in this Section 3.09, any
redemption pursuant to this Section 3.09 shall be made pursuant to the
provisions of Section 3.01 through 3.06 hereof.
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<PAGE> 38
SECTION 3.10. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.
In the event that, pursuant to Section 4.10 hereof, the Company shall
be required to commence an offer to all Holders of Senior Subordinated Notes to
purchase Senior Subordinated Notes (an "Asset Sale Offer"), it shall follow the
procedures specified below.
The Asset Sale Offer shall remain open for a period of 20 Business
Days following its commencement and no longer, except to the extent that a
longer period is required by applicable law (the "Offer Period"). No later than
five Business Days after the termination of the Offer Period (the "Purchase
Date"), the Company shall purchase the principal amount of Senior Subordinated
Notes required to be purchased pursuant to Section 4.10 hereof (the "Offer
Amount") or, if less than the Offer Amount has been tendered, all Senior
Subordinated Notes tendered in response to the Asset Sale Offer. Payment for any
Senior Subordinated Notes so purchased shall be made in the same manner as
interest payments are made.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest shall
be paid to the Person in whose name a Senior Subordinated Note is registered at
the close of business on such record date, and no additional interest shall be
payable to Holders who tender Senior Subordinated 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, with a
copy to the Depositary. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Senior Subordinated Notes pursuant to
the Asset Sale Offer. The procedures for commencing an Asset Sale Offer to
Holders of Senior Subordinated Discount Notes shall be governed by the terms of
the Senior Subordinated Discount Note Indenture. 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 Section
3.10 and Section 4.10 hereof and the length of time the Asset Sale Offer
shall remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Senior Subordinated Note not tendered or accepted for
payment shall continue to accrue interest;
(d) that, unless the Company defaults in making such payment, any
Senior Subordinated Note accepted for payment pursuant to the Asset Sale
Offer shall cease to accrue interest on and after the Purchase Date;
(e) that Holders electing to have a Senior Subordinated Note purchased
pursuant to an Asset Sale Offer may only elect to have all of such Senior
Subordinated Note purchased and may not elect to have only a portion of such
Senior Subordinated Note purchased;
(f) that Holders electing to have a Senior Subordinated Note purchased
pursuant to any Asset Sale Offer shall be required to surrender the Senior
Subordinated Note, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Senior Subordinated Note completed, or
transfer by book-entry transfer, to the Company, a depository, if appointed
by the Company, or a Paying Agent at the address specified in the notice at
least three days before the Purchase Date;
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<PAGE> 39
(g) 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 Senior Subordinated Note the Holder delivered for
purchase and a statement that such Holder is withdrawing his election to
have such Senior Subordinated Note purchased;
(h) that, if the aggregate principal amount of Senior Subordinated
Notes, together with the aggregate principal amount of Senior Subordinated
Discount Notes (or, if prior to the Full Accretion Date (as defined in the
Senior Subordinated Discount Note Indenture) the Accreted Value (as defined
in the Senior Subordinated Discount Note Indenture) thereof), surrendered by
Holders exceeds the Offer Amount, the Company shall select the Notes to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and
(i) that Holders whose Senior Subordinated Notes were purchased only
in part shall be issued new Senior Subordinated Notes equal in principal
amount to the unpurchased portion of the Senior Subordinated Notes
surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Offer Amount of Senior Subordinated Notes or portions thereof tendered pursuant
to the Asset Sale Offer, or if less than the Offer Amount has been tendered, all
Senior Subordinated Notes tendered, and shall deliver to the Trustee an
Officers' Certificate stating that such Senior Subordinated Notes or portions
thereof were accepted for payment by the Company in accordance with the terms of
this Section 3.10. The Company, the Depositary or the Paying Agent, as the case
may be, shall promptly (but in any case not later than five days after the
Purchase Date) mail or deliver to each tendering Holder an amount equal to the
purchase price of the Senior Subordinated Notes tendered by such Holder and
accepted by the Company for purchase, and the Company shall promptly issue a new
Senior Subordinated Note, and the Trustee, upon receipt of an Authentication
Order, shall authenticate and mail or deliver such new Senior Subordinated Note
to such Holder, in a principal amount equal to any unpurchased portion of the
Senior Subordinated Note surrendered. Any Senior Subordinated Note not so
accepted shall be promptly mailed or delivered by the Company to the Holder
thereof. The Company shall publicly announce the results of the Asset Sale Offer
on the Purchase Date.
Other than as specifically provided in this Section 3.10, any purchase
pursuant to this Section 3.10 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof.
ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF SENIOR SUBORDINATED NOTES.
The Company shall pay or cause to be paid the principal of, premium,
if any, and interest on the Senior Subordinated Notes on the dates and in the
manner provided in the Senior Subordinated 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 10:00 a.m. Eastern
Time on the due date (or, if required by the Depositary, such earlier time to
allow the Trustee to make timely payment to the Depositary) money deposited by
the Company in immediately available funds and designated for and sufficient
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<PAGE> 40
to pay all principal, premium, if any, and interest then due. The Company shall
pay all Liquidated Damages, if any, in immediately available funds in the same
manner on the dates and in the amounts set forth in the Registration Rights
Agreement.
The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the rate equal
to 1% per annum in excess of the then applicable interest rate on the Senior
Subordinated Notes to the extent lawful; it shall pay interest (including
post-petition 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.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, the City of
New York, an office or agency (which may be an office of the Trustee or an
Affiliate of the Trustee, Registrar or co-registrar) where Senior Subordinated
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 Senior Subordinated
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 of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Senior Subordinated Notes may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall in
any manner relieve the Company of its obligation to maintain an office or agency
in the Borough of Manhattan, the City of New York for such purposes. 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 of the
Trustee as one such office or agency of the Company in accordance with Section
2.03.
SECTION 4.03. REPORTS.
(a) Whether or not required by the rules and regulations of the SEC,
so long as any Senior Subordinated Notes are outstanding, the Company shall,
commencing after consummation of the Acquisition, furnish to the Holders of
Senior Subordinated Notes as of the same dates and for the same periods as would
be required pursuant to the Exchange Act if the Company were subject to the
Exchange Act (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. In addition, whether or not required by the rules and regulations of
the SEC, following the consummation of the Acquisition, the Company shall 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. The
Company shall at all times comply with TIA Section 314(a).
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<PAGE> 41
(b) For so long as any Senior Subordinated Notes remain outstanding,
the Company and the Guarantors shall furnish to the Holders of the Senior
Subordinated Notes 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.
SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) The Company shall deliver to the Trustee, within 90 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 has kept, observed, performed and fulfilled its
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
has kept, observed, performed and fulfilled each and every covenant contained in
this Indenture and is 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, 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, Liquidated Damages or interest, if any,
on the Senior Subordinated 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) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article 4 or Article 5 hereof or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Senior Subordinated Notes
are outstanding, deliver to the Trustee, forthwith upon 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 is not adverse in any material
respect to the Holders of the Senior Subordinated Notes.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
Each of the Company and the Guarantors 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 each of
the Company and the Guarantors
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<PAGE> 42
(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 Trustee, but shall suffer and permit the execution of every such power as
though no such law has been enacted.
SECTION 4.07. RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make
any other payment or distribution on account of the Company's or any of its
Restricted Subsidiaries' 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 any Restricted Subsidiary
of the Company); (ii) purchase, redeem, defease or otherwise acquire or retire
for value any Equity Interests of the Company or any direct or indirect parent
of the Company; (iii) make any principal payment on, or purchase, redeem,
defease or otherwise acquire or retire for value any Subordinated Indebtedness,
except at final maturity; or (iv) make any Restricted Investment (all such
payments and other actions set forth in clauses (i) through (iv) above 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 shall have occurred and be
continuing or would occur as a consequence thereof;
(b) the Company would, at the time of such Restricted Payment and
immediately 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 4.09 hereof; and
(c) such Restricted Payment, together with the aggregate of all other
Restricted Payments made by the Company and its Restricted Subsidiaries
after the date of this Indenture (including Restricted Payments permitted by
clause (i) of the next succeeding paragraph, but excluding all other
Restricted Payments permitted by the next succeeding paragraph), is less
than the sum of (i) 50% of the Consolidated Net Income of the Company for
the period (taken as one accounting period) from the beginning of the first
fiscal quarter commencing after the date of this Indenture 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 (ii) 100% of the aggregate net cash proceeds and the fair
market value, as determined in good faith by the Board of Directors, of
marketable securities received by the Company from the issue or sale since
the date of this Indenture of Equity Interests (including Retired Capital
Stock (as defined below)) of the Company (except in connection with the
Acquisition) or of debt securities of the Company that have been converted
into such Equity Interests (other than Refunding Capital Stock (as defined
below) or Equity Interests or convertible debt securities of the Company
sold to a Restricted Subsidiary of the Company and other than Disqualified
Stock or debt securities that have been converted into Disqualified Stock),
plus (iii) 100% of the aggregate amounts contributed to the common equity
capital of the Company since the date of this Indenture, (except amounts
contributed to finance the Acquisition), plus (iv) 100% of the aggregate
amounts received in cash and the fair market value of marketable securities
(other than Restricted Investments) received from (x) the sale or other
disposition of Restricted Investments made by the Company and its Restricted
Subsidiaries since the date of this Indenture or (y) the sale of the stock
of an Unrestricted Subsidiary or the sale of all or substantially all of the
assets of an Unrestricted Subsidiary to the extent that a liquidating
dividend is paid to the
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<PAGE> 43
Company or any Wholly Owned Restricted Subsidiary from the proceeds of such
sale, plus (v) 100% of any dividends received by the Company or a Wholly
Owned Restricted Subsidiary of the Company after the date of this Indenture
from an Unrestricted Subsidiary of the Company, plus (vi) $10.0 million.
The foregoing provisions shall not prohibit:
(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at the date of declaration such payment would have
complied with the provisions of this Indenture;
(ii) the redemption, repurchase, retirement or other acquisition of
any Equity Interests of the Company or any Restricted Subsidiary (the
"Retired Capital Stock") or any Subordinated Indebtedness, in each case, in
exchange for, or out of the proceeds of, the substantially concurrent sale
(other than to a Restricted Subsidiary of the Company) of Equity Interests
of the Company (other than any Disqualified Stock) (the "Refunding Capital
Stock"); provided that the amount of any such net cash proceeds that are
utilized for any such redemption, repurchase, retirement or other
acquisition shall be excluded from clause (c)(ii) of the immediately
preceding paragraph;
(iii) the defeasance, redemption or repurchase of Subordinated
Indebtedness with the net cash proceeds from an incurrence of Permitted
Refinancing Indebtedness;
(iv) the redemption, repurchase or other acquisition or retirement for
value of any Equity Interests of the Company or any Restricted Subsidiary of
the Company held by any member of the Company's (or any of its Restricted
Subsidiaries') management pursuant to any management equity subscription
agreement or stock option or similar agreement; provided that the aggregate
price paid for all such repurchased, redeemed, acquired or retired Equity
Interests shall not exceed the sum of $5.0 million in any twelve-month
period plus the aggregate cash proceeds received by the Company during such
twelve-month period from any issuance of Equity Interests by the Company to
members of management of the Company and its Restricted Subsidiaries;
provided that the amount of any such net cash proceeds that are utilized for
any such redemption, repurchase, retirement or other acquisition shall be
excluded from clause (c)(ii) of the immediately preceding paragraph;
(v) Investments in Unrestricted Subsidiaries or Joint Ventures having
an aggregate fair market value, taken together with all other Investments
made pursuant to this clause (v) that are at that time outstanding, not to
exceed 5% of Total Assets at the time of such Investment (with the fair
market value of each Investment being measured at the time made and without
giving effect to subsequent changes in value);
(vi) repurchases of Equity Interests deemed to occur upon exercise or
conversion of stock options, warrants, convertible securities or other
Equity Interests if such Equity Interests represent a portion of the
exercise or conversion price of such options, warrants, convertible
securities or other similar Equity Interests;
(vii) the making and consummation of a Subordinated Asset Sale Offer
in accordance with the provisions of Section 4.10 hereof; and
(viii) any dividend or distribution payable on or in respect of any
class of Equity Interests issued by a Restricted Subsidiary of the Company;
provided that such dividend or distribution is paid on
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<PAGE> 44
a pro rata basis to all of the holders of such Equity Interests in
accordance with their respective holdings of such Equity Interests;
provided, further, that at the time of, and after giving effect to,
any Restricted Payment permitted under clauses (iv) or (v) above, no Default or
Event of Default shall have occurred and be continuing or would occur as a
consequence thereof.
As of the date of this Indenture, all of the Company's Subsidiaries
shall be Restricted Subsidiaries. The Company shall not permit any Unrestricted
Subsidiary to become a Restricted Subsidiary except pursuant to the last
sentence of the definition of Unrestricted Subsidiary in Section 1.01 hereof.
For purposes of designating any Restricted Subsidiary as an Unrestricted
Subsidiary, all outstanding Investments by the Company and its Restricted
Subsidiaries (except to the extent repaid) in the Subsidiary so designated shall
be deemed to be Restricted Payments in an amount equal to the book value of such
Investment at the time of such designation. Such designation shall only be
permitted if a Restricted Payment in such amount would be permitted at such time
and if such Subsidiary otherwise meets the definition of an Unrestricted
Subsidiary. Unrestricted Subsidiaries shall not be subject to any of the
restrictive covenants set forth in this Article 4.
The amount of all Restricted Payments (other than cash) shall be the
fair market value (evidenced by a resolution of the Board of Directors set forth
in an Officers' Certificate delivered to the Trustee) on the date of the
Restricted Payment of the asset(s) proposed to be transferred by the Company or
such Restricted Subsidiary, as the case may be, pursuant to the Restricted
Payment. Not later than the date of making any Restricted Payment, 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 4.07 were computed, which calculations may
be based upon the Company's latest available financial statements.
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES.
The Company shall not, and shall not permit any of its Restricted
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
Restricted Subsidiary to (i)(a) pay dividends or make any other distributions to
the Company or any of its Restricted 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
Restricted Subsidiaries, (ii) make loans or advances to the Company or any of
its Restricted Subsidiaries or (iii) sell, lease or transfer any of its
properties or assets to the Company or any of its Restricted Subsidiaries,
except for such encumbrances or restrictions existing under or by reason of (a)
Existing Indebtedness as in effect on the date of this Indenture, (b) the New
Bank Credit Agreement and any amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings thereof,
provided that the New Bank Credit Agreement and any amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacement or
refinancings thereof are no more restrictive taken as a whole with respect to
such dividend and other payment restrictions than those terms described in
Exhibit F hereto, (c) this Indenture and the Senior Subordinated Notes, (d) the
Senior Subordinated Discount Note Indenture and the Senior Subordinated Discount
Notes, (e) applicable law, (f) any instrument governing Indebtedness or Capital
Stock of a Person acquired by the Company or any of its Restricted Subsidiaries
as in effect at the time of such acquisition (except to the extent such
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,
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so acquired, provided that, in the case of Indebtedness, such Indebtedness was
permitted by the terms of this Indenture to be incurred, (g) by reason of
customary non-assignment or net worth provisions in leases and other agreements
entered into in the ordinary course of business and consistent with past
practices, (h) purchase money 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, (i) 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, (j) other
Indebtedness permitted to be incurred subsequent to the date of this Indenture
pursuant to the provisions of Section 4.09 hereof; provided that any such
restrictions are customary with respect to the type of Indebtedness being
incurred (under the relevant circumstances), (k) any Mortgage Financing or
Mortgage Refinancing that imposes restrictions on the real property securing
such Indebtedness, (l) any Permitted Investment, (m) contracts for the sale of
assets, including, without limitation, customary restrictions with respect to a
Restricted Subsidiary of the Company pursuant to an agreement that has been
entered into for the sale or disposition of all or substantially all of the
Capital Stock or assets of such Restricted Subsidiary or (n) customary
provisions in joint venture agreements and other similar agreements.
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED STOCK.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create, incur, issue, assume, guaranty or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur" and correlatively, an "incurrence" of) any Indebtedness
(including Acquired Debt) and the Company shall not issue any Disqualified
Stock; provided, however, that the Company may incur Indebtedness (including
Acquired Debt) or issue shares of Disqualified Stock if the Fixed Charge
Coverage Ratio for the Company for the most recently ended four full fiscal
quarters for which internal financial statements are available immediately
preceding the date of such incurrence would have been at least 2.00 to 1.0 if
such date is on or prior to September 15, 1997, 2.25 to 1.0 if such date is
after September 15, 1997 and on or prior to March 15, 1999 and 2.50 to 1.0
thereafter, in each case, 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, as the case may be,
and the application of the proceeds therefrom had occurred at the beginning of
such four-quarter period.
The foregoing provisions shall not apply to:
(a) the incurrence by the Company (and the Guarantee thereof by the
Guarantors) of (i) Indebtedness under the New Bank Credit Agreement and the
issuance of letters of credit thereunder (with letters of credit being
deemed to have a principal amount equal to the aggregate maximum amount then
available to be drawn thereunder, assuming compliance with all conditions
for drawing) up to an aggregate principal amount of $715.0 million
outstanding at any one time, less principal repayments of term loans and
permanent commitment reductions with respect to revolving loans and letters
of credit under the New Bank Credit Agreement made after the date of this
Indenture and (ii) additional Indebtedness under the New Bank Credit
Agreement and the issuance of additional letters of credit thereunder (with
letters of credit being deemed to have a principal amount equal to the
aggregate maximum amount then available to be drawn thereunder, assuming
compliance with all conditions for drawing) up to an aggregate principal
amount of $75.0 million outstanding at any one time (reduced by the
aggregate principal amount (or accreted value, as applicable) of
Indebtedness outstanding pursuant to clause (l) of this Section 4.09);
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(b) the incurrence by the Company or any of its Restricted
Subsidiaries of any Existing Indebtedness;
(c) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by the Senior Subordinated Notes or
the Senior Subordinated Discount Notes;
(d) Indebtedness (including Capital Lease Obligations) incurred by the
Company or any of its Restricted Subsidiaries to finance the purchase, lease
or improvement of property (real or personal), assets or equipment (whether
through the direct purchase of assets or the Capital Stock of any Person
owning such assets), in an aggregate principal amount not to exceed 5% of
Total Assets at any time outstanding;
(e) Indebtedness incurred by the Company or any of its Restricted
Subsidiaries constituting reimbursement obligations with respect to letters
of credit issued in the ordinary course of business, including, without
limitation, letters of credit in respect of workers' compensation claims or
self-insurance, or other Indebtedness with respect to reimbursement type
obligations regarding workers' compensation claims;
(f) intercompany Indebtedness between or among the Company and any of
its Restricted Subsidiaries and Guarantees by a Restricted Subsidiary of the
Company of Indebtedness of any other Restricted Subsidiary of the Company or
the Company;
(g) Hedging Obligations that are incurred (1) for the purpose of
fixing or hedging interest rate risk with respect to any Indebtedness that
is permitted by the terms of this Indenture to be outstanding or (2) for the
purpose of fixing or hedging currency exchange rate risk with respect to any
currency exchanges;
(h) obligations in respect of performance and surety bonds and
completion guarantees provided by the Company or any Restricted Subsidiary
in the ordinary course of business;
(i) the incurrence by the Company or any of the Guarantors of
Indebtedness in connection with the acquisition of assets or a new
Restricted Subsidiary; provided that such Indebtedness was incurred by the
prior owner of such assets or such new Restricted Subsidiary prior to such
acquisition by the Company or such Restricted Subsidiary and was not
incurred in connection with, or in contemplation of, such acquisition; and
provided further that the Fixed Charge Coverage Ratio for the Company for
the most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date of such
transaction would have been at least 2.00 to 1.0 if such date is on or prior
to September 15, 1997, 2.25 to 1.0 if such date is after September 15, 1997
and on or prior to March 15, 1999 and 2.50 to 1.0 thereafter, in each case,
determined on a pro forma basis, as if such transaction had occurred at the
beginning of such four-quarter period and such Indebtedness or Disqualified
Stock and the Consolidated Cash Flow of such merged or acquired Person had
been included for all purposes in such pro forma calculation;
(j) the incurrence by the Company or any of its Restricted
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;
(k) the incurrence by the Company's Unrestricted Subsidiaries of
Non-Recourse Debt, provided, however, that if any such Indebtedness ceases
to be Non-Recourse Debt of an Unrestricted Subsidiary,
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such event shall be deemed to constitute an incurrence of Indebtedness by a
Restricted Subsidiary of the Company; and
(l) the incurrence by the Company of additional Indebtedness not
otherwise permitted hereunder in an amount under this clause (l) not to
exceed $75.0 million in aggregate principal amount (or accreted value, as
applicable) outstanding at any one time (reduced by the aggregate principal
amount of Indebtedness outstanding pursuant to clause (a)(ii) above).
SECTION 4.10. ASSET SALES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, cause, make or suffer to exist an Asset Sale unless (i) the
Company (or the Restricted Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair market
value (evidenced by a resolution of the Board of Directors set forth in an
Officers' Certificate delivered to the Trustee) of the assets or Equity
Interests issued or sold or otherwise disposed of and (ii) except in the case of
a Permitted Asset Swap, at least 80% of the consideration therefor received by
the Company or such Restricted 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 Restricted Subsidiary's most recent balance sheet) of the
Company or any Restricted Subsidiary (other than contingent liabilities and
liabilities that are by their terms subordinated to the Senior Subordinated
Notes or any guarantee thereof) that are assumed by the transferee of any such
assets pursuant to a customary novation agreement that releases the Company or
such Restricted Subsidiary from further liability and (y) any notes or other
obligations received by the Company or any such Restricted Subsidiary from such
transferee that are immediately converted by the Company or such Restricted
Subsidiary into cash (to the extent of the cash received), shall be deemed to be
cash for purposes of this provision.
Within 365 days after the Company's or any Restricted Subsidiary's
receipt of the Net Proceeds of any Asset Sale, the Company or such Restricted
Subsidiary may apply the Net Proceeds from such Asset Sale, at its option, (i)
to permanently reduce Obligations under the New Bank Credit Agreement (and to
correspondingly reduce commitments with respect thereto) or other Senior Debt or
Pari Passu Indebtedness, (ii) to secure Letter of Credit Obligations to the
extent related letters of credit have not been drawn upon or returned undrawn,
(iii) to an investment in any one or more businesses, capital expenditures or
acquisitions of other assets, in each case, used or useful in a Principal
Business, (iv) to an investment in properties or assets that replace the
properties and assets that are the subject of such Asset Sale and/or (v) in the
case of a sale of a bowling center or bowling centers, deem such Net Proceeds to
have been applied pursuant to the immediately preceding clause (iv) to the
extent of any expenditures made to acquire or construct one or more bowling
centers in the general vicinity of the bowling center(s) sold within 365 days
preceding the date of the Asset Sale. Pending the final application of any such
Net Proceeds, the Company or such Restricted Subsidiary may temporarily reduce
Indebtedness under a revolving credit facility, if any, or otherwise invest such
Net Proceeds in Cash Equivalents. Any Net Proceeds from the Asset Sale that are
not invested as provided and within the time period set forth in the first
sentence of this paragraph shall be deemed to constitute "Excess Proceeds." When
the aggregate amount of Excess Proceeds exceeds $25.0 million, the Company shall
make an Asset Sale Offer to all Holders of Notes to purchase the maximum
principal amount of Notes, that is an integral multiple of $1,000, that may be
purchased out of the Excess Proceeds at a purchase price in cash in an amount
equal to (i) 100% of the aggregate principal amount thereof, plus accrued and
unpaid interest, including Liquidated Damages, if any, to the date fixed for the
closing of such offer or (ii) with respect to Senior Subordinated Discount
Notes, 100% of the Accreted Value (as defined in the Senior Subordinated
Discount Note Indenture) thereof on the date of purchase, plus accrued and
unpaid Liquidated Damages, if any, if such Asset Sale Offer is prior to the Full
Accretion
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Date (as defined therein), in either case in accordance with the procedures set
forth in Section 3.10 hereof. The Company shall commence an Asset Sale Offer
with respect to Excess Proceeds within 10 Business Days after the date that the
aggregate amount of Excess Proceeds exceeds $25.0 million according to the
procedure described in Section 3.10 hereof. To the extent that the aggregate
amount of Notes tendered pursuant to an Asset Sale Offer is less than the Excess
Proceeds, the Company may use any remaining Excess Proceeds (x) to offer to
redeem Subordinated Indebtedness (a "Subordinated Asset Sale Offer") in
accordance with the indenture or other agreement governing such Subordinated
Indebtedness or (y) for any purpose not prohibited by any provision herein. If
the aggregate principal amount (or Accreted Value, if applicable) of Notes
surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Trustees shall select the Notes to be purchased on a pro rata basis, based upon
the principal amount (or, with respect to Senior Subordinated Discount Notes,
the Accreted Value (as defined in the Senior Subordinated Discount Note
Indenture) thereof if such Asset Sale Offer is prior to the Full Accretion Date)
of Notes tendered. Upon completion of any such Asset Sale Offer, the amount of
Excess Proceeds shall be reset at zero.
The Company shall 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 Senior Subordinated Notes as a result of an Asset Sale.
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or 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 or amend 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 Restricted Subsidiary than those that would have been obtained in a
comparable transaction by the Company or such Restricted Subsidiary with an
unrelated Person and (ii) the Company delivers to the Trustee (a) with respect
to any Affiliate Transaction or series of related Affiliate Transactions
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 of the
Board of Directors (if there are any disinterested members of the Board of
Directors) and (b) with respect to any Affiliate Transaction or series of
related Affiliate Transactions involving aggregate consideration in excess of
$10.0 million, or with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of $5.0
million as to which there are no disinterested members of the Board of
Directors, an opinion as to the fairness to the Holders of such Affiliate
Transaction from a financial point of view issued by an accounting, appraisal or
investment banking firm of national standing.
The foregoing provisions shall not apply to the following: (i)
transactions between or among the Company and/or any of its Restricted
Subsidiaries; (ii) Restricted Payments or Permitted Investments permitted under
Section 4.07 hereof; (iii) the payment of all fees, expenses and other amounts
as disclosed in the Offering Circular relating to the Acquisition; (iv) the
payment of reasonable and customary regular fees to, and indemnity provided on
behalf of, officers, directors, employees or consultants of the Company or any
Restricted Subsidiary of the Company; (v) the transfer or provision of
inventory, goods or services by the Company or any Restricted Subsidiary of the
Company in the ordinary course of business to any Restricted Subsidiary of the
Company on terms that are customary in the industry or consistent with past
practices; (vi) the execution of, or the performance by the Company or any of
its Restricted Subsidiaries of its obligations under the terms of, any financial
advisory, financing, underwriting or placement agreement
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or any other agreement relating to investment banking or financing activities
with Goldman, Sachs & Co. or any of its Affiliates including, without
limitation, in connection with acquisitions or divestitures, in each case to the
extent that such agreement was approved by a majority of the disinterested
members of the Board of Directors in good faith; (vii) payments, advances or
loans to employees that are approved by a majority of the disinterested members
of the Board of Directors of the Company in good faith; (viii) the performance
of any agreement as in effect as of the date of this Indenture or any amendment
thereto or any transaction contemplated thereby (including pursuant to any
amendment thereto so long as any such amendment is not disadvantageous to the
Holders of Senior Subordinated Notes in any material respect); (ix) the
existence of, or the performance by the Company or any of its Restricted
Subsidiaries of its obligations under the terms of, any stockholders agreement
(including any registration rights agreement or purchase agreement related
thereto) to which it is a party as of the date of this Indenture and any similar
agreements which it may enter into thereafter, provided, however, that the
existence of, or the performance by the Company or any of its Restricted
Subsidiaries of obligations under, any future amendment to any such existing
agreement or under any similar agreement entered into after the date of this
Indenture shall only be permitted by this clause (ix) to the extent that the
terms of any such amendment or new agreement are not otherwise disadvantageous
to the Holders of the Notes in any material respect; (x) transactions permitted
by, and complying with, the provisions of Section 5.01 hereof; and (xi)
transactions with suppliers or other purchases or sales of goods or services, in
each case in the ordinary course of business (including, without limitation,
pursuant to joint venture agreements) and otherwise in compliance with the terms
of this Indenture which are fair to the Company or its Restricted Subsidiaries,
in the reasonable determination of a majority of the disinterested members of
the Board of Directors of the Company or an executive officer thereof, or are on
terms at least as favorable as might reasonably have been obtained at such time
from an unaffiliated party.
SECTION 4.12. LIENS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien that secures obligations under any Pari Passu Indebtedness or
Subordinated Indebtedness on any asset or property now owned or hereafter
acquired by the Company or any of its Restricted Subsidiaries, or on any income
or profits therefrom, or assign or convey any right to receive income therefrom
to secure any Pari Passu Indebtedness or Subordinated Indebtedness, unless the
Senior Subordinated Notes are equally and ratably secured with the obligations
so secured or until such time as such obligations are no longer secured by a
Lien; provided, that in any case involving a Lien securing Subordinated
Indebtedness, such Lien is subordinated to the Lien securing the Senior
Subordinated Notes to the same extent that such Subordinated Indebtedness is
subordinated to the Senior Subordinated Notes.
SECTION 4.13. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, each Holder of Senior
Subordinated Notes shall have the right to require the Company to repurchase all
or any part (equal to $1,000 or an integral multiple thereof) of such Holder's
Senior Subordinated Notes pursuant to the offer described below (the "Change of
Control Offer") at a purchase price in cash (the "Change of Control Payment")
equal to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest, including Liquidated Damages, if any, thereon to the date of
repurchase. Within 30 days following any Change of Control, the Company shall
mail a notice to each Holder, the Trustee and the Depositary stating: (1) that
the Change of Control Offer is being made pursuant to this Section 4.13 and that
all Senior Subordinated Notes tendered shall be accepted for payment; (2) the
purchase price and the purchase date described below (the "Change of
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Control Payment Date"); (3) that any Senior Subordinated Note not tendered shall
continue to accrue interest; (4) that, unless the Company defaults in the
payment of the Change of Control Payment, all Senior Subordinated Notes accepted
for payment pursuant to the Change of Control Offer shall cease to accrue
interest after the Change of Control Payment Date; (5) that Holders electing to
have any Senior Subordinated Notes purchased pursuant to a Change of Control
Offer shall be required to surrender the Senior Subordinated Notes, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of the Senior
Subordinated Notes completed, to the Paying Agent or the Depositary, as
applicable, at the address specified in the notice prior to the close of
business on the third Business Day preceding the Change of Control Payment Date;
(6) that Holders shall be entitled to withdraw their election if the Paying
Agent or Depositary, as applicable, receives, not later than the close of
business on the second Business Day preceding the Change of Control Payment Date
(or such later date required by applicable law), a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of Senior Subordinated Notes delivered for purchase, and a statement that
such Holder is withdrawing his or her election to have the Senior Subordinated
Notes purchased; and (7) that Holders whose Senior Subordinated Notes are being
purchased only in part shall be issued new Senior Subordinated Notes equal in
principal amount to the unpurchased portion of the Senior Subordinated Notes
surrendered, which unpurchased portion must be equal to $1,000 in principal
amount or an integral multiple thereof. The Company shall 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 Senior Subordinated Notes as a
result of a Change of Control.
(b) On a date that is no earlier than 30 days nor later than 60 days
from the date that the Company mails or causes to be mailed notice of the Change
of Control to the Holders (the "Change of Control Payment Date") the Company
shall, to the extent lawful, (1) accept for payment all Senior Subordinated
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 Senior Subordinated Notes or portions thereof
so tendered and (3) deliver or cause to be delivered to the Trustee for
cancellation the Senior Subordinated Notes so accepted together with an
Officers' Certificate stating the aggregate principal amount of Senior
Subordinated Notes or portions thereof being purchased by the Company. The
Paying Agent shall promptly mail to each Holder of Senior Subordinated Notes so
tendered the Change of Control Payment for such Senior Subordinated Notes, and
the Trustee shall promptly authenticate and mail (or cause to be transferred by
book entry) to each Holder a new Senior Subordinated Note equal in principal
amount to any unpurchased portion of the Senior Subordinated Notes surrendered,
if any; provided that each such new Senior Subordinated Note shall be in a
principal amount of $1,000 or an integral multiple thereof. The Company shall
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
(c) Prior to complying with the provisions of this Section 4.13, but
in any event within 30 days following a Change of Control, the Company shall
either repay all outstanding amounts under the New Bank Credit Agreement or
offer to repay in full all outstanding amounts under the New Bank Credit
Agreement and repay the Obligations held by each lender who has accepted such
offer or obtain the requisite consents, if any, under the New Bank Credit
Agreement to permit the repurchase of the Senior Subordinated Notes required by
this Section 4.13.
(d) The Company shall not be required to make a Change of Control
Offer upon a Change of Control if a third party makes the Change of Control
Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in this Section 4.13 and Section 3.10 hereof and such
third
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party purchases all of the Senior Subordinated Notes validly tendered and not
withdrawn under such Change of Control Offer.
SECTION 4.14. ISSUANCES OF GUARANTEES OF INDEBTEDNESS.
The Company shall not permit any Restricted Subsidiary, directly or
indirectly, to guarantee or pledge any assets to secure the payment of any other
Indebtedness unless such Restricted Subsidiary either (i) is a Guarantor, or
(ii) simultaneously executes and delivers a supplemental indenture to this
Indenture, in the form of Exhibit E hereto, providing for the Guarantee of the
payment of all Obligations with respect to the Senior Subordinated Notes by such
Restricted Subsidiary, which Guarantee shall be senior to such Restricted
Subsidiary's Guarantee of or pledge to secure any other Indebtedness that
constitutes Subordinated Indebtedness and subordinated to such Restricted
Subsidiary's Guarantee of or pledge to secure any other Indebtedness that
constitutes Senior Debt to the same extent as the Senior Subordinated Notes are
subordinated to Senior Debt. In addition, (x) if the Company shall, after the
date of this Indenture, create or acquire any new First-Tier Subsidiary, then
such newly created or acquired First-Tier Subsidiary shall execute a
supplemental indenture and a Senior Subordinated Guarantee and deliver an
Opinion of Counsel in accordance with Article 11 hereof, (y) if any First-Tier
Subsidiary shall, after the date of this Indenture, create or acquire any new
Second-Tier Subsidiary, then such newly created or acquired Second-Tier
Subsidiary shall execute a supplemental indenture and a Senior Subordinated
Guarantee and deliver an Opinion of Counsel in accordance with Article 11 hereof
and (z) if the Company shall, after the date of this Indenture, create or
acquire any new Subsidiary (other than a First-Tier Subsidiary or Second-Tier
Subsidiary) that becomes a guarantor under the New Bank Credit Agreement, then
such newly created or acquired Subsidiary shall execute a supplemental indenture
and a Senior Subordinated Guarantee and deliver an Opinion of Counsel in
accordance with Article 11 hereof. Notwithstanding the foregoing, any such
Senior Subordinated Guarantee shall provide by its terms that it shall be
automatically and unconditionally released and discharged upon certain mergers,
consolidations, sales and other dispositions (including, without limitation, by
foreclosure) pursuant to Article 11 hereof.
SECTION 4.15. ACTIVITIES OF HOLDINGS.
In addition to the restrictions set forth herein, Holdings shall not
(i) hold any assets or incur any Indebtedness or (ii) engage in any business
activities; except Holdings may (x) hold all, but not less than all, of the
Capital Stock of the Company and (y) be a co-obligor and/or guarantor with
respect to Indebtedness if the Company is a primary obligor or guarantor of such
Indebtedness and the net proceeds of such Indebtedness are lent to the Company
or one or more of its Restricted Subsidiaries.
SECTION 4.16. ACTIVITIES OF THE COMPANY.
The Company shall use its best efforts to cause the Acquisition to be
consummated as soon as practicable after the closing of the Offering on
substantially the terms described in the Offering Circular; provided, however,
that the foregoing shall not require Holdings to waive any condition provided in
the Stock Purchase Agreement to its obligation to consummate the Acquisition.
Until consummation of the Acquisition, neither the Company nor any of
its Subsidiaries shall be permitted to conduct any substantial business
activities of any kind.
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SECTION 4.17. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company and the Guarantors shall do
or cause to be done all things necessary to preserve and keep in full force and
effect (i) its corporate existence, and the corporate, partnership or other
existence of each of its Restricted Subsidiaries, in accordance with the
respective organizational documents (as the same may be amended from time to
time) of the Company or any such Restricted Subsidiary and (ii) the rights
(charter and statutory), licenses and franchises of the Company, the Guarantors
and their respective Restricted Subsidiaries; provided, however, that the
Company and the Guarantors shall not be required to preserve any such right,
license or franchise, or the corporate, partnership or other existence of any of
their respective Restricted Subsidiaries, if the Board of Directors shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Company or such Guarantor, as applicable, and its Restricted
Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any
material respect to the Holders of the Notes. Notwithstanding the foregoing, the
loss of licenses shall not be deemed a default under this Section 4.17 provided
that such loss is not adverse in any material respect to the Holders of the
Notes.
SECTION 4.18. NO SENIOR SUBORDINATED DEBT.
Notwithstanding the provisions of Section 4.09 hereof, (i) the Company
shall not directly or indirectly incur, create, issue, assume, guarantee or
otherwise become liable for any Indebtedness that is subordinate or junior in
right of payment to any Senior Debt and senior in any respect in right of
payment to the Senior Subordinated Notes and (ii) no Guarantor shall directly or
indirectly incur, create, issue, assume, guarantee or otherwise become liable
for any Indebtedness that is subordinate or junior in right of payment to the
Senior Guarantees and senior in any respect in right of payment to the Senior
Subordinated Guarantees.
ARTICLE 5
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ALL OR SUBSTANTIALLY ALL
ASSETS.
The Company shall not 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 is a corporation organized or existing
under the laws of the United States, any state thereof or the District of
Columbia; (ii) the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company) or the entity or Person to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made assumes all the obligations of the Company under the Senior
Subordinated Notes, this Indenture pursuant to a supplemental indenture in form
reasonably satisfactory to the Trustee, and, if such sale, assignment, transfer,
lease, conveyance or other disposition occurs prior to the consummation of the
Acquisition, all the obligations of the Company under the Senior Subordinated
Note Pledge and Escrow Agreement; (iii) immediately after such transaction no
Default or Event of Default exists; and (iv) except in the case of a merger of
the Company with or into a Wholly Owned Restricted Subsidiary of the Company,
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 shall have been
made
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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
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the
first paragraph of Section 4.09 hereof. Notwithstanding the foregoing clauses
(iii) and (iv), (a) any Restricted Subsidiary may consolidate with, merge into
or transfer all or part of its properties and assets to the Company and (b) the
Company may merge with an Affiliate incorporated solely for the purpose of
reincorporating the Company in another jurisdiction.
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 Company shall not be relieved from the obligation to pay the
principal of and interest on the Senior Subordinated Notes except in the case of
a sale of all of the Company's assets that meets the requirements of Section
5.01 hereof.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
An "Event of Default" occurs if:
(1) the Company defaults in the payment of interest, including
Liquidated Damages, if any, on the Senior Subordinated Notes when the same
becomes due and payable and the Default continues for a period of 30 days,
whether or not such payment is prohibited by the provisions of Article 10
hereof;
(2) the Company defaults in the payment of the principal of or
premium, if any, on the Senior Subordinated Notes when the same become due
and payable at maturity, upon redemption or otherwise, whether or not such
payment is prohibited by the provisions of Article 10 hereof;
(3) the Company fails, and such failure continues for 30 days after
notice from the Trustee or the Holders of at least 25% in principal amount
of the then outstanding Senior Subordinated Notes, to observe or perform any
covenant, condition or agreement on the part of the Company to be observed
or performed pursuant to Sections 3.09, 4.07, 4.09, 4.13 and 5.01 hereof;
(4) the Company fails, and such failure continues for 60 days after
notice from the Trustee or the Holders of at least 25% in principal amount
of the then outstanding Senior Subordinated Notes, to comply with any of its
other agreements or covenants in, or provisions of, the Senior Subordinated
Notes or this Indenture;
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(5) a default occurs 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 Restricted
Subsidiaries (or the payment of which is guaranteed by the Company or any of
its Restricted Subsidiaries), whether such Indebtedness or guarantee now
exists or shall be created after the date of this Indenture, which default
results in the acceleration of such Indebtedness prior to its express
maturity and, in each case, the principal amount of such Indebtedness,
together with the principal amount of any other such Indebtedness the
maturity of which has been so accelerated, aggregates $25.0 million or more;
(6) the Company or any of its Restricted Subsidiaries fails to pay
final judgments aggregating in excess of $25.0 million, which judgments are
not paid, discharged or stayed for a period of 60 days;
(7) the Company or any of its Restricted Subsidiaries pursuant to or
within the meaning of any Bankruptcy Law:
(a) commences a voluntary case,
(b) consents to the entry of an order for relief against it in an
involuntary case,
(c) consents to the appointment of a Custodian of it or for all or
substantially all of its property,
(d) makes a general assignment for the benefit of its creditors,
or
(e) admits in writing its inability to pay its debts as they
become due;
(8) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(a) is for relief against the Company or any Restricted Subsidiary
in an involuntary case,
(b) appoints a Custodian of the Company or any Restricted
Subsidiary or for all or substantially all of the property of the
Company or any Restricted Subsidiary, or
(c) orders the liquidation of the Company or any Restricted
Subsidiary,
and the order or decree remains unstayed and in effect for 60 consecutive
days;
(9) at any time prior to the consummation of the Acquisition, the
Company shall breach any material representation, warranty or agreement set
forth in, or otherwise not comply with the provisions of, the Senior
Subordinated Note Pledge and Escrow Agreement, or the Senior Subordinated
Note Pledge and Escrow Agreement shall be held in any judicial proceeding to
be unenforceable or invalid or shall cease for any reason to be in full
force and effect; or
(10) except as otherwise permitted under the provisions of this
Indenture, any Senior Subordinated Guarantee is held in any judicial
proceeding to be unenforceable or invalid or ceases for any reason to be in
full force and effect (except by its terms) or any Guarantor, or any Person
acting on behalf of any Guarantor, denies or disaffirms such Guarantor's
obligations under its Senior Subordinated Guarantee.
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The term "Custodian" means any receiver, trustee, assignee, liquidator
or similar official under any Bankruptcy Law. Except for a Default or an Event
of Default pursuant to Sections 6.01(1), 6.01(2) or 6.01(3) (with respect to
Section 3.09) hereof, the Trustee shall not be deemed to have knowledge of any
Default or Event of Default unless the Trustee shall have received written
notification of such Default or Event of Default.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have had
to pay if the Company then had elected to redeem the Senior Subordinated Notes
pursuant to Section 3.07 hereof, an equivalent premium shall also become and be
immediately due and payable to the extent permitted by law upon the acceleration
of the Senior Subordinated Notes. If an Event of Default occurs prior to March
15, 2001 by reason of any willful action (or inaction) taken (or not taken) by
or on behalf of the Company with the intention of avoiding the prohibition on
redemption of the Senior Subordinated Notes prior to March 15, 2001, pursuant to
Section 3.07 hereof, then the premium payable for purposes of this paragraph for
each of the years beginning on March 15 of the years set forth below shall be as
set forth in the following table expressed as a percentage of the principal
amount, plus accrued interest, if any, and Liquidated Damages, if any, to the
date of payment:
<TABLE>
<CAPTION>
Percentage of
Year Principal Amount
---- ----------------
<S> <C>
1996 .............................. 110.875%
1997 .............................. 109.788%
1998 .............................. 108.700%
1999 .............................. 107.613%
2000 .............................. 106.525%
</TABLE>
SECTION 6.02. ACCELERATION.
If an Event of Default (other than an Event of Default specified in
clauses (7) and (8) of Section 6.01 hereof) relating to the Company or any
Restricted Subsidiary occurs and is continuing, the Trustee by notice to the
Company, or the Holders of at least 25% in principal amount of the then
outstanding Senior Subordinated Notes by written notice to the Company and the
Trustee, may declare the unpaid principal amount of, any accrued interest on and
any Liquidated Damages due in respect of all the Senior Subordinated Notes to be
due and payable immediately. Upon such declaration the principal, premium, if
any, and interest, including Liquidated Damages, if any, shall be due and
payable immediately; provided, however, that so long as any Senior Debt or any
commitment therefor is outstanding under the New Bank Credit Agreement, any such
notice or declaration shall not become effective until the earlier of (a) five
Business Days after such notice is delivered to the Representative for the
Senior Bank Debt or (b) the acceleration of any Indebtedness under the New Bank
Credit Agreement. Notwithstanding the foregoing, if an Event of Default
specified in clause (7) or (8) of Section 6.01 hereof relating to the Company,
any Significant Restricted Subsidiary or any group of Restricted Subsidiaries
that, taken together, would constitute a Significant Restricted Subsidiary
occurs, all outstanding Senior Subordinated Notes shall become and be
immediately
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<PAGE> 56
due and payable without any declaration or other act on the part of the Trustee
or any Holder. The Holders of a majority in aggregate principal amount of the
then outstanding Senior Subordinated Notes by written notice to the Trustee may
rescind an acceleration and its consequences if the rescission would not
conflict with any judgment or decree.
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, including Liquidated Damages, if any, on the Senior
Subordinated Notes or to enforce the performance of any provision of the Senior
Subordinated Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Senior Subordinated Notes or does not produce any of them in the
proceeding. A delay or omission by the Trustee or any Holder of a Senior
Subordinated 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.
Holders of not less than a majority in aggregate principal amount of
the Senior Subordinated Notes then outstanding by notice to the Trustee may on
behalf of the Holders of all of the Senior Subordinated Notes waive an existing
Default or Event of Default and its consequences hereunder, except a continuing
Default or Event of Default in the payment of principal of, premium, if any, and
interest, including Liquidated Damages, if any, on, the Senior Subordinated
Notes (including in connection with an offer to purchase) (provided, however,
that the Holders of a majority in aggregate principal amount of the then
outstanding Senior Subordinated Notes may rescind an acceleration and its
consequences, including any related payment default that resulted from such
acceleration). 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 a majority in principal amount of the then outstanding
Senior Subordinated 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 may be unduly prejudicial to the rights of other Holders of Senior
Subordinated Notes or that may involve the Trustee in personal liability.
SECTION 6.06. LIMITATION ON SUITS.
A Holder of a Senior Subordinated Note may pursue a remedy with
respect to this Indenture or the Senior Subordinated Notes only if:
(a) the Holder of a Senior Subordinated Note gives to the Trustee
written notice of a continuing Event of Default;
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(b) the Holders of at least 25% in principal amount of the then
outstanding Senior Subordinated Notes make a written request to the Trustee
to pursue the remedy;
(c) such Holder of a Senior Subordinated Note or Holders of Senior
Subordinated Notes offer and, if requested, provide to the Trustee indemnity
satisfactory to the Trustee against any loss, 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 Senior Subordinated Notes do not give the
Trustee a direction inconsistent with the request.
A Holder of a Senior Subordinated Note may not use this Indenture to prejudice
the rights of another Holder of a Senior Subordinated Note or to obtain a
preference or priority over another Holder of a Senior Subordinated Note.
SECTION 6.07. RIGHTS OF HOLDERS OF SENIOR SUBORDINATED NOTES TO RECEIVE
PAYMENT.
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Senior Subordinated Note to receive payment of principal,
premium, if any, and interest, including Liquidated Damages, if any, on the
Senior Subordinated Note, on or after the respective due dates expressed in the
Senior Subordinated 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(1) or (2) occurs and
is continuing, the Trustee is authorized to recover judgments in its own name
and as trustee of an express trust against the Company or any Guarantor for the
whole amount of principal of, premium, if any, and interest, including
Liquidated Damages, if any, remaining unpaid on the Senior Subordinated 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 Senior Subordinated Notes allowed in any judicial proceedings
relative to the Company or any of the Guarantors (or any other obligor upon the
Senior Subordinated 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,
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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 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 Senior Subordinated 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 Senior Subordinated Notes for amounts due and
unpaid on the Senior Subordinated Notes for principal, premium, if any, and
interest, including Liquidated Damages, if any, ratably, without preference or
priority of any kind, according to the amounts due and payable on the Senior
Subordinated 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 Senior Subordinated 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
Senior Subordinated Note pursuant to Section 6.07 hereof, or a suit by Holders
of more than 10% in principal amount of the then outstanding Senior Subordinated
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 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 a Responsible 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 paragraphs
(a), (b), and (c) of this Section.
(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 reasonably 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.
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SECTION 7.02. RIGHTS OF TRUSTEE.
(a) 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, 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 or any Guarantor shall be
sufficient if signed by an Officer of the Company or such Guarantor.
(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
security or indemnity reasonably satisfactory to the Trustee against the costs,
expenses and liabilities that might be incurred by it in compliance with such
request or direction.
(g) Except with respect to Sections 4.01 and 4.04 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(1), 6.01(2), or 6.01(3) (with respect to
Section 3.09) hereof or (ii) any Default or Event of Default of which the
Trustee shall have received written notification or obtained actual knowledge.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Senior Subordinated Notes and may otherwise deal with the
Company, the Guarantors 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, 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, the Senior Subordinated Notes
or the Senior Subordinated Guarantees, it shall not be accountable for the
Company's use of the proceeds from the Senior Subordinated Notes or any
money
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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 Senior
Subordinated Notes or any other document in connection with the sale of the
Senior Subordinated Notes or pursuant to this Indenture other than its
certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if it is
known to a Responsible Officer of the Trustee, the Trustee shall mail to Holders
of Senior Subordinated Notes a notice of the Default or Event of Default within
90 days after it occurs unless such Default or Event of Default has been cured.
Except in the case of a Default or Event of Default in payment of principal of,
premium, if any, or interest on, any Senior Subordinated Note, the Trustee may
withhold the notice if and so long as a committee of its Responsible Officers in
good faith determines that withholding the notice is in the interests of the
Holders of the Senior Subordinated Notes.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE SENIOR SUBORDINATED NOTES.
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as Senior Subordinated Notes remain
outstanding, the Trustee shall mail to the Holders of the Senior Subordinated
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 twelve 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
Senior Subordinated Notes shall be mailed to the Company and filed with the SEC
and each stock exchange on which the Senior Subordinated Notes are listed in
accordance with TIA Section 313(d). The Company shall promptly notify the
Trustee when the Senior Subordinated Notes are listed on any stock exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company and the Guarantors 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 and the Guarantors
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
whether incurred in disputes between the parties or in disputes with third
parties or otherwise.
The Company and the Guarantors shall indemnify the Trustee against any
and all losses, liabilities or expenses 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 and the Guarantors (including this Section 7.07) and defending
itself against any claim (whether asserted by the Company, the Guarantors 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
such loss, liability or expense may be attributable to its negligence or bad
faith. The Trustee shall notify the Company and the Guarantors promptly of any
claim for which it may seek indemnity. Failure by the Trustee to so notify
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the Company and the Guarantors shall not relieve the Company and the Guarantors
of their obligations hereunder. The Company and the Guarantors shall defend the
claim and the Trustee shall cooperate in the defense. The Trustee may have
separate counsel and the Company and the Guarantors shall pay the reasonable
fees and expenses of such counsel. The Company and the Guarantors need not pay
for any settlement made without their consent, which consent shall not be
unreasonably withheld.
The obligations of the Company and the Guarantors under this Section
7.07 shall survive the satisfaction and discharge of this Indenture.
To secure the Company's and the Guarantors' payment obligations in
this Section, the Trustee shall have a Lien prior to the Senior Subordinated
Notes on all money or property held or collected by the Trustee, except that
held in trust to pay principal, premium, if any, and interest, including
Liquidated Damages, if any, on particular Senior Subordinated 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 Section 6.01(7) or (8) 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 a majority
in principal amount of the then outstanding Senior Subordinated 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;
(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 Senior Subordinated
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 Senior Subordinated Notes of at least
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10% in principal amount of the then outstanding Senior Subordinated 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 Senior
Subordinated Note who has been a Holder of a Senior Subordinated Note for at
least six months, fails to comply with Section 7.10, such Holder of a Senior
Subordinated 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 Senior Subordinated 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
organized and doing business under the laws of the 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 a combined capital and surplus of at least $50.0
million 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 Senior
Subordinated Notes upon compliance with the conditions set forth below in this
Article 8.
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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, the Company and the Guarantors shall, subject
to the satisfaction of the conditions set forth in Section 8.04 hereof, be
deemed to have been discharged from their obligations with respect to all
outstanding Senior Subordinated Notes 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 Senior Subordinated
Notes, 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 Senior Subordinated Notes and this Indenture and the
Senior Subordinated Guarantees (and the Trustee, on 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 Senior
Subordinated Notes to receive payments in respect of the principal of, premium,
if any, and interest, including Liquidated Damages, if any, on such Senior
Subordinated Notes when such payments are due from the trust fund described in
Section 8.04 hereof, and as more fully set forth in such Section, (b) the
Company's obligations with respect to such Senior Subordinated 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, the Company and the Guarantors shall, subject
to the satisfaction of the conditions set forth in Section 8.04 hereof, be
released from their obligations under the covenants contained in Sections 4.07,
4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16 and 4.18 hereof and the
covenants contained in the Senior Subordinated Guarantees with respect to the
outstanding Senior Subordinated Notes on and after the date the conditions set
forth below are satisfied (hereinafter, "Covenant Defeasance"), and the Senior
Subordinated Notes 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 Senior Subordinated Notes shall not be deemed outstanding
for accounting purposes). For this purpose, Covenant Defeasance means that, with
respect to the outstanding Senior Subordinated 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, such Senior Subordinated Notes and such Senior
Subordinated Guarantees 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, Sections 6.01(3) through 6.01(6), 6.01(9) and 6.01(10)
hereof shall not constitute Events of Default.
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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 Senior Subordinated Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company or the Guarantors must irrevocably deposit with
the Trustee, in trust, for the benefit of the Holders of the Senior
Subordinated Notes, 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 provided to the Trustee, to pay the
principal of, premium, if any, and interest, including Liquidated
Damages, if any, on the outstanding Senior Subordinated Notes on the
stated maturity or on the applicable redemption date, as the case may
be, and the Company or the Guarantors must, concurrently with such
deposit and opinion, provide written notice to the Trustee specifying
whether the Senior Subordinated 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 or the Guarantors shall have delivered to the Trustee an
Opinion of Counsel in the United States reasonably acceptable to the
Trustee confirming that (A) the Company or the Guarantors have
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 Senior Subordinated 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 or the Guarantors 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 Senior
Subordinated 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 borrowing of funds to be applied to such
deposit) or insofar as Section 6.01(7) or 6.01(8) hereof is concerned,
at any time in the period ending on the 91st day after the date of
deposit;
(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 instrument (other than this Indenture) to which
the Company or any of its Restricted Subsidiaries is a party or by
which the Company or any of its Restricted Subsidiaries is bound;
(f) the Company or the Guarantors shall have delivered to the
Trustee an Opinion of Counsel to the effect that after the 91st day
following the deposit, the trust funds will not be
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subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights
generally;
(g) the Company or the Guarantors shall have delivered to the
Trustee an Officers' Certificate stating that the deposit was not made
by the Company or the Guarantors, as applicable, with the intent of
preferring the Holders of Senior Subordinated Notes over the other
creditors of the Company or the Guarantors, as applicable, with the
intent of defeating, hindering, delaying or defrauding creditors of
the Company or the Guarantors, as applicable, or others; and
(h) the Company or the Guarantors shall have delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel, each
stating that all conditions precedent provided for or relating to the
Legal Defeasance or the Covenant Defeasance have been complied with.
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 Senior
Subordinated Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Senior Subordinated 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 Senior Subordinated 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 and the Guarantors 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 other than any such tax,
fee or other charge which by law is for the account of the Holders of the
outstanding Senior Subordinated Notes.
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 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,
or interest, including Liquidated Damages, if any, on any Senior Subordinated
Note and remaining unclaimed for two years after such principal, premium, if
any, or interest, including Liquidated Damages, if any, 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 Senior
Subordinated Note shall thereafter, as a general 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
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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 obligations of the Company and the Guarantors under this
Indenture, the Senior Subordinated Notes and the Senior Subordinated Guarantees
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 or any
Guarantor makes any payment of principal of, premium, if any, or interest,
including Liquidated Damages, if any, on any Senior Subordinated Note following
the reinstatement of its obligations, the Company or such Guarantor shall be
subrogated to the rights of the Holders of such Senior Subordinated Notes to
receive such payment from the money held by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF SENIOR SUBORDINATED NOTES.
Notwithstanding Section 9.02 of this Indenture, the Company, the
Guarantors and the Trustee may amend or supplement this Indenture, the Senior
Subordinated Note Pledge and Escrow Agreement or the Senior Subordinated Notes
without the consent of any Holder of a Senior Subordinated Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Senior Subordinated Notes in
addition to or in place of certificated Senior Subordinated Notes;
(c) to provide for the assumption of the Company's obligations to the
Holders of the Senior Subordinated Notes in the case of a merger or
consolidation pursuant to Article 5 hereof;
(d) to make any change that would provide any additional rights or
benefits to the Holders of the Senior Subordinated Notes or that does not
adversely affect the legal rights hereunder of any Holder of the Senior
Subordinated Notes;
(e) to comply with requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA; or
(f) to allow any Guarantor to execute a supplemental indenture and/or
a Senior Subordinated Guarantee with respect to the Senior Subordinated
Notes.
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Upon the request of the Company accompanied by a resolution of the
Board of Directors of the Company and each of the Guarantors, as the case may
be, 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 and the Guarantors 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 Indenture that affects its own rights, duties
or immunities under this Indenture or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF SENIOR SUBORDINATED NOTES.
Except as provided below in this Section 9.02, the Company, the
Guarantors and the Trustee may amend or supplement this Indenture (including
Section 4.10 and 4.13 hereof), the Senior Subordinated Note Pledge and Escrow
Agreement and the Senior Subordinated Notes with the consent of the Holders of
at least a majority in principal amount of the Senior Subordinated Notes then
outstanding (including, without limitation, consents obtained in connection with
a purchase of, or tender offer or exchange offer for, the Senior Subordinated
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, including Liquidated Damages, if
any, on the Senior Subordinated Notes, except a payment default resulting from
an acceleration that has been rescinded) or compliance with any provision of
this Indenture, the Senior Subordinated Note Pledge and Escrow Agreement or the
Senior Subordinated Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Senior Subordinated Notes
(including, without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, the Senior Subordinated Notes).
Upon the request of the Company accompanied by a resolution of the
Board of Directors of the Company and each of the Guarantors, as the case may
be, 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 Senior Subordinated 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 and the Guarantors in the execution of such
amended or supplemental Indenture unless such amended or supplemental Indenture
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 Senior
Subordinated 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 Senior Subordinated 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 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 Senior
Subordinated Notes then outstanding may waive compliance in a particular
instance by the Company or any Guarantor with any provision of this Indenture or
the Senior Subordinated Notes. However, without the consent of each Holder
affected, an amendment or waiver may not (with respect to any Senior
Subordinated Notes held by a non-consenting Holder):
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(a) reduce the principal amount of Senior Subordinated Notes whose
Holders must consent to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any
Senior Subordinated Note or alter the provisions with respect to the
redemption of the Senior Subordinated Notes (except as provided above
with respect to Sections 4.10 and 4.13 hereof);
(c) reduce the rate of or change the time for payment of interest,
default interest and Liquidated Damages, if any, on any Senior
Subordinated Note;
(d) waive a Default or Event of Default in the payment of
principal of or premium, if any, or interest, including Liquidated
Damages, if any, on the Senior Subordinated Notes (except a rescission
of acceleration of the Senior Subordinated Notes by the Holders of at
least a majority in aggregate principal amount of the Senior
Subordinated Notes and a waiver of the payment default that resulted
from such acceleration);
(e) make any Senior Subordinated Note payable in money other than
that stated in the Senior Subordinated Notes;
(f) make any change in the provisions of this Indenture relating
to waivers of past Defaults or the rights of Holders of Senior
Subordinated Notes to receive payments of principal of or premium, if
any, or interest, including Liquidated Damages, if any, on the Senior
Subordinated Notes;
(g) waive a redemption payment with respect to any Senior
Subordinated Note (except as provided above with respect to Sections
4.10 and 4.13 hereof);
(h) 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 Senior
Subordinated Notes shall be set forth in an amended or supplemental Indenture
that complies with the TIA as then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Senior Subordinated Note is a continuing consent by the
Holder of a Senior Subordinated Note and every subsequent Holder of a Senior
Subordinated Note or portion of a Senior Subordinated Note that evidences the
same debt as the consenting Holder's Senior Subordinated Note, even if notation
of the consent is not made on any Senior Subordinated Note. However, any such
Holder of a Senior Subordinated Note or subsequent Holder of a Senior
Subordinated Note may revoke the consent as to its Senior Subordinated Note if
the Trustee receives written notice of revocation before the date the waiver,
supplement or amendment becomes effective. An amendment, supplement or waiver
becomes effective in accordance with its terms and thereafter binds every
Holder.
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SECTION 9.05. NOTATION ON OR EXCHANGE OF SENIOR SUBORDINATED NOTES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Senior Subordinated Note thereafter authenticated.
The Company in exchange for all Senior Subordinated Notes may issue and the
Trustee shall, upon receipt of an Authentication Order, authenticate new Senior
Subordinated Notes that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Senior
Subordinated 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.
Neither the Company nor any Guarantor may sign an amended or supplemental
Indenture until its respective Board of Directors approves it. In executing any
amended or supplemental indenture, the Trustee shall be entitled 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 and that
there has been compliance with all conditions precedent.
ARTICLE 10
SUBORDINATION
SECTION 10.01. AGREEMENT TO SUBORDINATE.
The Company agrees, and each Holder by accepting a Senior Subordinated
Note agrees, that the Indebtedness evidenced by the Senior Subordinated Note is
subordinated in right of payment, to the extent and in the manner provided in
this Article, to the prior payment in full of all Senior Debt (whether
outstanding on the date hereof or hereafter created, incurred, assumed or
guaranteed), and that the subordination is for the benefit of the holders of
Senior Debt.
SECTION 10.02. CERTAIN DEFINITIONS.
"Accrued Bankruptcy Interest" means, with respect to any Indebtedness
or Hedging Obligations under or secured by the New Bank Credit Agreement, all
interest accruing thereon after the filing of a petition by or against the
Company 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 or Hedging
Obligations, whether or not the claim for such interest is allowed as a claim
after such filing in any proceeding under such Bankruptcy Law.
"Bankruptcy Law" means title 11, U.S. Code or any similar Federal or
state law for the relief of debtors.
"Designated Senior Debt" means (i) so long as the Senior Bank Debt is
outstanding, the Senior Bank Debt, (ii) the Senior Bank Hedging Obligations and
(iii) any other Senior Debt permitted under this
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Indenture the principal amount of which is $25.0 million or more and that has
been designated by the Company as "Designated Senior Debt."
"Representative" means the indenture trustee or other trustee, agent
or representative for any Senior Debt.
"Senior Bank Debt" means all Obligations in respect of the
Indebtedness outstanding under the New Bank Credit Agreement, together with any
refunding, refinancing or replacement (in whole or in part) of such
Indebtedness.
"Senior Bank Hedging Obligations" means all present and future Hedging
Obligations of the Company, whether existing now or in the future, that are
secured by the New Bank Credit Agreement or any of the collateral documents
executed from time to time in connection therewith.
"Senior Debt" means (i) the Senior Bank Debt, (ii) the Senior Bank
Hedging Obligations and (iii) any other Indebtedness permitted to be incurred by
the Company under the terms of this Indenture, unless the instrument under which
such Indebtedness is incurred expressly provides that it is on a parity with or
subordinated in right of payment to the Senior Subordinated Notes.
Notwithstanding anything to the contrary in the foregoing, Senior Debt will not
include (1) any liability for federal, state, local or other taxes owed or owing
by the Company, (2) any Indebtedness of the Company to any of its Restricted
Subsidiaries or other Affiliates (other than Goldman, Sachs & Co. and its
Affiliates, including Pearl Street L.P.), (3) any trade payables, (4) that
portion of any Indebtedness that is incurred in violation of this Indenture, (5)
Indebtedness which, when incurred and without respect to any election under
Section 1111(b) of Title 11, United States Code, is without recourse to the
Company, (6) any Indebtedness, Guarantee or obligation of the Company which is
contractually subordinate in right of payment to any other Indebtedness,
Guarantee or obligation of the Company; provided, however, that this clause (6)
shall not apply to the subordination of liens or security interests covering
particular properties or types of assets securing Senior Debt, (7) Indebtedness
evidenced by the Notes and (8) Capital Stock.
A distribution may consist of cash, securities or other property, by
set-off or otherwise.
All Designated Senior Debt now or hereafter existing and all other
Obligations relating thereto shall not be deemed to have been paid in full
unless the holders or owners thereof shall have received payment in full in cash
with respect to such Designated Senior Debt and all other Obligations with
respect thereto.
SECTION 10.03. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company, in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, or
in an assignment for the benefit of creditors or any marshalling of the
Company's assets and liabilities:
(1) holders of Senior Debt shall be entitled to receive payment in
full of all Obligations in respect of such Senior Debt (including Accrued
Bankruptcy Interest) and to have all outstanding Letter of Credit
Obligations fully cash collateralized before the Trustee or the Holders
shall be entitled to receive any payment of Obligations with respect to the
Senior Subordinated Notes (except that the Trustee or the Holders of Senior
Subordinated Notes may receive (i) payments of Escrow Funds from the
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Escrow Account and (ii) payments and other distributions made from any
defeasance trust created pursuant to Section 8.01 hereof); and
(2) until all Obligations with respect to Senior Debt (as provided in
subsection (1) above) are paid in full and all outstanding Letter of Credit
Obligations are fully cash collateralized, any distribution to which the
Trustee or the Holders of Senior Subordinated Notes would be entitled but
for this Article, including any such distribution that is payable or
deliverable by reason of the payment of any other Indebtedness of the
Company being subordinated to the payment of the Senior Subordinated Notes,
shall be made to holders of Senior Debt or their Representatives, ratably in
accordance with the respective amounts of the principal of such Senior Debt,
interest (including Accrued Bankruptcy Interest) thereon and all other
Obligations with respect thereto (except that Holders of Senior Subordinated
Notes may receive (i) payments of Escrow Funds from the Escrow Account and
(ii) payments and other distributions made from any defeasance trust created
pursuant to Section 8.01 hereof), as their interests may appear.
SECTION 10.04. DEFAULT ON DESIGNATED SENIOR DEBT.
The Company may not make any payment or distribution to the Trustee or
any Holder in respect of Obligations with respect to the Senior Subordinated
Notes and may not acquire from the Trustee or any Holder any Senior Subordinated
Notes for cash or property (other than (i) payments of Escrow Funds from the
Escrow Account and (ii) payments and other distributions made from any
defeasance trust created pursuant to Section 8.01 hereof) until all principal
and other Obligations with respect to the Senior Debt have been paid in full if:
(i) a default in the payment of any principal or other Obligations
with respect to Designated Senior Debt occurs and is continuing (including
any default in payment upon the maturity of any Designated Senior Debt by
lapse of time, acceleration or otherwise), or any judicial proceeding is
pending to determine whether any such default has occurred; or
(ii) a default, other than a payment default described in subsection
(i) above, on Designated Senior Debt, including any event which, with giving
of notice or lapse of time, or both, would become an event of default and
including any default or event of default that would result upon any payment
or distribution with respect to the Senior Subordinated Notes, has occurred
and is continuing with respect to any Designated Senior Debt (as such
default or event of default is defined in any agreement, indenture or other
document governing such Designated Senior Debt) and the Trustee receives a
notice of the default (a "Payment Blockage Notice") from a Person who may
give it pursuant to Section 10.12 hereof. If the Trustee receives any such
Payment Blockage Notice, no subsequent Payment Blockage Notice shall be
effective for purposes of this Section unless and until at least 360 days
shall have elapsed since the first day of effectiveness of the immediately
prior Payment Blockage Notice. No nonpayment default 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 unless such default shall have been waived for a period of not less
than 180 days.
If the Company is prohibited from making payments on or distributions
in respect of the Senior Subordinated Notes or from acquiring the Senior
Subordinated Notes, under subsection (i) or (ii) above, the Company may and
shall resume payments on and distributions in respect of the Senior Subordinated
Notes and may acquire them upon the earlier of:
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(1) the date upon which the default, event of default or other event
giving rise to such prohibition is cured or waived or shall have ceased to
exist, unless another default, event of default or other event that would
prohibit such payment, distribution or acquisition under Section 10.04(i) has
occurred and is continuing, or all Obligations in respect of such Designated
Senior Debt shall have been discharged or paid in full, or
(2) in the case of any prohibition referred to in Section 10.04(ii)
hereof, 179 days pass after the relevant Payment Blockage Notice is received by
the Trustee thereunder,
in each such case, if this Article otherwise permits the payment, distribution
or acquisition.
SECTION 10.05. ACCELERATION OF SENIOR SUBORDINATED NOTES.
If payment of the Senior Subordinated Notes is accelerated because of
an Event of Default, the Company shall promptly notify holders of Senior Debt of
the acceleration in accordance with Section 6.01 of this Indenture.
SECTION 10.06. WHEN DISTRIBUTION MUST BE PAID OVER.
If, notwithstanding the provisions of Sections 10.03 and 10.04, any
direct or indirect payment or distribution on account of principal of or
interest on or other Obligations with respect to the Senior Subordinated Notes
or acquisition, repurchase, redemption, retirement or defeasance of any of the
Senior Subordinated Notes shall be made by or on behalf of the Company
(including any payments or distribution by any liquidating trustee or agent or
other Person in a proceeding referred to in Section 10.03) and received by the
Trustee or any Holder of Senior Subordinated Notes at a time when such payment
or distribution was prohibited by the provisions of Section 10.03 or 10.04 or
such payment or distribution was required to be made to holders of Senior Debt
or their Representatives, then, unless and until such payment or distribution is
no longer prohibited by Section 10.03 or 10.04, such payment or distribution
shall be received, segregated from other funds or assets and held in trust by
the Trustee or such Holder of Senior Subordinated Notes, as the case may be, for
the benefit of, and shall be immediately paid or delivered over to, the holders
of Senior Debt or their Representatives, ratably in accordance with the
respective amounts of the principal of such Senior Debt, interest (including
Accrued Bankruptcy Interest) thereon and all other Obligations with respect
thereto held or represented by each, until the principal of all Senior Debt,
interest (including Accrued Bankruptcy Interest) thereon and all other
Obligations with respect thereto have been paid in full and all outstanding
Letter of Credit Obligations have been fully cash collateralized. Any
distribution to the holders of Senior Debt or their Representatives of assets
other than cash may be held by such holders or such Representatives as
additional collateral without any duty to the Holder of Senior Subordinated
Notes to liquidate or otherwise realize on such assets or to apply such assets
to any Senior Debt or other Obligations relating thereto.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform only such obligations on the part of the Trustee as are specifically set
forth in this Article 10, and no implied covenants or obligations with respect
to the holders of Senior Debt 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 Debt, and shall not be liable to any such holders if the
Trustee shall in good faith mistakenly pay over or distribute to or on behalf of
Holders of Senior Subordinated Notes or the Company or any other Person money or
assets to which any holders of Senior Debt shall be entitled by virtue of this
Article 10, except if such payment is made as a result of the willful misconduct
or gross negligence of the Trustee. Nothing in this Section 10.06 shall
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affect the obligation of any Person other than the Trustee to hold such payment
or distribution for the benefit of, and to pay or deliver such payment or
distribution over to, the holders of Senior Debt or their Representatives.
SECTION 10.07. 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 Senior Subordinated Notes to violate this Article, but
failure to give such notice shall not affect the subordination of the Senior
Subordinated Notes to the Senior Debt as provided in this Article.
SECTION 10.08. SUBROGATION.
After all Senior Debt is paid in full and until the Senior
Subordinated Notes are paid in full, Holders of Senior Subordinated Notes shall
be subrogated (equally and ratably with all other Indebtedness pari passu with
the Senior Subordinated Notes) to the rights of holders of Senior Debt to
receive distributions applicable to Senior Debt to the extent that distributions
otherwise payable to the Holders of Senior Subordinated Notes have been applied
to the payment of Senior Debt. A distribution made under this Article to holders
of Senior Debt that otherwise would have been made to Holders of Senior
Subordinated Notes is not, as between the Company and Holders, a payment by the
Company on the Senior Subordinated Notes.
SECTION 10.09. RELATIVE RIGHTS.
This Article defines the relative rights of Holders of Senior
Subordinated Notes and holders of Senior Debt. 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, premium,
if any, and interest, including Liquidated Damages, if any, on the Senior
Subordinated 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 Debt; 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 Debt to receive distributions and payments
otherwise payable to Holders.
If the Company fails because of this Article to pay principal of,
premium if any, or interest, including Liquidated Damages, if any, on a Senior
Subordinated Note on the due date, the failure is still a Default or Event of
Default.
SECTION 10.10. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY.
No right of any present or future holder of Senior Debt to enforce the
subordination of the Indebtedness evidenced by the Senior Subordinated Notes
shall be impaired by any act or failure to act by the Company or any Holder of
Senior Subordinated Notes or any holder of Senior Debt or by the failure of the
Company or any Holder of Senior Subordinated Notes or any holder of Senior Debt
to comply with this Indenture regardless of any knowledge thereof that any such
Holder of Senior Subordinated Notes or holder of Senior Debt, as the case may
be, may have or be otherwise charged with. The holders of Senior Debt may
extend,
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renew, restate, supplement, modify or amend the terms of the Senior Debt or any
Obligations with respect thereto or any security therefor and release, sell or
exchange such security and otherwise deal freely with the Company and its
Subsidiaries and Affiliates all without affecting the liabilities and
obligations of the parties to this Indenture or the Holders. No provision in any
supplemental indenture that adversely affects the subordination of the Senior
Subordinated Notes or other provisions of this Article 10 shall be effective
against the holders of the Designated Senior Debt that have not consented
thereto.
Each Holder of the Senior Subordinated Notes by their acceptance
thereof: (a) acknowledges and agrees that the holders of any Senior Debt or
their Representative, in its or their discretion, and without affecting any
rights of any holder of Senior Debt under this Article 10, may foreclose any
mortgage or deed of trust covering interest in real property securing such
Senior Debt or any guarantee thereof by judicial or nonjudicial sale, even
though such action may release the Company or any guarantor of such Senior Debt
from further liability under such Senior Debt or any guarantee thereof or may
otherwise limit the remedies available to the holders thereof; and (b) hereby
waives any defense that such Holder may otherwise have to the enforcement by any
holder of any Senior Debt or any Representative of such holder against such
Holder of this Article 10 after or as a result of any action, including any such
defense based on any loss or impairment of rights of subrogation.
If at any time any payment of Obligations with respect to any Senior
Debt is rescinded or must otherwise be returned upon the insolvency, bankruptcy,
reorganization or liquidation of the Company or otherwise, the provisions of
this Article 10 shall continue to be effective or reinstated, as the case may
be, to the same extent as though such payments had not been made.
SECTION 10.11. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to holders of
Senior Debt, 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 10, the Trustee and the Holders of Senior Subordinated Notes
shall be entitled to rely upon any order or decree made by any court of
competent jurisdiction or upon any certificate of such Representative or of the
liquidating trustee or agent or other Person making any distribution to the
Trustee or to the Holders of Senior Subordinated Notes for the purpose of
ascertaining the Persons entitled to participate in such distribution, the
holders of the Senior Debt 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 10.
SECTION 10.12. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 10 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 Senior Subordinated Notes, unless a Responsible Officer
of the Trustee shall have received at its Corporate Trust Office at least two
Business Days prior to the date of such payment written notice of facts that
would cause the payment of any Obligations with respect to the Senior
Subordinated Notes to violate this Article. Only the Company or a Representative
may give the notice. Nothing in this Article 10 shall impair the claims of, or
payments to, the Trustee under or pursuant to Section 7.07 hereof.
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The Trustee in its individual or any other capacity may hold Senior
Debt with the same rights it would have if it were not Trustee. Any Agent may do
the same with like rights.
SECTION 10.13. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of a Senior Subordinated 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 appropriate to effectuate the subordination as
provided in this Article 10, 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 under the New Bank Credit Agreement is hereby
authorized to file an appropriate claim for and on behalf of the Holders of the
Senior Subordinated Notes.
The Company, the Trustee and each Holder by their acceptance of the
Senior Subordinated Notes acknowledge that damages would be inadequate to
compensate the holders of Senior Debt for any breach or default by the Company,
the Trustee or any such Holder of its obligations under this Article 10, and,
therefore, agree that the holders of Senior Debt and their Representatives shall
be entitled to equitable relief, including injunctive relief and specific
performance, in the enforcement thereof.
SECTION 10.14. AMENDMENTS.
The provisions of this Article 10 shall not be amended or modified
without the written consent of the holders of all Senior Debt unless such
amendment or modification does not adversely affect the holders of such Senior
Debt.
ARTICLE 11
SENIOR SUBORDINATED GUARANTEES
SECTION 11.01. SENIOR SUBORDINATED GUARANTEES.
Subject to this Article 11, each of the Guarantors, jointly and
severally, hereby unconditionally guarantees to each Holder of a Senior
Subordinated Note authenticated and delivered by the Trustee and to the Trustee
and its successors and assigns, irrespective of the validity and enforceability
of this Indenture, the Senior Subordinated Notes or the obligations of the
Company under this Indenture or the Senior Subordinated Notes, that: (a) the
principal of, premium, if any, and interest, including Liquidated Damages, if
any, on the Senior Subordinated Notes shall be promptly paid in full when due,
whether at maturity, by acceleration, redemption or otherwise, and (to the
extent permitted by law) interest on the overdue principal of, premium and
interest, including Liquidated Damages, on the Senior Subordinated Notes, if
any, and all other obligations of the Company to the Holders or the Trustee
under this Indenture or the Senior Subordinated Notes shall be promptly paid in
full or performed, all in accordance with the terms of this Indenture and the
Senior Subordinated Notes; and (b) in case of any extension of time of payment
or renewal of any Senior Subordinated Notes or any of such other obligations,
that 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. Failing payment when due of any amount so guaranteed
for whatever reason, the Guarantors shall be obligated to pay the same
immediately whether or not such failure to pay has become an Event of Default
which could cause acceleration pursuant to Section 6.02 hereof. Each Guarantor
agrees that this is a guarantee of payment and not a guarantee of collection.
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The Guarantors hereby agree that their obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Senior Subordinated Notes or this Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the Senior Subordinated
Notes with respect to any provisions hereof or thereof, the recovery 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 guarantor. Each Guarantor hereby waives diligence, presentment,
demand of payment, filing of claims with a court in the event of insolvency or
bankruptcy of the Company, any right to require a proceeding first against the
Company, protest, notice and all demands whatsoever and covenants that, subject
to this Article 11, this Senior Subordinated Guarantee shall not be discharged
except by complete performance of the obligations contained in the Senior
Subordinated Notes and this Indenture.
If any Holder of Senior Subordinated Notes or the Trustee is required
by any court or otherwise to return to the Company or Guarantors, or any
Custodian, Trustee, liquidator or other similar official acting in relation to
either the Company or Guarantors, any amount paid by either to the Trustee or
such Holder, this Senior Subordinated Guarantee, to the extent theretofore
discharged, shall be reinstated in full force and effect.
Each Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders of Senior Subordinated Notes in respect
of any Obligations guaranteed hereby until payment in full of all Obligations
guaranteed hereby. Each Guarantor further agrees that, as between the
Guarantors, on the one hand, and the Holders 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 of this Senior Subordinated
Guarantee, notwithstanding any stay, injunction or other prohibition preventing
such acceleration in respect of the Obligations guaranteed hereby and (y) in the
event of any declaration of acceleration of such Obligations as provided in
Section 6.02 hereof, such Obligations (whether or not due and payable) shall
forthwith become due and payable by the Guarantors for the purpose of this
Senior Subordinated Guarantee. The Guarantors shall have the right to seek
contribution from any non-paying Guarantor so long as the exercise of such right
does not impair the rights of the Holders under the Senior Subordinated
Guarantees.
SECTION 11.02. SUBORDINATION OF SENIOR SUBORDINATED GUARANTEE.
The Obligations of each Guarantor under its Senior Subordinated
Guarantee pursuant to this Article 11 shall be junior and subordinated to the
Senior Guarantee of such Guarantor on the same basis as the Senior Subordinated
Notes are junior and subordinated to Senior Debt 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 Guarantors only at such
times as they may receive and/or retain payments in respect of the Senior
Subordinated Notes pursuant to this Indenture, including Article 10 hereof.
SECTION 11.03. LIMITATION ON GUARANTOR LIABILITY.
Each Guarantor, and by its acceptance of Senior Subordinated Notes,
each Holder, hereby confirms that it is the intention of all such parties that
the Senior Subordinated Guarantee of such Guarantor not constitute a fraudulent
transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent
Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or
state law to the extent applicable to any Senior Subordinated Guarantee. To
effectuate the foregoing intention, the Trustee, the Holders and the Guarantors
hereby irrevocably agree that the obligations of such Guarantor under its Senior
Subordinated Guarantee and this Article 11 shall be limited to the maximum
amount as will, after giving effect to such maximum amount and all other
contingent and fixed liabilities of such Guarantor that are
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relevant under such laws, and after giving effect to any collections from,
rights to receive contribution from or payments made by or on behalf of any
other Guarantor in respect of the obligations of such other Guarantor under this
Article 11, result in the obligations of such Guarantor under its Senior
Subordinated Guarantee not constituting a fraudulent transfer or conveyance.
SECTION 11.04. EXECUTION AND DELIVERY OF SENIOR SUBORDINATED GUARANTEES.
To evidence its Senior Subordinated Guarantee set forth in Section
11.01, each Guarantor hereby agrees that a notation of such Senior Subordinated
Guarantee substantially in the form of Exhibit D shall be endorsed by an Officer
of such Guarantor on each Senior Subordinated Note authenticated and delivered
by the Trustee and that this Indenture shall be executed on behalf of such
Guarantor by its President or one of its Vice Presidents and attested to by an
Officer of such Guarantor.
Each Guarantor hereby agrees that its Senior Subordinated Guarantee
set forth in Section 11.01 shall remain in full force and effect notwithstanding
any failure to endorse on each Senior Subordinated Note a notation of such
Senior Subordinated Guarantee.
If an Officer whose signature is on this Indenture or on the Senior
Subordinated Guarantee no longer holds that office at the time the Trustee
authenticates the Senior Subordinated Note on which a Senior Subordinated
Guarantee is endorsed, the Senior Subordinated Guarantee shall be valid
nevertheless.
The delivery of any Senior Subordinated Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the Senior
Subordinated Guarantee set forth in this Indenture on behalf of the Guarantors.
In the event that the Company creates or acquires any new Subsidiaries
subsequent to the date of this Indenture, if required by Section 4.14 hereof,
the Company shall cause such Subsidiaries to execute supplemental indentures to
this Indenture and Senior Subordinated Guarantees in accordance with Section
4.14 hereof and this Article 11, to the extent applicable.
SECTION 11.05. GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.
No Guarantor may consolidate with or merge with or into (whether or
not such Guarantor is the surviving Person) another corporation, Person or
entity whether or not affiliated with such Guarantor unless:
(a) subject to Section 11.06 hereof, the Person formed by or surviving
any such consolidation or merger (if other than such Guarantor)
unconditionally assumes all the obligations of such Guarantor under the
Senior Subordinated Guarantee and this Indenture on the terms set forth
herein pursuant to a supplemental indenture in form and substance reasonably
satisfactory to the Trustee;
(b) immediately after giving effect to such transaction, no Default or
Event of Default exists; and
(c) the Company would be permitted by virtue of the Company's pro
forma Fixed Charge Coverage Ratio to incur, immediately after giving effect
to such transaction, 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 hereof.
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In case of any such consolidation or merger and upon the assumption by the
successor corporation, by supplemental indenture, executed and delivered to the
Trustee and satisfactory in form to the Trustee, of the Senior Subordinated
Guarantee endorsed upon the Senior Subordinated Notes and of the due and
punctual performance of all of the covenants and conditions of this Indenture to
be performed by the Guarantor, such successor corporation shall succeed to and
be substituted for the Guarantor with the same effect as if it had been named
herein as a Guarantor. Such successor corporation thereupon may cause to be
signed any or all of the Senior Subordinated Guarantees to be endorsed upon all
of the Senior Subordinated Notes issuable hereunder which theretofore shall not
have been signed by the Company and delivered to the Trustee. All the Senior
Subordinated Guarantees so issued shall in all respects have the same legal rank
and benefit under this Indenture as the Guarantees theretofore and thereafter
issued in accordance with the terms of this Indenture as though all of such
Senior Subordinated Guarantees had been issued at the date of the execution
hereof.
Except as set forth in Articles 4 and 5 hereof, and notwithstanding
clauses (a) through (c) above, nothing contained in this Indenture or in any of
the Senior Subordinated Notes shall prevent any consolidation or merger of a
Guarantor with or into the Company or another Guarantor, or shall prevent any
sale or conveyance of the property of a Guarantor as an entirety or
substantially as an entirety to the Company or another Guarantor.
SECTION 11.06. RELEASES OF SENIOR SUBORDINATED GUARANTEES.
In the event of a sale or other disposition of all or substantially
all of the assets of any Guarantor (other than Holdings), by way of merger,
consolidation or otherwise, or a sale or other disposition (including, without
limitation, by foreclosure) of all of the Capital Stock of any Guarantor (other
than Holdings), then such Guarantor (in the event of a sale or other
disposition, by way of such a merger, consolidation or otherwise (including,
without limitation, by foreclosure), 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 Guarantor) shall be automatically
released and relieved of any obligations under its Senior Subordinated
Guarantee; provided that the Net Proceeds of such sale or other disposition are
applied in accordance with Section 4.10 hereof. Upon the merger, consolidation,
sale or other disposition (including, without limitation, by foreclosure) of all
or substantially all of the assets of the Company, then Holdings shall be
automatically released and relieved of any obligations under its Senior
Subordinated Guarantee; provided that such merger, consolidation or sale
complies with Section 5.01 hereof. Upon delivery by the Company to the Trustee
of an Officers' Certificate and an Opinion of Counsel to the effect that such
sale or other disposition was made by the Company in accordance with the
provisions of this Indenture, including without limitation Sections 4.10 and
5.01 hereof, the Trustee shall execute any documents reasonably required in
order to evidence the release of any Guarantor from its obligations under its
Senior Subordinated Guarantee.
Any Guarantor not released from its obligations under its Senior
Subordinated Guarantee shall remain liable for the full amount of principal of
and interest on the Senior Subordinated Notes and for the other obligations of
any Guarantor under this Indenture as provided in this Article 11.
SECTION 11.07. "TRUSTEE" TO INCLUDE PAYING AGENT.
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article 11 shall in such case (unless the context shall
otherwise require) be construed as extending to and including such Paying
Agent
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within its meaning as fully and for all intents and purposes as if such Paying
Agent were named in this Article 11 in place of the Trustee.
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 TIA Section 318(c), the imposed duties shall control.
SECTION 12.02. NOTICES.
Any notice, request, instruction, order or other communication by the
Company, the Guarantors or the Trustee to the others is duly given only 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 or any Guarantors:
AMF Group Inc.
7313 Bell Creek Road
Mechanicsville, VA 23221
Telecopier No.: (804) 559-8666
Attention: Secretary
With a copy to:
GS Capital Partners II, L.P.
85 Broad Street
New York, NY 10004
Telecopier No.: (212) 902-3000
Attention: David J. Greenwald
and
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Telecopier No.: (212) 403-2000
Attention: Elliott V. Stein
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If to the Trustee:
IBJ Schroder Bank & Trust Company
One State Street
New York, NY 10004
Telecopier No.: (212) 858-2156
Attention: Corporate Trust Administration
The Company, any Guarantor 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; five Business Days after being deposited in the mail,
postage prepaid, if mailed; 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 SENIOR SUBORDINATED NOTES WITH
OTHER HOLDERS OF SENIOR SUBORDINATED NOTES.
Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the Senior
Subordinated Notes. The Company, the Guarantors, 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 or any Guarantor to the
Trustee to take any action under this Indenture, the Company or such Guarantor,
as the case may be, shall furnish to the Trustee:
(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
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(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.
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.
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 any Guarantor, as such, shall have any
liability for any obligations of the Company or the Guarantors under the Senior
Subordinated Notes, the Senior Subordinated Guarantees, this Indenture or for
any claim based on, in respect of, or by reason of, such obligations or their
creation. Each Holder of Senior Subordinated Notes by accepting a Senior
Subordinated Note waives and releases all such liability. The waiver and release
are part of the consideration for issuance of the Senior Subordinated 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 SENIOR SUBORDINATED NOTES AND THE SENIOR
SUBORDINATED 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 and the Senior Subordinated Guarantees.
76
<PAGE> 83
SECTION 12.10. SUCCESSORS.
All agreements of the Company and each Guarantor in this Indenture and
the Senior Subordinated Notes shall bind its respective 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 Senior Subordinated
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.
SECTION 12.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
77
<PAGE> 84
SIGNATURES
Dated as of March 21, 1996
AMF GROUP INC.
Attest: By: /s/ Richard A. Friedman
--------------------------------
Name: Richard A. Friedman
Title: President
/s/ Michael P. Bardaro
- --------------------------
Name: Michael P. Bardaro
Title: Secretary
AMF GROUP HOLDINGS INC.
Attest: By: /s/ Richard A. Friedman
--------------------------------
Name: Richard A. Friedman
Title: President
/s/ Carla H. Skodinski
- --------------------------
Name: Carla H. Skodinski
Title: Secretary
AMF BOWLING HOLDINGS INC.
Attest: By: /s/ Robert L. Morin
--------------------------------
Name: Robert L. Morin
Title: President
/s/ William W. Flexon
- --------------------------
Name: William W. Flexon
Title: Secretary
AMF BOWLING CENTERS HOLDINGS INC.
Attest: By: /s/ Douglas J. Stanard
------------------------------
Name: Douglas J. Stanard
Title: President
/s/ Michael P. Bardaro
- --------------------------
Name: Michael P. Bardaro
Title: Assistant Secretary
AMF WORLDWIDE BOWLING CENTERS
HOLDINGS INC.
Attest: By: /s/ Douglas J. Stanard
------------------------------
Name: Douglas J. Stanard
Title: President
/s/ Michael P. Bardaro
- --------------------------
Name: Michael P. Bardaro
Title: Secretary
<PAGE> 85
Dated as of March 21, 1996 IBJ SCHRODER BANK & TRUST COMPANY
Trustee
Attest: By: /s/ Irene Teutonico
--------------------------------
/s/ Kerry A. Monaghan Name: IRENE TEUTONICO
- --------------------------- Title: ASSISTANT VICE PRESIDENT
KERRY A. MONAGHAN
ASSISTANT SECRETARY
<PAGE> 86
EXHIBIT A-1
(Face of Senior Subordinated Note)
================================================================================
CUSIP 030985AA3
No. ___ $__________
10 7/8% [Series A] [Series B] Senior Subordinated Notes due 2006
AMF GROUP INC.
promises to pay to
or registered assigns,
the principal sum of
Dollars ($____________) on March 15, 2006.
Interest Payment Dates: March 15 and September 15
Record Dates: March 1 and September 1
Dated: __________, ____
AMF GROUP INC.
By:______________________________
Name:
Title:
By:______________________________
Name:
Title:
This is one of the Senior
Subordinated Notes referred to
in the within-mentioned Indenture: (SEAL)
IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee
By:__________________________________
Authorized Signatory
================================================================================
A1-1
<PAGE> 87
(Back of Senior Subordinated Note)
10 7/8% [Series A] [Series B] Senior Subordinated Note due 2006
[UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SENIOR
SUBORDINATED NOTES IN DEFINITIVE FORM, THIS SENIOR SUBORDINATED 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 ISSUER 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)
THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND (A) MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) BY THE INITIAL INVESTOR (a) TO
A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (b) IN AN OFFSHORE TRANSACTION COMPLYING
WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (c) PURSUANT
TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE), (d) TO THE COMPANY OR (e) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (2) BY SUBSEQUENT INVESTORS,
AS SET FORTH IN (1) ABOVE AND, IN ADDITION, TO AN INSTITUTIONAL ACCREDITED
INVESTOR IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, AND, IN EACH CASE, IN ACCORDANCE WITH ALL APPLICABLE SECURITIES
LAWS OF THE STATES OF THE UNITED STATES AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE NOTES
EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE. NO
REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY
RULE 144 FOR RESALES OF THE NOTES.
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. INTEREST. AMF Group Inc., a Delaware corporation (the "Company"),
promises to pay interest on the principal amount of this Senior Subordinated
Note at the rate of 10 7/8% per annum, which interest shall be payable in cash
semi-annually in arrears on March 15 and September 15, or if any such day is not
a Business Day, on the next succeeding Business Day (each an "Interest Payment
Date"); provided that the first Interest Payment Date shall be September 15,
1996. Interest on the Senior Subordinated 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 original issuance. Interest will be computed on the basis of a 360-day
year comprised of twelve 30-day months.
- -----------------------
(1) This paragraph should be included only if the Senior Subordinated Note is
issued in global form.
A1-2
<PAGE> 88
2. METHOD OF PAYMENT. On each Interest Payment Date the Company shall pay
interest and Liquidated Damages, if any, to the Person who is the Holder of
record of this Senior Subordinated Note as of the close of business on March 1
or September 1 immediately preceding such Interest Payment Date, even if this
Senior Subordinated Note is cancelled after such record date and on or before
such Interest Payment Date, except as provided in Section 2.12 of the Indenture
with respect to defaulted interest. Principal, premium, if any, and interest,
including Liquidated Damages, if any, on this Senior Subordinated Note 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, including Liquidated Damages, if any, may be made by check mailed
to the Holder of this Senior Subordinated Note at its address set forth in the
register of Holders of Senior Subordinated Notes; provided, however, that all
payments with respect to Global Notes and Certificated Notes the Holders of
which have given wire transfer instructions to the Company at least 10 Business
Days prior to the applicable payment date will be required to be made by wire
transfer of immediately available funds to the accounts specified by the Holders
thereof. 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, IBJ Schroder Bank & Trust
Company, 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, any Guarantor or any other of its Restricted
Subsidiaries may act in any such capacity.
4. INDENTURE. The Company issued the Senior Subordinated Notes under an
Indenture dated as of March 21, 1996 ("Indenture") among the Company, the
Guarantors and the Trustee. The terms of the Senior Subordinated 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 Senior Subordinated Notes are subject to all such terms, and
Holders are referred to the Indenture and such Act for a statement of such
terms. The Senior Subordinated Notes are general unsecured obligations of the
Company limited in an aggregate principal amount at maturity to $250.0 million
and will mature on March 15, 2006.
5. OPTIONAL REDEMPTION.
(a) The Senior Subordinated Notes are not redeemable at the Company's option
prior to March 15, 2001. From and after March 15, 2001, the Senior
Subordinated Notes will be subject to redemption at the option of the
Company, in whole or in part, upon not less than 30 nor more than 60 days'
written notice, at the redemption prices (expressed as percentages of
principal amount) set forth below, plus accrued and unpaid interest,
including Liquidated Damages, if any, thereon to the applicable redemption
date, if redeemed during the twelve-month period beginning on March 15 of the
years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2001............................. 105.438%
2002............................. 103.625%
2003............................. 101.813%
2004 and thereafter.............. 100.000%
</TABLE>
A1-3
<PAGE> 89
(b) Notwithstanding the provisions of clause (a) of this Paragraph 5, prior
to March 15, 1999, the Company may, at its option, on any one or more occasions,
redeem up to $100.0 million in aggregate principal amount of Senior Subordinated
Notes at a redemption price equal to 110.875% of the principal amount thereof,
plus accrued and unpaid interest, including Liquidated Damages, if any, thereon
to the redemption date, with the net proceeds of public or private sales of
common stock of, or contributions to the common equity capital of, the Company;
provided that at least $150.0 million in aggregate principal amount of Senior
Subordinated Notes remains outstanding immediately after the occurrence of such
redemption; and provided, further, that such redemption shall occur within 60
days of the date of the closing of the related sale of common stock of, or
capital contribution to, the Company.
6. MANDATORY REDEMPTION.
Except as set forth in paragraphs 7 and 8 below, the Company shall not be
required to make mandatory redemption or sinking fund payments with respect
to the Senior Subordinated Notes.
7. SPECIAL MANDATORY REDEMPTION.
If consummation of the Acquisition has not occurred on or prior to May 31,
1996, all of the outstanding Senior Subordinated Notes shall be subject to a
Special Mandatory Redemption upon seven days' prior written notice to the
Holders with the Escrow Funds from the Escrow Account at a redemption price
equal to the Special Redemption Price, including Liquidated Damages, if any, as
of the date of redemption. Such Special Mandatory Redemption may be made prior
to May 31, 1996, in accordance with the provisions described above if the
Company determines at such time that it will not consummate the Acquisition.
"Special Redemption Price" means, with respect to any Senior Subordinated Note
as of any date of redemption with respect thereto, an amount equal to (x) 101%
of the principal amount thereof if such date is prior to April 18, 1996, (y)
102.5% of the principal amount thereof if such date is on or after May 31, 1996,
and (z) on any date that is on or after April 18, 1996, and prior to May 31,
1996, a percentage of the principal amount thereof determined by linear
interpolation between 101% and 102.5% based on the number of days elapsed since
April 18, 1996, in the 43-day period between April 18, 1996, and May 31, 1996,
including April 18, 1996, as the first day in such period.
8. REPURCHASE AT OPTION OF HOLDER.
(a) If there is a Change of Control, each Holder of Senior Subordinated
Notes shall have the right to require the Company to repurchase all or any part
(equal to $1,000 in principal amount or an integral multiple thereof) of such
Holder's Senior Subordinated Notes pursuant to the offer described below (the
"Change of Control Offer") at a purchase price in cash (the "Change of Control
Payment") equal to 101% of the aggregate principal amount thereof plus accrued
and unpaid interest, including Liquidated Damages, if any, thereon to the date
of repurchase. Within 30 days following any Change of Control, the Company
shall mail a notice to each Holder setting forth the procedures governing the
Change of Control Offer as required by the Indenture.
(b) If the Company or a Restricted Subsidiary consummates any Asset Sales
permitted by the Indenture, within 10 days of each date on which the aggregate
amount of Excess Proceeds exceeds $25.0 million, the Company shall commence an
offer to all Holders of Senior Subordinated Notes and, to the extent required by
the Senior Subordinated Discount Note Indenture, the Holders of Senior
Subordinated Discount Notes (an "Asset Sale Offer") pursuant to Section 3.10 of
the Indenture to purchase the maximum principal amount of Notes, that is an
integral multiple of $1,000, that may be purchased out of the Excess Proceeds at
a purchase price in cash in an amount equal to (i) 100% of the aggregate
principal amount thereof on the
A1-4
<PAGE> 90
date fixed for the closing of such offer plus accrued and unpaid interest,
including Liquidated Damages, if any, to the date fixed for the closing of such
offer or (ii) with respect to the Senior Subordinated Discount Notes, 100% of
the Accreted Value (as defined in the Senior Subordinated Discount Note
Indenture) thereof on the date of purchase, plus accrued and unpaid Liquidated
Damages, if any, if such Asset Sale Offer is prior to the Full Accretion Date
(as defined therein), in either case in accordance with the procedures set forth
in the Indenture and the Senior Subordinated Discount Note Indenture, as
applicable. To the extent that the aggregate amount of Notes tendered pursuant
to an Asset Sale Offer is less than the Excess Proceeds, the Company may use any
remaining Excess Proceeds (x) to offer to redeem Subordinated Indebtedness in
accordance with Section 4.07 of the Indenture or (y) for any purpose not
prohibited by any provision of the Indenture. If the aggregate principal amount
of Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds,
the Trustees shall select the Notes to be purchased on a pro rata basis. Holders
of Senior Subordinated Notes that are the subject of an offer to purchase will
receive an Asset Sale Offer from the Company prior to any related purchase date
and may elect to have such Senior Subordinated Notes purchased by completing the
form entitled "Option of Holder to Elect Purchase" on the reverse of this Senior
Subordinated Note.
9. NOTICE OF OPTIONAL REDEMPTION. Notice of optional redemption will be
mailed at least 30 days but not more than 60 days before the redemption date to
each Holder whose Senior Subordinated Notes are to be redeemed at its registered
address. Senior Subordinated Notes in denominations larger than $1,000 may be
redeemed in part but only in whole multiples of $1,000, unless all of the Senior
Subordinated Notes held by a Holder are to be redeemed. On and after the
redemption date interest ceases to accrue on Senior Subordinated Notes or
portions thereof called for redemption.
10. DENOMINATIONS, TRANSFER, EXCHANGE. The Senior Subordinated Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Senior Subordinated Notes may be registered
and Senior Subordinated 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 Senior
Subordinated Note or portion of a Senior Subordinated Note selected for
redemption, except for the unredeemed portion of any Senior Subordinated Note
being redeemed in part. Also, it need not exchange or register the transfer of
any Senior Subordinated Notes for a period of 15 days before a selection of
Senior Subordinated Notes to be redeemed or during the period between a record
date and the corresponding Interest Payment Date.
11. PERSONS DEEMED OWNERS. The registered Holder of a Senior Subordinated
Note may be treated as its owner for all purposes.
12. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the
Indenture or the Senior Subordinated Notes may be amended or supplemented with
the consent of the Holders of at least a majority in principal amount of the
then outstanding Senior Subordinated Notes, and any existing default or
compliance with any provision of the Indenture or the Senior Subordinated Notes
may be waived with the consent of the Holders of a majority in principal amount
of the then outstanding Senior Subordinated Notes. Without the consent of any
Holder of a Senior Subordinated Note, the Indenture or the Senior Subordinated
Notes may be amended or supplemented to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Senior Subordinated Notes in
addition to or in place of certificated Senior Subordinated Notes, to provide
for the assumption of the Company's obligations to Holders of the Senior
Subordinated Notes in case of a merger or consolidation, to make any change that
would provide any additional rights or benefits to the Holders of the Senior
Subordinated Notes or that does not adversely affect the legal rights under the
Indenture
A1-5
<PAGE> 91
of any such Holder, or to comply with the requirements of the SEC in order to
effect or maintain the qualification of the Indenture under the Trust Indenture
Act.
13. DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30 days
in the payment when due of interest, including Liquidated Damages, if any, on
the Senior Subordinated Notes (whether or not prohibited by Article 10 the
Indenture); (ii) default in payment when due of the principal of or premium, if
any, on the Senior Subordinated Notes (whether or not prohibited by Article 10
of the Indenture); (iii) failure by the Company for 30 days after notice from
the Trustee or the Holders of at least 25% in principal amount of the then
outstanding Senior Subordinated Notes to comply with Sections 3.09, 4.07, 4.09,
4.13 or 5.01 of the Indenture; (iv) failure by the Company for 60 days after
notice from the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Senior Subordinated Notes to comply with any of its other
agreements in the Indenture or the Senior Subordinated Notes; (v) 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 Restricted Subsidiaries (or the payment of which is
guaranteed by the Company or any of its Restricted Subsidiaries) whether such
Indebtedness or guarantee now exists, or is created after the date of the
Indenture, which default 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
the maturity of which has been so accelerated, aggregates $25.0 million or more;
(vi) failure by the Company or any of its Restricted Subsidiaries to pay final
judgments aggregating in excess of $25.0 million, which judgments are not paid,
discharged or stayed for a period of 60 days; (vii) certain events of bankruptcy
or insolvency with respect to the Company or any of its Restricted Subsidiaries;
(viii) any failure by the Company to comply with the provisions of the Senior
Subordinated Note Pledge and Escrow Agreement at any time prior to the
consummation of the Acquisition; and (ix) except as permitted by the Indenture,
any Senior Subordinated Guarantee is held in any judicial proceeding to be
unenforceable or invalid or ceases for any reason to be in full force and effect
(except by its terms) or any Guarantor, or any Person acting on behalf of any
Guarantor, denies or disaffirms such Guarantor's obligations under its Senior
Subordinated Guarantee. If any Event of Default occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the then
outstanding Senior Subordinated Notes may declare all the Senior Subordinated
Notes to be due and payable immediately. Notwithstanding the foregoing, in the
case of an Event of Default arising from certain events of bankruptcy or
insolvency, all outstanding Senior Subordinated Notes will become due and
payable without further action or notice. Holders may not enforce the Indenture
or the Senior Subordinated Notes except as provided in the Indenture. Subject to
certain limitations, Holders of a majority in principal amount of the then
outstanding Senior Subordinated Notes may direct the Trustee in its exercise of
any trust or power. The Trustee may withhold from Holders of the Senior
Subordinated Notes notice of any continuing Default or Event of Default (except
a Default or Event of Default relating to the payment of principal or interest,
including Liquidated Damages, if any) if it determines that withholding notice
is in their interest. The Holders of a majority in aggregate principal amount of
the Senior Subordinated Notes then outstanding by notice to the Trustee may on
behalf of the Holders of all of the Senior Subordinated Notes waive any existing
Default or Event of Default and its consequences under the Indenture except a
continuing Default or Event of Default in the payment of interest, including
Liquidated Damages, if any, on, or the principal and premium, if any, of, the
Senior Subordinated 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.
14. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any
other capacity, may become the owner or pledgee of Senior Subordinated Notes,
and may otherwise deal with the Company, any Guarantor or any of their
respective Affiliates, as if it were not the Trustee. However, in the event
A1-6
<PAGE> 92
that the Trustee acquires any conflicting interest it must eliminate such
conflict within 90 days, apply to the SEC for permission to continue as trustee
or resign.
15. NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee, incorporator or stockholder of the Company or any Guarantor,
as such, shall have any liability for any obligations of the Company or the
Guarantors under the Senior Subordinated Notes, the Senior Subordinated
Guarantees, the Indenture or for any claim based on, in respect of, or by reason
of, such obligations or their creation. Each Holder of Senior Subordinated Notes
by accepting a Senior Subordinated Note waives and releases all such liability.
The waiver and release are part of the consideration for the issuance of the
Senior Subordinated Notes.
16. AUTHENTICATION. This Senior Subordinated Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
17. 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).
18. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED SECURITIES. In
addition to the rights provided to Holders of Senior Subordinated Notes under
the Indenture, Holders of Transferred Restricted Securities shall have all the
rights set forth in the Registration Rights Agreement dated as of March 21,
1996, between the Company and the parties named on the signature pages thereto
(the "Registration Rights Agreement").
19. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Senior Subordinated 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 Senior Subordinated Notes or as contained in any notice of redemption and
reliance may be placed only on the other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture, the Senior Subordinated Note Pledge and Escrow
Agreement and/or the Registration Rights Agreement. Requests may be made to:
AMF Group Inc.
7313 Bell Creek Road
Mechanicsville, Virginia, 23221
Telecopier No.: (804) 559-8666
Attention: Secretary
A1-7
<PAGE> 93
ASSIGNMENT FORM
To assign this Security, fill in the form below: (I) or (we) assign and
transfer this Security to
- -------------------------------------------------------------------------------
(Insert assignee's Social Security or tax I.D. No.)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint ---------------------------- agent to transfer this
Security on the books of the Company. The agent may substitute another to act
for him.
- -------------------------------------------------------------------------------
Date:
---------------------------
Your Signature:
-------------------------------------
(Sign exactly as your name appears on the face of
this Security)
Signature Guarantee:*
-------------------------------
- ------------------------------
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
A1-8
<PAGE> 94
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Senior Subordinated Note purchased by
the Company pursuant to Section 4.10 or 4.13 of the Indenture, check the box
below:
/ / Section 4.10 / / Section 4.13
If you want to elect to have only part of the Senior Subordinated Note
purchased by the Company pursuant to Section 4.10 or Section 4.13 of the
Indenture, state the amount you elect to have purchased: $ ________________
Date: Your Signature:
(Sign exactly as your name appears on the Security)
Tax Identification No.:
-------------------------
Signature Guarantee:*
--------------------------
- ------------------------------
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
A1-9
<PAGE> 95
SCHEDULE OF EXCHANGES FOR CERTIFICATED NOTES
OR ANOTHER GLOBAL NOTE(2)
The following exchanges of a part of this Global Note for Certificated
Notes or another Global Note have been made:
<TABLE>
<CAPTION>
Principal Amount of this Signature of
Amount of decrease in Amount of increase in Global Note authorized officer of
Principal Amount of Principal Amount of following such decrease Trustee or Note
Date of Exchange this Global Note this Global Note (or increase) Custodian
- ---------------- --------------------- --------------------- ----------------------- ---------------------
<S> <C> <C> <C> <C>
</TABLE>
- -------------------------------------
(2) To be included only if the Senior Subordinated Note is issued in global
form.
A1-10
<PAGE> 96
EXHIBIT A-2
(Face of Regulation S Temporary Global Note)
================================================================================
CUSIP U03155AA3
No. ___ $__________
10 7/8% [Series A] [Series B] Senior Subordinated Notes due 2006
AMF GROUP INC.
promises to pay to
or registered assigns,
the principal sum of
Dollars ($____________) on March 15, 2006.
Interest Payment Dates: March 15 and September 15
Record Dates: March 1 and September 1
Dated: __________, ____
AMF GROUP INC.
By:______________________________
Name:
Title:
By:______________________________
Name:
Title:
This is one of the Senior
Subordinated Notes referred to
in the within-mentioned Indenture: (SEAL)
IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee
By:__________________________________
Authorized Signatory
================================================================================
A2-1
<PAGE> 97
(Back of Regulation S Temporary Global Note)
10 7/8% [Series A] [Series B] Senior Subordinated Note due 2006
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND
THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE
AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN).
NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S
TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SENIOR
SUBORDINATED NOTES IN DEFINITIVE FORM, THIS SENIOR SUBORDINATED 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 ISSUER 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.
THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND (A) MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) BY THE INITIAL INVESTOR (A) TO
A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (B) IN AN OFFSHORE TRANSACTION COMPLYING
WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (C) PURSUANT
TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE), (D) TO THE COMPANY OR (E) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (2) BY SUBSEQUENT INVESTORS,
AS SET FORTH IN (1) ABOVE AND, IN ADDITION, TO AN INSTITUTIONAL ACCREDITED
INVESTOR IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, AND, IN EACH CASE, IN ACCORDANCE WITH ALL APPLICABLE SECURITIES
LAWS OF THE STATES OF THE UNITED STATES AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE NOTES
EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE. NO
REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY
RULE 144 FOR RESALES OF THE NOTES.
AMF Group Inc., a Delaware corporation (the "Company"), promises to pay
interest on the principal amount of this Senior Subordinated Note at the rate of
10 7/8% per annum, which interest shall be payable in cash semi-annually in
arrears on March 15 and September 15, or if any such day is not a Business
Day, on the next succeeding Business Day (each an "Interest Payment Date");
provided that the first Interest Payment Date shall be September 15, 1996.
Interest on the Senior Subordinated 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 original issuance. Interest will be computed on the basis of
a 360-day year comprised of twelve 30-day months.
A2-2
<PAGE> 98
This Regulation S Temporary Global Note is issued in respect of an
issue of 10 7/8% Senior Subordinated Notes due 2006 (the "Senior Subordinated
Notes") of the Company, limited to the aggregate principal amount of U.S. $250.0
million issued pursuant to an Indenture (the "Indenture") dated as of March 21,
1996, among the Company, the Guarantors Listed on Exhibit C thereto and IBJ
Schroder Bank & Trust Company, as trustee (the "Trustee"), and is governed by
the terms and conditions of the Indenture governing the Senior Subordinated
Notes, which terms and conditions are incorporated herein by reference and,
except as otherwise provided herein, shall be binding on the Company and the
Holder hereof as if fully set forth herein. Unless the context otherwise
requires, the terms used herein shall have the meanings specified in the
Indenture.
Until this Regulation S Temporary Global Note is exchanged for
Regulation S Permanent Global Notes, the Holder hereof shall not be entitled to
receive payments of interest hereon; until so exchanged in full, this Regulation
S Temporary Global Note shall in all other respects be entitled to the same
benefits as other Senior Subordinated Notes under the Indenture.
This Regulation S Temporary Global Note is exchangeable in whole or in
part for one or more Regulation S Permanent Global Notes or Rule 144A Global
Notes only (i) on or after the termination of the 40-day restricted period (as
defined in Regulation S) and (ii) upon presentation of certificates (accompanied
by an Opinion of Counsel, if applicable) required by Article 2 of the Indenture.
Upon exchange of this Regulation S Temporary Global Note for one or more
Regulation S Permanent Global Notes or Rule 144A Global Notes, the Trustee shall
cancel this Regulation S Temporary Global Note.
This Regulation S Temporary Global Note shall not become valid or
obligatory until the certificate of authentication hereon shall have been duly
manually signed by the Trustee in accordance with the Indenture. This Regulation
S Temporary Global Note shall be governed by and construed in accordance with
the laws of the State of the New York. All references to "$," "Dollars,"
"dollars" or "U.S. $" are to such coin or currency of the United States of
America as at the time shall be legal tender for the payment of public and
private debts therein.
A2-3
<PAGE> 99
SCHEDULE OF EXCHANGES FOR GLOBAL NOTES
The following exchanges of a part of this Regulation S Temporary
Global Note for other Global Notes have been made:
<TABLE>
<CAPTION>
Principal Amount of this Signature of
Amount of decrease in Amount of increase in Global Note authorized officer of
Principal Amount of Principal Amount of following such decrease Trustee or Note
Date of Exchange this Global Note this Global Note (or increase) Custodian
- ---------------- --------------------- --------------------- ----------------------- ---------------------
<S> <C> <C> <C> <C>
</TABLE>
A2-4
<PAGE> 100
EXHIBIT B-1
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
FROM RULE 144A GLOBAL NOTE TO REGULATION S GLOBAL NOTE
(Pursuant to Section 2.06(a)(i) of the Indenture)
IBJ Schroder Bank & Trust Company
One State Street
New York, NY 10004
Attention: Corporate Trust Division
Re: 10 7/8% Senior Subordinated Notes due 2006 of AMF Group Inc.
Reference is hereby made to the Indenture, dated as of March 21, 1996
(the "Indenture"), among AMF Group Inc., as issuer (the "Company"), the Parties
Listed on Exhibit C thereto as guarantors and IBJ Schroder Bank & Trust Company,
as trustee. Capitalized terms used but not defined herein shall have the
meanings given to them in the Indenture.
This letter relates to $_______ principal amount of Senior Subordinated
Notes which are evidenced by one or more Rule 144A Global Notes (CUSIP
030985AA3) and held with the Depositary in the name of ________________________
(the "Transferor"). The Transferor has requested a transfer of such beneficial
interest in the Senior Subordinated Notes to a Person who will take delivery
thereof in the form of an equal principal amount of Senior Subordinated Notes
evidenced by one or more Regulation S Global Notes (CUSIP U03155AA3), which
amount, immediately after such transfer, is to be held with the Depositary
through Euroclear or Cedel Bank or both (Common Code 6470904).
In connection with such request and in respect of such Senior
Subordinated Notes, the Transferor hereby certifies that such transfer has been
effected in compliance with the transfer restrictions applicable to the Global
Notes and pursuant to and in accordance with Rule 903 or Rule 904 under the
United States Securities Act of 1933, as amended (the "Securities Act"), and
accordingly the Transferor hereby further certifies that:
(1) The offer of the Senior Subordinated Notes was not made to a
person in the United States;
(2) either:
(a) at the time the buy order was originated, the transferee
was outside the United States or the Transferor and any
person acting on its behalf reasonably believed and
believes that the transferee was outside the United States;
or
(b) the transaction was executed in, on or through the
facilities of a designated offshore securities market and
neither the Transferor nor any person acting on its behalf
knows that the transaction was prearranged with a buyer in
the United States;
(3) no directed selling efforts have been made in contravention of
the requirements of Rule 904(b) of Regulation S;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
B1-1
<PAGE> 101
(5) upon completion of the transaction, the beneficial interest being
transferred as described above is to be held with the Depositary
through Euroclear or Cedel Bank or both (Common Code 6470904).
Upon giving effect to this request to exchange a beneficial
interest in a Rule 144A Global Note for a beneficial interest in a Regulation S
Global Note, the resulting beneficial interest shall be subject to the
restrictions on transfer applicable to Regulation S Global Notes pursuant to the
Indenture and the Securities Act and, if such transfer occurs prior to the end
of the 40-day restricted period associated with the initial offering of Senior
Subordinated Notes, the additional restrictions applicable to transfers of
interest in the Regulation S Temporary Global Note.
This certificate and the statements contained herein are made for
your benefit and the benefit of the Company and Goldman, Sachs & Co. (85 Broad
Street, New York, New York, 10004), the initial purchaser of such Senior
Subordinated Notes being transferred. Terms used in this certificate and not
otherwise defined in the Indenture have the meanings set forth in Regulation S
under the Securities Act.
__________________________
[Insert Name of Transferor]
By:_______________________
Name:
Title:
Dated:______________,____
cc: AMF Group Inc.
Goldman, Sachs & Co.
B1-2
<PAGE> 102
EXHIBIT B-2
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
FROM REGULATION S GLOBAL NOTE TO RULE 144A GLOBAL NOTE
(Pursuant to Section 2.06(a)(ii) of the Indenture)
IBJ Schroder Bank & Trust Company
One State Street
New York, NY 10004
Attention: Corporate Trust Division
Re: 10 7/8% Senior Subordinated Notes due 2006 of AMF Group Inc.
Reference is hereby made to the Indenture, dated as of March 21, 1996
(the "Indenture"), among AMF Group Inc., as issuer (the "Company"), the Parties
Listed on Exhibit C thereto as guarantors and IBJ Schroder Bank & Trust Company,
as trustee. Capitalized terms used but not defined herein shall have the
meanings given to them in the Indenture.
This letter relates to $_______ principal amount of Senior
Subordinated Notes which are evidenced by one or more Regulation S Global Notes
(CUSIP U03155AA3) and held with the Depositary through [Euroclear] [Cedel Bank]
(Common Code 6470904) in the name of ____________________________ (the
"Transferor"). The Transferor has requested a transfer of such beneficial
interest in the Senior Subordinated Notes to a Person who will take delivery
thereof in the form of an equal principal amount of Senior Subordinated Notes
evidenced by one or more Rule 144A Global Notes (CUSIP 030985AA3), to be held
with the Depositary.
In connection with such request and in respect of such Senior
Subordinated Notes, the Transferor hereby certifies that:
[CHECK ONE]
/ / such 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 Senior Subordinated Notes are being
transferred to a Person that the Transferor reasonably believes is
purchasing the Senior Subordinated Notes 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;
or
/ / such transfer is being effected pursuant to and in accordance with
Rule 144 under the Securities Act;
or
/ / such transfer is being effected pursuant to an effective registration
statement under the Securities Act;
B2-1
<PAGE> 103
or
/ / such transfer is being effected pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 144A
or Rule 144, and the Transferor hereby further certifies that the
Senior Subordinated Notes are being transferred in compliance with
the transfer restrictions applicable to the Global Notes and in
accordance with the requirements of the exemption claimed, which
certification is supported by an Opinion of Counsel, provided by the
transferor or the transferee (a copy of which the Transferor has
attached to this certification) in form reasonably acceptable to the
Company and to the Registrar, to the effect that such transfer is in
compliance with the Securities Act;
and such Senior Subordinated Notes are being transferred in compliance with any
applicable blue sky securities laws of any state of the United States.
Upon giving effect to this request to exchange a beneficial interest
in Regulation S Global Notes for a beneficial interest in Rule 144A Global
Notes, the resulting beneficial interest shall be subject to the restrictions on
transfer applicable to Rule 144A Global Notes pursuant to the Indenture and the
Securities Act.
This certificate and the statements contained herein are made for
your benefit and the benefit of the Company and Goldman, Sachs & Co. (85 Broad
Street, New York, New York, 10004), the initial purchaser of such Senior
Subordinated Notes being transferred. Terms used in this certificate and not
otherwise defined in the Indenture have the meanings set forth in Regulation S
under the Securities Act.
__________________________
[Insert Name of Transferor]
By:_______________________
Name:
Title:
Dated: ___________,____
cc: AMF Group Inc.
Goldman, Sachs & Co.
B2-2
<PAGE> 104
EXHIBIT B-3
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
OF CERTIFICATED NOTES
(Pursuant to Section 2.06(b) of the Indenture)
IBJ Schroder Bank & Trust Company
One State Street
New York, NY 10004
Attention: Corporate Trust Division
Re: 10 7/8% Senior Subordinated Notes due 2006 of AMF Group Inc.
Reference is hereby made to the Indenture, dated as of March 21, 1996
(the "Indenture"), among AMF Group Inc., as issuer (the "Company"), the Parties
Listed on Exhibit C thereto as guarantors and IBJ Schroder Bank & Trust Company,
as trustee. Capitalized terms used but not defined herein shall have the
meanings given to them in the Indenture.
This letter relates to $_______ principal amount of Senior Subordinated
Notes which are evidenced by one or more Certificated Notes (CUSIP __________)
in the name of ________________ (the "Transferor"). The Transferor has requested
an exchange or transfer of such Certificated Note(s) in the form of an equal
principal amount of Senior Subordinated Notes evidenced by one or more
Certificated Notes (CUSIP _________), to be delivered to the Transferor or, in
the case of a transfer of such Senior Subordinated Notes, to such Person as the
Transferor instructs the Trustee.
In connection with such request and in respect of the Senior
Subordinated Notes surrendered to the Trustee herewith for exchange or transfer
(the "Surrendered Senior Subordinated Notes"), the Transferor hereby certifies
that:
[CHECK ONE]
/ / the Surrendered Senior Subordinated Notes are being acquired for
the Transferor's own account, without transfer;
or
/ / the Surrendered Senior Subordinated Notes are being transferred
to the Company;
or
/ / the Surrendered Senior Subordinated Notes are being transferred
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 Surrendered Senior Subordinated Notes are being
transferred to a Person that the Transferor reasonably believes
is purchasing the Surrendered Senior Subordinated Notes 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 each case in a
transaction meeting the requirements of Rule 144A;
B3-1
<PAGE> 105
or
/ / the Surrendered Senior Subordinated Notes are being transferred
in a transaction permitted by Rule 144 under the Securities Act;
or
/ / the Surrendered Senior Subordinated Notes are being transferred
pursuant to an effective registration statement under the
Securities Act;
or
/ / such transfer is being effected pursuant to an exemption from
the registration requirements of the Securities Act other than
Rule 144A or Rule 144, and the Transferor hereby further
certifies that the Senior Subordinated Notes are being
transferred in compliance with the transfer restrictions
applicable to the Global Notes and in accordance with the
requirements of the exemption claimed, which certification is
supported by an Opinion of Counsel, provided by the transferor
or the transferee (a copy of which the Transferor has attached
to this certification) in form reasonably acceptable to the
Company and to the Registrar, to the effect that such transfer
is in compliance with the Securities Act;
and the Surrendered Senior Subordinated Notes are being transferred in
compliance with any applicable blue sky securities laws of any state of the
United States.
This certificate and the statements contained herein are made
for your benefit and the benefit of the Company and Goldman, Sachs & Co. (85
Broad Street, New York, New York, 10004), the initial purchaser of such Senior
Subordinated Notes being transferred. Terms used in this certificate and not
otherwise defined in the Indenture have the meanings set forth in Regulation S
under the Securities Act.
__________________________
[Insert Name of Transferor]
By:_______________________
Name:
Title:
Dated:____________,____
cc: AMF Group Inc.
Goldman, Sachs & Co.
B3-2
<PAGE> 106
EXHIBIT B-4
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
FROM RULE 144A GLOBAL NOTE OR REGULATION S PERMANENT
GLOBAL NOTE TO CERTIFICATED NOTE
(Pursuant to Section 2.06(c) of the Indenture)
IBJ Schroder Bank & Trust Company
One State Street
New York, NY 10004
Attention: Corporate Trust Division
Re: 10 7/8% Senior Subordinated Notes due 2006 of AMF Group Inc.
Reference is hereby made to the Indenture, dated as of March 21, 1996
(the "Indenture"), among AMF Group Inc., as issuer (the "Company"), the Parties
Listed on Exhibit C thereto as guarantors and IBJ Schroder Bank & Trust Company,
as trustee. Capitalized terms used but not defined herein shall have the
meanings given to them in the Indenture.
This letter relates to $_______ principal amount of Senior
Subordinated Notes which are evidenced by a beneficial interest in one or more
Rule 144A Global Notes or Regulation S Permanent Global Notes (CUSIP __________)
in the name of ______________________ (the "Transferor"). The Transferor has
requested an exchange or transfer of such beneficial interest in the form of an
equal principal amount of Senior Subordinated Notes evidenced by one or more
Certificated Notes (CUSIP _________), to be delivered to the Transferor or, in
the case of a transfer of such Senior Subordinated Notes, to such Person as the
Transferor instructs the Trustee.
In connection with such request and in respect of the Senior
Subordinated Notes surrendered to the Trustee herewith for exchange or transfer
(the "Surrendered Senior Subordinated Notes"), the Transferor hereby certifies
that:
[CHECK ONE]
/ / the Surrendered Senior Subordinated Notes are being
transferred to the beneficial owner of such Senior
Subordinated Notes;
or
/ / the Surrendered Senior Subordinated Notes are being
transferred 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 Surrendered Senior Subordinated
Notes are being transferred to a Person that the Transferor
reasonably believes is purchasing the Surrendered Senior
Subordinated Notes 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 each case in a transaction meeting the
requirements of Rule 144A;
B4-1
<PAGE> 107
or
/ / the Surrendered Senior Subordinated Notes are being
transferred in a transaction permitted by Rule 144 under the
Securities Act;
or
/ / the Surrendered Senior Subordinated Notes are being
transferred pursuant to an effective registration statement
under the Securities Act;
or
/ / such transfer is being effected pursuant to an exemption from
the registration requirements of the Securities Act other than
Rule 144A or Rule 144, and the Transferor hereby further
certifies that the Senior Subordinated Notes are being
transferred in compliance with the transfer restrictions
applicable to the Global Notes and in accordance with the
requirements of the exemption claimed, which certification is
supported by an Opinion of Counsel, provided by the transferor
or the transferee (a copy of which the Transferor has attached
to this certification) in form reasonably acceptable to the
Company and to the Registrar, to the effect that such transfer
is in compliance with the Securities Act;
and the Surrendered Senior Subordinated Notes are being transferred in
compliance with any applicable blue sky securities laws of any state of the
United States.
This certificate and the statements contained herein are made
for your benefit and the benefit of the Company and Goldman, Sachs & Co. (85
Broad Street, New York, New York, 10004), the initial purchaser of such Senior
Subordinated Notes being transferred. Terms used in this certificate and not
otherwise defined in the Indenture have the meanings set forth in Regulation S
under the Securities Act.
__________________________
[Insert Name of Transferor]
By:_______________________
Name:
Title:
Dated:____________,____
cc: AMF Group Inc.
Goldman, Sachs & Co.
B4-2
<PAGE> 108
EXHIBIT C
GUARANTORS
1. AMF Group Holdings Inc.
2. AMF Bowling Holdings Inc.
3. AMF Bowling Centers Holdings Inc.
4. AMF Worldwide Bowling Centers Holdings Inc.
C-1
<PAGE> 109
EXHIBIT D
FORM OF SENIOR SUBORDINATED GUARANTEE
The obligations of the Guarantors to the Holders of Senior
Subordinated Notes and to the Trustee pursuant to this Senior Subordinated
Guarantee and the Indenture dated March 21, 1996, among AMF Group Inc., each of
the Persons listed on Exhibit C thereto and IBJ Schroder Bank & Trust Company,
as trustee, (the "Indenture") are expressly set forth in Article 11 of the
Indenture, and reference is hereby made to such Indenture for the precise terms
of this Senior Subordinated Guarantee. The terms of Article 11 of the Indenture
are incorporated herein by reference.
Each of the Guarantors, jointly and severally, hereby unconditionally
guarantees to each Holder of a Senior Subordinated Note authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of the Indenture, the Senior
Subordinated Notes or the obligations of the Company under the Indenture or the
Senior Subordinated Notes, that: (a) the principal of, premium, if any, and
interest, including Liquidated Damages, if any, on the Senior Subordinated Notes
shall be promptly paid in full when due, whether at maturity, by acceleration,
redemption or otherwise, and (to the extent permitted by law) interest on the
overdue principal of, premium, if any, and interest, including Liquidated
Damages, if any, on the Senior Subordinated Notes, and all other obligations of
the Company to the Holders or the Trustee under the Indenture or the Senior
Subordinated Notes shall be promptly paid in full or performed, all in
accordance with the terms of the Indenture and the Senior Subordinated Notes;
and (b) in case of any extension of time of payment or renewal of any Senior
Subordinated Notes or any of such other obligations, that 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. Failing
payment when due of any amount so guaranteed for whatever reason, the Guarantors
shall be obligated to pay the same immediately whether or not such failure to
pay has become an Event of Default which could cause acceleration pursuant to
Section 6.02 of the Indenture. Each Guarantor agrees that this is a guarantee of
payment and not a guarantee of collection.
Each Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Senior Subordinated Notes or the Indenture, the absence of any action to enforce
the same, any waiver or consent by any Holder of the Senior Subordinated Notes
with respect to any provisions thereof, the recovery 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 guarantor.
Each Guarantor hereby waives diligence, presentment, demand of payment, filing
of claims with a court in the event of insolvency or bankruptcy of the Company,
any right to require a proceeding first against the Company, protest, notice and
all demands whatsoever and covenants that, subject to Article 11 of the
Indenture, this Senior Subordinated Guarantee shall not be discharged except by
complete performance of the obligations contained in the Senior Subordinated
Notes and the Indenture.
If any Holder of Senior Subordinated Notes or the Trustee is required
by any court or otherwise to return to the Company or Guarantors, or any
Custodian, Trustee, liquidator or other similar official acting in relation to
either the Company or Guarantors, any amount paid by either to the Trustee or
such Holder, this Senior Subordinated Guarantee, to the extent theretofore
discharged, shall be reinstated in full force and effect.
Each Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders of Senior Subordinated Notes in respect
of any Obligations guaranteed hereby until payment in full of all Obligations
guaranteed hereby. Each Guarantor further agrees that, as between the
Guarantors, on the one hand, and the Holders and the Trustee, on the other hand,
(x) the maturity of the Obligations guaranteed hereby may be accelerated as
provided in Article 6 of the Indenture for the purposes of this
D-1
<PAGE> 110
Senior Subordinated Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the Obligations
guaranteed hereby and (y) in the event of any declaration of acceleration of
such Obligations as provided in Section 6.02 of the Indenture, such Obligations
(whether or not due and payable) shall forthwith become due and payable by the
Guarantors for the purpose of this Senior Subordinated Guarantee. The Guarantors
shall have the right to seek contribution from any non-paying Guarantor so long
as the exercise of such right does not impair the rights of the Holders under
the Senior Subordinated Guarantees.
The Obligations of each Guarantor under this Senior Subordinated
Guarantee are junior and subordinated to the Senior Guarantee of such Guarantor
on the same basis as the Senior Subordinated Notes are junior and subordinated
to Senior Debt 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 Guarantors only at such times as they may receive and/or retain
payments in respect of the Senior Subordinated Notes pursuant to the Indenture,
including Article 10 thereof.
Each Guarantor, and by its acceptance of Senior Subordinated Notes,
each Holder, hereby confirms that it is the intention of all such parties that
this Senior Subordinated Guarantee not constitute a fraudulent transfer or
conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance
Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to
the extent applicable. To effectuate the foregoing intention, the Trustee, the
Holders and the Guarantors hereby irrevocably agree that the obligations of each
Guarantor under this Senior Subordinated Guarantee shall be limited to the
maximum amount as will, after giving effect to such maximum amount and all other
contingent and fixed liabilities of such Guarantor that are relevant under such
laws, and after giving effect to any collections from, rights to receive
contribution from or payments made by or on behalf of any other Guarantor in
respect of the obligations of such other Guarantor under Article 11 of the
Indenture, result in the obligations of such Guarantor under this Senior
Subordinated Guarantee not constituting a fraudulent transfer or conveyance.
This is a continuing Senior Subordinated Guarantee and shall remain in
full force and effect and shall be binding upon each Guarantor and its
respective successors and assigns to the extent set forth in the Indenture until
full and final payment of all of the Company's Obligations under the Senior
Subordinated Notes and the Indenture and shall inure to the benefit of the
successors and assigns of the Trustee and the Holders of Senior Subordinated
Notes and, in the event of any transfer or assignment of rights by any Holder of
Senior Subordinated Notes 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 and of
Article 11 of the Indenture.
This Senior Subordinated Guarantee shall not be valid or obligatory
for any purpose until the certificate of authentication on the Senior
Subordinated Note upon which this Senior Subordinated Guarantee is noted shall
have been executed by the Trustee under the Indenture by the manual signature of
one of its authorized officers. Notwithstanding the foregoing, in the event that
this Senior Subordinated Guarantee is executed subsequent to such manual
signature of one of the Trustee's authorized officers on such certificate of
authentication, then immediately upon the execution of this Senior Subordinated
Guarantee all obligations hereunder and under the Indenture shall be valid and
obligatory with respect to such Senior Subordinated Note(s) as if this Senior
Subordinated Guarantee were noted thereon.
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<PAGE> 111
Capitalized terms used herein have the same meanings given in the
Indenture unless otherwise indicated.
Dated: __________________,_______
AMF GROUP HOLDINGS INC.
Attest: By:______________________________
Name: Richard A. Friedman
Title: President
_____________________________
Name: Carla H. Skodinski
Title: Secretary
AMF BOWLING HOLDINGS INC.
Attest: By:______________________________
Name: Robert L. Morin
Title: President
_____________________________
Name: William W. Flexon
Title: Secretary
AMF BOWLING CENTERS HOLDINGS INC.
Attest: By:______________________________
Name: Douglas J. Stanard
Title: President
_____________________________
Name: Michael P. Bardaro
Title: Assistant Secretary
AMF WORLDWIDE BOWLING CENTERS
HOLDINGS INC.
Attest: By:______________________________
Name: Douglas J. Stanard
Title: President
______________________________
Name: Michael P. Bardaro
Title: Secretary
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EXHIBIT E
FORM OF SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE dated as of ________________, _____ between
__________________ (the "Guarantor" and, together with the Persons identified on
Exhibit C to the Indenture referred to below and any other Guarantors that
execute this form of Supplemental Indenture, the "Guarantors"), a Restricted
Subsidiary of AMF Group Inc., a Delaware corporation, or its successors and
assigns (the "Company"), and IBJ Schroder Bank & Trust Company, 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 March 21, 1996, providing
for the issuance of an aggregate principal amount of $250.0 million of 10 7/8%
Senior Subordinated Notes due 2006 (the "Senior Subordinated Notes");
WHEREAS, the Indenture provides that under certain circumstances the
Guarantor shall execute and deliver to the Trustee a supplemental indenture
pursuant to which the Guarantor shall unconditionally guarantee all of the
Company's Obligations under the Senior Subordinated Notes on the terms and
conditions set forth herein (the "Senior Subordinated 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
Guarantor and the Trustee mutually covenant and agree for the equal and ratable
benefit of the Holders of the Senior Subordinated Notes as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
2. COUNTERPART TO THE INDENTURE. This Supplemental Indenture
specifically incorporates, restates and reaffirms all of the warranties,
representations, covenants and other provisions of the Indenture,
notwithstanding the fact that such provisions are not restated herein. By
executing this Supplemental Indenture, the Guarantor subscribes to all of the
covenants and other provisions in the Indenture as applicable to the Guarantors,
and the Guarantor hereby agrees that it shall be bound by all of the provisions
of the Indenture. Upon execution, this Supplemental Indenture shall become part
of the Indenture and the rights and obligations of the Guarantor hereunder shall
be construed to be identical to the rights and obligations of the Guarantors
under the Indenture. Reference is hereby made to the Indenture for the precise
terms of this Supplemental Indenture. In the event of any conflict between the
provisions herein and the provisions of the Indenture, the Indenture shall
control.
3. AGREEMENT TO GUARANTEE. The Guarantor hereby agrees as follows:
(a) Subject to Article 11 of the Indenture, the Guarantor,
jointly and severally with the other Guarantors, hereby
unconditionally guarantees to each Holder of a Senior Subordinated
Note authenticated and delivered by the Trustee and to the Trustee and
its successors and assigns, irrespective of the validity and
enforceability of the Indenture, the Senior Subordinated Notes or the
Obligations of the Company under the Indenture or the Senior
Subordinated Notes, that: (a) the principal of, premium, if any, and
interest, including Liquidated Damages, if any, on the Senior
Subordinated Notes shall
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be promptly paid in full when due, whether at maturity, by acceleration,
redemption or otherwise, and (to the extent permitted by law) interest on
the overdue principal of, premium and interest, including Liquidated
Damages, on the Senior Subordinated Notes, if any, and all other
obligations of the Company to the Holders or the Trustee under the
Indenture or the Senior Subordinated Notes shall be promptly paid in full
or performed, all in accordance with the terms of the Indenture and the
Senior Subordinated Notes; and (b) in case of any extension of time for
payment or renewal of any Senior Subordinated Notes or any of such other
obligations, that 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. Failing payment when due
of any amount so guaranteed for whatever reason, the Guarantors shall be
obligated to pay the same immediately whether or not such failure to pay
has become an Event of Default which could cause acceleration pursuant to
Section 6.02 of the Indenture. The Guarantor agrees that this is a
guarantee of payment and not a guarantee of collection.
(b) The Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability
of the Senior Subordinated Notes or the Indenture, the absence of any
action to enforce the same, any waiver or consent by any Holder of the
Senior Subordinated Notes with respect to any provisions thereof, the
recovery 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 guarantor. The Guarantor hereby waives
diligence, presentment, demand of payment, filing of claims with a court in
the event of insolvency or bankruptcy of the Company, any right to require
a proceeding first against the Company, protest, notice and all demands
whatsoever and covenants that, subject to Article 11 of the Indenture, this
Senior Subordinated Guarantee shall not be discharged except by complete
performance of the obligations contained in the Senior Subordinated Notes
and the Indenture.
(c) If any Holder of Senior Subordinated Notes or the Trustee is
required by any court or otherwise to return to the Company or the
Guarantors, or any Custodian, Trustee, liquidator or other similar official
acting in relation to either the Company or the Guarantors, any amount paid
by either to the Trustee or such Holder, this Senior Subordinated
Guarantee, to the extent theretofore discharged, shall be reinstated in
full force and effect.
(d) The Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders of Senior Subordinated Notes in
respect of any Obligations guaranteed hereby until payment in full of all
Obligations guaranteed hereby. The Guarantor further agrees that, as
between the Guarantors, on the one hand, and the Holders and the Trustee,
on the other hand, (x) the maturity of the Obligations guaranteed hereby
may be accelerated as provided in Article 6 of the Indenture for the
purposes of this Senior Subordinated Guarantee, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of
the Obligations guaranteed thereby and (y) in the event of any declaration
of acceleration of such Obligations as provided in Section 6.02 of the
Indenture, such Obligations (whether or not due and payable) shall
forthwith become due and payable by the Guarantors for the purpose of this
Senior Subordinated Guarantee. The Guarantors shall have the right to seek
contribution from any non-paying Guarantor so long as the exercise of such
right does not impair the rights of the Holders under the Senior
Subordinated Guarantees.
4. SUBORDINATION OF SENIOR SUBORDINATED GUARANTEE. The Obligations of each
Guarantor under its Senior Subordinated Guarantee pursuant to Article 11 of the
Indenture shall be junior and subordinated to the Senior Guarantee of such
Guarantor on the same basis as the Senior Subordinated Notes are junior and
subordinated to Senior Debt 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 Guarantors only at such times as they may receive
and/or retain payments in respect of the Senior Subordinated Notes pursuant to
the Indenture, including Article 10 thereof.
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5. LIMITATION ON GUARANTOR LIABILITY. The Guarantor, and by its acceptance
of Senior Subordinated Notes, each Holder, hereby confirms that it is the
intention of all such parties that the Senior Subordinated Guarantee of the
Guarantor not constitute a fraudulent transfer or conveyance for purposes of
Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar federal or state law to the extent applicable to any
Senior Subordinated Guarantee. To effectuate the foregoing intention, the
Trustee, the Holders and the Guarantor hereby irrevocably agree that the
obligations of the Guarantor under its Senior Subordinated Guarantee and Article
11 of the Indenture shall be limited to the maximum amount as will, after giving
effect to such maximum amount and all other contingent and fixed liabilities of
the Guarantor that are relevant under such laws, and after giving effect to any
collections from, rights to receive contribution from or payments made by or on
behalf of any other Guarantor in respect of the obligations of such other
Guarantor under Article 11 of the Indenture, result in the obligations of the
Guarantor under its Senior Subordinated Guarantee not constituting a fraudulent
transfer or conveyance.
6. EXECUTION AND DELIVERY OF SENIOR SUBORDINATED GUARANTEES.
(a) To evidence its Senior Subordinated Guarantee set forth in this
Supplemental Indenture and in Section 11.01 of the Indenture, the Guarantor
hereby agrees that a notation of such Senior Subordinated Guarantee
substantially in the form of Exhibit D to the Indenture shall be endorsed
by an officer of the Guarantor on each Senior Subordinated Note
authenticated and delivered by the Trustee and that this Supplemental
Indenture, as a counterpart to the Indenture, shall be executed on behalf
of the Guarantor by its President or one of its Vice Presidents and
attested to by an Officer.
(b) The Guarantor hereby agrees that its Senior Subordinated Guarantee
set forth in this Supplemental Indenture and in Section 11.01 of the
Indenture shall remain in full force and effect notwithstanding any failure
to endorse on each Senior Subordinated Note a notation of such Senior
Subordinated Guarantee.
(c) If an Officer whose signature is on this Supplemental Indenture or
on the Senior Subordinated Guarantee no longer holds that office at the
time the Trustee authenticates the Senior Subordinated Note on which a
Senior Subordinated Guarantee is endorsed, the Senior Subordinated
Guarantee shall be valid nevertheless.
(d) The delivery of any Senior Subordinated Note by the Trustee, after
the authentication thereof under the Indenture, shall constitute due
delivery of the Senior Subordinated Guarantee set forth in the Indenture on
behalf of the Guarantor.
7. GUARANTOR MAY CONSOLIDATE, ETC., ON CERTAIN TERMS. No Guarantor may
consolidate with or merge with or into (whether or not such Guarantor is the
surviving Person) another corporation, Person or entity whether or not
affiliated with such Guarantor unless:
(a) subject to Section 11.06 of the Indenture, the Person formed by or
surviving any such consolidation or merger (if other than such Guarantor)
unconditionally assumes all the obligations of such Guarantor under the
Senior Subordinated Guarantee and the Indenture on the terms set forth in
the Indenture pursuant to a supplemental indenture in form and substance
reasonably satisfactory to the Trustee;
(b) immediately after giving effect to such transaction, no Default or
Event of Default exists; and
(c) the Company would be permitted by virtue of the Company's pro forma
Fixed Charge Coverage Ratio to incur, immediately after giving effect to
such transaction, 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 of the Indenture.
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In case of any such consolidation or merger and upon the assumption by the
successor corporation, by supplemental indenture, executed and delivered to the
Trustee and satisfactory in form to the Trustee, of the Senior Subordinated
Guarantee endorsed upon the Senior Subordinated Notes and of the due and
punctual performance of all of the covenants and conditions of the Indenture and
this Supplemental Indenture to be performed by the Guarantor, such successor
corporation shall succeed to and be substituted for the Guarantor with the same
effect as if it had been named in the Indenture as a Guarantor. Such successor
corporation thereupon may cause to be signed any or all of the Senior
Subordinated Guarantees to be endorsed upon all of the Senior Subordinated Notes
issuable under the Indenture which theretofore shall not have been signed by the
Company and delivered to the Trustee. All the Senior Subordinated Guarantees so
issued shall in all respects have the same legal rank and benefit under the
Indenture as the Senior Subordinated Guarantees theretofore and thereafter
issued in accordance with the terms of the Indenture as though all of such
Senior Subordinated Guarantees had been issued at the date of the execution of
the Indenture.
Except as set forth in Articles 4 and 5 of the Indenture, and
notwithstanding clauses (a) through (c) above, nothing contained in the
Indenture, this Supplemental Indenture or in any of the Senior Subordinated
Notes shall prevent any consolidation or merger of the Guarantor with or into
the Company or another Guarantor, or shall prevent any sale or conveyance of the
property of the Guarantor as an entirety or substantially as an entirety to the
Company or another Guarantor.
8. RELEASES OF SENIOR SUBORDINATED GUARANTEES. In the event of a sale or
other disposition of all or substantially all of the assets of the Guarantor, by
way of merger, consolidation or otherwise, or a sale or other disposition
(including, without limitation, by foreclosure) of all of the Capital Stock of
the Guarantor, then the Guarantor (in the event of a sale or other disposition,
by way of such a merger, consolidation or otherwise (including, without
limitation, by foreclosure), of all of the Capital Stock of the Guarantor) or
the corporation acquiring the property (in the event of a sale or other
disposition of all of the assets of the Guarantor) shall be automatically
released and relieved of any obligations under its Senior Subordinated
Guarantee; provided that the Net Proceeds of such sale or other disposition are
applied in accordance with Section 4.10 of the Indenture. Upon delivery by the
Company to the Trustee of an Officers' Certificate and an Opinion of Counsel to
the effect that such sale or other disposition was made by the Company in
accordance with the provisions of the Indenture, including without limitation
Sections 4.10 and 5.01 thereof, the Trustee shall execute any documents
reasonably required in order to evidence the release of the Guarantor from its
obligations under its Senior Subordinated Guarantee.
Any Guarantor not released from its obligations under its Senior
Subordinated Guarantee shall remain liable for the full amount of principal of
and interest on the Senior Subordinated Notes and for the other obligations of
any Guarantor under the Indenture as provided in Article 11 thereof.
9. "TRUSTEE" TO INCLUDE PAYING AGENT. In case at any time any Paying Agent
other than the Trustee shall have been appointed by the Company and be then
acting under the Indenture, the term "Trustee" as used in Article 11 thereto
shall in such case (unless the context shall otherwise require) be construed as
extending to and including such Paying Agent within its meaning as fully and for
all intents and purposes as if such Paying Agent were named in Article 11 of the
Indenture in place of the Trustee.
10. NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee, incorporator or stockholder of the Guarantor, as such, shall
have any liability for any obligations of the Company or any Guarantor under the
Senior Subordinated Notes, any Senior Subordinated Guarantees, the Indenture or
this Supplemental Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation. Each Holder of Senior
Subordinated Notes by accepting a Senior Subordinated Note waives and releases
all such liability. The waiver and release are part of the consideration for
issuance of the Senior Subordinated Notes.
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11. GOVERNING LAW. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN
AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE AND THE SENIOR SUBORDINATED
GUARANTEE.
12. COUNTERPART ORIGINALS. 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.
13. EFFECT OF HEADINGS. The Section headings herein are for convenience
only and shall not affect the construction hereof.
14. THE TRUSTEE. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the recitals contained herein, all of which
recitals are made solely by the Guarantor and the Company.
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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.
Dated: ____________, ____ [GUARANTOR]
By:____________________________
Attest: Name:
Title:
____________________________
Dated: ____________, ____ IBJ SCHRODER BANK & TRUST COMPANY
as Trustee
By:____________________________
Attest: Name:
Title:
____________________________
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EXHIBIT F
DIVIDEND AND PAYMENT RESTRICTION
TERMS OF NEW BANK CREDIT AGREEMENT
Negative Covenants. So long as any Advance shall remain unpaid,
any Letter of Credit shall be outstanding or any Lender Party shall have any
Commitment hereunder, the Borrower will not, at any time:
Dividends Etc. Declare or pay any dividends, purchase, redeem, retire,
defease or otherwise acquire for value any of its capital stock or any
warrants, rights or options to acquire such capital stock, now or hereafter
outstanding, return any capital to its stockholders as such, make any
distribution of assets, capital stock, warrants, rights, options,
obligations or securities to its stockholders as such or issue or sell any
capital stock or any warrants, rights or options to acquire such capital
stock, or permit any of its Subsidiaries to do any of the foregoing or
permit any of its Subsidiaries to purchase, redeem, retire, defease or
otherwise acquire for value any capital stock of the Borrower or any
warrants, rights or options to acquire such capital stock or to issue or
sell any capital stock or any warrants, rights or options to acquire such
capital stock, except that, so long as no Default shall have occurred and be
continuing at the time of any action described in clauses (i) and (ii) below
or would result therefrom, (i) the Borrower may (A) declare and pay
dividends and distributions payable only in common stock of the Borrower and
(B) declare and pay cash dividends to Parent solely to the extent necessary
to make payments required under the non-competition agreements listed on
Schedule 5.02(g) hereto, and (ii) any Subsidiary of the Borrower may (A)
declare and pay cash dividends to the Borrower and (B) declare and pay cash
dividends to any other wholly owned Subsidiary of the Borrower of which it
is a Subsidiary, provided that in the case of any dividend declared and paid
under this clause (ii) to any Loan Party, the Secured Parties shall have a
perfected first priority lien on and security interest in any such dividend.
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EXHIBIT G
FORM OF SENIOR SUBORDINATED NOTE
PLEDGE AND ESCROW AGREEMENT
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EXECUTION COPY
================================================================================
SENIOR SUBORDINATED NOTE
PLEDGE, ESCROW AND ASSIGNMENT AGREEMENT
by and among
AMF GROUP INC.
IBJ Schroder Bank & Trust Company,
as Trustee
and
IBJ Schroder Bank & Trust Company,
as Collateral Agent
Dated: March 21, 1996
================================================================================
<PAGE> 121
SENIOR SUBORDINATED NOTE
PLEDGE, ESCROW AND ASSIGNMENT AGREEMENT
THIS PLEDGE, ESCROW AND ASSIGNMENT AGREEMENT (this
"Agreement"), dated as of March 21, 1996, is by and among AMF GROUP INC. (the
"Company"), IBJ Schroder Bank & Trust Company, as trustee under the Senior
Subordinated Note Indenture referred to below (the "Trustee"), and IBJ Schroder
Bank & Trust Company in its capacity as collateral agent (the "Collateral
Agent").
RECITALS
A. The Senior Subordinated Notes. Pursuant to that certain Senior
Subordinated Note Indenture (the "Senior Subordinated Note Indenture") dated as
of March 21, 1996 by and between the Company and the Trustee, the Company will
issue $250,000,000 in aggregate principal amount of 10 7/8% Senior Subordinated
Notes due 2006 (the "Senior Subordinated Notes"). Simultaneously with receipt of
payment for the Senior Subordinated Notes (the "Deposit Time"), (i) all of the
net proceeds from the sale of the Senior Subordinated Notes, (ii) an equity
contribution of $50,000,000 from the Sponsors and (iii) $7,500,000 from the
Sellers, if requested by the Sponsors, (collectively, the "Escrow Proceeds")
will be deposited into a segregated cash collateral trust account with the
Collateral Agent at its office at One State Street in New York, New York,
Account No. C-50, in the name of IBJ Schroder Bank & Trust Company, as Trustee,
"Collateral Account of IBJ Schroder Bank & Trust Company, as Trustee, for AMF
Group Inc. Senior Subordinated Note Holders" (the "Escrow Account"). The Escrow
Account and all balances and investments from time to time therein shall be
under the sole dominion and control of the Trustee. The Collateral will be
invested as directed by the Company or an agent appointed by the Company subject
to the provisions of this Agreement. Capitalized terms used but not defined
herein shall have the meanings assigned to them in the Senior Subordinated Note
Indenture.
B. Purpose. The parties hereto desire to set forth their
agreement with regard to the administration of the Escrow Account, the creation
of a security interest in the Collateral (as defined herein) and the conditions
upon which funds will be released from the Escrow Account.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Security Interest.
1.1 Pledge and Assignment. The Company hereby irrevocably
pledges, assigns and sets over to the Trustee, and grants to the Trustee, for
the ratable benefit of the Holders of the Senior Subordinated Notes, a first
priority continuing security interest in all of the Company's right, title and
interest to all of the following, whether now owned or existing or hereafter
acquired or created (collectively, the "Collateral"):
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1.1.1 the Escrow Account;
1.1.2 all funds from time to time held in the Escrow
Account, including, without limitation, the Escrow Proceeds and all
certificates and instruments, if any, from time to time, representing
or evidencing the Escrow Account or the Escrow Proceeds;
1.1.3 all Cash Equivalents (as defined herein), whether the
same shall constitute certificated securities, uncertificated
securities, investment property, instruments, general intangibles or
otherwise held by or registered in the name of the Collateral Agent or
the Trustee or any of their respective nominees pursuant to Article 2
or Article 3 hereof and all certificates and instruments, if any, from
time to time representing or evidencing the Cash Equivalents;
1.1.4 all notes, certificates of deposit, deposit accounts,
checks and other instruments from time to time hereafter delivered to
or otherwise possessed by the Trustee or the Collateral Agent in
substitution for or in addition to any or all of the then existing
Collateral;
1.1.5 all interest, dividends, cash, instruments and other
property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the then
existing Collateral; and
1.1.6 all proceeds of the foregoing including, without
limitation, cash proceeds.
The Trustee hereby appoints the Collateral Agent to act as the Trustee's agent,
on behalf of the Holders of the Senior Subordinated Notes, for purposes of
perfecting the foregoing pledge, assignment and security interest in the
Collateral, and the Collateral Agent hereby accepts such appointment. For so
long as the foregoing pledge, assignment and security interest remains in
effect, the Collateral Agent hereby waives any right of setoff or banker's lien
that it, in its individual capacity, may have with respect to any or all of the
Collateral.
1.2 Secured Obligations. This Agreement secures the due
and punctual payment and performance of all obligations and indebtedness of the
Company, whether now or hereafter existing, under the Senior Subordinated Notes
and the Senior Subordinated Note Indenture including, without limitation,
interest accrued thereon after the commencement of a bankruptcy, reorganization
or similar proceeding involving the Company to the extent permitted by
applicable law (collectively, the "Secured Obligations").
1.3 Delivery of Collateral. All certificates or
instruments, if any, representing or evidencing the Collateral shall be held by
or on behalf of the Trustee pursuant hereto and shall be in suitable form for
transfer by delivery, or shall be accompanied by duly executed instruments of
transfer or assignments in blank, all in form and substance reasonably
satisfactory to the Trustee. All securities in uncertificated or book-entry
form, if any, representing or evidencing the Collateral shall be registered in
the name of the Trustee or any of its nominees by book-entry or as otherwise
appropriate so as to properly identify the interest of the Trustee
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therein. In addition, the Trustee shall have the right, at any time following
the occurrence of an Event of Default, in its discretion to transfer to or to
register in the name of the Trustee or any of its nominees any or all other
Collateral. Except as otherwise provided herein, all Collateral shall be
deposited and held in the Escrow Account. The Trustee shall have the right at
any time to exchange certificates or instruments representing or evidencing all
or any portion of the Collateral for certificates or instruments of smaller or
larger denominations in the same aggregate amount.
1.4 Further Assurances. Prior to, contemporaneously
herewith, and at any time and from time to time hereafter, the Company will, at
the Company's expense, execute and deliver to the Trustee such other instruments
and documents, and take all further action as it deems necessary or advisable or
as the Trustee may reasonably request to confirm or perfect the security
interest of the Trustee granted or purported to be granted hereby or to enable
the Trustee to exercise and enforce its rights and remedies hereunder with
respect to any Collateral and the Company will take all necessary action to
preserve and protect the security interest created hereby as a first priority,
perfected lien and encumbrance upon the Collateral.
1.5 Maintaining the Escrow Account. So long as this
Agreement is in full force and effect:
1.5.1 the Company shall establish and maintain the Escrow
Account with the Collateral Agent in New York, New York, and the Escrow
Account shall at all times remain under the exclusive dominion and
control of the Trustee; and
1.5.2 it shall be a term and condition of the Escrow
Account, notwithstanding any term or condition to the contrary in any
other agreement relating to the Escrow Account and except as otherwise
provided by the provisions of Article 3 of this Agreement, that no
amount (including, without limitation, interest on or other proceeds of
the Escrow Account or on any Cash Equivalents held therein) shall be
paid or released to or for the account of, or withdrawn by or for the
account of, the Company or any other person or entity other than the
Trustee or its designated agent from the Escrow Account (other than
customary brokerage or similar fees, discounts or commissions payable
in connection with investments of funds pursuant to Section 2.1
hereof).
1.6 Transfers and Other Liens. The Company agrees that it
will not (i) sell, assign (by operation of law or otherwise) or otherwise
dispose of, or grant any option with respect to, any of the Collateral or (ii)
create or permit to exist any Lien upon or with respect to any of the
Collateral, except for the security interest under this Agreement.
1.7 Attorneys-in-Fact. The Company hereby irrevocably
appoints each of the Trustee and the Collateral Agent as the Company's
attorney-in-fact, coupled with an interest, with full authority in the place and
stead of the Company and in the name of the Company or otherwise, from time to
time in the Trustee's or the Collateral Agent's discretion to take any action
and to execute any instrument which the Trustee or the Collateral Agent may deem
necessary or advisable to accomplish the purposes of this Agreement, including,
without limitation, to receive, endorse and collect all instruments made payable
to the Company
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representing any interest payment, dividend or other distribution in respect of
the Collateral or any part thereof and to give full discharge for the same, and
the expenses of the Trustee incurred in connection therewith shall be payable by
the Company.
1.8 Trustee May Perform. Without limiting the authority
granted under Section 1.7 and except with respect to the failure of the Company
to deliver investment instructions, which shall be governed by the second
paragraph of Section 2.1 hereof, if the Company fails to perform any agreement
contained herein, the Trustee or the Collateral Agent may, but shall not be
obligated to, itself perform, or cause performance of, such agreement, and the
expenses of the Trustee or the Collateral Agent incurred in connection therewith
shall be payable by the Company.
2. Investment and Liquidation of Funds in Escrow Account. Funds
deposited in the Escrow Account shall be invested and reinvested by the
Collateral Agent on the following terms and conditions:
2.1 Allowable Investments. Subject to the provisions of
Articles 2 and 3, funds held by the Collateral Agent in the Escrow Account may,
at the direction of the Company or an agent appointed by the Company, be
invested and reinvested in the following ("Cash Equivalents"):
(a) United States dollars, (b) securities issued or directly
and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof, (c)
certificates of deposit and eurodollar time deposits with
maturities no later than May 31, 1996, bankers' acceptances
with maturities no later than May 31, 1996 and overnight bank
deposits, in each case with any domestic bank having capital
and surplus in excess of $500,000,000 and a Keefe Bank Watch
Rating of "B" or better, (d) repurchase obligations with a
term of not more than seven days for underlying securities of
the types described in clauses (b) and (c) above entered into
with any financial institution meeting the qualifications
specified in clause (c) above and (e) commercial paper having
the highest rating obtainable from Moody's Investors Service,
Inc. or Standard & Poor's Corporation and in each case
maturing within one year after the date of acquisition.
Investment instructions may instruct the Collateral Agent to
purchase or sell specific securities to or from specific persons and/or on
specific terms negotiated by the Company or its agent. If the Company or such
agent fails to give investment instructions to the Collateral Agent by 12:00
noon (New York time) on any Business Day on which there is uninvested cash
and/or maturing Cash Equivalents in the Escrow Account, the Trustee is hereby
authorized and directed to direct the Collateral Agent to invest any such cash
or the proceeds of any maturing Cash Equivalents in Cash Equivalents maturing on
the next Business Day. The Company's or such agent's failure to give such
investment instructions shall not constitute a default or an event of default
hereunder.
All of the Cash Equivalents shall mature on or prior to May
31, 1996; provided, however, that if the Trustee receives from the Company a
certificate substantially in the form of Exhibit A hereto (a "Preliminary
Release Certificate") that: (x) sets forth the date (the
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<PAGE> 125
"Closing Date") set for the consummation of the Acquisition, which shall not be
earlier than five (5) Business Days after receipt of such Preliminary Release
Certificate; (y) states that the Company reasonably believes that the
Acquisition will be consummated on the specified Closing Date; and (z) directs
the liquidation of all of the Cash Equivalents in accordance with Section 3.1,
the Trustee shall direct the Collateral Agent to only invest in Cash Equivalents
such that the funds held in the Escrow Account will be available for release no
later than 12 p.m. on the Closing Date.
2.2 Interest. All interest earned on funds invested in
Cash Equivalents shall be held in the Escrow Account and reinvested in
accordance with the terms hereof and will be subject to the security interest
granted hereunder to the Trustee.
2.3 Limitation of Trustee's and Collateral Agent's
Liability. In no event shall the Trustee or the Collateral Agent have any
liability to the Company or any other person for investing the funds from time
to time in the Escrow Account in accordance with the provisions of this Article
2, regardless of whether greater income or a higher yield could have been
obtained had the Collateral Agent invested such funds in different Cash
Equivalents, or for any loss associated with the sale or liquidation of Cash
Equivalents in accordance with the terms of this Agreement.
3. Disposition of Collateral Upon Certain Events
3.1 Transfer of Escrow Proceeds for the Acquisition. If,
on or prior to May 23, 1996, the Company delivers to the Trustee a Preliminary
Release Certificate stating that the Acquisition will occur, the Trustee shall
direct the Collateral Agent to: (a) liquidate, within five (5) Business Days
after the Trustee's receipt of such Preliminary Release Certificate, all of the
Cash Equivalents in the Escrow Account and, (b) transfer, on the Closing Date,
such amount of funds as directed by the Company by wire transfer of immediately
available funds to such entity as designated by the Company, and the Collateral
Agent hereby agrees to liquidate such amount of Cash Equivalents and to make
such funds transfer.
3.2 Release of Funds. On the Closing Date, the Company
shall deliver to the Trustee (x) confirmation of the amounts required to be
transferred by the Collateral Agent pursuant to Section 3.1, (y) an opinion of
Wachtell, Lipton, Rosen & Katz, counsel to the Company, or McGuire Woods Battle
& Boothe LLP, counsel to the Company, as applicable, in the form of Exhibit B
hereto, with respect to certain matters concerning the due incorporation and the
authorized capital stock of the entities acquired pursuant to the Acquisition
and the due authorization, execution and delivery of the confirmation identified
in (x) and the Release Certificate (as defined below), and (z) a certificate
substantially in the form of Exhibit C hereto (a "Release Certificate") stating
that (1) all conditions to the consummation of the Acquisition have been
satisfied or waived, (2) that the Acquisition will be consummated on such date
on substantially the terms described in the Offering Circular and (3) that no
Event of Default (as defined in the Senior Subordinated Note Indenture) has
occurred and is continuing or will occur as a result of the release of funds
contemplated hereby, and instructing the Trustee to direct the Collateral Agent
to release the appropriate dollar amount of the Collateral in accordance with
this Section 3.2. Upon receipt of the foregoing and in good faith reliance
thereon, the Trustee shall direct the Collateral Agent to transfer the amount
specified by the applicable terms of such
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<PAGE> 126
Release Certificate in immediately available funds in accordance with the terms
of such Release Certificate. The delivery of the items identified in (x) and (z)
above shall be the only conditions precedent to the release of funds pursuant to
this Agreement.
3.3 Release of Security Interest. If the Trustee receives
a Release Certificate and the opinions required by Section 3.2, the Trustee and
the Collateral Agent shall deliver to the Company a release of security
interest, with respect to the funds released pursuant to such Release
Certificate at the time of release of such funds (the "Release Time"), in the
form of Exhibit D hereto, duly executed by the Trustee and the Collateral Agent,
and the Trustee and the Collateral Agent shall take all further actions, if any,
that are reasonably deemed necessary by the Company to terminate the Trustee's
security interest in the Collateral as of the Release Time and, at the Release
Time, all funds transferred by the Collateral Agent in accordance with the
provisions of Section 3.2 shall automatically be deemed to be free and clear of
the Trustee's security interest provided herein.
3.4 Special Mandatory Redemption. If (i) the Trustee has
not received a Release Certificate with respect to the Acquisition on or prior
to May 31, 1996 or (ii) the Trustee receives a certificate in the form of
Exhibit E hereto (a "Special Mandatory Redemption Certificate") with respect to
the Acquisition on or prior to May 31, 1996, the Trustee shall direct the
Collateral Agent to: (a) promptly liquidate all of the Cash Equivalents in the
Escrow Account to obtain net cash proceeds by no later than 12:00 noon (New York
time) on the date that is five (5) Business Days after such date specified in
clause (i) or (ii) above, as applicable, and (b) transfer such dollar amount to
the Paying Agent to be used to redeem Senior Subordinated Notes in accordance
with Section 3.09 of the Senior Subordinated Note Indenture, and the Collateral
Agent hereby agrees to liquidate such investments and to make such funds
transfer.
3.5 Release of Remaining Funds in Escrow Account. Upon
such date as all Escrow Proceeds have been released in accordance with Sections
3.1-3.4 hereof and upon receipt of a request by the Company, the Collateral
Agent shall transfer by wire transfer of immediately available funds any funds
remaining in the Escrow Account to an account designated by the Company.
4. Remedies upon Default. If (a) any Event of Default shall have
occurred and be continuing under Section 3.09 of the Indenture or (b) any other
Event of Default shall have occurred and be continuing that results in the
acceleration of the payment of principal, interest, premium, if any, and
Liquidated Damages, if any, pursuant to the terms of the Indenture:
(i) The Trustee may, without notice to the Company except
as required by law and at any time or from time to time, direct the
Collateral Agent to liquidate all Cash Equivalents and transfer all
funds in the Escrow Account to the Paying Agent to apply such funds in
accordance with Sections 3.09 of the Senior Subordinated Note
Indenture.
(ii) The Collateral Agent and/or the Trustee may also
exercise in respect of the Collateral, in addition to the other rights
and remedies provided for herein or otherwise available to it, all the
rights and remedies of a secured party on default under the Uniform
Commercial Code in effect at that time in the State of New York (the
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<PAGE> 127
"Code") (whether or not the Code applies to the affected Collateral),
and may also, without notice except as specified below, sell the
Collateral or any part thereof in one or more parcels at public or
private sales, at any of the Trustee's or the Collateral Agent's
offices or elsewhere, for cash, on credit or for future delivery, and
upon such other terms as the Trustee may deem commercially reasonable.
The Company agrees that, to the extent notice of sale shall be required
by law, at least ten days' notice to the Company of the time and place
of any public sale or the time after which any private sale is to be
made shall constitute reasonable notification. The Trustee and the
Collateral Agent shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. The Trustee or the
Collateral Agent may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such
sale may, without further notice, be made at the time and place to
which it was so adjourned.
(iii) Any cash held by the Collateral Agent as Collateral
and all net cash proceeds received by the Trustee or the Collateral
Agent in respect of any sale or liquidation of, collection from, or
other realization upon all or any part of the Collateral may, in the
discretion of the Trustee, be held by the Trustee or the Collateral
Agent as collateral for, and/or then or at any time thereafter be
applied (after payment of any costs and expenses incurred in connection
with any sale, liquidation or disposition of or realization upon the
Collateral and the payment of any amounts payable to the Trustee or the
Collateral Agent) in whole or in part by the Trustee or the Collateral
Agent for the ratable benefit of the Holders of the Senior Subordinated
Notes against, all or any part of the Secured Obligations in such order
as the Trustee shall elect. Any surplus of such cash or cash proceeds
held by the Trustee or the Collateral Agent and remaining after payment
in full of all the Secured Obligations and the costs and expenses
incurred by and amounts payable to the Trustee or the Collateral Agent
hereunder or under the Senior Subordinated Note Indenture shall be paid
over to the Company.
5. Representations and Warranties. The Company hereby makes all
representations and warranties applicable to the Company contained in the Senior
Subordinated Note Indenture. The Company further represents and warrants that:
5.1 The execution, delivery and performance by the
Company of this Agreement are within the Company's corporate powers, have been
duly authorized by all necessary corporate action, and do not contravene, or
constitute a default under, any provision of applicable law or regulation or of
the certificate of incorporation or bylaws of the Company or of any agreement,
judgment, injunction, order, decree or other instrument binding upon the
Company, or result in the creation or imposition of any Lien on any assets of
the Company, other than the Lien contemplated hereby.
5.2 The Company has full power and authority to enter
into this Agreement and has the right to vote, pledge and grant a security
interest in the Collateral as provided by this Agreement.
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5.3 This Agreement has been duly executed and delivered
by the Company and constitutes a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms.
5.4 Upon the delivery to the Collateral Agent of the
Collateral and (as to certain proceeds therefrom) the filing of Uniform
Commercial Code (the "UCC") financing statements, the pledge of the Collateral
pursuant to this Agreement creates a valid and perfected first priority security
interest in the Collateral, securing the payment of the Secured Obligations for
the benefit of the Collateral Agent and the Holders, and enforceable as such
against all creditors of the Company and any persons purporting to purchase any
of the Collateral from the Company.
5.5 No consent of any other person and no consent,
authorization, approval, or other action by, and no notice to or filing with,
any governmental authority or regulatory body is required either (i) for the
pledge by the Company of the Collateral pursuant to this Agreement or for the
execution, delivery or performance of this Agreement by the Company or (ii) for
the exercise by the Collateral Agent of the remedies in respect of the
Collateral pursuant to this Agreement (except as may be required in connection
with such disposition by laws affecting the offering and sale of securities).
5.6 No litigation, investigation or proceeding of or
before any arbitrator or governmental authority is pending or, to the best
knowledge of the Company, threatened by or against the Company or against any of
its properties or revenues with respect to this Agreement or any of the
transactions contemplated hereby.
5.7 The pledge of the Collateral pursuant to this
Agreement is not prohibited by any applicable law or governmental regulation,
release, interpretation or opinion of the Board of Governors of the Federal
Reserve System or other regulatory agency (including, without limitation,
Regulations G, T, U and X of the Board of Governors of the Federal Reserve
System).
5.8 All information set forth herein relating to the
Collateral is accurate and complete in all material respects.
6. Indemnity. The Company shall indemnify and hold harmless the
Trustee, the Collateral Agent and their respective directors, officers, agents
and employees, from and against any and all claims, actions, obligations,
liabilities and expenses, including, without limitation, defense costs,
investigative fees and costs, legal fees and claims for damages incurred in any
action or proceeding between the parties hereto or in disputes with third
parties or otherwise, arising from or in connection with the Trustee's and/or
the Collateral Agent's acceptance of, or performance under, this Agreement,
except to the extent that such liability, expense or claim is directly
attributable to the gross negligence or bad faith of the Trustee or the
Collateral Agent.
7. Termination. This Agreement shall terminate automatically upon
the first to occur of (a) the release of all of the Collateral pursuant to
Section 3.5 hereof or (b) payment in full of the Secured Obligations.
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8. Miscellaneous.
8.1 Waiver. Either party hereto may specifically waive
any breach of this Agreement by the other party, but no such waiver shall be
deemed to have been given unless such waiver is in writing, signed by the
waiving party, and specifically designates the breach waived, nor shall any such
waiver constitute a continuing waiver of similar or other breaches.
8.2 Invalidity. If, for any reason whatsoever, any one or
more of the provisions of this Agreement shall be held or deemed to be
inoperative, unenforceable or invalid in a particular case or in all cases, such
circumstances shall not have the effect of rendering any of the other provisions
of this Agreement inoperative, unenforceable or invalid, and the inoperative,
unenforceable or invalid provision shall be construed as if it were written so
as to effectuate, to the maximum extent possible, the parties' intent.
8.3 Assignment. This Agreement shall inure to and be
binding upon the parties and their respective successors and permitted assigns;
provided, however, that the Company may not assign its rights or obligations
hereunder without the express prior written consent of the Trustee.
8.4 Choice of Law. The existence, validity, construction,
operation and effect of any and all terms and provisions of this Agreement shall
be determined in accordance with and governed by the internal laws of the State
of New York including, without limitation the Uniform Commercial Code in effect
in the State of New York, without giving effect to the conflicts of law
principles of such State.
8.5 Entire Agreement; Amendments. This Agreement and the
Senior Subordinated Note Indenture contain the entire agreement among the
parties with respect to the subject matter hereof and supersede any and all
prior agreements, understandings and commitments with respect thereto, whether
oral or written; provided, however, that this Agreement is executed and accepted
by the Trustee and the Collateral Agent subject to all terms and conditions of
its acceptance of the trust under the Senior Subordinated Note Indenture, as
fully as if said terms and conditions were set forth at length herein. This
Agreement may be amended only by a writing signed by duly authorized
representatives of all parties. The Trustee and the Collateral Agent may execute
an amendment to this Agreement only if the requisite consent of the Holders of
the Senior Subordinated Notes required by Section 9.02 of the Senior
Subordinated Note Indenture has been obtained, unless no such consent is
required by such Section 9.02 of the Senior Subordinated Note Indenture.
8.6 Notices. All notices, requests, instructions, orders
and other communications required or permitted to be given or made under this
Agreement to any party hereto shall be delivered in writing by hand delivery or
overnight delivery, or shall be delivered by facsimile or telephonically with
confirmation in writing not more than twenty-four hours following such facsimile
or telephonic notice. A notice given in accordance with the preceding sentence
shall be deemed to have been duly given upon the sending thereof, except for
notice to the Trustee or the Collateral Agent, which shall be deemed given only
when received. Notices should be addressed as follows:
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<PAGE> 130
To the Company:
AMF Group Inc.
7313 Bell Creek Road
Mechanicsville, VA. 23221
Attention: Secretary
Facsimile number: (804) 559-8666
Telephone number: (804) 559-8600
With copies to:
Elliott V. Stein, Esq.
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Facsimile number: (212) 403-2000
Telephone number: (212) 403-1000
To the Trustee:
IBJ Schroder Bank & Trust Company
Attention: Corporate Trust Administration
(Reference - AMF Group Inc.)
One State Street
New York, NY 10004
Facsimile number: (212) 858-2952
Telephone number: (212) 858-2246
To the Collateral Agent:
IBJ Schroder Bank & Trust Company
Attention: Corporate Trust Department
One State Street
New York, NY 10004
Facsimile number: (212) 858-2156
Telephone number: (212) 858-2246
or at such other address, facsimile number or phone number as the specified
entity most recently may have designated in writing in accordance with this
paragraph to the other parties.
8.7 Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original but all
of which together shall constitute one and the same instrument. Delivery of
an executed counterpart of a signature page to this Agreement by facsimile
shall be effective as delivery of a manually executed counterpart of this
Agreement.
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<PAGE> 131
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the day first written above.
COMPANY: AMF GROUP INC.
By /s/ Robert L. Morin
---------------------------------
Name: ROBERT L. MORIN
Title: EXECUTIVE VICE PRESIDENT
TRUSTEE: IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee
By /s/ Irene Teutonico
---------------------------------
Name: IRENE TEUTONICO
Title: ASSISTANT VICE PRESIDENT
COLLATERAL AGENT: IBJ SCHRODER BANK & TRUST COMPANY,
as Collateral Agent
By /s/ Irene Teutonico
---------------------------------
Name: IRENE TEUTONICO
Title: ASSISTANT VICE PRESIDENT
<PAGE> 132
EXHIBIT A
[Form of Preliminary Release Certificate]
AMF GROUP INC.
Date:
The undersigned officer of AMF Group Inc., a Delaware corporation (the
"Company"), hereby certifies to the Trustee, pursuant to Section 3.1 of the
Pledge, Escrow and Assignment Agreement dated as of March 21, 1996 (the "Pledge,
Escrow and Assignment Agreement") by and among the Company, IBJ Schroder Bank &
Trust Company, as trustee (the "Trustee") under the Senior Subordinated Note
Indenture dated as of March 21, 1996 (the "Senior Subordinated Note Indenture")
between the Company and the Trustee, and IBJ Schroder Bank & Trust Company, as
collateral agent (the "Collateral Agent") as follows:
1. The consummation of the Acquisition (as defined in the Senior
Subordinated Note Indenture) on substantially the terms described in the
Offering Circular (as defined in the Senior Subordinated Note Indenture) has
been scheduled to occur on , 1996 (the "Closing Date").
2. The Company believes that the Acquisition will be consummated on the
Closing Date on substantially the terms described in the Offering Circular.
The Company hereby requests the Trustee to direct the Collateral Agent to
liquidate all of the Cash Equivalents (as defined in the Pledge, Escrow and
Assignment Agreement) by no later than ___________o'clock on __________________,
1996.
By: _________________________________
Name:
Title:
A-1
<PAGE> 133
EXHIBIT B
[Form of Opinion Required by Section 3.2]
1. Each of the entities acquired by the Company pursuant to the Acquisition
has been duly incorporated and is validly existing as a corporation in good
standing under the laws of the State of [state of incorporation].
2. All of the issued and outstanding shares of capital stock of each of the
entities acquired by the Company pursuant to the Acquisition have been duly
authorized and validly issued, are fully paid and nonassessable and were not
issued in violation of any preemptive or other similar rights.
3. The Company has duly authorized, executed and delivered each of (i) the
confirmation required pursuant to Section 3.2(x) and (ii) the Release
Certificate required pursuant to Section 3.2(z) of the Agreement.
B-1
<PAGE> 134
EXHIBIT C
[Form of Release Certificate]
AMF GROUP INC.
Date:
The undersigned officer of AMF Group Inc., a Delaware corporation (the
"Company"), hereby certifies, pursuant to Section 3.2 of the Pledge, Escrow and
Assignment Agreement dated as of March 21, 1996 (the "Pledge, Escrow and
Assignment Agreement") by and among the Company, IBJ Schroder Bank & Trust
Company, as trustee (the "Trustee") under the Senior Subordinated Note Indenture
dated as of March 21, 1996 (the "Senior Subordinated Note Indenture") between
the Company and the Trustee, and IBJ Schroder Bank & Trust Company, as
collateral agent (the "Collateral Agent"), as follows:
1. All of the conditions to the consummation of the Acquisition (as defined
in the Senior Subordinated Discount Note Indenture) have been satisfied or
waived as of the date hereof.
2. The Acquisition will be consummated on the date hereof on substantially
the terms described in the Offering Circular (as defined in the Senior
Subordinated Note Indenture).
3. No Event of Default (as defined in the Senior Subordinated Note
Indenture) has occurred and is continuing or will occur as a result of the
release of funds contemplated hereby.
Unless otherwise indicated, capitalized terms used herein without
definition shall have the meanings specified in the Pledge, Escrow and
Assignment Agreement.
C-1
<PAGE> 135
The Company hereby requests the Trustee to direct the Collateral Agent to
release the funds held by it in the Escrow Account at and to
terminate and release its pledge and assignment of, and security interest in,
the Collateral under the Pledge, Escrow and Assignment Agreement in accordance
with Section 3.3 thereof. At , such funds should be deposited in
immediately available funds in the following account or accounts at
in the amounts indicated.
By:
--------------------------------
Name:
Title:
C-2
<PAGE> 136
EXHIBIT D
[Form of Release of Security Interest]
[To be typed on Trustee's letterhead]
Date:
------------------
VIA FACSIMILE AND FEDERAL EXPRESS
AMF Group Inc.
7313 Bell Creek Road
Mechanicsville, VA 23221
Attention: Secretary
Re: Release of Security Interest
Ladies and Gentlemen:
Reference is hereby made to that certain Pledge, Escrow and Assignment
Agreement dated as of March 21, 1996 by and among AMF Group Inc., IBJ Schroder
Bank & Trust Company, as Trustee, and IBJ Schroder Bank & Trust Company, as
Collateral Agent (as amended, supplemented or modified from time to time in
accordance with the terms thereof, the "Pledge, Escrow and Assignment
Agreement").
By its signature below, each of the Collateral Agent and the Trustee hereby
terminates and releases its pledge and assignment of, and security interest in,
all of the Collateral under the Pledge, Escrow and Assignment Agreement, which
amount has been delivered to you or your order on the date hereof.
This release may be executed in one or more counterparts, each of which
shall be deemed an original and all of which, taken together, shall constitute
one and the same instrument.
D-1
<PAGE> 137
Very truly yours,
IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee
By
Name:
Title:
IBJ SCHRODER BANK & TRUST COMPANY,
as Collateral Agent
By
Name:
Title:
D-2
<PAGE> 138
EXHIBIT E
[Form of Special Mandatory Redemption Certificate]
AMF GROUP INC.
Date:
The undersigned officer of AMF Group Inc., a Delaware corporation (the
"Company"), hereby certifies, pursuant to Section 3.4 of the Pledge, Escrow and
Assignment Agreement dated as of March 21, 1996 (the "Pledge, Escrow and
Assignment Agreement") by and among the Company, IBJ Schroder Bank & Trust
Company, as trustee (the "Trustee") under the Senior Subordinated Note Indenture
dated as of March 21, 1996 (the "Senior Subordinated Note Indenture") between
the Company and the Trustee, and IBJ Schroder Bank & Trust Company, as
collateral agent (the "Collateral Agent"), that the Company has concluded, in
its sole judgment, that the Acquisition (as defined in the Senior Subordinated
Note Indenture) will not be consummated on or prior to May 31, 1996.
The Company hereby requests the Trustee to direct the Collateral Agent to
liquidate all of the Cash Equivalents in the Escrow Account by not later than
12:00 noon (New York time) on ____________, 1996 and to transfer $________ in
immediately available funds to the Paying Agent to redeem Senior Subordinated
Notes in accordance with Section 3.09 of the Senior Subordinated Note Indenture.
Capitalized terms used herein without definition shall have the meanings
set forth in the Pledge, Escrow and Assignment Agreement.
By:
Name:
Title:
E-1
<PAGE> 139
SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE dated as of May 1, 1996 between AMF
Bowling, Inc., AMF Bowling Centers, Inc., Bush River Corporation, AMF Beverage
Company of Oregon, Inc., King Louie Lenexa, Inc., AMF Bowling Centers
Switzerland Inc., AMF Bowling Centers (Aust.) International, Inc., AMF Bowling
Centers (Canada) International, Inc., AMF Bowling Centers (Hong Kong)
International, Inc., AMF Bowling Centers International, Inc., AMF BCO-UK One,
Inc., AMF BCO-UK Two, Inc., AMF BCO-France One, Inc., AMF BCO-France Two, Inc.,
AMF Bowling Centers Spain Inc., AMF Bowling Mexico Holding, Inc., Boliches AMF,
Inc.,AMF BCO-China, Inc., AMF Bowling Centers China, Inc., AMF Beverage Company
of W. Va., Inc. (the "Supplemental Guarantors" and, together with the Persons
identified on Exhibit C to the Indenture referred to below and any other
Supplemental Guarantors that execute this form of Supplemental Indenture, the
"Guarantors"), each a Subsidiary of AMF Group Inc., a Delaware corporation, or
its successors and assigns (the "Company"), and IBJ Schroder Bank & Trust
Company, 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 March 21, 1996,
providing for the issuance of an aggregate principal amount of $250.0 million of
10 7/8% Senior Subordinated Notes due 2006 (the "Senior Subordinated Notes");
WHEREAS, the Indenture provides that under certain
circumstances the Supplemental Guarantors shall execute and deliver to the
Trustee a supplemental indenture pursuant to which the Supplemental Guarantors
shall unconditionally guarantee all of the Company's Obligations under the
Senior Subordinated Notes on the terms and conditions set forth herein (the
"Senior Subordinated 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, each Supplemental Guarantor and the Trustee mutually covenant and
agree for the equal and ratable benefit of the Holders of the Senior
Subordinated Notes as follows:
1. Capitalized Terms. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
2. Counterpart to the Indenture. This Supplemental Indenture
specifically incorporates, restates and reaffirms all of the warranties,
representations, covenants and other provisions of the Indenture,
notwithstanding the fact that such provisions are not restated herein. By
executing this Supplemental Indenture, each Supplemental Guarantor subscribes to
all of the covenants and other provisions in the Indenture as applicable to the
Guarantors, and each Supplemental Guarantor hereby agrees that it shall be bound
by all of the provisions of the Indenture. Upon execution, this Supplemental
Indenture shall become part of the Indenture and the rights and obligations of
each Supplemental Guarantor hereunder shall be construed to be identical to the
rights and obligations of the Guarantors under the Indenture. Reference is
hereby made to the Indenture for the precise terms of this Supplemental
Indenture. In the event of any conflict between the provisions herein and the
provisions of the Indenture, the Indenture shall control.
<PAGE> 140
3. Agreement to Guarantee. Each Supplemental Guarantor hereby agrees as
follows:
(a) Subject to Article 11 of the Indenture, each Supplemental
Guarantor, jointly and severally with the other Guarantors, hereby
unconditionally guarantees to each Holder of a Senior Subordinated Note
authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, irrespective of the validity and enforceability
of the Indenture, the Senior Subordinated Notes or the Obligations of
the Company under the Indenture or the Senior Subordinated Notes, that:
(a) the principal of, premium, if any, and interest, including
Liquidated Damages, if any, on the Senior Subordinated Notes shall be
promptly paid in full when due, whether at maturity, by acceleration,
redemption or otherwise, and (to the extent permitted by law) interest
on the overdue principal of, premium and interest, including Liquidated
Damages, on the Senior Subordinated Notes, if any, and all other
obligations of the Company to the Holders or the Trustee under the
Indenture or the Senior Subordinated Notes shall be promptly paid in
full or performed, all in accordance with the terms of the Indenture
and the Senior Subordinated Notes; and (b) in case of any extension of
time for payment or renewal of any Senior Subordinated Notes or any of
such other obligations, that 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.
Failing payment when due of any amount so guaranteed for whatever
reason, the Guarantors shall be obligated to pay the same immediately
whether or not such failure to pay has become an Event of Default which
could cause acceleration pursuant to Section 6.02 of the Indenture.
Each Supplemental Guarantor agrees that this is a guarantee of payment
and not a guarantee of collection.
(b) Each Supplemental Guarantor hereby agrees that its obligations
hereunder shall be unconditional, irrespective of the validity,
regularity or enforceability of the Senior Subordinated Notes or the
Indenture, the absence of any action to enforce the same, any waiver or
consent by any Holder of the Senior Subordinated Notes with respect to
any provisions thereof, the recovery 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 guarantor. Each Supplemental Guarantor hereby waives diligence,
presentment, demand of payment, filing of claims with a court in the
event of insolvency or bankruptcy of the Company, any right to require
a proceeding first against the Company, protest, notice and all demands
whatsoever and covenants that, subject to Article 11 of the Indenture,
this Senior Subordinated Guarantee shall not be discharged except by
complete performance of the obligations contained in the Senior
Subordinated Notes and the Indenture.
(c) If any Holder of Senior Subordinated Notes or the Trustee is
required by any court or otherwise to return to the Company or the
Guarantors, or any Custodian, Trustee, liquidator or other similar
official acting in relation to either the Company or the Guarantors,
any amount paid by either to the Trustee or such Holder, this Senior
Subordinated Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect.
(d) Each Supplemental Guarantor agrees that it shall not be entitled
to any right of subrogation in relation to the Holders of Senior
Subordinated Notes in respect of any Obligations guaranteed hereby
until payment in full of all Obligations guaranteed hereby. Each
Supplemental Guarantor further agrees that, as between the Guarantors,
on the one hand, and the Holders and the Trustee, on the other
-2-
<PAGE> 141
hand, (x) the maturity of the Obligations guaranteed hereby may be
accelerated as provided in Article 6 of the Indenture for the purposes
of this Senior Subordinated Guarantee, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect
of the Obligations guaranteed thereby and (y) in the event of any
declaration of acceleration of such Obligations as provided in Section
6.02 of the Indenture, such Obligations (whether or not due and
payable) shall forthwith become due and payable by the Guarantors for
the purpose of this Senior Subordinated Guarantee. The Guarantors shall
have the right to seek contribution from any non-paying Guarantor so
long as the exercise of such right does not impair the rights of the
Holders under the Senior Subordinated Guarantees.
4. Subordination of Senior Subordinated Guarantee. The Obligations of
each Guarantor under its Senior Subordinated Guarantee pursuant to Article 11 of
the Indenture shall be junior and subordinated to the Senior Guarantee of such
Guarantor on the same basis as the Senior Subordinated Notes are junior and
subordinated to Senior Debt 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 Guarantors only at such times as they may receive
and/or retain payments in respect of the Senior Subordinated Notes pursuant to
the Indenture, including Article 10 thereof.
5. Limitation on Guarantor Liability. Each Supplemental Guarantor, and
by its acceptance of Senior Subordinated Notes, each Holder, hereby confirms
that it is the intention of all such parties that the Senior Subordinated
Guarantee of each Supplemental Guarantor not constitute a fraudulent transfer or
conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance
Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to
the extent applicable to any Senior Subordinated Guarantee. To effectuate the
foregoing intention, the Trustee, the Holders and each Supplemental Guarantor
hereby irrevocably agree that the obligations of each Supplemental Guarantor
under its Senior Subordinated Guarantee and Article 11 of the Indenture shall be
limited to the maximum amount as will, after giving effect to such maximum
amount and all other contingent and fixed liabilities of each Supplemental
Guarantor that are relevant under such laws, and after giving effect to any
collections from, rights to receive contribution from or payments made by or on
behalf of any other Guarantor in respect of the obligations of such other
Guarantor under Article 11 of the Indenture, result in the obligations of each
Supplemental Guarantor under its Senior Subordinated Guarantee not constituting
a fraudulent transfer or conveyance.
6. Execution and Delivery of Senior Subordinated Guarantees.
(a) To evidence its Senior Subordinated Guarantee set forth in this
Supplemental Indenture and in Section 11.01 of the Indenture, each
Supplemental Guarantor hereby agrees that a notation of such Senior
Subordinated Guarantee substantially in the form of Exhibit D to the
Indenture shall be endorsed by an officer of each Supplemental
Guarantor on each Senior Subordinated Note authenticated and delivered
by the Trustee and that this Supplemental Indenture, as a counterpart
to the Indenture, shall be executed on behalf of each Supplemental
Guarantor by its President or one of its Vice Presidents and attested
to by an Officer.
(b) Each Supplemental Guarantor hereby agrees that its Senior
Subordinated Guarantee set forth in this Supplemental Indenture and in
Section 11.01 of the Indenture shall remain in full force and effect
notwithstanding any failure to endorse on each Senior Subordinated Note
a notation of such Senior Subordinated Guarantee.
-3-
<PAGE> 142
(c) If an Officer whose signature is on this Supplemental Indenture
or on the Senior Subordinated Guarantee no longer holds that office at
the time the Trustee authenticates the Senior Subordinated Note on
which a Senior Subordinated Guarantee is endorsed, the Senior
Subordinated Guarantee shall be valid nevertheless.
(d) The delivery of any Senior Subordinated Note by the Trustee,
after the authentication thereof under the Indenture, shall constitute
due delivery of the Senior Subordinated Guarantee set forth in the
Indenture on behalf of each Supplemental Guarantor.
7. Guarantor May Consolidate, Etc., on Certain Terms. No Supplemental
Guarantor may consolidate with or merge with or into (whether or not such
Supplemental Guarantor is the surviving Person) another corporation, Person or
entity whether or not affiliated with such Supplemental Guarantor unless:
(a) subject to Section 11.06 of the Indenture, the Person formed by
or surviving any such consolidation or merger (if other than such
Supplemental Guarantor) unconditionally assumes all the obligations of
such Supplemental Guarantor under the Senior Subordinated Guarantee and
the Indenture on the terms set forth in the Indenture pursuant to a
supplemental indenture in form and substance reasonably satisfactory to
the Trustee;
(b) immediately after giving effect to such transaction, no Default
or Event of Default exists; and
(c) the Company would be permitted by virtue of the Company's pro
forma Fixed Charge Coverage Ratio to incur, immediately after giving
effect to such transaction, 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 of the Indenture.
In case of any such consolidation or merger and upon the assumption by the
successor corporation, by supplemental indenture, executed and delivered to the
Trustee and satisfactory in form to the Trustee, of the Senior Subordinated
Guarantee endorsed upon the Senior Subordinated Notes and of the due and
punctual performance of all of the covenants and conditions of the Indenture and
this Supplemental Indenture to be performed by the Supplemental Guarantor, such
successor corporation shall succeed to and be substituted for the Supplemental
Guarantor with the same effect as if it had been named in the Indenture as a
Guarantor. Such successor corporation thereupon may cause to be signed any or
all of the Senior Subordinated Guarantees to be endorsed upon all of the Senior
Subordinated Notes issuable under the Indenture which theretofore shall not have
been signed by the Company and delivered to the Trustee. All the Senior
Subordinated Guarantees so issued shall in all respects have the same legal rank
and benefit under the Indenture as the Senior Subordinated Guarantees
theretofore and thereafter issued in accordance with the terms of the Indenture
as though all of such Senior Subordinated Guarantees had been issued at the date
of the execution of the Indenture.
Except as set forth in Articles 4 and 5 of the Indenture, and
notwithstanding clauses (a) through (c) above, nothing contained in the
Indenture, this Supplemental Indenture or in any of the Senior Subordinated
Notes shall prevent any consolidation or merger of any Supplemental Guarantor
with or into the Company or another Guarantor, or shall prevent any sale or
conveyance of the property of any Supplemental Guarantor as an entirety or
substantially as an entirety to the Company or another Guarantor.
-4-
<PAGE> 143
8. Releases of Senior Subordinated Guarantees. In the event of a sale
or other disposition of all or substantially all of the assets of any
Supplemental Guarantor, by way of merger, consolidation or otherwise, or a sale
or other disposition (including, without limitation, by foreclosure) of all of
the Capital Stock of any Supplemental Guarantor, then the Supplemental Guarantor
(in the event of a sale or other disposition, by way of such a merger,
consolidation or otherwise (including, without limitation, by foreclosure), of
all of the Capital Stock of the Supplemental Guarantor) or the corporation
acquiring the property (in the event of a sale or other disposition of all of
the assets of the Supplemental Guarantor) shall be automatically released and
relieved of any obligations under its Senior Subordinated Guarantee; provided
that the Net Proceeds of such sale or other disposition are applied in
accordance with Section 4.10 of the Indenture. Upon delivery by the Company to
the Trustee of an Officers' Certificate and an Opinion of Counsel to the effect
that such sale or other disposition was made by the Company in accordance with
the provisions of the Indenture, including without limitation Sections 4.10 and
5.01 thereof, the Trustee shall execute any documents reasonably required in
order to evidence the release of the Supplemental Guarantor from its obligations
under its Senior Subordinated Guarantee.
Any Supplemental Guarantor not released from its obligations under
its Senior Subordinated Guarantee shall remain liable for the full amount of
principal of and interest on the Senior Subordinated Notes and for the other
obligations of any Supplemental Guarantor under the Indenture as provided in
Article 11 thereof.
9. "Trustee" to Include Paying Agent. In case at any time any Paying
Agent other than the Trustee shall have been appointed by the Company and be
then acting under the Indenture, the term "Trustee" as used in Article 11
thereto shall in such case (unless the context shall otherwise require) be
construed as extending to and including such Paying Agent within its meaning as
fully and for all intents and purposes as if such Paying Agent were named in
Article 11 of the Indenture in place of the Trustee.
10. No Recourse Against Others. No past, present or future director,
officer, employee, incorporator or stockholder of each Supplemental Guarantor,
as such, shall have any liability for any obligations of the Company or any
Guarantor under the Senior Subordinated Notes, any Senior Subordinated
Guarantees, the Indenture or this Supplemental Indenture or for any claim based
on, in respect of, or by reason of, such obligations or their creation. Each
Holder of Senior Subordinated Notes by accepting a Senior Subordinated Note
waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the Senior Subordinated Notes.
11. GOVERNING LAW. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL
GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE AND THE SENIOR
SUBORDINATED GUARANTEE.
12. Counterpart Originals. 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.
13. Effect of Headings. The Section headings herein are for convenience
only and shall not affect the construction hereof.
14. The Trustee. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the recitals contained herein, all of which
recitals are made solely by each Supplemental Guarantor and the Company.
-5-
<PAGE> 144
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.
Dated: May 1, 1996
AMF BOWLING, INC.
Attest:
By: /s/ Robert L. Morin
--------------------------------------
Name: Robert L. Morin
/s/ William W. Flexon Title: President
- --------------------------------
Name: William W. Flexon
Title: Secretary
AMF BOWLING CENTERS, INC.
Attest:
By: /s/ Douglas J. Stanard
--------------------------------------
Name: Douglas J. Stanard
/s/ Michael P. Bardaro Title: President
- --------------------------------
Name: Michael P. Bardaro
Title: Treasurer & Assistant
Secretary
BUSH RIVER CORPORATION
Attest:
By: /s/ Douglas J. Stanard
--------------------------------------
Name: Douglas J. Stanard
/s/ Michael P. Bardaro Title: President
- --------------------------------
Name: Michael P. Bardaro
Title: Treasurer & Assistant
Secretary
AMF BEVERAGE COMPANY OF
OREGON, INC.
Attest:
By: /s/ Douglas J. Stanard
--------------------------------------
Name: Douglas J. Stanard
/s/ Michael P. Bardaro Title: President
- --------------------------------
Name: Michael P. Bardaro
Title: Treasurer & Assistant
Secretary
KING LOUIE LENEXA, INC.
Attest:
By: /s/ Douglas J. Stanard
--------------------------------------
Name: Douglas J. Stanard
s/ Michael P. Bardaro Title: President
- --------------------------------
Name: Michael P. Bardaro
Title: Treasurer & Assistant
Secretary
-6-
<PAGE> 145
Dated: May 1, 1996
AMF BOWLING CENTERS
SWITZERLAND INC.
Attest:
By: /s/ Douglas J. Stanard
--------------------------------------
Name: Douglas J. Stanard
/s/ Michael P. Bardaro Title: Vice President
- --------------------------------
Name: Michael P. Bardaro
Title: Vice President
AMF BOWLING CENTERS (AUST.)
INTERNATIONAL, INC.
Attest:
By: /s/ Douglas J. Stanard
--------------------------------------
Name: Douglas J. Stanard
/s/ Michael P. Bardaro Title: President
- --------------------------------
Name: Michael P. Bardaro
Title: Secretary
AMF BOWLING CENTERS (CANADA)
INTERNATIONAL, INC.
Attest:
By: /s/ Douglas J. Stanard
--------------------------------------
Name: Douglas J. Stanard
/s/ Michael P. Bardaro Title: President
- --------------------------------
Name: Michael P. Bardaro
Title: Secretary
AMF BOWLING CENTERS (HONG KONG)
INTERNATIONAL, INC.
Attest:
By: /s/ Douglas J. Stanard
--------------------------------------
Name: Douglas J. Stanard
/s/ Michael P. Bardaro Title: President
- --------------------------------
Name: Michael P. Bardaro
Title: Secretary
AMF BOWLING CENTERS
INTERNATIONAL, INC.
Attest:
By: /s/ Douglas J. Stanard
--------------------------------------
Name: Douglas J. Stanard
/s/ Michael P. Bardaro Title: Vice President
- --------------------------------
Name: Michael P. Bardaro
Title: Treasurer & Assistant
Secretary
-7-
<PAGE> 146
Dated: May 1, 1996
AMF BCO-UK ONE, INC.
Attest:
By: /s/ Douglas J. Stanard
--------------------------------------
Name: Douglas J. Stanard
/s/ Michael P. Bardaro Title: President
- --------------------------------
Name: Michael P. Bardaro
Title: Secretary
AMF BCO-UK TWO, INC.
Attest:
By: /s/ Douglas J. Stanard
--------------------------------------
Name: Douglas J. Stanard
/s/ Michael P. Bardaro Title: President
- --------------------------------
Name: Michael P. Bardaro
Title: Secretary
AMF BCO-FRANCE ONE, INC.
Attest:
By: /s/ Douglas J. Stanard
--------------------------------------
Name: Douglas J. Stanard
/s/ Michael P. Bardaro Title: President
- --------------------------------
Name: Michael P. Bardaro
Title: Secretary
AMF BCO-FRANCE TWO, INC.
Attest:
By: /s/ Douglas J. Stanard
--------------------------------------
Name: Douglas J. Stanard
/s/ Michael P. Bardaro Title: President
- --------------------------------
Name: Michael P. Bardaro
Title: Secretary
AMF BOWLING CENTERS SPAIN INC.
Attest:
By: /s/ Douglas J. Stanard
--------------------------------------
Name: Douglas J. Stanard
/s/ Carla H. Skodinski Title: Vice President
- --------------------------------
Name: Carla H. Skodinski
Title: Secretary
AMF BOWLING MEXICO HOLDING, INC.
Attest:
By: /s/ Douglas J. Stanard
--------------------------------------
Name: Douglas J. Stanard
/s/ Michael P. Bardaro Title: President
- --------------------------------
Name: Michael P. Bardaro
Title: Secretary
-8-
<PAGE> 147
Dated: May 1, 1996
BOLICHES AMF, INC.
Attest:
By: /s/ Douglas J. Stanard
--------------------------------------
Name: Douglas J. Stanard
/s/ Michael P. Bardaro Title: President
- --------------------------------
Name: Michael P. Bardaro
Title: Secretary
AMF BCO-CHINA, INC.
Attest:
By: /s/ Douglas J. Stanard
--------------------------------------
Name: Douglas J. Stanard
/s/ Michael P. Bardaro Title: President
- --------------------------------
Name: Michael P. Bardaro
Title: Secretary
AMF BOWLING CENTERS CHINA, INC.
Attest:
By: /s/ Douglas J. Stanard
--------------------------------------
Name: Douglas J. Stanard
/s/ Michael P. Bardaro Title: President
- --------------------------------
Name: Michael P. Bardaro
Title: Secretary
AMF BEVERAGE COMPANY OF
W. VA., INC.
Attest:
By: /s/ Douglas J. Stanard
--------------------------------------
Name: Douglas J. Stanard
/s/ Michael P. Bardaro Title: President
- --------------------------------
Name: Michael P. Bardaro
Title: Treasurer & Assistant
Secretary
-9-
<PAGE> 148
Dated: May 1, 1996
IBJ SCHRODER BANK & TRUST COMPANY
as Trustee
Attest:
By: /s/ Irene Trutonico
--------------------------------------
Name: Irene Trutonico
/s/ Max Volmar Title: Assistant Vice President
- --------------------------------
Name: Max Volmar
Title: Assistant Secretary
-10-
<PAGE> 1
Exhibit 4.2
EXECUTION COPY
- --------------------------------------------------------------------------------
AMF GROUP INC.
As Issuer
THE PARTIES LISTED
ON EXHIBIT C HERETO
As Guarantors
SERIES A AND SERIES B
12 1/4% SENIOR SUBORDINATED DISCOUNT NOTES DUE 2006
-----------------
INDENTURE
Dated as of March 21, 1996
-----------------
-----------------
AMERICAN BANK NATIONAL ASSOCIATION
As Trustee
-----------------
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions.......................................... 1
Section 1.02. Other Definitions.................................... 15
Section 1.03. Incorporation by Reference of Trust Indenture Act.... 15
Section 1.04. Rules of Construction................................ 16
ARTICLE 2
THE SENIOR SUBORDINATED DISCOUNT NOTES
Section 2.01. Form and Dating...................................... 16
Section 2.02. Execution and Authentication......................... 18
Section 2.03. Registrar and Paying Agent........................... 19
Section 2.04. Paying Agent to Hold Money in Trust.................. 19
Section 2.05. Holder Lists......................................... 19
Section 2.06. Transfer and Exchange................................ 20
Section 2.07. Replacement Senior Subordinated Discount Notes....... 26
Section 2.08. Outstanding Senior Subordinated Discount Notes....... 27
Section 2.09. Treasury Senior Subordinated Discount Notes.......... 27
Section 2.10. Temporary Senior Subordinated Discount Notes......... 27
Section 2.11. Cancellation......................................... 28
Section 2.12. Defaulted Interest................................... 28
ARTICLE 3
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee................................... 28
Section 3.02. Selection of Senior Subordinated Discount Notes to
Be Redeemed.......................................... 29
Section 3.03. Notice of Redemption................................. 29
Section 3.04. Effect of Notice of Redemption....................... 30
Section 3.05. Deposit of Redemption Price.......................... 30
Section 3.06. Senior Subordinated Discount Notes Redeemed in
Part................................................. 31
Section 3.07. Optional Redemption.................................. 31
Section 3.08. Mandatory Redemption................................. 31
Section 3.09. Special Mandatory Redemption......................... 32
Section 3.10. Offer to Purchase by Application of Excess Proceeds.. 32
ARTICLE 4
COVENANTS
Section 4.01. Payment of Senior Subordinated Discount Notes........ 34
Section 4.02. Maintenance of Office or Agency...................... 35
Section 4.03. Reports.............................................. 35
Section 4.04. Compliance Certificate............................... 36
Section 4.05. Taxes................................................ 36
Section 4.06. Stay, Extension and Usury Laws....................... 36
Section 4.07. Restricted Payments.................................. 37
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
Section 4.08. Dividend and Other Payment Restrictions Affecting
Subsidiaries............................................ 39
Section 4.09. Incurrence of Indebtedness and Issuance of
Disqualified Stock...................................... 40
Section 4.10. Asset Sales............................................. 42
Section 4.11. Transactions with Affiliates............................ 43
Section 4.12. Liens................................................... 44
Section 4.13. Offer to Repurchase Upon Change of Control.............. 44
Section 4.14. Issuances of Guarantees of Indebtedness................. 46
Section 4.15. Activities of Holdings.................................. 46
Section 4.16. Activities of the Company............................... 46
Section 4.17. Corporate Existence..................................... 46
Section 4.18. No Senior Subordinated Debt............................. 47
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of All or Substantially
All Assets.............................................. 47
Section 5.02. Successor Corporation Substituted....................... 48
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default....................................... 48
Section 6.02. Acceleration............................................ 50
Section 6.03. Other Remedies.......................................... 51
Section 6.04. Waiver of Past Defaults................................. 51
Section 6.05. Control by Majority..................................... 51
Section 6.06. Limitation on Suits..................................... 51
Section 6.07. Rights of Holders of Senior Subordinated Discount
Notes to Receive Payment................................ 52
Section 6.08. Collection Suit by Trustee.............................. 52
Section 6.09. Trustee May File Proofs of Claim........................ 52
Section 6.10. Priorities.............................................. 53
Section 6.11. Undertaking for Costs................................... 53
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee....................................... 54
Section 7.02. Rights of Trustee....................................... 55
Section 7.03. Individual Rights of Trustee............................ 55
Section 7.04. Trustee's Disclaimer.................................... 55
Section 7.05. Notice of Defaults...................................... 56
Section 7.06. Reports by Trustee to Holders of the Senior.............
Subordinated Discount Notes............................. 56
Section 7.07. Compensation and Indemnity.............................. 56
Section 7.08. Replacement of Trustee.................................. 57
Section 7.09. Successor Trustee by Merger, etc........................ 58
Section 7.10. Eligibility; Disqualification........................... 58
Section 7.11. Preferential Collection of Claims Against Company....... 58
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant
Defeasance.............................................. 58
Section 8.02. Legal Defeasance and Discharge.......................... 59
Section 8.03. Covenant Defeasance..................................... 59
Section 8.04. Conditions to Legal or Covenant Defeasance.............. 60
Section 8.05. Deposited Money and Government Securities to be
Held in Trust; Other Miscellaneous Provisions........... 61
Section 8.06. Repayment to Company.................................... 61
Section 8.07. Reinstatement........................................... 62
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Senior Subordinated
Discount Notes.......................................... 62
Section 9.02. With Consent of Holders of Senior Subordinated
Discount Notes.......................................... 63
Section 9.03. Compliance with Trust Indenture Act..................... 64
Section 9.04. Revocation and Effect of Consents....................... 64
Section 9.05. Notation on or Exchange of Senior Subordinated
Discount Notes.......................................... 65
Section 9.06. Trustee to Sign Amendments, etc......................... 65
ARTICLE 10
SUBORDINATION
Section 10.01. Agreement to Subordinate................................ 65
Section 10.02. Certain Definitions..................................... 65
Section 10.03. Liquidation; Dissolution; Bankruptcy.................... 66
Section 10.04. Default on Designated Senior Debt....................... 67
Section 10.05. Acceleration of Senior Subordinated Discount Notes...... 68
Section 10.06. When Distribution Must Be Paid Over..................... 68
Section 10.07. Notice by Company....................................... 69
Section 10.08. Subrogation............................................. 69
Section 10.09. Relative Rights......................................... 69
Section 10.10. Subordination May Not Be Impaired by Company............ 70
Section 10.11. Distribution or Notice to Representative................ 70
Section 10.12. Rights of Trustee and Paying Agent...................... 71
Section 10.13. Authorization to Effect Subordination................... 71
Section 10.14. Amendments.............................................. 71
ARTICLE 11
SENIOR SUBORDINATED GUARANTEES
Section 11.01. Senior Subordinated Guarantees.......................... 71
Section 11.02. Subordination of Senior Subordinated Guarantee.......... 73
Section 11.03. Limitation on Guarantor Liability....................... 73
Section 11.04. Execution and Delivery of Senior Subordinated
Guarantees.............................................. 73
Section 11.05. Guarantors May Consolidate, etc., on Certain Terms...... 74
Section 11.06. Releases of Senior Subordinated Guarantees.............. 74
Section 11.07. "Trustee" to Include Paying Agent....................... 75
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
ARTICLE 12
MISCELLANEOUS
Section 12.01. Trust Indenture Act Controls............................ 75
Section 12.02. Notices................................................. 75
Section 12.03. Communication by Holders of Senior Subordinated
Discount Notes with Other Holders of Senior
Subordinated Discount Notes............................. 77
Section 12.04. Certificate and Opinion as to Conditions Precedent...... 77
Section 12.05. Statements Required in Certificate or Opinion........... 77
Section 12.06. Rules by Trustee and Agents............................. 77
Section 12.07. No Personal Liability of Directors, Officers,
Employees and Stockholders.............................. 78
Section 12.08. Governing Law........................................... 78
Section 12.09. No Adverse Interpretation of Other Agreements........... 78
Section 12.10. Successors.............................................. 78
Section 12.11. Severability............................................ 78
Section 12.12. Counterpart Originals................................... 78
Section 12.13. Table of Contents, Headings, etc. ...................... 78
</TABLE>
EXHIBITS
Exhibit A-1 FORM OF SENIOR SUBORDINATED DISCOUNT NOTE
Exhibit A-2 FORM OF REGULATION S TEMPORARY
GLOBAL NOTE
Exhibit B-1 FORM OF CERTIFICATE OF EXCHANGE OR
REGISTRATION OF TRANSFER FROM RULE 144A
GLOBAL NOTE TO REGULATION S GLOBAL NOTE
Exhibit B-2 FORM OF CERTIFICATE OF EXCHANGE OR
REGISTRATION OF TRANSFER FROM REGULATION S
GLOBAL NOTE TO RULE 144A GLOBAL NOTE
Exhibit B-3 FORM OF CERTIFICATE OF EXCHANGE OR
REGISTRATION OF TRANSFER OF CERTIFICATED
NOTES
Exhibit B-4 FORM OF CERTIFICATE OF EXCHANGE OR
REGISTRATION OF TRANSFER FROM RULE 144A
GLOBAL NOTE OR REGULATION S PERMANENT
GLOBAL NOTE TO CERTIFICATED NOTE
Exhibit C GUARANTORS
Exhibit D FORM OF SENIOR SUBORDINATED GUARANTEE
Exhibit E FORM OF SUPPLEMENTAL INDENTURE
Exhibit F DIVIDEND AND PAYMENT RESTRICTION TERMS OF
NEW BANK CREDIT AGREEMENT
Exhibit G FORM OF SENIOR SUBORDINATED DISCOUNT NOTE
PLEDGE AND ESCROW AGREEMENT
iv
<PAGE> 6
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture Section
<S> <C>
310 (a)(1)........................................................... 7.10
(a)(2)........................................................... 7.10
(a)(3)........................................................... N.A.
(a)(4)........................................................... N.A.
(a)(5)........................................................... 7.10
(b) ............................................................. 7.10
(c) ............................................................. N.A.
311 (a) ............................................................. 7.11
(b) ............................................................. 7.11
(c) ............................................................. N.A.
312 (a).............................................................. 2.05
(b).............................................................. 12.03
(c) ............................................................. 12.03
313 (a) ............................................................. 7.06
(b)(1) .......................................................... 10.03
(b)(2) .......................................................... 7.07
(c) ............................................................. 7.06; 12.02
(d).............................................................. 7.06
314 (a) ............................................................. 4.03; 12.02
(b) ............................................................. 10.02
(c)(1) .......................................................... 12.04
(c)(2) .......................................................... 12.04
(c)(3) .......................................................... N.A.
(d) ............................................................. 10.03-10.05
(e) ............................................................ 12.05
(f).............................................................. N.A.
315 (a).............................................................. 7.01
(b).............................................................. 7.05; 12.02
(c).............................................................. 7.01
(d).............................................................. 7.01
(e).............................................................. 6.11
316 (a)(last sentence) .............................................. 2.09
(a)(1)(A)........................................................ 6.05
(a)(1)(B) ....................................................... 6.04
(a)(2) .......................................................... N.A.
(b) ............................................................. 6.07
(c) ............................................................. 2.12
317 (a)(1) .......................................................... 6.08
(a)(2)........................................................... 6.09
(b) ............................................................. 2.04
318(a).............................................................. 12.01
(b).............................................................. N.A.
(c).............................................................. 12.01
</TABLE>
- ----------------
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
<PAGE> 7
INDENTURE dated as of March 21, 1996 among AMF Group Inc., a Delaware
corporation (the "Company"), each of the Persons listed on Exhibit C hereto
(each, a "Guarantor" and, collectively, the "Guarantors") and American Bank
National Association, as trustee (the "Trustee").
The Company, the Guarantors and the Trustee agree as follows for the
benefit of each other and for the equal and ratable benefit of the Holders of
the 12 1/4% Series A Senior Subordinated Discount Notes due 2006 of the Company
(the "Series A Senior Subordinated Discount Notes") and the 12 1/4% Series B
Senior Subordinated Discount Notes due 2006 of the Company (the "Series B Senior
Subordinated Discount Notes" and, together with the Series A Senior Subordinated
Discount Notes, the "Senior Subordinated Discount Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions.
"Accreted Value" means, as of any date of determination prior to the
Full Accretion Date, the sum of (a) the initial offering price of each Senior
Subordinated Discount Note and (b) the portion of the excess of the principal
amount of each Senior Subordinated Discount Note over such initial offering
price which shall have been accreted thereon through such date, such amount to
be so accreted on a daily basis at 12 1/4% per annum of the initial offering
price of the Senior Subordinated Discount Notes, compounded semi-annually on
each March 15 and September 15 from the date of issuance of the Senior
Subordinated Discount Notes through the date of determination; provided that on
and after the Full Accretion Date the Accreted Value shall be equal to the
principal amount of the outstanding Senior Subordinated Discount Note.
"Accrued Bankruptcy Interest" has the meaning set forth in Section
10.02 hereof.
"Acquired Debt" 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 Restricted 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
Restricted Subsidiary of such specified Person, and (ii) Indebtedness secured by
a Lien encumbering any asset acquired by such specified Person.
"Acquisition" means the acquisition by Holdings, through subsidiaries
of the Company, from the Sellers of the stock and assets contemplated by the
Stock Purchase Agreement.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For 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, shall 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 shall
be deemed to be control.
<PAGE> 8
"Agent" means any Registrar, Paying Agent or co-registrar.
"Agent Members" means any member of, or participant in, the
Depositary.
"AMF" means the AMF worldwide bowling businesses, including AMF
Bowling, Inc., AMF Bowling Centers, Inc., the AMF worldwide bowling centers and
their subsidiaries.
"Applicable Procedures" means, with respect to any transfer or
exchange of beneficial interests in a Global Note, the rules and procedures of
the Depositary, Euroclear and Cedel Bank that are applicable to such transfer or
exchange.
"Asset Sale" means: (i) the sale, conveyance, transfer or other
disposition (whether in a single transaction or a series of related
transactions) of property or assets (including by way of a sale and leaseback)
of the Company or any Restricted Subsidiary (each referred to in this definition
as a "disposition") or (ii) the issuance or sale of Equity Interests of any
Restricted Subsidiary (whether in a single transaction or a series of related
transactions), in each case, other than: (a) a disposition of Cash Equivalents
or goods held for sale in the ordinary course of business or obsolete equipment
in the ordinary course of business consistent with past practices of the
Company; (b) the disposition of all or substantially all of the assets of the
Company in a manner permitted pursuant to the provisions of Section 5.01 hereof
or any disposition that constitutes a Change of Control pursuant to this
Indenture; (c) any disposition that is a Restricted Payment or Permitted
Investment that is permitted pursuant to Section 4.07 hereof; (d) any
disposition, or related series of dispositions, of assets with an aggregate fair
market value of less than $2.5 million; (e) any sale of Equity Interest in, or
Indebtedness or other securities of, an Unrestricted Subsidiary; and (f)
foreclosures on assets.
"Bankruptcy Law" has the meaning set forth in Section 10.02 hereof.
"Board of Directors" means the Board of Directors of the Company, or
any authorized committee of the Board of Directors.
"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 (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof, (iii) certificates of
deposit and eurodollar time deposits with maturities of one year or less from
the date of acquisition, bankers' acceptances with maturities not exceeding one
year and overnight bank deposits, in each case with any domestic bank having
capital and surplus in excess of $500.0 million and a Keefe Bank Watch Rating of
"B" or better, (iv) repurchase obligations with a term of not more than seven
days for underlying
2
<PAGE> 9
securities of the types described in clauses (ii) and (iii) above entered into
with any financial institution meeting the qualifications specified in clause
(iii) above and (v) commercial paper having the highest rating obtainable from
Moody's Investors Service, Inc. or Standard & Poor's Corporation and in each
case maturing within one year after the date of acquisition.
"Cedel Bank" means Cedel Bank, societe anonyme.
"Certificated Notes" means Senior Subordinated Discount Notes that are
in the form of the Senior Subordinated Discount Notes attached hereto as Exhibit
A-1, that do not include the information called for by footnotes 1 and 2
thereof.
"Change of Control" means the occurrence of any of the following:
(i) the sale, lease, transfer, conveyance or other disposition (other
than by way of merger or consolidation), in one or a series of transactions, of
all or substantially all of the assets of the Company and its Restricted
Subsidiaries, taken as a whole, to any "person" (as such term is used in Section
13(d)(3) of the Exchange Act) other than the Permitted Holders and their Related
Parties;
(ii) the Company becomes aware (by way of a report or any other filing
pursuant to Section 13(d) of the Exchange Act, proxy, vote, written notice or
otherwise) of the acquisition by any Person or group (within the meaning of
Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor
provision), including any group acting for the purpose of acquiring, holding or
disposing of securities (within the meaning of Rule 13d-5(b)(1) under the
Exchange Act), other than the Permitted Holders or any of their Related Parties,
in a single transaction or in a related series of transactions, by way of
merger, consolidation or other business combination or purchase of beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any
successor provision) of 50% or more of the aggregate voting power of the Voting
Stock of the Company or Holdings, and beneficially owns more of such Voting
Stock than the Permitted Holders and their Related Parties; or
(iii) a majority of the members of the Board of Directors of the
Company cease to be Continuing Directors.
"Consolidated Cash Flow" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period plus (i) an
amount equal to any extraordinary loss plus any net loss realized in connection
with an Asset Sale (to the extent such losses were deducted in computing such
Consolidated Net Income), plus (ii) provision for taxes based on income or
profits of such Person and its Restricted Subsidiaries for such period, to the
extent that such provision for taxes was deducted in computing such Consolidated
Net Income, plus (iii) consolidated interest expense of such Person and its
Restricted Subsidiaries for such period, whether paid or accrued and whether or
not capitalized (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), to the extent that any
such expense was deducted in computing such Consolidated Net Income, plus (iv)
depreciation, amortization (including amortization of goodwill and other
intangibles but excluding amortization of pre-paid cash expenses that were paid
in a prior period) and other non-cash charges (excluding any such non-cash
charge to the extent that it represents an accrual of or reserve for cash
charges in any future period or amortization of a prepaid cash expense that was
paid in a prior period) of such Person and its Restricted
3
<PAGE> 10
Subsidiaries for such period to the extent that such depreciation, amortization
and other non-cash charges were deducted in computing such Consolidated Net
Income.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that (i) the Net Income (but not loss) for such period of
any Person that is not a Restricted Subsidiary or that is accounted for by the
equity method of accounting shall be included only to the extent of the amount
of dividends or distributions paid in cash to the referent Person or a Wholly
Owned Restricted Subsidiary thereof, (ii) the Net Income of any Restricted
Subsidiary shall be excluded to the extent that the declaration or payment of
dividends or similar distributions by that Restricted Subsidiary of that Net
Income is not at the date of determination permitted without any prior
governmental approval (that has not been obtained) or, directly or indirectly,
by operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to that
Restricted Subsidiary or its stockholders, (iii) the Net Income of any Person
acquired in a pooling of interests transaction for any period prior to the date
of such acquisition shall be excluded, (iv) the cumulative effect of a change in
accounting principles shall be excluded and (v) the Net Income of any
Unrestricted Subsidiary shall be excluded, whether or not distributed to the
Company or one of its Restricted Subsidiaries.
"Continuing Directors" means, as of any date of determination, any
member of the Board of Directors who (i) was a member of such Board of Directors
on the date of this Indenture or (ii) was nominated for election or elected to
such Board of Directors with, or whose election to such Board of Directors was
approved by, the affirmative vote of a majority of the Continuing Directors who
were members of such Board of Directors at the time of such nomination or
election or (iii) is any designee of the Permitted Holders or their Affiliates
or was nominated by the Permitted Holders or their Affiliates or any designees
of the Permitted Holders or their Affiliates on the Board of Directors.
"Corporate Trust Office of the Trustee" 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.
"Depositary" means, with respect to the Senior Subordinated Discount
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 Senior
Subordinated Discount Notes, until a successor shall have been appointed and
become such pursuant to the applicable provision of this Indenture, and,
thereafter, "Depositary" shall mean or include such successor.
"Designated Senior Debt" has the meaning set forth in Section 10.02
hereof.
"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, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, on or prior to the date
on which the Senior Subordinated Discount Notes mature.
4
<PAGE> 11
"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).
"Escrow Account" has the meaning given in the Senior Subordinated
Discount Note Pledge and Escrow Agreement.
"Escrow Funds" means the Company's net proceeds from the Senior
Subordinated Discount Notes together with $50.0 million of equity contributions
from the Sponsors and a deposit, if any, from the Sellers, all held in the
Escrow Account pursuant to the Senior Subordinated Discount Note Pledge and
Escrow Agreement.
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
Office, as operator of the Euroclear System.
"Event of Default" has the meaning set forth in Section 6.01 hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Offer" means the offer that may be made by the Company
pursuant to the Registration Rights Agreement to exchange Series B Senior
Subordinated Discount Notes for Series A Senior Subordinated Discount Notes.
"Existing Indebtedness" means Indebtedness of AMF and its Restricted
Subsidiaries (other than Indebtedness under the New Bank Credit Agreement) in
existence on the date of this Indenture, until such amounts are repaid.
"First-Tier Subsidiaries" means each of the Subsidiaries directly
owned by the Company.
"Fixed Charge Coverage Ratio" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person and its
Restricted Subsidiaries for such period to the Fixed Charges of such Person and
its Restricted Subsidiaries for such period. In the event that the Company or
any of its Restricted Subsidiaries incurs, assumes, Guarantees or redeems any
Indebtedness (other than revolving credit borrowings) or issues or redeems
Preferred Stock subsequent to the commencement of the period for which the Fixed
Charge Coverage Ratio is being calculated but 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 shall be calculated
giving pro forma effect to such incurrence, assumption, Guarantee or redemption
of Indebtedness, or such issuance or redemption of Preferred Stock, as if the
same had occurred at the beginning of the applicable four-quarter reference
period. In addition, for purposes of making the computation referred to above,
(i) acquisitions that have been made by the Company or any of its Restricted
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
shall be deemed to have occurred on the first day of the four-quarter reference
period and Consolidated Cash Flow for such reference period shall be calculated
(A) without giving effect to clause (iii) of the proviso set forth in the
definition of Consolidated Net Income and (B) subject to clause (ii) of the
definition of Consolidated Net Income, by treating a portion of the consolidated
revenue of any acquired entity that derives at least 90% of its revenues from
the ownership and operation of bowling centers as Consolidated Cash Flow of such
entity, regardless of the actual operating results of such entity, such portion
being the percentage of the consolidated revenues of the Company's domestic
bowling center
5
<PAGE> 12
operations that constituted Consolidated Cash Flow for the most recently ended
four full fiscal quarters for which internal financial statements are available
and (ii) the Consolidated Cash Flow attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses disposed of
prior to the Calculation Date, shall be excluded, and (iii) the Fixed Charges
attributable to discontinued operations, as determined in accordance with GAAP,
and operations or businesses disposed of prior to the Calculation Date, shall 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 Restricted
Subsidiaries following the Calculation Date.
"Fixed Charges" means, with respect to any Person for any period, the
sum of (i) the consolidated interest expense of such Person and its Restricted
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 Restricted 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 Restricted Subsidiaries or secured by a
Lien on assets of such Person or one of its Restricted Subsidiaries (whether or
not such Guarantee or Lien is called upon) and (iv) the product of (a) all cash
dividend payments (and non-cash dividend payments in the case of a Person that
is a Restricted Subsidiary) paid to any Person other than the Company or a
Restricted Subsidiary on any series of Preferred Stock of such Person, times (b)
a fraction, the numerator of which is one and the denominator of which is one
minus the then current combined federal, state and local statutory tax rate of
such Person paying the dividend, expressed as a decimal, in each case, on a
consolidated basis and in accordance with GAAP.
"Full Accretion Date" means March 15, 2001.
"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 date of this Indenture.
"Global Notes" means, individually and collectively, the Regulation S
Temporary Global Note, the Regulation S Permanent Global Note and the Rule 144A
Global Note.
"Government Securities" means securities that are (a) direct
obligations of the United States of America for the timely payment of which its
full faith and credit is pledged or (b) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the timely payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States of America, which, in either
case, are not callable or redeemable at the option of the issuer thereof, and
shall also include a depository receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act), as custodian with respect to any such Government
Security or a specific payment of principal of or interest on any such
Government Security held by such custodian for the account of the holder of such
depository receipt; provided, that (except as required by law) such custodian is
not authorized to make any deduction from the amount payable to the holder of
such depository receipt from any amount received by the custodian in respect of
the Government Security or the specific payment of principal of or interest on
the Government Security evidenced by such depository receipt.
6
<PAGE> 13
"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.
"Guarantors" means each of (i) Holdings, (ii) each of the First-Tier
Subsidiaries, (iii) each of the Second-Tier Subsidiaries and (iv) any other
Restricted Subsidiary of the Company that executes a Senior Subordinated
Guarantee pursuant to a supplemental indenture, in the form of Exhibit E hereto,
in accordance with the provisions of this Indenture, and, in each case, their
respective successors and assigns.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) currency exchange or interest rate swap
agreements, currency exchange or interest rate cap agreements and currency
exchange or interest rate collar agreements and (ii) other agreements or
arrangements designed to protect such Person against fluctuations in currency
exchange or interest rates.
"Holder" means a holder of any of the Senior Subordinated Discount
Notes or Senior Subordinated Notes, as the case may be.
"Holdings" means AMF Group Holdings Inc., a Delaware corporation.
"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 indebtedness of any other Person.
"Indenture" means this Indenture, as amended or supplemented from time
to time.
"Independent Financial Advisor" means an accounting, appraisal,
investment banking firm or consultant of nationally recognized standing that is
not an Affiliate of the Company and that is, in the judgment of the Company's
Board of Directors, qualified to perform the task for which it has been engaged.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
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 of Indebtedness, Equity Interests or other
securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP; provided that
an acquisition of Equity Interests or other securities by the Company for
consideration consisting of common equity securities of the Company shall not be
deemed to be an Investment. If the Company or any Subsidiary of the Company
sells or otherwise disposes of any Equity Interests of any direct or indirect
Subsidiary of the Company such that, after giving effect to any such sale or
disposition, the Company no longer owns, directly or indirectly, greater than
50% of the outstanding Equity Interests of such Subsidiary, the Company shall be
deemed to have made
7
<PAGE> 14
an Investment on the date of any such sale or disposition equal to the fair
market value of the Equity Interests of such Subsidiary not sold or disposed of.
"Joint Ventures" means all corporations, partnerships, associations or
other business entities (i) that are engaged in a Principal Business and (ii) of
which 50% of the total voting power of shares of Capital Stock entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by the Company or one or more Restricted Subsidiaries
(or a combination thereof).
"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 shall accrue
for the intervening period.
"Letter of Credit Obligations" means all Obligations in respect of
Indebtedness of the Company or any of its Restricted Subsidiaries with respect
to letters of credit issued pursuant to the New Bank Credit Agreement which
Indebtedness shall be deemed to consist of (a) the aggregate maximum amount then
available to be drawn under all such letters of credit (the determination of
such maximum amount to assume compliance with all conditions for drawing), and
(b) the aggregate amount that has then been paid by, and not reimbursed to, the
issuers under such letters of credit.
"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 thereof, any option or other agreement to sell or give a security
interest in and 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 Section 5 of the Registration Rights Agreement.
"Mortgage Financing" means the incurrence by the Company or a
Restricted Subsidiary of the Company of any Indebtedness secured by a mortgage
or other Lien on real property acquired or improved by the Company or any
Restricted Subsidiary of the Company after the date of this Indenture.
"Mortgage Refinancing" means the incurrence by the Company or a
Restricted Subsidiary of the Company of any Indebtedness secured by a mortgage
or other Lien on real property subject to a mortgage or other Lien existing on
the date of this Indenture or created or incurred subsequent to the date of this
Indenture as permitted by the terms of this Indenture and owned by the Company
or any Restricted Subsidiary of the Company.
"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 Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted 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).
8
<PAGE> 15
"Net Proceeds" means the aggregate cash proceeds received by the
Company or any of its Restricted 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 brokerage 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 Senior Bank Debt) secured
by a Lien on the asset or assets that were the subject of such Asset Sale and
any reserve for adjustment in respect of the sale price of such asset or assets
established in accordance with GAAP.
"New Bank Credit Agreement" means the credit agreement to be entered
into by and among the Company and the financial institutions party thereto
providing a portion of the financing for the Acquisition, including any related
notes, guarantees, collateral documents, instruments and agreements executed in
connection therewith, and in each case as amended, modified, renewed, refunded,
replaced or refinanced (in whole or in part) from time to time.
"Non-Recourse Debt" means Indebtedness of an Unrestricted Subsidiary
(i) as to which neither the Company nor any of its Restricted 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 Restricted Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity; and (iii) as to which the lenders have been notified in
writing that they will not have any recourse to the stock or assets of the
Company or any of its Restricted Subsidiaries.
"Note Custodian" means the Trustee, as custodian with respect to the
Senior Subordinated Discount Notes in global form, or any successor entity
thereto.
"Notes" means the Senior Subordinated Discount Notes and the Senior
Subordinated Notes.
"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.
"Offering Circular" means the circular or memorandum, dated March 7,
1996, prepared in connection with and relating to the Offering.
"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 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
Section 12.05 hereof.
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<PAGE> 16
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
12.05 hereof. The counsel may be an employee of or counsel to the Company, any
Guarantor or the Trustee.
"Pari Passu Indebtedness" means indebtedness which ranks pari passu in
right of payment to the Senior Subordinated Discount Notes.
"Permitted Asset Swap" means any one or more transactions in which the
Company or any of its Restricted Subsidiaries exchanges assets for consideration
consisting of cash and/or assets that are used or useful in a Principal Business
and/or a controlling equity interest in a Person engaged in a Principal
Business.
"Permitted Holders" means Goldman, Sachs & Co. and any of its
Affiliates.
"Permitted Investments" means (a) any Investment in the Company or in
a Restricted Subsidiary of the Company; (b) any Investment in cash and Cash
Equivalents; (c) any Investment by the Company or any Restricted Subsidiary of
the Company in a Person, if as a result of such Investment (A) such Person
becomes a Restricted Subsidiary of the Company or (B) such Person, in one
transaction or a series of related transactions, 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 Restricted Subsidiary of the
Company; (d) any Investment made as a result of the receipt of consideration not
constituting cash or Cash Equivalents from an Asset Sale that was made pursuant
to and in compliance with Section 4.10 hereof; (e) any Investment existing on
the date of this Indenture; (f) Permitted Asset Swaps; (g) any Investment by
Restricted Subsidiaries in other Restricted Subsidiaries and Investments by
Subsidiaries that are not Restricted Subsidiaries in other Subsidiaries that are
not Restricted Subsidiaries; (h) advances to employees not in excess of $5.0
million outstanding at any one time; (i) any Investment acquired by the Company
or any of its Restricted Subsidiaries (A) in exchange for any other Investment
or accounts receivable held by the Company or any such Restricted Subsidiary in
connection with or as a result of a bankruptcy, workout, reorganization or
recapitalization of the issuer of such other Investment or accounts receivable
or (B) as a result of a foreclosure by the Company or any of its Restricted
Subsidiaries with respect to any secured Investment or other transfer of title
with respect to any secured Investment in default; (j) Hedging Obligations; (k)
loans and advances to officers, directors and employees for business-related
travel expenses, moving expenses and other similar expenses, in each case
incurred in the ordinary course of business; (l) Investments the payment for
which consists exclusively of Equity Interests (exclusive of Disqualified Stock)
of the Company; and (m) additional Investments having an aggregate fair market
value, taken together with all other Investments made pursuant to this clause
(m) that are at that time outstanding, not to exceed 5% of Total Assets at the
time of such Investment (with the fair market value of each Investment being
measured at the time made and without giving effect to subsequent changes in
value).
"Permitted Refinancing Indebtedness" means any Indebtedness of the
Company or any of its Restricted 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 Restricted Subsidiaries
in whole or in part; provided that: (i) the principal amount (or accreted value,
if applicable) of such Permitted Refinancing Indebtedness does not exceed the
principal amount (or accreted value, if applicable) of the Indebtedness so
extended, refinanced, renewed, replaced, defeased or refunded (plus the amount
of reasonable expenses incurred in connection therewith); (ii) such Permitted
Refinancing Indebtedness has a final maturity date later than the final maturity
date of, and 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,
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<PAGE> 17
defeased or refunded; (iii) if the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded is subordinated in right of payment to
the Senior Subordinated Discount Notes, such Permitted Refinancing Indebtedness
has a final maturity date later than the final maturity date of, and is
subordinated in right of payment to, the Senior Subordinated Discount Notes on
terms at least as favorable to the Holders of Senior Subordinated Discount Notes
as those contained in the documentation governing the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded; and (iv) such
Indebtedness is incurred either by the Company or by the Restricted 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, government or any agency or political subdivision
thereof or any other entity.
"Preferred Stock" means any Equity Interest with preferential right of
payment of dividends or upon liquidation, dissolution, or winding up.
"Principal Business" means (i) the design, manufacture and sale of
bowling and bowling center equipment and allied products, including without
limitation, pinspotters, scoring equipment, masking panels, seating, lane
maintenance machines, bumper bowling systems, electronic foul detectors, back
office support systems, bowling pins, wood and synthetic lanes, ball returns,
ball lifts, ball cleaners, other equipment used to equip or outfit a bowling
center, spare and replacement parts, maintenance equipment and supplies, bowling
balls, bags, shoes, shirts, pool and billiard tables and cues, shuffleboard and
other gaming tables, and any other equipment and products used or useful in the
operation of bowling centers, (ii) the ownership and operation of bowling
centers, in the United States and throughout the world, including without
limitation bowling operations, shoe rental, food and beverage sales and
services, operation of lounges and bars at or within a bowling center (including
without limitation sales and service of alcoholic beverages and provision of
music and cabaret activities), operation of pro shops (including without
limitation sales and service of merchandise), billiards and other table games,
video and arcade games, play centers, movie viewing, gaming activities, such as
Pull-Tab, lottery, video poker and keno, and any other activities which are or
may become associated with bowling centers, and (iii) any activity or business
incidental, directly related or similar to those set forth in clauses (i) or
(ii) of this definition, or any business or activity that is a reasonable
extension, development or expansion thereof or ancillary thereto.
"Registration Rights Agreement" means that certain Registration Rights
Agreement, dated as of March 21, 1996, 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.
"Regulation S" means Regulation S promulgated under the Securities
Act.
"Regulation S Global Note" means a Regulation S Temporary Global Note
or Regulation S Permanent Global Note, as appropriate.
"Regulation S Permanent Global Note" means a permanent global note
that contains the paragraph referred to in footnote 1 and the additional
schedule referred to in footnote 2 to the form of the Senior Subordinated
Discount Note attached hereto as Exhibit A-1, and that is deposited with and
registered in the name of the Depositary, representing a series of Senior
Subordinated Discount Notes sold in reliance on Regulation S.
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<PAGE> 18
"Regulation S Temporary Global Note" means a single temporary global
note in the form of the Senior Subordinated Discount Note attached hereto as
Exhibit A-2 that is deposited with and registered in the name of the Depositary,
representing a series of Senior Subordinated Discount Notes sold in reliance on
Regulation S.
"Related Parties" means any Person controlled by the Permitted
Holders, including any partnership of which any of the Permitted Holders or
their Affiliates is a general partner.
"Representative" has the meaning set forth in Section 10.02 hereof.
"Repurchase Offer" means an offer made by the Company to purchase all
or any portion of a Holder's Senior Subordinated Discount Notes pursuant to
Section 4.10 or 4.13 hereof.
"Responsible Officer," when used with respect to the Trustee, means
any Officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other Officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
Officers and also means, with respect to a particular corporate trust matter,
any other Officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of the
referent Person that is not (i) an Unrestricted Subsidiary or (ii) a direct or
indirect Subsidiary of an Unrestricted Subsidiary; provided, however, that upon
the occurrence of any Unrestricted Subsidiary ceasing to be an Unrestricted
Subsidiary, such Subsidiary shall be included in the definition of Restricted
Subsidiary.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 144A Global Note" means a permanent global note that contains
the paragraph referred to in footnote 1 and the additional schedule referred to
in footnote 2 to the form of the Senior Subordinated Discount Note attached
hereto as Exhibit A-1, and that is deposited with and registered in the name of
the Depositary, representing a series of Senior Subordinated Discount Notes sold
to U.S. Persons in reliance on Rule 144A or another exemption from the
registration requirements of the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Second-Tier Subsidiaries" means each of the Subsidiaries directly
owned by the First-Tier Subsidiaries.
"Securities Act" means the Securities Act of 1933, as amended.
"Sellers" means the selling stockholders of AMF who are listed on the
signature page of the Stock Purchase Agreement.
"Senior Bank Debt" has the meaning set forth in Section 10.02 hereof.
"Senior Bank Hedging Obligations" has the meaning set forth in Section
10.02 hereof.
"Senior Debt" has the meaning set forth in Section 10.02 hereof.
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<PAGE> 19
"Senior Guarantees" means the Guarantees by the Guarantors of
Obligations under the New Bank Credit Agreement.
"Senior Subordinated Discount Note Pledge and Escrow Agreement" means
that certain Pledge, Escrow and Assignment Agreement dated as of March 21, 1996
by and among the Company, the Trustee, as trustee, and the Trustee, as
collateral agent, substantially in the form of Exhibit G hereto.
"Senior Subordinated Guarantees" means the Guarantees by the
Guarantors of the Obligations under this Indenture and the Senior Subordinated
Discount Notes.
"Senior Subordinated Note Indenture" means that certain indenture,
dated as of the date hereof, among the Company, the Guarantors and IBJ Schroder
Bank & Trust Company, as trustee, as amended or supplemented from time to time,
relating to the Senior Subordinated Notes.
"Senior Subordinated Notes" means the Company's 10 7/8% Senior
Subordinated Notes due 2006 issued pursuant to the Senior Subordinated Note
Indenture.
"Significant Restricted Subsidiary" means any Restricted Subsidiary
that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of
Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation
is in effect on the date of this Indenture.
"Special Redemption Price" has the meaning set forth in Section 3.09
hereof.
"Sponsors" means GS Capital Partners II, L.P., The Goldman Sachs
Group, L.P., GS Capital Partners II Offshore, L.P., Goldman, Sachs & Co.
Verwaltungs GmbH, as nominee for GS Capital Partners II Germany, C.L.P., Stone
Street Fund 1995, L.P., Bridge Street Fund 1995, L.P., Stone Street Fund 1996,
L.P. and Bridge Street Fund 1996, L.P.
"Stock Purchase Agreement" means that certain Stock Purchase
Agreement, dated as of February 16, 1996, by and among Holdings and the Sellers.
"Subordinated Indebtedness" means any Indebtedness (other than the
Notes) of the Company or any of its Restricted Subsidiaries which is expressly
by its terms subordinated in right of payment to any other Indebtedness.
"Subsidiary" means, with respect to any Person, (i) 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) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or one or more Subsidiaries
of such Person (or any combination thereof).
"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.
"Total Assets" means, with respect to any Person, the total
consolidated assets of such Person and its Restricted Subsidiaries, as shown on
the most recent balance sheet of such Person.
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<PAGE> 20
"Transfer Restricted Securities" means securities that bear or are
required to bear the legend set forth in Section 2.06 hereof.
"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.
"Trustees" means the Trustee together with the trustee named under the
Senior Subordinated Note Indenture.
"Unrestricted Subsidiary" means (i) any Subsidiary (other than the
Guarantors or any successor to any of them) 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 Debt; (b) is not party to any agreement, contract, arrangement or
understanding with the Company or any Restricted Subsidiary of the Company
unless the terms of any such agreement, contract, arrangement or understanding
are no less favorable to the Company or such Restricted 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 Restricted Subsidiaries has any direct or indirect 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; (d) has not guaranteed or otherwise directly or
indirectly provided credit support for any Indebtedness of the Company or any of
its Restricted Subsidiaries; and (e) has at least one director on its board of
directors that is not a director or executive officer of the Company or any of
its Restricted Subsidiaries and has at least one executive officer that is not a
director or executive officer of the Company or any of its Restricted
Subsidiaries. Any such designation by the Board of Directors shall 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 pursuant to Section 4.07 hereof. If, at any time, any Unrestricted
Subsidiary would fail to meet the foregoing requirements as an Unrestricted
Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for
purposes of this Indenture and any Indebtedness of such Subsidiary shall be
deemed to be incurred by a Restricted Subsidiary of the Company as of such date
(and, if such Indebtedness is not permitted to be incurred as of such date
pursuant to Section 4.09 hereof, the Company shall be in default of such
covenant). The Board of Directors of the Company may at any time designate any
Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such
designation shall be deemed to be an incurrence of Indebtedness by a Restricted
Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted
Subsidiary and such designation shall only be permitted if (i) such Indebtedness
is permitted under the covenant described under Section 4.09 hereof and (ii) no
Default or Event of Default would be in existence following such designation.
"U.S. Person" has the meaning specified in Regulation S.
"Voting Stock" means, with respect to any Person, any class or series
of capital stock of such Person that is ordinarily entitled to vote in the
election of directors thereof at a meeting of stockholders called for such
purpose, without the occurrence of any additional event or contingency.
"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
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<PAGE> 21
one-twelfth) that will elapse between such date and the making of such payment,
by (ii) the then outstanding principal amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" is any Wholly Owned Subsidiary
that is a Restricted Subsidiary.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such
Person all of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares) shall at the time be owned by
such Person or by one or more Wholly Owned Subsidiaries of such Person or by
such Person and one or more Wholly Owned Subsidiaries of such Person.
SECTION 1.02. OTHER DEFINITIONS.
<TABLE>
<CAPTION>
Defined in
Term Section
<S> <C>
"Accredited Investor" ......................... 2.01
"Affiliate Transaction" ....................... 4.11
"Asset Sale Offer" ............................ 3.10
"Authentication Order" ........................ 2.02
"Change of Control Offer" ..................... 4.13
"Change of Control Payment" ................... 4.13
"Change of Control Payment Date" .............. 4.13
"Covenant Defeasance" ......................... 8.03
"Custodian" ................................... 6.01
"Event of Default" ............................ 6.01
"Excess Proceeds" ............................. 4.10
"incur" ....................................... 4.09
"incurrence" .................................. 4.09
"Legal Defeasance" ............................ 8.02
"Offer Amount" ................................ 3.10
"Offer Period" ................................ 3.10
"Paying Agent" ................................ 2.03
"Payment Blockage Notice" ..................... 10.04
"Purchase Date" ............................... 3.10
"QIB" ......................................... 2.01
"Registrar" ................................... 2.03
"Restricted Payments" ......................... 4.07
"Retired Capital Stock" ....................... 4.07
"Refunding Capital Stock" ..................... 4.07
"Subordinated Asset Sale Offer" ............... 4.10
</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 Senior Subordinated Discount Notes;
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<PAGE> 22
"indenture security Holder" means a Holder of a Senior Subordinated
Discount Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Senior Subordinated Discount Notes and the Senior
Subordinated Guarantees means the Company and the Guarantors, respectively, and
any successor obligor upon the Senior Subordinated Discount Notes and the Senior
Subordinated Guarantees, respectively.
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 shall
be deemed to include substitute, replacement of successor sections or
rules adopted by the SEC from time to time.
ARTICLE 2
THE SENIOR SUBORDINATED DISCOUNT NOTES
SECTION 2.01. FORM AND DATING.
The Senior Subordinated Discount Notes and the Trustee's certificate
of authentication shall be substantially in the form of Exhibits A-1 and A-2
attached hereto. The Senior Subordinated Guarantees shall be substantially in
the form of Exhibit D attached hereto, the terms of which are incorporated in
and made part of this Indenture. The Senior Subordinated Discount Notes may have
notations, legends or endorsements required by law, stock exchange rule or
usage. Each Senior Subordinated Discount Note shall be dated the date of its
authentication. The Senior Subordinated Discount Notes shall be issued in
minimum denominations of $1,000 and integral multiples of $1,000 in excess
thereof. The terms and provisions contained in the Senior Subordinated Discount
Notes shall constitute, and are hereby expressly made, a part of this Indenture
and the Company, the Guarantors and the Trustee, by their execution and delivery
of this Indenture, expressly agree to such terms and provisions and to be bound
thereby.
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<PAGE> 23
(a) Global Notes. Senior Subordinated Discount Notes offered
and sold to (i) qualified institutional buyers as defined in Rule 144A ("QIBs")
in reliance on Rule 144A and (ii) institutional accredited investors as defined
in Rule 501(a)(1), (2), (3) or (7) under the Securities Act ("Accredited
Investors") who are not QIBs, shall be issued initially in the form of Rule 144A
Global Notes, which shall be deposited on behalf of the purchasers of the Senior
Subordinated Discount Notes represented thereby with the Depositary at its New
York office, and registered in the name of the Depositary or a nominee of the
Depositary, duly executed by the Company and authenticated by the Trustee as
hereinafter provided. The aggregate principal amount of the Rule 144A Global
Notes may from time to time be increased or decreased by adjustments made on the
records of the Trustee and the Depositary or its nominee as hereinafter
provided.
Senior Subordinated Discount Notes offered and sold in reliance on
Regulation S shall be issued initially in the form of the Regulation S Temporary
Global Note, which shall be deposited on behalf of the purchasers of the Senior
Subordinated Discount Notes represented thereby with the Trustee, at its New
York office, as custodian for the Depositary, and registered in the name of the
Depositary or the nominee of the Depositary for the accounts of designated
agents holding on behalf of Euroclear or Cedel Bank, duly executed by the
Company and authenticated by the Trustee as hereinafter provided. The "40-day
restricted period" (as defined in Regulation S) shall be terminated upon the
receipt by the Trustee of (i) a written certificate from the Depositary,
together with copies of certificates from Euroclear and Cedel Bank certifying
that they have received certification of non-United States beneficial ownership
of 100% of the aggregate principal amount of the Regulation S Temporary Global
Note (except to the extent of any beneficial owners thereof who acquired an
interest therein pursuant to another exemption from registration under the
Securities Act and who will take delivery of a beneficial ownership interest in
a Rule 144A Global Note, all as contemplated by Section 2.06(a)(ii) hereof), and
(ii) an Officers' Certificate from the Company. Following the termination of the
40-day restricted period, beneficial interests in the Regulation S Temporary
Global Note shall be exchanged for beneficial interests in Regulation S
Permanent Global Notes pursuant to the Applicable Procedures. Simultaneously
with the authentication of Regulation S Permanent Global Notes, the Trustee
shall cancel the Regulation S Temporary Global Note. The aggregate principal
amount of the Regulation S Temporary Global Note and the Regulation S Permanent
Global Notes may from time to time be increased or decreased by adjustments made
on the records of the Trustee and the Depositary or its nominee, as the case may
be, in connection with transfers of interest as hereinafter provided.
Each Global Note shall represent such of the outstanding Senior
Subordinated Discount Notes as shall be specified therein and each shall provide
that it shall represent the aggregate amount of outstanding Senior Subordinated
Discount Notes from time to time endorsed thereon and that the aggregate amount
of outstanding Senior Subordinated Discount Notes represented thereby may from
time to time be reduced or increased, as appropriate, to reflect exchanges,
redemptions and transfers of interest. Any endorsement of a Global Note to
reflect the amount of any increase or decrease in the amount of outstanding
Senior Subordinated Discount Notes represented thereby shall be made by the
Trustee or the Note Custodian, at the direction of the Trustee, in accordance
with instructions given by the Holder thereof as required by Section 2.06
hereof.
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 interests in the Regulation S Temporary Global Note and the
Regulation S Permanent Global Notes that are held by the Agent Members through
Euroclear or Cedel Bank.
Except as set forth in Section 2.06 hereof, the Global Notes
may be transferred, in whole an d not in part, only to another nominee of the
Depositary or to a successor of the Depositary or its nominee.
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<PAGE> 24
(b) Book-Entry Provisions. This Section 2.01(b) shall apply only to
Rule 144A Global Notes and the Regulation S Permanent Global Notes deposited
with or on behalf of the Depositary.
The Company shall execute and the Trustee shall, in accordance with
this Section 2.01(b), authenticate and deliver the Global Notes that (i) shall
be registered in the name of the Depositary or the nominee of the Depositary and
(ii) shall be delivered by the Trustee to the Depositary or pursuant to the
Depositary's instructions or held by the Trustee as custodian for the
Depositary.
Agent Members shall have no rights either under this Indenture with
respect to any Global Note held on their behalf by the Depositary or by the
Trustee as custodian for the Depositary or under such Global Note, and the
Depositary may be treated by the Company, the Trustee and any agent of the
Company or the Trustee as the absolute owner of such Global Note for all
purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent
the Company, the Trustee or any agent of the Company or the Trustee from giving
effect to any written certification, proxy or other authorization furnished by
the Depositary or impair, as between the Depositary and its Agent Members, the
operation of customary practices of such Depositary governing the exercise of
the rights of an owner of a beneficial interest in any Global Note.
(c) Certificated Notes. Senior Subordinated Discount Notes
issued in certificated form shall be substantially in the form of Exhibit A-1
attached hereto (but without including the text referred to in footnotes 1 and 2
thereto).
SECTION 2.02. EXECUTION AND AUTHENTICATION.
Two Officers of the Company shall sign the Senior Subordinated
Discount Notes for the Company by manual or facsimile signature. The Company's
seal shall be reproduced on the Senior Subordinated Discount Notes and may be in
facsimile form.
If an Officer of the Company whose signature is on a Senior
Subordinated Discount Note no longer holds that office at the time a Senior
Subordinated Discount Note is authenticated, the Senior Subordinated Discount
Note shall nevertheless be valid.
A Senior Subordinated Discount Note shall not be valid until
authenticated by the manual signature of the Trustee. The signature shall be
conclusive evidence that the Senior Subordinated Discount Note has been
authenticated under this Indenture.
The Trustee shall, upon receipt of a written order of the Company
signed by two Officers of the Company (the "Authentication Order"), authenticate
Senior Subordinated Discount Notes for original issue up to the aggregate
principal amount stated in paragraph 4 of the Senior Subordinated Discount
Notes. The aggregate principal amount of Senior Subordinated Discount Notes
outstanding at any time may not exceed such amount except as provided in Section
2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Senior Subordinated Discount Notes. An authenticating
agent may authenticate Senior Subordinated Discount 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 the Company or an Affiliate of the Company.
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<PAGE> 25
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency where Senior
Subordinated Discount Notes may be presented for registration of transfer or for
exchange ("Registrar") and an office or agency where Senior Subordinated
Discount Notes may be presented for payment ("Paying Agent"). The Registrar
shall keep a register of the Senior Subordinated Discount 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 the 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 Note Custodian with respect to the Global Notes. The
Company initially appoints the Trustee to act as the Registrar and Paying Agent
with respect to the Certificated 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, if any, or interest, including Liquidated Damages, if any,
on the Senior Subordinated Discount Notes, and will notify the Trustee of any
default by the Company or any Guarantor 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 or a Guarantor, the Trustee shall serve as
Paying Agent for the Senior Subordinated Discount 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 and/or the Guarantors shall furnish to the
Trustee at least 10 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 Senior Subordinated Discount Notes and the Company and the
Guarantors shall otherwise comply with TIA Section 312(a).
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SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Global Notes. The transfer and exchange
of Global Notes or beneficial interests therein shall be effected through the
Depositary, in accordance with this Indenture and the procedures of the
Depositary therefor, which shall include restrictions on transfer comparable to
those set forth herein to the extent required by the Securities Act. The Trustee
shall have no obligation to ascertain the Depositary's compliance with such
restrictions on transfer. Beneficial interests in a Global Note may be
transferred to Persons who take delivery thereof in the form of a beneficial
interest in the same Global Note in accordance with the transfer restrictions
set forth in the legend in subsection (g) of this Section 2.06. Transfers of
beneficial interests in the Global Notes to Persons required to take delivery
thereof in the form of an interest in another Global Note shall be permitted as
follows:
(i) Rule 144A Global Note to Regulation S Global Note. If, at any
time, an owner of a beneficial interest in a Rule 144A Global
Note deposited with the Depositary (or the Trustee as
custodian for the Depositary) wishes to transfer its
beneficial interest in such Rule 144A Global Note to a Person
who is required or permitted to take delivery thereof in the
form of an interest in a Regulation S Global Note, such owner
shall, subject to the Applicable Procedures, exchange or
cause the exchange of such interest for an equivalent
beneficial interest in a Regulation S Global Note as provided
in this Section 2.06(a)(i). Upon receipt by the Trustee of
(1) instructions given in accordance with the Applicable
Procedures from an Agent Member directing the Trustee to
credit or cause to be credited a beneficial interest in the
Regulation S Global Note in an amount equal to the beneficial
interest in the Rule 144A Global Note to be exchanged, (2) a
written order given in accordance with the Applicable
Procedures containing information regarding the participant
account of the Depositary and the Euroclear or Cedel Bank
account to be credited with such increase and (3) a
certificate in the form of Exhibit B-1 hereto given by the
owner of such beneficial interest stating that the transfer
of such interest has been made in compliance with the
transfer restrictions applicable to the Global Notes and
pursuant to and in accordance with Rule 903 or Rule 904 of
Regulation S, then the Trustee, as Registrar, shall instruct
the Depositary to reduce or cause to be reduced the aggregate
principal amount at maturity of the applicable Rule 144A
Global Note and to increase or cause to be increased the
aggregate principal amount at maturity of the applicable
Regulation S Global Note by the principal amount at maturity
of the beneficial interest in the Rule 144A Global Note to be
exchanged or transferred, to credit or cause to be credited
to the account of the Person specified in such instructions a
beneficial interest in the Regulation S Global Note equal to
the reduction in the aggregate principal amount at maturity
of the Rule 144A Global Note, and to debit, or cause to be
debited, from the account of the Person making such exchange
or transfer the beneficial interest in the Rule 144A Global
Note that is being exchanged or transferred.
(ii) Regulation S Global Note to Rule 144A Global Note. If, at any
time, an owner of a beneficial interest in a Regulation S
Global Note deposited with the Depositary (or with the
Trustee as custodian for the Depositary) wishes to transfer
its beneficial interest in such Regulation S Global Note to a
Person who is required or permitted to take delivery thereof
in the form of an interest in a Rule 144A Global Note, such
owner shall, subject to the Applicable Procedures, exchange
or cause the exchange of such interest for an equivalent
beneficial interest in a Rule 144A Global Note as provided in
this Section 2.06(a)(ii). Upon receipt by the Trustee of (1)
instructions from Euroclear or Cedel
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Bank, if applicable, and the Depositary, directing the
Trustee, as Registrar, to credit or cause to be credited a
beneficial interest in the Rule 144A Global Note equal to the
beneficial interest in the Regulation S Global Note to be
exchanged, such instructions to contain information regarding
the participant account with the Depositary to be credited
with such increase, (2) a written order given in accordance
with the Applicable Procedures containing information
regarding the participant account of the Depositary and (3) a
certificate in the form of Exhibit B-2 attached hereto given
by the owner of such beneficial interest stating (A) if the
transfer is pursuant to Rule 144A, that the Person
transferring such interest in a Regulation S Global Note
reasonably believes that the Person acquiring such interest
in a Rule 144A Global Note is a QIB and is obtaining such
beneficial interest in a transaction meeting the requirements
of Rule 144A and any applicable blue sky or securities laws
of any state of the United States, (B) that the transfer
complies with the requirements of Rule 144 under the
Securities Act and any applicable blue sky or securities laws
of any state of the United States or (C) if the transfer is
pursuant to any other exemption from the registration
requirements of the Securities Act, that the transfer of such
interest has been made in compliance with the transfer
restrictions applicable to the Global Notes and pursuant to
and in accordance with the requirements of the exemption
claimed, such statement to be supported by an Opinion of
Counsel from the transferee or the transferor in form
reasonably acceptable to the Company and to the Registrar,
then the Trustee, as Registrar, shall instruct the Depositary
to reduce or cause to be reduced the aggregate principal
amount at maturity of such Regulation S Global Note and to
increase or cause to be increased the aggregate principal
amount at maturity of the applicable Rule 144A Global Note by
the principal amount at maturity of the beneficial interest
in the Regulation S Global Note to be exchanged or
transferred, and the Trustee, as Registrar, shall instruct
the Depositary, concurrently with such reduction, to credit
or cause to be credited to the account of the Person
specified in such instructions a beneficial interest in the
applicable Rule 144A Global Note equal to the reduction in
the aggregate principal amount at maturity of such Regulation
S Global Note and to debit or cause to be debited from the
account of the Person making such transfer the beneficial
interest in the Regulation S Global Note that is being
exchanged or transferred.
(b) Transfer and Exchange of Certificated Notes. When Certificated
Notes are presented by a Holder to the Registrar with a request:
(x) to register the transfer of the Certificated Notes; or
(y) to exchange such Certificated Notes for an equal principal
amount of Certificated Notes of other authorized
denominations,
the Registrar shall register the transfer or make the exchange as requested;
provided, however, that the Certificated Notes presented or surrendered for
registration of transfer or exchange:
(i) shall be duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the Registrar
duly executed by such Holder or by his attorney, duly
authorized in writing; and
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(ii) in the case of a Certificated Note that is a Transfer
Restricted Security, such request shall be accompanied by the
following additional information and documents, as
applicable:
(A) if such Transfer Restricted Security is being delivered
to the Registrar by a Holder for registration in the
name of such Holder, without transfer, or such Transfer
Restricted Security is being transferred to the Company,
a certification to that effect from such Holder (in
substantially the form of Exhibit B-3 hereto);
(B) if such Transfer Restricted Security is being
transferred to a QIB in accordance with Rule 144A under
the Securities Act or pursuant to an exemption from
registration in accordance with Rule 144 under the
Securities Act or pursuant to an effective registration
statement under the Securities Act, a certification to
that effect from such Holder (in substantially the form
of Exhibit B-3 hereto); or
(C) if such Transfer Restricted Security is being
transferred in reliance on any other exemption from the
registration requirements of the Securities Act, a
certification to that effect from such Holder (in
substantially the form of Exhibit B-3 hereto) and an
Opinion of Counsel from such Holder or the transferee
reasonably acceptable to the Company and to the
Registrar to the effect that such transfer is in
compliance with the Securities Act.
(c) Transfer of a Beneficial Interest in a Rule 144A Global Note or
Regulation S Permanent Global Note for a Certificated Note.
(i) Any Person having a beneficial interest in a Rule 144A Global
Note or Regulation S Permanent Global Note may upon request,
subject to the Applicable Procedures, exchange such
beneficial interest for a Certificated Note. Upon receipt by
the Trustee of written instructions or such other form of
instructions as is customary for the Depositary (or Euroclear
or Cedel Bank, if applicable), from the Depositary or its
nominee on behalf of any Person having a beneficial interest
in a Rule 144A Global Note or Regulation S Permanent Global
Note, and, in the case of a Transfer Restricted Security, the
following additional information and documents (all of which
may be submitted by facsimile):
(A) if such beneficial interest is being transferred to the
Person designated by the Depositary as being the
beneficial owner, a certification to that effect from
such Person (in substantially the form of Exhibit B-4
hereto);
(B) if such beneficial interest is being transferred to a
QIB in accordance with Rule 144A under the Securities
Act or pursuant to an exemption from registration in
accordance with Rule 144 under the Securities Act or
pursuant to an effective registration statement under
the Securities Act, a certification to that effect from
the transferor (in substantially the form of Exhibit B-4
hereto); or
(C) if such beneficial interest is being transferred in
reliance on any other exemption from the registration
requirements of the Securities Act, a certification to
that effect from the transferor (in substantially the
form of Exhibit B-4 hereto) and an Opinion
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of Counsel from the transferee or the transferor
reasonably acceptable to the Company and to the
Registrar to the effect that such transfer is in
compliance with the Securities Act,
in which case the Trustee or the Note Custodian, at the
direction of the Trustee, shall, in accordance with the
standing instructions and procedures existing between the
Depositary and the Note Custodian, cause the aggregate
principal amount of Rule 144A Global Notes or Regulation S
Permanent Global Notes, as applicable, to be reduced
accordingly and, following such reduction, the Company shall
execute and the Trustee shall authenticate and deliver to the
transferee a Certificated Note in the appropriate principal
amount.
(ii) Certificated Notes issued in exchange for a beneficial
interest in a Rule 144A Global Note or Regulation S Permanent
Global Note, as applicable, pursuant to this Section 2.06(c)
shall be registered in such names and in such authorized
denominations as the Depositary, pursuant to instructions
from its direct or indirect participants or otherwise, shall
instruct the Trustee. The Trustee shall deliver such
Certificated Notes to the Persons in whose names such Senior
Subordinated Discount Notes are so registered. Following any
such issuance of Certificated Notes, the Trustee, as
Registrar, shall instruct the Depositary to reduce or cause
to be reduced the aggregate principal amount at maturity of
the applicable Global Note to reflect the transfer.
(d) Restrictions on Transfer and Exchange of Global Notes.
Notwithstanding any other provision of this Indenture (other than the provisions
set forth in subsection (f) of this Section 2.06), a Global Note may not be
transferred as a whole except 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.
(e) Transfer and Exchange of a Certificated Note for a Beneficial
Interest in a Global Note. A Certificated Note may not be transferred or
exchanged for a beneficial interest in a Global Note.
(f) Authentication of Certificated Notes in Absence of Depositary.
If at any time:
(i) the Depositary for the Senior Subordinated Discount
Notes notifies the Company that the Depositary is
unwilling or unable to continue as Depositary for the
Global Notes and a successor Depositary for the Global
Notes is not appointed by the Company within 90 days
after delivery of such notice; or
(ii) the Company delivers to the Trustee an Officers'
Certificate or an order signed by two Officers of the
Company notifying the Trustee that it elects to cause
the issuance of Certificated Notes under this Indenture,
then the Company shall execute, and the Trustee shall, upon receipt of an
Authentication Order in accordance with Section 2.02 hereof, authenticate and
deliver, Certificated Notes in an aggregate principal amount equal to the
principal amount of the Global Notes in exchange for such Global Notes.
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(g) Legends.
(i) Except as permitted by the following paragraphs (ii),
(iii) and (iv), each Senior Subordinated Discount Note
certificate evidencing Global Notes and Certificated
Notes (and all Senior Subordinated Discount Notes issued
in exchange therefor or substitution thereof) shall bear
a legend in substantially the following form:
"THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE
"SECURITIES ACT") AND (A) MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) BY THE
INITIAL INVESTOR (a) TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144A, (b) IN AN OFFSHORE
TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF
REGULATION S UNDER THE SECURITIES ACT, (c) PURSUANT TO
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (d) TO
THE COMPANY OR (e) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND (2) BY SUBSEQUENT
INVESTORS, AS SET FORTH IN (1) ABOVE AND, IN ADDITION,
TO AN INSTITUTIONAL ACCREDITED INVESTOR IN A TRANSACTION
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, AND, IN EACH CASE, IN ACCORDANCE WITH
ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE
UNITED STATES AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER
FROM IT OF THE NOTES EVIDENCED HEREBY OF THE RESALE
RESTRICTIONS SET FORTH IN (A) ABOVE. NO REPRESENTATION
CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION
PROVIDED BY RULE 144 FOR RESALES OF THE NOTES."
(ii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security
represented by a Global Note) pursuant to Rule 144 under
the Securities Act or pursuant to an effective
registration statement under the Securities Act:
(A) in the case of any Transfer Restricted Security that
is a Certificated Note, the Registrar shall permit
the Holder thereof to exchange such Transfer
Restricted Security for a Certificated Note that
does not bear the legend set forth in (i) above and
rescind any restriction on the transfer of such
Transfer Restricted Security upon receipt of a
certification from the transferring Holder
substantially in the form of Exhibit B-4 hereto; and
(B) in the case of any Transfer Restricted Security
represented by a Global Note, such Transfer
Restricted Security shall not be required to bear
the legend set forth in (i) above, but shall
continue to be subject to the provisions of Section
2.06(a) and (b) hereof; provided, however, that with
respect to any request for an exchange of a Transfer
Restricted Security that is represented by a Global
Note for a Certificated Note that does not bear the
legend set forth in (i) above, which request is made
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in reliance upon Rule 144, the Holder thereof shall
certify in writing to the Registrar that such
request is being made pursuant to Rule 144 (such
certification to be substantially in the form of
Exhibit B-4 hereto).
(iii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security
represented by a Global Note) in reliance on any
exemption from the registration requirements of the
Securities Act (other than exemptions pursuant to Rule
144A or Rule 144 under the Securities Act) in which the
Holder or the transferee provides an Opinion of Counsel
to the Company and the Registrar in form and substance
reasonably acceptable to the Company and the Registrar
(which Opinion of Counsel shall also state that the
transfer restrictions contained in the legend are no
longer applicable):
(A) in the case of any Transfer Restricted Security that
is a Certificated Note, the Registrar shall permit
the Holder thereof to exchange such Transfer
Restricted Security for a Certificated Note that
does not bear the legend set forth in (i) above and
rescind any restriction on the transfer of such
Transfer Restricted Security; and
(B) in the case of any Transfer Restricted Security
represented by a Global Note, such Transfer
Restricted Security shall not be required to bear
the legend set forth in (i) above, but shall
continue to be subject to the provisions of Section
2.06(a) and (b) hereof.
(iv) Notwithstanding the foregoing, upon consummation 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 hereof, the Trustee shall authenticate
Series B Senior Subordinated Discount Notes in exchange
for Series A Senior Subordinated Discount Notes accepted
for exchange in the Exchange Offer, which Series B
Senior Subordinated Discount Notes shall not bear the
legend set forth in (i) above, and the Registrar shall
rescind any restriction on the transfer of such Series B
Senior Subordinated Discount Notes, in each case unless
the Holder of such Series A Senior Subordinated Discount
Notes is either (A) a broker-dealer, (B) a Person
participating in the distribution of the Series A Senior
Subordinated Discount Notes or (C) a Person who is an
affiliate (as defined in Rule 144A) of the Company.
(h) Cancellation and/or Adjustment of Global Notes. At such time as
all beneficial interests in Global Notes have been exchanged for Certificated
Notes, redeemed, repurchased or cancelled, all Global Notes 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 an interest in another Global Note or for Certificated
Notes, redeemed, repurchased or cancelled, the principal amount of Senior
Subordinated Discount Notes represented by such Global Note shall be reduced
accordingly and an endorsement shall be made on such Global Note, by the Trustee
or the Note Custodian, at the direction of the Trustee, to reflect such
reduction.
(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
Certificated Notes and Global Notes at the Registrar's
request.
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(ii) No service charge shall be made to a Holder 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 3.07, 3.09, 4.10, 4.13 and 9.05
hereof).
(iii) The Registrar shall not be required to register the transfer
of or exchange any Senior Subordinated Discount Note
selected for redemption in whole or in part, except the
unredeemed portion of any Senior Subordinated Discount Note
being redeemed in part.
(iv) All Certificated Notes and Global Notes issued upon any
registration of transfer or exchange of Certificated Notes
or Global Notes shall be the valid obligations of the
Company, evidencing the same debt, and entitled to the same
benefits under this Indenture, as the Certificated Notes or
Global 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
Senior Subordinated Discount Notes during a period
beginning at the opening of business 15 days before the
day of any selection of Senior Subordinated Discount
Notes for redemption under Section 3.02 hereof and
ending at the close of business on the day of selection;
or
(B) to register the transfer of or to exchange any Senior
Subordinated Discount Note so selected for redemption in
whole or in part, except the unredeemed portion of any
Senior Subordinated Discount Note being redeemed in
part; or
(C) to register the transfer of or to exchange a Senior
Subordinated Discount 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 Senior Subordinated Discount Note, the Trustee, any
Agent and the Company may deem and treat the Person in whose
name any Senior Subordinated Discount Note is registered as
the absolute owner of such Senior Subordinated Discount Note
for the purpose of receiving payment of principal of and
interest on such Senior Subordinated Discount Notes, and
neither the Trustee, any Agent nor the Company shall be
affected by notice to the contrary.
(vii) The Trustee shall authenticate Certificated Notes and Global
Notes in accordance with the provisions of Section 2.02
hereof.
SECTION 2.07. REPLACEMENT SENIOR SUBORDINATED DISCOUNT NOTES.
If any mutilated Senior Subordinated Discount Note is surrendered to
the Trustee, or the Company and the Trustee receive evidence to their
satisfaction of the destruction, loss or theft of any Senior Subordinated
Discount Note, the Company shall issue and the Trustee shall authenticate a
replacement Senior Subordinated Discount Note if the conditions for replacement
set forth herein have been 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
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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
Senior Subordinated Discount Note is replaced. The Company and the Trustee may
charge for their expenses in replacing a Senior Subordinated Discount Note.
Every replacement Senior Subordinated Discount 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 Senior Subordinated
Discount Notes duly issued hereunder.
SECTION 2.08. OUTSTANDING SENIOR SUBORDINATED DISCOUNT NOTES.
The Senior Subordinated Discount Notes outstanding at any time are all
the Senior Subordinated Discount 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 Senior Subordinated Discount Note
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Senior Subordinated Discount Note.
If a Senior Subordinated Discount 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 Senior Subordinated Discount Note is held
by a bona fide purchaser.
If the principal amount of any Senior Subordinated Discount Note is
considered paid under Section 4.01 hereof, it ceases to be outstanding and
interest on it ceases to accrete or accrue.
If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Senior Subordinated Discount Notes payable on that date, then
on and after that date such Senior Subordinated Discount Notes shall be deemed
to be no longer outstanding and shall cease to accrete or accrue interest.
SECTION 2.09. TREASURY SENIOR SUBORDINATED DISCOUNT NOTES.
In determining whether the Holders of the required principal amount of
Senior Subordinated Discount Notes have concurred in any direction, waiver or
consent, Senior Subordinated Discount Notes owned by the Company, any Guarantor,
or by any Person directly or indirectly controlling or controlled by or under
direct or indirect common control with the Company or any Guarantor (other than
Senior Subordinated Discount Notes held by Goldman, Sachs & Co.), shall be
considered as though not outstanding, except that for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Senior Subordinated Discount Notes shown on
the Trustee's register as being so owned shall be so disregarded.
SECTION 2.10. TEMPORARY SENIOR SUBORDINATED DISCOUNT NOTES.
Until Certificated Notes are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Senior Subordinated
Discount Notes upon a written order of the Company signed by two Officers of the
Company. Temporary Senior Subordinated Discount Notes shall be substantially in
the form of Certificated Notes but may have variations that the Company
considers appropriate for temporary Senior Subordinated Discount Notes and as
shall be reasonably acceptable to the Trustee. Without unreasonable
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delay, the Company shall prepare and the Trustee shall authenticate Certificated
Notes in exchange for temporary Senior Subordinated Discount Notes.
Holders of temporary Senior Subordinated Discount Notes shall be
entitled to all of the benefits of this Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Senior Subordinated Discount Notes
to the Trustee for cancellation. The Registrar and Paying Agent shall forward to
the Trustee any Senior Subordinated Discount Notes surrendered to them for
registration of transfer, exchange or payment. The Trustee and no one else shall
cancel all Senior Subordinated Discount Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall retain or
destroy, in accordance with its normal practice, cancelled Senior Subordinated
Discount Notes (subject to the record retention requirement of the Exchange
Act). If such Senior Subordinated Discount Notes are destroyed, certification of
the destruction of all cancelled Senior Subordinated Discount Notes shall be
delivered to the Company. The Company may not issue new Senior Subordinated
Discount Notes to replace Senior Subordinated Discount 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 Senior
Subordinated Discount 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 Senior Subordinated Discount 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 Senior Subordinated Discount 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.
ARTICLE 3
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Senior Subordinated Discount Notes
pursuant to the optional redemption provisions of Section 3.07 hereof, it shall
furnish to the Trustee, at least 30 days (or at least 45 days if the Company
requests the Trustee to give notice to the Holders pursuant to Section 3.03
hereof) 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
Senior Subordinated Discount Notes to be redeemed and (iv) the redemption price.
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SECTION 3.02. SELECTION OF SENIOR SUBORDINATED DISCOUNT NOTES TO BE REDEEMED.
If less than all of the Senior Subordinated Discount Notes are to be
redeemed at any time, selection of the Senior Subordinated Discount Notes for
redemption shall be made by the Trustee in compliance with the requirements of
the principal national securities exchange, if any, on which the Senior
Subordinated Discount Notes are listed or, if the Senior Subordinated Discount
Notes are not so listed, on a pro rata basis, by lot or by such method as the
Trustee shall deem fair and appropriate; provided that, subject to the
limitations described above, the Company may, at its option, elect to redeem
either Senior Subordinated Discount Notes, Senior Subordinated Notes, or both
Senior Subordinated Discount Notes and Senior Subordinated Notes; and provided
further, that no Senior Subordinated Discount Notes of $1,000 or less shall be
redeemed in part. In the event of partial redemption by lot, the particular
Senior Subordinated Discount 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 Senior Subordinated Discount
Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of the Senior
Subordinated Discount Notes selected for redemption and, in the case of any
Senior Subordinated Discount Note selected for partial redemption, the principal
amount thereof to be redeemed. Senior Subordinated Discount Notes and portions
of Senior Subordinated Discount Notes selected shall be in amounts of $1,000 or
whole multiples of $1,000; except that if all of the Senior Subordinated
Discount Notes of a Holder are to be redeemed, the entire outstanding amount of
Senior Subordinated Discount Notes held by such Holder, even if not a multiple
of $1,000, shall be redeemed. If any Senior Subordinated Discount Note is to be
redeemed in part only, a new Senior Subordinated Discount 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 Senior Subordinated Discount
Note. On and after the redemption date, unless the Company defaults in payment
of the redemption price, interest ceases to accrete or accrue on Senior
Subordinated Discount Notes or portions of them called for redemption. Except as
provided in this Section 3.02, provisions of this Indenture that apply to Senior
Subordinated Discount Notes called for redemption also apply to portions of
Senior Subordinated Discount Notes called for redemption.
SECTION 3.03. NOTICE OF REDEMPTION.
Subject to the provisions of Section 3.10 hereof, 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 of
Senior Subordinated Discount Notes to be redeemed at such Holder's registered
address.
The notice shall identify the Senior Subordinated Discount Notes to be
redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Senior Subordinated Discount Note is being redeemed in
part, the portion of the principal amount of such Senior Subordinated
Discount Note to be redeemed and that, after the redemption date upon
surrender of such Senior Subordinated Discount Note, a new Senior
Subordinated Discount Note or Senior Subordinated Discount Notes in
principal amount equal to the unredeemed portion shall be issued upon
cancellation of the original Senior Subordinated Discount Note;
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<PAGE> 36
(d) the name and address of the Paying Agent or the place or places
where such Senior Subordinated Discount Notes are to be surrendered for
payment;
(e) that Senior Subordinated Discount 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 Senior Subordinated Discount Notes called for
redemption ceases to accrete or accrue on and after the redemption date;
(g) the paragraph of the Senior Subordinated Discount Notes and/or
Section of this Indenture pursuant to which the Senior Subordinated
Discount 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 Senior
Subordinated Discount 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, Senior Subordinated Discount 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.
At least one Business Day prior to the redemption date, the Company
shall deposit with the Trustee or with the Paying Agent money sufficient to pay
the redemption price of and accrued interest on all Senior Subordinated Discount
Notes to be redeemed on that date. The Trustee or the Paying Agent shall
promptly return to the 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 Senior Subordinated Discount
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 accrete or
accrue on the Senior Subordinated Discount Notes or the portions of Senior
Subordinated Discount Notes called for redemption. If a Senior Subordinated
Discount 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 Senior Subordinated Discount Note was
registered at the close of business on such record date. If any Senior
Subordinated Discount 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 Senior Subordinated Discount Notes and in Section 4.01 hereof.
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SECTION 3.06. SENIOR SUBORDINATED DISCOUNT NOTES REDEEMED IN PART.
Upon surrender of a Senior Subordinated Discount Note that is redeemed
in part, the Company shall issue and the Trustee shall authenticate for the
Holder at the expense of the Company a new Senior Subordinated Discount Note
equal in principal amount to the unredeemed portion of the Senior Subordinated
Discount Note surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
(a) Except as set forth in clause (b) of this Section 3.07, the
Company shall not have the option to redeem the Senior Subordinated Discount
Notes pursuant to this Section 3.07 prior to March 15, 2001. From and after
March 15, 2001, the Company shall have the option to redeem the Senior
Subordinated Discount Notes, in whole or in part, upon not less than 30 nor more
than 60 days' written notice at the Senior Subordinated Discount Note redemption
prices (expressed as percentages of principal amount) set forth below, plus
accrued and unpaid interest (including Liquidated Damages, if any) thereon to
the applicable redemption date, if redeemed during the twelve-month period
beginning on March 15 of each of the years indicated below:
<TABLE>
<CAPTION>
Percentage of
Year Principal Amount
---- ----------------
<S> <C>
2001......................................... 106.125%
2002......................................... 104.083%
2003......................................... 102.042%
2004 and thereafter.......................... 100.000%
</TABLE>
(b) Notwithstanding the provisions of clause (a) of this Section 3.07,
at any time prior to March 15, 1999, the Company may, at its option, on any one
or more occasions, redeem Senior Subordinated Discount Notes at a redemption
price equal to 112.250% of the Accreted Value thereof, plus accrued and unpaid
Liquidated Damages, if any, with the net proceeds of public or private sales of
common stock of, or contributions to the common equity capital of, the Company;
provided that at least $150.0 million in aggregate Accreted Value of Senior
Subordinated Discount Notes remains outstanding immediately after the occurrence
of such redemption; and provided, further, that such redemption shall occur
within 60 days of the date of the closing of the related sale of common stock
of, or capital contribution to, the Company.
(c) Any redemption pursuant to this Section 3.07 shall be made
pursuant to the provisions of Sections 3.01 through 3.06 hereof.
SECTION 3.08. MANDATORY REDEMPTION.
Except as set forth under Sections 3.09, 4.10 and 4.13 hereof, the
Company shall not be required to make mandatory redemption or sinking fund
payments with respect to the Senior Subordinated Discount Notes.
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<PAGE> 38
SECTION 3.09. SPECIAL MANDATORY REDEMPTION.
(a) The Escrow Funds, in the amount of the net proceeds of the
Offering, together with $50.0 million of equity contributions from the Sponsors
and one-half of the deposit, if any, from the Sellers, shall be held by the
Trustee in the Escrow Account pursuant to the Senior Subordinated Discount Note
Pledge and Escrow Agreement. The Escrow Funds shall be invested in Cash
Equivalents, as directed from time to time by the Company.
(b) In addition to any payments required by Sections 4.10 and 4.13
hereof, if consummation of the Acquisition has not occurred on or prior to May
31, 1996, the Company shall redeem all of the outstanding Senior Subordinated
Discount Notes upon seven days' prior written notice to the Holders with the
Escrow Funds delivered to the Paying Agent pursuant to the terms of the Senior
Subordinated Discount Note Pledge and Escrow Agreement, at a redemption price
equal to the Special Redemption Price, including Liquidated Damages, if any, as
of the date of redemption. Such redemption may be made prior to May 31, 1996, in
accordance with the provisions described in this Section 3.09 if the Company
determines at such time that it will not consummate the Acquisition.
(c) Immediately upon receipt by the Paying Agent of the Escrow Funds,
the Trustee shall set a date for redemption of all of the Senior Subordinated
Discount Notes, which date shall not be more than 7 days from the receipt of
such Escrow Funds by the Paying Agent. Once a date for any such redemption has
been publicly announced, it shall not be changed. The Trustee shall promptly
notify the Holders of the date fixed for any redemption pursuant to this Section
3.09.
(d) "Special Redemption Price" means, with respect to any Senior
Subordinated Discount Note as of any date of redemption with respect thereto, an
amount equal to (x) 101% of the Accreted Value thereof if such date is prior to
April 18, 1996, (y) 102.5% of the Accreted Value thereof if such date is on or
after May 31, 1996, and (z) on any date that is on or after April 18, 1996, and
prior to May 31, 1996, a percentage of the Accreted Value thereof determined by
linear interpolation between 101% and 102.5% based on the number of days elapsed
since April 18, 1996, in the 43-day period between April 18, 1996, and May 31,
1996, including April 18, 1996, as the first day in such period.
(e) Other than as specifically provided in this Section 3.09, any
redemption pursuant to this Section 3.09 shall be made pursuant to the
provisions of Section 3.01 through 3.06 hereof.
SECTION 3.10. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.
In the event that, pursuant to Section 4.10 hereof, the Company shall
be required to commence an offer to all Holders of Senior Subordinated Discount
Notes to purchase Senior Subordinated Discount Notes (an "Asset Sale Offer"), it
shall follow the procedures specified below.
The Asset Sale Offer shall remain open for a period of 20 Business
Days following its commencement and no longer, except to the extent that a
longer period is required by applicable law (the "Offer Period"). No later than
five Business Days after the termination of the Offer Period (the "Purchase
Date"), the Company shall purchase the principal amount of Senior Subordinated
Discount Notes required to be purchased pursuant to Section 4.10 hereof (the
"Offer Amount") or, if less than the Offer Amount has been tendered, all Senior
Subordinated Discount Notes tendered in response to the Asset Sale Offer.
Payment for any Senior Subordinated Discount Notes so purchased shall be made in
the same manner as interest payments are made.
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<PAGE> 39
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest shall
be paid to the Person in whose name a Senior Subordinated Discount Note is
registered at the close of business on such record date, and no additional
interest shall be payable to Holders who tender Senior Subordinated Discount
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, with a
copy to the Depositary. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Senior Subordinated Discount Notes
pursuant to the Asset Sale Offer. The procedures for commencing an Asset Sale
Offer to Holders of Senior Subordinated Notes shall be governed by the terms of
the Senior Subordinated Note Indenture. 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 Section
3.10 and Section 4.10 hereof and the length of time the Asset Sale Offer
shall remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Senior Subordinated Discount Note not tendered or
accepted for payment shall continue to accrete or accrue interest;
(d) that, unless the Company defaults in making such payment, any
Senior Subordinated Discount Note accepted for payment pursuant to the Asset
Sale Offer shall cease to accrete or accrue interest on and after the
Purchase Date;
(e) that Holders electing to have a Senior Subordinated Discount Note
purchased pursuant to an Asset Sale Offer may only elect to have all of such
Senior Subordinated Discount Note purchased and may not elect to have only a
portion of such Senior Subordinated Discount Note purchased;
(f) that Holders electing to have a Senior Subordinated Discount Note
purchased pursuant to any Asset Sale Offer shall be required to surrender
the Senior Subordinated Discount Note, with the form entitled "Option of
Holder to Elect Purchase" on the reverse of the Senior Subordinated Discount
Note completed, or transfer by book-entry transfer, to the Company, a
depository, if appointed by the Company, or a Paying Agent at the address
specified in the notice at least three days before the Purchase Date;
(g) 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 Senior Subordinated Discount Note the Holder
delivered for purchase and a statement that such Holder is withdrawing his
election to have such Senior Subordinated Discount Note purchased;
(h) that, if the aggregate principal amount of Senior Subordinated
Discount Notes (or, if prior to the Full Accretion Date, the Accreted Value
thereof), together with the aggregate principal amount of Senior
Subordinated Notes, surrendered by Holders exceeds the Offer Amount, the
Company shall select the Notes to be purchased on a pro rata basis (with
such adjustments as may be deemed appropriate by the Company so that only
Notes in denominations of $1,000, or integral multiples thereof, shall be
purchased); and
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<PAGE> 40
(i) that Holders whose Senior Subordinated Discount Notes were
purchased only in part shall be issued new Senior Subordinated Discount
Notes equal in principal amount to the unpurchased portion of the Senior
Subordinated Discount Notes surrendered (or transferred by book-entry
transfer).
On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, the
Offer Amount of Senior Subordinated Discount Notes or portions thereof tendered
pursuant to the Asset Sale Offer, or if less than the Offer Amount has been
tendered, all Senior Subordinated Discount Notes tendered, and shall deliver to
the Trustee an Officers' Certificate stating that such Senior Subordinated
Discount Notes or portions thereof were accepted for payment by the Company in
accordance with the terms of this Section 3.10. The Company, the Depositary or
the Paying Agent, as the case may be, shall promptly (but in any case not later
than five days after the Purchase Date) mail or deliver to each tendering Holder
an amount equal to the purchase price of the Senior Subordinated Discount Notes
tendered by such Holder and accepted by the Company for purchase, and the
Company shall promptly issue a new Senior Subordinated Discount Note, and the
Trustee, upon receipt of an Authentication Order, shall authenticate and mail or
deliver such new Senior Subordinated Discount Note to such Holder, in a
principal amount equal to any unpurchased portion of the Senior Subordinated
Discount Note surrendered. Any Senior Subordinated Discount Note not so accepted
shall be promptly mailed or delivered by the Company to the Holder thereof. The
Company shall publicly announce the results of the Asset Sale Offer on the
Purchase Date.
Other than as specifically provided in this Section 3.10, any purchase
pursuant to this Section 3.10 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof.
ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF SENIOR SUBORDINATED DISCOUNT NOTES.
The Company shall pay or cause to be paid the principal of, premium,
if any, and interest on the Senior Subordinated Discount Notes on the dates and
in the manner provided in the Senior Subordinated Discount 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
10:00 a.m. Eastern Time on the due date (or, if required by the Depositary, such
earlier time to allow the Trustee to make timely payment to the Depositary)
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. The
Company shall pay all Liquidated Damages, if any, in immediately available funds
in the same manner on the dates and in the amounts set forth in the Registration
Rights Agreement.
The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the rate equal
to 1% per annum in excess of the then applicable interest rate on the Senior
Subordinated Discount Notes to the extent lawful; it shall pay interest
(including post-petition 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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<PAGE> 41
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, the City of
New York, an office or agency (which may be an office of the Trustee or an
Affiliate of the Trustee, Registrar or co-registrar) where Senior Subordinated
Discount 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 Senior
Subordinated Discount 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 of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Senior Subordinated Discount Notes may be
presented or surrendered for any or all such purposes and may from time to time
rescind such designations; provided, however, that no such designation or
rescission shall in any manner relieve the Company of its obligation to maintain
an office or agency in the Borough of Manhattan, the City of New York for such
purposes. 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 of the
Trustee as one such office or agency of the Company in accordance with Section
2.03.
SECTION 4.03. REPORTS.
(a) Whether or not required by the rules and regulations of the SEC,
so long as any Senior Subordinated Discount Notes are outstanding, the Company
shall, commencing after consummation of the Acquisition, furnish to the Holders
of Senior Subordinated Discount Notes as of the same dates and for the same
periods as would be required pursuant to the Exchange Act if the Company were
subject to the Exchange Act (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. In addition, whether or not required by the rules
and regulations of the SEC, following the consummation of the Acquisition, the
Company shall 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. The Company shall at all times comply with TIA Section 314(a).
(b) For so long as any Senior Subordinated Discount Notes remain
outstanding, the Company and the Guarantors shall furnish to the Holders of the
Senior Subordinated Discount Notes 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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<PAGE> 42
SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) The Company shall deliver to the Trustee, within 90 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 has kept, observed, performed and fulfilled its
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
has kept, observed, performed and fulfilled each and every covenant contained in
this Indenture and is 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, 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, Liquidated Damages or interest, if any,
on the Senior Subordinated Discount 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) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article 4 or Article 5 hereof or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Senior Subordinated
Discount Notes are outstanding, deliver to the Trustee, forthwith upon 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 is not adverse in any material
respect to the Holders of the Senior Subordinated Discount Notes.
Section 4.06. STAY, EXTENSION AND USURY LAWS.
Each of the Company and the Guarantors 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 each of
the Company and the Guarantors (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 Trustee, but shall suffer and permit the
execution of every such power as though no such law has been enacted.
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<PAGE> 43
SECTION 4.07. RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make
any other payment or distribution on account of the Company's or any of its
Restricted Subsidiaries' 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 any Restricted Subsidiary
of the Company); (ii) purchase, redeem, defease or otherwise acquire or retire
for value any Equity Interests of the Company or any direct or indirect parent
of the Company; (iii) make any principal payment on, or purchase, redeem,
defease or otherwise acquire or retire for value any Subordinated Indebtedness,
except at final maturity; or (iv) make any Restricted Investment (all such
payments and other actions set forth in clauses (i) through (iv) above 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 shall have occurred and be
continuing or would occur as a consequence thereof;
(b) the Company would, at the time of such Restricted Payment and
immediately 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 4.09 hereof; and
(c) such Restricted Payment, together with the aggregate of all other
Restricted Payments made by the Company and its Restricted Subsidiaries
after the date of this Indenture (including Restricted Payments permitted by
clause (i) of the next succeeding paragraph, but excluding all other
Restricted Payments permitted by the next succeeding paragraph), is less
than the sum of (i) 50% of the Consolidated Net Income of the Company for
the period (taken as one accounting period) from the beginning of the first
fiscal quarter commencing after the date of this Indenture 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 (ii) 100% of the aggregate net cash proceeds and the fair
market value, as determined in good faith by the Board of Directors, of
marketable securities received by the Company from the issue or sale since
the date of this Indenture of Equity Interests (including Retired Capital
Stock (as defined below)) of the Company (except in connection with the
Acquisition) or of debt securities of the Company that have been converted
into such Equity Interests (other than Refunding Capital Stock (as defined
below) or Equity Interests or convertible debt securities of the Company
sold to a Restricted Subsidiary of the Company and other than Disqualified
Stock or debt securities that have been converted into Disqualified Stock),
plus (iii) 100% of the aggregate amounts contributed to the common equity
capital of the Company since the date of this Indenture (except amounts
contributed to finance the Acquisition), plus (iv) 100% of the aggregate
amounts received in cash and the fair market value of marketable securities
(other than Restricted Investments) received from (x) the sale or other
disposition of Restricted Investments made by the Company and its Restricted
Subsidiaries since the date of this Indenture or (y) the sale of the stock
of an Unrestricted Subsidiary or the sale of all or substantially all of the
assets of an Unrestricted Subsidiary to the extent that a liquidating
dividend is paid to the Company or any Wholly-Owned Restricted Subsidiary
from the proceeds of such sale, plus (v) 100% of any dividends received by
the Company or a Wholly Owned Restricted Subsidiary of the Company after the
date of this Indenture from an Unrestricted Subsidiary of the Company, plus
(vi) $10.0 million.
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<PAGE> 44
The foregoing provisions shall not prohibit:
(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at the date of declaration such payment would have
complied with the provisions of this Indenture;
(ii) the redemption, repurchase, retirement or other acquisition of
any Equity Interests of the Company or any Restricted Subsidiary (the
"Retired Capital Stock") or any Subordinated Indebtedness, in each case, in
exchange for, or out of the proceeds of, the substantially concurrent sale
(other than to a Restricted Subsidiary of the Company) of Equity Interests
of the Company (other than any Disqualified Stock) (the "Refunding Capital
Stock"); provided that the amount of any such net cash proceeds that are
utilized for any such redemption, repurchase, retirement or other
acquisition shall be excluded from clause (c)(ii) of the immediately
preceding paragraph;
(iii) the defeasance, redemption or repurchase of Subordinated
Indebtedness with the net cash proceeds from an incurrence of Permitted
Refinancing Indebtedness;
(iv) the redemption, repurchase or other acquisition or retirement for
value of any Equity Interests of the Company or any Restricted Subsidiary of
the Company held by any member of the Company's (or any of its Restricted
Subsidiaries') management pursuant to any management equity subscription
agreement or stock option or similar agreement; provided that the aggregate
price paid for all such repurchased, redeemed, acquired or retired Equity
Interests shall not exceed the sum of $5.0 million in any twelve-month
period plus the aggregate cash proceeds received by the Company during such
twelve-month period from any issuance of Equity Interests by the Company to
members of management of the Company and its Restricted Subsidiaries;
provided that the amount of any such net cash proceeds that are utilized for
any such redemption, repurchase, retirement or other acquisition shall be
excluded from clause (c)(ii) of the immediately preceding paragraph;
(v) Investments in Unrestricted Subsidiaries or Joint Ventures having
an aggregate fair market value, taken together with all other Investments
made pursuant to this clause (v) that are at that time outstanding, not to
exceed 5% of Total Assets at the time of such Investment (with the fair
market value of each Investment being measured at the time made and without
giving effect to subsequent changes in value);
(vi) repurchases of Equity Interests deemed to occur upon exercise or
conversion of stock options, warrants, convertible securities or other
Equity Interests if such Equity Interests represent a portion of the
exercise or conversion price of such options, warrants, convertible
securities or other similar Equity Interests;
(vii) the making and consummation of a Subordinated Asset Sale Offer
in accordance with the provisions of Section 4.10 hereof; and
(viii) any dividend or distribution payable on or in respect of any
class of Equity Interests issued by a Restricted Subsidiary of the Company;
provided that such dividend or distribution is paid on a pro rata basis to
all of the holders of such Equity Interests in accordance with their
respective holdings of such Equity Interests;
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provided, further, that at the time of, and after giving effect to,
any Restricted Payment permitted under clauses (iv) or (v) above, no Default or
Event of Default shall have occurred and be continuing or would occur as a
consequence thereof.
As of the date of this Indenture, all of the Company's Subsidiaries
shall be Restricted Subsidiaries. The Company shall not permit any Unrestricted
Subsidiary to become a Restricted Subsidiary except pursuant to the last
sentence of the definition of Unrestricted Subsidiary in Section 1.01 hereof.
For purposes of designating any Restricted Subsidiary as an Unrestricted
Subsidiary, all outstanding Investments by the Company and its Restricted
Subsidiaries (except to the extent repaid) in the Subsidiary so designated shall
be deemed to be Restricted Payments in an amount equal to the book value of such
Investment at the time of such designation. Such designation shall only be
permitted if a Restricted Payment in such amount would be permitted at such time
and if such Subsidiary otherwise meets the definition of an Unrestricted
Subsidiary. Unrestricted Subsidiaries shall not be subject to any of the
restrictive covenants set forth in this Article 4.
The amount of all Restricted Payments (other than cash) shall be the
fair market value (evidenced by a resolution of the Board of Directors set forth
in an Officers' Certificate delivered to the Trustee) on the date of the
Restricted Payment of the asset(s) proposed to be transferred by the Company or
such Restricted Subsidiary, as the case may be, pursuant to the Restricted
Payment. Not later than the date of making any Restricted Payment, 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 4.07 were computed, which calculations may
be based upon the Company's latest available financial statements.
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES.
The Company shall not, and shall not permit any of its Restricted
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
Restricted Subsidiary to (i)(a) pay dividends or make any other distributions to
the Company or any of its Restricted 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
Restricted Subsidiaries, (ii) make loans or advances to the Company or any of
its Restricted Subsidiaries or (iii) sell, lease or transfer any of its
properties or assets to the Company or any of its Restricted Subsidiaries,
except for such encumbrances or restrictions existing under or by reason of (a)
Existing Indebtedness as in effect on the date of this Indenture, (b) the New
Bank Credit Agreement and any amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings thereof,
provided that the New Bank Credit Agreement and any amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacement or
refinancings thereof are no more restrictive taken as a whole with respect to
such dividend and other payment restrictions than those terms described in
Exhibit F hereto, (c) this Indenture and the Senior Subordinated Discount Notes,
(d) the Senior Subordinated Note Indenture and the Senior Subordinated Notes,
(e) applicable law, (f) any instrument governing Indebtedness or Capital Stock
of a Person acquired by the Company or any of its Restricted Subsidiaries as in
effect at the time of such acquisition (except to the extent such 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, provided that, in the case of Indebtedness, such
Indebtedness was permitted by the terms of this Indenture to be incurred, (g) by
reason of customary non-assignment or net worth provisions in leases and other
agreements entered into in the ordinary course of business and consistent with
past practices, (h) purchase money obligations
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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, (i) 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, (j) other Indebtedness permitted to be incurred
subsequent to the date of this Indenture pursuant to the provisions of Section
4.09 hereof; provided that any such restrictions are customary with respect to
the type of Indebtedness being incurred (under the relevant circumstances), (k)
any Mortgage Financing or Mortgage Refinancing that imposes restrictions on the
real property securing such Indebtedness, (l) any Permitted Investment, (m)
contracts for the sale of assets, including, without limitation, customary
restrictions with respect to a Restricted Subsidiary of the Company pursuant to
an agreement that has been entered into for the sale or disposition of all or
substantially all of the Capital Stock or assets of such Restricted Subsidiary
or (n) customary provisions in joint venture agreements and other similar
agreements.
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED STOCK.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create, incur, issue, assume, guaranty or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "incur" and correlatively, an "incurrence" of) any Indebtedness
(including Acquired Debt) and the Company shall not issue any Disqualified
Stock; provided, however, that the Company may incur Indebtedness (including
Acquired Debt) or issue shares of Disqualified Stock if the Fixed Charge
Coverage Ratio for the Company for the most recently ended four full fiscal
quarters for which internal financial statements are available immediately
preceding the date of such incurrence would have been at least 2.00 to 1.0 if
such date is on or prior to September 15, 1997, 2.25 to 1.0 if such date is
after September 15, 1997 and on or prior to March 15, 1999 and 2.50 to 1.0
thereafter, in each case, 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, as the case may be,
and the application of the proceeds therefrom had occurred at the beginning of
such four-quarter period.
The foregoing provisions shall not apply to:
(a) the incurrence by the Company (and the Guarantee thereof by the
Guarantors) of (i) Indebtedness under the New Bank Credit Agreement and the
issuance of letters of credit thereunder (with letters of credit being
deemed to have a principal amount equal to the aggregate maximum amount then
available to be drawn thereunder, assuming compliance with all conditions
for drawing) up to an aggregate principal amount of $715.0 million
outstanding at any one time, less principal repayments of term loans and
permanent commitment reductions with respect to revolving loans and letters
of credit under the New Bank Credit Agreement made after the date of this
Indenture and (ii) additional Indebtedness under the New Bank Credit
Agreement and the issuance of additional letters of credit thereunder (with
letters of credit being deemed to have a principal amount equal to the
aggregate maximum amount then available to be drawn thereunder, assuming
compliance with all conditions for drawing) up to an aggregate principal
amount of $75.0 million outstanding at any one time (reduced by the
aggregate principal amount (or accreted value, as applicable) of
Indebtedness outstanding pursuant to clause (l) of this Section 4.09);
(b) the incurrence by the Company or any of its Restricted
Subsidiaries of any Existing Indebtedness;
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(c) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by the Senior Subordinated Discount
Notes or the Senior Subordinated Notes;
(d) Indebtedness (including Capital Lease Obligations) incurred by the
Company or any of its Restricted Subsidiaries to finance the purchase, lease
or improvement of property (real or personal), assets or equipment (whether
through the direct purchase of assets or the Capital Stock of any Person
owning such assets), in an aggregate principal amount not to exceed 5% of
Total Assets at any time outstanding;
(e) Indebtedness incurred by the Company or any of its Restricted
Subsidiaries constituting reimbursement obligations with respect to letters
of credit issued in the ordinary course of business, including, without
limitation, letters of credit in respect of workers' compensation claims or
self-insurance, or other Indebtedness with respect to reimbursement type
obligations regarding workers' compensation claims;
(f) intercompany Indebtedness between or among the Company and any of
its Restricted Subsidiaries and Guarantees by a Restricted Subsidiary of the
Company of Indebtedness of any other Restricted Subsidiary of the Company or
the Company;
(g) Hedging Obligations that are incurred (1) for the purpose of
fixing or hedging interest rate risk with respect to any Indebtedness that
is permitted by the terms of this Indenture to be outstanding or (2) for the
purpose of fixing or hedging currency exchange rate risk with respect to any
currency exchanges;
(h) obligations in respect of performance and surety bonds and
completion guarantees provided by the Company or any Restricted Subsidiary
in the ordinary course of business;
(i) the incurrence by the Company or any of the Guarantors of
Indebtedness in connection with the acquisition of assets or a new
Restricted Subsidiary; provided that such Indebtedness was incurred by the
prior owner of such assets or such new Restricted Subsidiary prior to such
acquisition by the Company or such Restricted Subsidiary and was not
incurred in connection with, or in contemplation of, such acquisition; and
provided further that the Fixed Charge Coverage Ratio for the Company for
the most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date of such
transaction would have been at least 2.00 to 1.0 if such date is on or prior
to September 15, 1997, 2.25 to 1.0 if such date is after September 15, 1997
and on or prior to March 15, 1999 and 2.50 to 1.0 thereafter, in each case,
determined on a pro forma basis, as if such transaction had occurred at the
beginning of such four-quarter period and such Indebtedness or Disqualified
Stock and the Consolidated Cash Flow of such merged or acquired Person had
been included for all purposes in such pro forma calculation;
(j) the incurrence by the Company or any of its Restricted
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;
(k) the incurrence by the Company's Unrestricted Subsidiaries of
Non-Recourse Debt, provided, however, that if any such Indebtedness ceases
to be Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be
deemed to constitute an incurrence of Indebtedness by a Restricted
Subsidiary of the Company; and
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(l) the incurrence by the Company of additional Indebtedness not
otherwise permitted hereunder in an amount under this clause (l) not to
exceed $75.0 million in aggregate principal amount (or accreted value, as
applicable) outstanding at any one time (reduced by the aggregate principal
amount of Indebtedness outstanding pursuant to clause (a)(ii) above).
SECTION 4.10. ASSET SALES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, cause, make or suffer to exist an Asset Sale unless (i) the
Company (or the Restricted Subsidiary, as the case may be) receives
consideration at the time of such Asset Sale at least equal to the fair market
value (evidenced by a resolution of the Board of Directors set forth in an
Officers' Certificate delivered to the Trustee) of the assets or Equity
Interests issued or sold or otherwise disposed of and (ii) except in the case of
a Permitted Asset Swap, at least 80% of the consideration therefor received by
the Company or such Restricted 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 Restricted Subsidiary's most recent balance sheet) of the
Company or any Restricted Subsidiary (other than contingent liabilities and
liabilities that are by their terms subordinated to the Senior Subordinated
Discount Notes or any guarantee thereof) that are assumed by the transferee of
any such assets pursuant to a customary novation agreement that releases the
Company or such Restricted Subsidiary from further liability and (y) any notes
or other obligations received by the Company or any such Restricted Subsidiary
from such transferee that are immediately converted by the Company or such
Restricted Subsidiary into cash (to the extent of the cash received), shall be
deemed to be cash for purposes of this provision.
Within 365 days after the Company's or any Restricted Subsidiary's
receipt of the Net Proceeds of any Asset Sale, the Company or such Restricted
Subsidiary may apply the Net Proceeds from such Asset Sale, at its option, (i)
to permanently reduce Obligations under the New Bank Credit Agreement (and to
correspondingly reduce commitments with respect thereto) or other Senior Debt or
Pari Passu Indebtedness, (ii) to secure Letter of Credit Obligations to the
extent related letters of credit have not been drawn upon or returned undrawn,
(iii) to an investment in any one or more businesses, capital expenditures or
acquisitions of other assets, in each case, used or useful in a Principal
Business, (iv) to an investment in properties or assets that replace the
properties and assets that are the subject of such Asset Sale and/or (v) in the
case of a sale of a bowling center or bowling centers, deem such Net Proceeds to
have been applied pursuant to the immediately preceding clause (iv) to the
extent of any expenditures made to acquire or construct one or more bowling
centers in the general vicinity of the bowling center(s) sold within 365 days
preceding the date of the Asset Sale. Pending the final application of any such
Net Proceeds, the Company or such Restricted Subsidiary may temporarily reduce
Indebtedness under a revolving credit facility, if any, or otherwise invest such
Net Proceeds in Cash Equivalents. Any Net Proceeds from the Asset Sale that are
not invested as provided and within the time period set forth in the first
sentence of this paragraph shall be deemed to constitute "Excess Proceeds." When
the aggregate amount of Excess Proceeds exceeds $25.0 million, the Company shall
make an Asset Sale Offer to all Holders of Notes to purchase the maximum
principal amount of Notes, that is an integral multiple of $1,000, that may be
purchased out of the Excess Proceeds at a purchase price in cash in an amount
equal to (i) 100% of the aggregate principal amount thereof, plus accrued and
unpaid interest, including Liquidated Damages, if any, to the date fixed for the
closing of such offer or (ii) with respect to Senior Subordinated Discount
Notes, 100% of the Accreted Value thereof on the date of purchase, plus accrued
and unpaid Liquidated Damages, if any, if such Asset Sale Offer is prior to the
Full Accretion Date, in either case in accordance with the procedures set forth
in Section 3.10 hereof. The Company shall commence an Asset Sale Offer with
respect to Excess Proceeds within 10 Business Days after the date that the
aggregate amount of Excess Proceeds exceeds $25.0 million according to the
procedure described in Section 3.10 hereof. To the extent that the aggregate
amount of
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Notes tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds,
the Company may use any remaining Excess Proceeds (x) to offer to redeem
Subordinated Indebtedness (a "Subordinated Asset Sale Offer") in accordance with
the indenture or other agreement governing such Subordinated Indebtedness or (y)
for any purpose not prohibited by any provision herein. If the aggregate
principal amount (or Accreted Value, if applicable) of Notes surrendered by
Holders thereof exceeds the amount of Excess Proceeds, the Trustees shall select
the Notes to be purchased on a pro rata basis, based upon the principal amount
(or Accreted Value, if applicable) of Senior Subordinated Discount Notes and the
principal amount of Senior Subordinated Notes tendered. Upon completion of any
such Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.
The Company shall 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 Senior Subordinated Discount Notes as a result of an Asset
Sale.
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or 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 or amend 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 Restricted Subsidiary than those that would have been obtained in a
comparable transaction by the Company or such Restricted Subsidiary with an
unrelated Person and (ii) the Company delivers to the Trustee (a) with respect
to any Affiliate Transaction or series of related Affiliate Transactions
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 of the
Board of Directors (if there are any disinterested members of the Board of
Directors) and (b) with respect to any Affiliate Transaction or series of
related Affiliate Transactions involving aggregate consideration in excess of
$10.0 million, or with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of $5.0
million as to which there are no disinterested members of the Board of
Directors, an opinion as to the fairness to the Holders of such Affiliate
Transaction from a financial point of view issued by an accounting, appraisal or
investment banking firm of national standing.
The foregoing provisions shall not apply to the following: (i)
transactions between or among the Company and/or any of its Restricted
Subsidiaries; (ii) Restricted Payments or Permitted Investments permitted under
Section 4.07 hereof; (iii) the payment of all fees, expenses and other amounts
as disclosed in the Offering Circular relating to the Acquisition; (iv) the
payment of reasonable and customary regular fees to, and indemnity provided on
behalf of, officers, directors, employees or consultants of the Company or any
Restricted Subsidiary of the Company; (v) the transfer or provision of
inventory, goods or services by the Company or any Restricted Subsidiary of the
Company in the ordinary course of business to any Restricted Subsidiary of the
Company on terms that are customary in the industry or consistent with past
practices; (vi) the execution of, or the performance by the Company or any of
its Restricted Subsidiaries of its obligations under the terms of, any financial
advisory, financing, underwriting or placement agreement or any other agreement
relating to investment banking or financing activities with Goldman, Sachs & Co.
or any of its Affiliates including, without limitation, in connection with
acquisitions or divestitures, in each case to the extent that such agreement was
approved by a majority of the disinterested members of the Board of Directors in
good faith; (vii) payments, advances or loans to employees that are approved
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by a majority of the disinterested members of the Board of Directors of the
Company in good faith; (viii) the performance of any agreement as in effect as
of the date of this Indenture or any amendment thereto or any transaction
contemplated thereby (including pursuant to any amendment thereto so long as any
such amendment is not disadvantageous to the Holders of Senior Subordinated
Discount Notes in any material respect); (ix) the existence of, or the
performance by the Company or any of its Restricted Subsidiaries of its
obligations under the terms of, any stockholders agreement (including any
registration rights agreement or purchase agreement related thereto) to which it
is a party as of the date of this Indenture and any similar agreements which it
may enter into thereafter, provided, however, that the existence of, or the
performance by the Company or any of its Restricted Subsidiaries of obligations
under, any future amendment to any such existing agreement or under any similar
agreement entered into after the date of this Indenture shall only be permitted
by this clause (ix) to the extent that the terms of any such amendment or new
agreement are not otherwise disadvantageous to the Holders of the Notes in any
material respect; (x) transactions permitted by, and complying with, the
provisions of Section 5.01 hereof; and (xi) transactions with suppliers or other
purchases or sales of goods or services, in each case in the ordinary course of
business (including, without limitation, pursuant to joint venture agreements)
and otherwise in compliance with the terms of this Indenture which are fair to
the Company or its Restricted Subsidiaries, in the reasonable determination of a
majority of the disinterested members of the Board of Directors of the Company
or an executive officer thereof, or are on terms at least as favorable as might
reasonably have been obtained at such time from an unaffiliated party.
SECTION 4.12. LIENS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien that secures obligations under any Pari Passu Indebtedness or
Subordinated Indebtedness on any asset or property now owned or hereafter
acquired by the Company or any of its Restricted Subsidiaries, or on any income
or profits therefrom, or assign or convey any right to receive income therefrom
to secure any Pari Passu Indebtedness or Subordinated Indebtedness, unless the
Senior Subordinated Discount Notes are equally and ratably secured with the
obligations so secured or until such time as such obligations are no longer
secured by a Lien; provided, that in any case involving a Lien securing
Subordinated Indebtedness, such Lien is subordinated to the Lien securing the
Senior Subordinated Discount Notes to the same extent that such Subordinated
Indebtedness is subordinated to the Senior Subordinated Discount Notes.
SECTION 4.13. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, each Holder of Senior
Subordinated Discount Notes shall have the right to require the Company to
repurchase all or any part (equal to $1,000 or an integral multiple thereof) of
such Holder's Senior Subordinated Discount Notes pursuant to the offer described
below (the "Change of Control Offer") at a purchase price in cash (the "Change
of Control Payment") equal to (i) 101% of the aggregate principal amount thereof
plus accrued and unpaid interest, including Liquidated Damages, if any, thereon
to the date of repurchase or (ii) 101% of the Accreted Value thereof on the date
of repurchase plus accrued and unpaid Liquidated Damages, if any, if the Change
of Control Offer is prior to the Full Accretion Date. Within 30 days following
any Change of Control, the Company shall mail a notice to each Holder, the
Trustee and the Depositary stating: (1) that the Change of Control Offer is
being made pursuant to this Section 4.13 and that all Senior Subordinated
Discount Notes tendered shall be accepted for payment; (2) the purchase price
and the purchase date described below (the "Change of Control Payment Date");
(3) that any Senior Subordinated Discount Note not tendered shall continue to
accrete or accrue interest; (4) that, unless the Company defaults in the payment
of the Change of Control
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Payment, all Senior Subordinated Discount Notes accepted for payment pursuant to
the Change of Control Offer shall cease to accrete or accrue interest after the
Change of Control Payment Date; (5) that Holders electing to have any Senior
Subordinated Discount Notes purchased pursuant to a Change of Control Offer
shall be required to surrender the Senior Subordinated Discount Notes, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of the Senior
Subordinated Discount Notes completed, to the Paying Agent or the Depositary, as
applicable, at the address specified in the notice prior to the close of
business on the third Business Day preceding the Change of Control Payment Date;
(6) that Holders shall be entitled to withdraw their election if the Paying
Agent or Depositary, as applicable, receives, not later than the close of
business on the second Business Day preceding the Change of Control Payment Date
(or such later date required by applicable law), a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of Senior Subordinated Discount Notes delivered for purchase, and a
statement that such Holder is withdrawing his or her election to have the Senior
Subordinated Discount Notes purchased; and (7) that Holders whose Senior
Subordinated Discount Notes are being purchased only in part shall be issued new
Senior Subordinated Discount Notes equal in principal amount to the unpurchased
portion of the Senior Subordinated Discount Notes surrendered, which unpurchased
portion must be equal to $1,000 in principal amount or an integral multiple
thereof. The Company shall 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 Senior Subordinated Discount Notes as a result of a Change of
Control.
(b) On a date that is no earlier than 30 days nor later than 60 days
from the date that the Company mails or causes to be mailed notice of the Change
of Control to the Holders (the "Change of Control Payment Date") the Company
shall, to the extent lawful, (1) accept for payment all Senior Subordinated
Discount 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 Senior Subordinated Discount Notes or
portions thereof so tendered and (3) deliver or cause to be delivered to the
Trustee for cancellation the Senior Subordinated Discount Notes so accepted
together with an Officers' Certificate stating the aggregate principal amount of
Senior Subordinated Discount Notes or portions thereof being purchased by the
Company. The Paying Agent shall promptly mail to each Holder of Senior
Subordinated Discount Notes so tendered the Change of Control Payment for such
Senior Subordinated Discount Notes, and the Trustee shall promptly authenticate
and mail (or cause to be transferred by book entry) to each Holder a new Senior
Subordinated Discount Note equal in principal amount to any unpurchased portion
of the Senior Subordinated Discount Notes surrendered, if any; provided that
each such new Senior Subordinated Discount Note shall be in a principal amount
of $1,000 or an integral multiple thereof. The Company shall publicly announce
the results of the Change of Control Offer on or as soon as practicable after
the Change of Control Payment Date.
(c) Prior to complying with the provisions of this Section 4.13, but
in any event within 30 days following a Change of Control, the Company shall
either repay all outstanding amounts under the New Bank Credit Agreement or
offer to repay in full all outstanding amounts under the New Bank Credit
Agreement and repay the Obligations held by each lender who has accepted such
offer or obtain the requisite consents, if any, under the New Bank Credit
Agreement to permit the repurchase of the Senior Subordinated Discount Notes
required by this Section 4.13.
(d) The Company shall not be required to make a Change of Control
Offer upon a Change of Control if a third party makes the Change of Control
Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in this Section 4.13 and Section 3.10 hereof and such
third
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party purchases all of the Senior Subordinated Discount Notes validly tendered
and not withdrawn under such Change of Control Offer.
SECTION 4.14. ISSUANCES OF GUARANTEES OF INDEBTEDNESS.
The Company shall not permit any Restricted Subsidiary, directly or
indirectly, to guarantee or pledge any assets to secure the payment of any other
Indebtedness unless such Restricted Subsidiary either (i) is a Guarantor, or
(ii) simultaneously executes and delivers a supplemental indenture to this
Indenture, in the form of Exhibit E hereto, providing for the Guarantee of the
payment of all Obligations with respect to the Senior Subordinated Discount
Notes by such Restricted Subsidiary, which Guarantee shall be senior to such
Restricted Subsidiary's Guarantee of or pledge to secure any other Indebtedness
that constitutes Subordinated Indebtedness and subordinated to such Restricted
Subsidiary's Guarantee of or pledge to secure any other Indebtedness that
constitutes Senior Debt to the same extent as the Senior Subordinated Discount
Notes are subordinated to Senior Debt. In addition, (x) if the Company shall,
after the date of this Indenture, create or acquire any new First-Tier
Subsidiary, then such newly created or acquired First-Tier Subsidiary shall
execute a supplemental indenture and a Senior Subordinated Guarantee and deliver
an Opinion of Counsel in accordance with Article 11 hereof, (y) if any
First-Tier Subsidiary shall, after the date of this Indenture, create or acquire
any new Second-Tier Subsidiary, then such newly created or acquired Second-Tier
Subsidiary shall execute a supplemental indenture and a Senior Subordinated
Guarantee and deliver an Opinion of Counsel in accordance with Article 11 hereof
and (z) if the Company shall, after the date of this Indenture, create or
acquire any new Subsidiary (other than a First-Tier Subsidiary or Second-Tier
Subsidiary) that becomes a guarantor under the New Bank Credit Agreement, then
such newly created or acquired Subsidiary shall execute a supplemental indenture
and a Senior Subordinated Guarantee and deliver an Opinion of Counsel in
accordance with Article 11 hereof. Notwithstanding the foregoing, any such
Senior Subordinated Guarantee shall provide by its terms that it shall be
automatically and unconditionally released and discharged upon certain mergers,
consolidations, sales and other dispositions (including, without limitation, by
foreclosure) pursuant to Article 11 hereof.
SECTION 4.15. ACTIVITIES OF HOLDINGS.
In addition to the restrictions set forth herein, Holdings shall not
(i) hold any assets or incur any Indebtedness or (ii) engage in any business
activities; except Holdings may (x) hold all, but not less than all, of the
Capital Stock of the Company and (y) be a co-obligor and/or guarantor with
respect to Indebtedness if the Company is a primary obligor or guarantor of such
Indebtedness and the net proceeds of such Indebtedness are lent to the Company
or one or more of its Restricted Subsidiaries.
SECTION 4.16. ACTIVITIES OF THE COMPANY.
The Company shall use its best efforts to cause the Acquisition to be
consummated as soon as practicable after the closing of the Offering on
substantially the terms described in the Offering Circular; provided, however,
that the foregoing shall not require Holdings to waive any condition provided in
the Stock Purchase Agreement to its obligation to consummate the Acquisition.
Until consummation of the Acquisition, neither the Company nor any of
its Subsidiaries shall be permitted to conduct any substantial business
activities of any kind.
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SECTION 4.17. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company and the Guarantors shall do
or cause to be done all things necessary to preserve and keep in full force and
effect (i) its corporate existence, and the corporate, partnership or other
existence of each of its Restricted Subsidiaries, in accordance with the
respective organizational documents (as the same may be amended from time to
time) of the Company or any such Restricted Subsidiary and (ii) the rights
(charter and statutory), licenses and franchises of the Company, the Guarantors
and their respective Restricted Subsidiaries; provided, however, that the
Company and the Guarantors shall not be required to preserve any such right,
license or franchise, or the corporate, partnership or other existence of any of
their respective Restricted Subsidiaries, if the Board of Directors shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Company or such Guarantor, as applicable, and its Restricted
Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any
material respect to the Holders of the Notes. Notwithstanding the foregoing, the
loss of licenses shall not be deemed a default under this Section 4.17 provided
that such loss is not adverse in any material respect to the Holders of the
Notes.
SECTION 4.18. NO SENIOR SUBORDINATED DEBT.
Notwithstanding the provisions of Section 4.09 hereof, (i) the Company
shall not directly or indirectly incur, create, issue, assume, guarantee or
otherwise become liable for any Indebtedness that is subordinate or junior in
right of payment to any Senior Debt and senior in any respect in right of
payment to the Senior Subordinated Discount Notes and (ii) no Guarantor shall
directly or indirectly incur, create, issue, assume, guarantee or otherwise
become liable for any Indebtedness that is subordinate or junior in right of
payment to the Senior Guarantees and senior in any respect in right of payment
to the Senior Subordinated Guarantees.
ARTICLE 5
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ALL OR SUBSTANTIALLY ALL
ASSETS.
The Company shall not 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 is a corporation organized or existing
under the laws of the United States, any state thereof or the District of
Columbia; (ii) the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company) or the entity or Person to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made assumes all the obligations of the Company under the Senior
Subordinated Discount Notes and this Indenture pursuant to a supplemental
indenture in form reasonably satisfactory to the Trustee, and, if such sale,
assignment, transfer, lease, conveyance or other disposition occurs prior to the
consummation of the Acquisition, all the obligations of the Company under the
Senior Subordinated Discount Note Pledge and Escrow Agreement; (iii) immediately
after such transaction no Default or Event of Default exists; and (iv) except in
the case of a merger of the Company with or into a Wholly Owned Restricted
Subsidiary of the Company, 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
shall
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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 Indebtedness pursuant to the Fixed Charge Coverage Ratio test set
forth in the first paragraph of Section 4.09 hereof. Notwithstanding the
foregoing clauses (iii) and (iv), (a) any Restricted Subsidiary may consolidate
with, merge into or transfer all or part of its properties and assets to the
Company and (b) the Company may merge with an Affiliate incorporated solely for
the purpose of reincorporating the Company in another jurisdiction.
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 Company shall not be relieved from the obligation to pay the
principal of and interest on the Senior Subordinated Discount Notes except in
the case of a sale of all of the Company's assets that meets the requirements of
Section 5.01 hereof.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
An "Event of Default" occurs if:
(1) the Company defaults in the payment of interest, including
Liquidated Damages, if any, on the Senior Subordinated Discount Notes when
the same becomes due and payable and the Default continues for a period of
30 days, whether or not such payment is prohibited by the provisions of
Article 10 hereof;
(2) the Company defaults in the payment of the principal of or
premium, if any, on the Senior Subordinated Discount Notes when the same
become due and payable at maturity, upon redemption or otherwise, whether or
not such payment is prohibited by the provisions of Article 10 hereof;
(3) the Company fails, and such failure continues for 30 days after
notice from the Trustee or the Holders of at least 25% in principal amount
of the then outstanding Senior Subordinated Discount Notes, to observe or
perform any covenant, condition or agreement on the part of the Company to
be observed or performed pursuant to Sections 3.09, 4.07, 4.09, 4.13 and
5.01 hereof;
(4) the Company fails, and such failure continues for 60 days after
notice from the Trustee or the Holders of at least 25% in principal amount
of the then outstanding Senior Subordinated Discount Notes, to comply with
any of its other agreements or covenants in, or provisions of, the Senior
Subordinated Discount Notes or this Indenture;
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(5) a default occurs 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 Restricted
Subsidiaries (or the payment of which is guaranteed by the Company or any of
its Restricted Subsidiaries), whether such Indebtedness or guarantee now
exists or shall be created after the date of this Indenture, which default
results in the acceleration of such Indebtedness prior to its express
maturity and, in each case, the principal amount of such Indebtedness,
together with the principal amount of any other such Indebtedness the
maturity of which has been so accelerated, aggregates $25.0 million or more;
(6) the Company or any of its Restricted Subsidiaries fails to pay
final judgments aggregating in excess of $25.0 million, which judgments are
not paid, discharged or stayed for a period of 60 days;
(7) the Company or any of its Restricted Subsidiaries pursuant to or
within the meaning of any Bankruptcy Law:
(a) commences a voluntary case,
(b) consents to the entry of an order for relief against it in an
involuntary case,
(c) consents to the appointment of a Custodian of it or for all or
substantially all of its property,
(d) makes a general assignment for the benefit of its creditors,
or
(e) admits in writing its inability to pay its debts as they
become due;
(8) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(a) is for relief against the Company or any Restricted Subsidiary
in an involuntary case,
(b) appoints a Custodian of the Company or any Restricted
Subsidiary or for all or substantially all of the property of
the Company or any Restricted Subsidiary, or
(c) orders the liquidation of the Company or any Restricted
Subsidiary,
and the order or decree remains unstayed and in effect for 60 consecutive
days;
(9) at any time prior to the consummation of the Acquisition, the
Company shall breach any material representation, warranty or agreement set
forth in, or otherwise not comply with the provisions of, the Senior
Subordinated Discount Note Pledge and Escrow Agreement, or the Senior
Subordinated Discount Note Pledge and Escrow Agreement shall be held in any
judicial proceeding to be unenforceable or invalid or shall cease for any
reason to be in full force and effect; or
(10) except as otherwise permitted under the provisions of this
Indenture, any Senior Subordinated Guarantee is held in any judicial
proceeding to be unenforceable or invalid or ceases for any reason to be in
full force and effect (except by its terms) or any Guarantor, or any Person
acting on behalf of any Guarantor, denies or disaffirms such Guarantor's
obligations under its Senior Subordinated Guarantee.
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The term "Custodian" means any receiver, trustee, assignee, liquidator
or similar official under any Bankruptcy Law. Except for a Default or an Event
of Default pursuant to Sections 6.01(1), 6.01(2) or 6.01(3) (with respect to
Section 3.09) hereof, the Trustee shall not be deemed to have knowledge of any
Default or Event of Default unless the Trustee shall have received written
notification of such Default or Event of Default.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have had
to pay if the Company then had elected to redeem the Senior Subordinated
Discount Notes pursuant to Section 3.07 hereof, an equivalent premium shall also
become and be immediately due and payable to the extent permitted by law upon
the acceleration of the Senior Subordinated Discount Notes. If an Event of
Default occurs prior to March 15, 2001 by reason of any willful action (or
inaction) taken (or not taken) by or on behalf of the Company with the intention
of avoiding the prohibition on redemption of the Senior Subordinated Discount
Notes prior to March 15, 2001, pursuant to Section 3.07 hereof, then the premium
payable for purposes of this paragraph for each of the years beginning on March
15 of the years set forth below shall be as set forth in the following table
expressed as a percentage of the Accreted Value, plus accrued interest, if any,
and Liquidated Damages, if any, to the date of payment:
<TABLE>
<CAPTION>
Percentage of
Year Accreted Value
---- --------------
<S> <C>
1996.................................... 112.250%
1997.................................... 111.025%
1998.................................... 109.800%
1999.................................... 108.575%
2000.................................... 107.350%
</TABLE>
SECTION 6.02. ACCELERATION.
If an Event of Default (other than an Event of Default specified in
clauses (7) and (8) of Section 6.01 hereof) relating to the Company or any
Restricted Subsidiary occurs and is continuing, the Trustee by notice to the
Company, or the Holders of at least 25% in principal amount of the then
outstanding Senior Subordinated Discount Notes by written notice to the Company
and the Trustee, may declare the unpaid principal amount of (or, if prior to the
Full Accretion Date, the Accreted Value of), any accrued interest on and any
Liquidated Damages due in respect of all the Senior Subordinated Discount Notes
to be due and payable immediately. Upon such declaration the principal (or
Accreted Value, if applicable), premium, if any, and interest, including
Liquidated Damages, if any, shall be due and payable immediately; provided,
however, that so long as any Senior Debt or any commitment therefor is
outstanding under the New Bank Credit Agreement, any such notice or declaration
shall not become effective until the earlier of (a) five Business Days after
such notice is delivered to the Representative for the Senior Bank Debt or (b)
the acceleration of any Indebtedness under the New Bank Credit Agreement.
Notwithstanding the foregoing, if an Event of Default specified in clause (7) or
(8) of Section 6.01 hereof relating to the Company, any Significant Restricted
Subsidiary or any group of Restricted Subsidiaries that, taken together, would
constitute a Significant
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Restricted Subsidiary occurs, all outstanding Senior Subordinated Discount Notes
shall become and be immediately due and payable without any declaration or other
act on the part of the Trustee or any Holder. The Holders of a majority in
aggregate principal amount of the then outstanding Senior Subordinated Discount
Notes by written notice to the Trustee may rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree.
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, including Liquidated Damages, if any, on the Senior
Subordinated Discount Notes or to enforce the performance of any provision of
the Senior Subordinated Discount Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Senior Subordinated Discount Notes or does not produce any of them in the
proceeding. A delay or omission by the Trustee or any Holder of a Senior
Subordinated Discount 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.
Holders of not less than a majority in aggregate principal amount of
the Senior Subordinated Discount Notes then outstanding by notice to the Trustee
may on behalf of the Holders of all of the Senior Subordinated Discount Notes
waive an existing Default or Event of Default and its consequences hereunder,
except a continuing Default or Event of Default in the payment of principal of,
premium, if any, and interest, including Liquidated Damages, if any, on, the
Senior Subordinated Discount Notes (including in connection with an offer to
purchase) (provided, however, that the Holders of a majority in aggregate
principal amount of the then outstanding Senior Subordinated Discount Notes may
rescind an acceleration and its consequences, including any related payment
default that resulted from such acceleration). 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 a majority in principal amount of the then outstanding
Senior Subordinated Discount 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 may be unduly prejudicial to the rights of other Holders of
Senior Subordinated Discount Notes or that may involve the Trustee in personal
liability.
SECTION 6.06. LIMITATION ON SUITS.
A Holder of a Senior Subordinated Discount Note may pursue a remedy
with respect to this Indenture or the Senior Subordinated Discount Notes only
if:
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(a) the Holder of a Senior Subordinated Discount Note gives to the
Trustee written notice of a continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Senior Subordinated Discount Notes make a written request to the
Trustee to pursue the remedy;
(c) such Holder of a Senior Subordinated Discount Note or Holders of
Senior Subordinated Discount Notes offer and, if requested, provide to the
Trustee indemnity satisfactory to the Trustee against any loss, 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 Senior Subordinated Discount Notes do not
give the Trustee a direction inconsistent with the request.
A Holder of a Senior Subordinated Discount Note may not use this Indenture to
prejudice the rights of another Holder of a Senior Subordinated Discount Note or
to obtain a preference or priority over another Holder of a Senior Subordinated
Discount Note.
SECTION 6.07. RIGHTS OF HOLDERS OF SENIOR SUBORDINATED DISCOUNT NOTES TO
RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Senior Subordinated Discount Note to receive payment of
principal (or Accreted Value, if applicable), premium, if any, and interest,
including Liquidated Damages, if any, on the Senior Subordinated Discount Note,
on or after the respective due dates expressed in the Senior Subordinated
Discount 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(1) or (2) occurs and
is continuing, the Trustee is authorized to recover judgments in its own name
and as trustee of an express trust against the Company or any Guarantor for the
whole amount of principal (or Accreted Value, if applicable) of, premium, if
any, and interest, including Liquidated Damages, if any, remaining unpaid on the
Senior Subordinated Discount 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 Senior Subordinated Discount Notes allowed in any judicial
proceedings relative to the Company or any of the Guarantors (or any other
obligor upon the Senior Subordinated Discount 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
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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 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 Senior
Subordinated Discount 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 Senior Subordinated Discount Notes for amounts
due and unpaid on the Senior Subordinated Discount Notes for principal (or
Accreted Value, if applicable), premium, if any, and interest, including
Liquidated Damages, if any, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Senior Subordinated Discount
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 Senior Subordinated Discount 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
Senior Subordinated Discount Note pursuant to Section 6.07 hereof, or a suit by
Holders of more than 10% in principal amount of the then outstanding Senior
Subordinated Discount 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 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 a Responsible 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 paragraphs
(a), (b), and (c) of this Section.
(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 reasonably 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.
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SECTION 7.02. RIGHTS OF TRUSTEE.
(a) 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, 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 or any Guarantor shall be
sufficient if signed by an Officer of the Company or such Guarantor.
(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
security or indemnity reasonably satisfactory to the Trustee against the costs,
expenses and liabilities that might be incurred by it in compliance with such
request or direction.
(g) Except with respect to Sections 4.01 and 4.04 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(1), 6.01(2) or 6.01(3) (with respect to
Section 3.09) hereof or (ii) any Default or Event of Default of which the
Trustee shall have received written notification or obtained actual knowledge.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Senior Subordinated Discount Notes and may otherwise deal
with the Company, the Guarantors 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, 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, the Senior Subordinated
Discount Notes or the Senior Subordinated Guarantees, it shall not be
accountable for the Company's use of the proceeds from the Senior Subordinated
Discount Notes
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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 Senior Subordinated Discount Notes or any other document in
connection with the sale of the Senior Subordinated Discount Notes or pursuant
to this Indenture other than its certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if it is
known to a Responsible Officer of the Trustee, the Trustee shall mail to Holders
of Senior Subordinated Discount Notes a notice of the Default or Event of
Default within 90 days after it occurs unless such Default or Event of Default
has been cured. Except in the case of a Default or Event of Default in payment
of principal of, premium, if any, or interest on, any Senior Subordinated
Discount Note, the Trustee may withhold the notice if and so long as a committee
of its Responsible Officers in good faith determines that withholding the notice
is in the interests of the Holders of the Senior Subordinated Discount Notes.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE SENIOR SUBORDINATED
DISCOUNT NOTES.
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as Senior Subordinated Discount
Notes remain outstanding, the Trustee shall mail to the Holders of the Senior
Subordinated Discount 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 twelve 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
Senior Subordinated Discount Notes shall be mailed to the Company and filed with
the SEC and each stock exchange on which the Senior Subordinated Discount Notes
are listed in accordance with TIA Section 313(d). The Company shall promptly
notify the Trustee when the Senior Subordinated Discount Notes are listed on any
stock exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company and the Guarantors 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 and the Guarantors
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
whether incurred in disputes between the parties or in disputes with third
parties or otherwise.
The Company and the Guarantors shall indemnify the Trustee against any
and all losses, liabilities or expenses 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 and the Guarantors (including this Section 7.07) and defending
itself against any claim (whether asserted by the Company, the Guarantors 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
such loss, liability or expense may be attributable to its negligence or bad
faith. The Trustee shall notify the Company and the Guarantors promptly of any
claim for which it may seek indemnity. Failure by the Trustee to so notify
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the Company and the Guarantors shall not relieve the Company and the Guarantors
of their obligations hereunder. The Company and the Guarantors shall defend the
claim and the Trustee shall cooperate in the defense. The Trustee may have
separate counsel and the Company and the Guarantors shall pay the reasonable
fees and expenses of such counsel. The Company and the Guarantors need not pay
for any settlement made without their consent, which consent shall not be
unreasonably withheld.
The obligations of the Company and the Guarantors under this Section
7.07 shall survive the satisfaction and discharge of this Indenture.
To secure the Company's and the Guarantors' payment obligations in
this Section, the Trustee shall have a Lien prior to the Senior Subordinated
Discount Notes on all money or property held or collected by the Trustee, except
that held in trust to pay principal (or Accreted Value, if applicable), premium,
if any, and interest, including Liquidated Damages, if any, on particular Senior
Subordinated Discount 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 Section 6.01(7) or (8) 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 a majority
in principal amount of the then outstanding Senior Subordinated Discount 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;
(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 Senior Subordinated
Discount 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 Senior Subordinated Discount Notes
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of at least 10% in principal amount of the then outstanding Senior Subordinated
Discount 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 Senior
Subordinated Discount Note who has been a Holder of a Senior Subordinated
Discount Note for at least six months, fails to comply with Section 7.10, such
Holder of a Senior Subordinated Discount 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 Senior Subordinated Discount 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
organized and doing business under the laws of the 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 a combined capital and surplus of at least $50.0
million 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
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outstanding Senior Subordinated Discount 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, the Company and the Guarantors shall, subject
to the satisfaction of the conditions set forth in Section 8.04 hereof, be
deemed to have been discharged from their obligations with respect to all
outstanding Senior Subordinated Discount Notes 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 Senior
Subordinated Discount Notes, 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 Senior Subordinated Discount
Notes and this Indenture and the Senior Subordinated Guarantees (and the
Trustee, on 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 Senior Subordinated Discount Notes to receive payments
in respect of the principal of, premium, if any, and interest, including
Liquidated Damages, if any, on such Senior Subordinated Discount Notes when such
payments are due from the trust fund described in Section 8.04 hereof, and as
more fully set forth in such Section, (b) the Company's obligations with respect
to such Senior Subordinated Discount 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, the Company and the Guarantors shall, subject
to the satisfaction of the conditions set forth in Section 8.04 hereof, be
released from their obligations under the covenants contained in Sections 4.07,
4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16 and 4.18 hereof and the
covenants contained in the Senior Subordinated Guarantees with respect to the
outstanding Senior Subordinated Discount Notes on and after the date the
conditions set forth below are satisfied (hereinafter, "Covenant Defeasance"),
and the Senior Subordinated Discount Notes 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 Senior Subordinated Discount Notes
shall not be deemed outstanding for accounting purposes). For this purpose,
Covenant Defeasance means that, with respect to the outstanding Senior
Subordinated Discount 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, such Senior Subordinated Discount Notes and such Senior Subordinated
Guarantees 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,
Sections 6.01(3) through 6.01(6), 6.01(9) and 6.01(10) hereof shall not
constitute Events of Default.
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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 Senior Subordinated Discount
Notes:
In order to exercise either Legal Defeasance or Covenant
Defeasance:
(a) the Company or the Guarantors must irrevocably deposit
with the Trustee, in trust, for the benefit of the Holders of the
Senior Subordinated Discount Notes, 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 provided to the
Trustee, to pay the principal of, premium, if any, and interest,
including Liquidated Damages, if any, on the outstanding Senior
Subordinated Discount Notes on the stated maturity or on the
applicable redemption date, as the case may be, and the Company or
the Guarantors must, concurrently with such deposit and opinion,
provide written notice to the Trustee specifying whether the
Senior Subordinated Discount 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 or the Guarantors shall have delivered to the Trustee
an Opinion of Counsel in the United States reasonably acceptable
to the Trustee confirming that (A) the Company or the Guarantors
have 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
Senior Subordinated Discount 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 or the Guarantors 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
Senior Subordinated Discount 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 borrowing of funds to be
applied to such deposit) or insofar as Section 6.01(7) or 6.01(8)
hereof is concerned, at any time in the period ending on the 91st
day after the date of deposit;
(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 instrument (other than this Indenture)
to which the Company or any of its Restricted Subsidiaries is a
party or by which the Company or any of its Restricted
Subsidiaries is bound;
(f) the Company or the Guarantors shall have delivered to
the Trustee an Opinion of Counsel to the effect that after the
91st day following the deposit, the trust funds will not be
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subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights
generally;
(g) the Company or the Guarantors shall have delivered to
the Trustee an Officers' Certificate stating that the deposit was
not made by the Company or the Guarantors, as applicable, with the
intent of preferring the Holders of Senior Subordinated Discount
Notes over the other creditors of the Company or the Guarantors,
as applicable, with the intent of defeating, hindering, delaying
or defrauding creditors of the Company or the Guarantors, as
applicable, or others; and
(h) the Company or the Guarantors shall have delivered to
the Trustee an Officers' Certificate and an Opinion of Counsel,
each stating that all conditions precedent provided for or
relating to the Legal Defeasance or the Covenant Defeasance have
been complied with.
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 Senior Subordinated Discount Notes shall be held in trust and
applied by the Trustee, in accordance with the provisions of such Senior
Subordinated Discount 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 Senior Subordinated Discount
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 and the Guarantors 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 other than any such tax,
fee or other charge which by law is for the account of the Holders of the
outstanding Senior Subordinated Discount Notes.
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 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, or interest, including Liquidated Damages, if any, on any Senior
Subordinated Discount Note and remaining unclaimed for two years after such
principal, premium, if any, or interest, including Liquidated Damages, if any,
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 Senior Subordinated Discount Note shall thereafter, as a general creditor,
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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 obligations of the Company and the Guarantors under this
Indenture, the Senior Subordinated Discount Notes and the Senior Subordinated
Guarantees 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 or any
Guarantor makes any payment of principal of, premium, if any, or interest,
including Liquidated Damages, if any, on any Senior Subordinated Discount Note
following the reinstatement of its obligations, the Company or such Guarantor
shall be subrogated to the rights of the Holders of such Senior Subordinated
Discount Notes to receive such payment from the money held by the Trustee or
Paying Agent.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF SENIOR SUBORDINATED DISCOUNT
NOTES.
Notwithstanding Section 9.02 of this Indenture, the Company, the
Guarantors and the Trustee may amend or supplement this Indenture, the Senior
Subordinated Discount Note Pledge and Escrow Agreement or the Senior
Subordinated Discount Notes without the consent of any Holder of a Senior
Subordinated Discount Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Senior Subordinated Discount Notes
in addition to or in place of certificated Senior Subordinated Discount
Notes;
(c) to provide for the assumption of the Company's obligations to the
Holders of the Senior Subordinated Discount Notes in the case of a merger or
consolidation pursuant to Article 5 hereof;
(d) to make any change that would provide any additional rights or
benefits to the Holders of the Senior Subordinated Discount Notes or that
does not adversely affect the legal rights hereunder of any Holder of the
Senior Subordinated Discount Notes;
(e) to comply with requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA; or
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(f) to allow any Guarantor to execute a supplemental indenture and/or
a Senior Subordinated Guarantee with respect to the Senior Subordinated
Discount Notes.
Upon the request of the Company accompanied by a resolution of the
Board of Directors of the Company and each of the Guarantors, as the case may
be, 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 and the Guarantors 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 Indenture that affects its own rights, duties
or immunities under this Indenture or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF SENIOR SUBORDINATED DISCOUNT NOTES.
Except as provided below in this Section 9.02, the Company, the
Guarantors and the Trustee may amend or supplement this Indenture (including
Section 4.10 and 4.13 hereof), the Senior Subordinated Discount Note Pledge and
Escrow Agreement and the Senior Subordinated Discount Notes with the consent of
the Holders of at least a majority in principal amount of the Senior
Subordinated Discount Notes then outstanding (including, without limitation,
consents obtained in connection with a purchase of, or tender offer or exchange
offer for, the Senior Subordinated Discount 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, including Liquidated Damages, if any, on the Senior Subordinated
Discount Notes, except a payment default resulting from an acceleration that has
been rescinded) or compliance with any provision of this Indenture, the Senior
Subordinated Discount Note Pledge and Escrow Agreement or the Senior
Subordinated Discount Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Senior Subordinated
Discount Notes (including, without limitation, consents obtained in connection
with a purchase of, or tender offer or exchange offer for, the Senior
Subordinated Discount Notes).
Upon the request of the Company accompanied by a resolution of the
Board of Directors of the Company and each of the Guarantors, as the case may
be, 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 Senior Subordinated Discount 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 and the Guarantors in the execution of
such amended or supplemental Indenture unless such amended or supplemental
Indenture 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 Senior
Subordinated Discount 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 Senior Subordinated Discount
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 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
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principal amount of the Senior Subordinated Discount Notes then outstanding may
waive compliance in a particular instance by the Company or any Guarantor with
any provision of this Indenture or the Senior Subordinated Discount Notes.
However, without the consent of each Holder affected, an amendment or waiver may
not (with respect to any Senior Subordinated Discount Notes held by a
non-consenting Holder):
(a) reduce the principal amount of Senior Subordinated Discount
Notes whose Holders must consent to an amendment, supplement or
waiver;
(b) reduce the principal of or change the fixed maturity of any
Senior Subordinated Discount Note or alter the provisions with
respect to the redemption of the Senior Subordinated Discount Notes
(except as provided above with respect to Sections 4.10 and 4.13
hereof);
(c) reduce the rate of accretion on the Senior Subordinated
Discount Notes;
(d) reduce the rate of or change the time for payment of interest,
default interest and Liquidated Damages, if any, on any Senior
Subordinated Discount Note;
(e) waive a Default or Event of Default in the payment of
principal of or premium, if any, or interest, including Liquidated
Damages, if any, on the Senior Subordinated Discount Notes (except a
rescission of acceleration of the Senior Subordinated Discount Notes
by the Holders of at least a majority in aggregate principal amount of
the Senior Subordinated Discount Notes and a waiver of the payment
default that resulted from such acceleration);
(f) make any Senior Subordinated Discount Note payable in money
other than that stated in the Senior Subordinated Discount Notes;
(g) make any change in the provisions of this Indenture relating
to waivers of past Defaults or the rights of Holders of Senior
Subordinated Discount Notes to receive payments of principal of or
premium, if any, or interest, including Liquidated Damages, if any, on
the Senior Subordinated Discount Notes;
(h) waive a redemption payment with respect to any Senior
Subordinated Discount Note (except as provided above with respect to
Sections 4.10 and 4.13 hereof);
(i) 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 Senior
Subordinated Discount Notes shall be set forth in an amended or supplemental
Indenture that complies with the TIA as then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Senior Subordinated Discount Note is a continuing consent
by the Holder of a Senior Subordinated Discount Note and every subsequent Holder
of a Senior Subordinated Discount Note or portion of a Senior Subordinated
Discount Note that evidences the same debt as the consenting Holder's Senior
Subordinated Discount Note, even if notation of the consent is not made on any
Senior Subordinated Discount Note. However, any
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such Holder of a Senior Subordinated Discount Note or subsequent Holder of a
Senior Subordinated Discount Note may revoke the consent as to its Senior
Subordinated Discount Note if the Trustee receives written notice of revocation
before the date the waiver, supplement or amendment becomes effective. 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 SENIOR SUBORDINATED DISCOUNT NOTES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Senior Subordinated Discount Note thereafter
authenticated. The Company in exchange for all Senior Subordinated Discount
Notes may issue and the Trustee shall, upon receipt of an Authentication Order,
authenticate new Senior Subordinated Discount Notes that reflect the amendment,
supplement or waiver.
Failure to make the appropriate notation or issue a new Senior
Subordinated Discount 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.
Neither the Company nor any Guarantor may sign an amended or supplemental
Indenture until its respective Board of Directors approves it. In executing any
amended or supplemental indenture, the Trustee shall be entitled 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 and that
there has been compliance with all conditions precedent.
ARTICLE 10
SUBORDINATION
SECTION 10.01. AGREEMENT TO SUBORDINATE.
The Company agrees, and each Holder by accepting a Senior Subordinated
Discount Note agrees, that the Indebtedness evidenced by the Senior Subordinated
Discount Note is subordinated in right of payment, to the extent and in the
manner provided in this Article, to the prior payment in full of all Senior Debt
(whether outstanding on the date hereof or hereafter created, incurred, assumed
or guaranteed), and that the subordination is for the benefit of the holders of
Senior Debt.
SECTION 10.02. CERTAIN DEFINITIONS.
"Accrued Bankruptcy Interest" means, with respect to any Indebtedness
or Hedging Obligations under or secured by the New Bank Credit Agreement, all
interest accruing thereon after the filing of a petition by or against the
Company 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 or Hedging
Obligations, whether or not the claim for such interest is allowed as a claim
after such filing in any proceeding under such Bankruptcy Law.
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"Bankruptcy Law" means title 11, U.S. Code or any similar Federal or
state law for the relief of debtors.
"Designated Senior Debt" means (i) so long as the Senior Bank Debt is
outstanding, the Senior Bank Debt, (ii) the Senior Bank Hedging Obligations and
(iii) any other Senior Debt permitted under this Indenture the principal amount
of which is $25.0 million or more and that has been designated by the Company as
"Designated Senior Debt."
"Representative" means the indenture trustee or other trustee, agent
or representative for any Senior Debt.
"Senior Bank Debt" means all Obligations in respect of the
Indebtedness outstanding under the New Bank Credit Agreement, together with any
refunding, refinancing or replacement (in whole or in part) of such
Indebtedness.
"Senior Bank Hedging Obligations" means all present and future Hedging
Obligations of the Company, whether existing now or in the future, that are
secured by the New Bank Credit Agreement or any of the collateral documents
executed from time to time in connection therewith.
"Senior Debt" means (i) the Senior Bank Debt, (ii) the Senior Bank
Hedging Obligations and (iii) any other Indebtedness permitted to be incurred by
the Company under the terms of this Indenture, unless the instrument under which
such Indebtedness is incurred expressly provides that it is on a parity with or
subordinated in right of payment to the Senior Subordinated Discount Notes.
Notwithstanding anything to the contrary in the foregoing, Senior Debt will not
include (1) any liability for federal, state, local or other taxes owed or owing
by the Company, (2) any Indebtedness of the Company to any of its Restricted
Subsidiaries or other Affiliates (other than Goldman, Sachs & Co. and its
Affiliates, including Pearl Street L.P.), (3) any trade payables, (4) that
portion of any Indebtedness that is incurred in violation of this Indenture, (5)
Indebtedness which, when incurred and without respect to any election under
Section 1111(b) of Title 11, United States Code, is without recourse to the
Company, (6) any Indebtedness, Guarantee or obligation of the Company which is
contractually subordinate in right of payment to any other Indebtedness,
Guarantee or obligation of the Company; provided, however, that this clause (6)
shall not apply to the subordination of liens or security interests covering
particular properties or types of assets securing Senior Debt, (7) Indebtedness
evidenced by the Notes and (8) Capital Stock.
A distribution may consist of cash, securities or other property, by
set-off or otherwise.
All Designated Senior Debt now or hereafter existing and all other
Obligations relating thereto shall not be deemed to have been paid in full
unless the holders or owners thereof shall have received payment in full in cash
with respect to such Designated Senior Debt and all other Obligations with
respect thereto.
SECTION 10.03. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company, in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, or
in an assignment for the benefit of creditors or any marshalling of the
Company's assets and liabilities:
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(1) holders of Senior Debt shall be entitled to receive payment in
full of all Obligations in respect of such Senior Debt (including Accrued
Bankruptcy Interest) and to have all outstanding Letter of Credit
Obligations fully cash collateralized before the Trustee or the Holders
shall be entitled to receive any payment of Obligations with respect to the
Senior Subordinated Discount Notes (except that the Trustee or the Holders
of Senior Subordinated Discount Notes may receive (i) payments of Escrow
Funds from the Escrow Account and (ii) payments and other distributions made
from any defeasance trust created pursuant to Section 8.01 hereof); and
(2) until all Obligations with respect to Senior Debt (as provided in
subsection (1) above) are paid in full and all outstanding Letter of Credit
Obligations are fully cash collateralized, any distribution to which the
Trustee or the Holders of Senior Subordinated Discount Notes would be
entitled but for this Article, including any such distribution that is
payable or deliverable by reason of the payment of any other Indebtedness of
the Company being subordinated to the payment of the Senior Subordinated
Discount Notes, shall be made to holders of Senior Debt or their
Representatives, ratably in accordance with the respective amounts of the
principal of such Senior Debt, interest (including Accrued Bankruptcy
Interest) thereon and all other Obligations with respect thereto (except
that Holders of Senior Subordinated Discount Notes may receive (i) payments
of Escrow Funds from the Escrow Account and (ii) payments and other
distributions made from any defeasance trust created pursuant to Section
8.01 hereof), as their interests may appear.
SECTION 10.04. DEFAULT ON DESIGNATED SENIOR DEBT.
The Company may not make any payment or distribution to the Trustee or
any Holder in respect of Obligations with respect to the Senior Subordinated
Discount Notes and may not acquire from the Trustee or any Holder any Senior
Subordinated Discount Notes for cash or property (other than (i) payments of
Escrow Funds from the Escrow Account and (ii) payments and other distributions
made from any defeasance trust created pursuant to Section 8.01 hereof) until
all principal and other Obligations with respect to the Senior Debt have been
paid in full if:
(i) a default in the payment of any principal or other Obligations
with respect to Designated Senior Debt occurs and is continuing (including
any default in payment upon the maturity of any Designated Senior Debt by
lapse of time, acceleration or otherwise), or any judicial proceeding is
pending to determine whether any such default has occurred; or
(ii) a default, other than a payment default described in subsection
(i) above, on Designated Senior Debt, including any event which, with giving
of notice or lapse of time, or both, would become an event of default and
including any default or event of default that would result upon any payment
or distribution with respect to the Senior Subordinated Discount Notes, has
occurred and is continuing with respect to any Designated Senior Debt (as
such default or event of default is defined in any agreement, indenture or
other document governing such Designated Senior Debt) and the Trustee
receives a notice of the default (a "Payment Blockage Notice") from a Person
who may give it pursuant to Section 10.12 hereof. If the Trustee receives
any such Payment Blockage Notice, no subsequent Payment Blockage Notice
shall be effective for purposes of this Section unless and until at least
360 days shall have elapsed since the first day of effectiveness of the
immediately prior Payment Blockage Notice. No nonpayment default 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 unless such default shall have been waived for a
period of not less than 180 days.
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If the Company is prohibited from making payments on or distributions
in respect of the Senior Subordinated Discount Notes or from acquiring the
Senior Subordinated Discount Notes, under subsection (i) or (ii) above, the
Company may and shall resume payments on and distributions in respect of the
Senior Subordinated Discount Notes and may acquire them upon the earlier of:
(1) the date upon which the default, event of default or other event
giving rise to such prohibition is cured or waived or shall have ceased to
exist, unless another default, event of default or other event that would
prohibit such payment, distribution or acquisition under Section 10.04(i) has
occurred and is continuing, or all Obligations in respect of such Designated
Senior Debt shall have been discharged or paid in full, or
(2) in the case of any prohibition referred to in Section 10.04(ii)
hereof, 179 days pass after the relevant Payment Blockage Notice is received by
the Trustee thereunder,
in each such case, if this Article otherwise permits the payment, distribution
or acquisition.
SECTION 10.05. ACCELERATION OF SENIOR SUBORDINATED DISCOUNT NOTES.
If payment of the Senior Subordinated Discount Notes is accelerated
because of an Event of Default, the Company shall promptly notify holders of
Senior Debt of the acceleration in accordance with Section 6.01 of this
Indenture.
SECTION 10.06. WHEN DISTRIBUTION MUST BE PAID OVER.
If, notwithstanding the provisions of Sections 10.03 and 10.04, any
direct or indirect payment or distribution on account of principal of or
interest on or other Obligations with respect to the Senior Subordinated
Discount Notes or acquisition, repurchase, redemption, retirement or defeasance
of any of the Senior Subordinated Discount Notes shall be made by or on behalf
of the Company (including any payments or distribution by any liquidating
trustee or agent or other Person in a proceeding referred to in Section 10.03)
and received by the Trustee or any Holder of Senior Subordinated Discount Notes
at a time when such payment or distribution was prohibited by the provisions of
Section 10.03 or 10.04 or such payment or distribution was required to be made
to holders of Senior Debt or their Representatives, then, unless and until such
payment or distribution is no longer prohibited by Section 10.03 or 10.04, such
payment or distribution shall be received, segregated from other funds or assets
and held in trust by the Trustee or such Holder of Senior Subordinated Discount
Notes, as the case may be, for the benefit of, and shall be immediately paid or
delivered over to, the holders of Senior Debt or their Representatives, ratably
in accordance with the respective amounts of the principal of such Senior Debt,
interest (including Accrued Bankruptcy Interest) thereon and all other
Obligations with respect thereto held or represented by each, until the
principal of all Senior Debt, interest (including Accrued Bankruptcy Interest)
thereon and all other Obligations with respect thereto have been paid in full
and all outstanding Letter of Credit Obligations have been fully cash
collateralized. Any distribution to the holders of Senior Debt or their
Representatives of assets other than cash may be held by such holders or such
Representatives as additional collateral without any duty to the Holder of
Senior Subordinated Discount Notes to liquidate or otherwise realize on such
assets or to apply such assets to any Senior Debt or other Obligations relating
thereto.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform only such obligations on the part of the Trustee as are specifically set
forth in this Article 10, and no implied covenants or obligations with respect
to the holders of Senior Debt shall be read into this Indenture against the
Trustee. The Trustee
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shall not be deemed to owe any fiduciary duty to the holders of Senior Debt, and
shall not be liable to any such holders if the Trustee shall in good faith
mistakenly pay over or distribute to or on behalf of Holders of Senior
Subordinated Discount Notes or the Company or any other Person money or assets
to which any holders of Senior Debt shall be entitled by virtue of this Article
10, except if such payment is made as a result of the willful misconduct or
gross negligence of the Trustee. Nothing in this Section 10.06 shall affect the
obligation of any Person other than the Trustee to hold such payment or
distribution for the benefit of, and to pay or deliver such payment or
distribution over to, the holders of Senior Debt or their Representatives.
SECTION 10.07. 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 Senior Subordinated Discount Notes to violate this Article,
but failure to give such notice shall not affect the subordination of the Senior
Subordinated Discount Notes to the Senior Debt as provided in this Article.
SECTION 10.08. SUBROGATION.
After all Senior Debt is paid in full and until the Senior
Subordinated Discount Notes are paid in full, Holders of Senior Subordinated
Discount Notes shall be subrogated (equally and ratably with all other
Indebtedness pari passu with the Senior Subordinated Discount Notes) to the
rights of holders of Senior Debt to receive distributions applicable to Senior
Debt to the extent that distributions otherwise payable to the Holders of Senior
Subordinated Discount Notes have been applied to the payment of Senior Debt. A
distribution made under this Article to holders of Senior Debt that otherwise
would have been made to Holders of Senior Subordinated Discount Notes is not, as
between the Company and Holders, a payment by the Company on the Senior
Subordinated Discount Notes.
SECTION 10.09. RELATIVE RIGHTS.
This Article defines the relative rights of Holders of Senior
Subordinated Discount Notes and holders of Senior Debt. 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, premium,
if any, and interest, including Liquidated Damages, if any, on the Senior
Subordinated Discount 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 Debt; 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 Debt to receive distributions and payments
otherwise payable to Holders.
If the Company fails because of this Article to pay principal of,
premium if any, or interest, including Liquidated Damages, if any, on a Senior
Subordinated Discount Note on the due date, the failure is still a Default or
Event of Default.
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SECTION 10.10. SUBORDINATION MAY NOT BE IMPAIRED BY COMPANY.
No right of any present or future holder of Senior Debt to enforce the
subordination of the Indebtedness evidenced by the Senior Subordinated Discount
Notes shall be impaired by any act or failure to act by the Company or any
Holder of Senior Subordinated Discount Notes or any holder of Senior Debt or by
the failure of the Company or any Holder of Senior Subordinated Discount Notes
or any holder of Senior Debt to comply with this Indenture regardless of any
knowledge thereof that any such Holder of Senior Subordinated Discount Notes or
holder of Senior Debt, as the case may be, may have or be otherwise charged
with. The holders of Senior Debt may extend, renew, restate, supplement, modify
or amend the terms of the Senior Debt or any Obligations with respect thereto or
any security therefor and release, sell or exchange such security and otherwise
deal freely with the Company and its Subsidiaries and Affiliates all without
affecting the liabilities and obligations of the parties to this Indenture or
the Holders. No provision in any supplemental indenture that adversely affects
the subordination of the Senior Subordinated Discount Notes or other provisions
of this Article 10 shall be effective against the holders of the Designated
Senior Debt that have not consented thereto.
Each Holder of the Senior Subordinated Discount Notes by their
acceptance thereof: (a) acknowledges and agrees that the holders of any Senior
Debt or their Representative, in its or their discretion, and without affecting
any rights of any holder of Senior Debt under this Article 10, may foreclose any
mortgage or deed of trust covering interest in real property securing such
Senior Debt or any guarantee thereof by judicial or nonjudicial sale, even
though such action may release the Company or any guarantor of such Senior Debt
from further liability under such Senior Debt or any guarantee thereof or may
otherwise limit the remedies available to the holders thereof; and (b) hereby
waives any defense that such Holder may otherwise have to the enforcement by any
holder of any Senior Debt or any Representative of such holder against such
Holder of this Article 10 after or as a result of any action, including any such
defense based on any loss or impairment of rights of subrogation.
If at any time any payment of Obligations with respect to any Senior
Debt is rescinded or must otherwise be returned upon the insolvency, bankruptcy,
reorganization or liquidation of the Company or otherwise, the provisions of
this Article 10 shall continue to be effective or reinstated, as the case may
be, to the same extent as though such payments had not been made.
SECTION 10.11. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to holders of
Senior Debt, 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 10, the Trustee and the Holders of Senior Subordinated Discount
Notes shall be entitled to rely upon any order or decree made by any court of
competent jurisdiction or upon any certificate of such Representative or of the
liquidating trustee or agent or other Person making any distribution to the
Trustee or to the Holders of Senior Subordinated Discount Notes for the purpose
of ascertaining the Persons entitled to participate in such distribution, the
holders of the Senior Debt 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 10.
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SECTION 10.12. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 10 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 Senior Subordinated Discount Notes, unless a Responsible
Officer of the Trustee shall have received at its Corporate Trust Office at
least two Business Days prior to the date of such payment written notice of
facts that would cause the payment of any Obligations with respect to the Senior
Subordinated Discount Notes to violate this Article. Only the Company or a
Representative may give the notice. Nothing in this Article 10 shall impair the
claims of, or payments to, the Trustee under or pursuant to Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold Senior
Debt with the same rights it would have if it were not Trustee. Any Agent may do
the same with like rights.
SECTION 10.13. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of a Senior Subordinated Discount 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 appropriate to effectuate the
subordination as provided in this Article 10, 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 under the New Bank Credit
Agreement is hereby authorized to file an appropriate claim for and on behalf of
the Holders of the Senior Subordinated Discount Notes.
The Company, the Trustee and each Holder by their acceptance of the
Senior Subordinated Discount Notes acknowledge that damages would be inadequate
to compensate the holders of Senior Debt for any breach or default by the
Company, the Trustee or any such Holder of its obligations under this Article
10, and, therefore, agree that the holders of Senior Debt and their
Representatives shall be entitled to equitable relief, including injunctive
relief and specific performance, in the enforcement thereof.
SECTION 10.14. AMENDMENTS.
The provisions of this Article 10 shall not be amended or modified
without the written consent of the holders of all Senior Debt unless such
amendment or modification does not adversely affect the holders of such Senior
Debt.
ARTICLE 11
SENIOR SUBORDINATED GUARANTEES
SECTION 11.01. SENIOR SUBORDINATED GUARANTEES.
Subject to this Article 11, each of the Guarantors, jointly and
severally, hereby unconditionally guarantees to each Holder of a Senior
Subordinated Discount Note authenticated and delivered by the Trustee and to the
Trustee and its successors and assigns, irrespective of the validity and
enforceability of this Indenture, the Senior Subordinated Discount Notes or the
obligations of the Company under this Indenture
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or the Senior Subordinated Discount Notes, that: (a) the principal of, premium,
if any, and interest, including Liquidated Damages, if any, on the Senior
Subordinated Discount Notes shall be promptly paid in full when due, whether at
maturity, by acceleration, redemption or otherwise, and (to the extent permitted
by law) interest on the overdue principal of, premium and interest, including
Liquidated Damages, on the Senior Subordinated Discount Notes, if any, and all
other obligations of the Company to the Holders or the Trustee under this
Indenture or the Senior Subordinated Discount Notes shall be promptly paid in
full or performed, all in accordance with the terms of this Indenture and the
Senior Subordinated Discount Notes; and (b) in case of any extension of time of
payment or renewal of any Senior Subordinated Discount Notes or any of such
other obligations, that 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. Failing payment when due of any
amount so guaranteed for whatever reason, the Guarantors shall be obligated to
pay the same immediately whether or not such failure to pay has become an Event
of Default which could cause acceleration pursuant to Section 6.02 hereof. Each
Guarantor agrees that this is a guarantee of payment and not a guarantee of
collection.
The Guarantors hereby agree that their obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Senior Subordinated Discount Notes or this Indenture, the absence of any action
to enforce the same, any waiver or consent by any Holder of the Senior
Subordinated Discount Notes with respect to any provisions hereof or thereof,
the recovery 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 guarantor. Each Guarantor hereby waives diligence,
presentment, demand of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Company, any right to require a proceeding first
against the Company, protest, notice and all demands whatsoever and covenants
that, subject to this Article 11, this Senior Subordinated Guarantee shall not
be discharged except by complete performance of the obligations contained in the
Senior Subordinated Discount Notes and this Indenture.
If any Holder of Senior Subordinated Discount Notes or the Trustee is
required by any court or otherwise to return to the Company or Guarantors, or
any Custodian, Trustee, liquidator or other similar official acting in relation
to either the Company or Guarantors, any amount paid by either to the Trustee or
such Holder, this Senior Subordinated Guarantee, to the extent theretofore
discharged, shall be reinstated in full force and effect.
Each Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders of Senior Subordinated Discount Notes in
respect of any Obligations guaranteed hereby until payment in full of all
Obligations guaranteed hereby. Each Guarantor further agrees that, as between
the Guarantors, on the one hand, and the Holders 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 of this Senior Subordinated
Guarantee, notwithstanding any stay, injunction or other prohibition preventing
such acceleration in respect of the Obligations guaranteed hereby and (y) in the
event of any declaration of acceleration of such Obligations as provided in
Section 6.02 hereof, such Obligations (whether or not due and payable) shall
forthwith become due and payable by the Guarantors for the purpose of this
Senior Subordinated Guarantee. The Guarantors shall have the right to seek
contribution from any non-paying Guarantor so long as the exercise of such right
does not impair the rights of the Holders under the Senior Subordinated
Guarantees.
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SECTION 11.02. SUBORDINATION OF SENIOR SUBORDINATED GUARANTEE.
The Obligations of each Guarantor under its Senior Subordinated
Guarantee pursuant to this Article 11 shall be junior and subordinated to the
Senior Guarantee of such Guarantor on the same basis as the Senior Subordinated
Discount Notes are junior and subordinated to Senior Debt 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 Guarantors only at
such times as they may receive and/or retain payments in respect of the Senior
Subordinated Discount Notes pursuant to this Indenture, including Article 10
hereof.
SECTION 11.03. LIMITATION ON GUARANTOR LIABILITY.
Each Guarantor, and by its acceptance of Senior Subordinated Discount
Notes, each Holder, hereby confirms that it is the intention of all such parties
that the Senior Subordinated Guarantee of such Guarantor not constitute a
fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform
Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar
federal or state law to the extent applicable to any Senior Subordinated
Guarantee. To effectuate the foregoing intention, the Trustee, the Holders and
the Guarantors hereby irrevocably agree that the obligations of such Guarantor
under its Senior Subordinated Guarantee and this Article 11 shall be limited to
the maximum amount as will, after giving effect to such maximum amount and all
other contingent and fixed liabilities of such Guarantor that are relevant under
such laws, and after giving effect to any collections from, rights to receive
contribution from or payments made by or on behalf of any other Guarantor in
respect of the obligations of such other Guarantor under this Article 11, result
in the obligations of such Guarantor under its Senior Subordinated Guarantee not
constituting a fraudulent transfer or conveyance.
SECTION 11.04. EXECUTION AND DELIVERY OF SENIOR SUBORDINATED GUARANTEES.
To evidence its Senior Subordinated Guarantee set forth in Section
11.01, each Guarantor hereby agrees that a notation of such Senior Subordinated
Guarantee substantially in the form of Exhibit D shall be endorsed by an Officer
of such Guarantor on each Senior Subordinated Discount Note authenticated and
delivered by the Trustee and that this Indenture shall be executed on behalf of
such Guarantor by its President or one of its Vice Presidents and attested to by
an Officer of such Guarantor.
Each Guarantor hereby agrees that its Senior Subordinated Guarantee
set forth in Section 11.01 shall remain in full force and effect notwithstanding
any failure to endorse on each Senior Subordinated Discount Note a notation of
such Senior Subordinated Guarantee.
If an Officer whose signature is on this Indenture or on the Senior
Subordinated Guarantee no longer holds that office at the time the Trustee
authenticates the Senior Subordinated Discount Note on which a Senior
Subordinated Guarantee is endorsed, the Senior Subordinated Guarantee shall be
valid nevertheless.
The delivery of any Senior Subordinated Discount Note by the Trustee,
after the authentication thereof hereunder, shall constitute due delivery of the
Senior Subordinated Guarantee set forth in this Indenture on behalf of the
Guarantors.
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In the event that the Company creates or acquires any new Subsidiaries
subsequent to the date of this Indenture, if required by Section 4.14 hereof,
the Company shall cause such Subsidiaries to execute supplemental indentures to
this Indenture and Senior Subordinated Guarantees in accordance with Section
4.14 hereof and this Article 11, to the extent applicable.
SECTION 11.05. GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.
No Guarantor may consolidate with or merge with or into (whether or
not such Guarantor is the surviving Person) another corporation, Person or
entity whether or not affiliated with such Guarantor unless:
(a) subject to Section 11.06 hereof, the Person formed by or surviving
any such consolidation or merger (if other than such Guarantor)
unconditionally assumes all the obligations of such Guarantor under the
Senior Subordinated Guarantee and this Indenture on the terms set forth
herein pursuant to a supplemental indenture in form and substance reasonably
satisfactory to the Trustee;
(b) immediately after giving effect to such transaction, no Default or
Event of Default exists; and
(c) the Company would be permitted by virtue of the Company's pro
forma Fixed Charge Coverage Ratio to incur, immediately after giving effect
to such transaction, 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 hereof.
In case of any such consolidation or merger and upon the assumption by the
successor corporation, by supplemental indenture, executed and delivered to the
Trustee and satisfactory in form to the Trustee, of the Senior Subordinated
Guarantee endorsed upon the Senior Subordinated Discount Notes and of the due
and punctual performance of all of the covenants and conditions of this
Indenture to be performed by the Guarantor, such successor corporation shall
succeed to and be substituted for the Guarantor with the same effect as if it
had been named herein as a Guarantor. Such successor corporation thereupon may
cause to be signed any or all of the Senior Subordinated Guarantees to be
endorsed upon all of the Senior Subordinated Discount Notes issuable hereunder
which theretofore shall not have been signed by the Company and delivered to the
Trustee. All the Senior Subordinated Guarantees so issued shall in all respects
have the same legal rank and benefit under this Indenture as the Guarantees
theretofore and thereafter issued in accordance with the terms of this Indenture
as though all of such Senior Subordinated Guarantees had been issued at the date
of the execution hereof.
Except as set forth in Articles 4 and 5 hereof, and notwithstanding
clauses (a) through (c) above, nothing contained in this Indenture or in any of
the Senior Subordinated Discount Notes shall prevent any consolidation or merger
of a Guarantor with or into the Company or another Guarantor, or shall prevent
any sale or conveyance of the property of a Guarantor as an entirety or
substantially as an entirety to the Company or another Guarantor.
SECTION 11.06. RELEASES OF SENIOR SUBORDINATED GUARANTEES.
In the event of a sale or other disposition of all or substantially
all of the assets of any Guarantor (other than Holdings), by way of merger,
consolidation or otherwise, or a sale or other disposition (including, without
limitation, by foreclosure) of all of the Capital Stock of any Guarantor (other
than Holdings), then such Guarantor (in the event of a sale or other
disposition, by way of such a merger, consolidation or
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otherwise (including, without limitation, by foreclosure), 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 Guarantor) shall be
automatically released and relieved of any obligations under its Senior
Subordinated Guarantee; provided that the Net Proceeds of such sale or other
disposition are applied in accordance with Section 4.10 hereof. Upon the merger,
consolidation, sale or other disposition (including, without limitation, by
foreclosure) of all or substantially all of the assets of the Company, then
Holdings shall be automatically released and relieved of any obligations under
its Senior Subordinated Guarantee; provided that such merger, consolidation or
sale complies with Section 5.01 hereof. Upon delivery by the Company to the
Trustee of an Officers' Certificate and an Opinion of Counsel to the effect that
such sale or other disposition was made by the Company in accordance with the
provisions of this Indenture, including without limitation Sections 4.10 and
5.01 hereof, the Trustee shall execute any documents reasonably required in
order to evidence the release of any Guarantor from its obligations under its
Senior Subordinated Guarantee.
Any Guarantor not released from its obligations under its Senior
Subordinated Guarantee shall remain liable for the full amount of principal of
and interest on the Senior Subordinated Discount Notes and for the other
obligations of any Guarantor under this Indenture as provided in this Article
11.
SECTION 11.07. "TRUSTEE" TO INCLUDE PAYING AGENT.
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article 11 shall in such case (unless the context shall
otherwise require) be construed as extending to and including such Paying Agent
within its meaning as fully and for all intents and purposes as if such Paying
Agent were named in this Article 11 in place of the Trustee.
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 TIA Section 318(c), the imposed duties shall control.
SECTION 12.02. NOTICES.
Any notice, request, instruction, order or other communication by the
Company, the Guarantors or the Trustee to the others is duly given only 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 or any Guarantors:
AMF Group Inc.
7313 Bell Creek Road
Mechanicsville, VA 23221
Telecopier No.: (804) 559-8666
Attention: Secretary
75
<PAGE> 82
With a copy to:
GS Capital Partners II, L.P.
85 Broad Street
New York, NY 10004
Telecopier No.: (212) 902-3000
Attention: David J. Greenwald
and
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Telecopier No.: (212) 403-2000
Attention: Elliott V. Stein
If to the Trustee:
American Bank National Association
101 E. Fifth Street
St. Paul, MN 55101-1860
Telecopier No.: (612) 229-6415
Attention: Corporate Trust Administration
The Company, any Guarantor 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; five Business Days after being deposited in the mail,
postage prepaid, if mailed; 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.
76
<PAGE> 83
SECTION 12.03. COMMUNICATION BY HOLDERS OF SENIOR SUBORDINATED DISCOUNT NOTES
WITH OTHER HOLDERS OF SENIOR SUBORDINATED DISCOUNT NOTES.
Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the Senior
Subordinated Discount Notes. The Company, the Guarantors, 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 or any Guarantor to the
Trustee to take any action under this Indenture, the Company or such Guarantor,
as the case may be, shall furnish to the Trustee:
(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.
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.
77
<PAGE> 84
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 any Guarantor, as such, shall have any
liability for any obligations of the Company or the Guarantors under the Senior
Subordinated Discount Notes, the Senior Subordinated Guarantees, this Indenture
or for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder of Senior Subordinated Discount Notes by accepting a
Senior Subordinated Discount Note waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the Senior
Subordinated Discount 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 SENIOR SUBORDINATED DISCOUNT NOTES AND THE SENIOR
SUBORDINATED 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 and the Senior Subordinated Guarantees.
SECTION 12.10. SUCCESSORS.
All agreements of the Company and each Guarantor in this Indenture and
the Senior Subordinated Discount Notes shall bind its respective 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 Senior Subordinated
Discount 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.
SECTION 12.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
78
<PAGE> 85
SIGNATURES
Dated as of March 21, 1996
AMF GROUP INC.
Attest: By: /s/ Richard A. Friedman
----------------------------
Name: Richard A. Friedman
Title: President
/s/ Michael P. Bardaro
- --------------------------
Name: Michael P. Bardaro
Title: Secretary
AMF GROUP HOLDINGS INC.
Attest: By: /s/ Richard A. Friedman
----------------------------
Name: Richard A. Friedman
Title: President
/s/ Carla H. Skodinski
- --------------------------
Name: Carla H. Skodinski
Title: Secretary
AMF BOWLING HOLDINGS INC.
Attest: By: /s/ Robert L. Morin
----------------------------
Name: Robert L. Morin
Title: President
/s/ William W. Flexon
- --------------------------
Name: William W. Flexon
Title: Secretary
AMF BOWLING CENTERS HOLDINGS INC.
Attest: By: /s/ Douglas J. Stanard
----------------------------
Name: Douglas J. Stanard
Title: President
/s/ Michael P. Bardaro
- --------------------------
Name: Michael P. Bardaro
Title: Assistant Secretary
AMF WORLDWIDE BOWLING CENTERS HOLDINGS INC.
Attest: By: /s/ Douglas J. Stanard
----------------------------
Name: Douglas J. Stanard
Title: President
/s/ Michael P. Bardaro
- --------------------------
Name: Michael P. Bardaro
Title: Secretary
<PAGE> 86
Dated as of March 21, 1996
AMERICAN BANK NATIONAL ASSOCIATION
Trustee
Attest: By: /s/ Frank Lester
-----------------------------------
/s/ THOMAS M. KORSMAN Name: FRANK P. LESTER IV
- ---------------------- Title: Vice President
THOMAS M. KORSMAN
VICE PRESIDENT
<PAGE> 87
EXHIBIT A-1
(Face of Senior Subordinated Discount Note)
================================================================================
FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED, THIS SECURITY IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT;
FOR EACH $1,000 PRINCIPAL AMOUNT OF THIS SECURITY, THE ISSUE PRICE IS
$552.94, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT IS $447.06, THE ISSUE DATE IS
MARCH 21, 1996 AND THE YIELD TO MATURITY IS 12 1/4% PER ANNUM.
CUSIP 030985AB1
No. $
----- ---------
12 1/4% [Series A] [Series B] Senior Subordinated Discount Notes due 2006
AMF GROUP INC.
promises to pay to
or registered assigns,
the principal sum of
Dollars ($ ) on March 15, 2006.
Interest Payment Dates: March 15 and September 15
Record Dates: March 1 and September 1
Dated: ,
----------- -----
AMF GROUP INC.
By:
------------------------
Name:
Title:
By:
------------------------
Name:
Title:
This is one of the Senior
Subordinated Discount Notes
referred to in the (SEAL)
within-mentioned Indenture:
AMERICAN BANK NATIONAL ASSOCIATION,
as Trustee
By:
----------------------------------
Authorized Signatory
================================================================================
A1-1
<PAGE> 88
(Back of Senior Subordinated Discount Note)
12 1/4% [Series A] [Series B] Senior Subordinated Discount Note due 2006
[UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SENIOR
SUBORDINATED DISCOUNT NOTES IN DEFINITIVE FORM, THIS SENIOR SUBORDINATED
DISCOUNT 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 ISSUER 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)
THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND (A) MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) BY THE INITIAL INVESTOR (a) TO
A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (b) IN AN OFFSHORE TRANSACTION COMPLYING
WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (c) PURSUANT
TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE), (d) TO THE COMPANY OR (e) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (2) BY SUBSEQUENT INVESTORS,
AS SET FORTH IN (1) ABOVE AND, IN ADDITION, TO AN INSTITUTIONAL ACCREDITED
INVESTOR IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, AND, IN EACH CASE, IN ACCORDANCE WITH ALL APPLICABLE SECURITIES
LAWS OF THE STATES OF THE UNITED STATES AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE NOTES
EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE. NO
REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY
RULE 144 FOR RESALES OF THE NOTES.
Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.
1. INTEREST. AMF Group Inc., a Delaware corporation (the "Company"),
promises to pay interest on the principal amount of this Senior Subordinated
Discount Note beginning March 15, 2001 at the rate of 12 1/4% per annum. Until
March 15, 2001 (the "Full Accretion Date"), no interest will be paid in cash on
the Senior Subordinated Discount Notes, but the Accreted Value will accrete
(representing the amortization of original issue discount) between the Issuance
Date and the Full Accretion Date, on a semi-annual bond equivalent basis using a
360-day year comprised of twelve 30-day months such that the Accreted Value
shall be equal to the full principal amount at maturity of the Senior
Subordinated Discount Notes on the Full Accretion Date. Beginning on the Full
Accretion Date, interest on the Senior Subordinated Discount
- --------------
1. This paragraph should be included only if the Senior Subordinated Discount
Note is issued in global form.
A1-2
<PAGE> 89
Notes shall accrue at the rate of 12 1/4% per annum and shall be payable in cash
semi-annually in arrears on March 15 and September 15, or if any such day is not
a Business Day, on the next succeeding Business Day (each an "Interest Payment
Date"); provided that the first Interest Payment Date shall be September 15,
2001. Interest on the Senior Subordinated Discount Notes will accrue from the
most recent date to which interest has been paid or, if no interest has been
paid, from the Full Accretion Date. Interest will be computed on the basis of a
360-day year comprised of twelve 30-day months.
2. METHOD OF PAYMENT. On each Interest Payment Date the Company shall pay
interest and Liquidated Damages, if any, to the Person who is the Holder of
record of this Senior Subordinated Discount Note as of the close of business on
March 1 or September 1 immediately preceding such Interest Payment Date, even if
this Senior Subordinated Discount Note is cancelled after such record date and
on or before such Interest Payment Date, except as provided in Section 2.12 of
the Indenture with respect to defaulted interest. Principal, premium, if any,
and interest, including Liquidated Damages, if any, on this Senior Subordinated
Discount Note 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, including Liquidated Damages, if any, may be made
by check mailed to the Holder of this Senior Subordinated Discount Note at its
address set forth in the register of Holders of Senior Subordinated Discount
Notes; provided, however, that all payments with respect to Global Notes and
Certificated Notes the Holders of which have given wire transfer instructions to
the Company at least 10 Business Days prior to the applicable payment date will
be required to be made by wire transfer of immediately available funds to the
accounts specified by the Holders thereof. 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, American Bank National
Association, 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, any Guarantor or any other of its Restricted
Subsidiaries may act in any such capacity.
4. INDENTURE. The Company issued the Senior Subordinated Discount Notes
under an Indenture dated as of March 21, 1996 ("Indenture") among the Company,
the Guarantors and the Trustee. The terms of the Senior Subordinated Discount
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 Senior Subordinated Discount Notes are
subject to all such terms, and Holders are referred to the Indenture and such
Act for a statement of such terms. The Senior Subordinated Discount Notes are
general unsecured obligations of the Company limited in an aggregate principal
amount at maturity to $452.0 million and will mature on March 15, 2006.
5. OPTIONAL REDEMPTION.
(a) The Senior Subordinated Discount Notes are not redeemable at the
Company's option prior to March 15, 2001. From and after March 15, 2001, the
Senior Subordinated Discount Notes will be subject to redemption at the option
of the Company, in whole or in part, upon not less than 30 nor more than 60
days' written notice, at the redemption prices (expressed as percentages of
principal amount) set forth below, plus accrued and unpaid interest, including
Liquidated Damages, if any, thereon to the applicable redemption date, if
redeemed during the twelve-month period beginning on March 15 of the years
indicated below:
A1-3
<PAGE> 90
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2001 ................................. 106.125%
2002 ................................. 104.083%
2003 ................................. 102.042%
2004 and thereafter .................. 100.000%
</TABLE>
(b) Notwithstanding the provisions of clause (a) of this Paragraph 5, prior
to March 15, 1999, the Company may, at its option, on any one or more occasions,
redeem Senior Subordinated Discount Notes at a redemption price equal to
112.250% of the Accreted Value thereof, plus accrued and unpaid Liquidated
Damages, if any, thereon with the net proceeds of public or private sales of
common stock of, or contributions to the common equity capital of, the Company;
provided that at least $150.0 million in aggregate Accreted Value of Senior
Subordinated Discount Notes remains outstanding immediately after the occurrence
of such redemption; and provided, further, that such redemption shall occur
within 60 days of the date of the closing of the related sale of common stock
of, or capital contribution to, the Company.
6. MANDATORY REDEMPTION.
Except as set forth in paragraphs 7 and 8 below, the Company shall not be
required to make mandatory redemption or sinking fund payments with respect to
the Senior Subordinated Discount Notes.
7. SPECIAL MANDATORY REDEMPTION.
If consummation of the Acquisition has not occurred on or prior to May 31,
1996, all of the outstanding Senior Subordinated Discount Notes shall be subject
to a Special Mandatory Redemption upon seven days' prior written notice to the
Holders with the Escrow Funds from the Escrow Account at a redemption price
equal to the Special Redemption Price, including Liquidated Damages, if any, as
of the date of redemption. Such Special Mandatory Redemption may be made prior
to May 31, 1996, in accordance with the provisions described above if the
Company determines at such time that it will not consummate the Acquisition.
"Special Redemption Price" means, with respect to any Senior Subordinated
Discount Note as of any date of redemption with respect thereto, an amount equal
to (x) 101% of the Accreted Value thereof if such date is prior to April 18,
1996, (y) 102.5% of the Accreted Value thereof if such date is on or after May
31, 1996, and (z) on any date that is on or after April 18, 1996, and prior to
May 31, 1996, a percentage of the Accreted Value thereof determined by linear
interpolation between 101% and 102.5% based on the number of days elapsed since
April 18, 1996, in the 43-day period between April 18, 1996, and May 31, 1996,
including April 18, 1996, as the first day in such period.
8. REPURCHASE AT OPTION OF HOLDER.
(a) If there is a Change of Control, each Holder of Senior Subordinated
Discount Notes shall have the right to require the Company to repurchase all or
any part (equal to $1,000 in principal amount or an integral multiple thereof)
of such Holder's Senior Subordinated Discount Notes pursuant to the offer
described below (the "Change of Control Offer") at a purchase price in cash (the
"Change of Control Payment") equal to 101% of the aggregate principal amount
thereof plus accrued and unpaid interest, including Liquidated Damages, if any,
thereon to the date of repurchase (or 101% of the Accreted Value thereof on the
date of repurchase, plus accrued and unpaid Liquidated Damages, if any, if the
Change of Control Offer occurs prior to the Full Accretion Date). Within 30 days
following any Change of Control, the Company shall
A1-4
<PAGE> 91
mail a notice to each Holder setting forth the procedures governing the Change
of Control Offer as required by the Indenture.
(b) If the Company or a Restricted Subsidiary consummates any Asset Sales
permitted by the Indenture, within 10 days of each date on which the aggregate
amount of Excess Proceeds exceeds $25.0 million, the Company shall commence an
offer to all Holders of Senior Subordinated Discount Notes and, to the extent
required by the Senior Subordinated Note Indenture, the Holders of Senior
Subordinated Notes (an "Asset Sale Offer") pursuant to Section 3.10 of the
Indenture to purchase the maximum principal amount of Notes, that is an integral
multiple of $1,000, that may be purchased out of the Excess Proceeds at a
purchase price in cash in an amount equal to 100% of the aggregate principal
amount thereof on the date fixed for the closing of such offer plus accrued and
unpaid interest, including Liquidated Damages, if any, to the date fixed for the
closing of such offer (or, with respect to Senior Subordinated Discount Notes,
100% of the Accreted Value thereof on the date of purchase if such Asset Sale
Offer is prior to the Full Accretion Date) in accordance with the procedures set
forth in the Indenture and the Senior Subordinated Note Indenture, as
applicable. To the extent that the aggregate amount of Notes tendered pursuant
to an Asset Sale Offer is less than the Excess Proceeds, the Company may use any
remaining Excess Proceeds (x) to offer to redeem Subordinated Indebtedness in
accordance with Section 4.07 of the Indenture or (y) for any purpose not
prohibited by any provision of the Indenture. If the aggregate principal amount
of Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds,
the Trustees shall select the Notes to be purchased on a pro rata basis. Holders
of Senior Subordinated Discount Notes that are the subject of an offer to
purchase will receive an Asset Sale Offer from the Company prior to any related
purchase date and may elect to have such Senior Subordinated Discount Notes
purchased by completing the form entitled "Option of Holder to Elect Purchase"
on the reverse of this Senior Subordinated Discount Note.
9. NOTICE OF OPTIONAL REDEMPTION. Notice of optional redemption will be
mailed at least 30 days but not more than 60 days before the redemption date to
each Holder whose Senior Subordinated Discount Notes are to be redeemed at its
registered address. Senior Subordinated Discount Notes in denominations larger
than $1,000 may be redeemed in part but only in whole multiples of $1,000,
unless all of the Senior Subordinated Discount Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrete or accrue
on Senior Subordinated Discount Notes or portions thereof called for redemption.
10. DENOMINATIONS, TRANSFER, EXCHANGE. The Senior Subordinated Discount
Notes are in registered form without coupons in denominations of $1,000 and
integral multiples of $1,000. The transfer of Senior Subordinated Discount Notes
may be registered and Senior Subordinated Discount 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 Senior Subordinated Discount Note or portion of a Senior
Subordinated Discount Note selected for redemption, except for the unredeemed
portion of any Senior Subordinated Discount Note being redeemed in part. Also,
it need not exchange or register the transfer of any Senior Subordinated
Discount Notes for a period of 15 days before a selection of Senior Subordinated
Discount Notes to be redeemed or during the period between a record date and the
corresponding Interest Payment Date.
11. PERSONS DEEMED OWNERS. The registered Holder of a Senior Subordinated
Discount Note may be treated as its owner for all purposes.
A1-5
<PAGE> 92
12. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the
Indenture or the Senior Subordinated Discount Notes may be amended or
supplemented with the consent of the Holders of at least a majority in principal
amount of the then outstanding Senior Subordinated Discount Notes, and any
existing default or compliance with any provision of the Indenture or the Senior
Subordinated Discount Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Senior Subordinated
Discount Notes. Without the consent of any Holder of a Senior Subordinated
Discount Note, the Indenture or the Senior Subordinated Discount Notes may be
amended or supplemented to cure any ambiguity, defect or inconsistency, to
provide for uncertificated Senior Subordinated Discount Notes in addition to or
in place of certificated Senior Subordinated Discount Notes, to provide for the
assumption of the Company's obligations to Holders of the Senior Subordinated
Discount Notes in case of a merger or consolidation, to make any change that
would provide any additional rights or benefits to the Holders of the Senior
Subordinated Discount Notes or that does not adversely affect the legal rights
under the Indenture of any such Holder, or to comply with the requirements of
the SEC in order to effect or maintain the qualification of the Indenture under
the Trust Indenture Act.
13. DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30
days in the payment when due of interest, including Liquidated Damages, if any,
on the Senior Subordinated Discount Notes (whether or not prohibited by Article
10 the Indenture); (ii) default in payment when due of the principal of or
premium, if any, on the Senior Subordinated Discount Notes (whether or not
prohibited by Article 10 of the Indenture); (iii) failure by the Company for 30
days after notice from the Trustee or the Holders of at least 25% in principal
amount of the then outstanding Senior Subordinated Discount Notes to comply with
Sections 3.09, 4.07, 4.09, 4.13 or 5.01 of the Indenture; (iv) failure by the
Company for 60 days after notice from the Trustee or the Holders of at least 25%
in principal amount of the then outstanding Senior Subordinated Discount Notes
to comply with any of its other agreements in the Indenture or the Senior
Subordinated Discount Notes; (v) 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
Restricted Subsidiaries (or the payment of which is guaranteed by the Company or
any of its Restricted Subsidiaries) whether such Indebtedness or guarantee now
exists, or is created after the date of the Indenture, which default 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 the maturity of which has been so
accelerated, aggregates $25.0 million or more; (vi) failure by the Company or
any of its Restricted Subsidiaries to pay final judgments aggregating in excess
of $25.0 million, which judgments are not paid, discharged or stayed for a
period of 60 days; (vii) certain events of bankruptcy or insolvency with respect
to the Company or any of its Restricted Subsidiaries; (viii) any failure by the
Company to comply with the provisions of the Senior Subordinated Discount Note
Pledge and Escrow Agreement at any time prior to the consummation of the
Acquisition; and (ix) except as permitted by the Indenture, any Senior
Subordinated Guarantee is held in any judicial proceeding to be unenforceable or
invalid or ceases for any reason to be in full force and effect (except by its
terms) or any Guarantor, or any Person acting on behalf of any Guarantor, denies
or disaffirms such Guarantor's obligations under its Senior Subordinated
Guarantee. If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Senior
Subordinated Discount Notes may declare all the Senior Subordinated Discount
Notes to be due and payable immediately. Notwithstanding the foregoing, in the
case of an Event of Default arising from certain events of bankruptcy or
insolvency, all outstanding Senior Subordinated Discount Notes will become due
and payable without further action or notice. Holders may not enforce the
Indenture or the Senior Subordinated Discount Notes except as provided in the
Indenture. Subject to certain limitations, Holders of a majority in principal
amount of the then outstanding Senior Subordinated Discount Notes may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of the Senior Subordinated Discount Notes notice of any continuing
Default or Event of Default (except a Default or Event of Default relating to
the payment
A1-6
<PAGE> 93
of principal or interest, including Liquidated Damages, if any) if it determines
that withholding notice is in their interest. The Holders of a majority in
aggregate principal amount of the Senior Subordinated Discount Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of the
Senior Subordinated Discount Notes waive any existing Default or Event of
Default and its consequences under the Indenture except a continuing Default or
Event of Default in the payment of interest, including Liquidated Damages, if
any, on, or the principal and premium, if any, of, the Senior Subordinated
Discount 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.
14. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or
any other capacity, may become the owner or pledgee of Senior Subordinated
Discount Notes, and may otherwise deal with the Company, any Guarantor or any of
their respective Affiliates, as if it were not the Trustee. However, in the
event that the Trustee acquires any conflicting interest it must eliminate such
conflict within 90 days, apply to the SEC for permission to continue as trustee
or resign.
15. NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee, incorporator or stockholder of the Company or any Guarantor,
as such, shall have any liability for any obligations of the Company or the
Guarantors under the Senior Subordinated Discount Notes, the Senior Subordinated
Guarantees, the Indenture or for any claim based on, in respect of, or by reason
of, such obligations or their creation. Each Holder of Senior Subordinated
Discount Notes by accepting a Senior Subordinated Discount Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Senior Subordinated Discount Notes.
16. AUTHENTICATION. This Senior Subordinated Discount Note shall not
be valid until authenticated by the manual signature of the Trustee or an
authenticating agent.
17. 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).
18. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED SECURITIES.
In addition to the rights provided to Holders of Senior Subordinated Discount
Notes under the Indenture, Holders of Transferred Restricted Securities shall
have all the rights set forth in the Registration Rights Agreement dated as of
March 21, 1996, between the Company and the parties named on the signature
pages thereto (the "Registration Rights Agreement").
19. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Senior Subordinated Discount 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 Senior Subordinated Discount Notes or as contained in any notice
of redemption and reliance may be placed only on the other identification
numbers placed thereon.
A1-7
<PAGE> 94
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture, the Senior Subordinated Discount Note
Pledge and Escrow Agreement and/or the Registration Rights Agreement. Requests
may be made to:
AMF Group Inc.
7313 Bell Creek Road
Mechanicsville, Virginia, 23221
Telecopier No.: (804) 559-8666
Attention: Secretary
A1-8
<PAGE> 95
ASSIGNMENT FORM
To assign this Security, fill in the form below: (I) or (we) assign
and transfer this Security to
________________________________________________________________________________
(Insert assignee's Social Security or tax I.D. No.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
________________________________________________________________________________
Date: _________________
Your Signature:__________________________________
(Sign exactly as your name appears on the face
of this Security)
Signature Guarantee:* ___________________________
___________________
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
A1-9
<PAGE> 96
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Senior Subordinated Discount Note
purchased by the Company pursuant to Section 4.10 or 4.13 of the Indenture,
check the box below:
/ / Section 4.10 / / Section 4.13
If you want to elect to have only part of the Senior Subordinated
Discount Note purchased by the Company pursuant to Section 4.10 or Section 4.13
of the Indenture, state the amount you elect to have purchased: $___________
Date: Your Signature:
(Sign exactly as your name appears on the Security)
Tax Identification No.: ___________________________
Signature Guarantee:* _____________________________
______________________
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
A1-10
<PAGE> 97
SCHEDULE OF EXCHANGES FOR CERTIFICATED NOTES OR ANOTHER GLOBAL NOTE(2)
The following exchanges of a part of this Global Note for Certificated
Notes or another Global Note have been made:
<TABLE>
<CAPTION>
Principal Amount of this Signature of
Amount of decrease in Amount of increase in Global Note authorized officer of
Principal Amount of Principal Amount of following such decrease Trustee or Note
Date of Exchange this Global Note this Global Note (or increase) Custodian
- ---------------- --------------------- --------------------- ----------------------- ---------------------
<S> <C> <C> <C> <C>
</TABLE>
- --------------------
2. To be included only if the Senior Subordinated Discount Note is issued in
global form.
A1-11
<PAGE> 98
EXHIBIT A-2
(Face of Regulation S Temporary Global Note)
================================================================================
FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED, THIS SECURITY IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT;
FOR EACH $1,000 PRINCIPAL AMOUNT OF THIS SECURITY, THE ISSUE PRICE IS
$552.94, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT IS $447.06, THE ISSUE DATE IS
MARCH 21, 1996 AND THE YIELD TO MATURITY IS 12 1/4% PER ANNUM.
CUSIP U03155AB1
No. $
----------- ------------
12 1/4% [Series A] [Series B] Senior Subordinated Discount Notes due 2006
AMF GROUP INC.
promises to pay to
or registered assigns,
the principal sum of
Dollars on March 15, 2006.
Interest Payment Dates: March 15 and September 15
Record Dates: March 1 and September 1
Dated: ,
--------- -----
AMF GROUP INC.
By:
----------------------------------
Name:
Title:
By:
----------------------------------
Name:
Title:
This is one of the Senior
Subordinated Discount Notes
referred to in the (SEAL)
within-mentioned Indenture:
AMERICAN BANK NATIONAL ASSOCIATION,
as Trustee
By:
-----------------------------------
Authorized Signatory
================================================================================
A2-1
<PAGE> 99
(Back of Regulation S Temporary Global Note)
12 1/4% [Series A] [Series B] Senior Subordinated Discount Note due 2006
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS
SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN).
NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S
TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SENIOR
SUBORDINATED DISCOUNT NOTES IN DEFINITIVE FORM, THIS SENIOR SUBORDINATED
DISCOUNT 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 ISSUER 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.
THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND (A) MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) BY THE INITIAL INVESTOR (A) TO
A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (B) IN AN OFFSHORE TRANSACTION COMPLYING
WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (C) PURSUANT
TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE), (D) TO THE COMPANY OR (E) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (2) BY SUBSEQUENT INVESTORS,
AS SET FORTH IN (1) ABOVE AND, IN ADDITION, TO AN INSTITUTIONAL ACCREDITED
INVESTOR IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, AND, IN EACH CASE, IN ACCORDANCE WITH ALL APPLICABLE SECURITIES
LAWS OF THE STATES OF THE UNITED STATES AND (B) THE HOLDER WILL, AND EACH
SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE NOTES
EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE. NO
REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY
RULE 144 FOR RESALES OF THE NOTES.
AMF Group Inc., a Delaware corporation (the "Company"), promises to pay
interest on the principal amount of this Senior Subordinated Discount Note
beginning March 15, 2001 at the rate of 12 1/4% per annum. Until March 15, 2001
(the "Full Accretion Date"), no interest will be paid in cash on the Senior
Subordinated Discount Notes, but the Accreted Value will accrete (representing
the amortization of original issue discount) between the Issuance Date and the
Full Accretion Date, on a semi-annual bond equivalent basis using a 360-day year
comprised of twelve 30-day months such that the Accreted Value shall be equal
A2-2
<PAGE> 100
to the full principal amount at maturity of the Senior Subordinated Discount
Notes on the Full Accretion Date. Beginning on the Full Accretion Date, interest
on the Senior Subordinated Discount Notes shall accrue at the rate of 12 1/4%
per annum and shall be payable in cash semi-annually in arrears on March 15 and
September 15, or if any such day is not a Business Day, on the next succeeding
Business Day (each an "Interest Payment Date"); provided that the first Interest
Payment Date shall be September 15, 2001. Interest on the Senior Subordinated
Discount Notes will accrue from the most recent date to which interest has been
paid or, if no interest has been paid, from the Full Accretion Date. Interest
will be computed on the basis of a 360-day year comprised of twelve 30-day
months.
This Regulation S Temporary Global Note is issued in respect of an issue
of 12 1/4% Senior Subordinated Discount Notes due 2006 (the "Senior Subordinated
Discount Notes") of the Company, limited to the aggregate principal amount of
U.S. $452.0 million issued pursuant to an Indenture (the "Indenture") dated as
of March 21, 1996, among the Company, the Guarantors Listed on Exhibit C thereto
and American Bank National Association, as trustee (the "Trustee"), and is
governed by the terms and conditions of the Indenture governing the Senior
Subordinated Discount Notes, which terms and conditions are incorporated herein
by reference and, except as otherwise provided herein, shall be binding on the
Company and the Holder hereof as if fully set forth herein. Unless the context
otherwise requires, the terms used herein shall have the meanings specified in
the Indenture.
Until this Regulation S Temporary Global Note is exchanged for
Regulation S Permanent Global Notes, the Holder hereof shall not be entitled to
receive payments of interest hereon; until so exchanged in full, this Regulation
S Temporary Global Note shall in all other respects be entitled to the same
benefits as other Senior Subordinated Discount Notes under the Indenture.
This Regulation S Temporary Global Note is exchangeable in whole or in
part for one or more Regulation S Permanent Global Notes or Rule 144A Global
Notes only (i) on or after the termination of the 40-day restricted period (as
defined in Regulation S) and (ii) upon presentation of certificates (accompanied
by an Opinion of Counsel, if applicable) required by Article 2 of the Indenture.
Upon exchange of this Regulation S Temporary Global Note for one or more
Regulation S Permanent Global Notes or Rule 144A Global Notes, the Trustee shall
cancel this Regulation S Temporary Global Note.
This Regulation S Temporary Global Note shall not become valid or
obligatory until the certificate of authentication hereon shall have been duly
manually signed by the Trustee in accordance with the Indenture. This Regulation
S Temporary Global Note shall be governed by and construed in accordance with
the laws of the State of the New York. All references to "$," "Dollars,"
"dollars" or "U.S. $" are to such coin or currency of the United States of
America as at the time shall be legal tender for the payment of public and
private debts therein.
A2-3
<PAGE> 101
SCHEDULE OF EXCHANGES FOR GLOBAL NOTES
The following exchanges of a part of this Regulation S Temporary Global
Note for other Global Notes have been made:
<TABLE>
<CAPTION>
Principal Amount of this Signature of
Amount of decrease in Amount of increase in Global Note authorized officer of
Principal Amount of Principal Amount of following such decrease Trustee or Note
Date of Exchange this Global Note this Global Note (or increase) Custodian
- ---------------- --------------------- --------------------- ----------------------- ---------------------
<S> <C> <C> <C> <C>
</TABLE>
A2-4
<PAGE> 102
EXHIBIT B-1
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
FROM RULE 144A GLOBAL NOTE TO REGULATION S GLOBAL NOTE
(Pursuant to Section 2.06 (a)(i) of the Indenture)
American Bank National Association
101 E. Fifth Street
St. Paul, MN 55101-1860
Attention: Corporate Trust Division
Re: 12 1/4% Senior Subordinated Discount Notes due 2006 of AMF Group Inc.
Reference is hereby made to the Indenture, dated as of March 21, 1996
(the "Indenture"), among AMF Group Inc., as issuer (the "Company"), the Parties
Listed on Exhibit C thereto as guarantors and American Bank National
Association, as trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
This letter relates to $_______ principal amount of Senior Subordinated
Discount Notes which are evidenced by one or more Rule 144A Global Notes (CUSIP
030985AB1) and held with the Depositary in the name of_________________________
(the "Transferor"). The Transferor has requested a transfer of such beneficial
interest in the Senior Subordinated Discount Notes to a Person who will take
delivery thereof in the form of an equal principal amount of Senior Subordinated
Discount Notes evidenced by one or more Regulation S Global Notes (CUSIP
U03155AB1), which amount, immediately after such transfer, is to be held with
the Depositary through Euroclear or Cedel Bank or both (Common Code 6470947).
In connection with such request and in respect of such Senior
Subordinated Discount Notes, the Transferor hereby certifies that such transfer
has been effected in compliance with the transfer restrictions applicable to the
Global Notes and pursuant to and in accordance with Rule 903 or Rule 904 under
the United States Securities Act of 1933, as amended (the "Securities Act"), and
accordingly the Transferor hereby further certifies that:
(1) The offer of the Senior Subordinated Discount Notes was not made to a
person in the United States;
(2) either:
(a) at the time the buy order was originated, the transferee was
outside the United States or the Transferor and any person acting
on its behalf reasonably believed and believes that the transferee
was outside the United States; or
(b) the transaction was executed in, on or through the facilities of a
designated offshore securities market and neither the Transferor
nor any person acting on its behalf knows that the transaction was
prearranged with a buyer in the United States;
(3) no directed selling efforts have been made in contravention of the
requirements of Rule 904(b) of Regulation S;
B1-1
<PAGE> 103
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
(5) upon completion of the transaction, the beneficial interest being
transferred as described above is to be held with the Depositary through
Euroclear or Cedel Bank or both (Common Code 6470947).
Upon giving effect to this request to exchange a beneficial interest in
a Rule 144A Global Note for a beneficial interest in a Regulation S Global Note,
the resulting beneficial interest shall be subject to the restrictions on
transfer applicable to Regulation S Global Notes pursuant to the Indenture and
the Securities Act and, if such transfer occurs prior to the end of the 40-day
restricted period associated with the initial offering of Senior Subordinated
Discount Notes, the additional restrictions applicable to transfers of interest
in the Regulation S Temporary Global Note.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company and Goldman, Sachs & Co. (85 Broad
Street, New York, New York, 10004), the initial purchaser of such Senior
Subordinated Discount Notes being transferred. Terms used in this certificate
and not otherwise defined in the Indenture have the meanings set forth in
Regulation S under the Securities Act.
---------------------------
[Insert Name of Transferor]
By: ______________________
Name:
Title:
Dated: _____________,_____
cc: AMF Group Inc.
Goldman, Sachs & Co.
B1-2
<PAGE> 104
EXHIBIT B-2
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
FROM REGULATION S GLOBAL NOTE TO RULE 144A GLOBAL NOTE
(Pursuant to Section 2.06 (a)(ii) of the Indenture)
American Bank National Association
101 E. Fifth Street
St. Paul, MN 55101-1860
Attention: Corporate Trust Division
Re: 12 1/4% Senior Subordinated Discount Notes due 2006 of AMF Group Inc.
Reference is hereby made to the Indenture, dated as of March 21, 1996 (the
"Indenture"), among AMF Group Inc., as issuer (the "Company"), the Parties
Listed on Exhibit C thereto as guarantors and American Bank National
Association, as trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
This letter relates to $_______ principal amount of Senior Subordinated
Discount Notes which are evidenced by one or more Regulation S Global Notes
(CUSIP U03155AB1) and held with the Depositary through [Euroclear] [Cedel Bank]
(Common Code 6470947) in the name of ____________________________ (the
"Transferor"). The Transferor has requested a transfer of such beneficial
interest in the Senior Subordinated Discount Notes to a Person who will take
delivery thereof in the form of an equal principal amount of Senior Subordinated
Discount Notes evidenced by one or more Rule 144A Global Notes (CUSIP
030985AB1), to be held with the Depositary.
In connection with such request and in respect of such Senior Subordinated
Discount Notes, the Transferor hereby certifies that:
[CHECK ONE]
/ / such 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 Senior Subordinated Discount Notes are being
transferred to a Person that the Transferor reasonably believes is
purchasing the Senior Subordinated Discount Notes 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;
or
/ / such transfer is being effected pursuant to and in accordance with Rule
144 under the Securities Act;
or
/ / such transfer is being effected pursuant to an effective registration
statement under the Securities Act;
B2-1
<PAGE> 105
or
/ / such transfer is being effected pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 144A or
Rule 144, and the Transferor hereby further certifies that the Senior
Subordinated Discount Notes are being transferred in compliance with
the transfer restrictions applicable to the Global Notes and in
accordance with the requirements of the exemption claimed, which
certification is supported by an Opinion of Counsel, provided by the
transferor or the transferee (a copy of which the Transferor has
attached to this certification) in form reasonably acceptable to the
Company and to the Registrar, to the effect that such transfer is in
compliance with the Securities Act;
and such Senior Subordinated Discount Notes are being transferred in compliance
with any applicable blue sky securities laws of any state of the United States.
Upon giving effect to this request to exchange a beneficial interest
in Regulation S Global Notes for a beneficial interest in Rule 144A Global
Notes, the resulting beneficial interest shall be subject to the restrictions on
transfer applicable to Rule 144A Global Notes pursuant to the Indenture and the
Securities Act.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company and Goldman, Sachs & Co. (85 Broad
Street, New York, New York, 10004), the initial purchaser of such Senior
Subordinated Discount Notes being transferred. Terms used in this certificate
and not otherwise defined in the Indenture have the meanings set forth in
Regulation S under the Securities Act.
--------------------------
[Insert Name of Transferor]
By: _____________________
Name:
Title:
Dated: _____________, _____
cc: AMF Group Inc.
Goldman, Sachs & Co.
B2-2
<PAGE> 106
EXHIBIT B-3
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
OF CERTIFICATED NOTES
(Pursuant to Section 2.06 (b) of the Indenture)
American Bank National Association
101 E. Fifth Street
St. Paul, MN 55101-1860
Attention: Corporate Trust Division
Re: 12 1/4% Senior Subordinated Discount Notes due 2006 of AMF Group Inc.
Reference is hereby made to the Indenture, dated as of March 21, 1996 (the
"Indenture"), among AMF Group Inc., as issuer (the "Company"), the Parties
Listed on Exhibit C thereto as guarantors and American Bank National
Association, as trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
This letter relates to $_______ principal amount of Senior Subordinated
Discount Notes which are evidenced by one or more Certificated Notes (CUSIP
__________) in the name of ________________ (the "Transferor"). The Transferor
has requested an exchange or transfer of such Certificated Note(s) in the form
of an equal principal amount of Senior Subordinated Discount Notes evidenced by
one or more Certificated Notes (CUSIP _________), to be delivered to the
Transferor or, in the case of a transfer of such Senior Subordinated Discount
Notes, to such Person as the Transferor instructs the Trustee.
In connection with such request and in respect of the Senior Subordinated
Discount Notes surrendered to the Trustee herewith for exchange or transfer (the
"Surrendered Senior Subordinated Discount Notes"), the Transferor hereby
certifies that:
[CHECK ONE]
/ / the Surrendered Senior Subordinated Discount Notes are being acquired for
the Transferor's own account, without transfer;
or
/ / the Surrendered Senior Subordinated Discount Notes are being transferred
to the Company;
or
/ / the Surrendered Senior Subordinated Discount Notes are being transferred
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 Surrendered
Senior Subordinated Discount Notes are being transferred to a Person that
the Transferor reasonably believes is purchasing the Surrendered Senior
Subordinated Discount Notes for its own account, or for one or more
accounts with respect to which such Person exercises sole investment
discretion, and such Person
B3-1
<PAGE> 107
and each such account is a "qualified institutional buyer" within the
meaning of Rule 144A, in each case in a transaction meeting the
requirements of Rule 144A;
or
/ / the Surrendered Senior Subordinated Discount Notes are being transferred
in a transaction permitted by Rule 144 under the Securities Act;
or
/ / the Surrendered Senior Subordinated Discount Notes are being transferred
pursuant to an effective registration statement under the Securities Act;
or
/ / such transfer is being effected pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 144A or
Rule 144, and the Transferor hereby further certifies that the Senior
Subordinated Discount Notes are being transferred in compliance with the
transfer restrictions applicable to the Global Notes and in accordance
with the requirements of the exemption claimed, which certification is
supported by an Opinion of Counsel, provided by the transferor or the
transferee (a copy of which the Transferor has attached to this
certification) in form reasonably acceptable to the Company and to the
Registrar, to the effect that such transfer is in compliance with the
Securities Act;
and the Surrendered Senior Subordinated Discount Notes are being transferred in
compliance with any applicable blue sky securities laws of any state of the
United States.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company and Goldman, Sachs & Co. (85 Broad
Street, New York, New York, 10004), the initial purchaser of such Senior
Subordinated Discount Notes being transferred. Terms used in this certificate
and not otherwise defined in the Indenture have the meanings set forth in
Regulation S under the Securities Act.
--------------------------
[Insert Name of Transferor]
By: ___________________________
Name:
Title:
Dated: _____________, _____
cc: AMF Group Inc.
Goldman, Sachs & Co.
B3-2
<PAGE> 108
EXHIBIT B-4
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
FROM RULE 144A GLOBAL NOTE OR REGULATION S PERMANENT GLOBAL NOTE
TO CERTIFICATED NOTE
(Pursuant to Section 2.06(c) of the Indenture)
American Bank National Association
101 E. Fifth Street
St. Paul, MN 55101-1860
Attention: Corporate Trust Division
Re: 12 1/4% Senior Subordinated Discount Notes due 2006 of AMF Group Inc.
Reference is hereby made to the Indenture, dated as of March 21, 1996
(the "Indenture"), among AMF Group Inc., as issuer (the "Company"), the Parties
Listed on Exhibit C thereto as guarantors and American Bank National
Association, as trustee. Capitalized terms used but not defined herein shall
have the meanings given to them in the Indenture.
This letter relates to $_______ principal amount of Senior Subordinated
Discount Notes which are evidenced by a beneficial interest in one or more Rule
144A Global Notes or Regulation S Permanent Global Notes (CUSIP __________) in
the name of ______________________ (the "Transferor"). The Transferor has
requested an exchange or transfer of such beneficial interest in the form of an
equal principal amount of Senior Subordinated Discount Notes evidenced by one or
more Certificated Notes (CUSIP _________), to be delivered to the Transferor or,
in the case of a transfer of such Senior Subordinated Discount Notes, to such
Person as the Transferor instructs the Trustee.
In connection with such request and in respect of the Senior Subordinated
Discount Notes surrendered to the Trustee herewith for exchange or transfer (the
"Surrendered Senior Subordinated Discount Notes"), the Transferor hereby
certifies that:
[CHECK ONE]
/ / the Surrendered Senior Subordinated Discount Notes are being transferred
to the beneficial owner of such Senior Subordinated Discount Notes;
or
/ / the Surrendered Senior Subordinated Discount Notes are being transferred
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
Surrendered Senior Subordinated Discount Notes are being transferred to
a Person that the Transferor reasonably believes is purchasing the
Surrendered Senior Subordinated Discount Notes 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 each
case in a transaction meeting the requirements of Rule 144A;
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or
/ / the Surrendered Senior Subordinated Discount Notes are being transferred
in a transaction permitted by Rule 144 under the Securities Act;
or
/ / the Surrendered Senior Subordinated Discount Notes are being transferred
pursuant to an effective registration statement under the Securities
Act;
or
/ / such transfer is being effected pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 144A or
Rule 144, and the Transferor hereby further certifies that the Senior
Subordinated Discount Notes are being transferred in compliance with the
transfer restrictions applicable to the Global Notes and in accordance
with the requirements of the exemption claimed, which certification is
supported by an Opinion of Counsel, provided by the transferor or the
transferee (a copy of which the Transferor has attached to this
certification) in form reasonably acceptable to the Company and to the
Registrar, to the effect that such transfer is in compliance with the
Securities Act;
and the Surrendered Senior Subordinated Discount Notes are being transferred in
compliance with any applicable blue sky securities laws of any state of the
United States.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company and Goldman, Sachs & Co. (85 Broad
Street, New York, New York, 10004), the initial purchaser of such Senior
Subordinated Discount Notes being transferred. Terms used in this certificate
and not otherwise defined in the Indenture have the meanings set forth in
Regulation S under the Securities Act.
---------------------------
[Insert Name of Transferor]
By:_______________________________
Name:
Title:
Dated: _____________, _____
cc: AMF Group Inc.
Goldman, Sachs & Co.
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<PAGE> 110
EXHIBIT C
GUARANTORS
1. AMF Group Holdings Inc.
2. AMF Bowling Holdings Inc.
3. AMF Bowling Centers Holdings Inc.
4. AMF Worldwide Bowling Centers Holdings Inc.
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<PAGE> 111
EXHIBIT D
FORM OF SENIOR SUBORDINATED GUARANTEE
The obligations of the Guarantors to the Holders of Senior
Subordinated Discount Notes and to the Trustee pursuant to this Senior
Subordinated Guarantee and the Indenture dated March 21, 1996, among AMF Group
Inc., each of the Persons listed on Exhibit C thereto and American Bank National
Association, as trustee, (the "Indenture") are expressly set forth in Article 11
of the Indenture, and reference is hereby made to such Indenture for the precise
terms of this Senior Subordinated Guarantee. The terms of Article 11 of the
Indenture are incorporated herein by reference.
Each of the Guarantors, jointly and severally, hereby unconditionally
guarantees to each Holder of a Senior Subordinated Discount Note authenticated
and delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of the Indenture, the Senior
Subordinated Discount Notes or the obligations of the Company under the
Indenture or the Senior Subordinated Discount Notes, that: (a) the principal of,
premium, if any, and interest, including Liquidated Damages, if any, on the
Senior Subordinated Discount Notes shall be promptly paid in full when due,
whether at maturity, by acceleration, redemption or otherwise, and (to the
extent permitted by law) interest on the overdue principal of, premium, if any,
and interest, including Liquidated Damages, if any, on the Senior Subordinated
Discount Notes, and all other obligations of the Company to the Holders or the
Trustee under the Indenture or the Senior Subordinated Discount Notes shall be
promptly paid in full or performed, all in accordance with the terms of the
Indenture and the Senior Subordinated Discount Notes; and (b) in case of any
extension of time of payment or renewal of any Senior Subordinated Discount
Notes or any of such other obligations, that 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. Failing payment when
due of any amount so guaranteed for whatever reason, the Guarantors shall be
obligated to pay the same immediately whether or not such failure to pay has
become an Event of Default which could cause acceleration pursuant to Section
6.02 of the Indenture. Each Guarantor agrees that this is a guarantee of payment
and not a guarantee of collection.
Each Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Senior Subordinated Discount Notes or the Indenture, the absence of any action
to enforce the same, any waiver or consent by any Holder of the Senior
Subordinated Discount Notes with respect to any provisions thereof, the recovery
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 guarantor. Each Guarantor hereby waives diligence, presentment,
demand of payment, filing of claims with a court in the event of insolvency or
bankruptcy of the Company, any right to require a proceeding first against the
Company, protest, notice and all demands whatsoever and covenants that, subject
to Article 11 of the Indenture, this Senior Subordinated Guarantee shall not be
discharged except by complete performance of the obligations contained in the
Senior Subordinated Discount Notes and the Indenture.
If any Holder of Senior Subordinated Discount Notes or the Trustee is
required by any court or otherwise to return to the Company or Guarantors, or
any Custodian, Trustee, liquidator or other similar official acting in relation
to either the Company or Guarantors, any amount paid by either to the Trustee or
such Holder, this Senior Subordinated Guarantee, to the extent theretofore
discharged, shall be reinstated in full force and effect.
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<PAGE> 112
Each Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders of Senior Subordinated Discount Notes in
respect of any Obligations guaranteed hereby until payment in full of all
Obligations guaranteed hereby. Each Guarantor further agrees that, as between
the Guarantors, on the one hand, and the Holders and the Trustee, on the other
hand, (x) the maturity of the Obligations guaranteed hereby may be accelerated
as provided in Article 6 of the Indenture for the purposes of this Senior
Subordinated Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the Obligations
guaranteed hereby and (y) in the event of any declaration of acceleration of
such Obligations as provided in Section 6.02 of the Indenture, such Obligations
(whether or not due and payable) shall forthwith become due and payable by the
Guarantors for the purpose of this Senior Subordinated Guarantee. The Guarantors
shall have the right to seek contribution from any non-paying Guarantor so long
as the exercise of such right does not impair the rights of the Holders under
the Senior Subordinated Guarantees.
The Obligations of each Guarantor under this Senior Subordinated
Guarantee are junior and subordinated to the Senior Guarantee of such Guarantor
on the same basis as the Senior Subordinated Discount Notes are junior and
subordinated to Senior Debt 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 Guarantors only at such times as they may receive
and/or retain payments in respect of the Senior Subordinated Discount Notes
pursuant to the Indenture, including Article 10 thereof.
Each Guarantor, and by its acceptance of Senior Subordinated Discount
Notes, each Holder, hereby confirms that it is the intention of all such parties
that this Senior Subordinated Guarantee not constitute a fraudulent transfer or
conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance
Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to
the extent applicable. To effectuate the foregoing intention, the Trustee, the
Holders and the Guarantors hereby irrevocably agree that the obligations of each
Guarantor under this Senior Subordinated Guarantee shall be limited to the
maximum amount as will, after giving effect to such maximum amount and all other
contingent and fixed liabilities of such Guarantor that are relevant under such
laws, and after giving effect to any collections from, rights to receive
contribution from or payments made by or on behalf of any other Guarantor in
respect of the obligations of such other Guarantor under Article 11 of the
Indenture, result in the obligations of such Guarantor under this Senior
Subordinated Guarantee not constituting a fraudulent transfer or conveyance.
This is a continuing Senior Subordinated Guarantee and shall remain
in full force and effect and shall be binding upon each Guarantor and its
respective successors and assigns to the extent set forth in the Indenture until
full and final payment of all of the Company's Obligations under the Senior
Subordinated Discount Notes and the Indenture and shall inure to the benefit of
the successors and assigns of the Trustee and the Holders of Senior Subordinated
Discount Notes and, in the event of any transfer or assignment of rights by any
Holder of Senior Subordinated Discount Notes 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 and of Article 11 of the Indenture.
This Senior Subordinated Guarantee shall not be valid or obligatory
for any purpose until the certificate of authentication on the Senior
Subordinated Discount Note upon which this Senior Subordinated Guarantee is
noted shall have been executed by the Trustee under the Indenture by the manual
signature of one of its authorized officers. Notwithstanding the foregoing, in
the event that this Senior Subordinated Guarantee is executed subsequent to such
manual signature of one of the Trustee's authorized officers on such certificate
of authentication, then immediately upon the execution of this Senior
Subordinated Guarantee all obligations hereunder and under the Indenture shall
be valid and obligatory with respect to such Senior Subordinated Discount
Note(s) as if this Senior Subordinated Guarantee were noted thereon.
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<PAGE> 113
Capitalized terms used herein have the same meanings given in the
Indenture unless otherwise indicated.
Dated:
--------------------
AMF GROUP HOLDINGS INC.
Attest: By:
-------------------------------
Name: Richard A. Friedman
Title: President
- ------------------------------
Name: Carla H. Skodinski
Title: Secretary
AMF BOWLING HOLDINGS INC.
Attest: By:
-------------------------------
Name: Robert L. Morin
Title: President
- ------------------------------
Name: William W. Flexon
Title: Secretary
AMF BOWLING CENTERS HOLDINGS INC.
Attest: By:
-------------------------------
Name: Douglas J. Stanard
Title: President
- ------------------------------
Name: Michael P. Bardaro
Title: Assistant Secretary
AMF WORLDWIDE BOWLING CENTERS
HOLDINGS INC.
Attest: By:
-------------------------------
Name: Douglas J. Stanard
Title: President
- ------------------------------
Name: Michael P. Bardaro
Title: Secretary
D-3
<PAGE> 114
EXHIBIT E
FORM OF SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE dated as of ________________, _____ between
__________________ (the "Guarantor" and, together with the Persons identified on
Exhibit C to the Indenture referred to below and any other Guarantors that
execute this form of Supplemental Indenture, the "Guarantors"), a Restricted
Subsidiary of AMF Group Inc., a Delaware corporation, or its successors and
assigns (the "Company"), and American Bank National Association, 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 March 21, 1996, providing
for the issuance of an aggregate principal amount of $452.0 million of 12 1/4%
Senior Subordinated Discount Notes due 2006 (the "Senior Subordinated Discount
Notes");
WHEREAS, the Indenture provides that under certain circumstances the
Guarantor shall execute and deliver to the Trustee a supplemental indenture
pursuant to which the Guarantor shall unconditionally guarantee all of the
Company's Obligations under the Senior Subordinated Discount Notes on the terms
and conditions set forth herein (the "Senior Subordinated 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
Guarantor and the Trustee mutually covenant and agree for the equal and ratable
benefit of the Holders of the Senior Subordinated Discount Notes as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
2. COUNTERPART TO THE INDENTURE. This Supplemental Indenture
specifically incorporates, restates and reaffirms all of the warranties,
representations, covenants and other provisions of the Indenture,
notwithstanding the fact that such provisions are not restated herein. By
executing this Supplemental Indenture, the Guarantor subscribes to all of the
covenants and other provisions in the Indenture as applicable to the Guarantors,
and the Guarantor hereby agrees that it shall be bound by all of the provisions
of the Indenture. Upon execution, this Supplemental Indenture shall become part
of the Indenture and the rights and obligations of the Guarantor hereunder shall
be construed to be identical to the rights and obligations of the Guarantors
under the Indenture. Reference is hereby made to the Indenture for the precise
terms of this Supplemental Indenture. In the event of any conflict between the
provisions herein and the provisions of the Indenture, the Indenture shall
control.
3. AGREEMENT TO GUARANTEE. The Guarantor hereby agrees as follows:
(a) Subject to Article 11 of the Indenture, the Guarantor, jointly and
severally with the other Guarantors, hereby unconditionally guarantees to
each Holder of a Senior Subordinated Discount Note authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of the Indenture, the Senior
Subordinated Discount Notes or the
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<PAGE> 115
Obligations of the Company under the Indenture or the Senior Subordinated
Discount Notes, that: (a) the principal of, premium, if any, and interest,
including Liquidated Damages, if any, on the Senior Subordinated Discount
Notes shall be promptly paid in full when due, whether at maturity, by
acceleration, redemption or otherwise, and (to the extent permitted by law)
interest on the overdue principal of, premium and interest, including
Liquidated Damages, on the Senior Subordinated Discount Notes, if any, and
all other obligations of the Company to the Holders or the Trustee under the
Indenture or the Senior Subordinated Discount Notes shall be promptly paid
in full or performed, all in accordance with the terms of the Indenture and
the Senior Subordinated Discount Notes; and (b) in case of any extension of
time for payment or renewal of any Senior Subordinated Discount Notes or any
of such other obligations, that 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. Failing payment
when due of any amount so guaranteed for whatever reason, the Guarantors
shall be obligated to pay the same immediately whether or not such failure
to pay has become an Event of Default which could cause acceleration
pursuant to Section 6.02 of the Indenture. The Guarantor agrees that this is
a guarantee of payment and not a guarantee of collection.
(b) The Guarantor hereby agrees that its obligations hereunder shall
be unconditional, irrespective of the validity, regularity or enforceability
of the Senior Subordinated Discount Notes or the Indenture, the absence of
any action to enforce the same, any waiver or consent by any Holder of the
Senior Subordinated Discount Notes with respect to any provisions thereof,
the recovery 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 guarantor. The Guarantor hereby waives
diligence, presentment, demand of payment, filing of claims with a court in
the event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands
whatsoever and covenants that, subject to Article 11 of the Indenture, this
Senior Subordinated Guarantee shall not be discharged except by complete
performance of the obligations contained in the Senior Subordinated Discount
Notes and the Indenture.
(c) If any Holder of Senior Subordinated Discount Notes or the Trustee
is required by any court or otherwise to return to the Company or the
Guarantors, or any Custodian, Trustee, liquidator or other similar official
acting in relation to either the Company or the Guarantors, any amount paid
by either to the Trustee or such Holder, this Senior Subordinated Guarantee,
to the extent theretofore discharged, shall be reinstated in full force and
effect.
(d) The Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders of Senior Subordinated Discount Notes
in respect of any Obligations guaranteed hereby until payment in full of all
Obligations guaranteed hereby. The Guarantor further agrees that, as between
the Guarantors, on the one hand, and the Holders and the Trustee, on the
other hand, (x) the maturity of the Obligations guaranteed hereby may be
accelerated as provided in Article 6 of the Indenture for the purposes of
this Senior Subordinated Guarantee, notwithstanding any stay, injunction or
other prohibition preventing such acceleration in respect of the Obligations
guaranteed thereby and (y) in the event of any declaration of acceleration
of such Obligations as provided in Section 6.02 of the Indenture, such
Obligations (whether or not due and payable) shall forthwith become due and
payable by the Guarantors for the purpose of this Senior Subordinated
Guarantee. The Guarantors shall have the right to seek contribution from any
non-paying Guarantor so long as the exercise of such right does not impair
the rights of the Holders under the Senior Subordinated Guarantees.
4. SUBORDINATION OF SENIOR SUBORDINATED GUARANTEE. The Obligations of each
Guarantor under its Senior Subordinated Guarantee pursuant to Article 11 of the
Indenture shall be junior and subordinated to the Senior Guarantee of such
Guarantor on the same basis as the Senior Subordinated Discount Notes
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<PAGE> 116
are junior and subordinated to Senior Debt 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 Guarantors only at such times as
they may receive and/or retain payments in respect of the Senior Subordinated
Discount Notes pursuant to the Indenture, including Article 10 thereof.
5. LIMITATION ON GUARANTOR LIABILITY. The Guarantor, and by its acceptance
of Senior Subordinated Discount Notes, each Holder, hereby confirms that it is
the intention of all such parties that the Senior Subordinated Guarantee of the
Guarantor not constitute a fraudulent transfer or conveyance for purposes of
Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar federal or state law to the extent applicable to any
Senior Subordinated Guarantee. To effectuate the foregoing intention, the
Trustee, the Holders and the Guarantor hereby irrevocably agree that the
obligations of the Guarantor under its Senior Subordinated Guarantee and Article
11 of the Indenture shall be limited to the maximum amount as will, after giving
effect to such maximum amount and all other contingent and fixed liabilities of
the Guarantor that are relevant under such laws, and after giving effect to any
collections from, rights to receive contribution from or payments made by or on
behalf of any other Guarantor in respect of the obligations of such other
Guarantor under Article 11 of the Indenture, result in the obligations of the
Guarantor under its Senior Subordinated Guarantee not constituting a fraudulent
transfer or conveyance.
6. EXECUTION AND DELIVERY OF SENIOR SUBORDINATED GUARANTEES.
(a) To evidence its Senior Subordinated Guarantee set forth in this
Supplemental Indenture and in Section 11.01 of the Indenture, the Guarantor
hereby agrees that a notation of such Senior Subordinated Guarantee
substantially in the form of Exhibit D to the Indenture shall be endorsed by
an officer of the Guarantor on each Senior Subordinated Discount Note
authenticated and delivered by the Trustee and that this Supplemental
Indenture, as a counterpart to the Indenture, shall be executed on behalf of
the Guarantor by its President or one of its Vice Presidents and attested to
by an Officer.
(b) The Guarantor hereby agrees that its Senior Subordinated Guarantee
set forth in this Supplemental Indenture and in Section 11.01 of the
Indenture shall remain in full force and effect notwithstanding any failure
to endorse on each Senior Subordinated Discount Note a notation of such
Senior Subordinated Guarantee.
(c) If an Officer whose signature is on this Supplemental Indenture or
on the Senior Subordinated Guarantee no longer holds that office at the time
the Trustee authenticates the Senior Subordinated Discount Note on which a
Senior Subordinated Guarantee is endorsed, the Senior Subordinated Guarantee
shall be valid nevertheless.
(d) The delivery of any Senior Subordinated Discount Note by the
Trustee, after the authentication thereof under the Indenture, shall
constitute due delivery of the Senior Subordinated Guarantee set forth in
the Indenture on behalf of the Guarantor.
7. GUARANTOR MAY CONSOLIDATE, ETC., ON CERTAIN TERMS. No Guarantor may
consolidate with or merge with or into (whether or not such Guarantor is the
surviving Person) another corporation, Person or entity whether or not
affiliated with such Guarantor unless:
(a) subject to Section 11.06 of the Indenture, the Person formed by or
surviving any such consolidation or merger (if other than such Guarantor)
unconditionally assumes all the obligations of such Guarantor under the
Senior Subordinated Guarantee and the Indenture on the terms set forth
in the Indenture pursuant to a supplemental indenture in form and
substance reasonably satisfactory to the Trustee;
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(b) immediately after giving effect to such transaction, no Default or
Event of Default exists; and
(c) the Company would be permitted by virtue of the Company's pro forma
Fixed Charge Coverage Ratio to incur, immediately after giving effect to
such transaction, 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 of the Indenture.
In case of any such consolidation or merger and upon the assumption by the
successor corporation, by supplemental indenture, executed and delivered to the
Trustee and satisfactory in form to the Trustee, of the Senior Subordinated
Guarantee endorsed upon the Senior Subordinated Discount Notes and of the due
and punctual performance of all of the covenants and conditions of the Indenture
and this Supplemental Indenture to be performed by the Guarantor, such successor
corporation shall succeed to and be substituted for the Guarantor with the same
effect as if it had been named in the Indenture as a Guarantor. Such successor
corporation thereupon may cause to be signed any or all of the Senior
Subordinated Guarantees to be endorsed upon all of the Senior Subordinated
Discount Notes issuable under the Indenture which theretofore shall not have
been signed by the Company and delivered to the Trustee. All the Senior
Subordinated Guarantees so issued shall in all respects have the same legal rank
and benefit under the Indenture as the Senior Subordinated Guarantees
theretofore and thereafter issued in accordance with the terms of the Indenture
as though all of such Senior Subordinated Guarantees had been issued at the date
of the execution of the Indenture.
Except as set forth in Articles 4 and 5 of the Indenture, and
notwithstanding clauses (a) through (c) above, nothing contained in the
Indenture, this Supplemental Indenture or in any of the Senior Subordinated
Discount Notes shall prevent any consolidation or merger of the Guarantor with
or into the Company or another Guarantor, or shall prevent any sale or
conveyance of the property of the Guarantor as an entirety or substantially as
an entirety to the Company or another Guarantor.
8. RELEASES OF SENIOR SUBORDINATED GUARANTEES. In the event of a sale or
other disposition of all or substantially all of the assets of the Guarantor, by
way of merger, consolidation or otherwise, or a sale or other disposition
(including, without limitation, by foreclosure) of all of the Capital Stock of
the Guarantor, then the Guarantor (in the event of a sale or other disposition,
by way of such a merger, consolidation or otherwise (including, without
limitation, by foreclosure), of all of the Capital Stock of the Guarantor) or
the corporation acquiring the property (in the event of a sale or other
disposition of all of the assets of the Guarantor) shall be automatically
released and relieved of any obligations under its Senior Subordinated
Guarantee; provided that the Net Proceeds of such sale or other disposition are
applied in accordance with Section 4.10 of the Indenture. Upon delivery by the
Company to the Trustee of an Officers' Certificate and an Opinion of Counsel to
the effect that such sale or other disposition was made by the Company in
accordance with the provisions of the Indenture, including without limitation
Sections 4.10 and 5.01 thereof, the Trustee shall execute any documents
reasonably required in order to evidence the release of the Guarantor from its
obligations under its Senior Subordinated Guarantee. Any Guarantor not released
from its obligations under its Senior Subordinated Guarantee shall remain liable
for the full amount of principal of and interest on the Senior Subordinated
Discount Notes and for the other obligations of any Guarantor under the
Indenture as provided in Article 11 thereof.
9. "TRUSTEE" TO INCLUDE PAYING AGENT. In case at any time any Paying Agent
other than the Trustee shall have been appointed by the Company and be then
acting under the Indenture, the term "Trustee" as used in Article 11 thereto
shall in such case (unless the context shall otherwise require) be construed as
extending to and including such Paying Agent within its meaning as fully and for
all intents and purposes as if such Paying Agent were named in Article 11 of the
Indenture in place of the Trustee.
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<PAGE> 118
10. NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee, incorporator or stockholder of the Guarantor, as such, shall
have any liability for any obligations of the Company or any Guarantor under the
Senior Subordinated Discount Notes, any Senior Subordinated Guarantees, the
Indenture or this Supplemental Indenture or for any claim based on, in respect
of, or by reason of, such obligations or their creation. Each Holder of Senior
Subordinated Discount Notes by accepting a Senior Subordinated Discount Note
waives and releases all such liability. The waiver and release are part of the
consideration for issuance of the Senior Subordinated Discount Notes.
11. GOVERNING LAW. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN
AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE AND THE SENIOR SUBORDINATED
GUARANTEE.
12. COUNTERPART ORIGINALS. 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.
13. EFFECT OF HEADINGS. The Section headings herein are for convenience only
and shall not affect the construction hereof.
14. THE TRUSTEE. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this
Supplemental Indenture or for or in respect of the recitals contained herein,
all of which recitals are made solely by the Guarantor and the Company.
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<PAGE> 119
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.
Dated: ____________, ____ [GUARANTOR]
By:__________________________
Attest: Name:
Title:
_____________________________
Dated: ____________, ____ AMERICAN BANK NATIONAL ASSOCIATION,
as Trustee
By: _________________________
Attest: Name:
Title:
_____________________________
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<PAGE> 120
EXHIBIT F
DIVIDEND AND PAYMENT RESTRICTION
TERMS OF NEW BANK CREDIT AGREEMENT
Negative Covenants. So long as any Advance shall remain unpaid, any Letter
of Credit shall be outstanding or any Lender Party shall have any Commitment
hereunder, the Borrower will not, at any time:
Dividends Etc. Declare or pay any dividends, purchase, redeem, retire,
defease or otherwise acquire for value any of its capital stock or any warrants,
rights or options to acquire such capital stock, now or hereafter outstanding,
return any capital to its stockholders as such, make any distribution of assets,
capital stock, warrants, rights, options, obligations or securities to its
stockholders as such or issue or sell any capital stock or any warrants, rights
or options to acquire such capital stock, or permit any of its Subsidiaries to
do any of the foregoing or permit any of its Subsidiaries to purchase, redeem,
retire, defease or otherwise acquire for value any capital stock of the Borrower
or any warrants, rights or options to acquire such capital stock or to issue or
sell any capital stock or any warrants, rights or options to acquire such
capital stock, except that, so long as no Default shall have occurred and be
continuing at the time of any action described in clauses (i) and (ii) below or
would result therefrom, (i) the Borrower may (A) declare and pay dividends and
distributions payable only in common stock of the Borrower and (B) declare and
pay cash dividends to Parent solely to the extent necessary to make payments
required under the non-competition agreements listed on Schedule 5.02(g) hereto,
and (ii) any Subsidiary of the Borrower may (A) declare and pay cash dividends
to the Borrower and (B) declare and pay cash dividends to any other wholly owned
Subsidiary of the Borrower of which it is a Subsidiary, provided that in the
case of any dividend declared and paid under this clause (ii) to any Loan Party,
the Secured Parties shall have a perfected first priority lien on and security
interest in any such dividend.
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EXHIBIT G
FORM OF SENIOR SUBORDINATED DISCOUNT NOTE
PLEDGE AND ESCROW AGREEMENT
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<PAGE> 122
EXECUTION COPY
================================================================================
SENIOR SUBORDINATED DISCOUNT NOTE
PLEDGE, ESCROW AND ASSIGNMENT AGREEMENT
by and among
AMF GROUP INC.
American Bank National Association,
as Trustee
and
American Bank National Association,
as Collateral Agent
Dated: March 21, 1996
================================================================================
<PAGE> 123
SENIOR SUBORDINATED DISCOUNT NOTE
PLEDGE, ESCROW AND ASSIGNMENT AGREEMENT
THIS PLEDGE, ESCROW AND ASSIGNMENT AGREEMENT (this
"Agreement"), dated as of March 21, 1996, is by and among AMF GROUP INC. (the
"Company"), American Bank National Association, as trustee under the Senior
Subordinated Note Indenture referred to below (the "Trustee"), and American
Bank National Association in its capacity as collateral agent (the "Collateral
Agent").
RECITALS
A. The Senior Subordinated Discount Notes. Pursuant to that
certain Senior Subordinated Discount Note Indenture (the "Senior Subordinated
Discount Note Indenture") dated as of March 21, 1996 by and between the Company
and the Trustee, the Company will issue $452,000,000 in aggregate principal
amount of 12 1/4% Senior Subordinated Discount Notes due 2006 (the "Senior
Subordinated Discount Notes"). Simultaneously with receipt of payment for the
Senior Subordinated Discount Notes (the "Deposit Time"), (i) all of the net
proceeds from the sale of the Senior Subordinated Discount Notes, (ii) an equity
contribution of $50,000,000 from the Sponsors and (iii) $7,500,000 from the
Sellers, if requested by the Sponsors, (collectively, the "Escrow Proceeds")
will be deposited into a segregated cash collateral trust account with the
Collateral Agent at Bank of New York in New York, New York, Account No.
78-8330-01, in the name of American Bank National Association, as Trustee,
"Collateral Account of American Bank National Association, as Trustee, for AMF
Group Inc. Senior Subordinated Discount Note Holders" (the "Escrow Account").
The Escrow Account and all balances and investments from time to time therein
shall be under the sole dominion and control of the Trustee. The Collateral will
be invested as directed by the Company or an agent appointed by the Company
subject to the provisions of this Agreement. Capitalized terms used but not
defined herein shall have the meanings assigned to them in the Senior
Subordinated Discount Note Indenture.
B. Purpose. The parties hereto desire to set forth their
agreement with regard to the administration of the Escrow Account, the creation
of a security interest in the Collateral (as defined herein) and the conditions
upon which funds will be released from the Escrow Account.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Security Interest.
1.1 Pledge and Assignment. The Company hereby irrevocably
pledges, assigns and sets over to the Trustee, and grants to the Trustee, for
the ratable benefit of the Holders of the Senior Subordinated Discount Notes,
a first priority continuing security interest in all of the Company's right,
title and interest to all of the following, whether now owned or existing or
hereafter acquired or created (collectively, the "Collateral"):
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1.1.1 the Escrow Account;
1.1.2 all funds from time to time held in the Escrow
Account, including, without limitation, the Escrow Proceeds and all
certificates and instruments, if any, from time to time, representing
or evidencing the Escrow Account or the Escrow Proceeds;
1.1.3 all Cash Equivalents (as defined herein), whether the
same shall constitute certificated securities, uncertificated
securities, investment property, instruments, general intangibles or
otherwise held by or registered in the name of the Collateral Agent or
the Trustee or any of their respective nominees pursuant to Article 2
or Article 3 hereof and all certificates and instruments, if any, from
time to time representing or evidencing the Cash Equivalents;
1.1.4 all notes, certificates of deposit, deposit accounts,
checks and other instruments from time to time hereafter delivered to
or otherwise possessed by the Trustee or the Collateral Agent in
substitution for or in addition to any or all of the then existing
Collateral;
1.1.5 all interest, dividends, cash, instruments and other
property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the then
existing Collateral; and
1.1.6 all proceeds of the foregoing including, without
limitation, cash proceeds.
The Trustee hereby appoints the Collateral Agent to act as the Trustee's agent,
on behalf of the Holders of the Senior Subordinated Notes, for purposes of
perfecting the foregoing pledge, assignment and security interest in the
Collateral, and the Collateral Agent hereby accepts such appointment. For so
long as the foregoing pledge, assignment and security interest remains in
effect, the Collateral Agent hereby waives any right of setoff or banker's lien
that it, in its individual capacity, may have with respect to any or all of the
Collateral.
1.2 Secured Obligations. This Agreement secures the due
and punctual payment and performance of all obligations and indebtedness of the
Company, whether now or hereafter existing, under the Senior Subordinated Notes
and the Senior Subordinated Note Indenture including, without limitation,
interest accrued thereon after the commencement of a bankruptcy, reorganization
or similar proceeding involving the Company to the extent permitted by
applicable law (collectively, the "Secured Obligations").
1.3 Delivery of Collateral. All certificates or
instruments, if any, representing or evidencing the Collateral shall be held by
or on behalf of the Trustee pursuant hereto and shall be in suitable form for
transfer by delivery, or shall be accompanied by duly executed instruments of
transfer or assignments in blank, all in form and substance reasonably
satisfactory to the Trustee. All securities in uncertificated or book-entry
form, if any, representing or evidencing the Collateral shall be registered in
the name of the Trustee or any of its nominees by book-entry or as otherwise
appropriate so as to properly identify the interest of the Trustee
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therein. In addition, the Trustee shall have the right, at any time following
the occurrence of an Event of Default, in its discretion to transfer to or to
register in the name of the Trustee or any of its nominees any or all other
Collateral. Except as otherwise provided herein, all Collateral shall be
deposited and held in the Escrow Account. The Trustee shall have the right at
any time to exchange certificates or instruments representing or evidencing all
or any portion of the Collateral for certificates or instruments of smaller or
larger denominations in the same aggregate amount.
1.4 Further Assurances. Prior to, contemporaneously
herewith, and at any time and from time to time hereafter, the Company will, at
the Company's expense, execute and deliver to the Trustee such other instruments
and documents, and take all further action as it deems necessary or advisable or
as the Trustee may reasonably request to confirm or perfect the security
interest of the Trustee granted or purported to be granted hereby or to enable
the Trustee to exercise and enforce its rights and remedies hereunder with
respect to any Collateral and the Company will take all necessary action to
preserve and protect the security interest created hereby as a first priority,
perfected lien and encumbrance upon the Collateral.
1.5 Maintaining the Escrow Account. So long as this
Agreement is in full force and effect:
1.5.1 the Company shall establish and maintain the Escrow
Account with the Collateral Agent in New York, New York, and the Escrow
Account shall at all times remain under the exclusive dominion and
control of the Trustee; and
1.5.2 it shall be a term and condition of the Escrow
Account, notwithstanding any term or condition to the contrary in any
other agreement relating to the Escrow Account and except as otherwise
provided by the provisions of Article 3 of this Agreement, that no
amount (including, without limitation, interest on or other proceeds of
the Escrow Account or on any Cash Equivalents held therein) shall be
paid or released to or for the account of, or withdrawn by or for the
account of, the Company or any other person or entity other than the
Trustee or its designated agent from the Escrow Account (other than
customary brokerage or similar fees, discounts or commissions payable
in connection with investments of funds pursuant to Section 2.1
hereof).
1.6 Transfers and Other Liens. The Company agrees that it
will not (i) sell, assign (by operation of law or otherwise) or otherwise
dispose of, or grant any option with respect to, any of the Collateral or (ii)
create or permit to exist any Lien upon or with respect to any of the
Collateral, except for the security interest under this Agreement.
1.7 Attorneys-in-Fact. The Company hereby irrevocably
appoints each of the Trustee and the Collateral Agent as the Company's
attorney-in-fact, coupled with an interest, with full authority in the place and
stead of the Company and in the name of the Company or otherwise, from time to
time in the Trustee's or the Collateral Agent's discretion to take any action
and to execute any instrument which the Trustee or the Collateral Agent may deem
necessary or advisable to accomplish the purposes of this Agreement, including,
without limitation, to receive, endorse and collect all instruments made payable
to the Company
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representing any interest payment, dividend or other distribution in respect of
the Collateral or any part thereof and to give full discharge for the same, and
the expenses of the Trustee incurred in connection therewith shall be payable by
the Company.
1.8 Trustee May Perform. Without limiting the authority
granted under Section 1.7 and except with respect to the failure of the Company
to deliver investment instructions, which shall be governed by the second
paragraph of Section 2.1 hereof, if the Company fails to perform any agreement
contained herein, the Trustee or the Collateral Agent may, but shall not be
obligated to, itself perform, or cause performance of, such agreement, and the
expenses of the Trustee or the Collateral Agent incurred in connection therewith
shall be payable by the Company.
2. Investment and Liquidation of Funds in Escrow Account. Funds
deposited in the Escrow Account shall be invested and reinvested by the
Collateral Agent on the following terms and conditions:
2.1 Allowable Investments. Subject to the provisions of
Articles 2 and 3, funds held by the Collateral Agent in the Escrow Account may,
at the direction of the Company or an agent appointed by the Company, be
invested and reinvested in the following ("Cash Equivalents"):
(a) United States dollars, (b) securities issued or directly
and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof, (c)
certificates of deposit and eurodollar time deposits with
maturities no later than May 31, 1996, bankers' acceptances
with maturities no later than May 31, 1996 and overnight bank
deposits, in each case with any domestic bank having capital
and surplus in excess of $500,000,000 and a Keefe Bank Watch
Rating of "B" or better, (d) repurchase obligations with a
term of not more than seven days for underlying securities of
the types described in clauses (b) and (c) above entered into
with any financial institution meeting the qualifications
specified in clause (c) above and (e) commercial paper having
the highest rating obtainable from Moody's Investors Service,
Inc. or Standard & Poor's Corporation and in each case
maturing within one year after the date of acquisition.
Investment instructions may instruct the Collateral Agent to
purchase or sell specific securities to or from specific persons and/or on
specific terms negotiated by the Company or its agent. If the Company or such
agent fails to give investment instructions to the Collateral Agent by 12:00
noon (New York time) on any Business Day on which there is uninvested cash
and/or maturing Cash Equivalents in the Escrow Account, the Trustee is hereby
authorized and directed to direct the Collateral Agent to invest any such cash
or the proceeds of any maturing Cash Equivalents in Cash Equivalents maturing on
the next Business Day. The Company's or such agent's failure to give such
investment instructions shall not constitute a default or an event of default
hereunder.
All of the Cash Equivalents shall mature on or prior to May
31, 1996; provided, however, that if the Trustee receives from the Company a
certificate substantially in the form of Exhibit A hereto (a "Preliminary
Release Certificate") that: (x) sets forth the date (the
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"Closing Date") set for the consummation of the Acquisition, which shall not be
earlier than five (5) Business Days after receipt of such Preliminary Release
Certificate; (y) states that the Company reasonably believes that the
Acquisition will be consummated on the specified Closing Date; and (z) directs
the liquidation of all of the Cash Equivalents in accordance with Section 3.1,
the Trustee shall direct the Collateral Agent to only invest in Cash Equivalents
such that the funds held in the Escrow Account will be available for release no
later than 12 p.m. on the Closing Date.
2.2 Interest. All interest earned on funds invested in
Cash Equivalents shall be held in the Escrow Account and reinvested in
accordance with the terms hereof and will be subject to the security interest
granted hereunder to the Trustee.
2.3 Limitation of Trustee's and Collateral Agent's
Liability. In no event shall the Trustee or the Collateral Agent have any
liability to the Company or any other person for investing the funds from time
to time in the Escrow Account in accordance with the provisions of this Article
2, regardless of whether greater income or a higher yield could have been
obtained had the Collateral Agent invested such funds in different Cash
Equivalents, or for any loss associated with the sale or liquidation of Cash
Equivalents in accordance with the terms of this Agreement.
3. Disposition of Collateral Upon Certain Events
3.1 Transfer of Escrow Proceeds for the Acquisition. If,
on or prior to May 23, 1996, the Company delivers to the Trustee a Preliminary
Release Certificate stating that the Acquisition will occur, the Trustee shall
direct the Collateral Agent to: (a) liquidate, within five (5) Business Days
after the Trustee's receipt of such Preliminary Release Certificate, all of the
Cash Equivalents in the Escrow Account and, (b) transfer, on the Closing Date,
such amount of funds as directed by the Company by wire transfer of immediately
available funds to such entity as designated by the Company, and the Collateral
Agent hereby agrees to liquidate such amount of Cash Equivalents and to make
such funds transfer.
3.2 Release of Funds. On the Closing Date, the Company
shall deliver to the Trustee (x) confirmation of the amounts required to be
transferred by the Collateral Agent pursuant to Section 3.1, (y) an opinion of
Wachtell, Lipton, Rosen & Katz, counsel to the Company, or McGuire Woods Battle
& Boothe LLP, counsel to the Company, as applicable, in the form of Exhibit B
hereto, with respect to certain matters concerning the due incorporation and the
authorized capital stock of the entities acquired pursuant to the Acquisition
and the due authorization, execution and delivery of the confirmation identified
in (x) and the Release Certificate (as defined below), and (z) a certificate
substantially in the form of Exhibit C hereto (a "Release Certificate") stating
that (1) all conditions to the consummation of the Acquisition have been
satisfied or waived, (2) that the Acquisition will be consummated on such date
on substantially the terms described in the Offering Circular and (3) that no
Event of Default (as defined in the Senior Subordinated Note Indenture) has
occurred and is continuing or will occur as a result of the release of funds
contemplated hereby, and instructing the Trustee to direct the Collateral Agent
to release the appropriate dollar amount of the Collateral in accordance with
this Section 3.2. Upon receipt of the foregoing and in good faith reliance
thereon, the Trustee shall direct the Collateral Agent to transfer the amount
specified by the
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applicable terms of such Release Certificate in immediately available funds in
accordance with the terms of such Release Certificate. The delivery of the
items identified in (x) and (z) above shall be the only conditions precedent to
the release of funds pursuant to this Agreement.
3.3 Release of Security Interest. If the Trustee receives
a Release Certificate and the opinions required by Section 3.2, the Trustee and
the Collateral Agent shall deliver to the Company a release of security
interest, with respect to the funds released pursuant to such Release
Certificate at the time of release of such funds (the "Release Time"), in the
form of Exhibit D hereto, duly executed by the Trustee and the Collateral Agent,
and the Trustee and the Collateral Agent shall take all further actions, if any,
that are reasonably deemed necessary by the Company to terminate the Trustee's
security interest in the Collateral as of the Release Time and, at the Release
Time, all funds transferred by the Collateral Agent in accordance with the
provisions of Section 3.2 shall automatically be deemed to be free and clear of
the Trustee's security interest provided herein.
3.4 Special Mandatory Redemption. If (i) the Trustee has
not received a Release Certificate with respect to the Acquisition on or prior
to May 31, 1996 or (ii) the Trustee receives a certificate in the form of
Exhibit E hereto (a "Special Mandatory Redemption Certificate") with respect to
the Acquisition on or prior to May 31, 1996, the Trustee shall direct the
Collateral Agent to: (a) promptly liquidate all of the Cash Equivalents in the
Escrow Account to obtain net cash proceeds by no later than 12:00 noon (New York
time) on the date that is five (5) Business Days after such date specified in
clause (i) or (ii) above, as applicable, and (b) transfer such dollar amount to
the Paying Agent to be used to redeem Senior Subordinated Notes in accordance
with Section 3.09 of the Senior Subordinated Note Indenture, and the Collateral
Agent hereby agrees to liquidate such investments and to make such funds
transfer.
3.5 Release of Remaining Funds in Escrow Account. Upon
such date as all Escrow Proceeds have been released in accordance with Sections
3.1-3.4 hereof and upon receipt of a request by the Company, the Collateral
Agent shall transfer by wire transfer of immediately available funds any funds
remaining in the Escrow Account to an account designated by the Company.
4. Remedies upon Default. If (a) any Event of Default shall have
occurred and be continuing under Section 3.09 of the Indenture or (b) any other
Event of Default shall have occurred and be continuing that results in the
acceleration of the payment of principal, interest, premium, if any, and
Liquidated Damages, if any, pursuant to the terms of the Indenture:
(i) The Trustee may, without notice to the Company except
as required by law and at any time or from time to time, direct the
Collateral Agent to liquidate all Cash Equivalents and transfer all
funds in the Escrow Account to the Paying Agent to apply such funds in
accordance with Sections 3.09 of the Senior Subordinated Note
Indenture.
(ii) The Collateral Agent and/or the Trustee may also
exercise in respect of the Collateral, in addition to the other rights
and remedies provided for herein or otherwise available to it, all the
rights and remedies of a secured party on default under
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the Uniform Commercial Code in effect at that time in the State of New
York (the "Code") (whether or not the Code applies to the affected
Collateral), and may also, without notice except as specified below,
sell the Collateral or any part thereof in one or more parcels at
public or private sales, at any of the Trustee's or the Collateral
Agent's offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as the Trustee may deem
commercially reasonable. The Company agrees that, to the extent notice
of sale shall be required by law, at least ten days' notice to the
Company of the time and place of any public sale or the time after
which any private sale is to be made shall constitute reasonable
notification. The Trustee and the Collateral Agent shall not be
obligated to make any sale of Collateral regardless of notice of sale
having been given. The Trustee or the Collateral Agent may adjourn any
public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned.
(iii) Any cash held by the Collateral Agent as Collateral
and all net cash proceeds received by the Trustee or the Collateral
Agent in respect of any sale or liquidation of, collection from, or
other realization upon all or any part of the Collateral may, in the
discretion of the Trustee, be held by the Trustee or the Collateral
Agent as collateral for, and/or then or at any time thereafter be
applied (after payment of any costs and expenses incurred in connection
with any sale, liquidation or disposition of or realization upon the
Collateral and the payment of any amounts payable to the Trustee or the
Collateral Agent) in whole or in part by the Trustee or the Collateral
Agent for the ratable benefit of the Holders of the Senior Subordinated
Notes against, all or any part of the Secured Obligations in such order
as the Trustee shall elect. Any surplus of such cash or cash proceeds
held by the Trustee or the Collateral Agent and remaining after payment
in full of all the Secured Obligations and the costs and expenses
incurred by and amounts payable to the Trustee or the Collateral Agent
hereunder or under the Senior Subordinated Note Indenture shall be paid
over to the Company.
5. Representations and Warranties. The Company hereby
makes all representations and warranties applicable to the Company contained
in the Senior Subordinated Note Indenture. The Company further represents and
warrants that:
5.1 The execution, delivery and performance by the
Company of this Agreement are within the Company's corporate powers, have been
duly authorized by all necessary corporate action, and do not contravene, or
constitute a default under, any provision of applicable law or regulation or of
the certificate of incorporation or bylaws of the Company or of any agreement,
judgment, injunction, order, decree or other instrument binding upon the
Company, or result in the creation or imposition of any Lien on any assets of
the Company, other than the Lien contemplated hereby.
5.2 The Company has full power and authority to enter
into this Agreement and has the right to vote, pledge and grant a security
interest in the Collateral as provided by this Agreement.
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5.3 This Agreement has been duly executed and delivered
by the Company and constitutes a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms.
5.4 Upon the delivery to the Collateral Agent of the
Collateral and (as to certain proceeds therefrom) the filing of Uniform
Commercial Code (the "UCC") financing statements, the pledge of the Collateral
pursuant to this Agreement creates a valid and perfected first priority security
interest in the Collateral, securing the payment of the Secured Obligations for
the benefit of the Collateral Agent and the Holders, and enforceable as such
against all creditors of the Company and any persons purporting to purchase any
of the Collateral from the Company.
5.5 No consent of any other person and no consent,
authorization, approval, or other action by, and no notice to or filing with,
any governmental authority or regulatory body is required either (i) for the
pledge by the Company of the Collateral pursuant to this Agreement or for the
execution, delivery or performance of this Agreement by the Company or (ii) for
the exercise by the Collateral Agent of the remedies in respect of the
Collateral pursuant to this Agreement (except as may be required in connection
with such disposition by laws affecting the offering and sale of securities).
5.6 No litigation, investigation or proceeding of or
before any arbitrator or governmental authority is pending or, to the best
knowledge of the Company, threatened by or against the Company or against any of
its properties or revenues with respect to this Agreement or any of the
transactions contemplated hereby.
5.7 The pledge of the Collateral pursuant to this
Agreement is not prohibited by any applicable law or governmental regulation,
release, interpretation or opinion of the Board of Governors of the Federal
Reserve System or other regulatory agency (including, without limitation,
Regulations G, T, U and X of the Board of Governors of the Federal Reserve
System).
5.8 All information set forth herein relating to the
Collateral is accurate and complete in all material respects.
6. Indemnity. The Company shall indemnify and hold harmless the
Trustee, the Collateral Agent and their respective directors, officers, agents
and employees, from and against any and all claims, actions, obligations,
liabilities and expenses, including, without limitation, defense costs,
investigative fees and costs, legal fees and claims for damages incurred in any
action or proceeding between the parties hereto or in disputes with third
parties or otherwise, arising from or in connection with the Trustee's and/or
the Collateral Agent's acceptance of, or performance under, this Agreement,
except to the extent that such liability, expense or claim is directly
attributable to the gross negligence or bad faith of the Trustee or the
Collateral Agent.
7. Termination. This Agreement shall terminate automatically upon
the first to occur of (a) the release of all of the Collateral pursuant to
Section 3.5 hereof or (b) payment in full of the Secured Obligations.
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8. Miscellaneous.
8.1 Waiver. Either party hereto may specifically waive
any breach of this Agreement by the other party, but no such waiver shall be
deemed to have been given unless such waiver is in writing, signed by the
waiving party, and specifically designates the breach waived, nor shall any such
waiver constitute a continuing waiver of similar or other breaches.
8.2 Invalidity. If, for any reason whatsoever, any one or
more of the provisions of this Agreement shall be held or deemed to be
inoperative, unenforceable or invalid in a particular case or in all cases, such
circumstances shall not have the effect of rendering any of the other provisions
of this Agreement inoperative, unenforceable or invalid, and the inoperative,
unenforceable or invalid provision shall be construed as if it were written so
as to effectuate, to the maximum extent possible, the parties' intent.
8.3 Assignment. This Agreement shall inure to and be
binding upon the parties and their respective successors and permitted assigns;
provided, however, that the Company may not assign its rights or obligations
hereunder without the express prior written consent of the Trustee.
8.4 Choice of Law. The existence, validity, construction,
operation and effect of any and all terms and provisions of this Agreement shall
be determined in accordance with and governed by the internal laws of the State
of New York including, without limitation the Uniform Commercial Code in effect
in the State of New York, without giving effect to the conflicts of law
principles of such State.
8.5 Entire Agreement; Amendments. This Agreement and the
Senior Subordinated Note Indenture contain the entire agreement among the
parties with respect to the subject matter hereof and supersede any and all
prior agreements, understandings and commitments with respect thereto, whether
oral or written; provided, however, that this Agreement is executed and accepted
by the Trustee and the Collateral Agent subject to all terms and conditions of
its acceptance of the trust under the Senior Subordinated Note Indenture, as
fully as if said terms and conditions were set forth at length herein. This
Agreement may be amended only by a writing signed by duly authorized
representatives of all parties. The Trustee and the Collateral Agent may execute
an amendment to this Agreement only if the requisite consent of the Holders of
the Senior Subordinated Notes required by Section 9.02 of the Senior
Subordinated Note Indenture has been obtained, unless no such consent is
required by such Section 9.02 of the Senior Subordinated Note Indenture.
8.6 Notices. All notices, requests, instructions, orders
and other communications required or permitted to be given or made under this
Agreement to any party hereto shall be delivered in writing by hand delivery or
overnight delivery, or shall be delivered by facsimile or telephonically with
confirmation in writing not more than twenty-four hours following such facsimile
or telephonic notice. A notice given in accordance with the preceding sentence
shall be deemed to have been duly given upon the sending thereof, except for
notice to the Trustee or the Collateral Agent, which shall be deemed given only
when received. Notices should be addressed as follows:
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To the Company:
AMF Group Inc.
7313 Bell Creek Road
Mechanicsville, VA. 23221
Attention: Secretary
Facsimile number: (804) 559-8666
Telephone number: (804) 559-8600
With copies to:
Elliott V. Stein, Esq.
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Facsimile number: (212) 403-2000
Telephone number: (212) 403-1000
To the Trustee:
American Bank National Association
Attention: Corporate Trust Administration
(Reference - AMF Group Inc.)
101 East 5th Street
St. Paul, MN 55101
Facsimile number: (612) 229-6415
Telephone number: (612) 229-2600
To the Collateral Agent:
American Bank National Association
Attention: Corporate Trust Department
101 East 5th Street
St. Paul, MN 55101
Facsimile number: (612) 229-6415
Telephone number: (612) 229-2600
or at such other address, facsimile number or phone number as the specified
entity most recently may have designated in writing in accordance with this
paragraph to the other parties.
8.7 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. Delivery of an executed
counterpart of a signature page to this Agreement by facsimile shall be
effective as delivery of a manually executed counterpart of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the day first written above.
COMPANY: AMF GROUP INC.
By /s/ Robert L. Morin
---------------------------------
Name: Robert L. Morin
Title: Executive Vice President
TRUSTEE: AMERICAN BANK NATIONAL ASSOCIATION,
as Trustee
By /s/ Frank Leslie
---------------------------------
Name: Frank P. Leslie III
Title: Vice President
By /s/ Thomas M. Korsman
---------------------------------
Name: Thomas M. Korsman
Title: Vice President
COLLATERAL AGENT: AMERICAN BANK NATIONAL ASSOCIATION,
as Collateral Agent
By /s/ Frank P. Leslie
---------------------------------
Name: Frank P. Leslie
Title: Vice President
By /s/ Thomas M. Korsman
---------------------------------
Name: Thomas M. Korsman
Title: Vice President
<PAGE> 134
EXHIBIT A
[Form of Preliminary Release Certificate]
AMF GROUP INC.
Date:
-------------------
The undersigned officer of AMF Group Inc., a Delaware corporation (the
"Company"), hereby certifies to the Trustee, pursuant to Section 3.1 of the
Pledge, Escrow and Assignment Agreement dated as of March 21, 1996 (the "Pledge,
Escrow and Assignment Agreement") by and among the Company, American Bank
National Association, as trustee (the "Trustee") under the Senior Subordinated
Discount Note Indenture dated as of March 21, 1996 (the "Senior Subordinated
Discount Note Indenture") between the Company and the Trustee, and American Bank
National Association, as collateral agent (the "Collateral Agent") as follows:
1. The consummation of the Acquisition (as defined in the Senior
Subordinated Discount Note Indenture) on substantially the terms described in
the Offering Circular (as defined in the Senior Subordinated Discount Note
Indenture) has been scheduled to occur on , 1996 (the "Closing Date").
2. The Company believes that the Acquisition will be consummated on the
Closing Date on substantially the terms described in the Offering Circular.
The Company hereby requests the Trustee to direct the Collateral Agent to
liquidate all of the Cash Equivalents (as defined in the Pledge, Escrow and
Assignment Agreement) by no later than o'clock on ,
1996.
By:
---------------------------------
Name:
Title:
A-1
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EXHIBIT B
[Form of Opinion Required by Section 3.2]
1. Each of the entities acquired by the Company pursuant to the Acquisition
has been duly incorporated and is validly existing as a corporation in good
standing under the laws of the State of [state of incorporation].
2. All of the issued and outstanding shares of capital stock of each of the
entities acquired by the Company pursuant to the Acquisition have been duly
authorized and validly issued, are fully paid and nonassessable and were not
issued in violation of any preemptive or other similar rights.
3. The Company has duly authorized, executed and delivered each of (i) the
confirmation required pursuant to Section 3.2(x) and (ii) the Release
Certificate required pursuant to Section 3.2(z) of the Agreement.
B-1
<PAGE> 136
EXHIBIT C
[Form of Release Certificate]
AMF GROUP INC.
Date:
-------------------
The undersigned officer of AMF Group Inc., a Delaware corporation (the
"Company"), hereby certifies, pursuant to Section 3.2 of the Pledge, Escrow and
Assignment Agreement dated as of March 21, 1996 (the "Pledge, Escrow and
Assignment Agreement") by and among the Company, American Bank National
Association, as trustee (the "Trustee") under the Senior Subordinated Discount
Note Indenture dated as of March 21, 1996 (the "Senior Subordinated Discount
Note Indenture") between the Company and the Trustee, and American Bank National
Association, as collateral agent (the "Collateral Agent"), as follows:
1. All of the conditions to the consummation of the Acquisition (as defined
in the Senior Subordinated Discount Note Indenture) have been satisfied or
waived as of the date hereof.
2. The Acquisition will be consummated on the date hereof on substantially
the terms described in the Offering Circular (as defined in the Senior
Subordinated Discount Note Indenture).
3. No Event of Default (as defined in the Senior Subordinated Discount Note
Indenture) has occurred and is continuing or will occur as a result of the
release of funds contemplated hereby.
Unless otherwise indicated, capitalized terms used herein without
definition shall have the meanings specified in the Pledge, Escrow and
Assignment Agreement.
C-1
<PAGE> 137
The Company hereby requests the Trustee to direct the Collateral Agent to
release the funds held by it in the Escrow Account at and to
terminate and release its pledge and assignment of, and security interest in,
the Collateral under the Pledge, Escrow and Assignment Agreement in accordance
with Section 3.3 thereof. At , such funds should be deposited in
immediately available funds in the following account or accounts at
in the amounts indicated.
By:
--------------------------------
Name:
Title:
C-2
<PAGE> 138
EXHIBIT D
[Form of Release of Security Interest]
[To be typed on Trustee's letterhead]
Date:
VIA FACSIMILE AND FEDERAL EXPRESS
AMF Group Inc.
7313 Bell Creek Road
Mechanicsville, VA 23221
Attention: Secretary
Re: Release of Security Interest
Ladies and Gentlemen:
Reference is hereby made to that certain Pledge, Escrow and Assignment
Agreement dated as of March 21, 1996 by and among AMF Group Inc., American Bank
National Association, as Trustee, and American Bank National Association, as
Collateral Agent (as amended, supplemented or modified from time to time in
accordance with the terms thereof, the "Pledge, Escrow and Assignment
Agreement").
By its signature below, each of the Collateral Agent and the Trustee hereby
terminates and releases its pledge and assignment of, and security interest in,
all of the Collateral under the Pledge, Escrow and Assignment Agreement, which
amount has been delivered to you or your order on the date hereof.
This release may be executed in one or more counterparts, each of which
shall be deemed an original and all of which, taken together, shall constitute
one and the same instrument.
D-1
<PAGE> 139
Very truly yours,
AMERICAN BANK NATIONAL ASSOCIATION,
as Trustee
By
---------------------------------
Name:
Title:
AMERICAN BANK NATIONAL ASSOCIATION,
as Collateral Agent
By
---------------------------------
Name:
Title:
D-2
<PAGE> 140
EXHIBIT E
[Form of Special Mandatory Redemption Certificate]
AMF GROUP INC.
Date: ________________
The undersigned officer of AMF Group Inc., a Delaware corporation (the
"Company"), hereby certifies, pursuant to Section 3.4 of the Pledge, Escrow and
Assignment Agreement dated as of March 21, 1996 (the "Pledge, Escrow and
Assignment Agreement") by and among the Company, American Bank National
Association, as trustee (the "Trustee") under the Senior Subordinated Discount
Note Indenture dated as of March 21, 1996 (the "Senior Subordinated Discount
Note Indenture") between the Company and the Trustee, and American Bank National
Association, as collateral agent (the "Collateral Agent"), that the Company has
concluded, in its sole judgment, that the Acquisition (as defined in the Senior
Subordinated Discount Note Indenture) will not be consummated on or prior to May
31, 1996.
The Company hereby requests the Trustee to direct the Collateral Agent to
liquidate all of the Cash Equivalents in the Escrow Account by not later than
12:00 noon (New York time) on _______________, 1996 and to transfer $__________
in immediately available funds to the Paying Agent to redeem Senior
Subordinated Discount Notes in accordance with Section 3.09 of the Senior
Subordinated Discount Note Indenture.
Capitalized terms used herein without definition shall have the meanings
set forth in the Pledge, Escrow and Assignment Agreement.
By: ______________________________
Name:
Title:
E-1
<PAGE> 141
SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE dated as of May 1, 1996, between AMF
Bowling, Inc., AMF Bowling Centers, Inc., Bush River Corporation, AMF Beverage
Company of Oregon, Inc., King Louie Lenexa, Inc., AMF Bowling Centers
Switzerland Inc., AMF Bowling Centers (Aust.) International, Inc., AMF Bowling
Centers (Canada) International, Inc., AMF Bowling Centers (Hong Kong)
International, Inc., AMF Bowling Centers International, Inc., AMF BCO-UK One,
Inc., AMF BCO-UK Two, Inc., AMF BCO-France One, Inc., AMF BCO-France Two, Inc.,
AMF Bowling Centers Spain Inc., AMF Bowling Mexico Holding, Inc., Boliches AMF,
Inc.,AMF BCO-China, Inc., AMF Bowling Centers China, Inc., AMF Beverage Company
of W. Va., Inc. (the "Supplemental Guarantors" and, together with the Persons
identified on Exhibit C to the Indenture referred to below and any other
Supplemental Guarantors that execute this form of Supplemental Indenture, the
"Guarantors"), each a Subsidiary of AMF Group Inc., a Delaware corporation, or
its successors and assigns (the "Company"), and American Bank National
Association, 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 March 21, 1996,
providing for the issuance of an aggregate principal amount of $452.0 million of
12 1/4% Senior Subordinated Discount Notes due 2006 (the "Senior Subordinated
Discount Notes");
WHEREAS, the Indenture provides that under certain
circumstances the Supplemental Guarantors shall execute and deliver to the
Trustee a supplemental indenture pursuant to which each Supplemental Guarantor
shall unconditionally guarantee all of the Company's Obligations under the
Senior Subordinated Discount Notes on the terms and conditions set forth herein
(the "Senior Subordinated 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,
each Supplemental Guarantor and the Trustee mutually covenant and agree for the
equal and ratable benefit of the Holders of the Senior Subordinated Discount
Notes as follows:
1. Capitalized Terms. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
2. Counterpart to the Indenture. This Supplemental Indenture
specifically incorporates, restates and reaffirms all of the warranties,
representations, covenants and other provisions of the Indenture,
notwithstanding the fact that such provisions are not restated herein. By
executing this Supplemental Indenture, each Supplemental Guarantor subscribes to
all of the covenants and other provisions in the Indenture as applicable to the
Guarantors, and each Supplemental Guarantor hereby agrees that it shall be bound
by all of the provisions of the Indenture. Upon execution, this Supplemental
Indenture shall become part of the Indenture and the rights and obligations of
each Supplemental Guarantor hereunder shall be construed to be identical to the
rights and obligations of the Guarantors under the Indenture. Reference is
hereby made to the Indenture for the precise terms of this Supplemental
Indenture. In the event of any conflict between the provisions herein and the
provisions of the Indenture, the Indenture shall control.
<PAGE> 142
3. Agreement to Guarantee. Each Supplemental Guarantor hereby agrees as
follows:
(a) Subject to Article 11 of the Indenture, each Supplemental
Guarantor, jointly and severally with the other Guarantors, hereby
unconditionally guarantees to each Holder of a Senior Subordinated
Discount Note authenticated and delivered by the Trustee and to the
Trustee and its successors and assigns, irrespective of the validity
and enforceability of the Indenture, the Senior Subordinated Discount
Notes or the Obligations of the Company under the Indenture or the
Senior Subordinated Discount Notes, that: (a) the principal of,
premium, if any, and interest, including Liquidated Damages, if any, on
the Senior Subordinated Discount Notes shall be promptly paid in full
when due, whether at maturity, by acceleration, redemption or
otherwise, and (to the extent permitted by law) interest on the overdue
principal of, premium and interest, including Liquidated Damages, on
the Senior Subordinated Discount Notes, if any, and all other
obligations of the Company to the Holders or the Trustee under the
Indenture or the Senior Subordinated Discount Notes shall be promptly
paid in full or performed, all in accordance with the terms of the
Indenture and the Senior Subordinated Discount Notes; and (b) in case
of any extension of time for payment or renewal of any Senior
Subordinated Discount Notes or any of such other obligations, that 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. Failing payment when due of any amount so
guaranteed for whatever reason, the Guarantors shall be obligated to
pay the same immediately whether or not such failure to pay has become
an Event of Default which could cause acceleration pursuant to Section
6.02 of the Indenture. Each Supplemental Guarantor agrees that this is
a guarantee of payment and not a guarantee of collection.
(b) Each Supplemental Guarantor hereby agrees that its obligations
hereunder shall be unconditional, irrespective of the validity,
regularity or enforceability of the Senior Subordinated Discount Notes
or the Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Senior Subordinated Discount
Notes with respect to any provisions thereof, the recovery 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 guarantor. Each Supplemental
Guarantor hereby waives diligence, presentment, demand of payment,
filing of claims with a court in the event of insolvency or bankruptcy
of the Company, any right to require a proceeding first against the
Company, protest, notice and all demands whatsoever and covenants that,
subject to Article 11 of the Indenture, this Senior Subordinated
Guarantee shall not be discharged except by complete performance of the
obligations contained in the Senior Subordinated Discount Notes and the
Indenture.
(c) If any Holder of Senior Subordinated Discount Notes or the
Trustee is required by any court or otherwise to return to the Company
or the Guarantors, or any Custodian, Trustee, liquidator or other
similar official acting in relation to either the Company or the
Guarantors, any amount paid by either to the Trustee or such Holder,
this Senior Subordinated Guarantee, to the extent theretofore
discharged, shall be reinstated in full force and effect.
(d) Each Supplemental Guarantor agrees that it shall not be entitled
to any right of subrogation in relation to the Holders of Senior
Subordinated Discount Notes in respect of any Obligations guaranteed
hereby until payment in full of all Obligations guaranteed hereby. Each
Supplemental Guarantor further agrees that,
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<PAGE> 143
as between the Guarantors, on the one hand, and the Holders and the
Trustee, on the other hand, (x) the maturity of the Obligations
guaranteed hereby may be accelerated as provided in Article 6 of the
Indenture for the purposes of this Senior Subordinated Guarantee,
notwithstanding any stay, injunction or other prohibition preventing
such acceleration in respect of the Obligations guaranteed thereby and
(y) in the event of any declaration of acceleration of such Obligations
as provided in Section 6.02 of the Indenture, such Obligations (whether
or not due and payable) shall forthwith become due and payable by the
Guarantors for the purpose of this Senior Subordinated Guarantee. The
Guarantors shall have the right to seek contribution from any
non-paying Guarantor so long as the exercise of such right does not
impair the rights of the Holders under the Senior Subordinated
Guarantees.
4. Subordination of Senior Subordinated Guarantee. The Obligations of
each Guarantor under its Senior Subordinated Guarantee pursuant to Article 11 of
the Indenture shall be junior and subordinated to the Senior Guarantee of such
Guarantor on the same basis as the Senior Subordinated Discount Notes are junior
and subordinated to Senior Debt 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 Guarantors only at such times as they may
receive and/or retain payments in respect of the Senior Subordinated Discount
Notes pursuant to the Indenture, including Article 10 thereof.
5. Limitation on Guarantor Liability. Each Supplemental Guarantor, and
by its acceptance of Senior Subordinated Discount Notes, each Holder, hereby
confirms that it is the intention of all such parties that the Senior
Subordinated Guarantee of each Supplemental Guarantor not constitute a
fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform
Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar
federal or state law to the extent applicable to any Senior Subordinated
Guarantee. To effectuate the foregoing intention, the Trustee, the Holders and
each Supplemental Guarantor hereby irrevocably agree that the obligations of
each Supplemental Guarantor under its Senior Subordinated Guarantee and Article
11 of the Indenture shall be limited to the maximum amount as will, after giving
effect to such maximum amount and all other contingent and fixed liabilities of
each Supplemental Guarantor that are relevant under such laws, and after giving
effect to any collections from, rights to receive contribution from or payments
made by or on behalf of any other Guarantor in respect of the obligations of
such other Guarantor under Article 11 of the Indenture, result in the
obligations of each Supplemental Guarantor under its Senior Subordinated
Guarantee not constituting a fraudulent transfer or conveyance.
6. Execution and Delivery of Senior Subordinated Guarantees.
(a) To evidence its Senior Subordinated Guarantee set forth in this
Supplemental Indenture and in Section 11.01 of the Indenture, each
Supplemental Guarantor hereby agrees that a notation of such Senior
Subordinated Guarantee substantially in the form of Exhibit D to the
Indenture shall be endorsed by an officer of each Supplemental
Guarantor on each Senior Subordinated Discount Note authenticated and
delivered by the Trustee and that this Supplemental Indenture, as a
counterpart to the Indenture, shall be executed on behalf of each
Supplemental Guarantor by its President or one of its Vice Presidents
and attested to by an Officer.
(b) Each Supplemental Guarantor hereby agrees that its Senior
Subordinated Guarantee set forth in this Supplemental Indenture and in
Section 11.01 of
-3-
<PAGE> 144
the Indenture shall remain in full force and effect notwithstanding any
failure to endorse on each Senior Subordinated Discount Note a notation
of such Senior Subordinated Guarantee.
(c) If an Officer whose signature is on this Supplemental Indenture
or on the Senior Subordinated Guarantee no longer holds that office at
the time the Trustee authenticates the Senior Subordinated Discount
Note on which a Senior Subordinated Guarantee is endorsed, the Senior
Subordinated Guarantee shall be valid nevertheless.
(d) The delivery of any Senior Subordinated Discount Note by the
Trustee, after the authentication thereof under the Indenture, shall
constitute due delivery of the Senior Subordinated Guarantee set forth
in the Indenture on behalf of each Supplemental Guarantor.
7. Guarantor May Consolidate, Etc., on Certain Terms. No Supplemental
Guarantor may consolidate with or merge with or into (whether or not such
Supplemental Guarantor is the surviving Person) another corporation, Person or
entity whether or not affiliated with such Supplemental Guarantor unless:
(a) subject to Section 11.06 of the Indenture, the Person formed by
or surviving any such consolidation or merger (if other than such
Supplemental Guarantor) unconditionally assumes all the obligations of
such Supplemental Guarantor under the Senior Subordinated Guarantee and
the Indenture on the terms set forth in the Indenture pursuant to a
supplemental indenture in form and substance reasonably satisfactory to
the Trustee;
(b) immediately after giving effect to such transaction, no Default
or Event of Default exists; and
(c) the Company would be permitted by virtue of the Company's pro
forma Fixed Charge Coverage Ratio to incur, immediately after giving
effect to such transaction, 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 of the Indenture.
In case of any such consolidation or merger and upon the assumption by the
successor corporation, by supplemental indenture, executed and delivered to the
Trustee and satisfactory in form to the Trustee, of the Senior Subordinated
Guarantee endorsed upon the Senior Subordinated Discount Notes and of the due
and punctual performance of all of the covenants and conditions of the Indenture
and this Supplemental Indenture to be performed by the Supplemental Guarantor,
such successor corporation shall succeed to and be substituted for the
Supplemental Guarantor with the same effect as if it had been named in the
Indenture as a Guarantor. Such successor corporation thereupon may cause to be
signed any or all of the Senior Subordinated Guarantees to be endorsed upon all
of the Senior Subordinated Discount Notes issuable under the Indenture which
theretofore shall not have been signed by the Company and delivered to the
Trustee. All the Senior Subordinated Guarantees so issued shall in all respects
have the same legal rank and benefit under the Indenture as the Senior
Subordinated Guarantees theretofore and thereafter issued in accordance with the
terms of the Indenture as though all of such Senior Subordinated Guarantees had
been issued at the date of the execution of the Indenture.
Except as set forth in Articles 4 and 5 of the Indenture, and
notwithstanding clauses (a) through (c) above, nothing contained in the
Indenture, this Supplemental
-4-
<PAGE> 145
Indenture or in any of the Senior Subordinated Discount Notes shall prevent any
consolidation or merger of any Supplemental Guarantor with or into the Company
or another Guarantor, or shall prevent any sale or conveyance of the property of
any Supplemental Guarantor as an entirety or substantially as an entirety to the
Company or another Guarantor.
8. Releases of Senior Subordinated Guarantees. In the event of a sale
or other disposition of all or substantially all of the assets of any
Supplemental Guarantor, by way of merger, consolidation or otherwise, or a sale
or other disposition (including, without limitation, by foreclosure) of all of
the Capital Stock of any Supplemental Guarantor, then the Supplemental Guarantor
(in the event of a sale or other disposition, by way of such a merger,
consolidation or otherwise (including, without limitation, by foreclosure), of
all of the Capital Stock of the Supplemental Guarantor) or the corporation
acquiring the property (in the event of a sale or other disposition of all of
the assets of the Supplemental Guarantor) shall be automatically released and
relieved of any obligations under its Senior Subordinated Guarantee; provided
that the Net Proceeds of such sale or other disposition are applied in
accordance with Section 4.10 of the Indenture. Upon delivery by the Company to
the Trustee of an Officers' Certificate and an Opinion of Counsel to the effect
that such sale or other disposition was made by the Company in accordance with
the provisions of the Indenture, including without limitation Sections 4.10 and
5.01 thereof, the Trustee shall execute any documents reasonably required in
order to evidence the release of the Supplemental Guarantor from its obligations
under its Senior Subordinated Guarantee. Any Supplemental Guarantor not released
from its obligations under its Senior Subordinated Guarantee shall remain liable
for the full amount of principal of and interest on the Senior Subordinated
Discount Notes and for the other obligations of any Supplemental Guarantor under
the Indenture as provided in Article 11 thereof.
9. "Trustee" to Include Paying Agent. In case at any time any Paying
Agent other than the Trustee shall have been appointed by the Company and be
then acting under the Indenture, the term "Trustee" as used in Article 11
thereto shall in such case (unless the context shall otherwise require) be
construed as extending to and including such Paying Agent within its meaning as
fully and for all intents and purposes as if such Paying Agent were named in
Article 11 of the Indenture in place of the Trustee.
10. No Recourse Against Others. No past, present or future director,
officer, employee, incorporator or stockholder of each Supplemental Guarantor,
as such, shall have any liability for any obligations of the Company or any
Guarantor under the Senior Subordinated Discount Notes, any Senior Subordinated
Guarantees, the Indenture or this Supplemental Indenture or for any claim based
on, in respect of, or by reason of, such obligations or their creation. Each
Holder of Senior Subordinated Discount Notes by accepting a Senior Subordinated
Discount Note waives and releases all such liability. The waiver and release are
part of the consideration for issuance of the Senior Subordinated Discount
Notes.
11. GOVERNING LAW. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL
GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE AND THE SENIOR
SUBORDINATED GUARANTEE.
12. Counterpart Originals. 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.
13. Effect of Headings. The Section headings herein are for convenience
only and shall not affect the construction hereof.
-5-
<PAGE> 146
14. The Trustee. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the recitals contained herein, all of which
recitals are made solely by each Supplemental Guarantor and the Company.
-6-
<PAGE> 147
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.
Dated: May 1, 1996
AMF BOWLING, INC.
Attest:
By: /s/ Robert L. Morin
--------------------------
/s/ William W. Flexon Name: Robert L. Morin
- --------------------------------------- Title: President
Name: William W. Flexon
Title: Secretary
AMF BOWLING CENTERS, INC.
Attest:
By: /s/ Douglas J. Stanard
--------------------------
/s/ Michael P. Bardaro Name: Douglas J. Stanard
- --------------------------------------- Title: President
Name: Michael P. Bardaro
Title: Treasurer & Assistant
Secretary
BUSH RIVER CORPORATION
Attest:
By: /s/ Douglas J. Stanard
--------------------------
/s/ Michael P. Bardaro Name: Douglas J. Stanard
- --------------------------------------- Title: President
Name: Michael P. Bardaro
Title: Treasurer & Assistant
Secretary
AMF BEVERAGE COMPANY OF
OREGON, INC.
Attest:
By: /s/ Douglas J. Stanard
--------------------------
/s/ Michael P. Bardaro Name: Douglas J. Stanard
- --------------------------------------- Title: President
Name: Michael P. Bardaro
Title: Treasurer & Assistant
Secretary
KING LOUIE LENEXA, INC.
Attest:
By: /s/ Douglas J. Stanard
--------------------------
/s/ Michael P. Bardaro Name: Douglas J. Stanard
- --------------------------------------- Title: President
Name: Michael P. Bardaro
Title: Treasurer & Assistant
Secretary
-7-
<PAGE> 148
Dated: May 1, 1996
AMF BOWLING CENTERS
SWITZERLAND INC.
Attest:
By: /s/ Douglas J. Stanard
--------------------------
/s/ Michael P. Bardaro Name: Douglas J. Stanard
- --------------------------------------- Title: Vice President
Name: Michael P. Bardaro
Title: Vice President
AMF BOWLING CENTERS (AUST.)
INTERNATIONAL, INC.
Attest:
By: /s/ Douglas J. Stanard
--------------------------
/s/ Michael P. Bardaro Name: Douglas J. Stanard
- --------------------------------------- Title: President
Name: Michael P. Bardaro
Title: Secretary
AMF BOWLING CENTERS (CANADA)
INTERNATIONAL, INC.
Attest:
By: /s/ Douglas J. Stanard
--------------------------
/s/ Michael P. Bardaro Name: Douglas J. Stanard
- --------------------------------------- Title: President
Name: Michael P. Bardaro
Title: Secretary
AMF BOWLING CENTERS (HONG KONG)
INTERNATIONAL, INC.
Attest:
By: /s/ Douglas J. Stanard
--------------------------
/s/ Michael P. Bardaro Name: Douglas J. Stanard
- --------------------------------------- Title: President
Name: Michael P. Bardaro
Title: Secretary
AMF BOWLING CENTERS
INTERNATIONAL, INC.
Attest:
By: /s/ Douglas J. Stanard
--------------------------
/s/ Michael P. Bardaro Name: Douglas J. Stanard
- --------------------------------------- Title: Vice President
Name: Michael P. Bardaro
Title: Treasurer & Assistant
Secretary
-8-
<PAGE> 149
Dated: May 1, 1996
AMF BCO-UK ONE, INC.
Attest:
By: /s/ Douglas J. Stanard
--------------------------
/s/ Michael P. Bardaro Name: Douglas J. Stanard
- --------------------------------------- Title: President
Name: Michael P. Bardaro
Title: Secretary
AMF BCO-UK TWO, INC.
Attest:
By: /s/ Douglas J. Stanard
--------------------------
/s/ Michael P. Bardaro Name: Douglas J. Stanard
- --------------------------------------- Title: President
Name: Michael P. Bardaro
Title: Secretary
AMF BCO-FRANCE ONE, INC.
Attest:
By: /s/ Douglas J. Stanard
--------------------------
/s/ Michael P. Bardaro Name: Douglas J. Stanard
- --------------------------------------- Title: President
Name: Michael P. Bardaro
Title: Secretary
AMF BCO-FRANCE TWO, INC.
Attest:
By: /s/ Douglas J. Stanard
--------------------------
/s/ Michael P. Bardaro Name: Douglas J. Stanard
- --------------------------------------- Title: President
Name: Michael P. Bardaro
Title: Secretary
AMF BOWLING CENTERS SPAIN INC.
Attest:
By: /s/ Douglas J. Stanard
--------------------------
/s/ Carla H. Skodinski Name: Douglas J. Stanard
- --------------------------------------- Title: Vice President
Name: Carla H. Skodinski
Title: Secretary
AMF BOWLING MEXICO HOLDING, INC.
Attest:
By: /s/ Douglas J. Stanard
--------------------------
/s/ Michael P. Bardaro Name: Douglas J. Stanard
- --------------------------------------- Title: President
Name: Michael P. Bardaro
Title: Secretary
-9-
<PAGE> 150
Dated: May 1, 1996
BOLICHES AMF, INC.
Attest:
By: /s/ Douglas J. Stanard
--------------------------
/s/ Michael P. Bardaro Name: Douglas J. Stanard
- --------------------------------------- Title: President
Name: Michael P. Bardaro
Title: Secretary
AMF BCO-CHINA, INC.
Attest:
By: /s/ Douglas J. Stanard
--------------------------
/s/ Michael P. Bardaro Name: Douglas J. Stanard
- --------------------------------------- Title: President
Name: Michael P. Bardaro
Title: Secretary
AMF BOWLING CENTERS CHINA, INC.
Attest:
By: /s/ Douglas J. Stanard
--------------------------
/s/ Michael P. Bardaro Name: Douglas J. Stanard
- --------------------------------------- Title: President
Name: Michael P. Bardaro
Title: Secretary
AMF BEVERAGE COMPANY OF
W. VA., INC.
Attest:
By: /s/ Douglas J. Stanard
--------------------------
/s/ Michael P. Bardaro Name: Douglas J. Stanard
- --------------------------------------- Title: President
Name: Michael P. Bardaro
Title: Treasurer & Assistant
Secretary
-10-
<PAGE> 151
Dated: May 1, 1996
AMERICAN BANK NATIONAL ASSOCIATION
as Trustee
Attest:
By: /S/ Thomas M. Korsman
--------------------------
/s/ Angela Weidell Name: THOMAS M. KORSMAN
- --------------------------------------- Title: VICE PRESIDENT
Name: ANGELA WEIDELL
Title: TRUST OFFICER
-11-
<PAGE> 1
EXHIBIT 4.3
(Face of Senior Subordinated Note)
================================================================================
CUSIP [to be supplied]
No. ___ $__________
10 7/8% Series B Senior Subordinated Notes due 2006
AMF GROUP INC.
promises to pay to
or registered assigns,
the principal sum of
Dollars ($____________) on March 15, 2006.
Interest Payment Dates: March 15 and September 15
Record Dates: March 1 and September 1
Dated: __________, ____
AMF GROUP INC.
By:______________________________
Name:
Title:
By:______________________________
Name:
Title:
This is one of the Senior
Subordinated Notes referred to in
the within-mentioned Indenture: (SEAL)
IBJ Schroder Bank & Trust Company,
as Trustee
By:__________________________________
Authorized Signatory
================================================================================
<PAGE> 2
(Back of Senior Subordinated Note)
10 7/8% Series B Senior Subordinated Note due 2006
[UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR
SENIOR SUBORDINATED NOTES IN DEFINITIVE FORM, THIS SENIOR SUBORDINATED 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 ISSUER 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)
Capitalized terms used herein shall have the meanings assigned
to them in the Indenture referred to below unless otherwise indicated.
I. Interest. AMF Group Inc., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Senior
Subordinated Note at the rate of 10 7/8% per annum, which interest shall be
payable in cash semi-annually in arrears on March 15 and September 15, or if any
such day is not a Business Day, on the next succeeding Business Day (each an
"Interest Payment Date"); provided that the first Interest Payment Date shall be
September 15, 1996. Interest on the Senior Subordinated 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 original issuance. Interest will be computed on the basis
of a 360-day year comprised of twelve 30-day months.
II. Method of Payment. On each Interest Payment Date the
Company shall pay interest and Liquidated Damages, if any, to the Person who is
the Holder of record of this Senior Subordinated Note as of the close of
business on March 1 or September 1 immediately preceding such Interest Payment
Date, even if this Senior Subordinated Note is cancelled after such record date
and on or before such Interest Payment Date, except
- -------------------
(1.) This paragraph should be included only if the Senior Subordinated Note is
issued in global form.
-2-
<PAGE> 3
as provided in Section 2.12 of the Indenture with respect to defaulted interest.
Principal, premium, if any, and interest, including Liquidated Damages, if any,
on this Senior Subordinated Note 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, including Liquidated Damages, if
any, may be made by check mailed to the Holder of this Senior Subordinated Note
at its address set forth in the register of Holders of Senior Subordinated
Notes; provided, however, that all payments with respect to Global Notes and
Certificated Notes the Holders of which have given wire transfer instructions to
the Company at least 10 Business Days prior to the applicable payment date will
be required to be made by wire transfer of immediately available funds to the
accounts specified by the Holders thereof. 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.
III. Paying Agent and Registrar. Initially, IBJ Schroder Bank &
Trust Company, 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, any Guarantor or any other of its Restricted
Subsidiaries may act in any such capacity.
IV. Indenture. The Company issued the Senior Subordinated Notes
under an Indenture dated as of March 21, 1996 ("Indenture") among the Company,
the Guarantors and the Trustee. The terms of the Senior Subordinated 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 Senior Subordinated Notes are subject to all such terms,
and Holders are referred to the Indenture and such Act for a statement of such
terms. The Senior Subordinated Notes are general unsecured obligations of the
Company limited in an aggregate principal amount at maturity to $250.0 million
and will mature on March 15, 2006.
V. Optional Redemption. A. The Senior Subordinated Notes are
not redeemable at the Company's option prior to March 15, 2001. From and after
March 15, 2001, the Senior Subordinated Notes will be subject to redemption at
the option of the Company, in whole or in part, upon not less than 30 nor more
than 60 days' written notice, at the redemption prices (expressed as percentages
of principal amount) set forth below, plus accrued and unpaid interest,
including Liquidated Damages, if any, thereon to the applicable redemption date,
if redeemed during the twelve-month period beginning on March 15 of the years
indicated below:
-3-
<PAGE> 4
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---- ----------
<S> <C>
2001 ..................................................... 105.438%
2002 ..................................................... 103.625%
2003 ..................................................... 101.813%
2004 and thereafter ...................................... 100.000%
</TABLE>
B. Notwithstanding the provisions of clause (A) of this
Paragraph 5, prior to March 15, 1999, the Company may, at its option, on any one
or more occasions, redeem up to $100.0 million in aggregate principal amount of
Senior Subordinated Notes at a redemption price equal to 110.875% of the
principal amount thereof, plus accrued and unpaid interest, including Liquidated
Damages, if any, thereon to the redemption date, with the net proceeds of public
or private sales of common stock of, or contributions to the common equity
capital of, the Company; provided that at least $150.0 million in aggregate
principal amount of Senior Subordinated Notes remains outstanding immediately
after the occurrence of such redemption; and provided, further, that such
redemption shall occur within 60 days of the date of the closing of the related
sale of common stock of, or capital contribution to, the Company.
VI. Mandatory Redemption. Except as set forth in paragraphs 7
and 8 below, the Company shall not be required to make mandatory redemption or
sinking fund payments with respect to the Senior Subordinated Notes.
VII. Special Mandatory Redemption. If consummation of the
Acquisition has not occurred on or prior to May 31, 1996, all of the outstanding
Senior Subordinated Notes shall be subject to a Special Mandatory Redemption
upon seven days' prior written notice to the Holders with the Escrow Funds from
the Escrow Account at a redemption price equal to the Special Redemption Price,
including Liquidated Damages, if any, as of the date of redemption. Such Special
Mandatory Redemption may be made prior to May 31, 1996, in accordance with the
provisions described above if the Company determines at such time that it will
not consummate the Acquisition. "Special Redemption Price" means, with respect
to any Senior Subordinated Note as of any date of redemption with respect
thereto, an amount equal to (x) 101% of the principal amount thereof if such
date is prior to April 18, 1996, (y) 102.5% of the principal amount thereof if
such date is on or after May 31, 1996, and (z) on any date that is on or after
April 18, 1996, and prior to May 31, 1996, a percentage of the principal amount
thereof determined by linear interpolation between 101% and 102.5% based on the
number of days elapsed since April 18, 1996, in the 43-day period between April
18, 1996, and May 31, 1996, including April 18, 1996, as the first day in such
period.
-4-
<PAGE> 5
VIII. Repurchase at Option of Holder. A. If there is a Change
of Control, each Holder of Senior Subordinated Notes shall have the right to
require the Company to repurchase all or any part (equal to $1,000 in principal
amount or an integral multiple thereof) of such Holder's Senior Subordinated
Notes pursuant to the offer described below (the "Change of Control Offer") at a
purchase price in cash (the "Change of Control Payment") equal to 101% of the
aggregate principal amount thereof plus accrued and unpaid interest, including
Liquidated Damages, if any, thereon to the date of repurchase. Within 30 days
following any Change of Control, the Company shall mail a notice to each Holder
setting forth the procedures governing the Change of Control Offer as required
by the Indenture.
B. If the Company or a Restricted Subsidiary consummates any
Asset Sales permitted by the Indenture, within 10 days of each date on which the
aggregate amount of Excess Proceeds exceeds $25.0 million, the Company shall
commence an offer to all Holders of Senior Subordinated Notes and, to the extent
required by the Senior Subordinated Discount Note Indenture, the Holders of
Senior Subordinated Discount Notes (an "Asset Sale Offer") pursuant to Section
3.10 of the Indenture to purchase the maximum principal amount of Notes, that is
an integral multiple of $1,000, that may be purchased out of the Excess Proceeds
at a purchase price in cash in an amount equal to (i) 100% of the aggregate
principal amount thereof on the date fixed for the closing of such offer plus
accrued and unpaid interest, including Liquidated Damages, if any, to the date
fixed for the closing of such offer or (ii) with respect to the Senior
Subordinated Discount Notes, 100% of the Accreted Value (as defined in the
Senior Subordinated Discount Note Indenture) thereof on the date of purchase,
plus accrued and unpaid Liquidated Damages, if any, if such Asset Sale Offer is
prior to the Full Accretion Date (as defined therein), in either case in
accordance with the procedures set forth in the Indenture and the Senior
Subordinated Discount Note Indenture, as applicable. To the extent that the
aggregate amount of Notes tendered pursuant to an Asset Sale Offer is less than
the Excess Proceeds, the Company may use any remaining Excess Proceeds (x) to
offer to redeem Subordinated Indebtedness in accordance with Section 4.07 of the
Indenture or (y) for any purpose not prohibited by any provision of the
Indenture. If the aggregate principal amount of Notes surrendered by Holders
thereof exceeds the amount of Excess Proceeds, the Trustees shall select the
Notes to be purchased on a pro rata basis. Holders of Senior Subordinated Notes
that are the subject of an offer to purchase will receive an Asset Sale Offer
from the Company prior to any related purchase date and may elect to have such
Senior Subordinated Notes purchased by completing the form entitled "Option of
Holder to Elect Purchase" on the reverse of this Senior Subordinated Note.
-5-
<PAGE> 6
IX. Notice of Optional Redemption. Notice of optional
redemption will be mailed at least 30 days but not more than 60 days before the
redemption date to each Holder whose Senior Subordinated Notes are to be
redeemed at its registered address. Senior Subordinated Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Senior Subordinated Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Senior
Subordinated Notes or portions thereof called for redemption.
X. Denominations, Transfer, Exchange. The Senior Subordinated
Notes are in registered form without coupons in denominations of $1,000 and
integral multiples of $1,000. The transfer of Senior Subordinated Notes may be
registered and Senior Subordinated 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 Senior Subordinated Note or portion of a Senior Subordinated
Note selected for redemption, except for the unredeemed portion of any Senior
Subordinated Note being redeemed in part. Also, it need not exchange or register
the transfer of any Senior Subordinated Notes for a period of 15 days before a
selection of Senior Subordinated Notes to be redeemed or during the period
between a record date and the corresponding Interest Payment Date.
XI. Persons Deemed Owners. The registered Holder of a Senior
Subordinated Note may be treated as its owner for all purposes.
XII. Amendment, Supplement and Waiver. Subject to certain
exceptions, the Indenture or the Senior Subordinated Notes may be amended or
supplemented with the consent of the Holders of at least a majority in principal
amount of the then outstanding Senior Subordinated Notes, and any existing
default or compliance with any provision of the Indenture or the Senior
Subordinated Notes may be waived with the consent of the Holders of a majority
in principal amount of the then outstanding Senior Subordinated Notes. Without
the consent of any Holder of a Senior Subordinated Note, the Indenture or the
Senior Subordinated Notes may be amended or supplemented to cure any ambiguity,
defect or inconsistency, to provide for uncertificated Senior Subordinated Notes
in addition to or in place of certificated Senior Subordinated Notes, to provide
for the assumption of the Company's obligations to Holders of the Senior
Subordinated Notes in case of a merger or consolidation, to make any change that
would provide any additional rights or benefits to the Holders of the Senior
Subordinated Notes or that does not adversely affect the legal rights under the
Indenture of any such Holder, or to comply with the requirements of the SEC
-6-
<PAGE> 7
in order to effect or maintain the qualification of the Indenture under the
Trust Indenture Act.
XIII. Defaults and Remedies. Events of Default include: (i)
default for 30 days in the payment when due of interest, including Liquidated
Damages, if any, on the Senior Subordinated Notes (whether or not prohibited by
Article 10 the Indenture); (ii) default in payment when due of the principal of
or premium, if any, on the Senior Subordinated Notes (whether or not prohibited
by Article 10 of the Indenture); (iii) failure by the Company for 30 days after
notice from the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Senior Subordinated Notes to comply with Sections 3.09,
4.07, 4.09, 4.13 or 5.01 of the Indenture; (iv) failure by the Company for 60
days after notice from the Trustee or the Holders of at least 25% in principal
amount of the then outstanding Senior Subordinated Notes to comply with any of
its other agreements in the Indenture or the Senior Subordinated Notes; (v)
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 Restricted Subsidiaries (or the payment of
which is guaranteed by the Company or any of its Restricted Subsidiaries)
whether such Indebtedness or guarantee now exists, or is created after the date
of the Indenture, which default 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 the maturity of which has been so accelerated, aggregates $25.0
million or more; (vi) failure by the Company or any of its Restricted
Subsidiaries to pay final judgments aggregating in excess of $25.0 million,
which judgments are not paid, discharged or stayed for a period of 60 days;
(vii) certain events of bankruptcy or insolvency with respect to the Company or
any of its Restricted Subsidiaries; (viii) any failure by the Company to comply
with the provisions of the Senior Subordinated Note Pledge and Escrow Agreement
at any time prior to the consummation of the Acquisition; and (ix) except as
permitted by the Indenture, any Senior Subordinated Guarantee is held in any
judicial proceeding to be unenforceable or invalid or ceases for any reason to
be in full force and effect (except by its terms) or any Guarantor, or any
Person acting on behalf of any Guarantor, denies or disaffirms such Guarantor's
obligations under its Senior Subordinated Guarantee. If any Event of Default
occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Senior Subordinated Notes may declare
all the Senior Subordinated Notes to be due and payable immediately.
Notwithstanding the foregoing, in the case of an Event of Default arising from
certain events of bankruptcy or insolvency, all outstanding Senior Subordinated
Notes will become due and payable without further action or notice. Holders may
not enforce the Indenture or the Senior Subordinated Notes
-7-
<PAGE> 8
except as provided in the Indenture. Subject to certain limitations, Holders of
a majority in principal amount of the then outstanding Senior Subordinated Notes
may direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of the Senior Subordinated Notes notice of any continuing
Default or Event of Default (except a Default or Event of Default relating to
the payment of principal or interest, including Liquidated Damages, if any) if
it determines that withholding notice is in their interest. The Holders of a
majority in aggregate principal amount of the Senior Subordinated Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of the
Senior Subordinated Notes waive any existing Default or Event of Default and its
consequences under the Indenture except a continuing Default or Event of Default
in the payment of interest, including Liquidated Damages, if any, on, or the
principal and premium, if any, of, the Senior Subordinated 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.
XIV. Trustee Dealings with Company. The Trustee, in its
individual or any other capacity, may become the owner or pledgee of Senior
Subordinated Notes, and may otherwise deal with the Company, any Guarantor or
any of their respective Affiliates, as if it were not the Trustee. However, in
the event that the Trustee acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the SEC for permission to continue as
trustee or resign.
XV. No Recourse Against Others. No past, present or future
director, officer, employee, incorporator or stockholder of the Company or any
Guarantor, as such, shall have any liability for any obligations of the Company
or the Guarantors under the Senior Subordinated Notes, the Senior Subordinated
Guarantees, the Indenture or for any claim based on, in respect of, or by reason
of, such obligations or their creation. Each Holder of Senior Subordinated Notes
by accepting a Senior Subordinated Note waives and releases all such liability.
The waiver and release are part of the consideration for the issuance of the
Senior Subordinated Notes.
XVI. Authentication. This Senior Subordinated Note shall not be
valid until authenticated by the manual signature of the Trustee or an
authenticating agent.
XVII. 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).
-8-
<PAGE> 9
XVIII. CUSIP Numbers. Pursuant to a recommendation promulgated
by the Committee on Uniform Security Identification Procedures, the Company has
caused CUSIP numbers to be printed on the Senior Subordinated 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 Senior Subordinated Notes or as contained in any notice of
redemption and reliance may be placed only on the other identification numbers
placed thereon.
The Company will furnish a copy of the Indenture to any Holder
upon written request and without charge. Requests may be made to:
AMF Group Inc.
7313 Bell Creek Road
Mechanicsville, Virginia 23111
Telecopier No.: (804) 559-8666
Attention: Secretary
-9-
<PAGE> 10
Assignment Form
To assign this Security, fill in the form below: (I) or (we)
assign and transfer this Security to
- --------------------------------------------------------------------------------
(Insert assignee's Social Security or tax I.D. No.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
- --------------------------------------------------------------------------------
Date:
----------------------------
Your Signature:
----------------------------------
(Sign exactly as your name appears on the face of
this Security)
Signature Guarantee:*
----------------------------
- ----------------
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
-10-
<PAGE> 11
Option of Holder to Elect Purchase
If you want to elect to have this Senior Subordinated Note
purchased by the Company pursuant to Section 4.10 or 4.13 of the Indenture,
check the box below:
Section 4.10 / / / / Section 4.13
If you want to elect to have only part of the Senior
Subordinated Note purchased by the Company pursuant to Section 4.10 or Section
4.13 of the Indenture, state the amount you elect to have purchased:
$___________
Date: Your Signature:
------------------------------------
(Sign exactly as your name appears on the Security)
Tax Identification No.:
----------------------------
Signature Guarantee:*
----------------------
- ---------------------
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
-11-
<PAGE> 12
SCHEDULE OF EXCHANGES FOR CERTIFICATED NOTES
OR ANOTHER GLOBAL NOTE*
The following exchanges of a part of this Global Note for
Certificated Notes or another Global Note have been made:
<TABLE>
<CAPTION>
Principal Amount
Amount of Amount of of this Signature of
decrease in increase in Global Note authorized
Principal Amount Principal Amount following officer of
Date of of this of this such decrease Trustee or
Exchange Global Note Global Note (or increase) Note Custodian
- -------- ---------------- ---------------- ---------------- --------------
<S> <C> <C> <C> <C>
</TABLE>
- -----------------
* To be included only if the Senior Subordinated Note is issued in global form.
-12-
<PAGE> 1
EXHIBIT 4.4
(Face of Senior Subordinated Discount Note)
================================================================================
FOR PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED, THIS SECURITY IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT;
FOR EACH $1,000 PRINCIPAL AMOUNT OF THIS SECURITY, THE ISSUE PRICE IS $552.94,
THE AMOUNT OF ORIGINAL ISSUE DISCOUNT IS $447.06, THE ISSUE DATE IS MARCH 21,
1996 AND THE YIELD TO MATURITY IS 12 1/4% PER ANNUM.
CUSIP [to be supplied]
No. ___ $__________
12 1/4% Series B Senior Subordinated Discount Notes due 2006
AMF GROUP INC.
promises to pay to
or registered assigns,
the principal sum of
Dollars ($___________) on March 15, 2006.
Interest Payment Dates: March 15 and September 15
Record Dates: March 1 and September 1
Dated: __________, ____
AMF GROUP INC.
By:______________________________
Name:
Title:
By:______________________________
Name:
Title:
This is one of the Senior
Subordinated Discount Notes
referred to in the (SEAL)
within-mentioned Indenture:
American Bank National Association,
as Trustee
By:__________________________________
Authorized Signatory
================================================================================
<PAGE> 2
(Back of Senior Subordinated Discount Note)
12 1/4% Series B Senior Subordinated Discount Note due 2006
[UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR
SENIOR SUBORDINATED DISCOUNT NOTES IN DEFINITIVE FORM, THIS SENIOR SUBORDINATED
DISCOUNT 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 ISSUER 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)
Capitalized terms used herein shall have the meanings assigned
to them in the Indenture referred to below unless otherwise indicated.
I. Interest. AMF Group Inc., a Delaware corporation (the "Company"),
promises to pay interest on the principal amount of this Senior Subordinated
Discount Note beginning March 15, 2001 at the rate of 12 1/4% per annum. Until
March 15, 2001 (the "Full Accretion Date"), no interest will be paid in cash on
the Senior Subordinated Discount Notes, but the Accreted Value will accrete
(representing the amortization of original issue discount) between the Issuance
Date and the Full Accretion Date, on a semi-annual bond equivalent basis using a
360-day year comprised of twelve 30-day months such that the Accreted Value
shall be equal to the full principal amount at maturity of the Senior
Subordinated Discount Notes on the Full Accretion Date. Beginning on the Full
Accretion Date, interest on the Senior Subordinated Discount Notes shall accrue
at the rate of 12 1/4% per annum and shall be payable in cash semi-annually in
arrears on March 15 and September 15, or if any such day is not a Business Day,
on the next succeeding Business Day (each an "Interest Payment Date"); provided
that the first Interest Payment Date shall be September 15, 2001. Interest on
the Senior Subordinated Discount Notes will accrue from the most recent date to
which interest has been paid or, if no interest has
- --------------
(1) This paragraph should be included only if the Senior Subordinated Discount
Note is issued in global form.
-2-
<PAGE> 3
been paid, from the Full Accretion Date. Interest will be computed on the basis
of a 360-day year comprised of twelve 30-day months.
II. Method of Payment. On each Interest Payment Date the Company shall
pay interest and Liquidated Damages, if any, to the Person who is the Holder of
record of this Senior Subordinated Discount Note as of the close of business on
March 1 or September 1 immediately preceding such Interest Payment Date, even if
this Senior Subordinated Discount Note is cancelled after such record date and
on or before such Interest Payment Date, except as provided in Section 2.12 of
the Indenture with respect to defaulted interest. Principal, premium, if any,
and interest, including Liquidated Damages, if any, on this Senior Subordinated
Discount Note 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, including Liquidated Damages, if any, may be made
by check mailed to the Holder of this Senior Subordinated Discount Note at its
address set forth in the register of Holders of Senior Subordinated Discount
Notes; provided, however, that all payments with respect to Global Notes and
Certificated Notes the Holders of which have given wire transfer instructions to
the Company at least 10 Business Days prior to the applicable payment date will
be required to be made by wire transfer of immediately available funds to the
accounts specified by the Holders thereof. 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.
III. Paying Agent and Registrar. Initially, American Bank National
Association, 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, any Guarantor or any other of its Restricted
Subsidiaries may act in any such capacity.
IV. Indenture. The Company issued the Senior Subordinated Discount
Notes under an Indenture dated as of March 21, 1996 ("Indenture") among the
Company, the Guarantors and the Trustee. The terms of the Senior Subordinated
Discount 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 Senior Subordinated Discount Notes are
subject to all such terms, and Holders are referred to the Indenture and such
Act for a statement of such terms. The Senior Subordinated Discount Notes are
general unsecured obligations of the Company limited in an aggregate principal
amount at maturity to $452.0 million and will mature on March 15, 2006.
V. Optional Redemption.
a. The Senior Subordinated Discount Notes are not redeemable at the
Company's option prior to March 15, 2001. From and after March 15, 2001, the
Senior Subordinated Discount Notes will be
-3-
<PAGE> 4
subject to redemption at the option of the Company, in whole or in part, upon
not less than 30 nor more than 60 days' written notice, at the redemption prices
(expressed as percentages of principal amount) set forth below, plus accrued and
unpaid interest, including Liquidated Damages, if any, thereon to the applicable
redemption date, if redeemed during the twelve-month period beginning on March
15 of the years indicated below:
<TABLE>
<CAPTION>
Percentage of
Year Principal Amount
---- ----------------
<S> <C>
2001 106.125%
2002 104.083%
2003 102.042%
2004 and thereafter 100.000%
</TABLE>
b. Notwithstanding the provisions of clause (a) of this Paragraph 5,
prior to March 15, 1999, the Company may, at its option, on any one or more
occasions, redeem Senior Subordinated Discount Notes at a redemption price equal
to 112.250% of the Accreted Value thereof, plus accrued and unpaid Liquidated
Damages, if any, thereon with the net proceeds of public or private sales of
common stock of, or contributions to the common equity capital of, the Company;
provided that at least $150.0 million in aggregate Accreted Value of Senior
Subordinated Discount Notes remains outstanding immediately after the occurrence
of such redemption; and provided, further, that such redemption shall occur
within 60 days of the date of the closing of the related sale of common stock
of, or capital contribution to, the Company.
VI. Mandatory Redemption.
Except as set forth in paragraphs 7 and 8 below, the Company shall not
be required to make mandatory redemption or sinking fund payments with respect
to the Senior Subordinated Discount Notes.
VII. Special Mandatory Redemption.
If consummation of the Acquisition has not occurred on or prior to May
31, 1996, all of the outstanding Senior Subordinated Discount Notes shall be
subject to a Special Mandatory Redemption upon seven days' prior written notice
to the Holders with the Escrow Funds from the Escrow Account at a redemption
price equal to the Special Redemption Price, including Liquidated Damages, if
any, as of the date of redemption. Such Special Mandatory Redemption may be made
prior to May 31, 1996, in accordance with the provisions described above if the
Company determines at such time that it will not consummate the Acquisition.
"Special Redemption Price" means, with respect to any Senior Subordinated
Discount Note as of any date of redemption with respect thereto, an amount equal
to (x) 101% of the Accreted Value thereof if such date is prior to April 18,
1996, (y) 102.5% of the Accreted Value thereof if such date is on or after May
31, 1996, and (z) on any date that
-4-
<PAGE> 5
is on or after April 18, 1996, and prior to May 31, 1996, a percentage of the
Accreted Value thereof determined by linear interpolation between 101% and
102.5% based on the number of days elapsed since April 18, 1996, in the 43-day
period between April 18, 1996, and May 31, 1996, including April 18, 1996, as
the first day in such period.
VIII. Repurchase at Option of Holder.
a. If there is a Change of Control, each Holder of Senior Subordinated
Discount Notes shall have the right to require the Company to repurchase all or
any part (equal to $1,000 in principal amount or an integral multiple thereof)
of such Holder's Senior Subordinated Discount Notes pursuant to the offer
described below (the "Change of Control Offer") at a purchase price in cash (the
"Change of Control Payment") equal to 101% of the aggregate principal amount
thereof plus accrued and unpaid interest, including Liquidated Damages, if any,
thereon to the date of repurchase (or 101% of the Accreted Value thereof on the
date of repurchase, plus accrued and unpaid Liquidated Damages, if any, if the
Change of Control Offer occurs prior to the Full Accretion Date). Within 30 days
following any Change of Control, the Company shall mail a notice to each Holder
setting forth the procedures governing the Change of Control Offer as required
by the Indenture.
b. If the Company or a Restricted Subsidiary consummates any Asset
Sales permitted by the Indenture, within 10 days of each date on which the
aggregate amount of Excess Proceeds exceeds $25.0 million, the Company shall
commence an offer to all Holders of Senior Subordinated Discount Notes and, to
the extent required by the Senior Subordinated Note Indenture, the Holders of
Senior Subordinated Notes (an "Asset Sale Offer") pursuant to Section 3.10 of
the Indenture to purchase the maximum principal amount of Notes, that is an
integral multiple of $1,000, that may be purchased out of the Excess Proceeds at
a purchase price in cash in an amount equal to 100% of the aggregate principal
amount thereof on the date fixed for the closing of such offer plus accrued and
unpaid interest, including Liquidated Damages, if any, to the date fixed for the
closing of such offer (or, with respect to Senior Subordinated Discount Notes,
100% of the Accreted Value thereof on the date of purchase if such Asset Sale
Offer is prior to the Full Accretion Date) in accordance with the procedures set
forth in the Indenture and the Senior Subordinated Note Indenture, as
applicable. To the extent that the aggregate amount of Notes tendered pursuant
to an Asset Sale Offer is less than the Excess Proceeds, the Company may use any
remaining Excess Proceeds (x) to offer to redeem Subordinated Indebtedness in
accordance with Section 4.07 of the Indenture or (y) for any purpose not
prohibited by any provision of the Indenture. If the aggregate principal amount
of Notes surrendered by Holders thereof exceeds the amount of Excess Proceeds,
the Trustees shall select the Notes to be purchased on a pro rata basis. Holders
of Senior Subordinated Discount Notes that are the subject of an offer to
purchase will receive an Asset Sale Offer from the Company prior to any related
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<PAGE> 6
purchase date and may elect to have such Senior Subordinated Discount Notes
purchased by completing the form entitled "Option of Holder to Elect Purchase"
on the reverse of this Senior Subordinated Discount Note.
IX. Notice of Optional Redemption. Notice of optional redemption will
be mailed at least 30 days but not more than 60 days before the redemption date
to each Holder whose Senior Subordinated Discount Notes are to be redeemed at
its registered address. Senior Subordinated Discount Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Senior Subordinated Discount Notes held by a Holder
are to be redeemed. On and after the redemption date interest ceases to accrete
or accrue on Senior Subordinated Discount Notes or portions thereof called for
redemption.
X. Denominations, Transfer, Exchange. The Senior Subordinated Discount
Notes are in registered form without coupons in denominations of $1,000 and
integral multiples of $1,000. The transfer of Senior Subordinated Discount Notes
may be registered and Senior Subordinated Discount 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 Senior Subordinated Discount Note or portion of a Senior
Subordinated Discount Note selected for redemption, except for the unredeemed
portion of any Senior Subordinated Discount Note being redeemed in part. Also,
it need not exchange or register the transfer of any Senior Subordinated
Discount Notes for a period of 15 days before a selection of Senior Subordinated
Discount Notes to be redeemed or during the period between a record date and the
corresponding Interest Payment Date.
XI. Persons Deemed Owners. The registered Holder of a Senior
Subordinated Discount Note may be treated as its owner for all purposes.
XII. Amendment, Supplement and Waiver. Subject to certain exceptions,
the Indenture or the Senior Subordinated Discount Notes may be amended or
supplemented with the consent of the Holders of at least a majority in principal
amount of the then outstanding Senior Subordinated Discount Notes, and any
existing default or compliance with any provision of the Indenture or the Senior
Subordinated Discount Notes may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Senior Subordinated
Discount Notes. Without the consent of any Holder of a Senior Subordinated
Discount Note, the Indenture or the Senior Subordinated Discount Notes may be
amended or supplemented to cure any ambiguity, defect or inconsistency, to
provide for uncertificated Senior Subordinated Discount Notes in
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<PAGE> 7
addition to or in place of certificated Senior Subordinated Discount Notes, to
provide for the assumption of the Company's obligations to Holders of the Senior
Subordinated Discount Notes in case of a merger or consolidation, to make any
change that would provide any additional rights or benefits to the Holders of
the Senior Subordinated Discount Notes or that does not adversely affect the
legal rights under the Indenture of any such Holder, or to comply with the
requirements of the SEC in order to effect or maintain the qualification of the
Indenture under the Trust Indenture Act.
XIII. Defaults and Remedies. Events of Default include: (i) default for
30 days in the payment when due of interest, including Liquidated Damages, if
any, on the Senior Subordinated Discount Notes (whether or not prohibited by
Article 10 the Indenture); (ii) default in payment when due of the principal of
or premium, if any, on the Senior Subordinated Discount Notes (whether or not
prohibited by Article 10 of the Indenture); (iii) failure by the Company for 30
days after notice from the Trustee or the Holders of at least 25% in principal
amount of the then outstanding Senior Subordinated Discount Notes to comply with
Sections 3.09, 4.07, 4.09, 4.13 or 5.01 of the Indenture; (iv) failure by the
Company for 60 days after notice from the Trustee or the Holders of at least 25%
in principal amount of the then outstanding Senior Subordinated Discount Notes
to comply with any of its other agreements in the Indenture or the Senior
Subordinated Discount Notes; (v) 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
Restricted Subsidiaries (or the payment of which is guaranteed by the Company or
any of its Restricted Subsidiaries) whether such Indebtedness or guarantee now
exists, or is created after the date of the Indenture, which default 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 the maturity of which has been so
accelerated, aggregates $25.0 million or more; (vi) failure by the Company or
any of its Restricted Subsidiaries to pay final judgments aggregating in excess
of $25.0 million, which judgments are not paid, discharged or stayed for a
period of 60 days; (vii) certain events of bankruptcy or insolvency with respect
to the Company or any of its Restricted Subsidiaries; (viii) any failure by the
Company to comply with the provisions of the Senior Subordinated Discount Note
Pledge and Escrow Agreement at any time prior to the consummation of the
Acquisition; and (ix) except as permitted by the Indenture, any Senior
Subordinated Guarantee is held in any judicial proceeding to be unenforceable or
invalid or ceases for any reason to be in full force and effect (except by its
terms) or any Guarantor, or any Person acting on behalf of any Guarantor, denies
or disaffirms such Guarantor's obligations under its Senior Subordinated
Guarantee. If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in principal amount of the then outstanding Senior
Subordinated Discount Notes may declare
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<PAGE> 8
all the Senior Subordinated Discount Notes to be due and payable immediately.
Notwithstanding the foregoing, in the case of an Event of Default arising from
certain events of bankruptcy or insolvency, all outstanding Senior Subordinated
Discount Notes will become due and payable without further action or notice.
Holders may not enforce the Indenture or the Senior Subordinated Discount Notes
except as provided in the Indenture. Subject to certain limitations, Holders of
a majority in principal amount of the then outstanding Senior Subordinated
Discount Notes may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Holders of the Senior Subordinated Discount Notes
notice of any continuing Default or Event of Default (except a Default or Event
of Default relating to the payment of principal or interest, including
Liquidated Damages, if any) if it determines that withholding notice is in their
interest. The Holders of a majority in aggregate principal amount of the Senior
Subordinated Discount Notes then outstanding by notice to the Trustee may on
behalf of the Holders of all of the Senior Subordinated Discount Notes waive any
existing Default or Event of Default and its consequences under the Indenture
except a continuing Default or Event of Default in the payment of interest,
including Liquidated Damages, if any, on, or the principal and premium, if any,
of, the Senior Subordinated Discount 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.
XIV. Trustee Dealings with Company. The Trustee, in its individual or
any other capacity, may become the owner or pledgee of Senior Subordinated
Discount Notes, and may otherwise deal with the Company, any Guarantor or any of
their respective Affiliates, as if it were not the Trustee. However, in the
event that the Trustee acquires any conflicting interest it must eliminate such
conflict within 90 days, apply to the SEC for permission to continue as trustee
or resign.
XV. No Recourse Against Others. No past, present or future director,
officer, employee, incorporator or stockholder of the Company or any Guarantor,
as such, shall have any liability for any obligations of the Company or the
Guarantors under the Senior Subordinated Discount Notes, the Senior Subordinated
Guarantees, the Indenture or for any claim based on, in respect of, or by reason
of, such obligations or their creation. Each Holder of Senior Subordinated
Discount Notes by accepting a Senior Subordinated Discount Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Senior Subordinated Discount Notes.
XVI. Authentication. This Senior Subordinated Discount Note shall not
be valid until authenticated by the manual signature of the Trustee or an
authenticating agent.
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<PAGE> 9
XVII. 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).
XVIII. Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Senior Subordinated Discount 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 Senior Subordinated Discount Notes or as contained in any notice
of redemption and reliance may be placed only on the other identification
numbers placed thereon.
The Company will furnish a copy of the Indenture to any Holder upon
written request and without charge. Requests may be made to:
AMF Group Inc.
7313 Bell Creek Road
Mechanicsville, Virginia, 23111
Telecopier No.: (804) 559-8666
Attention: Secretary
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<PAGE> 10
Assignment Form
To assign this Security, fill in the form below: (I) or (we) assign and
transfer this Security to
- --------------------------------------------------------------------------------
(Insert assignee's Social Security or tax I.D. No.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
Date:
------------------------------------
Your Signature:
-----------------------------
(Sign exactly as your name appears
on the face of this Security)
Signature Guarantee:*
-----------------------------
- ---------------------
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
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<PAGE> 11
Option of Holder to Elect Purchase
If you want to elect to have this Senior Subordinated Discount
Note purchased by the Company pursuant to Section 4.10 or 4.13 of the Indenture,
check the box below:
Section 4.10 / /
Section 4.13 / /
If you want to elect to have only part of the Senior
Subordinated Discount Note purchased by the Company pursuant to Section 4.10 or
Section 4.13 of the Indenture, state the amount you elect to have purchased:
$___________
Date: Your Signature:
(Sign exactly as your name
appears on the Security)
Tax Identification No.:
--------------------
Signature Guarantee:*
-------------------------------------------
- -------------------
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
-11-
<PAGE> 12
SCHEDULE OF EXCHANGES FOR CERTIFICATED NOTES OR ANOTHER GLOBAL NOTE(2)
The following exchanges of a part of this Global Note for
Certificated Notes or another Global Note have been made:
<TABLE>
<CAPTION>
Date of Exchange Amount of decrease Amount of increase Principal Amount Signature of
---------------- in Principal in Principal of this authorized
Amount of Amount of Global Note officer of
this Global this Global following such Trustee or Note
Note Note decrease Custodian
------------------ ------------------ (or increase) ---------------
----------------
<S> <C> <C> <C> <C>
</TABLE>
- -------------------
(2) To be included only if the Senior Subordinated Discount Note is issued in
global form.
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<PAGE> 1
EXHIBIT 5.1
[Letterhead of Wachtell, Lipton, Rosen & Katz]
May 31, 1996
AMF Group Inc.
7313 Bell Creek Road
Mechanicsville, Virginia 23111
Dear Sirs:
We have acted as counsel for AMF Group Inc., a Delaware
corporation (the "Company"), in connection with the preparation of the
Registration Statement on Form S-4 of the Company (the "Registration
Statement"), to be filed with the Securities and Exchange Commission on May 31,
1996, relating to an offer to exchange (the "Exchange Offer") 10 7/8% Series B
Senior Subordinated Notes Due 2006 of the Company (the "Exchange Senior
Subordinated Notes") and 12 1/4% Series B Senior Subordinated Discount Notes due
2006 of the Company (the "Exchange Senior Subordinated Discount Notes" and,
collectively with the Exchange Senior Subordinated Notes, the "Exchange Notes")
for an equal principal amount of the Company's outstanding 10 7/8% Series A
Senior Subordinated Notes due 2006 (the "Senior Subordinated Notes") and 12 1/4%
Series A Senior Subordinated Discount Notes due 2006 (the "Senior Subordinated
Discount Notes" and, collectively with the Senior Subordinated Notes, the
"Notes"). The Exchange Notes will be guaranteed on a senior subordinated basis
(the "Guarantees") by AMF Group Holdings Inc., a Delaware corporation of which
the Company is a wholly owned subsidiary, and by each of the Company's direct
and indirect domestic subsidiaries (collectively, the "Guarantors").
The Exchange Senior Subordinated Notes will be issued under an
Indenture dated as of March 21, 1996 (the "Senior Subordinated Note Indenture"),
among the Company, the Guarantors and IBJ Schroder Bank & Trust Company, as
trustee (the "Senior Subordinated Note Trustee"). The Exchange Senior
Subordinated
<PAGE> 2
AMF Group Inc.
May 31, 1996
Page 2
Discount Notes will be issued under an Indenture dated as of March 21, 1996 (the
"Senior Subordinated Discount Note Indenture" and, collectively with the Senior
Subordinated Note Indenture, the "Indentures"), among the Company, the
Guarantors, and American Bank National Association, as trustee (the "Senior
Subordinated Discount Note Trustee" and, collectively with the Senior
Subordinated Note Trustee, the "Trustees").
As counsel we have examined the Registration Statement, the
Indentures, the forms of the Exchange Notes, the forms of the Notes and such
other documents, records and other matters as we have deemed necessary or
appropriate in order to give the opinions set forth herein.
In giving the opinions contained herein, we have, with your
approval, relied upon representations of officers of the Company and the
Guarantors and certificates of public officials with respect to the accuracy of
the material factual matters addressed by such representations and certificates.
We have, with your approval, assumed the genuineness of all signatures or
instruments submitted to us, and the conformity of certified copies submitted to
us with the original documents to which such certified copies relate.
We are members of the bar of the State of New York and we
express no opinion as to the laws of any jurisdiction other than the federal
laws of the United States and the laws of the State of New York. In addition, we
express no opinion as to the effects of either (i) Section 548 of Title 11 of
the United States Code or (ii) Article 10 of the New York Debtor and Creditor
Law, relating to fraudulent transfers, on any obligation under the Guarantees of
the Guarantors that are direct or indirect subsidiaries of the Company.
Based upon and subject to the foregoing, assuming that each of
the Indentures has been duly authorized, executed and delivered by, and
represents the valid and binding obligation of, the applicable Trustee, it is
our opinion that:
(1) each Indenture has been duly executed and delivered by, and
constitutes the legal, valid and binding obligation of, the
Company and each of the Guarantors, as the case may be,
enforceable against the Company and each of the Guarantors, as
the case may be, in accordance with its terms;
<PAGE> 3
AMF Group Inc.
May 31, 1996
Page 3
(2) the Exchange Notes, when duly executed and delivered by the
Company upon the terms set forth in the Exchange Offer, will
constitute legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their
respective terms; and
(3) the Guarantees will constitute the legal, valid and binding
obligations of the Guarantors, enforceable against the
Guarantors in accordance with their respective terms;
subject in each case to (a) bankruptcy, insolvency, moratorium, reorganization
and other laws of general applicability relating to or affecting creditors'
rights from time to time in effect and (b) application of general principles of
equity (regardless of whether considered in proceedings in equity or at law).
The opinions expressed above are subject to (i) standards of
commercial reasonableness and good faith, (ii) public policy and (iii) other
applicable laws, rules, regulations, court decisions and constitutional
requirements in and of the State of New York or the United States of America
limiting or affecting the exercise of remedies under the Indentures and the
Exchange Notes, provided that any limitations imposed by such other applicable
laws, rules, regulations, court decisions, and constitutional requirements will
not, in our opinion, materially interfere with the realization by the holders of
the Exchange Notes of the practical benefits intended to be conferred by the
Exchange Notes and the Indentures, although they may result in a delay thereof
(and we express no opinion with respect to the economic consequences of any such
delay).
We express no opinion with respect to: (i) the enforceability
of provisions in the Indentures relating to delay or omission of enforcement of
rights or remedies, or waivers of defenses, or waivers of benefits of usury,
appraisement, valuation, stay, extension, moratorium, redemption, statutes of
limitation, or other non-waivable benefits bestowed by operation of law; or (ii)
the lawfulness or enforceability of exculpation clauses, clauses relating to
releases of unmatured claims, clauses purporting to waive unmatured rights,
severability clauses, and clauses similar in substance or nature to those
expressed in the foregoing clause (i) and this clause (ii), insofar as any of
the foregoing are contained in the Indentures. In addition, we express no
opinion as to whether a federal or state court outside of the State of New York
would give effect to the choice of New York law provided for in the Indentures.
<PAGE> 4
AMF Group Inc.
May 31, 1996
Page 4
We consent to the use of this opinion as an Exhibit to the
Registration Statement and to the reference to our firm in the Prospectus that
is a part of the Registration Statement. In giving such consent, we do not
hereby admit that we are in the category of persons whose consent is required
under Section 7 of the Securities Act of 1933.
Very truly yours,
WACHTELL, LIPTON, ROSEN & KATZ
<PAGE> 1
EXHIBIT 10.1
EXECUTION COPY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
Dated as of March 21, 1996
by and among
AMF Group Inc.,
the Guarantors party hereto
and
Goldman, Sachs & Co.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
This Registration Rights Agreement (this "Agreement") is made and entered
into as of March 21, 1996 by and among AMF Group Inc., a Delaware corporation
(the "Company"), AMF Group Holdings Inc., a Delaware corporation ("Holdings"),
each domestic subsidiary of the Company existing on the date hereof and by each
additional subsidiary of the Company that is created or acquired after the date
hereof that executes a counterpart to this Agreement substantially in the form
of Exhibit A attached hereto pursuant to Section 6(d)(xxii) (collectively,
including Holdings, the "Guarantors"), and Goldman, Sachs & Co. (the "Initial
Purchaser"), who has agreed to purchase the Company's 10 7/8% Series A Senior
Subordinated Notes due 2006 (the "Series A Senior Subordinated Notes") and the
Company's 12 1/4% Series A Senior Subordinated Discount Notes due 2006 (the
"Series A Senior Subordinated Discount Notes" and, together with the Senior
Subordinated Notes, the "Series A Notes") pursuant to the Note Purchase
Agreement (as defined below).
This Agreement is made pursuant to the Note Purchase Agreement, dated March
7, 1996 (the "Note Purchase Agreement"), by and among the Company, the
Guarantors and the Initial Purchaser. In order to induce the Initial Purchaser
to purchase the Series A Notes, the Company and the Guarantors have 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
Purchaser set forth in Section 2 of the Note Purchase Agreement.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have the
following meanings:
Acquisition: The acquisition by the subsidiaries of the Company of all of
the outstanding stock of the AMF worldwide bowling businesses, including AMF
Bowling, Inc., AMF Bowling Centers, Inc., the AMF worldwide bowling centers and
their subsidiaries.
Act: The Securities Act of 1933, as amended.
Broker-Dealer: Any broker or dealer registered under the Exchange Act.
Broker-Dealer Transfer Restricted Securities: Series B Notes that are
acquired by a Restricted Broker-Dealer for its own account as a result of
market-making activities or other trading activities.
Closing Date: The date of the closing of the Acquisition.
Commission: The Securities and Exchange Commission.
Consummate: A Registered Exchange Offer shall be deemed "Consummated" for
purposes of this Agreement upon the occurrence of (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 continuously effective and the
keeping of the Exchange Offer open for a period not less than the minimum period
required pursuant to Section 3(b) hereof, and (iii) the delivery by the Company
to the Registrars under the Indentures of Series B Notes in the same aggregate
principal amount as the aggregate principal amount of Series A Notes that were
tendered by Holders thereof pursuant to the Exchange Offer.
1
<PAGE> 3
Damages Payment Date: With respect to the Series A Notes, each Interest
Payment Date.
Effectiveness Target Date: As defined in Section 5.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exchange Offer: The registration by the Company under the Act of the Series
B Notes pursuant to a Registration Statement pursuant to which the Company
offers the Holders of all outstanding Transfer Restricted Securities the
opportunity to exchange all such outstanding Transfer Restricted Securities held
by such Holders for Series B Notes in an aggregate principal amount equal to the
aggregate principal amount of the Transfer Restricted Securities tendered in
such exchange offer by such Holders.
Exchange Offer Registration Statement: The Registration Statement relating
to the Exchange Offer, including the related Prospectus.
Exempt Resales: The transactions in which the Initial Purchaser proposes to
sell the Series A Notes to certain "qualified institutional buyers," as such
term is defined in Rule 144A under the Act, and to certain institutional
"accredited investors," as such term is defined in Rule 501(a)(1), (2), (3) or
(7) of Regulation D under the Act ("Accredited Institutions").
Guarantors: As defined in the preamble hereto.
Holders: As defined in Section 2(b) and 2(c) hereof.
Indemnified Holder: As defined in Section 8(a) hereof.
Indentures: Collectively, (i) the Indenture, dated as of March 21, 1996,
among the Company, IBJ Schroder Bank & Trust Company, as trustee (the "Senior
Subordinated Trustee") and the Guarantors, pursuant to which the Series A Senior
Subordinated Notes and the Series B Senior Subordinated Notes are to be issued
and (ii) the Indenture, dated as of March 21, 1996, among the Company, American
Bank National Association, as trustee (the "Senior Subordinated Discount
Trustee") and the Guarantors, pursuant to which the Series A Senior Subordinated
Discount Notes and the Series B Senior Subordinated Discount Notes are to be
issued, as each of such Indentures are amended or supplemented from time to time
in accordance with the terms thereof.
Initial Purchaser: As defined in the preamble hereto.
Interest Payment Date: As defined in the Indentures and the Notes.
Market-Maker Prospectus: As defined in Section 4 hereof.
NASD: National Association of Securities Dealers, Inc.
Notes: The Series A Notes and the Series B Notes.
Person: An individual, partnership, corporation, trust, limited liability
company or unincorporated organization, or a government or agency or political
subdivision thereof.
2
<PAGE> 4
Prospectus: The prospectus included in a Registration Statement including,
without limitation, a Market-Maker Prospectus, in each case, 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.
Record Holder: With respect to any Damages Payment Date relating to Notes,
each Person who is a Holder of Notes on the record date with respect to the
Interest Payment Date on which such Damages Payment Date shall occur.
Restricted Broker-Dealer: Any Broker-Dealer that is an affiliate of the
Company and that holds Broker-Dealer Transfer Restricted Securities.
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, (b) the
registration for resale of Transfer Restricted Securities pursuant to the Shelf
Registration Statement, which is filed pursuant to the provisions of Section
4(b) of this Agreement, or (c) the registration for resale of Broker-Dealer
Transfer Restricted Securities, which is filed pursuant to the provisions of
Section 4(c) 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.
Series A Notes: As defined in the preamble hereto.
Series B Notes: The Company's 10 7/8% Series B Senior Subordinated Notes
due 2006 (the "Series B Senior Subordinated Notes") and the Company's 12 1/4%
Series B Senior Subordinated Discount Notes due 2006 (the "Series B Senior
Subordinated Discount Notes") to be issued pursuant to the Indentures in the
Exchange Offer.
Shelf Filing Deadline: As defined in Section 4 hereof.
Shelf Registration Statement: As defined in Section 4 hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as in
effect on the date of the Indentures.
Transfer Restricted Securities: Each Note, until the earliest to occur of
(a) the date on which such Note is exchanged in the Exchange Offer and entitled
to be resold to the public by the Holder thereof without complying with the
prospectus delivery requirements of the Act, (b) the date on which such Note has
been effectively registered under the Act and disposed of in accordance with a
Shelf Registration Statement and (c) the date on which such Note is distributed
to the public pursuant to Rule 144 under the Act or by a Broker-Dealer pursuant
to the "Plan of Distribution" contemplated by the Exchange Offer Registration
Statement (including delivery of the Prospectus contained therein).
Underwritten Registration or Underwritten Offering: A registration in which
securities of the Company are sold to an underwriter for reoffering to the
public.
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SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) Transfer Restricted Securities and Broker-Dealer Transfer Restricted
Securities. The securities entitled to the benefits of this Agreement are the
Transfer Restricted Securities and the Broker-Dealer Transfer Restricted
Securities.
(b) Holders of Transfer Restricted Securities. A Person is deemed to be a
holder of Transfer Restricted Securities (each, a "Holder") whenever such Person
owns Transfer Restricted Securities.
(c) Holders of Broker-Dealer Transfer Restricted Securities. A Restricted
Broker-Dealer is deemed to be a holder of Broker-Dealer Transfer Restricted
Securities (each, a "Holder") whenever such Restricted Broker-Dealer owns
Broker-Dealer Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permissible under applicable law
or Commission policy (after the procedures set forth in Section 6(a) below have
been complied with), the Company and the Guarantors shall (i) cause to be filed
with the Commission as soon as practicable after the Closing Date, but in no
event later than 30 days after the Closing Date, a Registration Statement under
the Act relating to the Series B Notes and the Exchange Offer, (ii) use their
best efforts to cause such Registration Statement to become effective at the
earliest possible time, but in no event later than 90 days after the date on
which such Registration Statement is filed with the Commission (which 90-day
period shall be extended for a number of days equal to the number of business
days, if any, that the Commission is officially closed during such period),
(iii) in connection with the foregoing, (A) file all pre-effective amendments to
such Registration Statement as may be necessary in order to cause such
Registration Statement to become effective, (B) file, if applicable, a
post-effective amendment to such Registration Statement pursuant to Rule 430A
under the Act and (C) cause all necessary filings in connection with the
registration and qualification of the Series B Notes to be made under the Blue
Sky laws of such jurisdictions as are necessary to permit Consummation of the
Exchange Offer, and (iv) upon the effectiveness of such Registration Statement,
commence the Exchange Offer. The Exchange Offer Registration Statement shall be
on the appropriate form permitting registration of the Series B Notes to be
offered in exchange for the Transfer Restricted Securities and to permit resales
of Notes held by Broker-Dealers as contemplated by Section 3(c) below.
(b) The Company and the Guarantors shall 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 and the Guarantors shall cause the Exchange Offer to comply
with all applicable federal and state securities laws. No securities other than
the Notes shall be included in the Exchange Offer Registration Statement. The
Company and the Guarantors shall use their best efforts to cause the Exchange
Offer to be Consummated on the earliest practicable date after the Exchange
Offer Registration Statement has become effective, but in no event later than 30
days thereafter.
(c) The Company and the Guarantors shall indicate in a "Plan of
Distribution" section contained in the Prospectus contained in the Exchange
Offer Registration Statement that any Broker-Dealer who holds Series A Notes
that are Transfer Restricted Securities and that were acquired for its own
account as a result of market-making activities or other trading activities
(other than Transfer
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<PAGE> 6
Restricted Securities acquired directly from the Company), may exchange such
Series A Notes pursuant to the Exchange Offer; however, 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 any sales of the Series B Notes received by such Broker-Dealer
in the Exchange Offer, which prospectus delivery requirement may be satisfied by
the delivery by such Broker-Dealer of the Prospectus contained in the Exchange
Offer Registration Statement. Such "Plan of Distribution" section shall also
contain all other information with respect to such resales by Broker-Dealers
that the Commission may require in order to permit such resales pursuant
thereto, but such "Plan of Distribution" shall not name any such Broker-Dealer
or disclose the amount of Notes held by any such Broker-Dealer except to the
extent required by the Commission.
The Company and the Guarantors shall use their best efforts to keep the
Exchange Offer Registration Statement continuously effective, supplemented and
amended as required by the provisions of Section 6(d) below to the extent
necessary to ensure that it is available for resales of Notes acquired by
Broker-Dealers for their own accounts as a result of market-making activities or
other trading activities, and to ensure that such Registration Statement
conforms 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 180 days from the date on which the Exchange Offer Registration
Statement is declared effective.
The Company and the Guarantors shall promptly provide sufficient copies of
the latest version of such Prospectus to Broker-Dealers promptly upon request,
at any time during such 180-day period in order to facilitate such sales.
SECTION 4. SHELF REGISTRATION; MARKET-MAKER PROSPECTUS
(a) Shelf Registration. If (i) the Company and the Guarantors are not
required to file an Exchange Offer Registration Statement or permitted to
Consummate the Exchange Offer, in either case, because the Exchange Offer is not
permitted by applicable law or Commission policy (after the procedures set forth
in Section 6(a) below have been complied with) or (ii) if any Holder of Transfer
Restricted Securities shall notify the Company on or prior to the 20th business
day following Consummation of the Exchange Offer that such Holder alone or
together with Holders who hold in the aggregate at least $1.0 million in
principal amount (or Accreted Value, as applicable) of Series A Notes (A) is
prohibited by law or Commission policy from participating in the Exchange Offer,
or (B) may not resell the Series B Notes acquired by it in the Exchange Offer to
the public without delivering a prospectus and that the Prospectus contained in
the Exchange Offer Registration Statement is not appropriate or available for
such resales by such Holder or (C) is a Broker-Dealer and holds Series A Notes
acquired directly from the Company or one of its affiliates, then the Company
and the Guarantors shall
(x) cause to be filed a shelf registration statement pursuant to Rule 415
under the Act, which may be an amendment to the Exchange Offer Registration
Statement (in either event, the "Shelf Registration Statement") on or prior to
the earlier to occur of (1) the 30th day after the date on which the Company is
notified by the Commission or otherwise determines that it is not required to
file the Exchange Offer Registration Statement or permitted to Consummate the
Exchange Offer, and (2) the 30th day after the date on which the Company
receives notice from a Holder of Transfer Restricted Securities as contemplated
by clause (ii) above (such earlier date
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<PAGE> 7
being the "Shelf Filing Deadline"), which Shelf Registration Statement shall
provide for resales of all Transfer Restricted Securities the Holders of which
shall have provided the information required pursuant to Section 4(b) hereof;
and
(y) use their best efforts to cause such Shelf Registration Statement to be
declared effective by the Commission on or before the 60th day after the Shelf
Filing Deadline.
The Company and the Guarantors shall use their best efforts to keep such Shelf
Registration Statement continuously effective, supplemented and amended as
required by the provisions of Sections 6(b) and (d) hereof to the extent
necessary to ensure that it is available for resales of Notes by the Holders of
Transfer Restricted Securities entitled to the benefit of this Section 4(a), and
to ensure that it conforms with the requirements of this Agreement, the Act and
the policies, rules and regulations of the Commission as announced from time to
time, until the third anniversary of the Closing Date or such shorter period
that will terminate when all the Notes covered by the Shelf Registration
Statement have been sold pursuant to the Shelf Registration Statement or become
eligible for resale pursuant to Rule 144 without volume or other restrictions.
(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 business days after receipt of a request
therefor, such information as the Company may reasonably request for use in
connection with any Shelf Registration Statement or Prospectus or preliminary
Prospectus included therein. No Holder of Transfer Restricted Securities shall
be entitled to Liquidated Damages pursuant to Section 5 hereof unless and until
such Holder shall have used its best efforts to provide all such reasonably
requested information. Each Holder as to which any Shelf Registration Statement
is being effected agrees to furnish promptly to the Company all information
required to be disclosed in order to make the information previously furnished
to the Company by such Holder not materially misleading.
(c) Market-Maker Prospectus. The Company and the Guarantors acknowledge
that any Restricted Broker-Dealer holding Broker-Dealer Transfer Restricted
Securities may not resell such Broker-Dealer Transfer Restricted Securities
without delivering a Prospectus. Consequently, on the date that the Exchange
Offer Registration Statement is filed with the Commission, the Company and the
Guarantors shall file a Registration Statement (which may be the Exchange Offer
Registration Statement or the Shelf Registration Statement if permitted by the
rules and regulations of the Commission) and shall use their best efforts to
cause such Registration Statement to be declared effective by the Commission on
or prior to the Consummation of the Exchange Offer. The Company and the
Guarantors shall use their best efforts to keep such Registration Statement
continuously effective, supplemented and amended as required by the provisions
of Sections 6(c) and (d) hereof to the extent necessary to ensure that it is
available for resales of Broker-Dealer Transfer Restricted Securities by
Restricted Broker-Dealers, and to ensure that it conforms with the requirements
of this Agreement, the Act and the policies, rules and regulations of the
Commission as announced from time to time, until such time as all Restricted
Broker-Dealers determine in their judgment that they are no longer required to
deliver a Prospectus in connection with sales of Broker-Dealer Transfer
Restricted Securities. The Prospectus included in such Registration Statement is
referred to in this Agreement as a "Market-Maker Prospectus."
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<PAGE> 8
SECTION 5. LIQUIDATED DAMAGES
If (i) either of the Registration Statements required by Sections 3 or 4(a)
of this Agreement is not filed with the Commission on or prior to the date
specified for such filing in this Agreement, (ii) either of such Registration
Statements has not been declared effective by the Commission on or prior to the
date specified for such effectiveness in this Agreement (the "Effectiveness
Target Date"), (iii) the Exchange Offer has not been Consummated within 30
business days after the Effectiveness Target Date with respect to the Exchange
Offer Registration Statement or (iv) either Registration Statement required by
this Agreement is filed and declared effective but shall thereafter cease to be
effective or fail to be usable (except as permitted by Section 6(d)(i) of this
Agreement) for its intended purpose without being succeeded immediately by a
post-effective amendment to such Registration Statement that cures such failure
and that is itself immediately declared effective (each such event referred to
in clauses (i) through (iv), a "Registration Default"), the Company and the
Guarantors hereby jointly and severally agree to pay liquidated damages to each
Holder of Transfer Restricted Securities with respect to the first 90-day period
immediately following the occurrence of such Registration Default, in an amount
equal to $0.05 per week per $1,000 principal amount of Transfer Restricted
Securities held by such Holder for each week or portion thereof that the
Registration Default continues. The amount of the liquidated damages shall
increase by an additional $0.05 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 $0.50 per week per $1,000 principal amount of Transfer
Restricted Securities. All accrued liquidated damages shall be paid to Record
Holders by the Company by wire transfer of immediately available funds or by
federal funds check on each Damages Payment Date, as provided in the Indentures.
Following the cure of all Registration Defaults relating to any particular
Transfer Restricted Securities, the accrual of liquidated damages with respect
to such Transfer Restricted Securities will cease.
All obligations of the Company and the Guarantors set forth in the
preceding paragraph that are outstanding with respect to any Transfer Restricted
Security at the time such security ceases to be a Transfer Restricted Security
shall survive until such time as all such obligations with respect to such
Security shall have been satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the Exchange
Offer, the Company and the Guarantors shall comply with all of the provisions of
Section 6(d) below, shall use their best efforts to effect such exchange to
permit the sale of Transfer Restricted Securities being sold in accordance with
the intended method or methods of distribution thereof, and shall comply with
all of the following provisions:
(i) If in the reasonable opinion of counsel to the Company there is a
question as to whether the Exchange Offer is permitted by applicable law, the
Company and the Guarantors hereby agree to seek a no-action letter or other
favorable decision from the Commission allowing the Company and the Guarantors
to Consummate an Exchange Offer for such Series A Notes. The Company and the
Guarantors each hereby agrees to pursue the issuance of such a decision to the
Commission staff level but shall not be required to take commercially
unreasonable action to effect a change of Commission policy. The Company and the
Guarantors each hereby agrees, however, to (A) participate in telephonic
conferences with the Commission, (B) deliver to the Commission staff an
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<PAGE> 9
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 pursue a resolution (which need not be favorable)
by the Commission staff of such submission.
(ii) As a condition to its participation in the Exchange Offer pursuant to
the terms of this Agreement, each Holder of Transfer Restricted Securities shall
furnish, upon the request of the Company, prior to the Consummation thereof, 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. In addition, all such Holders of Transfer Restricted
Securities shall otherwise cooperate in the Company's preparations for the
Exchange Offer. Each Holder hereby acknowledges and agrees that any
Broker-Dealer and any such Holder using the Exchange Offer to participate in a
distribution of the securities to be acquired in the Exchange Offer (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 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
should 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 if the resales are of Series B Notes obtained by such Holder in
exchange for Series A Notes acquired by such Holder directly from the Company.
(iii) Prior to effectiveness of the Exchange Offer Registration Statement,
the Company and the Guarantors shall, if required by the Commission, provide a
supplemental letter to the Commission (A) stating that the Company and the
Guarantors are 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) and, if applicable,
any no-action letter obtained pursuant to clause (i) above and (B) including a
representation that neither the Company nor the Guarantors have 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.
(b) Shelf Registration Statement. In connection with the Shelf Registration
Statement, the Company and the Guarantors shall comply with all the provisions
of Section 6(d) below and shall use their best efforts to effect such
registration to permit the sale of the Transfer Restricted Securities being sold
in accordance with the intended method or methods of distribution thereof, and
pursuant thereto the Company will as expeditiously as possible 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.
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<PAGE> 10
(c) Market-Maker Prospectus. In connection with any Registration Statement
filed pursuant to Section 4(c) of this Agreement, the Company and the Guarantors
will comply with all of the provisions of Section 6(d) (other than sub-sections
(xii), (xiii), (xiv), (xvi), (xix) and (xx)) below until such time as all
Restricted Broker-Dealers determine in their judgment that they are no longer
required to deliver Market-Maker Prospectuses in connection with sales of
Broker-Dealer Transfer Restricted Securities. The Company and Guarantors shall
use their best efforts to deliver Market-Maker Prospectuses to all Restricted
Broker-Dealers immediately upon the effectiveness of the Registration Statement
and from time to time thereafter upon request, in such quantities as such
Restricted Broker-Dealer shall require.
(d) General Provisions. In connection with any Registration Statement and
any Prospectus required by this Agreement to permit the sale or resale of
Transfer Restricted Securities (including, without limitation, any Registration
Statement and the related Prospectus required to permit resales of Notes by
Broker-Dealers) and Broker-Dealer Transfer Restricted Securities, the Company
and the Guarantors shall:
(i) use their best efforts to keep such Registration Statement continuously
effective and provide all requisite financial statements (including, if required
by the Act or any regulation thereunder, financial statements of the Guarantors)
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 a material
misstatement or omission or (B) not to be effective and usable for resale of
Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities,
as applicable, during the period required by this Agreement, the Company and the
Guarantors shall file promptly an appropriate amendment to such Registration
Statement, in the case of clause (A), correcting any such misstatement or
omission, and, in the case of either clause (A) or (B), use their best efforts
to cause such amendment to be declared effective and such Registration Statement
and the related Prospectus to become usable for their intended purpose(s) as
soon as practicable thereafter. Notwithstanding the foregoing, at any time after
Consummation of the Exchange Offer, the Company and the Guarantors may allow the
Shelf Registration Statement or Market-Maker Prospectus and the related
Registration Statement to cease to be effective and usable if (x) the Board of
Directors of the Company determines in good faith that it is in the best
interests of the Company not to disclose the existence of or facts surrounding
any proposed or pending material corporate transaction involving the Company,
and the Company notifies the Holders within two business days after the Board of
Directors makes such determination, or (y) the Prospectus contained in the Shelf
Registration Statement or the Market-Maker Prospectus, as the case may be,
contains an untrue statement of a material fact 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; provided that the
three-year period referred to in Section 4(a) hereof during which the Shelf
Registration Statement is required to be effective and usable shall be extended
by the number of days during which such registration statement was not effective
or usable pursuant to the foregoing provisions;
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be necessary to
keep the Registration Statement effective for the applicable period set forth in
Section 3 or 4 hereof, as applicable; 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 the applicable provisions of
Rules 424 and 430A 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
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<PAGE> 11
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 the underwriter(s), if any, and selling Holders of Transfer
Restricted Securities and, following the Consummation of the Exchange Offer,
Holders of Broker-Dealer Transfer Restricted Securities, promptly and, if
requested by such Persons, to 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 Registration Statement or any post-effective
amendment thereto, when the same has become effective, (B) of any request by the
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 or Broker-Dealer Transfer Restricted Securities, as
applicable, for offering or sale in any jurisdiction, or the initiation of any
proceeding for any of the preceding purposes, and (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
or the Prospectus in order to make the statements therein 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 or
Broker-Dealer Transfer Restricted Securities, as applicable, under state
securities or Blue Sky laws, the Company and the Guarantors shall use their best
efforts to obtain the withdrawal or lifting of such order at the earliest
possible time;
(iv) furnish to each of the selling Holders of Transfer Restricted
Securities or Holders of Broker-Dealer Transfer Restricted Securities and each
of the underwriter(s), 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 of such
Holders and underwriter(s), if any, for a period of at least five business days,
and the Company and the Guarantors 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) if a
selling Holder of Transfer Restricted Securities or a Holder of Broker-Dealer
Transfer Restricted Securities, as applicable, covered by such Registration
Statement or the underwriter(s), if any, shall not have had such an opportunity
to participate in the preparation thereof;
(v) 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 the selling Holders of Transfer Restricted Securities or the Holders
of Broker-Dealer Transfer Restricted Securities, as applicable, and to the
underwriter(s), if any, make the Company's representatives available (and
representatives of the Guarantors) 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 selling Holders or underwriter(s), if any,
reasonably may request;
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(vi) make available at reasonable times at the Company's principal place of
business for inspection by the selling Holders of Transfer Restricted
Securities, any underwriter participating in any disposition pursuant to such
Registration Statement, and any attorney or accountant retained by such selling
Holders or any of the underwriter(s) who shall certify to the Company and the
Guarantors that they have a current intention to sell Transfer Restricted
Securities or Broker-Dealer Transfer Restricted Securities pursuant to a Shelf
Registration Statement or Market-Maker Prospectus, and, following the
Consummation of the Exchange Offer, the Holders of Broker-Dealer Transfer
Restricted Securities, such financial and other information of the Company and
the Guarantors as reasonably requested and cause the Company's and the
Guarantors' officers, directors and employees to respond to such inquiries as
shall be reasonably necessary, in the reasonable judgment of counsel to such
Holders, to conduct a reasonable investigation; provided, however, that each
such party shall be required to maintain in confidence and not to disclose to
any other person any information or records reasonably designated by the Company
in writing as being confidential, until such time as (A) such information
becomes a matter of public record (whether by virtue of its inclusion in such
Registration Statement or otherwise), or (B) such person shall be required so to
disclose such information pursuant to the subpoena or order of any court or
other governmental agency or body having jurisdiction over the matter (subject
to the requirements of such order, and only after such person shall have given
the Company prompt prior written notice of such requirement), or (C) such
information is required to be set forth in such Registration Statement or the
Prospectus included therein or in an amendment to such Registration Statement or
an amendment or supplement to such Prospectus in order that such Registration
Statement, Prospectus, amendment or supplement, as the case may be, does not
contain an untrue statement of a material fact or omit to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading;
(vii) if requested by any selling Holders of Transfer Restricted Securities
or Holders of Broker-Dealer Transfer Restricted Securities, as applicable, or
the underwriter(s), if any, promptly incorporate in any Registration Statement
or Prospectus, pursuant to a supplement or post-effective amendment if
necessary, such information that is required by the Act as such Holders and
underwriter(s), if any, may reasonably request to have included therein,
including, without limitation, information relating to the "Plan of
Distribution" of the Transfer Restricted Securities or Broker-Dealer Transfer
Restricted Securities, as applicable, information with respect to the principal
amount of Transfer Restricted Securities being sold to such underwriter(s), the
purchase price being paid therefor and any other terms of the offering of the
Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities,
as applicable, to be sold in such offering; 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 incorporated in such
Prospectus supplement or post-effective amendment;
(viii) furnish to each Holder of Transfer Restricted Securities or Holders
of Broker-Dealer Transfer Restricted Securities, as applicable, and each of the
underwriter(s), if any, 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);
(ix) deliver to each selling Holder of Transfer Restricted Securities and
each of the underwriter(s), if any, and each Holder of Broker-Dealer Transfer
Restricted Securities, without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any
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amendment or supplement thereto as such Persons reasonably may request; the
Company and the Guarantors hereby consent to the use of the Prospectus and any
amendment or supplement thereto by each of the selling Holders and each of the
underwriter(s), if any, and each Holder of Broker-Dealer Transfer Restricted
Securities, in connection with the offering and the sale of the Transfer
Restricted Securities and Broker-Dealer Transfer Restricted Securities, as
applicable, covered by the Prospectus or any amendment or supplement thereto;
(x) enter into, and cause the Guarantors to enter into, such agreements
(including an underwriting agreement), and make, and cause the Guarantors to
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 and Broker-Dealer Transfer Restricted Securities,
as applicable, pursuant to any Registration Statement contemplated by this
Agreement, all to such extent as may be requested by the Initial Purchaser or,
in the case of registration for resale of Transfer Restricted Securities
pursuant to the Shelf Registration Statement, by any Holder or Holders of
Transfer Restricted Securities who hold at least 25% in aggregate principal
amount of such class of Transfer Restricted Securities or, in the case of
Broker-Dealer Transfer Restricted Securities, by any Holder of Broker-Dealer
Transfer Restricted Securities; provided, that, the Company and the Guarantors
shall not be required to enter into any such agreement more than once with
respect to all of the Transfer Restricted Securities and, in the case of a Shelf
Registration Statement, may delay entering into such agreement if the Board of
Directors of the Company determines in good faith that it is in the best
interests of the Company not to disclose the existence of or facts surrounding
any proposed or pending material corporate transaction involving the Company;
and whether or not an underwriting agreement is entered into and whether or not
the registration is an Underwritten Registration, the Company and the Guarantors
shall:
(A) furnish to the Initial Purchaser, the Holders of Transfer Restricted
Securities who hold at least 25% in aggregate principal amount of such class of
Transfer Restricted Securities (in the case of a Shelf Registration Statement),
each Holder of Broker-Dealer Transfer Restricted Securities and each
underwriter, if any, in such substance and scope as they may request and as are
customarily made in connection with an offering of debt securities pursuant to a
Registration Statement (i) upon the effective date of any Registration Statement
(and if such Registration Statement contemplates an Underwritten Offering of
Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities,
as applicable, upon the date of the closing under the underwriting agreement
related thereto) and (ii) upon the filing of any amendment or supplement to any
Registration Statement or any other document that is incorporated in any
Registration Statement by reference and includes financial data with respect to
a fiscal quarter or year:
(1) a certificate, dated the date of effectiveness of any Registration
Statement (and if such Registration Statement contemplates an Underwritten
Offering of Transfer Restricted Securities or Broker-Dealer Transfer Restricted
Securities, as applicable, the date of the closing under the underwriting
agreement related thereto) or the date of the filing of any other document
pursuant to clause (A)(ii) above, as the case may be, signed by (y) the
President or any Vice President and (z) a principal financial or accounting
officer of each of the Company and the Guarantors, confirming, as of the date
thereof, the matters set forth in paragraphs (e), (f), (i) and (j) of Section 7
of the Note Purchase Agreement and such other matters as such parties may
reasonably request;
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(2) an opinion, dated the date of effectiveness of any Registration
Statement (and if such Registration Statement contemplates an Underwritten
Offering of Transfer Restricted Securities or Broker-Dealer Transfer Restricted
Securities, as applicable, the date of the closing under the underwriting
agreement related thereto) or the date of the filing of any other document
pursuant to clause (A)(ii) above, as the case may be, of counsel for the Company
and the Guarantors, covering the matters set forth in paragraphs (b) and (c) of
Section 7 of the Note Purchase Agreement and such other matter as such parties
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 and the Guarantors, representatives of the
independent public accountants for the Company and the Guarantors, the Initial
Purchaser's representatives and the Initial Purchaser's counsel in connection
with the preparation of such Registration Statement and the related Prospectus
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 a
certain extent upon facts provided to such counsel by officers and other
representatives of the Company and the Guarantors 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, 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 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, has not independently verified and expresses no opinion with
respect to, the accuracy, completeness or fairness of the financial statements,
notes and schedules and other financial data included in any Registration
Statement contemplated by this Agreement or the related Prospectus; and
(3) a customary comfort letter, dated the date of effectiveness of any
Registration Statement (and if such Registration Statement contemplates an
Underwritten Offering of Transfer Restricted Securities or Broker-Dealer
Transfer Restricted Securities, as applicable, the date of the closing under the
underwriting agreement related thereto) or the date of the filing of any other
document pursuant to clause (A)(ii) above, as the case may be, from the
Company's independent accountants, in the customary form and covering matters of
the type customarily covered in comfort letters by underwriters in connection
with an offering of debt securities pursuant to a Registration Statement, and
affirming, or updating, as applicable, the matters set forth in the comfort
letters delivered pursuant to Section 7(d) of the Note Purchase Agreement,
without exception;
(B) set forth in full or incorporate by reference in the underwriting
agreement, if any, the indemnification provisions and procedures of Section 8
hereof with respect to all parties to be indemnified pursuant to said Section;
and
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(C) deliver such other documents and certificates as may be reasonably
requested by such parties to evidence compliance with clause (A) above and with
any customary conditions contained in the underwriting agreement or other
agreement entered into by the Company pursuant to this clause (x), if any.
(xi) prior to any public offering of Transfer Restricted Securities or
Broker-Dealer Transfer Restricted Securities, as applicable, cooperate with, and
cause the Guarantors to cooperate with, the selling Holders of Transfer
Restricted Securities, the Holders of Broker-Dealer Transfer Restricted
Securities, the underwriter(s), if any, and their respective counsel in
connection with the registration and qualification of the Transfer Restricted
Securities or Broker-Dealer Transfer Restricted Securities, as applicable, under
the securities or Blue Sky laws of such jurisdictions as the selling Holders of
Transfer Restricted Securities or Holders of Broker-Dealer Transfer Restricted
Securities or underwriter(s) may reasonably 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 or Broker-Dealer Transfer
Restricted Securities, as applicable, covered by any Registration Statement
filed pursuant to Section 4 hereof; provided, however, that neither the Company
nor the Guarantors shall be required to register or qualify as a foreign
corporation where they are not now so qualified or to take any action that would
subject them 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 they are not now so subject;
(xii) shall issue, upon the request of any Holder of Series A Notes covered
by the Shelf Registration Statement, Series B Notes, having an aggregate
principal amount equal to the aggregate principal amount of Series A Notes
surrendered to the Company by such Holder in exchange therefor or being sold by
such Holder; such Series B Notes to be registered in the name of such Holder or
in the name of the purchaser(s) of such Notes, as the case may be; in return,
the Series A Notes held by such Holder shall be surrendered to the Company for
cancellation;
(xiii) cooperate with, and cause the Guarantors to cooperate with, the
selling Holders of Transfer Restricted Securities and the underwriter(s), if
any, to facilitate the timely preparation and delivery of certificates
representing Transfer Restricted Securities to be sold and not bearing any
restrictive legends; and enable such Transfer Restricted Securities to be in
such denominations and registered in such names as such Holders or the
underwriter(s), if any, may request at least two business days prior to any sale
of Transfer Restricted Securities made by such underwriter(s);
(xiv) use its reasonable best efforts to cause the Transfer Restricted
Securities or Broker-Dealer Transfer Restricted Securities, as applicable,
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 or the underwriter(s), if any, to consummate the
disposition of such Transfer Restricted Securities or Broker-Dealer Transfer
Restricted Securities, as applicable, subject to the proviso contained in clause
(xi) above;
(xv) if any fact or event contemplated by clause (d)(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 or Broker-Dealer
Transfer Restricted Securities, as applicable, the Prospectus will not contain
an untrue statement of
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<PAGE> 16
a material fact or omit to state any material fact necessary to make the
statements therein not misleading;
(xvi) provide CUSIP numbers for all Transfer Restricted Securities not
later than the effective date of the Registration Statement and provide the
Trustees under the Indentures with printed certificates for the Transfer
Restricted Securities which are in a form eligible for deposit with the
Depository Trust Company;
(xvii) cooperate and assist in any filings required to be made with the
NASD and in the performance of any due diligence investigation by any
underwriter (including any "qualified independent underwriter") that is required
to be retained in accordance with the rules and regulations of the NASD;
(xviii) otherwise use its best efforts to comply with all applicable rules
and regulations of the Commission, and make generally available to its security
holders, as soon as practicable, a consolidated earnings statement meeting the
requirements of Rule 158 (which need not be audited) for the twelve-month period
(A) commencing at the end of any fiscal quarter in which Transfer Restricted
Securities are sold to underwriters in a firm or best efforts Underwritten
Offering or (B) if not sold to underwriters in such an offering, beginning with
the first month of the Company's first fiscal quarter commencing after the
effective date of the Registration Statement;
(xix) cause the Indentures 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, and cause the Guarantors to cooperate,
with the Trustees and the Holders of Notes to effect such changes to the
Indentures as may be required for such Indentures to be so qualified in
accordance with the terms of the TIA; and execute, and cause the Guarantors to
execute, and use their best efforts to cause the Trustees 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 Indentures to
be so qualified in a timely manner;
(xx) cause all Transfer Restricted Securities covered by the Registration
Statement to be listed on each securities exchange on which similar securities
issued by the Company are then listed if requested by the Holders of a majority
in aggregate principal amount of Series A Notes or the managing underwriter(s),
if any;
(xxi) provide promptly to each Holder upon request each document filed with
the Commission pursuant to the requirements of Section 13 and Section 15 of the
Exchange Act; and
(xxii) cause each direct or indirect domestic subsidiary of the Company
that is created or acquired pursuant to the Acquisition or otherwise and that is
required to become a guarantor of the Notes under the Indentures, upon the
creation or acquisition of such subsidiary, to execute a counterpart to this
Agreement in the form attached hereto as Exhibit A and to deliver such
counterpart, together with an opinion of counsel as to the enforceability
thereof against such entity, to the Initial Purchaser no later than seven days
following the execution thereof.
Each Holder agrees by acquisition of a Transfer Restricted Security or
Broker-Dealer Transfer Restricted Securities, as applicable, that, upon receipt
of any notice from the Company of the existence of any fact of the kind
described in Section 6(d)(iii)(D) hereof, such Holder will forthwith discontinue
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<PAGE> 17
disposition of Transfer Restricted Securities pursuant to the applicable
Registration Statement until such Holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 6(d)(xv) hereof, or
until it is advised in writing (the "Advice") 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. If so
directed by the Company, each Holder will 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 or Broker-Dealer Transfer Restricted Securities, as applicable, that
was current at the time of receipt of such notice. In the event the Company
shall give any such notice, the time period regarding the effectiveness of such
Registration Statement set forth in Section 3 or 4(a) hereof, as applicable,
shall be extended by the number of days during the period from and including the
date of the giving of such notice pursuant to Section 6(d)(iii)(D) hereof to and
including the date when each selling Holder covered by such Registration
Statement shall have received the copies of the supplemented or amended
Prospectus contemplated by Section 6(d)(xv) hereof or shall have received the
Advice.
The Company may require each Holder of Transfer Restricted Securities or
Broker-Dealer Transfer Restricted Securities as to which any registration is
being effected to furnish to the Company such information regarding such Holder
and such Holder's intended method of distribution of the applicable Transfer
Restricted Securities or Broker-Dealer Transfer Restricted Securities as the
Company may from time to time reasonably request in writing, but only to the
extent that such information is required in order to comply with the Act. Each
such Holder agrees to notify the Company as promptly as practicable of (i) any
inaccuracy or change in information previously furnished by such Holder to the
Company or (ii) the occurrence of any event, in either case, as a result of
which any Prospectus relating to such registration contains or would contain an
untrue statement of a material fact regarding such Holder or such Holder's
intended method of distribution of the applicable Transfer Restricted Securities
or Broker-Dealer Transfer Restricted Securities or omits to state any material
fact regarding such Holder or such Holder's intended method of distribution of
the applicable Transfer Restricted Securities or Broker-Dealer Transfer
Restricted Securities required to be stated therein or necessary to made the
statements therein not misleading and promptly to furnish to the Company any
additional information required to correct and update any previously furnished
information or required so that such Prospectus shall not contain, with respect
to such Holder or the distribution of the applicable Transfer Restricted
Securities or Broker-Dealer Transfer Restricted Securities an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses associated with and incident to the Company's or the
Guarantors' performance of or compliance with this Agreement will be borne by
the Company or the Guarantors, regardless of whether a Registration Statement
becomes effective, including without limitation: (i) all registration and filing
fees and expenses (including filings made by the Initial Purchaser or any Holder
with the NASD and reasonable counsel fees and disbursements in connection
therewith (and, if applicable, the fees and expenses of any "qualified
independent underwriter" and its counsel that may be required by the rules and
regulations of the NASD)); (ii) all reasonable fees and disbursements of
compliance with federal securities and state Blue Sky or securities laws
(including all reasonable fees and expenses of counsel to the underwriter(s) in
connection with compliance with state Blue Sky or securities laws); (iii) all
expenses of printing (including printing certificates for the Series B Notes to
be issued in the Exchange Offer and
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printing of Prospectuses), messenger and delivery services and telephone; (iv)
all fees and disbursements of counsel for the Company and the Guarantors and,
subject to Section 7(b) below, the reasonable fees and disbursements of counsel
for the Holders of Transfer Restricted Securities; (v) all application and
filing fees in connection with listing Notes on a national securities exchange
or automated quotation system pursuant to the requirements hereof; (vi) all fees
and expenses of the Trustees under the Indentures to the extent provided in the
Indentures and of any escrow agent, custodian or exchange agent; and (vii) all
fees and disbursements of independent certified public accountants of the
Company and the Guarantors (including the expenses of any special audit and
comfort letters required by or incident to such performance).
The Company shall, in any event, bear its and the Guarantors' internal
expenses (including, without limitation, all salaries and expenses of their
officers and employees performing legal or accounting duties), the 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 shall reimburse the
Initial Purchaser and the Holders of Transfer Restricted Securities being
tendered in the Exchange Offer and/or resold pursuant to the "Plan of
Distribution" contained in the Exchange Offer Registration Statement or
registered pursuant to the Shelf Registration Statement, as applicable, for the
reasonable fees and disbursements of not more than one counsel, who shall be
Latham & Watkins or such other counsel as may 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) Indemnification by the Company and the Guarantors. Upon any
registration of Transfer Restricted Securities or Broker-Dealer Transfer
Restricted Securities, as applicable, pursuant to Sections 3 and 4 hereof, and
in consideration of the agreements of the Initial Purchaser contained herein,
and as an inducement to the Initial Purchaser to purchase the Notes, the Company
and the Guarantors, jointly and severally, shall and hereby agree to, (i)
indemnify and hold harmless each Holder of Transfer Restricted Securities and
Broker-Dealer Transfer Restricted Securities, as applicable, to be included in
such registration and each person who participates as a placement or sales agent
or as an underwriter in any offering or sale of such Transfer Restricted
Securities or Broker-Dealer Transfer Restricted Securities, as applicable,
against any losses, claims, damages or liabilities, joint or several, to which
such Holder, agent or underwriter may become subject under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement under which
such Transfer Restricted Securities or Broker-Dealer Transfer Restricted
Securities, as applicable, were registered under the Act, or any preliminary,
final or summary Prospectus contained therein or furnished by the Company to any
such Holder, agent or underwriter, or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, and (ii) reimburse such Holder, such agent
and such underwriter for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such action or claim as such
expenses are incurred; provided, however, that the Company and the Guarantors
shall not be liable under (i) above to any such person in any such case to the
extent that any such loss, claim, damage or liability arises out
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of or is based upon an untrue statement or alleged untrue statement or omission
or alleged omission made in such Registration Statement, or preliminary, final
or summary Prospectus, or amendment or supplement thereto, in reliance upon and
in conformity with written information furnished to the Company by such person
expressly for use therein.
(b) Indemnification by the Holders and any Agents and Underwriters. The
Company and the Guarantors may require, as a condition to including any Transfer
Restricted Securities or Broker-Dealer Transfer Restricted Securities, as
applicable, in any Registration Statement filed pursuant to Sections 3 and 4
hereof and to entering into any underwriting agreement, if any, with respect
thereto, that the Company and the Guarantors shall have received an undertaking
reasonably satisfactory to them from the Holders of such Transfer Restricted
Securities or Broker-Dealer Transfer Restricted Securities, as applicable, and
from each underwriter named in any such underwriting agreement, if any,
severally and not jointly, to (i) indemnify and hold harmless the Company and
the Guarantors, and, in the case of a Shelf Registration Statement, all other
Holders of Transfer Restricted Securities, against any losses, claims, damages
or liabilities to which the Company, the Guarantors or such other Holders of
Transfer Restricted Securities or Broker-Dealer Transfer Restricted Securities,
as applicable, may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in such Registration Statement, or any preliminary,
final or summary Prospectus contained therein or furnished by the Company to any
such Holder, agent or underwriter, if any, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by such Holder or underwriter expressly for
use therein, and (ii) reimburse the Company and the Guarantors for any legal or
other expenses reasonably incurred by the Company and the Guarantors in
connection with investigating or defending any such action or claim as such
expenses are incurred; provided, however, that no such Holder shall be required
to undertake liability to any person under this Section 8(b) for any amounts in
excess of the dollar amount of the proceeds to be received by such Holder from
the sale of such Holder's Transfer Restricted Securities or Broker-Dealer
Transfer Restricted Securities, as applicable, pursuant to such registration.
(c) Notices of Claims, Etc. Promptly after receipt by an indemnified party
under subsection (a) or (b) above of written notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is to be
made against an indemnifying party pursuant to the indemnification provisions of
or contemplated by this Section 8, notify such indemnifying party in writing of
the commencement of such action; but the omission so to notify the indemnifying
party shall not relieve it from any liability which it may have to any
indemnified party other than under the indemnification provisions of or
contemplated by Section 8(a) or 8(b) hereof. In case any such action shall be
brought against any indemnified party and it shall notify an indemnifying party
of the commencement thereof, such indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party, and, after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, such indemnifying party shall not be liable to such
indemnified party for any legal expenses of other counsel or any other expenses,
in each case subsequently incurred by such indemnified party, in connection with
the defense thereof other than reasonable costs of investigation.
Notwithstanding the foregoing, any indemnified party shall have the right to
employ separate counsel in any such action and participate in the defense
thereof, but the fees
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and expenses of such counsel shall be at the expense of the indemnified party
unless the indemnified party shall have been advised by counsel that
representation of the indemnified party by counsel provided by the indemnifying
party would be inappropriate due to actual or potential conflicting interests
between the indemnifying party and the indemnified party, including situations
in which there are one or more legal defenses available to the indemnified party
that are different from or additional to those available to the indemnifying
party; provided, however, that the indemnifying party shall not, in connection
with any one such action or proceeding or separate but substantially similar
actions or proceedings arising out of the same general allegations, be liable
for the fees and expenses of more than one separate firm of attorneys at any
time for all indemnified parties, except to the extent that local counsel, in
addition to its regular counsel, is required in order to effectively defend
against such action or proceeding. The indemnifying party shall not be required
to indemnify any indemnified party for any amount paid or payable by such
indemnified party in the settlement of any action, proceeding or investigation
without the written consent of the indemnifying party, which consent shall not
be unreasonably withheld. No indemnifying party shall, without the written
consent of the indemnified party, effect the settlement or compromise of, or
consent to the entry of any judgment with respect to, any pending or threatened
action or claim in respect of which indemnification or contribution may be
sought hereunder (whether or not the indemnified party is an actual or potential
party to such action or claim) unless such settlement, compromise or judgment
(i) includes an unconditional release of the indemnified party from all
liability arising out of such action or claim 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 any indemnified party.
(d) Contribution. Each party hereto agrees that, if for any reason the
indemnification provisions contemplated by Section 8(a) or Section 8(b) are
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, claims damages or liabilities (or actions in respect thereof)
referred to therein, then each indemnifying party shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative fault of the indemnifying party and the
indemnified party in connection with the statements or omissions which resulted
in such losses, claims, damages or liabilities (or actions in respect thereof),
as well as any other relevant equitable considerations. It is understood that
contribution under this subsection (d) is unavailable to indemnified parties to
the same extent that indemnification is unavailable under the proviso at the end
of subsection (a) above. The relative fault of such indemnifying party and
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by
such indemnifying party or by such indemnified party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The parties hereto agree that it would not be just
and equitable if contributions pursuant to this Section 8(d) were determined by
pro rata allocation (even if the Holders or any agents or underwriters or all of
them 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 this Section 8(d). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, or liabilities (or actions in respect
thereof) referred to above shall be deemed to include any legal or other fees or
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8(d), no Holder shall be required to contribute any
amount in excess of the amount by which the dollar amount of the proceeds
received by such Holder from the sale of any Transfer Restricted Securities
(after deducting any fees, discounts and commissions applicable thereto) or
Broker-Dealer Transfer Restricted Securities, as applicable, exceeds 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,
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<PAGE> 21
and no underwriter shall be required to contribute any amount in excess of the
amount by which the total price at which the Transfer Restricted Securities
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which such underwriter 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'
and any underwriters' obligations in this Section 8(d) to contribute shall be
several in proportion to the principal amount of Transfer Restricted Securities
or Broker-Dealer Transfer Restricted Securities, as applicable, registered or
underwritten, as the case may be, by them and not joint.
(e) The obligations of the Company and the Guarantors under this Section 8
shall be in addition to any liability which the Company and the Guarantors may
otherwise have and shall extend, upon the same terms and conditions, to each
officer, director and partner of each Holder, agent and underwriter and each
person, if any, who controls any Holder, agent or underwriter within the meaning
of the Act; and the obligations of the Holders and any underwriters contemplated
by this Section 8 shall be in addition to any liability which the respective
Holder or underwriter may otherwise have and shall extend, upon the same terms
and conditions, to each officer and director of the Company and the Guarantors
(including any person who, with his consent, is named in any Registration
Statement as about to become a director of the Company and the Guarantors) and
to each person, if any, who controls the Company and the Guarantors within the
meaning of the Act.
SECTION 9. RULE 144A
The Company and the Guarantors hereby agree with each Holder, for so long
as any Transfer Restricted Securities remain outstanding, to make available to
any Holder or beneficial owner of Transfer Restricted Securities in connection
with any sale thereof and any prospective purchaser of such Transfer Restricted
Securities from such Holder or beneficial owner, the information required by
Rule 144A(d)(4) under the Act in order to permit resales of such Transfer
Restricted Securities pursuant to Rule 144A.
SECTION 10. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Registration hereunder unless
such Holder (a) agrees to sell such Holder's Transfer Restricted Securities on
the basis provided in any underwriting arrangements approved by the Persons
entitled hereunder to approve such arrangements and (b) completes and executes
all reasonable questionnaires, powers of attorney, indemnities, underwriting
agreements, lock-up letters and other documents required under the terms of such
underwriting arrangements.
SECTION 11. SELECTION OF UNDERWRITERS
The Holders of Transfer Restricted Securities covered by the Shelf
Registration Statement who desire to do so may sell such Transfer Restricted
Securities in an Underwritten Offering. In any such Underwritten Offering, the
investment banker or investment bankers and manager or managers that will
administer the offering will be selected by the Company; provided, that such
investment bankers and managers must be Goldman, Sachs & Co. or another firm
reasonably satisfactory to the Holders of a majority in aggregate principal
amount of the Transfer Restricted Securities included in such offering.
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SECTION 12. MISCELLANEOUS
(a) Remedies. The Company and the Guarantors agree that monetary damages
(including the liquidated damages contemplated hereby) would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of this Agreement and hereby 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, and will cause the
Guarantors not to, 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. Neither the Company nor the Guarantors have previously
entered into any agreement granting any registration rights with respect to its
debt securities or convertible debt 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) Adjustments Affecting the Notes. The Company and the Guarantors shall
not take any action, or permit any change to occur, with respect to the Notes
that would materially and adversely affect the ability of the Holders to
Consummate the Exchange Offer or the ability of the Holders to include such
Notes in the Exchange Offer.
(d) 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 the Company has obtained the
written consent of Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities. Notwithstanding the foregoing, a waiver or
consent to departure from the provisions hereof that relates exclusively to the
rights of Holders whose securities are being tendered pursuant to the Exchange
Offer and that does not affect directly or indirectly the rights of other
Holders whose 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 or registered. The provisions of
Sections 4(c), 6(d), 7, 8 and this Section 12(d) may not be amended, modified or
supplemented without the written consent of the Initial Purchaser.
(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 air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of the
Registrars under the Indentures, with a copy to the Registrars under the
Indentures; and
(ii) if to the Company and the Guarantors:
AMF Group Inc.
7313 Bell Creek Road
Mechanicsville, VA 23221
Telecopier No.: (804) 559-8666
Attention: Secretary
21
<PAGE> 23
With a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Telecopier No.: (212) 403-2000
Attention: Elliott V. Stein
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
answered back, if telexed; 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 Trustees at the
address specified in the Indentures.
(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 of Transfer Restricted Securities.
(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, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
(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 together with the other Operative
Documents (as defined in the Note Purchase 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 and the
Guarantors with respect to the Transfer Restricted Securities. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
22
<PAGE> 24
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
AMF BOWLING CENTERS HOLDINGS INC.
By: /s/ Douglas J. Stanard
- ---------------------------------------------------------
Name: Douglas J. Stanard
Title: President
AMF BOWLING HOLDINGS INC.
By: /s/ Robert L. Morin
- ---------------------------------------------------------
Name: Robert L. Morin
Title: President, Treasurer, Asst. Secretary
AMF GROUP HOLDINGS INC.
By: /s/ Richard A. Friedman
- ---------------------------------------------------------
Name: Richard A. Friedman
Title: President
23
<PAGE> 25
AMF GROUP INC.
By: /s/ Robert L. Morin
- ---------------------------------------------------------
Name: Robert L. Morin
Title: Executive Vice President
AMF WORLDWIDE BOWLING CENTERS HOLDINGS INC.
By: /s/ Douglas J. Stanard
- ---------------------------------------------------------
Name: Douglas J. Stanard
Title: President, Treasurer, Asst. Secretary
24
<PAGE> 26
GOLDMAN, SACHS & CO.
/s/ GOLDMAN, SACHS & CO.
- --------------------------------------
(Goldman, Sachs & Co.)
25
<PAGE> 27
EXHIBIT A
Counterpart To Registration Rights Agreement
The undersigned hereby absolutely, unconditionally and irrevocably agrees
to be bound by the terms and provisions of the Registration Rights Agreement,
dated as of March 21, 1996, by and among AMF Group Inc., a Delaware corporation,
AMF Group Holdings Inc., a Delaware corporation and each of the Guarantors (as
defined therein).
IN WITNESS WHEREOF, the undersigned has executed this Counterpart as of ,
1996.
[NAME]
By:
Name:
Title:
26
<PAGE> 1
Exhibit 10.2
$715,000,000
CREDIT AGREEMENT
Dated as of May 1, 1996
Among
AMF GROUP INC.
as Borrower
and
THE INITIAL LENDERS AND INITIAL ISSUING BANKS
and
GOLDMAN, SACHS & CO.
and
CITICORP SECURITIES, INC.
as Arrangers
and
GOLDMAN, SACHS & CO.
as Syndication Agent
and
CITIBANK, N.A.
as Administrative Agent
<PAGE> 2
<TABLE>
<CAPTION>
T A B L E O F C O N T E N T S
SECTION PAGE
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
<S> <C>
1.01. Certain Defined Terms.................................................................. 2
1.02. Computation of Time Periods............................................................ 36
1.03. Accounting Terms....................................................................... 36
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
AND THE LETTERS OF CREDIT
2.01. The Advances........................................................................... 37
2.02. Making the Advances.................................................................... 39
2.03. Issuance of and Drawings and Reimbursement Under Letters of Credit..................... 40
2.04. Repayment of Advances.................................................................. 42
2.05. Termination or Reduction of the Commitments............................................ 47
2.06. Prepayments............................................................................ 49
2.07. Interest............................................................................... 53
2.08. Fees................................................................................... 54
2.09. Conversion of Advances................................................................. 55
2.10. Increased Costs, Etc................................................................... 56
2.11. Payments and Computations.............................................................. 58
2.12. Taxes.................................................................................. 59
2.13. Sharing of Payments, Etc............................................................... 62
2.14. Use of Proceeds........................................................................ 63
2.15. Defaulting Lenders..................................................................... 63
ARTICLE III
CONDITIONS OF LENDING
3.01. Conditions Precedent to Initial Extension of Credit.................................... 66
3.02. Conditions Precedent to Each Borrowing and Issuance.................................... 76
3.03. Determinations Under Section 3.01...................................................... 77
ARTICLE IV
</TABLE>
<PAGE> 3
ii
<TABLE>
<CAPTION>
SECTION PAGE
REPRESENTATIONS AND WARRANTIES
<S> <C>
4.01. Representations and Warranties of the Borrower......................................... 77
ARTICLE V
COVENANTS OF THE BORROWER
5.01. Affirmative Covenants.................................................................. 86
5.02. Negative Covenants..................................................................... 95
5.03. Reporting Requirements................................................................. 106
5.04. Financial Covenants.................................................................... 111
ARTICLE VI
EVENTS OF DEFAULT
6.01. Events of Default...................................................................... 116
6.02. Actions in Respect of the Letters of Credit upon Default............................... 120
ARTICLE VII
THE AGENTS
7.01. Authorization and Action............................................................... 121
7.02. Agents' Reliance, Etc.................................................................. 121
7.03. Citibank, Citicorp, Goldman and Affiliates............................................. 122
7.04. Lender Party Credit Decision........................................................... 122
7.05. Indemnification........................................................................ 122
7.06. Successor Agents....................................................................... 124
ARTICLE VIII
MISCELLANEOUS
8.01. Amendments, Etc........................................................................ 125
8.02. Notices, Etc........................................................................... 127
8.03. No Waiver; Remedies.................................................................... 127
</TABLE>
<PAGE> 4
iii
<TABLE>
<S> <C>
8.04. Costs and Expenses..................................................................... 127
8.05. Right of Set-off....................................................................... 130
8.06. Binding Effect......................................................................... 130
8.07. Assignments and Participations......................................................... 130
8.08. Execution in Counterparts.............................................................. 134
8.09. No Liability of the Issuing Banks...................................................... 134
8.10. Confidentiality........................................................................ 135
8.11. Jurisdiction, Etc...................................................................... 135
8.12. Release of Collateral.................................................................. 136
8.13. Governing Law; Waiver of Jury Trial.................................................... 137
</TABLE>
SCHEDULES
Schedule I - Commitments and Applicable Lending Offices
Schedule II - Subsidiary Guarantors
Schedule III - Stockholders' Agreement
Schedule 3.01(e) - Surviving Debt
Schedule 3.01(p)(xx) - Local Counsel
Schedule 4.01(a) - Equity Investors' Ownership of Parent
Schedule 4.01(b) - Subsidiaries
Schedule 4.01(d) - Authorizations, Approvals, Actions, Notices and
Filings
Schedule 4.01(m) - Plans, Multiemployer Plans and Welfare Plans
Schedule 4.01(v) - Environmental Laws Disclosure
Schedule 4.01(w) - Environmental Disclosure
Schedule 4.01(x) - Hazardous Materials Disclosure
<PAGE> 5
iv
Schedule 4.01(bb) - Open Years
Schedule 4.01(ff) - Acquisitions by AMF Bowling Centers
Schedule 4.01(ii) - Existing Debt
Schedule 4.01(kk) - Owned Real Property
Schedule 4.01(ll) - Leased Real Property
Schedule 4.01(mm) - Investments
Schedule 4.01(nn) - Intellectual Property
Schedule 5.01(l) - Transactions with Affiliates
Schedule 5.02(a) - Existing Liens
Schedule 5.02(g) - Non-competition Agreements
EXHIBITS
Exhibit A-1 - Form of Term Loan Note
Exhibit A-2 - Form of AXELs Series A Note
Exhibit A-3 - Form of AXELs Series B Note
Exhibit A-4 - Form of Working Capital Note
Exhibit A-5 - Form of Acquisition Note
Exhibit B - Form of Notice of Borrowing
Exhibit C - Form of Assignment and Acceptance
Exhibit D - Form of Security Agreement
Exhibit E - Form of Intellectual Property Security
Agreement
<PAGE> 6
v
Exhibit F - Form of Mortgage
Exhibit G - Form of Holdings Guaranty
Exhibit H - Form of Subsidiary Guaranty
Exhibit I - Form of Solvency Opinion
Exhibit J - Form of Solvency Certificate
Exhibit K - Form of Opinion of Counsel to the Loan Parties
Exhibit L - Form of Opinion of Intellectual Property
Counsel
<PAGE> 7
CREDIT AGREEMENT
CREDIT AGREEMENT dated as of May 1, 1996 among AMF GROUP INC.,
a Delaware corporation (the "Borrower"), the banks, financial institutions and
other institutional lenders listed on the signature pages hereof as the Initial
Lenders (the "Initial Lenders") and the banks listed on the signature pages
hereof as the Initial Issuing Banks (the "Initial Issuing Banks"), GOLDMAN,
SACHS & CO. ("Goldman") and CITICORP SECURITIES, INC., as arrangers (the
"Arrangers"), GOLDMAN, as syndication agent (together with any successor
appointed pursuant to Article VII, the "Syndication Agent"), CITIBANK, N.A.
("Citibank"), as administrative agent (together with any successor appointed
pursuant to Article VII, the "Administrative Agent") for the Lender Parties (as
hereinafter defined) and CITICORP USA, INC. ("Citicorp") as collateral agent
(together with any successor appointed pursuant to Article VII, the "Collateral
Agent", and together with the Syndication Agent and the Administrative Agent,
the "Agents").
PRELIMINARY STATEMENTS:
(1) The Borrower is a direct, wholly owned Subsidiary (as
hereinafter defined) of AMF Group Holdings Inc., a Delaware corporation
("Holdings"), which is a direct, wholly owned Subsidiary of AMF Holdings Inc., a
Delaware corporation ("Parent").
(2) Parent and Holdings were organized by GS Capital Partners
II, L.P., GS Capital Partners II Offshore, L.P. and Goldman, Sachs & Co.
Verwaltungs GmbH (collectively, together with The Goldman Sachs Group L.P.,
Stone Street Fund 1995 L.P., Stone Street Fund 1996 L.P., Bridge Street Fund
1995 L.P. and Bridge Street Fund 1996 L.P. and in each case any successor funds,
the "Goldman Investors") to acquire control, together with the other Equity
Investors (as hereinafter defined), of AMF Bowling, Inc., a Virginia
corporation, AMF Bowling Centers, Inc., a Virginia corporation, AMF Worldwide
Bowling Centers Group and their respective Subsidiaries (collectively, the
"Company").
(3) Pursuant to the Stock Purchase Agreement dated February
16, 1996 (as amended, supplemented or otherwise modified in accordance with its
terms, to the extent permitted in accordance with the Loan Documents (as
hereinafter defined), the "Purchase Agreement") between Holdings and the Sellers
(as defined therein), Holdings proposes to acquire all of the outstanding common
stock of the Company (the "Stock Acquisition"), in the case of AMF Bowling and
AMF Bowling Centers (each as hereinafter defined), through two intermediate
holding company Subsidiaries (the "Intermediate Companies"), and to acquire from
the Retained Entities and WBB (each as defined in the Purchase Agreement)
certain assets (the "Asset Acquisition", and together with the Stock
Acquisition, the "Acquisition"). Immediately upon the consummation of the
Acquisition, one of the
<PAGE> 8
2
Intermediate Companies will be merged into AMF Bowling and the other
Intermediate Company will be merged into AMF Bowling Centers.
(4) The Borrower has requested that, immediately upon the
consummation of the Acquisition, the Lender Parties lend to the Borrower up to
$715,000,000 to pay to the Sellers the cash consideration for the Acquisition,
to pay transaction fees and expenses and to refinance certain Existing Debt (as
hereinafter defined) of the Company and that, from time to time, the Lender
Parties lend to the Borrower and issue Letters of Credit for the account of the
Borrower to finance certain acquisitions on the terms and conditions set forth
herein and to provide working capital for the Borrower and its Subsidiaries. The
Lender Parties have indicated their willingness to agree to lend such amounts on
the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements contained herein, the parties hereto hereby
agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain 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):
"Acquisition" has the meaning specified in the Preliminary
Statements.
"Acquisition Advance" has the meaning specified in Section
2.01(e).
"Acquisition Borrowing" means a borrowing consisting of
simultaneous Acquisition Advances of the same Type made by the
Acquisition Lenders.
"Acquisition Commitment" means, with respect to any
Acquisition Lender at any time, the amount set forth opposite such
Lender's name on Schedule I hereto under the caption "Acquisition
Commitment" or, if such Lender has entered into one or more Assignments
and Acceptances, set forth for such Lender in the Register maintained
by the Administrative Agent pursuant to Section 8.07(d) as such
Lender's "Acquisition Commitment", as such amount may be reduced at or
prior to such time pursuant to Section 2.05.
<PAGE> 9
3
"Acquisition Facility" means, at any time, the aggregate
amount of the Acquisition Lenders' Acquisition Commitments at such
time.
"Acquisition Lender" means any Lender that has an Acquisition
Commitment.
"Acquisition Note" means a promissory note of the Borrower
payable to the order of any Acquisition Lender, in substantially the
form of Exhibit A-5 hereto, evidencing the indebtedness of the Borrower
to such Lender resulting from the Acquisition Advances made by such
Lender.
"Additional Acquisition Amount" means, at any time, $0 or, if
the Administrative Agent shall have received the relevant Financial
Statements and a certificate of a Designated Financial Officer
demonstrating a Pro Forma Senior Debt/EBITDA Ratio of less than or
equal to 2.5:1, an amount equal to the Additional Amount at such time.
"Additional Amount" means, at any time, a dollar amount
designated by the Borrower as the amount by which the Additional
Acquisition Amount is to increase at such time, but in no event shall
the aggregate amount so designated exceed $50,000,000.
"Adjusted EBITDA" means, at any time, in the case of any New
Center, the product of (a) the Average EBITDA Margin calculated as of
the end of the fiscal quarter immediately preceding the fiscal quarter
in which the time of the acquisition or construction of such New Center
(within the meaning of the definition of "New Center" contained in this
Section 1.01) occurs and (b) the Specified Revenues of such New Center.
"Administrative Agent" has the meaning specified in the
recital of parties to this Agreement.
"Administrative Agent's Account" means the account of the
Administrative Agent maintained by the Administrative Agent with
Citibank at its office at 399 Park Avenue, New York, New York 10043,
Account No. 3885-8061, Attention: Alexandra Lozovsky.
"Advance" means a Term Loan Advance, an AXELs Series A
Advance, an AXELs Series B Advance, a Working Capital Advance, an
Acquisition Advance or a Letter of Credit Advance.
<PAGE> 10
4
"Affiliate" means, as to any Person, any other Person that,
directly or indirectly, controls, is controlled by or is under common
control with such Person or is a director or officer of such Person.
For purposes of this definition, the term "control" (including the
terms "controlling," "controlled by" and "under common control with")
of a Person means the possession, direct or indirect, of the power to
vote 5% or more of the Voting Stock of such Person or to direct or
cause the direction of the management and policies of such Person,
whether through the ownership of Voting Stock, by contract or
otherwise.
"Agents" has the meaning specified in the recital of parties
to this Agreement.
"AMF Bowling" means AMF Bowling, Inc., a Virginia corporation
and an indirect wholly owned Subsidiary of the Borrower.
"AMF Bowling Centers" means AMF Bowling Centers, Inc., a
Virginia corporation and an indirect wholly owned Subsidiary of the
Borrower.
"AMF Worldwide" means AMF Worldwide Bowling Centers Holdings
Inc., a Delaware corporation and an indirect wholly owned Subsidiary of
the Borrower.
"Amortization Amount A" means, at any time of determination,
an amount equal to (a) until the Availability Termination Date, 50% of
the amount by which the aggregate principal amount of the Acquisition
Advances outstanding at such time exceeds $75,000,000 but in any event
not less than zero, and (b) thereafter, 50% of the amount by which the
aggregate principal amount of the Acquisition Advances outstanding on
the Availability Termination Date (after giving effect to any
Acquisition Advances made on such date) exceeds $75,000,000 but in any
event not less than zero.
"Amortization Amount B" means, at any time of determination,
an amount equal to (a) until the Availability Termination Date, the
lesser of (i) $18,750,000 and (ii) 25% of the aggregate principal
amount of the Acquisition Advances outstanding at such time, and (b)
thereafter, the lesser of (i) $18,750,000 and (ii) 25% of the aggregate
principal amount of the Acquisition Advances outstanding on the
Availability Termination Date.
"Applicable Lending Office" means, with respect to each Lender
Party, such Lender Party's Domestic Lending Office in the case of a
Base Rate Advance and such Lender Party's Eurodollar Lending Office in
the case of a Eurodollar Rate Advance.
"Applicable Margin" means (a) 1.875% per annum for Base Rate
Advances and 2.875% per annum for Eurodollar Rate Advances outstanding
under the AXELs Series A Facility and 2.125% per annum for Base Rate
Advances and 3.125% per annum for Eurodollar Rate Advances outstanding
under the AXELs Series B Facility,
<PAGE> 11
5
and (b) (i) from the date hereof until the one-year anniversary of the
Closing Date hereof, 1.50% per annum for Base Rate Advances and 2.50%
per annum for Eurodollar Rate Advances outstanding under the Term Loan
Facility, the Working Capital Facility or the Acquisition Facility, as
the case may be, and (ii) thereafter, a percentage per annum determined
by reference to the Total Debt/EBITDA Ratio as set forth below:
<TABLE>
<CAPTION>
================================================================================
BASE RATE ADVANCES EURODOLLAR RATE ADVANCES
================================================================================
<S> <C> <C>
Level I
less than 3.5:1 0.00% 1.00%
Level II
3.5:1 or greater, 0.50% 1.50%
but less than 4.25:1
Level III
4.25:1 or greater, 1.00% 2.00%
but less than 4.75:1
Level IV
4.75:1 or greater, 1.25% 2.25%
but less than 5.25:1
Level V
5.25:1 or greater 1.50% 2.50%
================================================================================
</TABLE>
The Applicable Margin for each Base Rate Advance shall be determined by
reference to the ratio in effect from time to time and the Applicable
Margin for each Eurodollar Rate Advance shall be determined by
reference to the ratio in effect on the first day of each Interest
Period for such Advance; provided, however, that (A) no change in the
Applicable Margin shall be effective until three Business Days after
the date on which the Administrative Agent receives the relevant
Financial Statements and a certificate of a Designated Financial
Officer demonstrating such ratio, and (B) the Applicable Margin shall
be at Level V for so long as the Borrower has not submitted to the
Administrative Agent the information described in clause (A) of this
proviso as and when required under Section 5.03(b) or (c), as the case
may be.
<PAGE> 12
6
"Applicable Percentage" means (a) from the date hereof until
the one-year anniversary of the Closing Date, 0.5% per annum, and (b)
thereafter, 0.5% per annum, or, if the Total Debt/EBITDA Ratio for the
immediately preceding 12-month period reflected in the relevant
Financial Statements shall be less than 4.00:1 and the Administrative
Agent shall have received a certificate of a Designated Financial
Officer demonstrating such ratio, 0.375% per annum.
"Applicable Unavailable Acquisition Percentage" means (a) from
the date hereof until the one-year anniversary of the Closing Date,
0.375% per annum, and (b) thereafter, 0.375% per annum, or, if the
Total Debt/EBITDA Ratio for the immediately preceding 12-month period
reflected in the relevant Financial Statements shall be less than
4.00:1 and the Administrative Agent shall have received a certificate
of a Designated Financial Officer demonstrating such ratio, 0.25% per
annum.
"Appropriate Lender" means, at any time, with respect to (a)
any of the Term Loan Facility, AXELs Series A Facility, AXELs Series B
Facility, Working Capital Facility or Acquisition Facility, a Lender
that has a Commitment with respect to such Facility at such time and
(b) the Letter of Credit Facility, (i) any Issuing Bank and (ii) if the
other Working Capital Lenders have made Letter of Credit Advances
pursuant to Section 2.03(c) that are outstanding at such time, each
such other Working Capital Lender.
"Arrangers" has the meaning specified in the recital of
parties to this Agreement.
"Assignment and Acceptance" means an assignment and acceptance
entered into by a Lender Party and an Eligible Assignee, and accepted
by the Administrative Agent, in accordance with Section 8.07 and in
substantially the form of Exhibit C hereto.
"Availability Termination Date" means, with respect to the
Acquisition Facility, the earlier of the Termination Date and the date
that is 3-1/2 years after the Closing Date.
"Available Amount" of any Letter of Credit means, at any time,
the maximum amount available to be drawn under such Letter of Credit at
such time (assuming compliance at such time with all conditions to
drawing).
"Average EBITDA Margin" means, at any time of determination,
an amount equal to (a) the sum of Consolidated EBITDA of AMF Bowling
Centers and its Subsidiaries and Consolidated EBITDA of AMF Worldwide
and its Subsidiaries divided by (b) the sum of Consolidated revenues of
AMF Bowling Centers and its Subsidiaries and Consolidated revenues of
AMF Worldwide and its Subsidiaries, in each case for the 12-month
period reflected in the most recent Financial Statements.
<PAGE> 13
7
"AXELs Series A Advance" has the meaning specified in Section
2.01(b).
"AXELs Series A Borrowing" means a borrowing consisting of
simultaneous AXELs Series A Advances of the same Type made by the AXELs
Series A Lenders.
"AXELs Series A Commitment" means, with respect to any AXELs
Series A Lender at any time, the amount set forth opposite such
Lender's name on Schedule I hereto under the caption "AXELs Series A
Commitment" or, if such Lender has entered into one or more Assignments
and Acceptances, set forth for such Lender in the Register maintained
by the Administrative Agent pursuant to Section 8.07(d) as such
Lender's "AXELs Series A Commitment", as such amount may be reduced at
or prior to such time pursuant to Section 2.05.
"AXELs Series A Facility" means, at any time, the aggregate
amount of the AXELs Series A Lenders' AXELs Series A Commitments at
such time.
"AXELs Series A Lender" means any Lender that has an AXELs
Series A Commitment.
"AXELs Series A Note" means a promissory note of the Borrower
payable to the order of any AXELs Series A Lender, in substantially the
form of Exhibit A-2 hereto, evidencing the indebtedness of the Borrower
to such Lender resulting from the AXELs Series A Advance made by such
Lender.
"AXELs Series B Advance" has the meaning specified in Section
2.01(c).
"AXELs Series B Borrowing" means a borrowing consisting of
simultaneous AXELs Series B Advances of the same Type made by the AXELs
Series B Lenders.
"AXELs Series B Commitment" means, with respect to any AXELs
Series B Lender at any time, the amount set forth opposite such
Lender's name on Schedule I hereto under the caption "AXELs Series B
Commitment" or, if such Lender has entered into one or more Assignments
and Acceptances, set forth for such Lender in the Register maintained
by the Administrative Agent pursuant to Section 8.07(d) as such
Lender's "AXELs Series B Commitment", as such amount may be reduced at
or prior to such time pursuant to Section 2.05.
"AXELs Series B Facility" means, at any time, the aggregate
amount of the AXELs Series B Lenders' AXELs Series B Commitments at
such time.
"AXELs Series B Lender" means any Lender that has an AXELs
Series B Commitment.
<PAGE> 14
8
"AXELs Series B Note" means a promissory note of the Borrower
payable to the order of any AXELs Series B Lender, in substantially the
form of Exhibit A-3 hereto, evidencing the indebtedness of the Borrower
to such Lender resulting from the AXELs Series B Advance made by such
Lender.
"Bank Hedge Agreement" means any interest rate Hedge Agreement
required or permitted under Article V that is entered into by and
between the Borrower and any Lender Party.
"Base Rate" means a fluctuating interest rate per annum in
effect from time to time, which rate per annum shall at all times be
equal to the highest of:
(a) the rate of interest announced publicly by
Citibank in New York, New York, from time to time, as
Citibank's base rate;
(b) the sum (adjusted to the nearest 1/4 of 1% or, if
there is no nearest 1/4 of 1%, to the next higher 1/4 of 1%)
of (i) 1/2 of 1% per annum, plus (ii) the rate obtained by
dividing (A) the latest three-week moving average of secondary
market morning offering rates in the United States for
three-month certificates of deposit of major United States
money market banks, such three-week moving average (adjusted
to the basis of a year of 360 days) being determined weekly on
each Monday (or, if such day is not a Business Day, on the
next succeeding Business Day) for the three-week period ending
on the previous Friday by Citibank on the basis of such rates
reported by certificate of deposit dealers to and published by
the Federal Reserve Bank of New York or, if such publication
shall be suspended or terminated, on the basis of quotations
for such rates received by Citibank from three New York
certificate of deposit dealers of recognized standing selected
by Citibank, by (B) a percentage equal to 100% minus the
average of the daily percentages specified during such
three-week period by the Board of Governors of the Federal
Reserve System (or any successor) for determining the maximum
reserve requirement (including, but not limited to, any
emergency, supplemental or other marginal reserve requirement)
for Citibank with respect to liabilities consisting of or
including (among other liabilities) three-month U.S. dollar
non-personal time deposits in the United States, plus (iii)
the average during such three-week period of the annual
assessment rates estimated by Citibank for determining the
then current annual assessment payable by Citibank to the
Federal Deposit Insurance Corporation (or any successor) for
insuring U.S. dollar deposits of Citibank in the United
States; and
(c) 1/2 of 1% per annum above the Federal Funds Rate.
<PAGE> 15
9
"Base Rate Advance" means an Advance that bears interest as
provided in Section 2.07(a)(i).
"Blocked Accounts" has the meaning specified in the Security
Agreement.
"Borrower" has the meaning specified in the recital of parties
to this Agreement.
"Borrower's Account" means the account of the Borrower
maintained by the Borrower with The Chase Manhattan Bank, N.A. at its
office at One Chase Plaza, New York, New York 10081, Account No.
001-71281-9-01 or such other account of the Borrower maintained by the
Borrower in the United States as the Borrower shall designate in
writing to the Administrative Agent.
"Borrowing" means a Term Loan Borrowing, an AXELs Series A
Borrowing, an AXELs Series B Borrowing, a Working Capital Borrowing or
an Acquisition Borrowing.
"Business Day" means a day of the year on which banks are not
required or authorized by law to close in New York City and, if the
applicable Business Day relates to any Eurodollar Rate Advances, on
which dealings in U.S. dollar deposits are carried on in the London
interbank market.
"Capital Expenditures" means, for any Person for any period,
the sum of (a) all expenditures made, directly or indirectly, by such
Person or any of its Subsidiaries during such period for equipment,
fixed assets, real property or improvements, or for replacements or
substitutions therefor or additions thereto, that have been or should
be, in accordance with GAAP, reflected as additions to property, plant
or equipment on a Consolidated balance sheet of such Person or have a
useful life of more than one year plus (b) the aggregate principal
amount of all Debt (including Obligations under Capitalized Leases)
assumed or incurred in connection with any such expenditures; provided,
however, that the following shall in any event be excluded from the
definition of Capital Expenditures: any such expenditures made with, or
subsequently reimbursed out of, the proceeds of insurance, condemnation
awards (or payments in lieu thereof), indemnity payments or payments in
respect of judgments or settlements received from third parties for
purposes of replacing or repairing the assets in respect of which such
proceeds, awards or payments were received, so long as such
expenditures are commenced within 3 months of the later of the
occurrence of the damage to or loss of the assets being replaced or
repaired and the receipt of such proceeds, awards or payments in
respect thereof; provided further, however, that notwithstanding
anything contained herein, Capital Expenditures shall not include any
Investments.
<PAGE> 16
10
"Capitalized Leases" means all leases that have been or should
be, in accordance with GAAP, recorded as capitalized leases.
"Cash Collateral Account" has the meaning specified in the
Security Agreement.
"Cash Equivalents" means any of the following, to the extent
owned by the Borrower or any of its Subsidiaries free and clear of all
Liens other than Liens created under the Collateral Documents and
having a maturity of not greater than 90 days from the date of
acquisition thereof: (a) readily marketable direct obligations of the
Government of the United States or any agency or instrumentality
thereof or obligations unconditionally guaranteed by the full faith and
credit of the Government of the United States, (b) insured certificates
of deposit of or time deposits with any commercial bank that is a
Lender Party or a member of the Federal Reserve System, issues (or the
parent of which issues) commercial paper rated as described in clause
(c), is organized under the laws of the United States or any State
thereof and has combined capital and surplus of at least $1 billion,
(c) commercial paper in an aggregate amount of no more than $10,000,000
per issuer outstanding at any time, issued by any corporation organized
under the laws of any State of the United States and rated at least
"Prime-1" (or the then equivalent grade) by Moody's Investors Service,
Inc. or "A-1" (or the then equivalent grade) by Standard & Poor's
Ratings Group or (d) Investments in money market funds that invest
primarily in Cash Equivalents of the types described in clauses (a),
(b) and (c) above.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to time.
"CERCLIS" means the Comprehensive Environmental Response,
Compensation and Liability Information System maintained by the U.S.
Environmental Protection Agency.
"Change of Control" means the occurrence of any of the
following: (a) at any time prior to an IPO, the Goldman Investors shall
at any time for any reason cease to own beneficially Voting Stock of
Parent representing 51% or more of the combined voting power of all
Voting Stock of Parent; (b) at any time after an IPO, the Goldman
Investors shall at any time for any reason cease to own beneficially
Voting Stock of Parent representing 35% or more of the combined voting
power of all Voting Stock of Parent; (c) at any time after an IPO, any
Person or two or more Persons acting in concert other than the Goldman
Investors shall have acquired at any time beneficial ownership (within
the meaning of Rule 13d-3 of the Securities and Exchange Commission
under the Securities Exchange Act of 1934), directly or indirectly, of
Voting Stock of Parent (or other securities convertible into such
Voting Stock) representing more of the combined voting power of all
Voting Stock of Parent than is beneficially owned by the Goldman
Investors at such time; (d) during any period of
<PAGE> 17
11
up to 24 consecutive months, commencing after the date of this
Agreement, individuals who at the beginning of such 24-month period
were directors of Parent shall cease for any reason to constitute a
majority of the board of directors of Parent (except to the extent that
individuals who at the beginning of such 24-month period were replaced
by individuals (x) elected by a majority of the remaining members of
the board of directors of Parent or (y) nominated for election by a
majority of the remaining members of the board of directors of Parent
and thereafter elected as directors by the shareholders of Parent); or
(e) a "Change of Control" as defined in the Senior Subordinated Notes
Indenture or the Senior Subordinated Discount Notes Indenture.
"China Joint Venture" means AMF Garden Hotel Bowling Center
Company, a company organized under the laws of the People's Republic of
China by AMF Bowling Centers (China) Company, a Subsidiary of the
Borrower, and the Guangzhou Garden Hotel.
"Citibank" has the meaning specified in the recital of parties
to this Agreement.
"Citicorp" has the meaning specified in the recital of parties
to this Agreement.
"Closing Date" means the date on which the Initial Extension
of Credit occurs following satisfaction or waiver of the conditions set
forth in Sections 3.01 and 3.02.
"Collateral" means all "Collateral" referred to in the
Collateral Documents and all other property that is or is intended to
be subject to any Lien in favor of the Collateral Agent for the benefit
of the Secured Parties.
"Collateral Agent" has the meaning specified in the recital of
parties to this Agreement.
"Collateral Documents" means the Security Agreement, the
Intellectual Property Security Agreement, the Mortgages and any other
agreement that creates or purports to create a Lien in favor of the
Collateral Agent for the benefit of the Secured Parties.
"Commitment" means a Term Loan Commitment, an AXELs Series A
Commitment, an AXELs Series B Commitment, a Working Capital Commitment,
an Acquisition Commitment or a Letter of Credit Commitment.
"Company" has the meaning specified in the Preliminary
Statements.
<PAGE> 18
12
"Confidential Information" means information that the Borrower
furnishes to any Agent or any Lender Party in a writing designated as
confidential but does not include any such information that is or
becomes generally available to the public other than as a result of a
breach by any Agent or any Lender Party of its obligations hereunder or
that is or becomes available to such Agent or such Lender Party from a
source other than the Borrower that is not, to the best of such Agent's
or such Lender Party's knowledge, acting in violation of a
confidentiality agreement with the Borrower.
"Consolidated" refers to the consolidation of accounts in
accordance with GAAP.
"Conversion", "Convert" and "Converted" each refer to a
conversion of Advances of one Type into Advances of the other Type
pursuant to Section 2.09 or 2.10.
"Current Assets" of any Person means all assets of such Person
that would, in accordance with GAAP, be classified as current assets of
a company conducting a business the same as or similar to that of such
Person, after deducting adequate reserves in each case in which a
reserve is proper in accordance with GAAP.
"Current Liabilities" of any Person means (a) all Debt of such
Person that by its terms is payable on demand or matures within one
year after the date of determination (excluding any Debt renewable or
extendible, at the option of such Person, to a date more than one year
from such date or arising under a revolving credit or similar agreement
that obligates the lender or lenders to extend credit during a period
of more than one year from such date), (b) all amounts of Funded Debt
of such Person required to be paid or prepaid within one year after
such date and (c) all other items (including taxes accrued as
estimated) that in accordance with GAAP would be classified as current
liabilities of such Person.
"Debt" of any Person means, without duplication, (a) all
indebtedness of such Person for borrowed money, (b) all Obligations of
such Person for the deferred purchase price of property or services
(other than trade payables not overdue by more than 60 days incurred in
the ordinary course of such Person's business), (c) all Obligations of
such Person evidenced by notes, bonds, debentures or other similar
instruments, (d) all Obligations of such Person created or arising
under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the event of
default are limited to repossession or sale of such property), (e) all
Obligations of such Person as lessee under Capitalized Leases, (f) all
Obligations, contingent or otherwise, of such Person under acceptance,
letter of credit or similar facilities, (g) all Obligations, contingent
or otherwise, of such Person to purchase, redeem, retire, defease or
otherwise make any payment in respect of any
<PAGE> 19
13
capital stock of or other ownership or profit interest in such Person
or any other Person or any warrants, rights or options to acquire such
capital stock, valued, in the case of Redeemable Preferred Stock, at
the greater of its voluntary or involuntary liquidation preference plus
accrued and unpaid dividends, (h) all Obligations of such Person in
respect of Hedge Agreements, (i) all Obligations of such Person in
respect of long-term non-competition agreements or arrangements, (j)
all Debt of others referred to in clauses (a) through (i) above or
clause (k) below guaranteed directly or indirectly in any manner by
such Person, or in effect guaranteed directly or indirectly by such
Person through an agreement (i) to pay or purchase such Debt or to
advance or supply funds for the payment or purchase of such Debt, (ii)
to purchase, sell or lease (as lessee or lessor) property, or to
purchase or sell services, primarily for the purpose of enabling the
debtor to make payment of such Debt or to assure the holder of such
Debt against loss, (iii) to supply funds to or in any other manner
invest in the debtor (including any agreement to pay for property or
services irrespective of whether such property is received or such
services are rendered) or (iv) otherwise to assure a creditor against
loss, and (k) all Debt referred to in clauses (a) through (j) above of
another Person secured by (or for which the holder of such Debt has an
existing right, contingent or otherwise, to be secured by) any Lien on
property (including, without limitation, accounts and contract rights)
owned by such Person, even though such Person has not assumed or become
liable for the payment of such Debt.
"Default" means any Event of Default or any event that would
constitute an Event of Default but for the requirement that notice be
given or time elapse or both.
"Defaulted Advance" means, with respect to any Lender Party at
any time, the portion of any Advance required to be made by such Lender
Party to the Borrower pursuant to Section 2.01 or 2.02 at or prior to
such time which has not been made by such Lender Party or by the
Administrative Agent for the account of such Lender Party pursuant to
Section 2.02(d) as of such time. In the event that a portion of a
Defaulted Advance shall be deemed made pursuant to Section 2.15(a), the
remaining portion of such Defaulted Advance shall be considered a
Defaulted Advance originally required to be made pursuant to Section
2.01 on the same date as the Defaulted Advance so deemed made in part.
"Defaulted Amount" means, with respect to any Lender Party at
any time, any amount required to be paid by such Lender Party to any
Agent or any other Lender Party hereunder or under any other Loan
Document at or prior to such time which has not been so paid as of such
time, including, without limitation, any amount required to be paid by
such Lender Party to (a) any Issuing Bank pursuant to Section 2.03(c)
to purchase a portion of a Letter of Credit Advance made by such
Issuing Bank, (b) the Administrative Agent pursuant to Section 2.02(d)
to reimburse the Administrative Agent for the amount of any Advance
made by the Administrative Agent for the account of such Lender Party,
(c) any other Lender Party pursuant to
<PAGE> 20
14
Section 2.13 to purchase any participation in Advances owing to such
other Lender Party and (d) any Agent or any Issuing Bank pursuant to
Section 7.05 to reimburse such Agent or such Issuing Bank for such
Lender Party's ratable share of any amount required to be paid by the
Lender Parties to such Agent or such Issuing Bank as provided therein.
In the event that a portion of a Defaulted Amount shall be deemed paid
pursuant to Section 2.15(b), the remaining portion of such Defaulted
Amount shall be considered a Defaulted Amount originally required to be
paid hereunder or under any other Loan Document on the same date as the
Defaulted Amount so deemed paid in part.
"Defaulting Lender" means, at any time, any Lender Party that,
at such time, (a) owes a Defaulted Advance or a Defaulted Amount or (b)
shall take any action or be the subject of any action or proceeding of
a type described in Section 6.01(f).
"Designated Financial Officer" means any of the President or
Vice President-Finance of AMF Bowling or AMF Bowling Centers or the
chief financial officer of the Borrower.
"Domestic Lending Office" means, with respect to any Lender
Party, the office of such Lender Party specified as its "Domestic
Lending Office" opposite its name on Schedule I hereto or in the
Assignment and Acceptance pursuant to which it became a Lender Party,
as the case may be, or such other office of such Lender Party as such
Lender Party may from time to time specify to the Borrower and the
Administrative Agent.
"EBITDA" means, for any Person, for any period, the sum,
determined on a Consolidated basis and without duplication, of (a) net
income (or net loss), (b) interest expense, (c) income tax expense, (d)
depreciation expense, (e) amortization expense, (f) the aggregate
amount of a one-time bonus and "phantom" stock payments (and payroll
taxes associated therewith) made, in each case, to employees, former
employees, former owners and former consultants of the Company and its
Subsidiaries and the aggregate amount of professional and similar fees
incurred by the Sellers in connection with the Acquisition, provided
that, in each case, such amount shall have been funded by the Sellers
at or prior to the consummation of the Acquisition, (g) non-cash
foreign exchange losses, if any, (h) extraordinary or non-recurring
losses, if any, included in determining such net income (or net loss),
(i) other non-operating expense, if any, included in determining such
net income (or net loss), and (j) Other Additions for such period, less
the sum of (i) non-cash foreign exchange gains, if any, (ii)
extraordinary or non-recurring gains, if any, included in determining
such net income (or net loss), and (iii) other non-operating income, if
any, included in determining such net income (or net loss), in each
case of such Person and its Subsidiaries, determined, except in the
case of clause (j) above, in accordance with GAAP for such period.
<PAGE> 21
15
"EBITDA Adjustment Amount" means, at any time of
determination, an amount equal to 80% of the aggregate amount of the
EBITDA of each bowling center acquired or constructed by the Borrower
or any of its Subsidiaries after the Closing Date and acquired or
constructed at least 15 months prior to such time of determination, as
reflected in the certificate most recently required to be furnished to
the Lender Parties pursuant to Section 5.03(b) or (c), as the case may
be, provided that for purposes hereof, the time of any such acquisition
shall be the date of consummation of such acquisition and the time of
any such construction shall be the date of the opening of such bowling
center for business.
"ECF Percentage" means 75%, or, if the Total Debt/EBITDA Ratio
for the immediately preceding 12-month period reflected in the relevant
Financial Statements shall be less than 4.0:1 and the Administrative
Agent shall have received a certificate of a Designated Financial
Officer demonstrating such ratio, 50%.
"Eligible Assignee" means (a) with respect to any Facility
(other than the Letter of Credit Facility), (i) a Lender; (ii) an
Affiliate of a Lender; (iii) a commercial bank organized under the laws
of the United States, or any State thereof, and having a combined
capital and surplus of at least $500,000,000, in the case of the
Acquisition Facility and the Working Capital Facility, and at least
$100,000,000, in the case of the Term Loan Facility, the AXELs Series A
Facility and the AXELs Series B Facility; (iv) a savings and loan
association or savings bank organized under the laws of the United
States, or any State thereof, and having a combined capital and surplus
of at least $500,000,000, in the case of the Acquisition Facility and
the Working Capital Facility, and at least $100,000,000, in the case of
the Term Loan Facility, the AXELs Series A Facility and the AXELs
Series B Facility; (v) a commercial bank organized under the laws of
any other country that is a member of the OECD or has concluded special
lending arrangements with the International Monetary Fund associated
with its General Arrangements to Borrow, or a political subdivision of
any such country, and having a combined capital and surplus of at least
$500,000,000, in the case of the Acquisition Facility and the Working
Capital Facility, and at least $100,000,000, in the case of the Term
Loan Facility, the AXELs Series A Facility and the AXELs Series B
Facility, so long as such bank is acting through a branch or agency
located in the United States; (vi) the central bank of any country that
is a member of the OECD; (vii) a finance company, insurance company or
other financial institution or fund (whether a corporation,
partnership, trust or other entity) that is engaged in making,
purchasing or otherwise investing in commercial loans in the ordinary
course of its business and having a combined capital and surplus of at
least $500,000,000, in the case of the Acquisition Facility and the
Working Capital Facility, and at least $100,000,000, in the case of the
Term Loan Facility, the AXELs Series A Facility and the AXELs Series B
Facility; and (viii) any other Person approved by the Administrative
Agent and the Borrower, such approval not to be unreasonably withheld
or delayed, and (b) with respect to the Letter of Credit Facility, a
Person that is an Eligible Assignee under subclause (iii) or (v) of
<PAGE> 22
16
clause (a) of this definition and is approved by the Administrative
Agent and, so long as no Default shall have occurred and be continuing,
by the Borrower, such approval not to be unreasonably withheld or
delayed; provided, however, that neither any Loan Party nor any
Affiliate of a Loan Party shall qualify as an Eligible Assignee under
this definition.
"Environmental Action" means any action, suit, demand, demand
letter, claim, notice of non-compliance or violation, notice of
liability or potential liability, investigation, proceeding, consent
order or consent agreement pursuant to any Environmental Law or any
Environmental Permit or relating to any Hazardous Material, including,
without limitation, (a) by any governmental or regulatory authority for
enforcement, cleanup, removal, response, remedial or other actions or
damages and (b) by any governmental or regulatory authority or third
party for damages, contribution, indemnification, cost recovery,
compensation or injunctive relief.
"Environmental Law" means any applicable federal, state, local
or foreign statute, law, ordinance, rule, regulation, code, order,
writ, judgment, injunction, decree, judicial decision, or agency
interpretation, policy or guidance that has the force and effect of
law, relating to pollution or protection of the environment, public
health, safety or natural resources, including, without limitation,
those relating to the use, handling, transportation, treatment,
storage, disposal, release or discharge of Hazardous Materials.
"Environmental Permit" means any permit, approval,
identification number, license or other authorization from any
governmental or regulatory authority required under any Environmental
Law.
"Equity Investors" means the Persons listed under the caption
"Equity Investors" on Schedule 4.01(a).
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder.
"ERISA Affiliate" means any Person that for purposes of Title
IV of ERISA is a member of the controlled group of any Loan Party, or
under common control with any Loan Party, within the meaning of Section
414 of the Internal Revenue Code.
"ERISA Event" means (a) (i) the occurrence of a reportable
event, within the meaning of Section 4043 of ERISA, with respect to any
Plan unless the 30-day notice requirement with respect to such event
has been waived by the PBGC, or (ii) the requirements of subsection (1)
of Section 4043(b) of ERISA (without regard to subsection (2) of such
Section) are met with respect to a contributing sponsor, as
<PAGE> 23
17
defined in Section 4001(a)(13) of ERISA, of a Plan, and an event
described in paragraph (9), (10), (11), (12) or (13) of Section 4043(c)
of ERISA is reasonably expected to occur with respect to such Plan
within the following 30 days; (b) the application for a minimum funding
waiver with respect to a Plan; (c) the provision by the administrator
of any Plan of a notice of intent to terminate such Plan, pursuant to
Section 4041(a)(2) of ERISA (including any such notice with respect to
a plan amendment referred to in Section 4041(e) of ERISA); (d) the
cessation of operations at a facility of any Loan Party or any ERISA
Affiliate in the circumstances described in Section 4062(e) of ERISA;
(e) the withdrawal by any Loan Party or any ERISA Affiliate from a
Multiple Employer Plan during a plan year for which it was a
substantial employer, as defined in Section 4001(a)(2) of ERISA; (f)
the conditions for imposition of a lien under Section 302(f) of ERISA
shall have been met with respect to any Plan; (g) the adoption of an
amendment to a Plan requiring the provision of security to such Plan
pursuant to Section 307 of ERISA; or (h) the institution by the PBGC of
proceedings to terminate a Plan pursuant to Section 4042 of ERISA, or
the occurrence of any event or condition described in Section 4042 of
ERISA that constitutes grounds for the termination of, or the
appointment of a trustee to administer, such Plan.
"Eurocurrency Liabilities" has the meaning specified in
Regulation D of the Board of Governors of the Federal Reserve System,
as in effect from time to time.
"Eurodollar Lending Office" means, with respect to any Lender
Party, the office of such Lender Party specified as its "Eurodollar
Lending Office" opposite its name on Schedule I hereto or in the
Assignment and Acceptance pursuant to which it became a Lender Party
(or, if no such office is specified, its Domestic Lending Office), or
such other office of such Lender Party as such Lender Party may from
time to time specify to the Borrower and the Administrative Agent.
"Eurodollar Rate" means, for any Interest Period for all
Eurodollar Rate Advances comprising part of the same Borrowing, an
interest rate per annum equal to the rate per annum obtained by
dividing (a) the rate per annum at which deposits in U.S. dollars are
offered by the principal office of Citibank in London, England to prime
banks in the London interbank market at 11:00 A.M. (London time) two
Business Days before the first day of such Interest Period in an amount
substantially equal to Citibank's Eurodollar Rate Advance comprising
part of such Borrowing to be outstanding during such Interest Period
(or, if Citibank shall not have such a Eurodollar Rate Advance,
$1,000,000) and for a period equal to such Interest Period by (b) a
percentage equal to 100% minus the Eurodollar Rate Reserve Percentage
for such Interest Period.
"Eurodollar Rate Advance" means an Advance that bears interest
as provided in Section 2.07(a)(ii).
<PAGE> 24
18
"Eurodollar Rate Reserve Percentage" for any Interest Period
for all Eurodollar Rate Advances comprising part of the same Borrowing
means the reserve percentage applicable two Business Days before the
first day of such Interest Period under regulations issued from time to
time by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement (including,
without limitation, any emergency, supplemental or other marginal
reserve requirement) for a member bank of the Federal Reserve System in
New York City with respect to liabilities or assets consisting of or
including Eurocurrency Liabilities (or with respect to any other
category of liabilities that includes deposits by reference to which
the interest rate on Eurodollar Rate Advances is determined) having a
term equal to such Interest Period.
"Events of Default" has the meaning specified in Section 6.01.
"Excess Cash Flow" means, for any Fiscal Year, determined in
accordance with GAAP for the Borrower and its Subsidiaries on a
Consolidated basis and without duplication:
(a) Consolidated EBITDA of the Borrower and its
Subsidiaries for such Fiscal Year less (to the extent included
in the calculation of EBITDA) any Extraordinary Receipts
received by the Borrower or any of its Subsidiaries during
such Fiscal Year less extraordinary or non-recurring cash
losses in such Fiscal Year plus extraordinary or non-recurring
cash gains in such Fiscal Year, less
(b) the sum of
(i) Consolidated cash interest expense
payable by the Borrower and its Subsidiaries in such
Fiscal Year plus
(ii) the aggregate amount of Capital
Expenditures made pursuant to Section 5.02(q) by the
Borrower and its Subsidiaries during such Fiscal Year
(but not exceeding the amount permitted to be made in
such Fiscal Year pursuant to Section 5.02(q)) plus
(iii) optional prepayments and scheduled
payments of principal of Debt of the Borrower and its
Subsidiaries in such Fiscal Year (including, without
limitation, prepayments of the Working Capital
Facility to the extent that the Working Capital
Facility is permanently reduced) plus
<PAGE> 25
19
(iv) cash taxes paid by the Borrower and its
Subsidiaries in such Fiscal Year plus
(c) if there was a net increase in Consolidated
Current Liabilities of the Borrower and its Subsidiaries
during such Fiscal Year, the amount of such net increase plus
(d) if there was a net decrease in Consolidated
Current Assets (excluding cash and Cash Equivalents) of the
Borrower and its Subsidiaries during such Fiscal Year, the
amount of such net decrease less
(e) if there was a net decrease in Consolidated
Current Liabilities of the Borrower and its Subsidiaries
during such Fiscal Year, the amount of such net decrease less
(f) if there was a net increase in Consolidated
Current Assets (excluding cash and Cash Equivalents) of the
Borrower and its Subsidiaries during such Fiscal Year, the
amount of such net increase.
"Excess Cash Flow Amount" means (a) for each of the first two
Fiscal Years ending after the Closing Date, an amount equal to the
lesser of (i) the amount by which Excess Cash Flow for such Fiscal Year
exceeds $10,000,000 and (ii) an amount equal to the product of the ECF
Percentage and Excess Cash Flow for such Fiscal Year, (b) for the third
Fiscal Year ending after the Closing Date, an amount equal to the
lesser of (i) the amount by which Excess Cash Flow for such Fiscal Year
exceeds $20,000,000 and (ii) an amount equal to the product of the ECF
Percentage and Excess Cash Flow for such Fiscal Year and (c) for each
Fiscal Year ending thereafter, an amount equal to the product of the
ECF Percentage and Excess Cash Flow for such Fiscal Year.
"Existing Debt" means Debt of the Company and its Subsidiaries
outstanding immediately before giving effect to the Acquisition.
"Extraordinary Receipt" means any cash received by or paid to
or for the account of any Person consisting of tax refunds, pension
plan reversions, proceeds of insurance (other than proceeds of business
interruption insurance to the extent such proceeds constitute
compensation for lost earnings), condemnation awards (and payments in
lieu thereof), indemnity payments and payments in respect of judgments
(including, without limitation, punitive damages); provided, however,
that an Extraordinary Receipt shall not include cash receipts received
from proceeds of insurance, condemnation awards (or payments in lieu
thereof), indemnity payments or
<PAGE> 26
20
payments in respect of judgments or settlements (i) to the extent that
such proceeds, awards or payments in respect of loss or damage to
equipment, fixed assets or real property are applied to replace or
repair such equipment, fixed assets or real property to the extent such
replacement or repair is not prohibited under the terms of the
Collateral Documents, so long as such application is commenced within 3
months after the later of the occurrence of such loss or damage and the
receipt of such proceeds, awards or payments in respect thereof or (ii)
to the extent that such proceeds, awards or payments reimburse such
Person for the prior payment of out-of-pocket costs.
"Facility" means the Term Loan Facility, the AXELs Series A
Facility, the AXELs Series B Facility, the Acquisition Facility, the
Working Capital Facility or the Letter of Credit Facility.
"Federal Funds Rate" means, for any period, a fluctuating
interest rate per annum 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 that is a
Business Day, the average of the quotations for such day for such
transactions received by the Administrative Agent from three Federal
funds brokers of recognized standing selected by it.
"Financial Statements" means, at any time, the most recent
financial statements furnished, or required to be furnished, by the
Borrower to the Lender Parties pursuant to Section 5.03(b) or (c), as
the case may be.
"First Prepayment Date" has the meaning specified in Section
2.06(b)(iv).
"Fiscal Year" means a fiscal year of the Borrower and its
Consolidated Subsidiaries ending on December 31 in any calendar year.
"Foreign Subsidiary" means a Subsidiary of the Borrower
organized under the laws of a country other than the United States or
any State thereof.
"Funded Debt" of any Person means Debt in respect of the
Advances, in the case of the Borrower, and all other Debt of such
Person that by its terms matures more than one year after the date of
its creation or matures within one year from such date but is renewable
or extendible, at the option of such Person, to a date more than one
year after such date or arises under a revolving credit or similar
agreement that
<PAGE> 27
21
obligates the lender or lenders to extend credit during a period of
more than one year after such date, including, without limitation, all
amounts of Funded Debt of such Person required to be paid or prepaid
within one year after the date of determination.
"GAAP" has the meaning specified in Section 1.03.
"Goldman" has the meaning specified in the recital of parties
to this Agreement.
"Goldman Investors" has the meaning specified in the
Preliminary Statements.
"Guaranties" means the Holdings Guaranty, the Subsidiary
Guaranty and any other guaranty delivered pursuant to Section 5.01(n).
"Guarantors" means Holdings and the Subsidiary Guarantors.
"Hazardous Materials" means (a) petroleum or petroleum
products, by-products or breakdown products, radioactive materials,
asbestos-containing materials, polychlorinated biphenyls and radon gas
and (b) any other chemicals, materials or substances designated,
classified or regulated as hazardous or toxic or as a pollutant or
contaminant under any Environmental Law.
"Hedge Agreements" means interest rate swap, cap or collar
agreements, interest rate future or option contracts, currency swap
agreements, currency future or option contracts and other similar
agreements.
"Hedge Bank" means any Lender Party in its capacity as a party
to a Bank Hedge Agreement.
"Holdings" has the meaning specified in the Preliminary
Statements.
"Holdings Guaranty" has the meaning specified in Section
3.01(p)(x).
"Indemnified Party" has the meaning specified in Section
8.04(b).
"Information Memorandum" means the information memorandum
dated February 1996 relating to the Borrower and the Company and used
by the Arrangers and the Syndication Agent in connection with the
syndication of the Commitments, as amended or supplemented from time to
time in writing.
<PAGE> 28
22
"Initial Extension of Credit" means the earlier to occur of
the initial Borrowing and the initial issuance of a Letter of Credit
hereunder.
"Initial Issuing Banks" has the meaning specified in the
recital of parties to this Agreement.
"Initial Lenders" has the meaning specified in the recital of
parties to this Agreement.
"Insufficiency" means, with respect to any Plan, the amount,
if any, of its unfunded benefit liabilities, as defined in Section
4001(a)(18) of ERISA.
"Intellectual Property Security Agreement" has the meaning
specified in Section 3.01(p)(viii).
"Interest Period" means, for each Eurodollar Rate Advance
comprising part of the same Borrowing, the period commencing on the
date of such Eurodollar Rate Advance or the date of the Conversion of
any Base Rate Advance into such Eurodollar Rate Advance, and ending on
the last day of the period selected by the Borrower pursuant to the
provisions below and, thereafter, each subsequent period commencing on
the last day of the immediately preceding Interest Period and ending on
the last day of the period selected by the Borrower pursuant to the
provisions below. The duration of each such Interest Period shall be
one, two, three or six months, as the Borrower may, upon notice
received by the Administrative Agent not later than 11:00 A.M. (New
York City time) on the third Business Day prior to the first day of
such Interest Period, select; provided, however, that:
(a) the Borrower may not select any Interest Period
with respect to any Eurodollar Rate Advance under a Facility
that ends after any principal repayment installment date for
such Facility unless, after giving effect to such selection,
the aggregate principal amount of Base Rate Advances and of
Eurodollar Rate Advances having Interest Periods that end on
or prior to such principal repayment installment date for such
Facility shall be at least equal to the aggregate principal
amount of Advances under such Facility due and payable on or
prior to such date;
(b) Interest Periods commencing on the same date for
Eurodollar Rate Advances comprising part of the same Borrowing
shall be of the same duration;
<PAGE> 29
23
(c) whenever the last day of any Interest Period
would otherwise occur on a day other than a Business Day, the
last day of such Interest Period shall be extended to occur on
the next succeeding Business Day, provided, however, that, if
such extension would cause the last day of such Interest
Period to occur in the next following calendar month, the last
day of such Interest Period shall occur on the next preceding
Business Day; and
(d) whenever the first day of any Interest Period
occurs on a day of an initial calendar month for which there
is no numerically corresponding day in the calendar month that
succeeds such initial calendar month by the number of months
equal to the number of months in such Interest Period, such
Interest Period shall end on the last Business Day of such
succeeding calendar month.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended from time to time, and the regulations promulgated and
rulings issued thereunder.
"Inventory" has the meaning specified in the Security
Agreement.
"Investment" in any Person means any loan or advance to such
Person, any purchase or other acquisition of any capital stock or other
ownership or profit interest, warrants, rights, options, obligations or
other securities or all or substantially all of the assets of such
Person, any capital contribution to such Person or any other direct or
indirect investment in such Person, including, without limitation, any
arrangement pursuant to which the investor incurs Debt of the types
referred to in clause (j) or (k) of the definition of "Debt" in respect
of such Person, any acquisition by way of a merger or consolidation and
any purchase or other acquisition or construction of bowling centers.
"IPO" means an initial public offering of common stock of
Parent.
"Issuing Banks" means each Initial Issuing Bank, any other
Working Capital Lender that has a Letter of Credit Commitment set forth
opposite its name on Schedule I hereto, any other Working Capital
Lender approved as an Issuing Bank by the Administrative Agent and, so
long as no Default shall have occurred and be continuing, by the
Borrower (such approval not to be unreasonably withheld or delayed) and
each Eligible Assignee to which a Letter of Credit Commitment hereunder
has been assigned pursuant to Section 8.07 so long as each such Working
Capital Lender or Eligible Assignee expressly agrees to perform in
accordance with their terms all of the obligations that by the terms of
this Agreement are required to be performed by it as an Issuing Bank
and notifies the Administrative Agent of its
<PAGE> 30
24
Applicable Lending Office and the amount of its Letter of Credit
Commitment (which information shall be recorded by the Administrative
Agent in the Register).
"L/C Cash Collateral Account" has the meaning specified in the
Security Agreement.
"L/C Related Documents" has the meaning specified in Section
2.04(f)(ii).
"Lender Party" means any Lender or any Issuing Bank.
"Lenders" means the Initial Lenders and each Person that shall
become a Lender hereunder pursuant to Section 8.07.
"Letter of Credit Advance" means an advance made by any
Issuing Bank or any Working Capital Lender pursuant to Section 2.03(c).
"Letter of Credit Agreement" has the meaning specified in
Section 2.03(a).
"Letter of Credit Commitment" means, with respect to any
Issuing Bank at any time, the amount set forth opposite such Issuing
Bank's name on Schedule I hereto under the caption "Letter of Credit
Commitment" or, if such Issuing Bank has entered into one or more
Assignments and Acceptances, set forth for such Issuing Bank in the
Register maintained by the Administrative Agent pursuant to Section
8.07(d) as such Issuing Bank's "Letter of Credit Commitment", as such
amount may be reduced at or prior to such time pursuant to Section
2.05.
"Letter of Credit Facility" means, at any time, an amount
equal to the lesser of (a) the aggregate amount of the Issuing Banks'
Letter of Credit Commitments at such time and (b) $10,000,000, as such
amount may be reduced at or prior to such time pursuant to Section
2.05.
"Letters of Credit" has the meaning specified in Section
2.01(f).
"Lien" means any lien, security interest or other charge or
encumbrance of any kind, or any other type of preferential arrangement,
including, without limitation, the lien or retained security title of a
conditional vendor and any easement, right of way or other encumbrance
on title to real property.
"Loan Documents" means (a) for purposes of this Agreement and
the Notes and any amendment or modification hereof or thereof and for
all other purposes other than for purposes of the Guaranties and the
Collateral Documents, (i) this Agreement,
<PAGE> 31
25
(ii) the Notes, (iii) the Guaranties, (iv) the Collateral Documents and
(v) each Letter of Credit Agreement and (b) for purposes of the
Guaranties and the Collateral Documents, (i) this Agreement, (ii) the
Notes, (iii) the Guaranties, (iv) the Collateral Documents, (v) each
Letter of Credit Agreement and (vi) each Bank Hedge Agreement, in each
case as amended, supplemented or otherwise modified from time to time.
"Loan Parties" means the Company, the Borrower and the
Guarantors.
"Margin Stock" has the meaning specified in Regulation U.
"Material Adverse Change" means any material adverse change in
the business, condition (financial or otherwise), operations,
performance, properties or prospects of Holdings or the Borrower, in
each case together with its respective Subsidiaries, taken as a whole.
"Material Adverse Effect" means a material adverse effect on
(a) the business, condition (financial or otherwise), operations,
performance, properties or prospects of Holdings or the Borrower, in
each case together with its respective Subsidiaries, taken as a whole,
(b) the rights and remedies of any Agent or any Lender Party under any
Loan Document or Related Document or (c) the ability of any Loan Party
to perform its Obligations under any Loan Document (excluding Mortgages
covering Collateral which, in the aggregate, is immaterial) or Related
Document to which it is or is to be a party.
"Material Subsidiary" means, at any time, a Subsidiary of the
Borrower having at least 5% of the total Consolidated assets of the
Borrower and its Subsidiaries (determined as of the last day of the
most recent fiscal quarter of the Borrower) or at least 5% of the total
Consolidated revenues or net income of the Borrower and its
Subsidiaries for the 12-month period ending on the last day of the most
recent fiscal quarter of the Borrower; provided, however, that any
Subsidiary formed or acquired after the last day of the most recent
fiscal quarter of the Borrower that would have been a Material
Subsidiary if it had been formed or acquired on or prior to the last
day of such fiscal quarter shall be a Material Subsidiary for purposes
hereof from and after the date of its formation or acquisition.
"Maximum Available Acquisition Amount" means, at any time, (a)
during the period from the Closing Date until the Availability
Termination Date, the lesser of (i) the Acquisition Facility at such
time and (ii) the amount by which (A) the sum of (x) $100,000,000 and
(y) the Additional Acquisition Amount at such time exceeds
<PAGE> 32
26
(B) the aggregate amount of Acquisition Advances made on or after the
Closing Date and (b) from and after the Availability Termination Date,
$0.
"Modified Consolidated EBITDA" means, for any Rolling Period,
Consolidated EBITDA of the Borrower and its Subsidiaries for such
Rolling Period, provided, however, that at any time of determination,
(i) solely with respect to any constructed New Center, Modified
Consolidated EBITDA shall be calculated using Adjusted EBITDA of such
New Center and (ii) solely with respect to any New Center acquired
within the immediately preceding 15 months, Modified Consolidated
EBITDA shall be calculated using the actual EBITDA of such New Center
for such Rolling Period (including, without limitation, for any portion
of such Rolling Period that is prior to the date of acquisition of such
New Center).
"Mortgage Policy" has the meaning specified in Section
3.01(p)(ix).
"Mortgages" has the meaning specified in Section 3.01(p)(ix).
"Multiemployer Plan" means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, that is subject to ERISA and to which any
Loan Party or any ERISA Affiliate is making or accruing an obligation
to make contributions, or has within any of the preceding five plan
years made or accrued an obligation to make contributions.
"Multiple Employer Plan" means a single employer plan, as
defined in Section 4001(a)(15) of ERISA, that is subject to ERISA and
that (a) is maintained for employees of any Loan Party or any ERISA
Affiliate and at least one Person other than the Loan Parties and the
ERISA Affiliates or (b) was so maintained and in respect of which any
Loan Party or any ERISA Affiliate could have liability under Section
4064 or 4069 of ERISA in the event such plan has been or were to be
terminated.
"Net Cash Proceeds" means, with respect to any sale, lease,
transfer or other disposition of any asset or the sale or issuance of
any Debt or capital stock or other ownership or profit interest, any
securities convertible into or exchangeable for capital stock or other
ownership or profit interest or any warrants, rights, options or other
securities to acquire capital stock or other ownership or profit
interest by any Person, or any Extraordinary Receipt received by or
paid to or for the account of any Person, the aggregate amount of cash
received from time to time (whether as initial consideration or through
payment or disposition of deferred consideration) by or on behalf of
such Person in connection with such transaction after deducting
therefrom only (without duplication) (a) reasonable and customary
brokerage commissions,
<PAGE> 33
27
underwriting fees and discounts, legal fees, finder's fees and other
similar fees and commissions and other reasonable and customary
expenses incurred in connection with such transaction and (b) the
amount of taxes payable in connection with or as a result of such
transaction, in each case to the extent, but only to the extent, that
the amounts so deducted are, at or prior to the time of receipt of such
cash, actually paid or payable to a Person that is not an Affiliate of
such Person or any Loan Party or any Affiliate of any Loan Party and
are properly attributable to such transaction or to the asset that is
the subject thereof; provided, however, that in the case of taxes that
are deductible under clause (b) but for the fact that at the time of
receipt of such cash, such taxes have not been actually paid or are not
then payable, such Person may deduct an amount (the "Reserved Amount")
equal to the amount reserved in accordance with GAAP for such Person's
reasonable estimate of such taxes, other than taxes for which such
Person is indemnified, provided further, however, that at the time such
taxes are paid, the Borrower shall prepay the Advances outstanding
hereunder, in accordance with the terms of Section 2.06(b)(ii), in an
amount equal to the amount, if any, by which the Reserved Amount
exceeds the amount of taxes actually paid.
"New Center" means, at any time of determination, any bowling
center acquired (whether by means of a stock or asset acquisition) or
constructed by the Borrower or any of its Subsidiaries after the
Closing Date and less than 15 months prior to such date of
determination, provided that for purposes hereof, the time of any such
acquisition shall be the date of consummation of such acquisition and
the time of any such construction shall be the date of the opening of
such bowling center for business.
"Note" means a Term Loan Note, an AXELs Series A Note, an
AXELs Series B Note, a Working Capital Note or an Acquisition Note.
"Notice of Borrowing" has the meaning specified in Section
2.02(a).
"Notice of Issuance" has the meaning specified in Section
2.03(a).
"NPL" means the National Priorities List under CERCLA.
"Obligation" means, with respect to any Person, any payment,
performance or other obligation of such Person of any kind, including,
without limitation, any liability of such Person on any claim, whether
or not the right of any creditor to payment in respect of such claim is
reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, disputed, undisputed, legal, equitable, secured or unsecured,
and whether or not such claim is discharged, stayed or otherwise
affected
<PAGE> 34
28
by any proceeding referred to in Section 6.01(f). Without limiting the
generality of the foregoing, the Obligations of the Loan Parties under
the Loan Documents include (a) the obligation to pay principal,
interest, Letter of Credit commissions, charges, expenses, fees,
attorneys' fees and disbursements, indemnities and other amounts
payable by any Loan Party under any Loan Document and (b) the
obligation of any Loan Party to reimburse any amount in respect of any
of the foregoing that any Lender Party, in its sole discretion, may
elect to pay or advance on behalf of such Loan Party.
"OECD" means the Organization for Economic Cooperation and
Development.
"Open Year" has the meaning specified in Section 4.01(bb).
"Other Additions" means, for any period, (a) during the period
from the Closing Date through December 31, 1997, an amount equal to the
sum of (i) amounts payable, or, in the judgment of a Designated
Financial Officer, expected to be payable, to the Borrower by the
Sellers pursuant to the Support Agreement during such period and (ii)
extraordinary, unusual or non-recurring, or expected to be
non-recurring, expenses and expenses resulting from changes in the
Borrower's accounting or management policies or practices, in each case
of the Borrower and its Subsidiaries for such period, all as determined
in the judgment of a Designated Financial Officer, in an aggregate
amount, under this clause (ii), not to exceed $20,000,000 from and
after the date hereof, and (b) thereafter, zero.
"Other Taxes" has the meaning specified in Section 2.12(b).
"Parent" has the meaning specified in the Preliminary
Statements.
"PBGC" means the Pension Benefit Guaranty Corporation (or any
successor thereto).
"Permitted Encumbrances" means, with respect to any real
property, minor survey exceptions, minor title irregularities,
easements, rights-of-way, restrictions and other similar charges or
encumbrances not interfering with the ordinary conduct of the business
of the Loan Parties and their Subsidiaries which were not incurred in
connection with and do not secure Debt or other extensions of credit
and which do not individually or in the aggregate materially adversely
affect the value of the properties of the Loan Parties and their
Subsidiaries taken as a whole or materially impair its use, taken as a
whole with all other properties of the Loan Parties and their
Subsidiaries, in the operation of the business of the Loan Parties and
their Subsidiaries.
<PAGE> 35
29
"Permitted Liens" means such of the following as to which no
enforcement, collection, execution, levy or foreclosure proceeding
shall have been commenced: (a) Liens for taxes, assessments and
governmental charges or levies to the extent not required to be paid
under Section 5.01(b); (b) Liens imposed by law, such as materialmen's,
mechanics', carriers', landlords', workmen's and repairmen's Liens and
other similar Liens arising in the ordinary course of business securing
obligations that are not overdue for a period of more than 30 days or
are being contested in good faith by proper proceedings and as to which
appropriate reserves are being maintained; (c) pledges or deposits to
secure obligations under workers' compensation laws or similar
legislation or to secure public or statutory obligations; and (d)
Permitted Encumbrances, provided, however, that no Lien in favor of the
PBGC shall, in any event, be a Permitted Lien.
"Person" means an individual, partnership, corporation
(including a business trust), limited liability company, joint stock
company, trust, unincorporated association, joint venture or other
entity, or a government or any political subdivision or agency thereof.
"Plan" means a Single Employer Plan or a Multiple Employer
Plan.
"Preferred Stock" means, with respect to any corporation,
capital stock issued by such corporation that is entitled to a
preference or priority over any other capital stock issued by such
corporation upon any distribution of such corporation's assets, whether
by dividend or upon liquidation.
"Pro Forma Senior Debt/EBITDA Ratio" means, at any time, the
ratio of Consolidated Debt (other than Subordinated Debt and Hedge
Agreements) of the Borrower and its Subsidiaries as at the end of the
immediately preceding Rolling Period to Consolidated EBITDA of the
Borrower and its Subsidiaries for such Rolling Period, including as
Debt, for purposes of calculating such ratio, the Additional Amount in
the amount designated at such time by the Borrower and including in the
calculation of Consolidated EBITDA, for purposes of calculating such
ratio, the EBITDA for such Rolling Period of any bowling center
proposed to be acquired by the Borrower or any of its Subsidiaries at
such time.
"Pro Rata Share" of any amount means (a) with respect to any
Working Capital Lender at any time, the product of such amount times a
fraction the numerator of which is the amount of such Lender's Working
Capital Commitment at such time and the denominator of which is the
Working Capital Facility at such time and (b) with respect to any
Acquisition Lender at any time, the product of such amount times a
fraction the numerator of which is the amount of such Lender's
Acquisition
<PAGE> 36
30
Commitment at such time and the denominator of which is the Acquisition
Facility at such time.
"Purchase Agreement" has the meaning specified in the
Preliminary Statements.
"Redeemable" means, with respect to any capital stock or other
ownership or profit interest, Debt or other right or Obligation, any
such right or Obligation that (a) the issuer has undertaken to redeem
at a fixed or determinable date or dates, whether by operation of a
sinking fund or otherwise, or upon the occurrence of a condition not
solely within the control of the issuer or (b) is redeemable at the
option of the holder.
"Reduction Amount" has the meaning specified in Section
2.06(b)(vii).
"Register" has the meaning specified in Section 8.07(d).
"Regulation U" means Regulation U of the Board of Governors of
the Federal Reserve System, as in effect from time to time.
"Related Documents" means the Purchase Agreement, the
Subordinated Debt Documents, the Tax Agreement, the Stockholders'
Agreement and the Support Agreement.
"Required Lenders" means, at any time, (i) Lenders owed or
holding at least a majority in interest of the sum of (a) the aggregate
principal amount of the Term Loan Advances, Working Capital Advances
and Acquisition Advances outstanding at such time, (b) the aggregate
Available Amount of all Letters of Credit outstanding at such time, (c)
the aggregate unused Commitments under the Term Loan Facility and under
the Acquisition Facility at such time and (d) the aggregate Unused
Working Capital Commitments at such time and (ii) Lenders owed or
holding at least a majority in interest of the sum of (a) the aggregate
principal amount of the AXELs Series A Advances and AXELs Series B
Advances outstanding at such time and (b) the aggregate unused
Commitments under the AXELs Series A Facility and AXELs Series B
Facility at such time; provided, however, that if any Lender shall be a
Defaulting Lender at such time, there shall be excluded from the
determination of Required Lenders at such time (A) the aggregate
principal amount of the Advances owing to such Lender (in its capacity
as a Lender) and outstanding at such time, (B) such Lender's Pro Rata
Share of the aggregate Available Amount of all Letters of Credit
outstanding at such time, (C) the aggregate unused Term Loan, AXELs
Series A, AXELs Series B and Acquisition Commitments of such Lender at
such time and
<PAGE> 37
31
(D) the Unused Working Capital Commitment of such Lender at such time.
For purposes of this definition, the aggregate principal amount of
Letter of Credit Advances owing to any Issuing Bank and the Available
Amount of each Letter of Credit shall be considered to be owed to the
Working Capital Lenders ratably in accordance with their respective
Working Capital Commitments.
"Responsible Officer" means any officer of any Loan Party or
any of its Subsidiaries.
"Rolling Period" means, with respect to any fiscal quarter of
the Borrower and its Subsidiaries, such fiscal quarter and the three
consecutive immediately preceding fiscal quarters.
"Second Prepayment Date" has the meaning specified in Section
2.06(b)(iv).
"Secured Parties" means the Arrangers, the Agents, the Lender
Parties and the Hedge Banks.
"Security Agreement" has the meaning specified in Section
3.01(p)(vii).
"Sellers" has the meaning specified in the Preliminary
Statements.
"Senior Subordinated Discount Notes" means the senior
subordinated discounted notes of the Borrower in an aggregate principal
amount of $452,000,000 issued pursuant to the Senior Subordinated
Discount Notes Indenture.
"Senior Subordinated Discount Notes Indenture" means the
Indenture dated as of March 21, 1996 among the Borrower, the guarantors
party thereto and American Bank National Association, as Trustee,
pursuant to which the Senior Subordinated Discount Notes are issued, as
amended, supplemented or otherwise modified from time to time in
accordance with its terms, to the extent permitted in accordance with
the Loan Documents.
"Senior Subordinated Notes" means the senior subordinated
notes of the Borrower in an aggregate principal amount of $250,000,000
issued pursuant to the Senior Subordinated Notes Indenture.
"Senior Subordinated Notes Indenture" means the Indenture
dated as of March 21, 1996 among the Borrower, the guarantors party
thereto and IBJ Schroder Bank & Trust Company, as Trustee, pursuant to
which the Senior Subordinated Notes are issued, as amended,
supplemented or otherwise modified from time to time in
<PAGE> 38
32
accordance with its terms, to the extent permitted in accordance with
the Loan Documents.
"Single Employer Plan" means a single employer plan, as
defined in Section 4001(a)(15) of ERISA, that is subject to ERISA and
that (a) is maintained for employees of any Loan Party or any ERISA
Affiliate and no Person other than the Loan Parties and the ERISA
Affiliates or (b) was so maintained and in respect of which any Loan
Party or any ERISA Affiliate could have liability under Section 4069 of
ERISA in the event such plan has been or were to be terminated.
"Solvent" and "Solvency" mean, with respect to any Person on a
particular date, that on such date (a) the fair value of the property
of such Person is greater than the total amount of liabilities,
including, without limitation, contingent liabilities, of such Person,
(b) the present fair salable value of the assets of such Person is not
less than the amount that will be required to pay the probable
liability of such Person on its debts as they become absolute and
matured, (c) such Person does not intend to, and does not believe that
it will, incur debts or liabilities beyond such Person's ability to pay
such debts and liabilities as they mature and (d) such Person is not
engaged in business or a transaction, and is not about to engage in
business or a transaction, for which such Person's property would
constitute an unreasonably small capital. The amount of contingent
liabilities at any time shall be computed as the amount that, in the
light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an
actual or matured liability.
"Specified Revenues" means at any time (a) in the case of any
acquisition of a New Center, aggregate revenues of such New Center for
the immediately preceding 12-month period, and (b) in the case of any
construction of a New Center, an amount equal to (i) at any time during
its first 12 full months of operations, the aggregate revenues of such
New Center for each full month it has operated times twelve divided by
the number of full months such New Center has operated and (ii) at any
time thereafter, aggregate revenues of such New Center for the
immediately preceding 12-month period.
"Standby Letter of Credit" means any Letter of Credit issued
under the Letter of Credit Facility, other than a Trade Letter of
Credit.
"Stockholders' Agreement" means the Stockholders' Agreement
set forth on Schedule III hereto, as amended, supplemented or otherwise
modified from time to time in accordance with its terms, to the extent
permitted in accordance with the Loan Documents.
<PAGE> 39
33
"Subordinated Debt" means the Subordinated Notes and any other
Debt of any Loan Party that is subordinated to the Obligations of such
Loan Party under the Loan Documents on, and that otherwise contains,
terms and conditions satisfactory to the Required Lenders.
"Subordinated Debt Documents" means the Subordinated Notes
Indentures and all other agreements, indentures and instruments
pursuant to which Subordinated Debt is issued.
"Subordinated Notes" means the Senior Subordinated Notes and
the Senior Subordinated Discount Notes.
"Subordinated Notes Indentures" means the Senior Subordinated
Notes Indenture and the Senior Subordinated Discount Notes Indenture.
"Subsidiary" of any Person means any corporation, partnership,
joint venture, limited liability company, trust or estate of which (or
in which) more than 50% of (a) the issued and outstanding capital stock
having ordinary voting power to elect a majority of the Board of
Directors of such corporation (irrespective of whether at the time
capital stock of any other class or classes of such corporation shall
or might have voting power upon the occurrence of any contingency), (b)
the interest in the capital or profits of such partnership, joint
venture or limited liability company or (c) the beneficial interest in
such trust or estate is at the time directly or indirectly owned or
controlled by such Person, by such Person and one or more of its other
Subsidiaries or by one or more of such Person's other Subsidiaries.
"Subsidiary Guarantors" means the Subsidiaries of the Borrower
listed on Schedule II hereto and each other Subsidiary of the Borrower
that shall be required to execute and deliver a guaranty pursuant to
Section 5.01(n).
"Subsidiary Guaranty" has the meaning specified in Section
3.01(p)(xi).
"Support Agreement" means the letter agreement dated April 11,
1996 between the Sellers and Holdings, as amended, supplemented or
otherwise modified from time to time in accordance with its terms, to
the extent permitted in accordance with the Loan Documents.
"Surviving Debt" has the meaning specified in Section 3.01(e).
"Syndication Agent" has the meaning specified in the recital
of parties to this Agreement.
<PAGE> 40
34
"Tax Agreement" means the Tax Allocation Agreement dated as of
May 1, 1996 among Parent, the Borrower and the Borrower's Subsidiaries
(other than Foreign Subsidiaries), as amended, supplemented or
otherwise modified from time to time in accordance with its terms, to
the extent permitted in accordance with the Loan Documents.
"Tax Certificate" has the meaning specified in Section
5.03(o).
"Taxes" has the meaning specified in Section 2.12(a).
"Term Facilities" means the Term Loan Facility, the AXELs
Series A Facility and the AXELs Series B Facility.
"Term Loan Advance" has the meaning specified in Section
2.01(a).
"Term Loan Borrowing" means a borrowing consisting of
simultaneous Term Loan Advances of the same Type made by the Term Loan
Lenders.
"Term Loan Commitment" means, with respect to any Term Loan
Lender at any time, the amount set forth opposite such Lender's name on
Schedule I hereto under the caption "Term Loan Commitment" or, if such
Lender has entered into one or more Assignments and Acceptances, set
forth for such Lender in the Register maintained by the Administrative
Agent pursuant to Section 8.07(d) as such Lender's "Term Loan
Commitment", as such amount may be reduced at or prior to such time
pursuant to Section 2.05.
"Term Loan Facility" means, at any time, the aggregate amount
of the Term Loan Lenders' Term Loan Commitments at such time.
"Term Loan Lender" means any Lender that has a Term Loan
Commitment.
"Term Loan Note" means a promissory note of the Borrower
payable to the order of any Term Loan Lender, in substantially the form
of Exhibit A-1 hereto, evidencing the indebtedness of the Borrower to
such Lender resulting from the Term Loan Advance made by such Lender.
"Termination Date" means (a) with respect to the Term Loan
Facility, the Working Capital Facility, the Acquisition Facility and
the Letter of Credit Facility, the earlier of March 31, 2001 and the
date of termination in whole of the Term Loan Commitments, the Working
Capital Commitments, the Acquisition Commitments and the Letter of
Credit Commitments pursuant to Section 2.05 or 6.01, (b) with respect
<PAGE> 41
35
to the AXELs Series A Facility, the earlier of March 31, 2003 and the
date of termination in whole of the AXELs Series A Commitments pursuant
to Section 2.05 or 6.01 and (c) with respect to the AXELs Series B
Facility, the earlier of March 31, 2004 and the date of termination in
whole of the AXELs Series B Commitments pursuant to Section 2.05 or
6.01.
"Total Debt/EBITDA Ratio" means, at any date of determination,
the ratio of Consolidated total Debt (other than Hedge Agreements) of
the Borrower and its Subsidiaries as at the end of the immediately
preceding Rolling Period to Consolidated EBITDA of the Borrower and its
Subsidiaries for such Rolling Period.
"Trade Letter of Credit" means any Letter of Credit that is
issued under the Letter of Credit Facility for the benefit of a
supplier of Inventory to the Borrower or any of its Subsidiaries to
effect payment for such Inventory, the conditions to drawing under
which include the presentation to the Issuing Bank that issued such
Letter of Credit of negotiable bills of lading, invoices and related
documents sufficient, in the judgment of such Issuing Bank, to create a
valid and perfected lien on or security interest in such Inventory,
bills of lading, invoices and related documents in favor of such
Issuing Bank.
"Type" refers to the distinction between Advances bearing
interest at the Base Rate and Advances bearing interest at the
Eurodollar Rate.
"Unavailable Acquisition Amount" means, at any time, an amount
equal to the Acquisition Facility at such time less the Maximum
Available Acquisition Amount at such time.
"Unused Working Capital Commitment" means, with respect to any
Working Capital Lender at any time, (a) such Lender's Working Capital
Commitment at such time minus (b) the sum of (i) the aggregate
principal amount of all Working Capital Advances and Letter of Credit
Advances made by such Lender (in its capacity as a Lender) and
outstanding at such time, plus (ii) such Lender's Pro Rata Share of (A)
the aggregate Available Amount of all Letters of Credit outstanding at
such time and (B) the aggregate principal amount of all Letter of
Credit Advances made by the Issuing Banks pursuant to Section 2.03(c)
and outstanding at such time.
"Voting Stock" means capital stock issued by a corporation, or
equivalent interests in any other Person, the holders of which are
ordinarily, in the absence of contingencies, entitled to vote for the
election of directors (or persons performing similar functions) of such
Person, even if the right so to vote has been suspended by the
happening of such a contingency.
<PAGE> 42
36
"Welfare Plan" means a welfare plan, as defined in Section
3(1) of ERISA, that is subject to ERISA and is maintained for employees
of any Loan Party or in respect of which any Loan Party could have
liability.
"Withdrawal Liability" has the meaning specified in Part I of
Subtitle E of Title IV of ERISA.
"Working Capital Advance" has the meaning specified in Section
2.01(d).
"Working Capital Borrowing" means a borrowing consisting of
simultaneous Working Capital Advances of the same Type made by the
Working Capital Lenders.
"Working Capital Commitment" means, with respect to any
Working Capital Lender at any time, the amount set forth opposite such
Lender's name on Schedule I hereto under the caption "Working Capital
Commitment" or, if such Lender has entered into one or more Assignments
and Acceptances, set forth for such Lender in the Register maintained
by the Administrative Agent pursuant to Section 8.07(d) as such
Lender's "Working Capital Commitment", as such amount may be reduced at
or prior to such time pursuant to Section 2.05.
"Working Capital Facility" means, at any time, the aggregate
amount of the Working Capital Lenders' Working Capital Commitments at
such time.
"Working Capital Lender" means any Lender that has a Working
Capital Commitment.
"Working Capital Note" means a promissory note of the Borrower
payable to the order of any Working Capital Lender, in substantially
the form of Exhibit A-4 hereto, evidencing the aggregate indebtedness
of the Borrower to such Lender resulting from the Working Capital
Advances made by such Lender.
SECTION 1.02. Computation of Time Periods. In this Agreement
in the computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including" and the words "to" and "until"
each mean "to but excluding".
SECTION 1.03. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles consistent with those applied in the preparation
of the financial statements referred to in Section 4.01(f) ("GAAP").
<PAGE> 43
37
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
AND THE LETTERS OF CREDIT
SECTION 2.01. The Advances. (a) The Term Loan Advances. Each
Term Loan Lender severally agrees, on the terms and conditions hereinafter set
forth, to make a single advance (a "Term Loan Advance") to the Borrower on the
Closing Date in an amount not to exceed such Lender's Term Loan Commitment at
such time. The Term Loan Borrowing shall consist of Term Loan Advances made
simultaneously by the Term Loan Lenders ratably according to their Term Loan
Commitments. Amounts borrowed under this Section 2.01(a) and repaid or prepaid
may not be reborrowed.
(b) The AXELs Series A Advances. Each AXELs Series A Lender
severally agrees, on the terms and conditions hereinafter set forth, to make a
single advance (an "AXELs Series A Advance") to the Borrower on the Closing Date
in an amount not to exceed such Lender's AXELs Series A Commitment at such time.
The AXELs Series A Borrowing shall consist of AXELs Series A Advances made
simultaneously by the AXELs Series A Lenders ratably according to their AXELs
Series A Commitments. Amounts borrowed under this Section 2.01(b) and repaid or
prepaid may not be reborrowed.
(c) The AXELs Series B Advances. Each AXELs Series B Lender
severally agrees, on the terms and conditions hereinafter set forth, to make a
single advance (an "AXELs Series B Advance") to the Borrower on the Closing Date
in an amount not to exceed such Lender's AXELs Series B Commitment at such time.
The AXELs Series B Borrowing shall consist of AXELs Series B Advances made
simultaneously by the AXELs Series B Lenders ratably according to their AXELs
Series B Commitments. Amounts borrowed under this Section 2.01(c) and repaid or
prepaid may not be reborrowed.
(d) The Working Capital Advances. Each Working Capital Lender
severally agrees, on the terms and conditions hereinafter set forth, to make
advances (each a "Working Capital Advance") to the Borrower from time to time on
any Business Day during the period from the Closing Date until the Termination
Date in an amount for each such Advance not to exceed such Lender's Unused
Working Capital Commitment at such time (subject, however, to the terms of
Section 2.01(g)). Each Working Capital Borrowing shall be in an aggregate amount
of $5,000,000 or an integral multiple of $1,000,000 in excess thereof and shall
consist of Working Capital Advances made simultaneously by the Working Capital
Lenders ratably according to their Working Capital Commitments. Within the
limits of each Working Capital Lender's Unused Working Capital Commitment in
effect from time to time, the Borrower may borrow under this Section 2.01(d),
prepay pursuant to Section 2.06(a) and reborrow under this Section 2.01(d).
<PAGE> 44
38
(e) The Acquisition Advances. Each Acquisition Lender
severally agrees, on the terms and conditions hereinafter set forth, to make
advances (each an "Acquisition Advance") to the Borrower on any Business Day
during the period from the Closing Date until the Availability Termination Date
in an amount not to exceed the lesser of (i) such Lender's unused Acquisition
Commitment at such time and (ii) such Lender's Pro Rata Share of the Maximum
Available Acquisition Amount at such time. Each Acquisition Borrowing shall be
in an aggregate amount of $1,000,000 or an integral multiple of $500,000 in
excess thereof and, if the acquisition to be made with the proceeds of such
Acquisition Borrowing shall be for cash consideration of less than $1,000,000,
such Acquisition Borrowing shall be in the amount of $1,000,000 and, in each
case, shall consist of Acquisition Advances made simultaneously by the
Acquisition Lenders ratably according to their Acquisition Commitments. Amounts
borrowed under this Section 2.01(e) and repaid or prepaid may not be reborrowed.
(f) Letters of Credit. Each Issuing Bank severally agrees, on
the terms and conditions hereinafter set forth, to issue (or cause its Affiliate
to issue on its behalf) letters of credit (the "Letters of Credit") for the
account of the Borrower from time to time on any Business Day during the period
from the Closing Date until 60 days before the Termination Date (i) in an
aggregate Available Amount for all Letters of Credit issued by such Issuing Bank
not to exceed at any time such Issuing Bank's Letter of Credit Commitment at
such time and (ii) in an Available Amount for each such Letter of Credit not to
exceed the lesser of (x) the Letter of Credit Facility at such time and (y) the
Unused Working Capital Commitments of the Working Capital Lenders at such time.
No Letter of Credit shall have an expiration date (including all rights of the
Borrower or the beneficiary to require renewal) later than the earlier of 30
days before the Termination Date and (A) in the case of a Standby Letter of
Credit, one year after the date of issuance thereof and (B) in the case of a
Trade Letter of Credit, 60 days after the date of issuance thereof. Within the
limits of the Letter of Credit Facility, and subject to the limits referred to
above, the Borrower may request the issuance of Letters of Credit under this
Section 2.01(f), repay any Letter of Credit Advances resulting from drawings
thereunder pursuant to Section 2.03(c) and request the issuance of additional
Letters of Credit under this Section 2.01(f).
(g) Set Aside of Working Capital Commitments in Respect of
Acquisition Advances. Each Working Capital Lender's Pro Rata Share of an
aggregate amount of Unused Working Capital Commitments shall be reserved in an
amount equal to the aggregate outstanding Acquisition Advances to the extent the
proceeds of such Acquisition Advances shall not have been used to finance
acquisitions of New Centers permitted hereunder or to refinance the costs of
construction of New Centers, and shall be available to be borrowed solely for
purposes of financing one or more acquisitions or refinancing such construction
costs to the extent otherwise permitted hereunder.
<PAGE> 45
39
SECTION 2.02. Making the Advances. (a) Except as otherwise
provided in Section 2.02(b) or 2.03, each Borrowing shall be made on notice,
given not later than 11:00 A.M. (New York City time) on the third Business Day
prior to the date of the proposed Borrowing in the case of a Borrowing
consisting of Eurodollar Rate Advances, or not later than 9:00 A.M. (New York
City time) on the date of the proposed Borrowing in the case of a Borrowing
consisting of Base Rate Advances, by the Borrower to the Administrative Agent,
which shall give to each Appropriate Lender prompt notice thereof by telex or
telecopier. Each such notice of a Borrowing (a "Notice of Borrowing") shall be
by telephone, confirmed immediately in writing, or telex or telecopier, in
substantially the form of Exhibit B hereto, specifying therein the requested (i)
date of such Borrowing, (ii) Facility under which such Borrowing is to be made,
(iii) Type of Advances comprising such Borrowing, (iv) aggregate amount of such
Borrowing and (v) in the case of a Borrowing consisting of Eurodollar Rate
Advances, initial Interest Period for each such Advance. Each Appropriate Lender
shall, before 1:00 P.M. (New York City time) on the date of such Borrowing, make
available for the account of its Applicable Lending Office to the Administrative
Agent at the Administrative Agent's Account, in same day funds, such Lender's
ratable portion of such Borrowing in accordance with the respective Commitments
under the applicable Facility of such Lender and the other Appropriate Lenders.
After the Administrative Agent's receipt of such funds and upon fulfillment of
the applicable conditions set forth in Article III, the Administrative Agent
will make such funds available to the Borrower by crediting the Borrower's
Account; provided, however, that, in the case of any Working Capital Borrowing,
the Administrative Agent shall first make a portion of such funds equal to the
aggregate principal amount of any Letter of Credit Advances made by any Issuing
Bank and by any other Working Capital Lender and outstanding on the date of such
Working Capital Borrowing, plus interest accrued and unpaid thereon to and as of
such date, available to such Issuing Bank and such other Working Capital Lenders
for repayment of such Letter of Credit Advances.
(b) Anything in subsection (a) above to the contrary
notwithstanding, (i) the Borrower may not select Eurodollar Rate Advances for
the initial Borrowing hereunder unless the Borrower shall have agreed, in
writing, prior to or concurrently with the giving of the applicable Notice of
Borrowing, to be bound by the terms of Section 2.02(c) or for any Borrowing if
the aggregate amount of such Borrowing is less than $5,000,000 or if the
obligation of the Appropriate Lenders to make Eurodollar Rate Advances shall
then be suspended pursuant to Section 2.09 or Section 2.10 and (ii) the Term
Loan Advances may not be outstanding as part of more than 5 separate Borrowings,
the AXELs Series A Advances may not be outstanding as part of more than 5
separate Borrowings, the AXELs Series B Advances may not be outstanding as part
of more than 5 separate Borrowings, the Working Capital Advances made on any
date may not be outstanding as part of more than 10 separate Borrowings and the
Acquisition Borrowings may not be outstanding as part of more than 25 separate
Borrowings.
<PAGE> 46
40
(c) Each Notice of Borrowing shall be irrevocable and binding
on the Borrower. In the case of any Borrowing that the related Notice of
Borrowing specifies is to be comprised of Eurodollar Rate Advances, the Borrower
shall indemnify each Appropriate Lender against any loss, cost or expense
incurred by such Lender as a result of any failure to fulfill on or before the
date specified in such Notice of Borrowing for such Borrowing the applicable
conditions set forth in Article III, including, without limitation, any loss
(including loss of anticipated profits), cost or expense incurred by reason of
the liquidation or reemployment of deposits or other funds acquired by such
Lender to fund the Advance to be made by such Lender as part of such Borrowing
when such Advance, as a result of such failure, is not made on such date.
(d) Unless the Administrative Agent shall have received notice
from an Appropriate Lender prior to the date of any Borrowing under a Facility
under which such Lender has a Commitment that such Lender will not make
available to the Administrative Agent such Lender's ratable portion of such
Borrowing, the Administrative Agent may assume that such Lender has made such
portion available to the Administrative Agent on the date of such Borrowing in
accordance with subsection (a) or (b) of this Section 2.02 and the
Administrative Agent may, in reliance upon such assumption, make available to
the Borrower on such date a corresponding amount. If and to the extent that such
Lender shall not have so made such ratable portion available to the
Administrative Agent, such Lender and the Borrower severally agree to repay or
pay to the Administrative Agent forthwith on demand such corresponding amount
and to pay interest thereon, for each day from the date such amount is made
available to the Borrower until the date such amount is repaid or paid to the
Administrative Agent, at (i) in the case of the Borrower, the interest rate
applicable at such time under Section 2.07 to Advances comprising such Borrowing
and (ii) in the case of such Lender, the Federal Funds Rate. If such Lender
shall pay to the Administrative Agent such corresponding amount, such amount so
paid shall constitute such Lender's Advance as part of such Borrowing for all
purposes.
(e) The failure of any Lender to make the Advance to be made
by it as part of any Borrowing shall not relieve any other Lender of its
obligation, if any, hereunder to make its Advance on the date of such Borrowing,
but no Lender shall be responsible for the failure of any other Lender to make
the Advance to be made by such other Lender on the date of any Borrowing.
SECTION 2.03. Issuance of and Drawings and Reimbursement Under
Letters of Credit. (a) Request for Issuance. Each Letter of Credit shall be
issued upon notice, given not later than 11:00 A.M. (New York City time) on the
fifth Business Day prior to the date of the proposed issuance of such Letter of
Credit, by the Borrower to any Issuing Bank, which shall give to the
Administrative Agent and each Working Capital Lender prompt notice thereof by
telex or telecopier. Each such notice of issuance of a Letter of Credit (a
"Notice
<PAGE> 47
41
of Issuance") shall be by telephone, confirmed immediately in writing, or telex
or telecopier, specifying therein the requested (A) date of such issuance (which
shall be a Business Day), (B) Available Amount of such Letter of Credit, (C)
expiration date of such Letter of Credit, (D) name and address of the
beneficiary of such Letter of Credit and (E) form of such Letter of Credit, and
shall be accompanied by such application and agreement for letter of credit as
such Issuing Bank may specify to the Borrower for use in connection with such
requested Letter of Credit (a "Letter of Credit Agreement"). If (x) the
requested form of such Letter of Credit is acceptable to such Issuing Bank in
its sole discretion and (y) it has not received notice of objection to such
issuance from the Agents, such Issuing Bank will, upon fulfillment of the
applicable conditions set forth in Article III, make such Letter of Credit
available to the Borrower at its office referred to in Section 8.02 or as
otherwise agreed with the Borrower in connection with such issuance. In the
event and to the extent that the provisions of any Letter of Credit Agreement
shall conflict with this Agreement, the provisions of this Agreement shall
govern.
(b) Letter of Credit Reports. Each Issuing Bank shall furnish
(A) to the Administrative Agent on the first Business Day of each month a
written report summarizing issuance and expiration dates of Letters of Credit
issued by such Issuing Bank during the previous month and drawings during such
month under all Letters of Credit issued by such Issuing Bank, (B) to each
Working Capital Lender on the first Business Day of each month a written report
summarizing issuance and expiration dates of Letters of Credit issued by such
Issuing Bank during the preceding month and drawings during such month under all
Letters of Credit issued by such Issuing Bank and (C) to the Administrative
Agent and each Working Capital Lender on the first Business Day of each calendar
quarter a written report setting forth the average daily aggregate Available
Amount during the preceding calendar quarter of all Letters of Credit issued by
such Issuing Bank.
(c) Drawing and Reimbursement. The payment by any Issuing Bank
of a draft drawn under any Letter of Credit shall constitute for all purposes of
this Agreement the making by such Issuing Bank of a Letter of Credit Advance,
which shall be a Base Rate Advance, in the amount of such draft. Upon payment by
any Issuing Bank of a draft drawn under any Letter of Credit, such Issuing Bank
shall give prompt notice thereof to the Borrower and the Administrative Agent.
Upon written demand by any Issuing Bank with an outstanding Letter of Credit
Advance, with a copy of such demand to the Administrative Agent, each Working
Capital Lender shall purchase from such Issuing Bank, and such Issuing Bank
shall sell and assign to each such Working Capital Lender, such Lender's Pro
Rata Share of such outstanding Letter of Credit Advance as of the date of such
purchase, by making available for the account of its Applicable Lending Office
to the Administrative Agent for the account of such Issuing Bank, by deposit to
the Administrative Agent's Account, in same day funds, an amount equal to the
portion of the outstanding principal amount of such Letter of Credit Advance to
be purchased by such Lender. Promptly after
<PAGE> 48
42
receipt thereof, the Administrative Agent shall transfer such funds to such
Issuing Bank. The Borrower hereby agrees to each such sale and assignment. Each
Working Capital Lender agrees to purchase its Pro Rata Share of an outstanding
Letter of Credit Advance on (i) the Business Day on which demand therefor is
made by the Issuing Bank which made such Advance, provided notice of such demand
is given not later than 11:00 A.M. (New York City time) on such Business Day or
(ii) the first Business Day next succeeding such demand if notice of such demand
is given after such time. Upon any such assignment by an Issuing Bank to any
other Working Capital Lender of a portion of a Letter of Credit Advance, such
Issuing Bank represents and warrants to such other Lender that such Issuing Bank
is the legal and beneficial owner of such interest being assigned by it, free
and clear of any liens, but makes no other representation or warranty and
assumes no responsibility with respect to such Letter of Credit Advance, the
Loan Documents or any Loan Party. If and to the extent that any Working Capital
Lender shall not have so made the amount of such Letter of Credit Advance
available to the Administrative Agent, such Working Capital Lender agrees to pay
to the Administrative Agent forthwith on demand such amount together with
interest thereon, for each day from the date of demand by such Issuing Bank
until the date such amount is paid to the Administrative Agent, at the Federal
Funds Rate for its account or the account of such Issuing Bank, as applicable.
If any Lender shall pay to the Administrative Agent such amount for the account
of such Issuing Bank on any Business Day, such amount so paid in respect of
principal shall constitute a Letter of Credit Advance made by such Lender on
such Business Day for purposes of this Agreement, and the outstanding principal
amount of the Letter of Credit Advance made by such Issuing Bank shall be
reduced by such amount on such Business Day.
(d) Failure to Make Letter of Credit Advances. The failure of
any Lender to make the Letter of Credit Advance to be made by it on the date
specified in Section 2.03(c) shall not relieve any other Lender of its
obligation hereunder to make its Letter of Credit Advance on such date, but no
Lender shall be responsible for the failure of any other Lender to make the
Letter of Credit Advance to be made by such other Lender on such date.
SECTION 2.04. Repayment of Advances. (a) Term Loan Advances.
The Borrower shall repay to the Administrative Agent for the ratable account of
the Term Loan Lenders the aggregate outstanding principal amount of the Term
Loan Advances on the following dates in the amounts indicated (which amounts
shall be reduced as a result of the application of prepayments in accordance
with the order of priority set forth in Section 2.06):
<TABLE>
<CAPTION>
DATE AMOUNT
---- ------
<S> <C>
June 30, 1996 $ 4,375,000
September 30, 1996 $ 4,375,000
December 31, 1996 $13,125,000
</TABLE>
<PAGE> 49
43
<TABLE>
<CAPTION>
DATE AMOUNT
---- ------
<S> <C>
March 31, 1997 $13,125,000
June 30, 1997 $ 5,000,000
September 30, 1997 $ 5,000,000
December 31, 1997 $15,000,000
March 31, 1998 $15,000,000
June 30, 1998 $ 5,625,000
September 30, 1998 $ 5,625,000
December 31, 1998 $16,875,000
March 31, 1999 $16,875,000
June 30, 1999 $ 6,875,000
September 30, 1999 $ 6,875,000
December 31, 1999 $20,625,000
March 31, 2000 $20,625,000
June 30, 2000 $ 9,375,000
September 30, 2000 $ 9,375,000
December 31, 2000 $28,125,000
March 31, 2001 $28,125,000
</TABLE>
provided, however, that the final principal installment shall be repaid on the
Termination Date and in any event shall be in an amount equal to the aggregate
principal amount of the Term Loan Advances outstanding on such date.
(b) AXELs Series A Advances. The Borrower shall repay to the
Administrative Agent for the ratable account of the AXELs Series A Lenders the
aggregate outstanding principal amount of the AXELs Series A Advances on the
following dates in the amounts indicated (which amounts shall be reduced as a
result of the application of prepayments in accordance with the order of
priority set forth in Section 2.06):
<TABLE>
<CAPTION>
DATE AMOUNT
---- ------
<S> <C>
June 30, 1996 $250,000
September 30, 1996 $250,000
December 31, 1996 $750,000
March 31, 1997 $750,000
June 30, 1997 $250,000
September 30, 1997 $250,000
December 31, 1997 $750,000
March 31, 1998 $750,000
</TABLE>
<PAGE> 50
44
<TABLE>
<CAPTION>
DATE AMOUNT
---- ------
<S> <C>
June 30, 1998 $ 250,000
September 30, 1998 $ 250,000
December 31, 1998 $ 750,000
March 31, 1999 $ 750,000
June 30, 1999 $ 250,000
September 30, 1999 $ 250,000
December 31, 1999 $ 750,000
March 31, 2000 $ 750,000
June 30, 2000 $ 250,000
September 30, 2000 $ 250,000
December 31, 2000 $ 750,000
March 31, 2001 $ 750,000
June 30, 2001 $10,000,000
September 30, 2001 $10,000,000
December 31, 2001 $30,000,000
March 31, 2002 $30,000,000
June 30, 2002 $12,500,000
September 30, 2002 $12,500,000
December 31, 2002 $37,500,000
March 31, 2003 $37,500,000
</TABLE>
provided, however, that the final principal installment shall be repaid on the
Termination Date and in any event shall be in an amount equal to the aggregate
principal amount of the AXELs Series A Advances outstanding on such date.
(c) AXELs Series B Advances. The Borrower shall repay to the
Administrative Agent for the ratable account of the AXELs Series B Lenders the
aggregate outstanding principal amount of the AXELs Series B Advances on the
following dates in the amounts indicated (which amounts shall be reduced as a
result of the application of prepayments in accordance with the order of
priority set forth in Section 2.06):
<TABLE>
<CAPTION>
DATE AMOUNT
---- ------
<S> <C>
June 30, 1996 $150,000
September 30, 1996 $150,000
December 31, 1996 $450,000
March 31, 1997 $450,000
June 30, 1997 $150,000
</TABLE>
<PAGE> 51
45
<TABLE>
<CAPTION>
DATE AMOUNT
---- ------
<S> <C>
September 30, 1997 $ 150,000
December 31, 1997 $ 450,000
March 31, 1998 $ 450,000
June 30, 1998 $ 150,000
September 30, 1998 $ 150,000
December 31, 1998 $ 450,000
March 31, 1999 $ 450,000
June 30, 1999 $ 150,000
September 30, 1999 $ 150,000
December 31, 1999 $ 450,000
March 31, 2000 $ 450,000
June 30, 2000 $ 150,000
September 30, 2000 $ 150,000
December 31, 2000 $ 450,000
March 31, 2001 $ 450,000
June 30, 2001 $ 150,000
September 30, 2001 $ 150,000
December 31, 2001 $ 450,000
March 31, 2002 $ 450,000
June 30, 2002 $ 150,000
September 30, 2002 $ 150,000
December 31, 2002 $ 450,000
March 31, 2003 $ 450,000
June 30, 2003 $ 8,325,000
September 30, 2003 $ 8,325,000
December 31, 2003 $24,975,000
March 31, 2004 $24,975,000
</TABLE>
provided, however, that the final principal installment shall be repaid on the
Termination Date and in any event shall be in an amount equal to the aggregate
principal amount of the AXELs Series B Advances outstanding on such date.
(d) Working Capital Advances. The Borrower shall repay to the
Administrative Agent for the ratable account of the Working Capital Lenders on
the Termination Date the aggregate outstanding principal amount of the Working
Capital Advances then outstanding.
<PAGE> 52
46
(e) Acquisition Advances. The Borrower shall repay to the
Administrative Agent for the ratable account of the Acquisition Lenders the
aggregate outstanding principal amount of the Acquisition Advances on the
following dates in the amounts indicated (which amounts shall be reduced as a
result of the application of prepayments in accordance with the order of
priority set forth in Section 2.06):
<TABLE>
<CAPTION>
DATE AMOUNT
---- ------
<S> <C>
December 31, 1999 Amortization Amount A
March 31, 2000 Amortization Amount A
June 30, 2000 Amortization Amount B
September 30, 2000 Amortization Amount B
December 31, 2000 Amortization Amount B
March 31, 2001 Amortization Amount B
</TABLE>
provided, however, that the final principal installment shall be repaid on the
Termination Date and in any event shall be in an amount equal to the aggregate
principal amount of the Acquisition Advances outstanding on such date.
(f) Letter of Credit Advances. (i) The Borrower shall repay to
the Administrative Agent for the account of each Issuing Bank and each other
Working Capital Lender that has made a Letter of Credit Advance on the earlier
of the second Business Day following the date on which such Letter of Credit is
drawn and the Termination Date the outstanding principal amount of each Letter
of Credit Advance made by each of them.
(ii) The Obligations of the Borrower under this Agreement, any
Letter of Credit Agreement and any other agreement or instrument
relating to any Letter of Credit shall be unconditional and
irrevocable, and shall be paid strictly in accordance with the terms of
this Agreement, such Letter of Credit Agreement and such other
agreement or instrument under all circumstances, including, without
limitation, the following circumstances (it being understood that any
such payment by the Borrower is without prejudice to, and does not
constitute a waiver of, any rights the Borrower might have or might
acquire as a result of the payment by any Issuing Bank of any draft or
the reimbursement by the Borrower thereof):
(A) any lack of validity or enforceability of any
Loan Document, any Letter of Credit Agreement, any Letter of
Credit or any other agreement or instrument relating thereto
(all of the foregoing being, collectively, the "L/C Related
Documents");
<PAGE> 53
47
(B) any change in the time, manner or place of
payment of, or in any other term of, all or any of the
Obligations of the Borrower in respect of any L/C Related
Document or any other amendment or waiver of or any consent to
departure from all or any of the L/C Related Documents;
(C) the existence of any claim, set-off, defense or
other right that the Borrower may have at any time against any
beneficiary or any transferee of a Letter of Credit (or any
Persons for whom any such beneficiary or any such transferee
may be acting), any Issuing Bank or any other Person, whether
in connection with the transactions contemplated by the L/C
Related Documents or any unrelated transaction;
(D) any statement or any other document presented
under a 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;
(E) payment by any Issuing Bank under a Letter of
Credit against presentation of a draft or certificate that
does not strictly comply with the terms of such Letter of
Credit;
(F) any exchange, release or non-perfection of any
Collateral or other collateral, or any release or amendment or
waiver of or consent to departure from any Guaranty or any
other guarantee, for all or any of the Obligations of the
Borrower in respect of the L/C Related Documents; or
(G) any other circumstance or happening whatsoever,
whether or not similar to any of the foregoing, including,
without limitation, any other circumstance that might
otherwise constitute a defense available to, or a discharge
of, the Borrower or a guarantor.
SECTION 2.05. Termination or Reduction of the Commitments. (a)
Optional. The Borrower may, upon at least five Business Days' notice to the
Administrative Agent, terminate in whole or reduce in part the unused portions
of the Term Loan Commitments, the AXELs Series A Commitments, the AXELs Series B
Commitments, the Letter of Credit Facility, the Unused Working Capital
Commitments and the Acquisition Commitments; provided, however, that each
partial reduction of a Facility (i) shall be in an aggregate amount of
$5,000,000 or an integral multiple of $1,000,000 in excess thereof and (ii)
shall be made ratably among the Appropriate Lenders in accordance with their
Commitments with respect to such Facility.
<PAGE> 54
48
(b) Mandatory. (i) On the date of the Term Loan Borrowing,
after giving effect to such Term Loan Borrowing, and from time to time
thereafter upon each repayment or prepayment of the Term Loan Advances, the
aggregate Term Loan Commitments of the Term Loan Lenders shall be automatically
and permanently reduced, on a pro rata basis, by an amount equal to the amount
by which the aggregate Term Loan Commitments immediately prior to such reduction
exceed the aggregate unpaid principal amount of the Term Loan Advances then
outstanding.
(ii) On the date of the AXELs Series A Borrowing, after giving
effect to such AXELs Series A Borrowing, and from time to time
thereafter upon each repayment or prepayment of the AXELs Series A
Advances, the aggregate AXELs Series A Commitments of the AXELs Series
A Lenders shall be automatically and permanently reduced, on a pro rata
basis, by an amount equal to the amount by which the aggregate AXELs
Series A Commitments immediately prior to such reduction exceed the
aggregate unpaid principal amount of the AXELs Series A Advances then
outstanding.
(iii) On the date of the AXELs Series B Borrowing, after
giving effect to such AXELs Series B Borrowing, and from time to time
thereafter upon each repayment or prepayment of the AXELs Series B
Advances, the aggregate AXELs Series B Commitments of the AXELs Series
B Lenders shall be automatically and permanently reduced, on a pro rata
basis, by an amount equal to the amount by which the aggregate AXELs
Series B Commitments immediately prior to such reduction exceed the
aggregate unpaid principal amount of the AXELs Series B Advances then
outstanding.
(iv) On the Availability Termination Date, after giving effect
to any Acquisition Borrowing on such day, and from time to time
thereafter upon each repayment or prepayment of the Acquisition
Advances, the aggregate Acquisition Commitments of the Acquisition
Lenders shall be automatically and permanently reduced, on a pro rata
basis, by an amount equal to the amount by which the aggregate
Acquisition Commitments immediately prior to such reduction exceed the
aggregate unpaid principal amount of the Acquisition Advances then
outstanding.
(v) The Working Capital Facility shall be automatically and
permanently reduced on a pro rata basis on each date on which
prepayment thereof is required to be made pursuant to Section
2.06(b)(i), (ii), (iii) or (iv) in an amount equal to the applicable
Reduction Amount, provided that each such reduction of the Working
Capital Facility shall be made ratably among the Working Capital
Lenders in accordance with their Working Capital Commitments.
<PAGE> 55
49
(vi) The Letter of Credit Facility shall be permanently
reduced from time to time on the date of each reduction in the Working
Capital Facility by the amount, if any, by which the amount of the
Letter of Credit Facility exceeds the Working Capital Facility after
giving effect to such reduction of the Working Capital Facility.
SECTION 2.06. Prepayments. (a) Optional. The Borrower may,
upon at least five Business Days' notice to the Administrative Agent stating the
proposed date and aggregate principal amount of the prepayment (including,
without limitation, as a result of any refinancing in part or in whole of
amounts outstanding under the Loan Documents), and if such notice is given the
Borrower shall, prepay the outstanding aggregate principal amount of the
Advances comprising part of the same Borrowing in whole or ratably in part,
together with (i) accrued interest to the date of such prepayment on the
aggregate principal amount prepaid and (ii) in the case of any such prepayment
of any Advances other than Term Loan Advances, Acquisition Advances, Working
Capital Advances and Letter of Credit Advances prior to the first anniversary of
the Closing Date, a premium of 1-3/4% of the aggregate principal amount so
prepaid, or on or after the first anniversary of the Closing Date but prior to
the second anniversary of the Closing Date, a premium of 1% of the aggregate
principal amount so prepaid; provided, however, that (x) each partial prepayment
shall be in an aggregate principal amount of $5,000,000 or an integral multiple
of $1,000,000 in excess thereof, (y) if any prepayment of a Eurodollar Rate
Advance shall be made on a date other than the last day of an Interest Period
therefor the Borrower shall also pay any amounts owing pursuant to Section
8.04(c) and (z) prepayments of the Acquisition Facility and the Term Facilities
shall be made ratably among such Facilities, to be applied to the installments
of each such Facility on a pro rata basis.
(b) Mandatory. (i) The Borrower shall, on the 90th day
following the end of each Fiscal Year, prepay an aggregate principal amount of
the Advances comprising part of the same Borrowings in an amount equal to the
Excess Cash Flow Amount for such Fiscal Year. Each such prepayment shall be
applied first to the Acquisition Facility and the Term Facilities in accordance
with, and subject to the terms of, clause (iv) below and second ratably to the
Working Capital Facility as set forth in clause (vii) below.
(ii) The Borrower shall, on the date of receipt of the Net
Cash Proceeds by any Loan Party or any of its Subsidiaries or, in the
case of clause (C) below, Parent from (A) the sale, lease, transfer or
other disposition of any assets of any Loan Party or any of its
Subsidiaries (other than any sale, lease, transfer or other disposition
of assets pursuant to clause (i), (ii), (iii), (iv) or (v) of Section
5.02(e) and other than the sale of assets pursuant to clause (vi) of
Section 5.02(e) to the extent that the Net Cash Proceeds of such sale
do not exceed, in the aggregate from the date hereof, $10,000,000), (B)
the incurrence or issuance by any Loan Party or any of its Subsidiaries
of any Debt (other than Debt incurred or issued pursuant to clause (i),
<PAGE> 56
50
(ii) or (iii) of Section 5.02(b)), (C) the sale or issuance by Parent
of any capital stock or other ownership or profit interest, any
securities convertible into or exchangeable for capital stock or other
ownership or profit interest or any warrants, rights or options to
acquire capital stock or other ownership or profit interest, in each
case in this clause (C) in an initial public offering or subsequent
offering of capital stock of Parent and (D) any Extraordinary Receipt
received by or paid to or for the account of any Loan Party or any of
its Subsidiaries and not otherwise included in clause (A) or (B) above,
prepay an aggregate principal amount of the Advances comprising part of
the same Borrowings equal to the amount of such Net Cash Proceeds. Each
such prepayment shall be applied first to the Acquisition Facility and
the Term Facilities in accordance with, and subject to the terms of,
clause (iv) below and second ratably to the Working Capital Facility as
set forth in clause (vii) below.
(iii) Anything contained in this Section 2.06(b) to the
contrary notwithstanding, (A) if, following the occurrence of any
"Asset Sale" (as such term is defined in the Senior Subordinated Notes
Indenture or the Senior Subordinated Discount Notes Indenture) by any
Loan Party or any of its Subsidiaries, the Borrower is required to
commit by a particular date (a "Commitment Date") to apply or cause its
Subsidiaries to apply an amount equal to any of the "Net Proceeds" (as
defined in the Senior Subordinated Notes Indenture or the Senior
Subordinated Discount Notes Indenture, as the case may be) thereof in a
particular manner, or to apply by a particular date (an "Application
Date") an amount equal to any such "Net Proceeds" in a particular
manner, in either case in order to excuse the Borrower from being
required to make an "Asset Sale Offer" (as defined in the Senior
Subordinated Notes Indenture or the Senior Subordinated Discount Notes
Indenture, as the case may be) in connection with such "Asset Sale,"
and the Borrower shall have failed to so commit or to so apply an
amount equal to such "Net Proceeds" at least 60 days before the
Commitment Date or the Application Date, as the case may be, or (B) if
the Borrower at any other time shall have failed to apply or commit or
cause to be applied an amount equal to any such "Net Proceeds," and,
within 60 days thereafter assuming no further application or commitment
of an amount equal to such "Net Proceeds" the Borrower would otherwise
be required to make an "Asset Sale Offer" in respect thereof, then in
either such case the Borrower shall immediately apply or cause to be
applied an amount equal to such "Net Proceeds" to the payment of the
Advances in the manner set forth in Section 2.06(b)(ii) in such amounts
as shall excuse the Borrower from making any such "Asset Sale Offer".
(iv) Prepayments of the Acquisition Facility and the Term
Facilities pursuant to Section 2.06(b)(i), (ii) or (iii) shall be made
ratably among such Facilities, to be applied to the installments of
each such Facility on a pro rata basis until such installments are paid
in full; provided, however, that with respect to prepayments
<PAGE> 57
51
made prior to or on the second anniversary of the Closing Date, once
prepayments in a principal amount of $25,000,000 or more in the
aggregate since the Closing Date shall have been applied to the AXELs
Series A Facility and the AXELs Series B Facility then the Lenders
under such Facilities, at each such Lender's option, may elect not to
accept such prepayment, in which event the provisions of the next
sentence shall apply. With respect to such prepayments made prior to or
on the second anniversary of the Closing Date, once the AXELs Series A
Facility and the AXELs Series B Facility shall have been prepaid in a
principal amount of $25,000,000 in the aggregate since the Closing
Date, then upon receipt by the Administrative Agent of such prepayment,
the amount of the prepayment that is available to prepay such
Facilities (subject to the proviso to the immediately preceding
sentence) shall be deposited in the Cash Collateral Account (the "First
Prepayment Amount"), pending application of such amount on the First
Prepayment Date and the Second Prepayment Date as set forth below and
promptly after such receipt (the date of such receipt being the
"Receipt Date"), the Administrative Agent shall give written notice to
the AXELs Series A Lenders and the AXELs Series B Lenders of the amount
available to prepay the Advances and the date on which such prepayment
shall be made (the "First Prepayment Date"), which date shall be 10
days after the Receipt Date. Any Lender declining such prepayment (a
"First Declining Lender") shall give written notice to the
Administrative Agent by 12:00 Noon (New York City time) on the Business
Day immediately preceding the First Prepayment Date. On the First
Prepayment Date, an amount equal to that portion of the First
Prepayment Amount accepted by the AXELs Series A Lenders and the AXELs
Series B Lenders other than the First Declining Lenders (such Lenders
being the "First Accepting Lenders") to prepay Advances owing to such
First Accepting Lenders shall be withdrawn from the Cash Collateral
Account and applied to prepay Advances owing to such First Accepting
Lenders on a pro rata basis and any amounts that would otherwise have
been applied to prepay Advances owing to the First Declining Lenders
(the "Second Prepayment Amount") shall instead be retained in the Cash
Collateral Account and offered to the First Accepting Lenders to prepay
Advances owing to such First Accepting Lenders. The Administrative
Agent shall, on or prior to the First Prepayment Date, give written
notice to the First Accepting Lenders of the Second Prepayment Amount
that is available to prepay the Advances owing to such First Accepting
Lenders and the date on which such prepayment shall be made (the
"Second Prepayment Date"), which date shall be 10 days after the First
Prepayment Date. Any First Accepting Lender declining such prepayment
(a "Second Declining Lender") shall give written notice to the
Administrative Agent by 12:00 Noon (New York City time) on the Business
Day immediately preceding the Second Prepayment Date. On the Second
Prepayment Date, an amount equal to the Second Prepayment Amount shall
be withdrawn from the Cash Collateral Account and applied to prepay
Advances owing to the First Accepting Lenders other than the Second
Declining
<PAGE> 58
52
Lenders (such Lenders being the "Second Accepting Lenders") on a pro
rata basis and any amounts that would otherwise have been applied to
prepay Advances owing to Second Declining Lenders shall instead be
applied first to prepay Advances owing to the Acquisition Lenders and
the Term Loan Lenders on a pro rata basis and, in each case, to the
installments thereof on a pro rata basis and second ratably to prepay
the Working Capital Facility as set forth in clause (vii) below and, if
the Acquisition Facility, Term Loan Facility and Working Capital
Facility shall have been paid in full and terminated, amounts that
would have been otherwise applied to prepay Advances under such
Facilities shall be applied instead to prepay Advances owing to the
Second Accepting Lenders.
(v) The Borrower shall, on each Business Day, prepay an
aggregate principal amount of the Working Capital Advances comprising
part of the same Borrowings and the Letter of Credit Advances equal to
the amount by which (A) the sum of the aggregate principal amount of
(x) the Working Capital Advances and (y) the Letter of Credit Advances
then outstanding plus the aggregate Available Amount of all Letters of
Credit then outstanding exceeds (B) the Working Capital Facility on
such Business Day.
(vi) The Borrower shall, on each Business Day, pay to the
Administrative Agent for deposit in the L/C Cash Collateral Account an
amount sufficient to cause the aggregate amount on deposit in such
Account to equal the amount by which the aggregate Available Amount of
all Letters of Credit then outstanding exceeds the Letter of Credit
Facility on such Business Day.
(vii) Prepayments of the Working Capital Facility made
pursuant to clause (i), (ii), (iii) or (iv) above shall be first
applied to prepay Letter of Credit Advances then outstanding until such
Advances are paid in full, second applied to prepay Working Capital
Advances then outstanding comprising part of the same Borrowings until
such Advances are paid in full and third deposited in the L/C Cash
Collateral Account to cash collateralize 100% of the Available Amount
of the Letters of Credit then outstanding; and, in the case of
prepayments of the Working Capital Facility required pursuant to clause
(i), (ii), (iii) or (iv) above, the amount remaining (if any) after the
prepayment in full of the Advances then outstanding and the 100% cash
collateralization of the aggregate Available Amount of Letters of
Credit then outstanding (the sum of such prepayment amounts, cash
collateralization amounts and remaining amount being referred to herein
as the "Reduction Amount") may be retained by the Borrower and the
Working Capital Facility shall be permanently reduced as set forth in
Section 2.05(b)(v). Upon the drawing of any Letter of Credit for which
funds are on deposit in the L/C Cash Collateral Account, such funds
shall
<PAGE> 59
53
be applied to reimburse the relevant Issuing Bank or Working Capital
Lenders, as applicable.
(viii) Notwithstanding anything to the contrary contained in
subsection (b)(ii) of this Section 2.06, so long as no Default shall
have occurred and be continuing, if, on any date on which a prepayment
of Advances would otherwise be required pursuant to subsection (b)(ii)
of this Section 2.06, the aggregate amount of Net Cash Proceeds or
other amounts otherwise required by such subsection to be applied to
prepay Advances on such date are less than or equal to $1,000,000, the
Borrower may defer such prepayment until the date on which the
aggregate amount of Net Cash Proceeds or other amounts otherwise
required by such subsection to be applied to prepay Advances exceeds
$1,000,000. During such deferral period the Borrower may apply all or
any part of such aggregate amount to prepay Working Capital Advances
and may, subject to the fulfillment of the conditions set forth in
Section 3.02, reborrow such amounts (which amounts, to the extent
originally constituting Net Cash Proceeds, shall be deemed to retain
their original character as Net Cash Proceeds when so reborrowed) for
application as required by this Section 2.06. Upon the occurrence of a
Default, the Borrower shall immediately prepay Advances in the amount
of all Net Cash Proceeds received by the Borrower and other amounts, as
applicable, that are required to be applied to prepay Advances by this
Section 2.06 (without giving effect to the first and second sentences
of this subsection (b)(viii)) but which have not previously been so
applied.
(ix) All prepayments under this subsection (b) shall be made
together with accrued interest to the date of such prepayment on the
principal amount prepaid.
SECTION 2.07. Interest. (a) Scheduled Interest. The Borrower
shall pay interest on the unpaid principal amount of each Advance owing to each
Lender from the date of such Advance until such principal amount shall be paid
in full, at the following rates per annum:
(i) Base Rate Advances. During such periods as such Advance is
a Base Rate Advance, a rate per annum equal at all times to the sum of
(A) the Base Rate in effect from time to time plus (B) the Applicable
Margin in effect from time to time, payable in arrears quarterly on the
first day of each July, October, January and April during such periods
and on the date such Base Rate Advance shall be Converted or paid in
full.
(ii) Eurodollar Rate Advances. During such periods as such
Advance is a Eurodollar Rate Advance, a rate per annum equal at all
times during each Interest Period for such Advance to the sum of (A)
the Eurodollar Rate for such Interest
<PAGE> 60
54
Period for such Advance plus (B) the Applicable Margin in effect on the
first day of such Interest Period, payable in arrears on the last day
of such Interest Period and, if such Interest Period has a duration of
more than three months, on each day that occurs during such Interest
Period every three months from the first day of such Interest Period
and on the date such Eurodollar Rate Advance shall be Converted or paid
in full.
(b) Default Interest. Upon the occurrence and during the
continuance of a Default, the Borrower shall pay interest on (i) the unpaid
principal amount of each Advance owing to each Lender, payable in arrears on the
dates referred to in clause (a)(i) or (a)(ii) above and on demand, at a rate per
annum equal at all times to 2% per annum above the rate per annum required to be
paid on such Advance pursuant to clause (a)(i) or (a)(ii) above and (ii) to the
fullest extent permitted by law, the amount of any interest, fee or other amount
payable hereunder that is not paid when due, from the date such amount shall be
due until such amount shall be paid in full, payable in arrears on the date such
amount shall be paid in full and on demand, at a rate per annum equal at all
times to 2% per annum above the rate per annum required to be paid, in the case
of interest, on the Type of Advance on which such interest has accrued pursuant
to clause (a)(i) or (a)(ii) above, and, in all other cases, on Base Rate
Advances pursuant to clause (a)(i) above.
(c) Notice of Interest Rate. Promptly after receipt of a
Notice of Borrowing pursuant to Section 2.02(a), the Administrative Agent shall
give notice to the Borrower and each Appropriate Lender of the applicable
interest rate determined by the Administrative Agent for purposes of clause
(a)(i) or (ii).
SECTION 2.08. Fees. (a) Commitment Fee. The Borrower shall pay
to the Administrative Agent for the account of the Lenders a commitment fee,
from the date of the acceptance of the Initial Lenders' Commitments by the
Borrower in the case of each Initial Lender and from the effective date
specified in the Assignment and Acceptance pursuant to which it became a Lender
in the case of each other Lender until the Termination Date, payable in arrears
on the date of the initial Borrowing hereunder, thereafter quarterly on the
first day of each July, October, January and April, commencing July 1, 1996, and
on the Termination Date, (i) at a rate per annum equal to the Applicable
Percentage in effect from time to time on the average daily unused portion of
each Appropriate Lender's Term Loan Commitment, AXELs Series A Commitment and
AXELs Series B Commitment, on such Lender's Pro Rata Share of the average daily
Maximum Available Acquisition Amount during such quarter and on the sum of the
average daily Unused Working Capital Commitment of such Lender during such
quarter and (ii) at a rate equal to the Applicable Unavailable Acquisition
Percentage in effect from time to time on such Lender's Pro Rata Share of the
average daily Unavailable Acquisition Amount during such quarter; provided,
<PAGE> 61
55
however, that no commitment fee shall accrue on any of the Commitments of a
Defaulting Lender so long as such Lender shall be a Defaulting Lender.
(b) Letter of Credit Fees, Etc. (i) The Borrower shall pay to
the Administrative Agent for the account of each Working Capital Lender a
commission, payable in arrears quarterly on the first day of each July, October,
January and April, commencing July 1, 1996, and on the earliest to occur of the
full drawing, expiration, termination or cancellation of any Letter of Credit
and on the Termination Date, on such Lender's Pro Rata Share of the average
daily aggregate Available Amount during such quarter of all Letters of Credit
outstanding from time to time at a rate per annum equal to the Applicable Margin
for Eurodollar Rate Advances in effect from time to time.
(ii) The Borrower shall pay to each Issuing Bank, for its own
account, such commissions, issuance fees, fronting fees, transfer fees
and other fees and charges in connection with the issuance or
administration of each Letter of Credit as the Borrower and such
Issuing Bank shall agree.
(c) Administrative Agent's Fees. The Borrower shall pay to the
Administrative Agent for its own account such fees as may from time to time be
agreed between the Borrower and the Administrative Agent.
SECTION 2.09. Conversion of Advances. (a) Optional. The
Borrower may on any Business Day, upon notice given to the Administrative Agent
not later than 11:00 A.M. (New York City time) on the third Business Day prior
to the date of the proposed Conversion and subject to the provisions of Section
2.10, Convert all or any portion of the Advances of one Type comprising the same
Borrowing into Advances of the other Type; provided, however, that any
Conversion of Eurodollar Rate Advances into Base Rate Advances shall be made
only on the last day of an Interest Period for such Eurodollar Rate Advances,
any Conversion of Base Rate Advances into Eurodollar Rate Advances shall be in
an amount not less than the minimum amount specified in Section 2.02(b), no
Conversion of any Advances shall result in more separate Borrowings than
permitted under Section 2.02(b) and each Conversion of Advances comprising part
of the same Borrowing under any Facility shall be made ratably among the
Appropriate Lenders in accordance with their Commitments under such Facility.
Each such notice of Conversion shall, within the restrictions specified above,
specify (i) the date of such Conversion, (ii) the Advances to be Converted and
(iii) if such Conversion is into Eurodollar Rate Advances, the duration of the
initial Interest Period for such Advances. Each notice of Conversion shall be
irrevocable and binding on the Borrower.
(b) Mandatory. (i) On the date on which the aggregate unpaid
principal amount of Eurodollar Rate Advances comprising any Borrowing shall be
reduced, by
<PAGE> 62
56
payment or prepayment or otherwise, to less than $5,000,000, such Advances shall
automatically Convert into Base Rate Advances.
(ii) If the Borrower shall fail to select the duration of any
Interest Period for any Eurodollar Rate Advances in accordance with the
provisions contained in the definition of "Interest Period" in Section
1.01, the Administrative Agent will forthwith so notify the Borrower
and the Appropriate Lenders, whereupon each such Eurodollar Rate
Advance will automatically, on the last day of the then existing
Interest Period therefor, Convert into a Eurodollar Rate Advance with
an Interest Period of one month.
(iii) Upon the occurrence and during the continuance of any
Default, (x) each Eurodollar Rate Advance will automatically, on the
last day of the then existing Interest Period therefor, Convert into a
Base Rate Advance and (y) the obligation of the Lenders to make, or to
Convert Advances into, Eurodollar Rate Advances shall be suspended.
SECTION 2.10. Increased Costs, Etc. (a) If, due to either (i)
the introduction of or any change in or in the interpretation of any law or
regulation or (ii) the compliance with any guideline or request from any central
bank or other governmental authority (whether or not having the force of law),
there shall be any increase in the cost to any Lender Party of agreeing to make
or of making, funding or maintaining Eurodollar Rate Advances or of agreeing to
issue or of issuing or maintaining or participating in Letters of Credit or of
agreeing to make or of making or maintaining Letter of Credit Advances
(excluding for purposes of this Section 2.10 any such increased costs resulting
from (i) Taxes or Other Taxes (as to which Section 2.12 shall govern) and (ii)
changes in the basis of taxation of overall net income or overall gross income
by the United States or by the foreign jurisdiction or state under the laws of
which such Lender Party is organized or has its Applicable Lending Office or any
political subdivision thereof), then the Borrower shall from time to time, upon
demand by such Lender Party (with a copy of such demand to the Administrative
Agent), pay to the Administrative Agent for the account of such Lender Party
additional amounts sufficient to compensate such Lender Party for such increased
cost; provided, however, that, before making any such demand, each Lender Party
agrees to use reasonable efforts (consistent with its internal policy and legal
and regulatory restrictions) to designate a different Applicable Lending Office
if the making of such a designation would avoid the need for, or reduce the
amount of, such increased cost and would not, in the reasonable judgment of such
Lender Party, be otherwise disadvantageous to such Lender Party. A certificate
as to the amount of such increased cost, submitted to the Borrower by such
Lender Party, shall be conclusive and binding for all purposes, absent manifest
error.
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(b) If any Lender Party determines that either (i) the
enactment of or any change in or in the interpretation of any law or regulation
or (ii) the compliance with any guideline or request from any central bank or
other governmental authority (whether or not having the force of law) affects or
would affect the amount of capital required or expected to be maintained by such
Lender Party or any corporation controlling such Lender Party and that the
amount of such capital is increased by or based upon the existence of such
Lender Party's commitment to lend or to issue or participate in Letters of
Credit hereunder and other commitments of such type or the issuance or
maintenance of or participation in the Letters of Credit (or similar contingent
obligations), then, upon demand by such Lender Party or such corporation (with a
copy of such demand to the Administrative Agent), the Borrower shall pay to the
Administrative Agent for the account of such Lender Party, from time to time as
specified by such Lender Party, additional amounts sufficient to compensate such
Lender Party in the light of such circumstances, to the extent that such Lender
Party reasonably determines such increase in capital to be allocable to the
existence of such Lender Party's commitment to lend or to issue or participate
in Letters of Credit hereunder or to the issuance or maintenance of or
participation in any Letters of Credit; provided, however, that, before making
any such demand, each Lender Party agrees to use reasonable efforts (consistent
with its internal policy and legal and regulatory restrictions) to designate a
different Applicable Lending Office if the making of such a designation would
avoid the need for, or reduce the amount of, such additional amounts payable
under this subsection (b) and would not, in the reasonable judgment of such
Lender Party, be otherwise disadvantageous to such Lender Party. A certificate
as to such amounts submitted to the Borrower by such Lender Party shall be
conclusive and binding for all purposes, absent manifest error.
(c) If, with respect to any Eurodollar Rate Advances under any
Facility, Lenders owed at least 25% of the then aggregate unpaid principal
amount thereof notify the Administrative Agent that the Eurodollar Rate for any
Interest Period for such Advances will not adequately reflect the cost to such
Lenders of making, funding or maintaining their Eurodollar Rate Advances for
such Interest Period, the Administrative Agent shall forthwith so notify the
Borrower and the Appropriate Lenders, whereupon (i) each such Eurodollar Rate
Advance under any Facility will automatically, on the last day of the then
existing Interest Period therefor, Convert into a Base Rate Advance and (ii) the
obligation of the Appropriate Lenders to make, or to Convert Advances into,
Eurodollar Rate Advances shall be suspended until the Administrative Agent shall
notify the Borrower that such Lenders have determined that the circumstances
causing such suspension no longer exist.
(d) Notwithstanding any other provision of this Agreement, if
the introduction of or any change in or in the interpretation of any law or
regulation shall make it unlawful, or any central bank or other governmental
authority shall assert that it is unlawful, for any Lender or its Eurodollar
Lending Office to perform its obligations hereunder to make Eurodollar Rate
Advances or to continue to fund or maintain Eurodollar
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Rate Advances hereunder, then, on notice thereof and demand therefor by such
Lender to the Borrower through the Administrative Agent, (i) each Eurodollar
Rate Advance under each Facility under which such Lender has a Commitment will
automatically, upon such demand, Convert into a Base Rate Advance and (ii) the
obligation of the Appropriate Lenders to make, or to Convert Advances into,
Eurodollar Rate Advances shall be suspended until the Administrative Agent shall
notify the Borrower that such Lender has determined that the circumstances
causing such suspension no longer exist.
SECTION 2.11. Payments and Computations. (a) The Borrower
shall make each payment hereunder and under the Notes, irrespective of any right
of counterclaim or set-off (except as otherwise provided in Section 2.15), not
later than 11:00 A.M. (New York City time) on the day when due in U.S. dollars
to the Administrative Agent at the Administrative Agent's Account in same day
funds, with payments being received by the Administrative Agent after such time
being deemed to have been received on the next succeeding Business Day. The
Administrative Agent will promptly thereafter cause like funds to be distributed
(i) if such payment by the Borrower is in respect of principal, interest,
commitment fees or any other Obligation then payable hereunder and under the
Notes to more than one Lender Party, to such Lender Parties for the account of
their respective Applicable Lending Offices ratably in accordance with the
amounts of such respective Obligations then payable to such Lender Parties and
(ii) if such payment by the Borrower is in respect of any Obligation then
payable hereunder to one Lender Party, to such Lender Party for the account of
its Applicable Lending Office, in each case to be applied in accordance with the
terms of this Agreement. Upon its acceptance of an Assignment and Acceptance and
recording of the information contained therein in the Register pursuant to
Section 8.07(d), from and after the effective date of such Assignment and
Acceptance, the Administrative Agent shall make all payments hereunder and under
the Notes in respect of the interest assigned thereby to the Lender Party
assignee thereunder, and the parties to such Assignment and Acceptance shall
make all appropriate adjustments in such payments for periods prior to such
effective date directly between themselves.
(b) If the Administrative Agent receives funds for application
to the Obligations under the Loan Documents under circumstances for which the
Loan Documents do not specify the Advances or the Facility to which, or the
manner in which, such funds are to be applied, the Administrative Agent may, but
shall not be obligated to, elect to distribute such funds to each Lender Party
ratably in accordance with such Lender Party's proportionate share of the
principal amount of all outstanding Advances and the Available Amount of all
Letters of Credit then outstanding, in repayment or prepayment of such of the
outstanding Advances or other Obligations owed to such Lender Party, and for
application to such principal installments, as the Administrative Agent shall
direct.
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(c) The Borrower hereby authorizes each Lender Party, if and
to the extent payment owed to such Lender Party is not made when due hereunder
or, in the case of a Lender, under the Note held by such Lender, to charge from
time to time against any or all of the Borrower's accounts with such Lender
Party any amount so due.
(d) All computations of interest, fees and Letter of Credit
commissions shall be made by the Administrative Agent on the basis of a year of
360 days, in each case for the actual number of days (including the first day
but excluding the last day) occurring in the period for which such interest,
fees or commissions are payable. Each determination by the Administrative Agent
of an interest rate, fee or commission hereunder shall be conclusive and binding
for all purposes, absent manifest error.
(e) Whenever any payment hereunder or under the Notes shall be
stated to be due on a day other than a Business Day, such payment shall be made
on the next succeeding Business Day, and such extension of time shall in such
case be included in the computation of payment of interest or commitment fee, as
the case may be; provided, however, that, if such extension would cause payment
of interest on or principal of Eurodollar Rate Advances to be made in the next
following calendar month, such payment shall be made on the next preceding
Business Day.
(f) Unless the Administrative Agent shall have received notice
from the Borrower prior to the date on which any payment is due to any Lender
Party hereunder that the Borrower will not make such payment in full, the
Administrative Agent may assume that the Borrower has made such payment in full
to the Administrative Agent on such date and the Administrative Agent may, in
reliance upon such assumption, cause to be distributed to such Lender Party on
such due date an amount equal to the amount then due such Lender Party. If and
to the extent the Borrower shall not have so made such payment in full to the
Administrative Agent, each such Lender Party shall repay to the Administrative
Agent forthwith on demand such amount distributed to such Lender Party together
with interest thereon, for each day from the date such amount is distributed to
such Lender Party until the date such Lender Party repays such amount to the
Administrative Agent, at the Federal Funds Rate.
SECTION 2.12. Taxes. (a) Any and all payments by the Borrower
hereunder or under the Notes shall be made, in accordance with Section 2.11,
free and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding, in the case of each Lender Party and each Agent,
taxes that are imposed on its overall net income by the United States and taxes
that are imposed on its overall net income (and franchise taxes imposed in lieu
thereof) by the state or foreign jurisdiction under the laws of which such
Lender Party or such Agent (as the case may be) is organized or any political
subdivision thereof and, in the
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case of each Lender Party, taxes that are imposed on its overall net income (and
franchise taxes imposed in lieu thereof) by the state or foreign jurisdiction of
such Lender Party's Applicable Lending Office or any political subdivision
thereof (all such non-excluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities in respect of payments hereunder or under the Notes
being hereinafter referred to as "Taxes"). If the Borrower shall be required by
law to deduct any Taxes from or in respect of any sum payable hereunder or under
any Note to any Lender Party or any Agent, (i) the sum payable shall be
increased as may be necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section
2.12) such Lender Party or such Agent (as the case may be) receives an amount
equal to the sum it would have received had no such deductions been made, (ii)
the Borrower shall make such deductions and (iii) the Borrower shall pay the
full amount deducted to the relevant taxation authority or other authority in
accordance with applicable law.
(b) In addition, the Borrower shall pay any present or future
stamp, documentary, excise, property or similar taxes, charges or levies that
arise from any payment made hereunder or under the Notes or from the execution,
delivery or registration of, performing under, or otherwise with respect to,
this Agreement or the Notes (hereinafter referred to as "Other Taxes").
(c) The Borrower shall indemnify each Lender Party and each
Agent for and hold it harmless against the full amount of Taxes and Other Taxes,
and the full amount of taxes of any kind imposed by any jurisdiction on amounts
payable under this Section 2.12, imposed on or paid by such Lender Party or such
Agent (as the case may be) and any liability (including penalties, additions to
tax, interest and expenses) arising therefrom or with respect thereto. This
indemnification shall be made within 30 days from the date such Lender Party or
such Agent (as the case may be) makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes, the
Borrower shall furnish to the Administrative Agent, at its address referred to
in Section 8.02, the original or a certified copy of a receipt evidencing such
payment. In the case of any payment hereunder or under the Notes by or on behalf
of the Borrower through an account or branch outside the United States or by or
on behalf of the Borrower by a payor that is not a United States person, if the
Borrower determines that no Taxes are payable in respect thereof, the Borrower
shall furnish, or shall cause such payor to furnish, to the Administrative
Agent, at such address, an opinion of counsel acceptable to the Administrative
Agent stating that such payment is exempt from Taxes. For purposes of this
subsection (d) and subsection (e), the terms "United States" and "United States
person" shall have the meanings specified in Section 7701 of the Internal
Revenue Code.
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(e) Each Lender Party organized under the laws of a
jurisdiction outside the United States shall, on or prior to the date of its
execution and delivery of this Agreement in the case of each Initial Lender or
Initial Issuing Bank, as the case may be, and on the date of the Assignment and
Acceptance pursuant to which it becomes a Lender Party in the case of each other
Lender Party, and from time to time thereafter as requested in writing by the
Borrower (but only so long thereafter as such Lender Party remains lawfully able
to do so), provide each of the Administrative Agent and the Borrower with two
original Internal Revenue Service forms 1001 or 4224 or (in the case of a Lender
Party that is claiming exemption from United States withholding tax under
Section 871(h) or 881(c) of the Internal Revenue Code with respect to payments
of "portfolio interest") form W-8 (and, if such Lender Party delivers a form
W-8, a certificate representing that such Lender Party is not a "bank" for
purposes of Section 881(c) of the Internal Revenue Code, is not a 10- percent
shareholder (within the meaning of Section 871(h)(3)(B) of the Internal Revenue
Code) of the Borrower and is not a controlled foreign corporation related to the
Borrower (within the meaning of Section 864(d)(4) of the Internal Revenue
Code)), as appropriate, or any successor or other form prescribed by the
Internal Revenue Service, certifying that such Lender Party is exempt from or
entitled to a reduced rate of United States withholding tax on payments pursuant
to this Agreement or the Notes or, in the case of a Lender Party providing a
form W-8, certifying that such Lender Party is a foreign corporation,
partnership, estate or trust. If the forms provided by a Lender Party at the
time such Lender Party first becomes a party to this Agreement indicates a
United States interest withholding tax rate in excess of zero, withholding tax
at such rate shall be considered excluded from the definition of Taxes hereunder
unless and until such Lender Party provides the appropriate form certifying that
a lesser rate applies, whereupon withholding tax at such lesser rate only shall
be considered excluded from the definition of Taxes hereunder for periods
governed by such form; provided, however, that, if at the date of the Assignment
and Acceptance pursuant to which a Lender Party becomes a party to this
Agreement, the Lender Party assignor was entitled to payments under subsection
(a) in respect of United States withholding tax with respect to interest paid at
such date, then, to such extent, the term Taxes shall include (in addition to
withholding taxes that may be imposed in the future or other amounts otherwise
includible in Taxes) United States withholding tax, if any, applicable with
respect to the Lender Party assignee on such date.
(f) For any period with respect to which a Lender Party has
failed to provide the Borrower with the appropriate form described in subsection
(e) above (other than if such failure is due to a change in law occurring after
the date on which a form originally was required to be provided or if such form
otherwise is not required under subsection (e) above), such Lender Party shall
not be entitled to indemnification under subsection (a) or (c) with respect to
Taxes imposed by the United States by reason of such failure; provided, however,
that should a Lender Party become subject to Taxes because of its failure to
deliver
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a form required hereunder, the Borrower shall take such steps as such Lender
Party shall reasonably request to assist such Lender Party to recover such
Taxes.
(g) Any Lender Party claiming any additional amounts payable
pursuant to this Section 2.12 shall use reasonable efforts (consistent with its
internal policy and legal and regulatory restrictions) to change the
jurisdiction of its Applicable Lending Office if the making of such a change
would avoid the need for, or reduce the amount of, any such additional amounts
that may thereafter accrue and would not, in the reasonable judgment of such
Lender Party, be otherwise disadvantageous to such Lender Party.
SECTION 2.13. Sharing of Payments, Etc. If any Lender Party
shall obtain at any time any payment (whether voluntary, involuntary, through
the exercise of any right of set-off, or otherwise, other than as a result of an
assignment pursuant to Section 8.07) (a) on account of Obligations due and
payable to such Lender Party hereunder and under the Notes at such time in
excess of its ratable share (according to the proportion of (i) the amount of
such Obligations due and payable to such Lender Party at such time to (ii) the
aggregate amount of the Obligations due and payable to all Lender Parties
hereunder and under the Notes at such time) of payments on account of the
Obligations due and payable to all Lender Parties hereunder and under the Notes
at such time obtained by all the Lender Parties at such time or (b) on account
of Obligations owing (but not due and payable) to such Lender Party hereunder
and under the Notes at such time in excess of its ratable share (according to
the proportion of (i) the amount of such Obligations owing to such Lender Party
at such time to (ii) the aggregate amount of the Obligations owing (but not due
and payable) to all Lender Parties hereunder and under the Notes at such time)
of payments on account of the Obligations owing (but not due and payable) to all
Lender Parties hereunder and under the Notes at such time obtained by all of the
Lender Parties at such time, such Lender Party shall forthwith purchase from the
other Lender Parties such interests or participating interests in the
Obligations due and payable or owing to them, as the case may be, as shall be
necessary to cause such purchasing Lender Party to share the excess payment
ratably with each of them; provided, however, that if all or any portion of such
excess payment is thereafter recovered from such purchasing Lender Party, such
purchase from each other Lender Party shall be rescinded and such other Lender
Party shall repay to the purchasing Lender Party the purchase price to the
extent of such Lender Party's ratable share (according to the proportion of (i)
the purchase price paid to such Lender Party to (ii) the aggregate purchase
price paid to all Lender Parties) of such recovery together with an amount equal
to such Lender Party's ratable share (according to the proportion of (i) the
amount of such other Lender Party's required repayment to (ii) the total amount
so recovered from the purchasing Lender Party) of any interest or other amount
paid or payable by the purchasing Lender Party in respect of the total amount so
recovered; provided further that so long as the Obligations under the Loan
Documents shall not have been accelerated, any excess payment received by any
Appropriate Lender shall be shared on a pro rata basis only
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with other Appropriate Lenders. The Borrower agrees that any Lender Party so
purchasing an interest or participating interest from another Lender Party
pursuant to this Section 2.13 may, to the fullest extent permitted by law,
exercise all its rights of payment (including the right of set-off) with respect
to such interest or participating interest, as the case may be, as fully as if
such Lender Party were the direct creditor of the Borrower in the amount of such
interest or participating interest, as the case may be.
SECTION 2.14. Use of Proceeds. The proceeds of (i) the Term
Loan Advances, the AXELs Series A Advances and the AXELs Series B Advances shall
be available (and the Borrower agrees that it shall use such proceeds) solely to
pay to the Sellers the cash consideration for the Acquisition, pay transaction
fees and expenses and refinance certain Existing Debt, (ii) the Acquisition
Advances shall be available (and the Borrower agrees that it shall use such
proceeds) solely to finance certain acquisitions to the extent permitted
hereunder (whether on the date of such acquisition or otherwise), to refinance
construction costs of new bowling centers after the completion of the
construction thereof and to provide working capital for the Borrower and its
Subsidiaries to the extent not used for such acquisitions, and (iii) the Working
Capital Advances and the issuances of Letters of Credit shall be available (and
the Borrower agrees that it shall use such proceeds and Letters of Credit)
solely (w) to provide working capital for the Borrower and its Subsidiaries, (x)
to finance certain acquisitions to the extent permitted hereunder and to
refinance construction costs of new bowling centers after the completion of the
construction thereof, in each case in this clause (x) to the extent Acquisition
Advances have previously been used to provide working capital for the Borrower
and its Subsidiaries, (y) to make any payments required under the Support
Agreement and (z) to pay to the Sellers the "purchase price adjustment" (if any)
required to be paid pursuant to the Purchase Agreement.
SECTION 2.15. Defaulting Lenders. (a) In the event that, at
any one time, (i) any Lender Party shall be a Defaulting Lender, (ii) such
Defaulting Lender shall owe a Defaulted Advance to the Borrower and (iii) the
Borrower shall be required to make any payment hereunder or under any other Loan
Document to or for the account of such Defaulting Lender, then the Borrower may,
so long as no Default shall occur or be continuing at such time and to the
fullest extent permitted by applicable law, set off and otherwise apply the
Obligation of the Borrower to make such payment to or for the account of such
Defaulting Lender against the obligation of such Defaulting Lender to make such
Defaulted Advance. In the event that, on any date, the Borrower shall so set off
and otherwise apply its obligation to make any such payment against the
obligation of such Defaulting Lender to make any such Defaulted Advance on or
prior to such date, the amount so set off and otherwise applied by the Borrower
shall constitute for all purposes of this Agreement and the other Loan Documents
an Advance by such Defaulting Lender made on the date under the Facility
pursuant to which such Defaulted Advance was originally required to have been
made pursuant to Section 2.01. Such Advance shall be a Base Rate Advance
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and shall be considered, for all purposes of this Agreement, to comprise part of
the Borrowing in connection with which such Defaulted Advance was originally
required to have been made pursuant to Section 2.01, even if the other Advances
comprising such Borrowing shall be Eurodollar Rate Advances on the date such
Advance is deemed to be made pursuant to this subsection (a). The Borrower shall
notify the Administrative Agent at any time the Borrower exercises its right of
set-off pursuant to this subsection (a) and shall set forth in such notice (A)
the name of the Defaulting Lender and the Defaulted Advance required to be made
by such Defaulting Lender and (B) the amount set off and otherwise applied in
respect of such Defaulted Advance pursuant to this subsection (a). Any portion
of such payment otherwise required to be made by the Borrower to or for the
account of such Defaulting Lender which is paid by the Borrower, after giving
effect to the amount set off and otherwise applied by the Borrower pursuant to
this subsection (a), shall be applied by the Administrative Agent as specified
in subsection (b) or (c) of this Section 2.15.
(b) In the event that, at any one time, (i) any Lender Party
shall be a Defaulting Lender, (ii) such Defaulting Lender shall owe a Defaulted
Amount to any Agent or any of the other Lender Parties and (iii) the Borrower
shall make any payment hereunder or under any other Loan Document to the
Administrative Agent for the account of such Defaulting Lender, then the
Administrative Agent may, on its behalf or on behalf of such other Lender
Parties and to the fullest extent permitted by applicable law, apply at such
time the amount so paid by the Borrower to or for the account of such Defaulting
Lender to the payment of each such Defaulted Amount to the extent required to
pay such Defaulted Amount. In the event that the Administrative Agent shall so
apply any such amount to the payment of any such Defaulted Amount on any date,
the amount so applied by the Administrative Agent shall constitute for all
purposes of this Agreement and the other Loan Documents payment, to such extent,
of such Defaulted Amount on such date. Any such amount so applied by the
Administrative Agent shall be retained by the Administrative Agent or
distributed by the Administrative Agent to such other Agents or Lender Parties,
ratably in accordance with the respective portions of such Defaulted Amounts
payable at such time to the Administrative Agent and such other Agents and
Lender Parties and, if the amount of such payment made by the Borrower shall at
such time be insufficient to pay all Defaulted Amounts owing at such time to the
Administrative Agent and the other Agents and Lender Parties, in the following
order of priority:
(i) first, to the Agents for any Defaulted Amount then owing
to the Agents, ratably in accordance with such respective Defaulted
Amounts then owing to the Agents; and
(ii) second, to any other Lender Parties for any Defaulted
Amounts then owing to such other Lender Parties, ratably in accordance
with such respective Defaulted Amounts then owing to such other Lender
Parties.
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Any portion of such amount paid by the Borrower for the account of such
Defaulting Lender remaining, after giving effect to the amount applied by the
Administrative Agent pursuant to this subsection (b), shall be applied by the
Administrative Agent as specified in subsection (c) of this Section 2.15.
(c) In the event that, at any one time, (i) any Lender Party
shall be a Defaulting Lender, (ii) such Defaulting Lender shall not owe a
Defaulted Advance or a Defaulted Amount and (iii) the Borrower, any Agent or any
other Lender Party shall be required to pay or distribute any amount hereunder
or under any other Loan Document to or for the account of such Defaulting
Lender, then the Borrower or such other Lender Party shall pay such amount to
the Administrative Agent to be held by the Administrative Agent, to the fullest
extent permitted by applicable law, in escrow or the Administrative Agent shall,
to the fullest extent permitted by applicable law, hold in escrow such amount
otherwise held by it. Any funds held by the Administrative Agent in escrow under
this subsection (c) shall be deposited by the Administrative Agent in an account
with Citibank, in the name and under the control of the Administrative Agent,
but subject to the provisions of this subsection (c). The terms applicable to
such account, including the rate of interest payable with respect to the credit
balance of such account from time to time, shall be Citibank's standard terms
applicable to escrow accounts maintained with it. Any interest credited to such
account from time to time shall be held by the Administrative Agent in escrow
under, and applied by the Administrative Agent from time to time in accordance
with the provisions of, this subsection (c). The Administrative Agent shall, to
the fullest extent permitted by applicable law, apply all funds so held in
escrow from time to time to the extent necessary to make any Advances required
to be made by such Defaulting Lender and to pay any amount payable by such
Defaulting Lender hereunder and under the other Loan Documents to the
Administrative Agent or any other Agent or Lender Party, as and when such
Advances or amounts are required to be made or paid and, if the amount so held
in escrow shall at any time be insufficient to make and pay all such Advances
and amounts required to be made or paid at such time, in the following order of
priority:
(i) first, to the Agents for any amount then due and payable
by such Defaulting Lender to the Agents under the Loan Documents,
ratably in accordance with such respective amounts then due and payable
to the Agents;
(ii) second, to any other Lender Parties for any amount then
due and payable by such Defaulting Lender to such other Lender Parties
hereunder, ratably in accordance with such respective amounts then due
and payable to such other Lender Parties; and
(iii) third, to the Borrower for any Advance then required to
be made by such Defaulting Lender pursuant to a Commitment of such
Defaulting Lender.
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In the event that any Lender Party that is a Defaulting Lender shall, at any
time, cease to be a Defaulting Lender, any funds held by the Administrative
Agent in escrow at such time with respect to such Lender Party shall be
distributed by the Administrative Agent to such Lender Party and applied by such
Lender Party to the Obligations owing to such Lender Party at such time under
this Agreement and the other Loan Documents ratably in accordance with the
respective amounts of such Obligations outstanding at such time.
(d) The rights and remedies against a Defaulting Lender under
this Section 2.15 are in addition to other rights and remedies that the Borrower
may have against such Defaulting Lender with respect to any Defaulted Advance
and that any Agent or any Lender Party may have against such Defaulting Lender
with respect to any Defaulted Amount.
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Conditions Precedent to Initial Extension of
Credit. The obligation of each Lender to make an Advance or of any Issuing Bank
to issue a Letter of Credit on the occasion of the Initial Extension of Credit
hereunder is subject to the satisfaction of the following conditions precedent
before or concurrently with the Initial Extension of Credit:
(a) The Acquisition shall have been consummated in accordance
with the terms of the Purchase Agreement, without any waiver or
amendment not consented to by the Agents of any material term,
provision or condition set forth therein, and in compliance with all
applicable laws.
(b) The Purchase Agreement shall be in full force and effect.
(c) Parent shall have received at least $375,000,000 in Net
Cash Proceeds of the sale of equity to the Equity Investors, and such
Net Cash Proceeds shall have been contributed, directly or indirectly,
to the Borrower as a capital contribution and the Borrower shall have
received $500,000,000 (less an underwriting spread of 3.5% on the first
$350,000,000 and 4.5% on the remaining $150,000,000) in gross cash
proceeds of the issuance of the Subordinated Notes.
(d) The Lender Parties shall be satisfied with the corporate
and legal structure and capitalization of each Loan Party and each of
its Subsidiaries, including the terms and conditions of the charter,
bylaws and each class of capital stock of each
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Loan Party and each such Subsidiary and of each agreement or instrument
relating to such structure or capitalization.
(e) The Agents shall be satisfied that all Existing Debt,
other than the Debt identified on Schedule 3.01(e) (the "Surviving
Debt"), has been prepaid, redeemed or defeased in full or otherwise
satisfied and extinguished and that all Surviving Debt shall be on
terms and conditions satisfactory to the Lender Parties.
(f) Before giving effect to the Acquisition and the other
transactions contemplated by this Agreement, there shall have occurred
no Material Adverse Change since December 31, 1995.
(g) There shall exist no action, suit, investigation,
litigation or proceeding affecting any Loan Party or any of its
Subsidiaries pending or threatened before any court, governmental
agency or arbitrator that (i) would be reasonably likely to have a
Material Adverse Effect or (ii) purports to affect the legality,
validity or enforceability of the Acquisition, this Agreement, any
Note, any other Loan Document, any Related Document or the consummation
of the transactions contemplated hereby.
(h) Nothing shall have come to the attention of the Lender
Parties during the course of their due diligence investigation to lead
them to believe (i) that the Information Memorandum was or has become
misleading, incorrect or incomplete in any material respect, (ii) that,
following the consummation of the Acquisition, the Borrower and its
Subsidiaries would not have good and marketable title to all material
assets of the Company and its Subsidiaries reflected in the Information
Memorandum (other than those disposed of in the ordinary course of
business) and (iii) that the Acquisition will have a Material Adverse
Effect; without limiting the generality of the foregoing, the Agents
shall have been given such access to the management, records, books of
account, contracts and properties of the Loan Parties and their
Subsidiaries as they shall have requested.
(i) All governmental and third party consents and approvals
necessary in connection with the Acquisition, the Loan Documents and
the Related Documents and the transactions contemplated thereby shall
have been obtained (without the imposition of any conditions that are
not reasonably acceptable to the Agents) and shall remain in effect
other than such governmental or third party consents and approvals the
failure to obtain which shall not (x) be materially adverse to Holdings
or the Borrower, in each case together with its respective
Subsidiaries, taken as a whole, (y) affect the enforceability, validity
or binding effect of any of the Loan Documents required to be executed
and delivered prior to or on the Closing Date or (z) expose the
Arrangers, the Agents or the Lender Parties to personal liability;
provided, however, that with
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respect to the receipt of licenses to sell or serve alcoholic beverages
or to engage in gaming, lottery or gambling activities (or the
necessary consents or approvals with respect thereto), such condition
shall be satisfied if the Agents are reasonably satisfied that licenses
have been obtained or that other appropriate mechanisms which will not
result in denial or loss of a license or penalties (other than
immaterial civil penalties) or put the Borrower or its Subsidiaries at
risk of an enforcement action for a violation are in place and, in each
case, are expected to remain in place for the foreseeable future
without material risk or expectation of losing such ability in the
future (other than the risk that any holder of a liquor license or a
gaming, lottery or gambling license that complies with the terms and
requirements of such license and the relevant law generally bears of
nonrenewal) so that after the Closing Date, alcoholic beverages can
continue to be sold or served and gaming activities can continue to be
conducted in essentially the same manner and on essentially the same
terms (and without any additional material restrictions) as before the
Closing Date and in compliance in all material respects with all
applicable laws and rules, regulations, statutes, licenses and orders
of any governmental authority relating to the sale or service of
alcoholic beverages or engaging in gaming, lottery and gambling
activities at bowling centers (or related premises) which would
reasonably be expected to enable the Borrower and its Subsidiaries to
derive, during a 10-month period beginning on the Closing Date, at
least 90% of the total revenues from the sale and/or service of
alcoholic beverages and, other than in the State of Washington, gaming,
lottery and gambling activities (and from any related management
service agreements and leases) during the 10-month period ended October
31, 1995; all applicable waiting periods shall have expired without any
action being taken by any competent authority; and no law or regulation
shall be applicable in the judgment of the Agents that restrains,
prevents or imposes materially adverse conditions upon the Acquisition,
the Loan Documents and the Related Documents and the transactions
contemplated thereby.
(j) The Agents shall be satisfied with all contractual and
other arrangements with the Borrower's management.
(k) All capital stock of the Borrower shall be owned by
Holdings, all capital stock of Holdings shall be owned by Parent and
all capital stock of Parent shall be owned by the Equity Investors, and
all of the stock of the Borrower's Subsidiaries shall be owned by the
Borrower or one or more of the Borrower's Subsidiaries, in each case
free and clear of any lien, charge or encumbrance, other than Liens in
favor of the Secured Parties.
(l) The Agents shall be satisfied that the Borrower and its
Subsidiaries will be able to meet their obligations under all Plans,
that the Borrower's and its Subsidiaries' Plans are, in all material
respects, funded in accordance with the
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minimum statutory requirements, that no material "reportable event" (as
defined in ERISA, but excluding events for which reporting has been
waived) has occurred as to any such Plan and that no termination of, or
withdrawal from, any such Plan has occurred or is contemplated that
could result in a material liability.
(m) The Agents shall be satisfied (i) with the sources, terms
and conditions of the equity and the other debt financing for the
Acquisition and the other transactions contemplated by the Loan
Documents and the Related Documents, (ii) that the amount of committed
equity and debt financing shall be sufficient to meet the financing
requirements of the Acquisition and the other transactions contemplated
by the Loan Documents and the Related Documents and (iii) that the
amount of transaction fees and expenses payable in connection with the
closing of the Acquisition and the other transactions contemplated by
the Loan Documents and the Related Documents does not exceed the
maximum amount previously disclosed to the Initial Lenders.
(n) The Lender Parties shall have received audited financial
statements of the Borrower and its Subsidiaries for the year ended
December 31, 1995, from which financial statements shall be derived a
Consolidated pro forma EBITDA of the Borrower and its Subsidiaries of
at least $165,000,000 (as reflected in the offering circular for the
Subordinated Notes).
(o) The Borrower shall have paid all accrued fees of the
Lender Parties and all accrued fees and expenses of the Agents and the
Arrangers (including the accrued fees and expenses of counsel to the
Agents and the Arrangers and local, foreign and intellectual property
counsel to, and of other experts and advisors retained by, the Agents
for the Lender Parties).
(p) The Administrative Agent shall have received on or before
the day of the Initial Extension of Credit the following, each dated
such day (unless otherwise specified), in form and substance
satisfactory to the Agents (unless otherwise specified) and (except for
the Notes) in sufficient copies for each Lender Party:
(i) The Notes payable to the order of the Lenders.
(ii) Certified copies of the resolutions of the Board
of Directors of the Borrower, the Company and each other Loan
Party approving the Acquisition, this Agreement, the Notes,
each other Loan Document and each Related Document to which it
is or is to be a party, and of all documents evidencing other
necessary corporate action and governmental and other third
party approvals and consents, if any, with respect to the
Acquisition, this
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Agreement, the Notes, each other Loan Document and each
Related Document.
(iii) A copy of a certificate of the Secretary of
State of the jurisdiction of its incorporation, dated
reasonably near the date of the Initial Extension of Credit,
listing the charter of the Borrower, the Company and each
other Loan Party and each amendment thereto on file in his
office and certifying that (A) such amendments are the only
amendments to the Borrower's, the Company's or such other Loan
Party's charter on file in his office, (B) the Borrower, the
Company and each other Loan Party have paid all franchise
taxes to the date of such certificate and (C) the Borrower,
the Company and each other Loan Party are duly incorporated
and in good standing under the laws of the jurisdiction of its
incorporation.
(iv) A copy of a certificate of the Secretary of
State of such states as the Administrative Agent may require,
dated reasonably near the date of the Initial Extension of
Credit, stating that the Borrower, the Company and each other
Loan Party are duly qualified and in good standing as foreign
corporations in such State and have filed all annual reports
required to be filed to the date of such certificate.
(v) A certificate of the Borrower, the Company and
each other Loan Party, signed on behalf of the Borrower, the
Company and such other Loan Party by its President or a Vice
President and its Secretary or any Assistant Secretary, dated
the date of the Initial Extension of Credit (the statements
made in which certificate shall be true on and as of the date
of the Initial Extension of Credit), certifying as to (A) the
absence of any amendments to the charter of the Borrower, the
Company or such other Loan Party since the date of the
Secretary of State's certificate referred to in Section
3.01(p)(iii), (B) a true and correct copy of the bylaws of the
Borrower, the Company and such other Loan Party as in effect
on the date of the Initial Extension of Credit, (C) the due
incorporation and good standing of the Borrower, the Company
and such other Loan Party as a corporation organized under the
laws of the state of its incorporation, and the absence of any
proceeding for the dissolution or liquidation of the Borrower,
the Company or such other Loan Party, (D) the truth of the
representations and warranties contained in the Loan Documents
as though made on and as of the date of the Initial Extension
of Credit and (E) the absence of any event occurring and
continuing, or resulting from the Initial Extension of Credit,
that constitutes a Default.
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(vi) A certificate of the Secretary or an Assistant
Secretary of the Borrower, the Company and each other Loan
Party certifying the names and true signatures of the officers
of the Borrower, the Company and such other Loan Party
authorized to sign this Agreement, the Notes, each other Loan
Document and each Related Document to which they are or are to
be parties and the other documents to be delivered hereunder
and thereunder.
(vii) A security agreement in substantially the form
of Exhibit D hereto (together with each other security
agreement delivered or to be delivered pursuant to Section
5.01(n), in each case as amended, supplemented or otherwise
modified from time to time in accordance with its terms, the
"Security Agreement"), duly executed by the Borrower and each
other Loan Party, together with:
(A) certificates representing the Pledged
Shares referred to therein accompanied by undated
stock powers executed in blank and instruments
evidencing the Pledged Debt referred to therein
indorsed in blank,
(B) duly executed proper financing
statements, to be filed under the Uniform Commercial
Code of all jurisdictions that the Collateral Agent
may deem necessary or desirable in order to perfect
and protect the first priority liens and security
interests created under the Security Agreement,
covering the Collateral described in the Security
Agreement,
(C) completed requests for information,
dated on or before the date of the Initial Extension
of Credit, listing all effective financing statements
filed in the jurisdictions referred to in clause (B)
above that name the Borrower, the Company or any
other Loan Party as debtor, together with copies of
such other financing statements,
(D) evidence of the completion of all other
recordings and filings of or with respect to the
Security Agreement that the Collateral Agent may deem
necessary or desirable in order to perfect and
protect the Liens created thereby,
(E) evidence of the insurance required by
the terms of the Security Agreement,
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(F) copies of the Assigned Agreements
referred to in the Security Agreement, together with
a consent to such assignment (to the extent required
by the terms of the Security Agreement), in
substantially the form of Exhibit B to the Security
Agreement, duly executed by each party to such
Assigned Agreements other than the Loan Parties,
(G) the Blocked Account Letters referred to
in the Security Agreement (to the extent required by
the terms of the Security Agreement), duly executed
by each Blocked Account Bank referred to in the
Security Agreement, and
(H) evidence that all other action that the
Collateral Agent may deem necessary or desirable in
order to perfect and protect the first priority liens
and security interests created under the Security
Agreement has been taken.
(viii) An intellectual property security agreement in
substantially the form of Exhibit E hereto (together with each
other intellectual property security agreement delivered or to
be delivered pursuant to Section 5.01(n), in each case as
amended, supplemented or otherwise modified from time to time
in accordance with its terms, the "Intellectual Property
Security Agreement"), duly executed by the Borrower and each
other Loan Party, together with evidence that all action that
the Collateral Agent may deem necessary or desirable in order
to perfect and protect the first priority liens and security
interests created under the Intellectual Property Security
Agreement has been taken.
(ix) Deeds of trust, trust deeds, mortgages,
leasehold mortgages and leasehold deeds of trust in
substantially the form of Exhibit F hereto and covering
properties listed on Part I of Schedule 4.01(kk) and Part I of
Schedule 4.01(ll) (together with each other mortgage delivered
or to be delivered pursuant to Section 5.01(n), in each case
as amended, supplemented or otherwise modified from time to
time in accordance with their terms, the "Mortgages"), duly
executed by the appropriate Loan Party, together with:
(A) fully paid American Land Title
Association Lender's Extended Coverage title
insurance policies (the "Mortgage Policies") in form
and substance, with endorsements and in amount
acceptable to the Collateral Agent, issued, coinsured
and reinsured by title insurers acceptable to the
Collateral Agent, insuring the Mortgages covering the
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73
manufacturing facilities listed on Schedules 4.01(kk)
and 4.01(ll) to be valid first and subsisting Liens
on the property described therein, free and clear of
all defects (including, but not limited to,
mechanics' and materialmen's Liens) and encumbrances,
excepting only Permitted Encumbrances, and providing
for such other affirmative insurance (including
endorsements for future advances under the Loan
Documents and for mechanics' and materialmen's Liens)
and such coinsurance and direct access reinsurance as
the Collateral Agent may deem necessary or desirable,
(B) title reports, prepared by one or more
nationally recognized title insurance companies, with
respect to each of the properties covered by the
Mortgages, reflecting that such properties are free
and clear of all defects (including, but not limited
to, mechanics' and materialmen's Liens) and
encumbrances, excepting only Permitted Encumbrances,
(C) Surveys in form and substance
satisfactory to the Collateral Agent with respect to
the manufacturing plants located in Lowville, New
York and Richmond, Virginia, each dated no more than
30 days before the day of the Initial Extension of
Credit, certified to the Collateral Agent and the
issuer of the Mortgage Policies in a manner
satisfactory to the Collateral Agent by a land
surveyor duly registered and licensed in the States
in which the respective property described in such
surveys is located and acceptable to the Collateral
Agent, showing all buildings and other improvements,
any off-site improvements, the location of any
easements, parking spaces, rights of way, building
set-back lines and other dimensional regulations and
the absence of encroachments, either by such
improvements or on to such property, and other
defects, other than encroachments and other defects
acceptable to the Collateral Agent, and
(D) evidence of the insurance required by
the terms of the Mortgages.
(x) A guaranty in substantially the form of Exhibit G
hereto (as amended, supplemented or otherwise modified in
accordance with its terms, the "Holdings Guaranty"), duly
executed by Holdings.
(xi) A guaranty in substantially the form of Exhibit
H hereto (together with each other guaranty delivered or to be
delivered pursuant to
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Section 5.01(n), in each case as amended, supplemented or
otherwise modified from time to time in accordance with its
terms, the "Subsidiary Guaranty"), duly executed by the
Subsidiary Guarantors.
(xii) Certified copies of each of the Related
Documents, duly executed by the parties thereto and in form
and substance satisfactory to the Lender Parties, together
with all agreements, instruments and other documents delivered
in connection therewith.
(xiii) Such financial, business and other information
regarding each Loan Party and its Subsidiaries as the Agents
shall have requested, including, without limitation,
information as to possible contingent liabilities, tax
matters, environmental matters, obligations under Plans,
Multiemployer Plans and Welfare Plans, collective bargaining
agreements and other arrangements with employees, audited
annual financial statements dated December 31, 1995, draft
financial statements dated March 31, 1996 (or, in the event
the Agents' due diligence review reveals material changes
since such financial statements, as of a later date within 45
days of the day of the Initial Extension of Credit), annual
financial statements dated December 31, 1995 reflecting
revenues and EBITDA by business segment, a business plan for
the Borrower prepared by management of the Borrower, pro forma
financial statements as to the Borrower and forecasts prepared
by management of the Borrower, in form and substance
satisfactory to the Agents, of balance sheets, income
statements and cash flow statements on an annual basis for
each year following the day of the Initial Extension of Credit
until the Termination Date for the AXELs Series B Facility.
(xiv) Letters and certificates, in substantially the
form of Exhibits I and J hereto, respectively, attesting to
the Solvency of Holdings, the Borrower and each of the
Borrower's first tier and second tier Subsidiaries (other than
any such Subsidiary the primary business of which is to hold
liquor licenses) after giving effect to the Acquisition and
the other transactions contemplated hereby, from a Designated
Financial Officer and Houlihan Lokey Howard & Zukin.
(xv) An environmental assessment report, in form and
substance satisfactory to the Lender Parties, from Dames &
Moore, as to any risks, costs or liabilities under
Environmental Laws to which any Loan Party or any of its
Subsidiaries may be subject, the amount and nature of which
and the Borrower's plans with respect to which shall be
acceptable to the Lender Parties, together with evidence, in
form and substance satisfactory to the
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Lender Parties, that all applicable Environmental Laws shall
have been materially complied with.
(xvi) A letter, in form and substance satisfactory to
the Administrative Agent, from the Borrower to Arthur
Andersen, L.L.P., its independent certified public
accountants, advising such accountants that the Administrative
Agent and the Lender Parties have been authorized to exercise
all rights of the Borrower to require such accountants to
disclose any and all financial statements and any other
information of any kind that they may have with respect to the
Borrower and its Subsidiaries and directing such accountants
to comply with any reasonable request of the Administrative
Agent or any Lender Party for such information.
(xvii) Evidence of insurance naming the Collateral
Agent for the benefit of the Secured Parties as insured and
loss payee with such responsible and reputable insurance
companies or associations, and in such amounts and covering
such risks, as is satisfactory to the Collateral Agent.
(xviii) Certified copies of each employment agreement
and other compensation arrangement with each executive officer
of any Loan Party or any of its Subsidiaries.
(xix) A favorable opinion of Wachtell, Lipton, Rosen
& Katz, counsel for the Loan Parties, in substantially the
form of Exhibit K hereto and as to such other matters as any
Lender Party through the Administrative Agent may reasonably
request.
(xx) A favorable opinion of local counsel listed on
Schedule 3.01(p)(xx), in the jurisdictions listed on Schedule
3.01(p)(xx), in form and substance satisfactory to the
Administrative Agent and as to such other matters as any
Lender Party through the Administrative Agent may reasonably
request.
(xxi) A favorable opinion of Pennie & Edmonds,
intellectual property counsel to the Lender Parties, in
substantially the form of Exhibit L hereto and as to such
other matters as any Lender Party through the Administrative
Agent may reasonably request.
(xxii) A favorable opinion of Shearman & Sterling,
counsel for the Arrangers and the Agents, in form and
substance satisfactory to the Arrangers and the Agents.
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SECTION 3.02. Conditions Precedent to Each Borrowing and
Issuance. The obligation of each Appropriate Lender to make an Advance (other
than a Letter of Credit Advance made by an Issuing Bank or a Working Capital
Lender pursuant to Section 2.03(c)) on the occasion of each Borrowing (including
the initial Borrowing), and the obligation of each Issuing Bank to issue a
Letter of Credit (including the initial issuance), shall be subject to the
further conditions precedent that on the date of such Borrowing or issuance (a)
the following statements shall be true (and each of the giving of the applicable
Notice of Borrowing or Notice of Issuance and the acceptance by the Borrower of
the proceeds of such Borrowing or of such Letter of Credit shall constitute a
representation and warranty by the Borrower that both on the date of such notice
and on the date of such Borrowing or issuance such statements are true):
(i) the representations and warranties contained in each Loan
Document are correct on and as of such date, before and after giving
effect to such Borrowing or issuance and to the application of the
proceeds therefrom, as though made on and as of such date;
(ii) no event has occurred and is continuing, or would result
from such Borrowing or issuance or from the application of the proceeds
therefrom, that constitutes a Default; and
(iii) in the case of any Working Capital Borrowing the
proceeds of which are to be used to make an acquisition or to refinance
the costs of construction of a New Center or any Acquisition Borrowing,
(A) after giving effect to the acquisition to be made, or costs of
construction to be refinanced, with the proceeds of such Borrowing, the
Borrower shall be in pro forma compliance with the covenants contained
in Section 5.04, calculated based on the most recent Financial
Statements (and including, for purposes of determining such pro forma
compliance, the Debt and Modified Consolidated EBITDA attributable to
the bowling center being so acquired or refinanced as though such
acquisition or construction had occurred at the beginning of the
12-month period covered by such Financial Statements), (B) the amount
of such Working Capital Borrowing to be applied to make an acquisition
or refinance the costs of construction of a New Center or the amount of
such Acquisition Borrowing or, if the amount of the proceeds of such
Borrowing to be applied to such acquisition or refinancing shall be
less than $1,000,000, such lesser amount, shall not exceed an amount
equal to the product of (x) 3.5, (y) Specified Revenues and (z) the
Average EBITDA Margin, and (C) the Borrower shall have delivered a
certificate to the Administrative Agent and the Lender Parties in form
satisfactory to the Administrative Agent demonstrating compliance with
clauses (A) and (B) above;
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and (b) the Administrative Agent shall have received such other approvals,
opinions or documents as any Appropriate Lender through the Administrative Agent
may reasonably request.
SECTION 3.03. Determinations Under Section 3.01. For purposes
of determining compliance with the conditions specified in Section 3.01, each
Lender Party shall be deemed to have consented to, approved or accepted or to be
satisfied with each document or other matter required thereunder to be consented
to or approved by or acceptable or satisfactory to the Lender Parties unless an
officer of the Administrative Agent responsible for the transactions
contemplated by the Loan Documents shall have received notice from such Lender
Party prior to the Initial Extension of Credit specifying its objection thereto
and if the Initial Extension of Credit consists of a Borrowing, such Lender
Party shall not have made available to the Administrative Agent such Lender
Party's ratable portion of such Borrowing.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrower.
The Borrower represents and warrants as follows:
(a) Each Loan Party (i) is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation, (ii) is duly qualified and in good
standing as a foreign corporation in each other jurisdiction in which
it owns or leases property or in which the conduct of its business
requires it to so qualify or be licensed except where the failure to so
qualify or be licensed could not be reasonably likely to have a
Material Adverse Effect and (iii) has all requisite corporate power and
authority (including, without limitation, all governmental licenses,
permits and other approvals) to own or lease and operate its properties
and to carry on its business as now conducted and as proposed to be
conducted. All of the outstanding capital stock of Parent, Holdings and
the Borrower has been validly issued, is fully paid and non-assessable
and, as of the date hereof, is owned by the Equity Investors in the
amounts specified on Schedule 4.01(a) or by Parent or Holdings, as the
case may be. All of the outstanding capital stock of Parent is owned,
as of the date hereof, free and clear of all Liens, except the pledge
of such capital stock as is owned by management of the Borrower to
secure obligations of such management owing to Parent. All of the
outstanding capital stock of Holdings and the Borrower is owned, in
each case free and clear of all Liens, except, in the
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case of the capital stock of the Borrower, those created under the
Collateral Documents.
(b) Set forth on Schedule 4.01(b) hereto is a complete and
accurate list of all Subsidiaries of each Loan Party, showing as of the
date hereof (as to each such Subsidiary) the jurisdiction of its
incorporation, the number of shares of each class of capital stock
authorized, and the number outstanding, on the date hereof and the
percentage of the outstanding shares of each such class owned (directly
or indirectly) by such Loan Party and the number of shares covered by
all outstanding options, warrants, rights of conversion or purchase and
similar rights at the date hereof. All of the outstanding capital stock
of all of such Subsidiaries has been validly issued and is fully paid
and non-assessable; and such capital stock (other than directors'
qualifying shares), as of the date hereof, is owned by such Loan Party
or one or more of its Subsidiaries, other than the China Joint Venture,
the capital stock of which is owned by a Loan Party or one or more of
its Subsidiaries in the amount and percentage ownership set forth on
Schedule 4.01(b) hereto. All of such outstanding capital stock to the
extent owned by a Loan Party is owned in each case free and clear of
all Liens, except those created under the Loan Documents. Each such
Subsidiary (i) is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation,
(ii) is duly qualified and in good standing as a foreign corporation in
each other jurisdiction in which it owns or leases property or in which
the conduct of its business requires it to so qualify or be licensed
except where the failure to so qualify or be licensed could not be
reasonably likely to have a Material Adverse Effect and (iii) has all
requisite corporate power and authority (including, without limitation,
all governmental licenses, permits and other approvals) to own or lease
and operate its properties and to carry on its business as now
conducted and as proposed to be conducted.
(c) The execution, delivery and performance by each Loan Party
of this Agreement, the Notes, each other Loan Document and each Related
Document to which it is or is to be a party (after the execution and
delivery thereof as and when required under this Agreement), and the
consummation of the Acquisition and the other transactions contemplated
hereby, are within such Loan Party's corporate powers, have been duly
authorized by all necessary corporate action, and do not (i) contravene
such Loan Party's charter or bylaws, (ii) violate any law (including,
without limitation, the Securities Exchange Act of 1934 and the
Racketeer Influenced and Corrupt Organizations Chapter of the Organized
Crime Control Act of 1970), rule, regulation (including, without
limitation, Regulation X of the Board of Governors of the Federal
Reserve System), order, writ, judgment, injunction, decree,
determination or award, (iii) conflict with or result in the breach of,
or constitute a default under, any loan agreement, indenture, mortgage,
deed of trust or other
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instrument or material contract or material lease binding on or
affecting any Loan Party, any of its Subsidiaries or any of their
properties or (iv) except for the Liens created under the Loan
Documents, result in or require the creation or imposition of any Lien
upon or with respect to any of the properties of any Loan Party or any
of its Subsidiaries. No Loan Party or any of its Subsidiaries is in
violation of any such law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award or in breach of any such
contract, loan agreement, indenture, mortgage, deed of trust, lease or
other instrument, the violation or breach of which could be reasonably
likely to have a Material Adverse Effect.
(d) No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body
or any other third party is required for (i) the due execution,
delivery, recordation, filing or performance by any Loan Party of this
Agreement, the Notes, any other Loan Document or any Related Document
to which it is or is to be a party, or for the consummation of the
Acquisition or the other transactions contemplated hereby, (ii) the
grant by any Loan Party of the Liens granted by it pursuant to the
Collateral Documents, (iii) the perfection or maintenance of the Liens
created by the Collateral Documents (including the first priority
nature thereof) or (iv) the exercise by any Agent or any Lender Party
of its rights under the Loan Documents or the remedies in respect of
the Collateral pursuant to the Collateral Documents, except for the
authorizations, approvals, actions, notices and filings listed on
Schedule 4.01(d) hereto, all of which have been duly obtained, taken,
given or made and are in full force and effect except as otherwise set
forth on Schedule 4.01(d) hereto and except those authorizations,
approvals, actions, notices and filings the failure to obtain, take,
give or make which, either individually or in the aggregate, could not
be reasonably expected to have a Material Adverse Effect. All
applicable waiting periods in connection with the Acquisition and the
other transactions contemplated hereby have expired or been terminated
without any action having been taken by any competent authority
restraining, preventing or imposing materially adverse conditions upon
the Acquisition or the rights of the Loan Parties or their Subsidiaries
freely to transfer or otherwise dispose of, or to create any Lien on,
any properties now owned or hereafter acquired by any of them except
where, in the case of any such waiting period other than any waiting
period required under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, the failure of such waiting period to have expired
without any such action having been taken could not be reasonably
likely to have a Material Adverse Effect.
(e) This Agreement has been, and each of the Notes, each other
Loan Document and each Related Document when delivered hereunder will
have been, duly executed and delivered by each Loan Party thereto. This
Agreement is, and each of
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the Notes, each other Loan Document and each Related Document when
delivered hereunder will be, the legal, valid and binding obligation of
each Loan Party thereto, enforceable against such Loan Party in
accordance with its terms.
(f) The Consolidated balance sheet of the Company and its
Subsidiaries as at December 31, 1995, and the related Consolidated
statements of income and cash flows of the Company and its Subsidiaries
for the fiscal year then ended, accompanied by an opinion of Price
Waterhouse, independent public accountants, copies of which have been
furnished to each Lender Party, fairly present the Consolidated
financial condition of the Company and its Subsidiaries as at such date
and the Consolidated results of the operations of the Company and its
Subsidiaries for the period ended on such date, all in accordance with
generally accepted accounting principles applied on a consistent basis,
and since December 31, 1995, there has been no Material Adverse Change.
(g) The Consolidated pro forma balance sheet of the Borrower
and its Subsidiaries as at December 31, 1995, and the related
Consolidated pro forma statements of income and cash flows of the
Borrower and its Subsidiaries for the year then ended, certified by a
Designated Financial Officer, copies of which have been furnished to
each Lender Party, fairly present the Consolidated pro forma financial
condition of the Borrower and its Subsidiaries as at such date and the
Consolidated pro forma results of operations of the Borrower and its
Subsidiaries for the period ended on such date, in each case giving
effect to the Acquisition and the other transactions contemplated
hereby, all in accordance with GAAP.
(h) The Consolidated forecasted balance sheets, income
statements and cash flows statements of the Borrower and its
Subsidiaries delivered to the Lender Parties pursuant to Section
3.01(p)(xiii) or 5.03 were prepared in good faith on the basis of the
assumptions stated therein, which assumptions were fair in the light of
conditions existing at the time of delivery of such forecasts, and
represented, at the time of delivery, the Borrower's best estimate of
its future financial performance.
(i) Neither the Information Memorandum nor any other
information, exhibit or report furnished by any Loan Party to any Agent
or any Lender Party in connection with the negotiation and syndication
of the Loan Documents or pursuant to the terms of the Loan Documents
contained any untrue statement of a material fact or omitted to state a
material fact necessary to make the statements made therein not
misleading.
(j) There is no action, suit, investigation, litigation or
proceeding affecting any Loan Party or any of its Subsidiaries,
including any Environmental Action,
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pending or threatened before any court, governmental agency or
arbitrator that (i) would be reasonably likely to have a Material
Adverse Effect or (ii) purports to affect the legality, validity or
enforceability of the Acquisition, this Agreement, any Note, any other
Loan Document or any Related Document or the consummation of the
transactions contemplated hereby (other than any such action, suit,
investigation, litigation or proceeding that, in the judgment of the
Agents, is frivolous).
(k) No proceeds of any Advance or drawings under any Letter of
Credit will be used to acquire any equity security of a class that is
registered pursuant to Section 12 of the Securities Exchange Act of
1934.
(l) The Borrower is not engaged in the business of extending
credit for the purpose of purchasing or carrying Margin Stock, and no
proceeds of any Advance or drawings under any Letter of Credit will be
used to purchase or carry any Margin Stock or to extend credit to
others for the purpose of purchasing or carrying any Margin Stock.
(m) Set forth on Schedule 4.01(m) hereto is a complete and
accurate list, as of the date hereof, of all Plans, Multiemployer Plans
and Welfare Plans.
(n) No ERISA Event has occurred or is reasonably expected to
occur with respect to any Plan that could be reasonably expected to
have a Material Adverse Effect.
(o) As of the last annual actuarial valuation date, the funded
current liability percentage, as defined in Section 302(d)(8) of ERISA,
of each Plan exceeds 90% and there has been no material adverse change
in the funding status of such Plan since such date.
(p) Schedule B (Actuarial Information) to the most recent
annual report (Form 5500 Series) for each Plan, copies of which have
been filed with the Internal Revenue Service and furnished to the
Lender Parties, is complete and accurate and fairly presents the
funding status of such Plan, and since the date of such Schedule B
there has been no material adverse change in such funding status.
(q) Neither any Loan Party nor any ERISA Affiliate has
incurred or is reasonably expected to incur any Withdrawal Liability to
any Multiemployer Plan that could be reasonably expected to have a
Material Adverse Effect.
(r) Neither any Loan Party nor any ERISA Affiliate has been
notified by the sponsor of a Multiemployer Plan that such Multiemployer
Plan is in
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reorganization or has been terminated, within the meaning of Title IV
of ERISA, and no such Multiemployer Plan is reasonably expected to be
in reorganization or to be terminated, within the meaning of Title IV
of ERISA, except to the extent that any such reorganization or
termination could not be reasonably expected to have a Material Adverse
Effect.
(s) With respect to each scheme or arrangement mandated by a
government other than the United States (a "Foreign Government Scheme
or Arrangement") and with respect to each employee benefit plan
maintained or contributed to by any Loan Party or any Subsidiary of any
Loan Party that is not subject to United States law (a "Foreign Plan")
to the extent that there could reasonably be expected to be a Material
Adverse Effect:
(i) Any employer and employee contributions required
by law or by the terms of any Foreign Government Scheme or
Arrangement or any Foreign Plan have been made, or, if
applicable, accrued, in accordance with normal accounting
practices.
(ii) The fair market value of the assets of each
funded Foreign Plan, the liability of each insurer for any
Foreign Plan funded through insurance or the book reserve
established for any Foreign Plan, together with any accrued
contributions, is sufficient to procure or provide for the
accrued benefit obligations, as of the date hereof, with
respect to all current and former participants in such Foreign
Plan according to the actuarial assumptions and valuations
most recently used to determine employer contributions to such
Foreign Plan.
(iii) Each Foreign Plan required to be registered has
been registered and has been maintained in good standing with
applicable regulatory authorities.
(t) Except as set forth in the financial statements referred
to in this Section 4.01 and in Section 5.03, the Loan Parties and their
respective Subsidiaries have no material liability with respect to
"expected post retirement benefit obligations" within the meaning of
Statement of Financial Accounting Standards No. 106.
(u) Neither the business nor the properties of any Loan Party
or any of its Subsidiaries have been affected by any fire, explosion,
accident, strike, lockout or other labor dispute, drought, storm, hail,
earthquake, embargo, act of God or of the public enemy or other
casualty (whether or not covered by insurance) that could be reasonably
likely to have a Material Adverse Effect.
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(v) Except as set forth on Schedule 4.01(v) hereto or as could
not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect, the operations and properties of each Loan
Party and each of its Subsidiaries comply with all applicable
Environmental Laws and Environmental Permits, and (except as aforesaid)
all past non-compliance with such Environmental Laws and Environmental
Permits has been resolved without ongoing obligations or costs, and no
circumstances exist that could be reasonably likely to (i) form the
basis of an Environmental Action against any Loan Party or any of its
Subsidiaries or any of their properties that could have a Material
Adverse Effect or (ii) cause any such property to be subject to any
material restrictions on ownership, occupancy, use or transferability
under any Environmental Law.
(w) Except as set forth on Schedule 4.01(w) hereto or as could
not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect, (i) none of the properties currently owned or
operated by any Loan Party or any of its Subsidiaries or, to the best
knowledge of any Loan Party or any of its Subsidiaries, none of the
properties formerly owned or operated by any of them, is listed or
proposed for listing on the NPL or on the CERCLIS or any analogous
foreign, state or local list or is adjacent to any such property; (ii)
there are no and never have been any underground or aboveground storage
tanks or any surface impoundments, septic tanks, pits, sumps or lagoons
in which Hazardous Materials are being or have been treated, stored or
disposed on any property currently owned or operated by any Loan Party
or any of its Subsidiaries or, to the best of its knowledge, on any
property formerly owned or operated by any Loan Party or any of its
Subsidiaries; (iii) there is no asbestos or asbestos-containing
material on any property currently owned or operated by any Loan Party
or any of its Subsidiaries; and (iv) Hazardous Materials have not been
released, discharged or disposed of on any property currently or
formerly owned or operated by any Loan Party or any of its
Subsidiaries.
(x) Except as set forth on Schedule 4.01(x) hereto or as could
not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect, neither any Loan Party nor any of its
Subsidiaries is undertaking, or has failed to complete, either
individually or together with other potentially responsible parties,
any investigation or assessment or remedial or response action relating
to any actual or threatened release, discharge or disposal of Hazardous
Materials at any site, location or operation, either voluntarily or
pursuant to the order of any governmental or regulatory authority or
the requirements of any Environmental Law; and all Hazardous Materials
generated, used, treated, handled or stored at, or transported to or
from, any property currently or formerly owned or operated by any Loan
Party or any of its Subsidiaries, and that have been disposed of in any
manner, have been
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disposed of only in a manner not reasonably expected to result in a
Material Adverse Effect.
(y) Neither any Loan Party nor any of its Subsidiaries is a
party to any indenture, loan or credit agreement or any lease or other
agreement or instrument or subject to any charter or corporate
restriction that could be reasonably likely to have a Material Adverse
Effect.
(z) The Collateral Documents create a valid and, upon the
making of the filings and recordings referred to in Section 5.01(q),
perfected first priority security interest in the Collateral subject
only to Permitted Encumbrances, securing the payment of the Secured
Obligations (as defined in the Collateral Documents), and all filings
and other actions necessary or desirable to perfect and protect such
security interest have been duly taken except, during the period
immediately following the Closing Date specified in Section 5.01(q),
the filings and other actions referred to in Section 5.01(q). The Loan
Parties are the legal and beneficial owners of the Collateral free and
clear of any Lien, except for the liens and security interests created
or permitted under the Loan Documents.
(aa) Each Loan Party and each of its Subsidiaries has filed,
has caused to be filed or has been included in all federal income and
other material tax returns (Federal, state, local and foreign) required
to be filed and has paid all income and other material taxes shown
thereon to be due, together with applicable interest and penalties.
(bb) Set forth on Schedule 4.01(bb) hereto is a complete and
accurate list, as of the date hereof, of each taxable year of each Loan
Party and each of its Subsidiaries for which Federal income tax returns
have been filed and for which the expiration of the applicable statute
of limitations for assessment or collection has not occurred by reason
of extension or otherwise (an "Open Year").
(cc) As of the date hereof, there are no adjustments to the
Federal income tax liability of each Loan Party and each of its
Subsidiaries proposed by the Internal Revenue Service with respect to
Open Years that, individually or in the aggregate, could be reasonably
likely to have a Material Adverse Effect. No issues have been raised by
the Internal Revenue Service in respect of Open Years that, in the
aggregate, could be reasonably likely to have a Material Adverse
Effect.
(dd) As of the date hereof, there are no adjustments to the
state, local and foreign tax liability of each Loan Party and its
Subsidiaries proposed by all state, local and foreign taxing
authorities (other than amounts arising from adjustments to
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85
Federal income tax returns) that, individually or in the aggregate,
could be reasonably likely to have a Material Adverse Effect. No issues
have been raised by such taxing authorities that, in the aggregate,
could be reasonably likely to have a Material Adverse Effect.
(ee) The Acquisition will not result in the imposition of
federal income taxes on or with respect to the Borrower.
(ff) Except as a direct result of the Acquisition and the
acquisition by AMF Bowling Centers of the companies set forth on
Schedule 4.01(ff) hereto, no "ownership change" as defined in Section
382(g) of the Internal Revenue Code, and no event that would result in
the application of the "separate return limitation year" or
"consolidated return change of ownership" limitations under the Federal
income tax consolidated return regulations, has occurred with respect
to the Borrower or the Company since May 1, 1993.
(gg) Neither any Loan Party nor any of its Subsidiaries is an
"investment company," or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment
Company Act of 1940, as amended. Neither the making of any Advances,
nor the issuance of any Letters of Credit, nor the application of the
proceeds or repayment thereof by the Borrower, nor the consummation of
the other transactions contemplated hereby, will violate any provision
of such Act or any rule, regulation or order of the Securities and
Exchange Commission thereunder.
(hh) Each Loan Party is, individually and together with its
Subsidiaries, Solvent.
(ii) Set forth on Schedule 4.01(ii) hereto is a complete and
accurate list of all Existing Debt (other than Surviving Debt), showing
as of the date hereof the principal amount outstanding thereunder.
(jj) Set forth on Schedule 3.01(e) hereto is a complete and
accurate list of all Surviving Debt, showing as of the date hereof the
principal amount outstanding thereunder, the maturity date thereof and
the amortization schedule therefor.
(kk) Set forth on Schedule 4.01(kk) hereto is a complete and
accurate list of all real property owned by any Loan Party or any of
its Subsidiaries, showing as of the date hereof the street address,
county or other relevant jurisdiction, state, record owner and book
value thereof. Each Loan Party or such Subsidiary has good,
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86
marketable and insurable fee simple title to such real property, free
and clear of all Liens, other than Liens created or permitted by the
Loan Documents.
(ll) Set forth on Schedule 4.01(ll) hereto is a complete and
accurate (in the case of leases of real property outside the United
States, in all material respects) list of all leases of real property
under which any Loan Party or any of its Subsidiaries is the lessee,
showing as of the date hereof the street address, county or other
relevant jurisdiction, state, lessor, lessee, expiration date and
annual rental cost thereof. Each such lease is the legal, valid and
binding obligation of the lessee thereof, enforceable in accordance
with its terms.
(mm) Set forth on Schedule 4.01(mm) hereto is a complete and
accurate list of all Investments held by any Loan Party or any of its
Subsidiaries, showing as of the date hereof the amount, obligor or
issuer and maturity, if any, thereof.
(nn) Set forth on Schedule 4.01(nn) hereto is a complete and
accurate list of all patents, trademarks, trade names, service marks
and copyrights, and all applications therefor and licenses thereof, of
each Loan Party or any of its Subsidiaries, showing as of the date
hereof the jurisdiction in which registered, the registration number,
the date of registration and the expiration date, and the Loan Parties
and their Subsidiaries own or have a license to use all patents,
trademarks, trade names, service marks and copyrights reasonably
necessary to carry on their business as now conducted and as proposed
to be conducted.
(oo) The Debt of the Loan Parties under the Loan Documents
constitutes "Senior Debt" as such term is defined in the Subordinated
Notes Indentures.
ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01. Affirmative Covenants. So long as any Advance
shall remain unpaid, any Letter of Credit shall be outstanding or any Lender
Party shall have any Commitment hereunder, the Borrower will:
(a) Compliance with Laws, Etc. Comply, and cause each of its
Subsidiaries to comply, in all material respects, with all applicable
laws, rules, regulations and orders, such compliance to include,
without limitation, compliance with ERISA and the Racketeer Influenced
and Corrupt Organizations Chapter of the Organized Crime Control Act of
1970, except, in any case, where the failure so to
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87
comply, either individually or in the aggregate, could not be
reasonably expected to have a Material Adverse Effect and would not be
reasonably likely to subject any Loan Party or any of its Subsidiaries
to any criminal penalties or any Lender Party to any civil or criminal
penalties.
(b) Payment of Taxes, Etc. Pay and discharge, and cause each
of its Subsidiaries to pay and discharge, before the same shall become
delinquent, (i) all federal income and other material taxes,
assessments and governmental charges or levies imposed upon it or upon
its property and (ii) all lawful claims that, if unpaid, might by law
become a Lien upon its property; provided, however, that neither the
Borrower nor any of its Subsidiaries shall be required to pay or
discharge any such tax, assessment, charge or claim (x) that is being
contested in good faith and by proper proceedings and as to which
appropriate reserves are being maintained or (y) in respect of which
the Lien resulting therefrom, if any, attaches to its property and
becomes enforceable against its other creditors, to the extent that the
aggregate amount of all such taxes, assessments, charges or claims does
not exceed $3,000,000.
(c) Compliance with Environmental Laws. Comply, and cause each
of its Subsidiaries and all lessees and other Persons operating or
occupying its properties to comply, in all material respects, with all
Environmental Laws and Environmental Permits; obtain and renew and
cause each of its Subsidiaries to obtain and renew, when legally
required, all Environmental Permits necessary for its operations and
properties; and conduct, and cause each of its Subsidiaries to conduct,
any required investigation, study, sampling and testing, and undertake
any required cleanup, removal, remedial or other action necessary to
remove and clean up all Hazardous Materials from any of its properties,
only in accordance with the requirements of all Environmental Laws;
except, in any case under this subsection (c), where the failure to so
comply with or perform any of the foregoing, either individually or in
the aggregate, could not be reasonably expected to have a Material
Adverse Effect and would not be reasonably likely to subject any Loan
Party or any of its Subsidiaries to any criminal penalties or any
Lender Party to any civil or criminal penalties; provided, however,
that neither the Borrower nor any of its Subsidiaries shall be required
to undertake any such cleanup, removal, remedial or other action to the
extent that its obligation to do so is being contested in good faith
and by proper proceedings and appropriate reserves are being maintained
with respect to such circumstances.
(d) Maintenance of Insurance. Maintain, and cause each of its
Subsidiaries to maintain, insurance with responsible and reputable
insurance companies or associations in such amounts and covering such
risks as is usually carried by
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companies engaged in similar businesses and owning similar properties
in the same general areas in which the Borrower or such Subsidiary
operates.
(e) Preservation of Corporate Existence, Etc. Preserve and
maintain, and cause each of its Subsidiaries to preserve and maintain,
its existence, legal structure, legal name, rights (charter and
statutory), permits, licenses, approvals, privileges and franchises;
provided, however, that the Borrower and its Subsidiaries may
consummate any merger or consolidation permitted under Section 5.02(d);
provided further that neither the Borrower nor any of its Subsidiaries
shall be required to preserve any right, permit, license, approval,
privilege or franchise if the Borrower or such Subsidiary shall
determine that the preservation thereof is no longer desirable in the
conduct of the business of the Borrower or such Subsidiary, as the case
may be, and that the loss thereof is not disadvantageous in any
material respect to the Borrower, such Subsidiary or the Lender Parties
or, with respect to permits, licenses, approvals, privileges and
franchises, that the loss thereof could not be reasonably expected to
have a Material Adverse Effect.
(f) Visitation Rights. At any reasonable time and from time to
time, permit any Agent or any of the Lender Parties or any agents or
representatives thereof, to examine and make copies of and abstracts
from the records and books of account of, and visit the properties of,
the Borrower and any of its Subsidiaries, and to discuss the affairs,
finances and accounts of the Borrower and any of its Subsidiaries with
any of their officers or directors and with their independent certified
public accountants.
(g) Preparation of Environmental Reports. At the request of
the Administrative Agent upon the occurrence and during the continuance
of a Default or upon the reasonable belief of the Required Lenders or
the Administrative Agent that Hazardous Materials contamination of a
nature or to an extent not set forth on Schedule 4.01(v), 4.01(w) or
4.01(x) hereto may be present on any property described in the
Mortgages in a manner or condition that could reasonably be expected to
have a Material Adverse Effect, provide to the Lender Parties within 60
days after such request, at the expense of the Borrower, an
environmental site assessment report for any of its or its
Subsidiaries' properties described in the Mortgages, prepared by an
environmental consulting firm acceptable to the Administrative Agent,
indicating the presence or absence of Hazardous Materials and the
estimated cost of any compliance, removal or remedial action in
connection with any Hazardous Materials on such properties; without
limiting the generality of the foregoing, if the Required Lenders
reasonably determine at any time that a material risk exists that any
such report will not be provided within the time referred to above, the
Required Lenders may retain an environmental consulting firm to prepare
such
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report at the expense of the Borrower, and the Borrower hereby grants
and agrees to cause any Subsidiary that owns any property described in
the Mortgages to grant at the time of such request, to the Agents, the
Lender Parties, such firm and any agents or representatives thereof an
irrevocable non-exclusive license, subject to the rights of tenants, to
enter onto their respective properties to undertake such an assessment
at any reasonable time and upon reasonable prior notice.
(h) Keeping of Books. Keep, and cause each of its Subsidiaries
to keep, proper books of record and account, in which full and correct
entries shall be made of all financial transactions and the assets and
business of the Borrower and each such Subsidiary in accordance with
generally accepted accounting principles in effect from time to time.
(i) Maintenance of Properties, Etc. Maintain and preserve, and
cause each of its Subsidiaries to maintain and preserve, all of its
properties that are used or useful in the conduct of its business in
good working order and condition, ordinary wear and tear excepted,
except where the failure to do so, either individually or in the
aggregate, could not be reasonably expected to have a Material Adverse
Effect.
(j) Compliance with Terms of Leaseholds. Make all payments and
otherwise perform all obligations in respect of all leases of real
property to which the Borrower or any of its Subsidiaries is a party,
keep such leases in full force and effect and not allow such leases to
lapse or be terminated or any rights to renew such leases to be
forfeited or cancelled, notify the Administrative Agent of any default
by any party with respect to such leases and cooperate with the
Administrative Agent in all respects to cure any such default, and
cause each of its Subsidiaries to do so, except, in any case, where the
failure to do so, either individually or in the aggregate, could not be
reasonably expected to have a Material Adverse Effect.
(k) Performance of Related Documents. Perform and observe all
of the terms and provisions of each Related Document to be performed or
observed by it, maintain each such Related Document in full force and
effect, enforce such Related Document in accordance with its terms
(other than Section 1.5 of the Stockholders' Agreement), take all such
action to such end as may be from time to time requested by the
Administrative Agent and, upon request of the Administrative Agent,
make to each other party to each such Related Document such demands and
requests for information and reports or for action as the Borrower is
entitled to make under such Related Document, and cause each of its
Subsidiaries to do so, except, in any case, where the failure to do so,
either individually or in the aggregate, could not be reasonably
expected to have a Material Adverse Effect.
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90
(l) Transactions with Affiliates. Conduct, and cause each of
its Subsidiaries to conduct, all transactions otherwise permitted under
the Loan Documents with any of their Affiliates on terms that are fair
and reasonable and no less favorable to the Borrower or such Subsidiary
than it would obtain in a comparable arm's-length transaction with a
Person not an Affiliate, other than transactions between or among Loan
Parties and other transactions described on Schedule 5.01(l) hereto.
(m) Cash Concentration Accounts. Maintain main cash
concentration accounts with Citibank and Blocked Accounts into which
substantially all proceeds of Collateral are paid with Citibank or one
or more banks acceptable to the Collateral Agent that have accepted the
assignment of such accounts to the Collateral Agent for the benefit of
the Secured Parties pursuant to the Security Agreement.
(n) Covenant to Guarantee Obligations and Give Security. At
any time (x) upon the request of the Collateral Agent following the
occurrence and during the continuance of a Default, (y) at such time as
any new direct or indirect Subsidiaries of the Borrower are formed or
acquired by any Loan Party or (z) any property is acquired by any Loan
Party, in each case at the expense of the Borrower:
(i) within 10 days after such request, formation or
acquisition, cause each such Subsidiary (other than any
Foreign Subsidiary), and cause each direct and indirect parent
(other than the Borrower and any Foreign Subsidiary) of such
Subsidiary (if it has not already done so), to duly execute
and deliver to the Collateral Agent a guaranty, in form and
substance satisfactory to the Collateral Agent, guaranteeing
the other Loan Parties' Obligations under the Loan Documents,
(ii) within 10 days after such request, formation or
acquisition, furnish to the Collateral Agent a description of
the real and personal properties of the Borrower and its
Subsidiaries in detail satisfactory to the Collateral Agent,
(iii) within 15 days after such request, formation or
acquisition, duly execute and deliver, and cause each such
Subsidiary (other than any Foreign Subsidiary) and each direct
and indirect parent of such Subsidiary (if it has not already
done so) (other than any Foreign Subsidiary except to the
extent permitted in the fourth proviso below) to duly execute
and deliver, to the Collateral Agent mortgages, pledges,
assignments and other security agreements, as specified by and
in form and substance satisfactory to the Collateral Agent,
securing payment of all the Obligations of the Borrower,
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such Subsidiary or such parent, as the case may be, under the
Loan Documents and constituting Liens on all such properties;
provided that with respect to any leasehold, the Borrower
shall use, and shall cause its Subsidiaries to use, best
efforts to acquire such leasehold in a way such that consent
of the landlord thereof shall not be required in connection
with the mortgaging thereof; provided further, however, that
such leasehold shall not be required to be mortgaged if, after
the applicable Loan Party has used its best efforts as set
forth in the immediately preceding proviso and to obtain
landlord consents to the extent required by Section 5.01(p),
such Loan Party is unable to obtain such consent; provided
still further that, so long as no Event of Default shall have
occurred and be continuing, such leasehold shall not be
required to be mortgaged if the Collateral Agent shall
determine, in its sole discretion, not to require the
mortgaging of such leasehold because such leasehold has an
immaterial value or constitutes an immaterial portion of the
property of the Person owning such leasehold; provided still
further, that with respect to the pledge of the capital stock
of any Foreign Subsidiary, such pledge shall cover not more
than 66% of the outstanding capital stock of such Foreign
Subsidiary if it is directly owned by a Loan Party and not
cover any of the outstanding capital stock of such Foreign
Subsidiary if it is directly or indirectly owned by another
Foreign Subsidiary,
(iv) within 30 days after such request, formation or
acquisition, take, and cause such Subsidiary (other than any
Foreign Subsidiary) or such parent (other than any Foreign
Subsidiary) to take, whatever action (including, without
limitation, the recording of mortgages, the filing of Uniform
Commercial Code financing statements, the giving of notices
and the endorsement of notices on title documents) may be
necessary or advisable in the opinion of the Collateral Agent
to vest in the Collateral Agent (or in any representative of
the Collateral Agent designated by it) valid and subsisting
Liens on the properties purported to be subject to the
mortgages, pledges, assignments and security agreements
delivered pursuant to this Section 5.01(n), enforceable
against all third parties in accordance with their terms,
(v) within 60 days after such request, formation or
acquisition, deliver to the Collateral Agent, upon the request
of the Collateral Agent in its sole discretion, a signed copy
of a favorable opinion, addressed to the Collateral Agent and
the other Secured Parties, of counsel for the Loan Parties
acceptable to the Collateral Agent as to the matters contained
in clauses (i), (iii) and (iv) above, as to such guaranties,
mortgages, pledges, assignments and security agreements being
legal, valid and binding obligations of each
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Loan Party party thereto enforceable in accordance with their
terms and as to such other matters as the Collateral Agent may
reasonably request,
(vi) as promptly as practicable after such request,
formation or acquisition, deliver, upon the request of the
Collateral Agent in its sole discretion, to the Collateral
Agent (x) with respect to each parcel of real property owned
or held by the entity (other than any Foreign Subsidiary) that
is the subject of such request, formation or acquisition and
on which a manufacturing facility is located, surveys and
engineering, soils and other reports meeting the criteria
specified in Section 3.01(p)(ix)(C) or (D), as the case may
be, Mortgage Policies and an environmental assessment report
meeting the criteria specified in Section 3.01(p)(xv) and (y)
with respect to each other parcel of real property owned by
the entity that is the subject of such request, formation or
acquisition, title reports meeting the criteria specified in
Section 3.01(p)(ix)(B), provided, however, that to the extent
that the Borrower or any of its Subsidiaries shall have
otherwise received any of the foregoing items with respect to
such real property, such items shall promptly after the
receipt thereof be delivered to the Collateral Agent,
(vii) upon the occurrence and during the continuance
of a Default, promptly cause to be deposited, and cause each
of its Subsidiaries to cause to be promptly deposited, any and
all cash dividends paid or payable to it or any of its
Subsidiaries from any of its Subsidiaries from time to time
into the Cash Collateral Account, and with respect to all
other dividends paid or payable to it or any of its
Subsidiaries from time to time, promptly execute and deliver,
or cause such Subsidiary to promptly execute and deliver, as
the case may be, any and all further instruments and take or
cause such Subsidiary to take, as the case may be, all such
other action as the Collateral Agent may deem necessary or
desirable in order to obtain and maintain from and after the
time such dividend is paid or payable a perfected, first
priority lien on and security interest in such dividends, and
(viii) at any time and from time to time, promptly
execute and deliver any and all further instruments and
documents and take all such other action as the Collateral
Agent may deem necessary or desirable in obtaining the full
benefits of, or in perfecting and preserving the Liens of,
such guaranties, mortgages, pledges, assignments and security
agreements.
(o) Interest Rate Hedging. Enter into prior to June 30, 1996,
and maintain at all times after November 15, 1996 until such time as
the aggregate outstanding amount under the Term Facilities shall be
less than $400,000,000, interest rate Hedge
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Agreements with Persons acceptable to the Administrative Agent,
covering a notional amount of not less than 50% of the Commitments
under all of the Facilities and the other floating rate Debt of the
Loan Parties and providing for such Persons to make payments thereunder
for a period of no less than one year to the extent of increases in
interest rates greater than 3% above the weighted average Eurodollar
Rate on the date hereof.
(p) Landlord's Consents, Etc. With respect to leaseholds set
forth on Part II of Schedule 4.01(ll) hereto, for a reasonable period
of time after the Closing Date, and with respect to any leasehold
acquired after the Closing Date (other than by a Foreign Subsidiary)
for a reasonable period of time after the acquisition thereof, use, and
cause its Subsidiaries to use, its best efforts to cure any technical
defect as may be required or, in the judgment of the Collateral Agent,
necessary or desirable (as notified to such Loan Party by the
Collateral Agent) to be cured in order to permit the mortgaging of any
leasehold under which any Loan Party is a lessee and, if a Default
shall have occurred and be continuing, use, and cause its Subsidiaries
to use, its best efforts to obtain any consent required or, in the
judgment of the Collateral Agent, necessary or desirable (as notified
to such Loan Party by the Collateral Agent) to permit the mortgaging of
any leasehold under which any Loan Party is a lessee, and, in either
case, use its best efforts to deliver and cause each of its
Subsidiaries to use its best efforts to deliver, such documents and
other items referred to in Section 5.01(n) as may be applicable in
connection with the mortgaging of such leasehold.
(q) Conditions Subsequent. Deliver to the Collateral Agent, in
form and substance satisfactory to the Collateral Agent and in
sufficient copies for each Lender Party, as soon as possible and in any
event within 60 days after the Initial Extension of Credit (or such
later date as may be agreed by the Borrower and the Collateral Agent):
(i) acknowledgment copies of proper financing
statements, duly filed under the Uniform Commercial Code of
all jurisdictions that the Collateral Agent may deem necessary
or desirable in order to perfect and protect the first
priority liens and security interests created under the
Security Agreement, covering the Collateral described in the
Security Agreement,
(ii) completed requests for information, listing the
financing statements referred to in clause (i) above and all
other effective financing statements filed in the
jurisdictions referred to in clause (i) above that name any
Loan Party as debtor, together with copies of such financing
statements,
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(iii) evidence that counterparts of the Mortgages
have been duly recorded in all filing or recording offices
that the Collateral Agent may deem necessary or desirable in
order to create a valid first and subsisting Lien on the
property described therein in favor of the Secured Parties
subject only to Permitted Encumbrances and that all filing and
recording taxes and fees have been paid,
(iv) evidence of the completion of all recordings and
filings of or with respect to the Intellectual Property
Security Agreement that the Collateral Agent may deem
necessary or desirable in order to perfect and protect the
Liens created thereunder,
(v) evidence that such action as the Collateral Agent
may deem necessary or desirable in order to perfect and
protect the Liens on the capital stock held by any Loan Party
in any of its Foreign Subsidiaries has been taken (including,
without limitation, the execution and delivery by the
applicable Loan Party of such agreements or instruments of
pledge as may be necessary to perfect and protect Liens in
favor of the Collateral Agent for the benefit of the Secured
Parties on capital stock of each of the Borrower's
Subsidiaries organized under the laws of Australia), provided
that in any event such Liens shall cover not more than 66% of
the outstanding capital stock of Foreign Subsidiaries directly
owned by such Loan Party and shall not cover any capital stock
of any Foreign Subsidiary directly or indirectly owned by a
Foreign Subsidiary,
(vi) a signed copy of a favorable opinion addressed
to the Collateral Agent and the other Secured Parties, of
counsel for the Loan Parties acceptable to the Collateral
Agent, as to the agreements and instruments of pledge referred
to in clause (v) above being the legal, valid and binding
obligation of the Loan Party party thereto, enforceable in
accordance with their terms and as to such other matters as
the Collateral Agent may reasonably request,
(vii) evidence that all other action as the
Collateral Agent may deem necessary or desirable in order to
perfect and protect the first priority liens and security
interests created under the Collateral Documents has been
taken,
(viii) evidence of business interruption insurance
naming the Collateral Agent for the benefit of the Secured
Parties as insured, as is satisfactory to the Collateral
Agent, and
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95
(ix) evidence that the Borrower shall have applied to
Standard & Poor's Ratings Group's CUSIP Service Bureau for the
assignment of private placement numbers to the Notes.
(r) Further Assurances. (i) Promptly upon request by the
Administrative Agent, or any Lender Party through the Administrative
Agent, correct, and cause each of its Subsidiaries promptly to correct,
any material defect or error that may be discovered in any Loan
Document or in the execution, acknowledgment, filing or recordation
thereof, and
(ii) Promptly upon request by the Collateral Agent, or any
Lender Party through the Collateral Agent, do, execute, acknowledge,
deliver, record, re-record, file, re-file, register and re-register,
and cause each of its Subsidiaries promptly to do, execute,
acknowledge, deliver, record, re-record, file, re-file, register and
re-register, any and all such further acts, deeds, conveyances, pledge
agreements, mortgages, deeds of trust, trust deeds, assignments,
financing statements and continuations thereof, termination statements,
notices of assignment, transfers, certificates, assurances and other
instruments as the Collateral Agent, or any Lender Party through the
Collateral Agent, may reasonably require from time to time in order to
(A) carry out more effectively the purposes of this Agreement, the
Notes or any other Loan Document, (B) to the fullest extent permitted
by applicable law, subject any of the Borrower's or any of its
Subsidiaries' properties, assets, rights or interests to the Liens now
or hereafter intended to be covered by any of the Collateral Documents,
(C) perfect and maintain the validity, effectiveness and priority of
any of the Collateral Documents and any of the Liens intended to be
created thereunder and (D) assure, convey, grant, assign, transfer,
preserve, protect and confirm more effectively unto the Agents and the
Lender Parties the rights granted or now or hereafter intended to be
granted to the Agents and the Lender Parties under any Loan Document or
under any other instrument executed in connection with any Loan
Document to which any Loan Party or any of its Subsidiaries is or is to
be a party; provided, however, that in any event this Section 5.01(r)
shall not require Liens on, and the execution and delivery of
Collateral Documents covering, any property to the extent not otherwise
required by the terms of the Loan Documents.
SECTION 5.02. Negative Covenants. So long as any Advance shall
remain unpaid, any Letter of Credit shall be outstanding or any Lender Party
shall have any Commitment hereunder, the Borrower will not, at any time:
(a) Liens, Etc. Create, incur, assume or suffer to exist, or
permit any of its Subsidiaries to create, incur, assume or suffer to
exist, any Lien on or with respect to any of its properties of any
character (including, without limitation, accounts)
<PAGE> 102
96
whether now owned or hereafter acquired, or sign or file or suffer to
exist, or permit any of its Subsidiaries to sign or file or suffer to
exist, under the Uniform Commercial Code of any jurisdiction, a
financing statement that names the Borrower or any of its Subsidiaries
as debtor, or sign or suffer to exist, or permit any of its
Subsidiaries to sign or suffer to exist, any security agreement
authorizing any secured party thereunder to file such financing
statement, or assign, or permit any of its Subsidiaries to assign, any
accounts or other right to receive income, excluding, however, from the
operation of the foregoing restrictions the following:
(i) Liens created under the Loan Documents;
(ii) Permitted Liens;
(iii) Liens existing on the date hereof and described
on Schedule 5.02(a) hereto;
(iv) purchase money Liens upon or in real property or
equipment acquired or held by the Borrower or any of its
Subsidiaries in the ordinary course of business to secure the
purchase price of such property or equipment or to secure Debt
incurred solely for the purpose of financing the acquisition,
construction or improvement of any such property or equipment
to be subject to such Liens, or Liens existing on any such
property or equipment at the time of acquisition (other than
any such Liens created in contemplation of such acquisition
that do not secure the purchase price), or extensions,
renewals or replacements of any of the foregoing for the same
or a lesser amount; provided, however, that no such Lien shall
extend to or cover any property other than the property or
equipment being acquired, constructed or improved, and no such
extension, renewal or replacement shall extend to or cover any
property not theretofore subject to the Lien being extended,
renewed or replaced; and provided further that the aggregate
principal amount of the Debt secured by Liens permitted by
this clause (iv) shall not exceed the amount permitted under
Section 5.02(b)(iii)(B) at any time outstanding and that any
such Debt shall not otherwise be prohibited by the terms of
the Loan Documents;
(v) Liens arising in connection with Capitalized
Leases permitted under Section 5.02(b)(iii)(C); provided that
no such Lien shall extend to or cover any Collateral or assets
other than the assets subject to such Capitalized Leases;
<PAGE> 103
97
(vi) Liens on property of a Person existing at the
time such Person is merged into or consolidated with the
Borrower or any Subsidiary of the Borrower or becomes a
Subsidiary of the Borrower; provided that such Liens were not
created in contemplation of such merger, consolidation or
investment and do not extend to any assets other than those of
the Person merged into or consolidated with the Borrower or
such Subsidiary or acquired by the Borrower or such
Subsidiary;
(vii) Liens securing Obligations of the Borrower or
any of its Subsidiaries in an aggregate amount not to exceed
$5,000,000 at any time outstanding;
(viii) Liens arising in connection with any lease
permitted under Section 5.02(c), provided that no such Lien
shall extend to or cover any assets other than the assets
subject to such lease; and
(ix) the replacement, extension or renewal of any
Lien permitted by clauses (iii) and (vi) above upon or in the
same property theretofore subject thereto or the replacement,
extension or renewal (without increase in the amount or change
in any direct or contingent obligor) of the Debt secured
thereby.
(b) Debt. Create, incur, assume or suffer to exist, or permit
any of its Subsidiaries to create, incur, assume or suffer to exist,
any Debt other than:
(i) in the case of the Borrower,
(A) Debt owed to its Subsidiaries; so long
as at the time of incurrence of such Debt,
foreclosure proceedings shall not have been commenced
with respect to any stock or assets of such
Subsidiaries, and
(B) Debt in respect of Hedge Agreements not
entered into for speculative purposes and designed to
hedge against fluctuations in interest rates or
foreign exchange rates incurred in the ordinary
course of business and consistent with prudent
business practice;
(ii) in the case of any of its Subsidiaries, Debt
owed to the Borrower or to a wholly owned Subsidiary of the
Borrower to the extent permitted under Section 5.02(f); and
<PAGE> 104
98
(iii) in the case of the Borrower and any of its
Subsidiaries,
(A) Debt under the Loan Documents,
(B) Debt secured by Liens permitted by
Section 5.02(a)(iv) not to exceed in the aggregate
$10,000,000 at any time outstanding,
(C) Capitalized Leases in an aggregate
amount, calculated in accordance with GAAP, not to
exceed in the aggregate $10,000,000 at any time
outstanding,
(D) the Surviving Debt, and any Debt
extending the maturity of, or refunding or
refinancing, in whole or in part, any Surviving Debt,
provided that the terms of any such extending,
refunding or refinancing Debt, and of any agreement
entered into and of any instrument issued in
connection therewith, are otherwise permitted by the
Loan Documents and provided further that the
principal amount of such Surviving Debt shall not be
increased above the principal amount thereof
outstanding immediately prior to such extension,
refunding or refinancing, and the direct and
contingent obligors therefor shall not be changed, as
a result of or in connection with such extension,
refunding or refinancing,
(E) Subordinated Debt under the Subordinated
Notes Indentures,
(F) Debt of any Person that becomes a
Subsidiary of the Borrower after the date hereof in
accordance with the terms of Section 5.02(f) that is
existing at the time such Person becomes a Subsidiary
of the Borrower,
(G) Debt in an aggregate principal amount
not to exceed $5,000,000 outstanding at any time and
consisting of letters of credit (other than Letters
of Credit issued hereunder) and reimbursement
obligations in respect thereof,
(H) other Debt in an aggregate amount not to
exceed $5,000,000 at any time outstanding, and
(I) indorsement of negotiable instruments
for deposit or collection or similar transactions in
the ordinary course of business.
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99
(c) Lease Obligations. Create, incur, assume or suffer to
exist, or permit any of its Subsidiaries to create, incur, assume or
suffer to exist, any obligations as lessee for the rental or hire of
real or personal property of any kind under leases or agreements to
lease (including Capitalized Leases) having an original term of one
year or more that would cause the direct and contingent liabilities of
the Borrower and its Subsidiaries, on a Consolidated basis, in respect
of all such obligations to exceed an amount payable in any period of 12
consecutive months equal to the sum of (i) $25,000,000, (ii) an amount
equal to the product of (x) $200,000 and (y) the number of leased
bowling centers acquired by the Borrower or any of its Subsidiaries
after the Closing Date and (iii) in each calendar year occurring after
1996, an amount equal to 4% of the amount permitted under this Section
5.02(c) in the immediately preceding calendar year, calculated as at
the end of such preceding calendar year.
(d) Mergers, Etc. Merge into or consolidate with any Person or
permit any Person to merge into it, or permit any of its Subsidiaries
to do so, except that (i) any Subsidiary of the Borrower may merge into
or consolidate with the Borrower (in the case of any merger or
consolidation to which the Borrower is a party), or any other
Subsidiary of the Borrower; provided that, in the case of any such
merger or consolidation, the Person surviving such merger or
consolidation shall be the Borrower (in the case of any merger or
consolidation to which the Borrower is a party), or a wholly owned
Subsidiary of the Borrower, (ii) in connection with any acquisition
permitted under Section 5.02(f), any Subsidiary of the Borrower may
merge into or consolidate with any other Person or permit any other
Person to merge into or consolidate with it; provided that the Person
surviving such merger shall be a wholly owned Subsidiary of the
Borrower and (iii) in connection with any sale or other disposition
permitted under Section 5.02(e) (other than clause (ii) thereof), any
Subsidiary of the Borrower may merge into or consolidate with any other
Person or permit any other Person to merge into or consolidate with it;
provided, however, that in each case, immediately after giving effect
thereto, no event shall occur and be continuing that constitutes a
Default.
(e) Sales, Etc. of Assets. Sell, lease, transfer or otherwise
dispose of, or permit any of its Subsidiaries to sell, lease, transfer
or otherwise dispose of, any assets, or grant any option or other right
to purchase, lease or otherwise acquire any assets other than inventory
to be sold in the ordinary course of its business, except:
(i) sales of Inventory in the ordinary course of its
business,
(ii) in a transaction authorized by subsection (d)(i)
or (ii) of this Section 5.02,
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100
(iii) the sale or other disposition of damaged, worn
out or obsolete property that is no longer necessary for the
proper conduct of the business of the Borrower and its
Subsidiaries in the ordinary course of business, provided that
the fair value of the assets so sold or otherwise disposed of
shall not exceed $1,000,000 in the aggregate in any Fiscal
Year,
(iv) the sale or other disposition of assets by any
Loan Party to any other Loan Party,
(v) the sale of assets or properties for fair value
in an aggregate amount for any one such transaction or series
of related transactions not to exceed $10,000,
(vi) sales or exchanges of assets by the Borrower or
any of its Subsidiaries for fair value and for cash or senior
promissory notes or equity of the seller thereof or like-kind
assets (including, without limitation, the stock of the Person
owning such assets) to be used in the business of the Borrower
and its Subsidiaries or any other assets, provided that the
fair value of the assets so sold or exchanged shall not exceed
$10,000,000 in the aggregate in any Fiscal Year, provided
further that any notes or equity or other non-cash assets
received in connection with any sale or exchange of assets
pursuant to this clause (vi) shall (A) not exceed $5,000,000
in value in the aggregate in any Fiscal Year, and (B) be
pledged as Collateral securing the Obligations of the Borrower
or such Subsidiary, as the case may be, under the Loan
Documents and the Secured Parties' lien and security interest
therein shall be perfected (and the Borrower shall, and shall
cause any such Subsidiary to, take such action as the
Collateral Agent may deem necessary or desirable to effect
such perfection) in accordance with the terms of the Loan
Documents, and
(vii) sale of the Borrower's billiards equipment
manufacturing business for fair value,
provided that in the case of sales or exchanges of assets pursuant to
clauses (vi) and (vii) above, the Borrower shall, on the date of
receipt by any Loan Party or any of its Subsidiaries of any Net Cash
Proceeds from such sale, prepay the Advances pursuant to, and in the
amount and order of priority set forth in, Section 2.06(b)(ii), as
specified therein.
(f) Investments in Other Persons. Make or hold, or permit any
of its Subsidiaries to make or hold, any Investment in any Person other
than:
<PAGE> 107
101
(i) (A) Investments by the Borrower and its
Subsidiaries in their Subsidiaries outstanding on the date
hereof, (B) additional Investments in their wholly owned
Subsidiaries that are Loan Parties and (C) additional
Investments in their wholly owned Subsidiaries that are not
Loan Parties and the China Joint Venture, in the case of this
clause (C), in an aggregate amount invested not to exceed an
amount in any Fiscal Year equal to the sum of (x) $10,000,000
and (y) the aggregate amount of capital contributions made
after the date hereof by the Equity Investors and new third
party equity investors in Parent in any Fiscal Year to the
extent such amount was contributed to such Subsidiary as a
capital contribution in such Fiscal Year (without duplication
of amounts contributed pursuant to clauses (ii) and (ix)
below), provided that, to the extent that any amount permitted
to be invested in any Fiscal Year pursuant to clause (x) or
(y) shall not have been so invested, such amount may be
invested pursuant to this subsection (i) in the next
succeeding Fiscal Year and any amounts invested in the next
succeeding Fiscal Year shall be deemed to be applied first
against the amount so carried over from the preceding Fiscal
Year;
(ii) Investments by the Borrower and its Subsidiaries
in their non-wholly owned Subsidiaries and in other Persons
that are not their Subsidiaries in an aggregate amount
invested from the date hereof not to exceed an amount in any
Fiscal Year equal to the sum of (A) $5,000,000 and (B) the
aggregate amount of capital contributions made after the date
hereof by the Equity Investors and new third party equity
investors in Parent in any Fiscal Year to the extent such
amount was contributed to such Subsidiary as a capital
contribution in such Fiscal Year (without duplication of
amounts contributed pursuant to clause (i) above and clause
(ix) below), provided that, to the extent that any amount
permitted to be invested in any Fiscal Year pursuant to clause
(A) or (B) above shall not have been so invested, such amount
may be invested pursuant to this subsection (ii) in the next
succeeding Fiscal Year and any amounts invested in the next
succeeding Fiscal Year shall be deemed to be applied first
against the amount so carried over from the preceding Fiscal
Year;
(iii) Loans and advances to employees in the ordinary
course of business of the Borrower and its Subsidiaries as
presently conducted in an aggregate principal amount not to
exceed $7,500,000 for the purpose of purchasing common stock
of Parent and an additional $2,000,000 at any time
outstanding;
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(iv) Investments by the Borrower and its Subsidiaries
in Cash Equivalents;
(v) Investments by the Borrower in Hedge Agreements
permitted under Section 5.02(b)(i)(B);
(vi) Investments consisting of intercompany Debt
permitted under Section 5.02(b)(i)(A);
(vii) Investments existing on the date hereof and
described on Schedule 4.01(mm) hereto;
(viii) Investments consisting of notes and equity
received pursuant to Section 5.02(e)(vi) or (vii); and
(ix) other Investments made in connection with the
acquisition of all or any part of the assets or stock or other
equity interest of any Person or the acquisition or
construction of New Centers in an aggregate amount invested
not to exceed, together with the aggregate amount of Debt
incurred pursuant to Section 5.02(b)(iii)(F), $300,000,000
plus, in the case of Investments in Persons that become wholly
owned Subsidiaries as set forth in clause (1) below, the
aggregate amount of capital contributions made after the date
hereof by the Equity Investors and new third party equity
investors in Parent in any Fiscal Year to the extent such
amount was contributed to such Subsidiaries as a capital
contribution in such Fiscal Year (without duplication of
amounts contributed pursuant to clauses (i) and (ii) above);
provided that with respect to Investments made under this
clause (ix): (1) any newly acquired or created Subsidiary of
the Borrower or any of its Subsidiaries shall be a wholly
owned Subsidiary thereof and such Subsidiary (unless such
Subsidiary is a Foreign Subsidiary) shall become a Subsidiary
Guarantor and execute and deliver the documents referred to in
Section 5.01(n); (2) immediately before and after giving
effect thereto, no Default shall have occurred and be
continuing or would result therefrom; (3) substantially all of
any business acquired or invested in pursuant to this clause
(ix) shall be in the same or a substantially related line of
business as the business of the Borrower or any of its
Subsidiaries; and (4) immediately after giving effect to the
acquisition of a company or business pursuant to this clause
(ix), the Borrower shall be in pro forma compliance with the
covenants contained in Section 5.04, calculated based on the
relevant Financial Statements, as though such acquisition had
occurred at the beginning of the 12-month period covered
thereby, as evidenced by a certificate of a Designated
Financial Officer furnished to the
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Lender Parties, demonstrating such compliance and reflecting
the Adjusted EBITDA of any bowling center so acquired for the
immediately preceding 12-month period.
(g) Dividends, Etc. Declare or pay any dividends, purchase,
redeem, retire, defease or otherwise acquire for value any of its
capital stock or any warrants, rights or options to acquire such
capital stock, now or hereafter outstanding, return any capital to its
stockholders as such, make any distribution of assets, capital stock,
warrants, rights, options, obligations or securities to its
stockholders as such or issue or sell any capital stock or any
warrants, rights or options to acquire such capital stock, or permit
any of its Subsidiaries to do any of the foregoing or permit any of its
Subsidiaries to purchase, redeem, retire, defease or otherwise acquire
for value any capital stock of the Borrower or any warrants, rights or
options to acquire such capital stock or to issue or sell any capital
stock or any warrants, rights or options to acquire such capital stock,
except that:
(i) so long as no Default shall have occurred and be
continuing or would result therefrom, the Borrower may (A)
declare and pay dividends and distributions payable only in
common stock of the Borrower and (B) declare and pay cash
dividends to Holdings solely to the extent necessary to (x)
make payments required under the non-competition agreements
listed on Schedule 5.02(g) hereto and (y) declare and pay cash
dividends to Parent to the extent permitted under, and in
accordance with the terms of, the Holdings Guaranty, and
(ii) so long as foreclosure proceedings shall not
have been commenced with respect to any stock or assets of any
Subsidiary of the Borrower, any such Subsidiary may (A)
declare and pay cash dividends to the Borrower and (B) declare
and pay cash dividends to any other wholly owned Subsidiary of
the Borrower of which it is a Subsidiary.
(h) Change in Nature of Business. Make, or permit any of its
Subsidiaries to make, any material change in the nature of its business
as carried on at the date hereof.
(i) Charter Amendments. Amend, or permit any of its
Subsidiaries to amend, its certificate of incorporation or bylaws in
any material respect.
(j) Accounting Changes. Make or permit, or permit any of its
Subsidiaries to make or permit, any change in (i) accounting policies
or reporting practices, except as required by generally accepted
accounting principles or (ii) its Fiscal Year.
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(k) Prepayments, Etc. of Debt. Prepay, redeem, purchase,
defease or otherwise satisfy prior to the scheduled maturity thereof in
any manner, or make any payment in violation of any subordination terms
of, any Debt, other than (i) the prepayment of the Advances in
accordance with the terms of this Agreement, (ii) regularly scheduled
or required repayments or redemptions of Surviving Debt and (iii) in
connection with any acquisition of a company or business pursuant to
Section 5.02(f)(ix), the prepayment, redemption, purchase, defeasance
or other satisfaction of existing Debt of such company or business to
the extent required by the terms of such Debt, or amend, modify or
change any term or condition of any Surviving Debt or Subordinated Debt
in any manner that would impair in any material respect the value of
the interests or rights of the Borrower or any of its Subsidiaries
thereunder or that would impair in any material respect the rights or
interests of any Agent or any Lender Party, or permit any of its
Subsidiaries to do any of the foregoing other than to prepay any Debt
payable to the Borrower or any other Loan Party.
(l) Amendment, Etc. of Related Documents. Cancel or terminate
any Related Document or consent to or accept any cancellation or
termination thereof, amend, modify or change in any manner any term or
condition of any Related Document or give any consent, waiver or
approval thereunder, waive any default under or any breach of any term
or condition of any Related Document, agree in any manner to any other
amendment, modification or change of any term or condition of any
Related Document or take any other action in connection with any
Related Document, in each case that would impair in any material
respect the value of the interests or rights of the Borrower thereunder
or that would impair in any material respect the rights or interests of
any Agent or any Lender Party, or permit any of its Subsidiaries to do
any of the foregoing.
(m) Ownership Change. Take, or permit any of its Subsidiaries
to take, any action that would result in an "ownership change" (as
defined in Section 382 of the Internal Revenue Code) with respect to
the Borrower or any of its Subsidiaries or the application of the
"separate return limitation year" or "consolidated return change of
ownership" limitations under the Federal income tax consolidated return
regulations with respect to the Borrower or any of its Subsidiaries
(other than as a direct result of the Acquisition and the acquisition
by AMF Bowling Centers of the companies set forth on Schedule 4.01(ff)
hereto) that could be reasonably likely to have a Material Adverse
Effect.
(n) Negative Pledge. Enter into or suffer to exist, or permit
any of its Subsidiaries to enter into or suffer to exist, any agreement
prohibiting or conditioning the creation or assumption of any Lien upon
any of its property or assets other than (i) in favor of the Secured
Parties, (ii) in connection with any Surviving Debt and any
<PAGE> 111
105
Debt outstanding on the date such Subsidiary first becomes a Subsidiary
(so long as such agreement was not entered into solely in contemplation
of such Subsidiary becoming a Subsidiary) or (iii) in connection with
any lease permitted under Section 5.02(c) solely to the extent that
such lease prohibits a Lien on the lease or the property subject to
such lease.
(o) Partnerships, Etc. Become a general partner in any general
or limited partnership or joint venture, or permit any of its
Subsidiaries to do so, other than any such Subsidiary the sole assets
of which consist of its interest in such partnership or joint venture.
(p) Speculative Transactions. Engage, or permit any of its
Subsidiaries to engage, in any transaction involving commodity options
or futures contracts or any similar speculative transactions except for
Hedge Agreements permitted under Section 5.02(b)(i)(B).
(q) Capital Expenditures. Make, or permit any of its
Subsidiaries to make, any Capital Expenditures that would cause the
aggregate of all such Capital Expenditures made by the Borrower and its
Subsidiaries to exceed the sum of (i) $20,000,000 in any Fiscal Year
plus the aggregate amount of capital contributions made after the date
hereof by the Equity Investors and new third party equity investors in
Parent in such Fiscal Year to the extent such amount was contributed to
the Borrower or any of its Subsidiaries as a capital contribution in
such Fiscal Year in accordance with the terms of the Loan Documents,
(ii) 4% of revenues for the prior Fiscal Year (or, if the applicable
bowling center is newly constructed and in the first year of its
operations, revenues for such Fiscal Year) of each bowling center
acquired or constructed by the Borrower or any of its Subsidiaries
after the date hereof and (iii) for any Fiscal Year after the Fiscal
Year ending December 31, 1996, an amount equal to the lesser of
$10,000,000 and the amount (if any) by which the amount of Capital
Expenditures permitted to be made in the immediately preceding Fiscal
Year pursuant to this Section 5.02(q) exceeds the amount of Capital
Expenditures actually made in such immediately preceding Fiscal Year.
(r) Payment Restrictions Affecting Subsidiaries. Directly or
indirectly, create or otherwise cause or suffer to exist or become
effective, or 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 of its
Subsidiaries to pay dividends or make any other distributions to the
Borrower or any of its Subsidiaries on its capital stock or with
respect to any other interest or participation, or measured by its
profits, or pay any Debt owed to the Borrower or any of its
Subsidiaries, except for such encumbrances or restrictions existing
under or
<PAGE> 112
106
by reason of the Loan Documents, Surviving Debt as in effect on the
date hereof and applicable law.
SECTION 5.03. Reporting Requirements. So long as any Advance
shall remain unpaid, any Letter of Credit shall be outstanding or any Lender
Party shall have any Commitment hereunder, the Borrower will furnish to the
Administrative Agent and the Lender Parties:
(a) Default Notice. As soon as possible and in any event
within two days after any officer of the Borrower or Holdings obtains
knowledge of any Default or any event, development or occurrence
reasonably likely to have a Material Adverse Effect continuing on the
date of such statement, a statement of a Designated Financial Officer
setting forth details of such Default, event, development or occurrence
and the action that the Borrower has taken and proposes to take with
respect thereto.
(b) Quarterly Financials. As soon as available and in any
event within 45 days after the end of each of the first three quarters
of each Fiscal Year, Consolidated and consolidating balance sheets of
the Borrower and its Subsidiaries as of the end of such quarter and
Consolidated and consolidating statements of income and a Consolidated
statement of cash flows of the Borrower and its Subsidiaries for the
period commencing at the end of the previous fiscal quarter and ending
with the end of such fiscal quarter and Consolidated and consolidating
statements of income and a Consolidated statement of cash flows of the
Borrower and its Subsidiaries for the period commencing at the end of
the previous Fiscal Year and ending with the end of such quarter,
setting forth in each case in comparative form the corresponding
figures for the corresponding date or period of the preceding Fiscal
Year, all in reasonable detail and duly certified (subject to normal
year-end audit adjustments) by a Designated Financial Officer as having
been prepared in accordance with GAAP, together with (i) a certificate
of said officer (A) stating that no Default has occurred and is
continuing or, if a Default has occurred and is continuing, a statement
as to the nature thereof and the action that the Borrower has taken and
proposes to take with respect thereto and (B) setting forth, for the
Rolling Period ending at the end of such fiscal quarter, the Adjusted
EBITDA (and the calculation thereof) of each New Center constructed
within the preceding 15 months, EBITDA of each bowling center acquired
or constructed by the Borrower or any of its Subsidiaries after the
Closing Date and acquired or constructed at least 15 months prior to
the end of such Rolling Period and all Other Additions, if any, for
such Rolling Period and (ii) a schedule in form satisfactory to the
Administrative Agent of the computations used by the Borrower in
determining compliance with the covenants contained in Section 5.04,
provided that in the event of any change in GAAP used in the
preparation of such financial statements, the Borrower shall also
provide, if necessary for the determination of compliance with
<PAGE> 113
107
Section 5.04, a statement of reconciliation conforming such financial
statements to GAAP.
(c) Annual Financials. As soon as available and in any event
within 90 days after the end of each Fiscal Year, a copy of the annual
audit report for such year for the Borrower and its Subsidiaries,
including therein Consolidated and consolidating balance sheets of the
Borrower and its Subsidiaries as of the end of such Fiscal Year and
Consolidated and consolidating statements of income and a Consolidated
statement of cash flows of the Borrower and its Subsidiaries for such
Fiscal Year, in each case accompanied by an opinion not qualified as to
scope or going concern of Arthur Andersen, L.L.P. or other independent
public accountants of nationally recognized standing acceptable to the
Administrative Agent, together with (i) a certificate of such
accounting firm to the Lender Parties stating that in the course of the
regular audit of the business of the Borrower and its Subsidiaries,
which audit was conducted by such accounting firm in accordance with
generally accepted auditing standards, such accounting firm has
obtained no knowledge that a Default has occurred and is continuing, or
if, in the opinion of such accounting firm, a Default has occurred and
is continuing, a statement as to the nature thereof, (ii) a schedule in
form satisfactory to the Administrative Agent of the computations used
by such accountants in determining, as of the end of such Fiscal Year,
compliance with the covenants contained in Section 5.04, provided that
in the event of any change in GAAP used in the preparation of such
financial statements, the Borrower shall also provide, if necessary for
the determination of compliance with Section 5.04, a statement of
reconciliation conforming such financial statements to GAAP and (iii) a
certificate of a Designated Financial Officer (A) stating that no
Default has occurred and is continuing or, if a default has occurred
and is continuing, a statement as to the nature thereof and the action
that the Borrower has taken and proposes to take with respect thereto
and (B) setting forth, for the Rolling Period ending at the end of such
Fiscal Year, the Adjusted EBITDA (and the calculation thereof) of each
New Center constructed within the preceding 15 months, EBITDA of each
bowling center acquired or constructed by the Borrower or any of its
Subsidiaries after the Closing Date and acquired or constructed at
least 15 months prior to the end of such Rolling Period and all Other
Additions, if any, for such Rolling Period.
(d) Annual Forecasts. As soon as available and in any event no
later than 15 days after the end of each Fiscal Year, forecasts
prepared by management of the Borrower, in form satisfactory to the
Administrative Agent, of balance sheets, income statements and cash
flow statements on a monthly basis for the Fiscal Year following such
Fiscal Year and on an annual basis for each Fiscal Year thereafter
until the Termination Date for the AXELs Series B Facility.
<PAGE> 114
108
(e) ERISA Events and ERISA Reports. (i) Promptly and in any
event within 20 days after any Loan Party or any ERISA Affiliate knows
or has reason to know that any ERISA Event has occurred, a statement of
a Designated Financial Officer describing such ERISA Event and the
action, if any, that such Loan Party or such ERISA Affiliate has taken
and proposes to take with respect thereto and (ii) on the date any
records, documents or other information must be furnished to the PBGC
with respect to any Plan pursuant to Section 4010 of ERISA, a copy of
such records, documents and information.
(f) Plan Terminations. Promptly and in any event within 10
Business Days after receipt thereof by any Loan Party or any ERISA
Affiliate, copies of each notice from the PBGC stating its intention to
terminate any Plan or to have a trustee appointed to administer any
Plan.
(g) Actuarial Reports. Within 20 Business Days after receipt
thereof by any Loan Party or any ERISA Affiliate, a copy of the annual
actuarial valuation report for each Plan the funded current liability
percentage (as defined in Section 302(d)(8) of ERISA) of which is less
than 90% or the unfunded current liability of which exceeds $2,000,000.
(h) Plan Annual Reports. Within 30 days after the filing
thereof with the Internal Revenue Service, copies of each Schedule B
(Actuarial Information) to the annual report (Form 5500 Series) with
respect to each Plan.
(i) Multiemployer Plan Notices. Promptly and in any event
within 10 Business Days after receipt thereof by any Loan Party or any
ERISA Affiliate from the sponsor of a Multiemployer Plan, copies of
each notice concerning (i) the imposition of Withdrawal Liability by
any such Multiemployer Plan, (ii) the reorganization or termination,
within the meaning of Title IV of ERISA, of any such Multiemployer Plan
or (iii) the amount of liability incurred, or that may be incurred, by
such Loan Party or any ERISA Affiliate in connection with any event
described in clause (i) or (ii).
(j) Litigation. Promptly after the commencement thereof,
notice of all actions, suits, investigations, litigation and
proceedings before any court or governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign,
affecting any Loan Party or any of its Subsidiaries of the type
required to be disclosed in Section 4.01(j).
(k) Securities Reports. Promptly after the sending or filing
thereof, copies of all proxy statements, financial statements and
reports that Parent or any Loan Party
<PAGE> 115
109
or any of its Subsidiaries sends to all of its stockholders, and copies
of all regular, periodic and special reports, and all registration
statements, that Parent or any Loan Party or any of its Subsidiaries
files with the Securities and Exchange Commission or any governmental
authority that may be substituted therefor, or with any national
securities exchange.
(l) Creditor Reports. Promptly after the furnishing thereof,
copies of any statement or report furnished to any other holder of the
securities of any Loan Party or of any of its Subsidiaries pursuant to
the terms of any indenture, loan or credit or similar agreement and not
otherwise required to be furnished to the Lender Parties pursuant to
any other clause of this Section 5.03.
(m) Agreement Notices. Promptly upon receipt thereof, copies
of all notices of any default or breach and all other material requests
and other documents received by any Loan Party or any of its
Subsidiaries under or pursuant to any Related Document or indenture,
loan or credit or similar agreement and, from time to time upon request
by the Administrative Agent, such information and reports regarding the
Related Documents as the Administrative Agent may reasonably request.
(n) Revenue Agent Reports. Within 10 days after receipt,
copies of all Revenue Agent Reports (Internal Revenue Service Form
886), or other written proposals of the Internal Revenue Service, that
propose, determine or otherwise set forth positive adjustments to the
Federal income tax liability of the affiliated group (within the
meaning of Section 1504(a)(1) of the Internal Revenue Code) of which
the Borrower is a member aggregating $2,000,000 or more.
(o) Tax Certificates. Promptly, and in any event within five
Business Days after the due date (with extensions) for filing the final
Federal income tax return in respect of each taxable year, a
certificate (a "Tax Certificate"), signed by the President of the
Borrower or a Designated Financial Officer, stating that the common
parent of the affiliated group (within the meaning of Section
1504(a)(1) of the Internal Revenue Code) of which the Borrower is a
member has paid to the Internal Revenue Service or other taxing
authority, or to the Borrower, the full amount that such affiliated
group is required to pay in respect of Federal income tax for such year
and that the Borrower and its Subsidiaries have received any amounts
payable to them, and have not paid amounts in respect of taxes
(Federal, state, local or foreign) in excess of the amount they are
required to pay, under the Tax Agreements in respect of such taxable
year.
<PAGE> 116
110
(p) Notification of Tax Adjustments. Promptly, and in any
event within five Business Days after receipt of notice thereof, notice
of any adjustment that has been proposed formally or informally by any
tax authority relating to any tax return (Federal, state, local and
foreign) filed by any Loan Party or any of its Subsidiaries and
Affiliates in excess of $1,000,000.
(q) Environmental Conditions. Notice of any Environmental
Action against, or of any noncompliance with any Environmental Law or
Environmental Permit by, any Loan Party or any of its Subsidiaries that
could (i) reasonably be expected to have a Material Adverse Effect or
(ii) reasonably be expected to cause any property described in the
Mortgages to be subject to any restrictions on ownership, occupancy,
use or transferability under any Environmental Law that could
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect, such notice to be furnished promptly after
such Environmental Action or noncompliance meets the criteria set forth
in either subsection (i) or subsection (ii) of this Section 5.03(q).
(r) Real Property. As soon as available and in any event
within 60 days after the end of each Fiscal Year, a report
supplementing Schedules 4.01(kk) and 4.01(ll) hereto, including an
identification of all real and leased property disposed of by the
Borrower or any of its Subsidiaries during such Fiscal Year, a list and
description (including the street address, county or other relevant
jurisdiction, state, record owner, book value thereof, and in the case
of leases of property, lessor, lessee, expiration date and annual
rental cost thereof) of all real property acquired or leased during
such Fiscal Year and a description of such other changes in the
information included in such Schedules as may be necessary for such
Schedules to be accurate and complete, provided that so long as no
Default shall have occurred and be continuing, updated asset appraisals
shall not be required pursuant to this subsection (r).
(s) Insurance. As soon as available and in any event within 60
days after the end of each Fiscal Year, a report summarizing the
insurance coverage (specifying type, amount and carrier) in effect for
each Loan Party and its Subsidiaries and containing such additional
information as any Lender Party (through the Administrative Agent) may
reasonably specify.
(t) Other Information. Such other information respecting the
business, condition (financial or otherwise), operations, performance,
properties or prospects of any Loan Party or any of its Subsidiaries as
any Lender Party (through the Administrative Agent) may from time to
time reasonably request.
<PAGE> 117
111
SECTION 5.04. Financial Covenants. So long as any Advance
shall remain unpaid, any Letter of Credit shall be outstanding or any Lender
Party shall have any Commitment hereunder, the Borrower will:
(a) Minimum EBITDA. Maintain at all times (calculated at the
end of each fiscal quarter of the Borrower) Modified Consolidated
EBITDA of not less than the sum of (i) the amount set forth below for
each Rolling Period set forth below and (ii) the EBITDA Adjustment
Amount for such Rolling Period:
<TABLE>
<CAPTION>
ROLLING PERIOD ENDING AMOUNT
- --------------------- ------
<S> <C>
September 30, 1996 $140,000,000
December 31, 1996 $145,000,000
March 31, 1997 $150,000,000
June 30, 1997 $150,000,000
September 30, 1997 $150,000,000
December 31, 1997 $150,000,000
March 31, 1998 $150,000,000
June 30, 1998 $150,000,000
September 30, 1998 $155,000,000
December 31, 1998 $155,000,000
March 31, 1999 $155,000,000
June 30, 1999 $155,000,000
September 30, 1999 $165,000,000
December 31, 1999 $165,000,000
March 31, 2000 $165,000,000
June 30, 2000 $165,000,000
September 30, 2000 $175,000,000
December 31, 2000 $175,000,000
March 31, 2001 $175,000,000
June 30, 2001 $175,000,000
September 30, 2001 $185,000,000
December 31, 2001 $185,000,000
March 31, 2002 $185,000,000
June 30, 2002 $185,000,000
September 30, 2002 $195,000,000
December 31, 2002 $195,000,000
March 31, 2003 $195,000,000
June 30, 2003 $195,000,000
September 30, 2003 $200,000,000
</TABLE>
<PAGE> 118
112
<TABLE>
<CAPTION>
ROLLING PERIOD ENDING AMOUNT
- --------------------- ------
<S> <C>
December 31, 2003 $200,000,000
March 31, 2004 and thereafter $200,000,000
</TABLE>
(b) Cash Interest Coverage Ratio. Maintain at all times
(calculated at the end of each fiscal quarter of the Borrower) a ratio
of Modified Consolidated EBITDA to cash interest payable on all Debt of
the Borrower and its Subsidiaries on a Consolidated basis, in each case
for such Rolling Period of not less than the amount set forth below for
each Rolling Period set forth below:
ROLLING PERIOD ENDING RATIO
- --------------------- -----
September 30, 1996 2.00
December 31, 1996 2.00
March 31, 1997 2.00
June 30, 1997 2.00
September 30, 1997 2.25
December 31, 1997 2.25
March 31, 1998 2.25
June 30, 1998 2.25
September 30, 1998 2.50
December 31, 1998 2.50
March 31, 1999 2.50
June 30, 1999 2.50
September 30, 1999 2.75
December 31, 1999 2.75
March 31, 2000 2.75
June 30, 2000 2.75
September 30, 2000 3.00
December 31, 2000 3.00
March 31, 2001 3.00
June 30, 2001 3.00
September 30, 2001 2.00
December 31, 2001 2.00
March 31, 2002 2.00
June 30, 2002 2.00
September 30, 2002 2.25
December 31, 2002 2.25
March 31, 2003 2.25
<PAGE> 119
113
ROLLING PERIOD ENDING RATIO
- --------------------- -----
June 30, 2003 2.25
September 30, 2003 2.25
December 31, 2003 2.25
March 31, 2004 2.25
June 30, 2004 2.25
September 30, 2004 and thereafter 2.50
(c) Fixed Charge Coverage Ratio. Maintain at all times
(calculated at the end of each fiscal quarter of the Borrower) a ratio
of (A) Modified Consolidated EBITDA during such Rolling Period less the
sum of (I) cash taxes paid plus (II) Capital Expenditures made, in each
case, by the Borrower and its Subsidiaries during such Rolling Period
to (B) the sum of (i) cash interest payable on all Debt plus (ii)
principal amounts of all Debt payable (other than the principal amount
of Debt to the extent it has been refinanced), in each case, by the
Borrower and its Subsidiaries during such Rolling Period of not less
than the amount set forth below for each Rolling Period set forth
below:
ROLLING PERIOD ENDING RATIO
- --------------------- -----
September 30, 1996 1.05
December 31, 1996 1.05
March 31, 1997 1.05
June 30, 1997 1.05
September 30, 1997 1.10
December 31, 1997 1.10
March 31, 1998 1.10
June 30, 1998 1.10
September 30, 1998 1.15
December 31, 1998 1.15
March 31, 1999 1.15
June 30, 1999 1.15
September 30, 1999 1.20
December 31, 1999 1.20
March 31, 2000 1.20
June 30, 2000 1.20
September 30, 2000 1.20
December 31, 2000 1.20
March 31, 2001 1.20
<PAGE> 120
114
ROLLING PERIOD ENDING RATIO
- --------------------- -----
June 30, 2001 1.20
September 30, 2001 1.05
December 31, 2001 1.05
March 31, 2002 1.05
June 30, 2002 1.05
September 30, 2002 1.10
December 31, 2002 1.10
March 31, 2003 1.10
June 30, 2003 1.10
September 30, 2003 1.10
December 31, 2003 1.10
March 31, 2004 and thereafter 1.10
(d) Senior Debt to EBITDA Ratio. Maintain at all times
(calculated at the end of each fiscal quarter of the Borrower) a ratio
of Consolidated Debt (other than Subordinated Debt and Hedge
Agreements) of the Borrower and its Subsidiaries to Modified
Consolidated EBITDA of not more than the amount set forth below for
each Rolling Period set forth below:
ROLLING PERIOD ENDING RATIO
- --------------------- -----
September 30, 1996 3.50
December 31, 1996 3.50
March 31, 1997 3.50
June 30, 1997 3.50
September 30, 1997 3.25
December 31, 1997 3.25
March 31, 1998 3.25
June 30, 1998 3.25
September 30, 1998 2.75
December 31, 1998 2.75
March 31, 1999 2.75
June 30, 1999 2.75
September 30, 1999 2.25
December 31, 1999 2.25
March 31, 2000 2.25
June 30, 2000 2.25
September 30, 2000 1.50
<PAGE> 121
115
ROLLING PERIOD ENDING RATIO
- --------------------- -----
December 31, 2000 1.50
March 31, 2001 1.50
June 30, 2001 1.50
September 30, 2001 1.50
December 31, 2001 1.50
March 31, 2002 1.50
June 30, 2002 1.50
September 30, 2002 1.50
December 31, 2002 1.50
March 31, 2003 1.50
June 30, 2003 1.50
September 30, 2003 1.50
December 31, 2003 1.50
March 31, 2004 and thereafter 1.50
(e) Total Debt/EBITDA Ratio. Maintain at all times (calculated
at the end of each fiscal quarter of the Borrower) a ratio of
Consolidated total Debt (other than Hedge Agreements) of the Borrower
and its Subsidiaries to Modified Consolidated EBITDA of not more than
the amount set forth below for each Rolling Period set forth below:
ROLLING PERIOD ENDING RATIO
- --------------------- -----
September 30, 1996 6.95
December 31, 1996 6.95
March 31, 1997 6.75
June 30, 1997 6.75
September 30, 1997 6.60
December 31, 1997 6.60
March 31, 1998 6.60
June 30, 1998 6.60
September 30, 1998 6.50
December 31, 1998 6.50
March 31, 1999 6.50
June 30, 1999 6.50
September 30, 1999 6.25
December 31, 1999 6.25
March 31, 2000 6.25
<PAGE> 122
116
ROLLING PERIOD ENDING RATIO
- --------------------- -----
June 30, 2000 6.25
September 30, 2000 5.50
December 31, 2000 5.50
March 31, 2001 5.50
June 30, 2001 5.50
September 30, 2001 4.75
December 31, 2001 4.75
March 31, 2002 4.75
June 30, 2002 4.75
September 30, 2002 4.25
December 31, 2002 4.25
March 31, 2003 4.25
June 30, 2003 4.25
September 30, 2003 4.00
December 31, 2003 4.00
March 31, 2004 and thereafter 4.00
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. If any of the following
events ("Events of Default") shall occur and be continuing:
(a) (i) the Borrower shall fail to pay any principal of any
Advance when the same shall become due and payable or (ii) the Borrower
shall fail to pay any interest on any Advance, or any Loan Party shall
fail to make any other payment under any Loan Document, in each case
under this clause (ii) within three days after the same becomes due and
payable; or
(b) any representation or warranty made by any Loan Party (or
any of its officers) under or in connection with any Loan Document
shall prove to have been incorrect in any material respect when made;
or
(c) the Borrower shall fail to perform or observe any term,
covenant or agreement contained in Section 2.14, 5.01(e), (f), (m),
(n)(i) or (n)(ii), (p) or (q), 5.02, 5.03(a) or 5.04; or
<PAGE> 123
117
(d) any Loan Party shall fail to perform any other term,
covenant or agreement contained in any Loan Document on its part to be
performed or observed if such failure shall remain unremedied for 15
days after the earlier of the date on which (A) a Responsible Officer
becomes aware of such failure or (B) written notice thereof shall have
been given to the Borrower by the Administrative Agent or any Lender
Party; or
(e) any Loan Party or any of its Material Subsidiaries shall
fail to pay any principal of, premium or interest on or any other
amount payable in respect of any Debt that is outstanding in a
principal amount of at least $25,000,000 either individually or in the
aggregate (but excluding Debt outstanding hereunder) of such Loan Party
or such Material Subsidiary (as the case may be), when the same becomes
due and payable (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise), and such failure shall continue
after the applicable grace period, if any, specified in the agreement
or instrument relating to such Debt; or any other event shall occur or
condition shall exist under any agreement or instrument relating to any
such Debt and shall continue after the applicable grace period, if any,
specified in such agreement or instrument, if the effect of such event
or condition is to accelerate, or to permit the acceleration of, the
maturity of such Debt or otherwise to cause, or to permit the holder
thereof to cause, such Debt to mature; or any such Debt shall be
declared to be due and payable or required to be prepaid or redeemed
(other than by a regularly scheduled required prepayment or
redemption), purchased or defeased, or an offer to prepay, redeem,
purchase or defease such Debt shall be required to be made, in each
case prior to the stated maturity thereof; or
(f) any Loan Party or any of its Material Subsidiaries shall
generally not pay its debts as such debts become due, or shall admit in
writing its inability to pay its debts generally, or shall make a
general assignment for the benefit of creditors; or any proceeding
shall be instituted by or against any Loan Party or any of its Material
Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under
any law relating to bankruptcy, insolvency or reorganization or relief
of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, or other similar official for it or
for any substantial part of its property and, in the case of any such
proceeding instituted against it (but not instituted by it) that is
being diligently contested by it in good faith, either such proceeding
shall remain undismissed or unstayed for a period of 30 days or any of
the actions sought in such proceeding (including, without limitation,
the entry of an order for relief against, or the appointment of a
receiver, trustee, custodian or other similar
<PAGE> 124
118
official for, it or any substantial part of its property) shall occur;
or any Loan Party or any of its Material Subsidiaries shall take any
corporate action to authorize any of the actions set forth above in
this subsection (f); or
(g) any judgment or order for the payment of money in excess
of $25,000,000 shall be rendered against any Loan Party or any of its
Material Subsidiaries and either (i) enforcement proceedings shall have
been commenced by any creditor upon such judgment or order or (ii)
there shall be any period of 15 consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect; provided, however, that any such
judgment or order shall not be an Event of Default under this Section
6.01(g) if and to the extent that the amount of such judgment or order
is covered by a valid and binding policy of insurance between the
defendant and the insurer covering payment thereof so long as such
insurer, which shall be rated at least "A" by A.M. Best Company, has
been notified of, and has not disputed the claim made for payment of,
the amount of such judgment or order; or
(h) any non-monetary judgment or order shall be rendered
against any Loan Party or any of its Material Subsidiaries that could
be reasonably likely to have a Material Adverse Effect, and there shall
be any period of 15 consecutive days during which a stay of enforcement
of such judgment or order, by reason of a pending appeal or otherwise,
shall not be in effect; or
(i) any provision of any Loan Document after delivery thereof
pursuant to Section 3.01 or 5.01(n) shall for any reason cease to be
valid and binding on or enforceable against any Loan Party party to it,
or any such Loan Party shall so state in writing; or
(j) any provision relating to the subordination of any
Subordinated Debt to the Obligations of the Loan Parties under the Loan
Documents contained in any Subordinated Debt Document shall for any
reason cease to be valid and binding on or enforceable against any Loan
Party party to it or any holder of Subordinated Debt issued pursuant to
such Subordinated Debt Document, or any such Loan Party or holder shall
so state in writing; or
(k) any Collateral Document (excluding Mortgages covering
Collateral which, in the aggregate, is immaterial) after delivery
thereof pursuant to Section 3.01 or 5.01(n) shall for any reason (other
than pursuant to the terms thereof or as a result of action taken or
failure to take action by any Agent or Lender Party) cease to create
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a valid and perfected first priority lien on and security interest in
the Collateral purported to be covered thereby; or
(l) Parent ceases to own and control legally and beneficially
all of the outstanding shares of the capital stock of Holdings; or
(m) Holdings ceases to own and control legally and
beneficially all of the outstanding shares of the capital stock of the
Borrower; or
(n) a Change of Control shall occur; or
(o) any ERISA Event shall have occurred with respect to a Plan
and the sum (determined as of the date of occurrence of such ERISA
Event) of the Insufficiency of such Plan and the Insufficiency of any
and all other Plans with respect to which an ERISA Event shall have
occurred and then exist (or the liability of the Loan Parties and the
ERISA Affiliates related to such ERISA Event) exceeds $25,000,000; or
(p) any Loan Party or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that it has incurred
Withdrawal Liability to such Multiemployer Plan in an amount that, when
aggregated with all other amounts required to be paid to Multiemployer
Plans by the Loan Parties and the ERISA Affiliates as Withdrawal
Liability (determined as of the date of such notification), exceeds
$25,000,000 or requires payments exceeding $7,500,000 per annum; or
(q) any Loan Party or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that such Multiemployer
Plan is in reorganization or is being terminated, within the meaning of
Title IV of ERISA, and as a result of such reorganization or
termination the aggregate annual contributions of the Loan Parties and
the ERISA Affiliates to all Multiemployer Plans that are then in
reorganization or being terminated have been or will be increased over
the amounts contributed to such Multiemployer Plans for the plan years
of such Multiemployer Plans immediately preceding the plan year in
which such reorganization or termination occurs by an amount exceeding
$7,500,000;
then, and in any such event, the Administrative Agent (i) shall at the request,
or may with the consent, of the Required Lenders, by notice to the Borrower,
declare the Commitments of the Lender Parties and the obligation of each
Appropriate Lender to make Advances (other than Letter of Credit Advances by an
Issuing Bank or a Working Capital Lender pursuant to
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Section 2.03(c)) and of each Issuing Bank to issue Letters of Credit to be
terminated, whereupon the same shall forthwith terminate, and (ii) shall at the
request, or may with the consent, of the Required Lenders, by notice to the
Borrower, declare the Notes, all interest thereon and all other amounts payable
under this Agreement and the other Loan Documents to be forthwith due and
payable, whereupon the Notes, all such interest and all such amounts shall
become and be forthwith due and payable, without presentment, demand, protest or
further notice of any kind, all of which are hereby expressly waived by the
Borrower; provided, however, that in the event of an actual or deemed entry of
an order for relief with respect to any Loan Party or any of its Subsidiaries
under the Federal Bankruptcy Code, (x) the obligation of each Lender to make
Advances (other than Letter of Credit Advances by an Issuing Bank or a Working
Capital Lender pursuant to Section 2.03(c)) and of each Issuing Bank to issue
Letters of Credit shall automatically be terminated and (y) the Notes, all such
interest and all such amounts shall automatically become and be due and payable,
without presentment, demand, protest or any notice of any kind, all of which are
hereby expressly waived by the Borrower.
SECTION 6.02. Actions in Respect of the Letters of Credit upon
Default. If any Event of Default shall have occurred and be continuing, the
Administrative Agent may, or shall at the request of the Required Lenders,
irrespective of whether it is taking any of the actions described in Section
6.01 or otherwise, make demand upon the Borrower to, and forthwith upon such
demand the Borrower will, pay to the Administrative Agent on behalf of the
Lender Parties in same day funds at the Administrative Agent's office designated
in such demand, for deposit in the L/C Cash Collateral Account, an amount equal
to the aggregate Available Amount of all Letters of Credit then outstanding. If
at any time the Administrative Agent determines that any funds held in the L/C
Cash Collateral Account are subject to any right or claim of any Person other
than the Administrative Agent and the Lender Parties or that the total amount of
such funds is less than the aggregate Available Amount of all Letters of Credit,
the Borrower will, forthwith upon demand by the Administrative Agent, pay to the
Administrative Agent, as additional funds to be deposited and held in the L/C
Cash Collateral Account, an amount equal to the excess of (a) such aggregate
Available Amount over (b) the total amount of funds, if any, then held in the
L/C Cash Collateral Account that the Administrative Agent determines to be free
and clear of any such right and claim.
ARTICLE VII
THE AGENTS
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SECTION 7.01. Authorization and Action. Each Lender Party (in
its capacities as a Lender, an Issuing Bank (if applicable) and a potential
Hedge Bank) hereby appoints and authorizes each Agent to take such action as
agent on its behalf and to exercise such powers and discretion under this
Agreement and the other Loan Documents as are delegated to such Agent by the
terms hereof and thereof, together with such powers and discretion as are
reasonably incidental thereto. As to any matters expressly provided for in the
Loan Documents as being subject to the discretion of any Agent, such matters
shall be subject to the sole discretion of such Agent, its directors, officers,
agents and employees. As to any matters not expressly provided for by the Loan
Documents (including, without limitation, enforcement or collection of the
Notes), no Agent shall be required to exercise any discretion or take any
action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions of
the Required Lenders, and such instructions shall be binding upon all Lender
Parties and all holders of Notes; provided, however, that no Agent shall be
required to take any action that exposes such Agent to personal liability or
that is contrary to this Agreement or applicable law. Each Agent agrees to give
to each Lender Party and each other Agent prompt notice of each notice given to
it by the Borrower pursuant to the terms of this Agreement.
SECTION 7.02. Agents' Reliance, Etc. Neither the Agents nor
any of their respective directors, officers, agents or employees shall be liable
for any action taken or omitted to be taken by it or them under or in connection
with the Loan Documents, except for its or their own gross negligence or willful
misconduct. Without limitation of the generality of the foregoing, each Agent:
(a) may treat the payee of any Note as the holder thereof until, in the case of
the Administrative Agent, the Administrative Agent receives and accepts an
Assignment and Acceptance entered into by the Lender that is the payee of such
Note, as assignor, and an Eligible Assignee, as assignee, or, in the case of any
other Agent, such Agent has received notice from the Administrative Agent that
it has received and accepted such Assignment and Acceptance, in each case as
provided in Section 8.07; (b) may consult with legal counsel (including counsel
for any Loan Party), independent public accountants and other experts selected
by it and shall not be liable for any action taken or omitted to be taken in
good faith by it in accordance with the advice of such counsel, accountants or
experts; (c) makes no warranty or representation to any Lender Party and shall
not be responsible to any Lender Party for any statements, warranties or
representations (whether written or oral) made in or in connection with the Loan
Documents; (d) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of any
Loan Document on the part of any Loan Party or to inspect the property
(including the books and records) of any Loan Party; (e) shall not be
responsible to any Lender Party for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of, or the perfection or
priority of any lien or security
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interest created or purported to be created under or in connection with, any
Loan Document or any other instrument or document furnished pursuant thereto;
and (f) shall incur no liability under or in respect of any Loan Document by
acting upon any notice, consent, certificate or other instrument or writing
(which may be by telegram, telecopy or telex) believed by it to be genuine and
signed or sent by the proper party or parties.
SECTION 7.03. Citibank, Citicorp, Goldman and Affiliates. With
respect to its Commitments, the Advances made by it and the Notes issued to it,
each of Citibank, Citicorp and Goldman shall have the same rights and powers
under the Loan Documents as any other Lender Party and may exercise the same as
though it were not an Agent; and the term "Lender Party" or "Lender Parties"
shall, unless otherwise expressly indicated, include each of Citibank, Citicorp
and Goldman in its individual capacity. Each of Citibank, Citicorp and Goldman
and its affiliates may accept deposits from, lend money to, act as trustee under
indentures of, accept investment banking engagements from and generally engage
in any kind of business with, any Loan Party, any of its Subsidiaries and any
Person who may do business with or own securities of any Loan Party or any such
Subsidiary, all as if Citibank, Citicorp or Goldman, as the case may be, were
not an Agent and without any duty to account therefor to the Lender Parties.
SECTION 7.04. Lender Party Credit Decision. Each Lender Party
acknowledges that it has, independently and without reliance upon the Agents or
any other Lender Party and based on the financial statements referred to in
Section 4.01 and such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender Party also acknowledges that it will, independently and
without reliance upon the Agents or any other Lender Party and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement.
SECTION 7.05. Indemnification. (a) Each Lender Party severally
agrees to indemnify each Agent (to the extent not promptly reimbursed by the
Borrower) from and against such Lender Party's ratable share (determined as
provided below) of any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever that may be imposed on, incurred by, or asserted
against such Agent in any way relating to or arising out of the Loan Documents
or any action taken or omitted by such Agent under the Loan Documents; provided,
however, that no Lender Party shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from such Agent's gross negligence or
willful misconduct. Without limitation of the foregoing, each Lender Party
agrees to reimburse such Agent promptly upon demand for its
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ratable share of any costs and expenses (including, without limitation,
reasonable fees and expenses of counsel) payable by the Borrower under Section
8.04, to the extent that such Agent is not promptly reimbursed for such costs
and expenses by the Borrower. For purposes of this Section 7.05(a), the Lender
Parties' respective ratable shares of any amount shall be determined, at any
time, according to the sum of (a) the aggregate principal amount of the Advances
outstanding at such time and owing to the respective Lender Parties, (b) their
respective Pro Rata Shares of the aggregate Available Amount of all Letters of
Credit outstanding at such time, (c) the aggregate unused portions of their
respective Term Loan Commitments, AXELs Series A Commitments, AXELs Series B
Commitments and Acquisition Commitments at such time and (d) their respective
Unused Working Capital Commitments at such time; provided that the aggregate
principal amount of Letter of Credit Advances owing to any Issuing Bank shall be
considered to be owed to the Working Capital Lenders ratably in accordance with
their respective Working Capital Commitments. In the event that any Defaulted
Advance shall be owing by any Defaulting Lender at any time, such Lender Party's
Commitment with respect to the Facility under which such Defaulted Advance was
required to have been made shall be considered to be unused for purposes of this
Section 7.05(a) to the extent of the amount of such Defaulted Advance. The
failure of any Lender Party to reimburse an Agent promptly upon demand for its
ratable share of any amount required to be paid by the Lender Party to such
Agent as provided herein shall not relieve any other Lender Party of its
obligation hereunder to reimburse such Agent for its ratable share of such
amount, but no Lender Party shall be responsible for the failure of any other
Lender Party to reimburse such Agent for such other Lender Party's ratable share
of such amount. Without prejudice to the survival of any other agreement of any
Lender Party hereunder, the agreement and obligations of each Lender Party
contained in this Section 7.05(a) shall survive the payment in full of
principal, interest and all other amounts payable hereunder and under the other
Loan Documents.
(b) Each Working Capital Lender severally agrees to indemnify
each Issuing Bank (to the extent not promptly reimbursed by the Borrower) from
and against such Working Capital Lender's ratable share (determined as provided
below) of any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever that may be imposed on, incurred by, or asserted against such
Issuing Bank in any way relating to or arising out of the Loan Documents or any
action taken or omitted by such Issuing Bank under the Loan Documents; provided,
however, that no Working Capital Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from such Issuing Bank's gross
negligence or willful misconduct. Without limitation of the foregoing, each
Working Capital Lender agrees to reimburse such Issuing Bank promptly upon
demand for its ratable share of any costs and expenses
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(including, without limitation, reasonable fees and expenses of counsel) payable
by the Borrower under Section 8.04, to the extent that such Issuing Bank is not
promptly reimbursed for such costs and expenses by the Borrower. For purposes of
this Section 7.05(b), the Working Capital Lenders' respective ratable shares of
any amount shall be determined, at any time, according to the sum of (a) the
aggregate principal amount of the Advances outstanding at such time and owing to
the respective Working Capital Lenders, (b) their respective Pro Rata Shares of
the aggregate Available Amount of all Letters of Credit outstanding at such
time, and (c) their respective Unused Working Capital Commitments at such time;
provided that the aggregate principal amount of Letter of Credit Advances owing
to any Issuing Bank shall be considered to be owed to the Working Capital
Lenders ratably in accordance with their respective Working Capital Commitments.
In the event that any Defaulted Advance shall be owing by any Defaulting Lender
at any time, such Lender Party's Commitment with respect to the Facility under
which such Defaulted Advance was required to have been made shall be considered
to be unused for purposes of this Section 7.05(b) to the extent of the amount of
such Defaulted Advance. The failure of any Working Capital Lender to reimburse
such Issuing Bank promptly upon demand for its ratable share of any amount
required to be paid by the Working Capital Lenders to such Issuing Bank as
provided herein shall not relieve any other Working Capital Lender of its
obligation hereunder to reimburse such Issuing Bank for its ratable share of
such amount, but no Working Capital Lender shall be responsible for the failure
of any other Working Capital Lender to reimburse such Issuing Bank for such
other Working Capital Lender's ratable share of such amount. Without prejudice
to the survival of any other agreement of any Working Capital Lender hereunder,
the agreement and obligations of each Working Capital Lender contained in this
Section 7.05(b) shall survive the payment in full of principal, interest and all
other amounts payable hereunder and under the other Loan Documents.
SECTION 7.06. Successor Agents. Any Agent may resign as to any
or all of the Facilities at any time by giving written notice thereof to the
Lender Parties and the Borrower and may be removed as to all of the Facilities
at any time with or without cause by the Required Lenders. Upon any such
resignation or removal, the Required Lenders shall have the right to appoint a
successor Agent as to such of the Facilities as to which such Agent has resigned
or been removed subject, so long as no Default shall have occurred and be
continuing, to the consent of the Borrower, such consent not to be unreasonably
withheld or delayed. If no successor Agent shall have been so appointed by the
Required Lenders, and shall have accepted such appointment, within 30 days after
such retiring Agent's giving of notice of resignation or the Required Lenders'
removal of such retiring Agent, then such retiring Agent may, on behalf of the
Lender Parties, appoint a successor Agent subject, so long as no Default shall
have occurred and be continuing, to the consent of the Borrower, such consent
not to be unreasonably withheld or delayed, which shall be a commercial bank
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organized or licensed under the laws of the United States or of any State
thereof and having a combined capital and surplus of at least $250,000,000. Upon
the acceptance of any appointment as an Agent hereunder by a successor Agent as
to all of the Facilities and upon the execution and filing or recording of such
financing statements, or amendments thereto, and such amendments or supplements
to the Mortgages, and such other instruments or notices, as may be necessary or
desirable, or as the Required Lenders may request, in order to continue the
perfection of the Liens granted or purported to be granted by the Collateral
Documents, such successor Agent shall succeed to and become vested with all the
rights, powers, discretion, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations under the
Loan Documents. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent as to less than all of the Facilities and upon the execution and
filing or recording of such financing statements, or amendments thereto, and
such amendments or supplements to the Mortgages, and such other instruments or
notices, as may be necessary or desirable, or as the Required Lenders may
request, in order to continue the perfection of the Liens granted or purported
to be granted by the Collateral Documents, such successor Agent shall succeed to
and become vested with all the rights, powers, discretion, privileges and duties
of the retiring Agent as to such Facilities, other than with respect to funds
transfers and other similar aspects of the administration of Borrowings under
such Facilities, issuances of Letters of Credit (notwithstanding any resignation
as Agent with respect to the Letter of Credit Facility) and payments by the
Borrower in respect of such Facilities, and the retiring Agent shall be
discharged from its duties and obligations under this Agreement as to such
Facilities, other than as aforesaid. After any retiring Agent's resignation or
removal hereunder as Agent as to all of the Facilities, the provisions of this
Article VII shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Agent as to any Facilities under this Agreement.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement or the Notes or any other Loan Document, nor consent
to any departure by the Borrower therefrom, shall in any event be effective
unless the same shall be in writing and signed (or, in the case of the
Collateral Documents, consented to) by the Required Lenders, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that (a) no amendment,
waiver or consent shall, unless in writing and signed by all of the Lender
Parties
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(other than any Lender Party that is, at such time, a Defaulting Lender), do any
of the following at any time: (i) waive any of the conditions specified in
Section 3.01 or, in the case of the Initial Extension of Credit, Section 3.02,
(ii) change the number of Lenders or the percentage of (x) the Commitments, (y)
the aggregate unpaid principal amount of the Advances or (z) the aggregate
Available Amount of outstanding Letters of Credit that, in each case, shall be
required for the Lenders or any of them to take any action hereunder, (iii)
reduce or limit the obligations of any Guarantor under Section 1 of any Guaranty
or release such Guarantor or otherwise limit such Guarantor's liability with
respect to the Obligations owing to the Administrative Agent and the Lender
Parties other than, in the case of any Subsidiary Guarantor, to the extent
permitted under the Subsidiary Guaranty, (iv) release any material portion of
the Collateral in any transaction or series of related transactions (except to
the extent permitted by Section 5.02(e)) or permit the creation, incurrence,
assumption or existence of any Lien (other than Liens permitted under Section
5.02(a)) on any material portion of the Collateral in any transaction or series
of related transactions to secure any Obligations other than Obligations owing
to the Secured Parties under the Loan Documents and other than Debt owing to any
other Person, provided that, in the case of any Lien on any material portion of
the Collateral to secure Debt owing to any other Person (other than Liens
permitted under Section 5.02(a)), (A) the Borrower shall, on the date such Debt
shall be incurred or issued, prepay the Advances pursuant to, and in the order
of priority set forth in, Section 2.06(b)(ii) in an aggregate principal amount
equal to the amount of the Net Cash Proceeds thereof to the extent required to
do so under Section 2.06(b)(ii), (B) such Lien shall be subordinated to the
Liens created under the Loan Documents on terms acceptable to the Required
Lenders and (C) the Required Lenders shall otherwise permit the creation,
incurrence, assumption or existence of such Lien and, to the extent not
otherwise permitted under Section 5.02(b), of such Debt, (v) amend this Section
8.01, or (vi) limit the liability of any Loan Party under any of the Loan
Documents and (b) no amendment, waiver or consent shall, unless in writing and
signed by the Required Lenders and each Lender that has a Commitment under the
Term Loan Facility, AXELs Series A Facility, AXELs Series B Facility,
Acquisition Facility or Working Capital Facility if affected by such amendment,
waiver or consent, (i) increase the Commitments of such Lender or subject such
Lender to any additional obligations, (ii) reduce the principal of, or interest
on, the Notes held by such Lender or any fees or other amounts payable hereunder
to such Lender, (iii) postpone any date fixed for any payment of principal of,
or interest on, the Notes held by such Lender or any fees or other amounts
payable hereunder to such Lender or (iv) change the allocation or the order of
application of any prepayment set forth in Section 2.06 in any manner that
materially affects such Lender; provided further that no amendment, waiver or
consent shall, unless in writing and signed by each Issuing Bank in addition to
the Lenders required above to take such action, affect the rights or obligations
of the Issuing Banks under this Agreement; and provided further that no
amendment, waiver or
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consent shall, unless in writing and signed by an Agent in addition to the
Lenders required above to take such action, affect the rights or duties of such
Agent under this Agreement.
SECTION 8.02. Notices, Etc. All notices and other
communications provided for hereunder shall be in writing (including
telegraphic, telecopy or telex communication) and mailed, telegraphed,
telecopied, telexed or delivered, if to the Borrower, at its address at AMF
Group Inc., 7313 Bell Creek Road, Mechanicsville, Virginia 23111, Attention:
Chief Financial Officer, with a copy to Goldman, Sachs & Co., 85 Broad Street,
New York, New York 10004, Attention: David Greenwald, Esq.; if to any Initial
Lender or any Initial Issuing Bank, at its Domestic Lending Office specified
opposite its name on Schedule I hereto; if to any other Lender Party, at its
Domestic Lending Office specified in the Assignment and Acceptance pursuant to
which it became a Lender Party; if to the Collateral Agent, at its address at
399 Park Avenue, New York, New York 10043, Attention: Charles Foster; and if to
the Administrative Agent, at its address at 399 Park Avenue, 6th Floor, New
York, New York 10043, Attention: Charles Foster; or, as to the Borrower or the
Administrative Agent, at such other address as shall be designated by such party
in a written notice to the other parties and, as to each other party, at such
other address as shall be designated by such party in a written notice to the
Borrower and the Administrative Agent. All such notices and communications shall
(a) when mailed, be effective three Business Days after the same is deposited in
the mails, (b) when mailed for next day delivery by a reputable freight company
or reputable overnight courier service, be effective one Business Day
thereafter, and (c) when sent by telegraph, telecopier or telex, be effective
when the same is confirmed by telephone, telecopier confirmation or return
telecopy or telex answerback, respectively, except that notices and
communications to the Administrative Agent pursuant to Article II, III or VII
shall not be effective until received by the Administrative Agent. Delivery by
telecopier of an executed counterpart of any amendment or waiver of any
provision of this Agreement or the Notes or of any Exhibit hereto to be executed
and delivered hereunder shall be effective as delivery of a manually executed
counterpart thereof.
SECTION 8.03. No Waiver; Remedies. No failure on the part of
any Lender Party or any Agent to exercise, and no delay in exercising, any right
hereunder or under any Note shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.
SECTION 8.04. Costs and Expenses. (a) The Borrower agrees to
pay on demand (i) all costs and expenses of the Arrangers and the Agents in
connection with the preparation, execution, delivery, administration,
modification and amendment of the Loan
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Documents (including, without limitation, (A) all due diligence, collateral
review, syndication, transportation, computer, duplication, appraisal, audit,
insurance, consultant, search, filing and recording fees and expenses and (B)
the reasonable fees and expenses of counsel (including, without limitation,
local or foreign counsel) for the Arrangers and the Agents with respect thereto,
with respect to advising each of the Administrative Agent and the Collateral
Agent as to its rights and responsibilities, or the perfection, protection or
preservation of rights or interests, under the Loan Documents, with respect to
negotiations with any Loan Party or with other creditors of any Loan Party or
any of its Subsidiaries arising out of any Default or any events or
circumstances that may give rise to a Default and with respect to presenting
claims in or otherwise participating in or monitoring any bankruptcy, insolvency
or other similar proceeding involving creditors' rights generally and any
proceeding ancillary thereto) and (ii) all costs and expenses of the Agents and
the Lender Parties in connection with the enforcement of the Loan Documents,
whether in any action, suit or litigation, any bankruptcy, insolvency or other
similar proceeding affecting creditors' rights generally (including, without
limitation, the reasonable fees and expenses of counsel (including, without
limitation, local or foreign counsel) for each Agent and each Lender Party with
respect thereto).
(b) The Borrower agrees to indemnify and hold harmless each
Agent, each Arranger, each Lender Party and each of their Affiliates and their
officers, trustees, directors, employees, agents and advisors (each, an
"Indemnified Party") from and against any and all claims, damages, losses,
liabilities and expenses (including, without limitation, reasonable fees and
expenses of counsel) that may be incurred by or asserted or awarded against any
Indemnified Party, in each case arising out of or in connection with or by
reason of, or in connection with the preparation for a defense of, any
investigation, litigation or proceeding arising out of, related to or in
connection with (i) the Facilities, the actual or proposed use of the proceeds
of the Advances or the Letters of Credit, the Loan Documents or any of the
transactions contemplated thereby, including, without limitation, any
acquisition or proposed acquisition (including, without limitation, the
Acquisition and any of the other transactions contemplated hereby) by the Equity
Investors or any of their Subsidiaries or Affiliates of all or any portion of
the stock or substantially all the assets of the Company or any of its
Subsidiaries or (ii) the actual or alleged presence of Hazardous Materials on
any property of any Loan Party or any of its Subsidiaries or any Environmental
Action relating in any way to any Loan Party or any of its Subsidiaries, in each
case whether or not such investigation, litigation or proceeding is brought by
any Loan Party, its directors, shareholders or creditors or an Indemnified Party
or any Indemnified Party is otherwise a party thereto and whether or not the
transactions contemplated hereby are consummated (but excluding any such claims,
damages, losses, liabilities and expenses (A) of any Indemnified Party to the
extent such claim, damage, loss, liability or expense is found in a final,
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non-appealable judgment by a court of competent jurisdiction to have resulted
from such Indemnified Party's gross negligence or willful misconduct or (B)
arising from disputes among two or more Lender Parties (but not including any
such dispute that involves a Lender Party to the extent that such Lender Party
is acting in any different capacity (such as an Agent or Arranger) or to the
extent it involves syndication activities). The Borrower also agrees not to
assert any claim against any Agent, any Lender Party or any of their Affiliates,
or any of their respective officers, directors, trustees, employees, attorneys
and agents, on any theory of liability, for special, indirect, consequential or
punitive damages arising out of or otherwise relating to the Facilities, the
actual or proposed use of the proceeds of the Advances or the Letters of Credit,
the Loan Documents or any of the transactions contemplated thereby.
(c) If any payment of principal of, or Conversion of, any
Eurodollar Rate Advance is made by the Borrower to or for the account of a
Lender Party other than on the last day of the Interest Period for such Advance,
as a result of a payment or Conversion pursuant to Section 2.06, 2.09(b)(i) or
2.10(d), acceleration of the maturity of the Notes pursuant to Section 6.01 or
for any other reason, or by an Eligible Assignee to a Lender Party other than on
the last day of the Interest Period for such Advance upon an assignment of
rights and obligations under this Agreement pursuant to Section 8.07 as a result
of a demand by the Borrower pursuant to Section 8.07(a), the Borrower shall,
upon demand by such Lender Party (with a copy of such demand to the
Administrative Agent), pay to the Administrative Agent for the account of such
Lender Party any amounts required to compensate such Lender Party for any
additional losses, costs or expenses that it may reasonably incur as a result of
such payment, including, without limitation, any loss (including loss of
anticipated profits), cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by any Lender Party to fund or
maintain such Advance.
(d) If any Loan Party fails to pay when due any costs,
expenses or other amounts payable by it under any Loan Document, including,
without limitation, fees and expenses of counsel and indemnities, such amount
may be paid on behalf of such Loan Party by the Administrative Agent or any
Lender Party, in its sole discretion.
(e) Without prejudice to the survival of any other agreement
of any Loan Party hereunder or under any other Loan Document, the agreements and
obligations of the Borrower contained in Sections 2.10 and 2.12 and this Section
8.04 shall survive the payment in full of principal, interest and all other
amounts payable hereunder and under any of the other Loan Documents.
<PAGE> 136
130
SECTION 8.05. Right of Set-off. Upon (a) the occurrence and
during the continuance of any Event of Default and (b) the making of the request
or the granting of the consent specified by Section 6.01 to authorize the
Administrative Agent to declare the Notes due and payable pursuant to the
provisions of Section 6.01, each Lender Party and each of its respective
Affiliates is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and otherwise apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Lender Party or such
Affiliate to or for the credit or the account of the Borrower against any and
all of the Obligations of the Borrower now or hereafter existing under this
Agreement and the Note or Notes (if any) held by such Lender Party, irrespective
of whether such Lender Party shall have made any demand under this Agreement or
such Note or Notes and although such obligations may be unmatured. Each Lender
Party agrees promptly to notify the Borrower after any such set-off and
application; provided, however, that the failure to give such notice shall not
affect the validity of such set-off and application. The rights of each Lender
Party and its respective Affiliates under this Section are in addition to other
rights and remedies (including, without limitation, other rights of set-off)
that such Lender Party and its respective Affiliates may have.
SECTION 8.06. Binding Effect. This Agreement shall become
effective when it shall have been executed by the Borrower and the Agents and
when the Administrative Agent shall have been notified by each Initial Lender
and each Initial Issuing Bank that such Initial Lender and such Initial Issuing
Bank has executed it and thereafter shall be binding upon and inure to the
benefit of the Borrower, each Agent and each Lender Party and their respective
successors and assigns, except that the Borrower shall not have the right to
assign its rights hereunder or any interest herein without the prior written
consent of the Lender Parties.
SECTION 8.07. Assignments and Participations. (a) Each Lender
may (and, so long as no Default shall have occurred and be continuing, if
demanded by the Borrower (following a demand by such Lender pursuant to Section
2.10 or 2.12 or if such Lender shall be a Defaulting Lender) upon at least 5
Business Days' notice to such Lender and the Administrative Agent, will) assign
to one or more Eligible Assignees all or a portion of its rights and obligations
under this Agreement and the other Loan Documents (including, without
limitation, all or a portion of its Commitment or Commitments, the Advances
owing to it and the Note or Notes held by it); provided, however, that (i) each
such assignment shall be of a uniform, and not a varying, percentage of all
rights and obligations under and in respect of one or more Facilities, (ii)
except in the case of an assignment to a Person that, immediately prior to such
assignment, was a Lender or an assignment of all of a Lender's rights and
obligations under this Agreement, the amount of the Commitment or Commitments
<PAGE> 137
131
of the assigning Lender being assigned pursuant to each such assignment
(determined as of the date of the Assignment and Acceptance with respect to such
assignment) shall in no event be less than $5,000,000, (iii) each such
assignment shall be to an Eligible Assignee, (iv) each such assignment made as a
result of a demand by the Borrower pursuant to this Section 8.07(a) shall be
arranged by the Borrower after consultation with the Administrative Agent and
shall be either an assignment of all of the rights and obligations of the
assigning Lender under this Agreement and the other Loan Documents or an
assignment of a portion of such rights and obligations made concurrently with
another such assignment or other such assignments that together cover all of the
rights and obligations of the assigning Lender under this Agreement and the
other Loan Documents, (v) no Lender shall be obligated to make any such
assignment as a result of a demand by the Borrower pursuant to this Section
8.07(a) unless and until such Lender shall have received one or more payments
from either the Borrower or one or more Eligible Assignees in an aggregate
amount at least equal to the aggregate outstanding principal amount of the
Advances owing to such Lender, together with accrued interest thereon to the
date of payment of such principal amount and all other amounts payable to such
Lender under this Agreement, and (vi) the parties to each such assignment shall
execute and deliver to the Administrative Agent, for its acceptance and
recording in the Register, an Assignment and Acceptance, together with any Note
or Notes subject to such assignment and a processing and recordation fee of
$1,500 for each Assignment and Acceptance between a Lender and one of its
Affiliates or another Lender or $3,000 for each other Assignment and Acceptance,
provided, however, that for each such assignment made as a result of a demand by
the Borrower pursuant to this Section 8.07(a), the Borrower shall pay to the
Administrative Agent the applicable processing and recordation fee.
(b) Upon such execution, delivery, acceptance and recording,
from and after the effective date specified in such Assignment and Acceptance,
(x) the assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, have the rights and obligations of a Lender or
Issuing Bank, as the case may be, hereunder and (y) the Lender or Issuing Bank
assignor thereunder shall, to the extent that rights and obligations hereunder
have been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights (other than its rights under Sections 2.10, 2.12 and 8.04 to the
extent any claim thereunder relates to an event arising prior to such
assignment) and be released from its obligations under this Agreement (and, in
the case of an Assignment and Acceptance covering all or the remaining portion
of an assigning Lender's or Issuing Bank's rights and obligations under this
Agreement, such Lender or Issuing Bank shall cease to be a party hereto).
<PAGE> 138
132
(c) By executing and delivering an Assignment and Acceptance,
the Lender Party assignor thereunder and the assignee thereunder confirm to and
agree with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Lender Party makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or any other Loan Document or any other instrument or document
furnished pursuant hereto or thereto or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of, or the perfection or
priority of any lien or security interest created or purported to be created
under or in connection with, this Agreement or any other Loan Document or any
other instrument or document furnished pursuant hereto or thereto; (ii) such
assigning Lender Party makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or any
other Loan Party or the performance or observance by any Loan Party of any of
its obligations under any Loan Document or any other instrument or document
furnished pursuant thereto; (iii) such assignee confirms that it has received a
copy of this Agreement, together with copies of the financial statements
referred to in Section 4.01 and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance; (iv) such assignee will, independently and
without reliance upon any Agent, such assigning Lender Party or any other Lender
Party and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under this Agreement; (v) such assignee confirms that it is an Eligible
Assignee; (vi) such assignee appoints and authorizes each Agent to take such
action as agent on its behalf and to exercise such powers and discretion under
the Loan Documents as are delegated to such Agent by the terms hereof, together
with such powers and discretion as are reasonably incidental thereto; and (vii)
such assignee agrees that it will perform in accordance with their terms all of
the obligations which by the terms of this Agreement are required to be
performed by it as a Lender or Issuing Bank, as the case may be.
(d) The Administrative Agent, acting for this purpose (but
only for this purpose) as the agent of the Borrower, shall maintain at its
address referred to in Section 8.02 a copy of each Assignment and Acceptance
delivered to and accepted by it and a register for the recordation of the names
and addresses of the Lender Parties and the Commitment under each Facility of,
and principal amount of the Advances owing under each Facility to, each Lender
Party from time to time (the "Register"). The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error, and the
Borrower, the Agents and the Lender Parties shall treat each Person whose name
is recorded in the Register as a Lender Party hereunder for all purposes of this
Agreement. The
<PAGE> 139
133
Register shall be available for inspection by the Borrower or any Lender Party
at any reasonable time and from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed
by an assigning Lender Party and an assignee, together with any Note or Notes
subject to such assignment, the Administrative Agent shall, if such Assignment
and Acceptance has been completed and is in substantially the form of Exhibit C
hereto, (i) accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register and (iii) give prompt notice thereof to the
Borrower and the other Agents. In the case of any assignment by a Lender, within
five Business Days after its receipt of such notice, the Borrower, at its own
expense, shall execute and deliver to the Administrative Agent in exchange for
the surrendered Note or Notes a new Note to the order of such Eligible Assignee
in an amount equal to the Commitment assumed by it under a Facility pursuant to
such Assignment and Acceptance and, if the assigning Lender has retained a
Commitment hereunder under such Facility, a new Note to the order of the
assigning Lender in an amount equal to the Commitment retained by it hereunder.
Such new Note or Notes shall be in an aggregate principal amount equal to the
aggregate principal amount of such surrendered Note or Notes, shall be dated the
effective date of such Assignment and Acceptance and shall otherwise be in
substantially the form of Exhibit A-1, A-2, A-3, A-4 or A-5 hereto, as the case
may be.
(f) Each Issuing Bank may assign to one or more Eligible
Assignees all or a portion of its rights and obligations under the undrawn
portion of its Letter of Credit Commitment at any time; provided, however, that
(i) except in the case of an assignment to a Person that immediately prior to
such assignment was an Issuing Bank or an assignment of all of an Issuing Bank's
rights and obligations under this Agreement, the amount of the Letter of Credit
Commitment of the assigning Issuing Bank being assigned pursuant to each such
assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall in no event be less than $5,000,000 and shall
be in an integral multiple of $1,000,000 in excess thereof, (ii) each such
assignment shall be to an Eligible Assignee and (iii) the parties to each such
assignment shall execute and deliver to the Administrative Agent, for its
acceptance and recording in the Register, an Assignment and Acceptance, together
with a processing and recordation fee of $3,000.
(g) Each Lender Party may sell participations to one or more
Persons (other than any Loan Party or any of its Affiliates) in or to all or a
portion of its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitments, the Advances owing to it and
the Note or Notes (if any) held by it); provided, however, that (i) such Lender
Party's obligations under this Agreement (including, without limitation, its
Commitments) shall remain unchanged, (ii) such Lender Party shall remain
<PAGE> 140
134
solely responsible to the other parties hereto for the performance of such
obligations, (iii) such Lender Party shall remain the holder of any such Note
for all purposes of this Agreement, (iv) the Borrower, the Administrative Agent
and the other Lender Parties shall continue to deal solely and directly with
such Lender Party in connection with such Lender Party's rights and obligations
under this Agreement and (v) no participant under any such participation shall
have any right to approve any amendment or waiver of any provision of any Loan
Document, or any consent to any departure by any Loan Party therefrom, except to
the extent that such amendment, waiver or consent would reduce the principal of,
or interest on, the Notes or any fees or other amounts payable hereunder, in
each case to the extent subject to such participation, postpone any date fixed
for any payment of principal of, or interest on, the Notes or any fees or other
amounts payable hereunder, in each case to the extent subject to such
participation, release any Guarantor or Guarantors to the extent that such
release would have the effect of releasing all or substantially all of the
Collateral, or release all or substantially all of the Collateral.
(h) Any Lender Party may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this Section
8.07, disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrower furnished to such Lender
Party by or on behalf of the Borrower; provided, however, that, prior to any
such disclosure, the assignee or participant or proposed assignee or participant
shall agree to preserve the confidentiality of any Confidential Information
received by it from such Lender Party.
(i) Notwithstanding any other provision set forth in this
Agreement, any Lender Party may at any time create a security interest in all or
any portion of its rights under this Agreement (including, without limitation,
the Advances owing to it and the Note or Notes held by it) in favor of any
Federal Reserve Bank in accordance with Regulation A of the Board of Governors
of the Federal Reserve System.
SECTION 8.08. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different 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. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
SECTION 8.09. No Liability of the Issuing Banks. The Borrower
assumes all risks of the acts or omissions of any beneficiary or transferee of
any Letter of Credit with respect to its use of such Letter of Credit. Neither
any Issuing Bank nor any other Lender
<PAGE> 141
135
Party nor any of their respective officers or directors shall be liable or
responsible for: (a) the use that may be made of any Letter of Credit or any
acts or omissions of any beneficiary or transferee in connection therewith; (b)
the validity, sufficiency or genuineness of documents, or of any endorsement
thereon, even if such documents should prove to be in any or all respects
invalid, insufficient, fraudulent or forged; (c) payment by such Issuing Bank
against presentation of documents that do not comply with the terms of a Letter
of Credit, including failure of any documents to bear any reference or adequate
reference to the Letter of Credit; or (d) any other circumstances whatsoever in
making or failing to make payment under any Letter of Credit, except that the
Borrower shall have a claim against such Issuing Bank, and such Issuing Bank
shall be liable to the Borrower, to the extent of any direct, but not
consequential, damages suffered by the Borrower that the Borrower proves were
caused by (i) such Issuing Bank's willful misconduct or gross negligence in
determining whether documents presented under any Letter of Credit comply with
the terms of such Letter of Credit or (ii) such Issuing Bank's willful failure
to make lawful payment under a Letter of Credit after the presentation to it of
a draft and certificates strictly complying with the terms and conditions of the
Letter of Credit. In furtherance and not in limitation of the foregoing, such
Issuing Bank may accept documents that appear on their face to be in order,
without responsibility for further investigation, regardless of any notice or
information to the contrary.
SECTION 8.10. Confidentiality. Neither any Agent nor any
Lender Party shall disclose any Confidential Information to any Person without
the consent of the Borrower, other than (a) to such Agent's or such Lender
Party's Affiliates and their officers, directors, partners, employees, agents
and advisors and to actual or prospective Eligible Assignees and participants,
and then only on a confidential basis, (b) as required by any law, rule or
regulation or judicial process, provided that, other than with respect to
Confidential Information otherwise permitted to be disclosed pursuant to clause
(d) below, such Agent or Lender Party shall, unless prohibited by applicable law
or regulation or court order, give notice to the Borrower of any such
requirement to disclose such Confidential Information, and, if practicable, such
notice shall be given prior to such disclosure, provided, however, that the
failure to give such notice shall not prohibit such disclosure, (c) to any
rating agency when required by it, provided that, prior to any such disclosure,
such rating agency shall undertake to preserve the confidentiality of any
Confidential Information relating to the Borrower received by it from such
Lender Party and (d) as requested or required by any state, federal or foreign
authority or examiner or the National Association of Insurance Commissioners or
any state or federal authority regulating such Lender Party.
SECTION 8.11. Jurisdiction, Etc. (a) Each of the parties
hereto hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive
<PAGE> 142
136
jurisdiction of any New York State court or federal court of the United States
of America sitting in New York City, and any appellate court from any thereof,
in any action or proceeding arising out of or relating to this Agreement or any
of the other Loan Documents to which it is a party, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in any such New York State court or, to
the extent permitted by law, in such federal court. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any
right that any party may otherwise have to bring any action or proceeding
relating to this Agreement or any of the other Loan Documents in the courts of
any jurisdiction.
(b) Each of the parties hereto irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or any of the
other Loan Documents to which it is a party in any New York State or federal
court. Each of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the maintenance
of such action or proceeding in any such court.
SECTION 8.12. Release of Collateral. Upon the sale, lease,
transfer or other disposition of any item of Collateral of any Loan Party
(including, without limitation, as a result of the sale, in accordance with the
terms of the Loan Documents, of the Loan Party that owns such Collateral) in
accordance with the terms of the Loan Documents, the Collateral Agent will, at
the Borrower's expense, execute and deliver to such Loan Party such documents as
such Loan Party may reasonably request to evidence the release of such item of
Collateral from the assignment and security interest granted under the
Collateral Documents in accordance with the terms of the Loan Documents.
<PAGE> 143
SECTION 8.13. Governing Law; Waiver of Jury Trial. This
Agreement and the Notes shall be governed by, and construed in accordance with,
the laws of the State of New York. Each of the Borrower, the Agents and the
Lender Parties irrevocably waives all right to trial by jury in any action,
proceeding or counterclaim (whether based on contract, tort or otherwise)
arising out of or relating to any of the Loan Documents, the Advances or the
actions of any Agent or any Lender Party in the negotiation, administration,
performance or enforcement thereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
AMF GROUP INC.
By /s/ Robert L. Morin
--------------------------
Title:
CITIBANK, N.A., as
Administrative Agent
By /s/ Judith Fishlow
--------------------------
Title: Attorney-in-Fact
GOLDMAN, SACHS & CO., as
Syndication Agent
By /s/ Goldman, Sachs & Co.
--------------------------
CITICORP USA, INC., as
Collateral Agent
By /s/ Judith Fishlow
--------------------------
Title: Attorney-in-Fact
<PAGE> 144
INITIAL LENDERS
PEARL STREET L.P.
By /s/ Simon B. Javitz
-----------------------------
Title: Authorized Signatory
CITICORP USA, INC.
By /s/ Judith Fishlow
-----------------------------
Title: Attorney-in-Fact
<PAGE> 1
EXHIBIT 10.4
STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT, dated as of April 30, 1996 (the
"Agreement"), by and among AMF HOLDINGS INC., a Delaware corporation
("Holdings"), GS CAPITAL PARTNERS II, L.P., a Delaware limited partnership
("GSCP II"), GS CAPITAL PARTNERS II OFFSHORE, L.P., a Cayman Islands exempt
limited partnership ("GSCP II Offshore"), GOLDMAN, SACHS & CO. VERWALTUNGS GMBH,
a corporation recorded in the Commercial Register Frankfurt, as nominee for GS
Capital Partners II Germany C.L.P. ("GSCP II Germany"), THE GOLDMAN SACHS GROUP,
L.P., a Delaware limited partnership ("GS Group"), STONE STREET FUND 1995, L.P.,
a Delaware limited partnership ("Stone 1995"), STONE STREET FUND 1996, L.P., a
Delaware limited partnership ("Stone 1996"), BRIDGE STREET FUND 1995, L.P., a
Delaware limited partnership ("Bridge 1995"), BRIDGE STREET FUND 1996, L.P., a
Delaware limited partnership ("Bridge 1996" and, together with GSCP II, GSCP II
Offshore, GSCP II Germany, GS Group, Stone 1995, Stone 1996 and Bridge 1995,
"GSCP"), BLACKSTONE CAPITAL PARTNERS II MERCHANT BANKING FUND L.P., a Delaware
limited partnership ("Blackstone Fund 1"), BLACKSTONE OFFSHORE CAPITAL PARTNERS
II L.P., a Delaware limited partnership ("Blackstone Fund 2"), BLACKSTONE FAMILY
INVESTMENT PARTNERSHIP L.P., a Delaware limited partnership ("Blackstone Fund 3"
and together with Blackstone Fund 1 and Blackstone Fund 2, "Blackstone"), KELSO
INVESTMENT ASSOCIATES V, L.P., a Delaware limited partnership ("KIA V"), KELSO
EQUITY PARTNERS V, L.P., a Delaware limited partnership ("KEP V," and together
with KIA V, "Kelso"), (Blackstone together with Kelso are herein referred to as
the "Special Vote Investors"), BAIN CAPITAL FUND V, L.P., a Delaware limited
partnership ("Bain Fund 1"), BAIN CAPITAL FUND V-B, L.P., a Delaware limited
partnership ("Bain Fund 2"), BCIP ASSOCIATES, a Delaware general partnership
("Bain Fund 3"), BCIP TRUST ASSOCIATES, L.P., a Delaware limited partnership
("Bain Fund 4," and together with Bain Fund 1, Bain Fund 2 and Bain Fund 3,
"Bain") (Blackstone, Kelso and Bain are herein referred to collectively as the
"Governance Investors" and each individually as a "Governance Investor"),
CITICORP NORTH AMERICA, INC., a Delaware corporation ("Citibank"), CHARLES M.
DIKER ("Diker") (Blackstone, Kelso, Bain, Citibank and Diker are herein
collectively referred to as the "Investors" and each individually as an
"Investor") and each of the individuals listed on Schedule I hereto
(collectively, the "Management Investors"). Employees, directors, consultants
and certain other Persons (as defined below) having significant business
relationships with Holdings and its Affiliates (as defined below) may be issued
shares of Common Stock (as defined below) (or other equity securities of
Holdings) or securities convertible
<PAGE> 2
into or exchangeable for Common Stock (or other equity securities of Holdings)
subject to the terms of this Agreement and, if so issued, Holdings, without the
consent of any other party hereto, may amend this Agreement to allow any such
Person Holdings so chooses to become an additional Management Investor
hereunder, subject to such Person (as used herein, "Person" shall mean an
individual, corporation, partnership, joint venture, trust, unincorporated
organization, government (or any department or agency thereof) or other entity)
becoming a signatory to this Agreement. The parties hereto (other than Holdings)
and any other Person who shall hereafter acquire shares of Common Stock of
Holdings, Warrants (as hereinafter defined) or options to acquire Common Stock
of Holdings pursuant to the provisions of, and/or subject to the restrictions
and rights set forth in, this Agreement (including through participation in
certain Holdings stock or option plans) are sometimes hereinafter referred to
individually as a "Stockholder" or collectively as the "Stockholders."
RECITALS
A. Holdings, as of the Effective Date (as defined herein),
will have an authorized capital stock consisting of 60,000,000 shares of Common
Stock, par value $0.01 per share (the "Common Stock"), each share of which,
other than certain shares issued to or held by Special Vote Investors or their
respective affiliates, designees or transferees prior to expiration or
termination of all applicable waiting periods under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended ("HSR"), is entitled to one vote
on all stockholder matters as more specifically provided in the amended
certificate of incorporation of Holdings (the "Amended Certificate"), and of
which 38,225,000 shares will be issued and outstanding as of the Effective Date.
In addition, Holdings will have reserved, as of the Effective Date, 2,877,151
shares of Common Stock for issuance pursuant to (i) a Holdings 1996 Stock
Incentive Plan (the "Stock Incentive Plan"), (ii) the exercise of the Senior
Management Options (as defined below), and (iii) the exercise of the Warrants
(as defined below). In addition, Holdings may from time to time reserve and
issue shares of Common Stock pursuant to any subscription therefor Holdings
requires GSCP and the Funding Investors (as hereinafter defined) to make after
the Effective Date pursuant to Section 1.5 hereof (the "Subsequent Shares").
B. A Stock Purchase Agreement, dated February 16, 1996, as
amended by a letter agreement dated April 11, 1996 (the "Stock Purchase
Agreement"), has been executed by and among AMF Group Holdings Inc., a Delaware
corporation and a
-2-
<PAGE> 3
wholly-owned subsidiary of Holdings ("AGHI"), and the other Persons listed on
the signature pages thereto providing for the acquisition (the "Acquisition") by
AGHI and/or its subsidiaries of all the outstanding capital stock and other
equity interests of AMF Bowling, Inc., a Virginia corporation, AMF Bowling
Centers, Inc., a Virginia corporation, and certain related entities and certain
related assets.
C. Holdings, GSCP and the Investors have entered into a Stock
Subscription Agreement of even date herewith (the "Subscription Agreement")
pursuant to which GSCP and the Investors have agreed to subscribe for shares of
Common Stock. The parties hereto have entered into a Registration Rights
Agreement of even date herewith (the "Registration Rights Agreement") pursuant
to which Holdings has granted to the other parties thereto certain registration
rights.
D. In connection with the Acquisition, Holdings is entering
into a Warrant Agreement (the "Warrant Agreement") with GS Group, which provides
for the issuance of warrants ("Warrants") to GS Group, to purchase 870,000
shares of Common Stock at $.01 per share, subject to certain adjustments
contained therein.
E. In connection with the Acquisition, (1) Holdings and
certain subsidiaries thereof intend to enter into an employment agreement (an
"Employment Agreement") with each of Robert Morin and Douglas Stanard which will
provide for (a) the sale of 150,000 shares of Common Stock to each of Messrs.
Morin and Stanard for the payment from each of them of $500,000 in cash plus the
issuance of a note for $1,000,000 (a "Management Note") and (b) the grant to
Morin of options to purchase 110,000, and the grant to Stanard of options to
purchase 130,000, shares of Common Stock (the "Senior Management Options") and
(2) Holdings intends to enter into a related Stock Pledge Agreement (the "Stock
Pledge Agreements") with each of Messrs. Morin and Stanard.
F. The individual holdings of Common Stock of each
Stockholder, immediately after the closing of the transactions contemplated in
the Subscription Agreement, the Employment Agreements and the Warrant Agreement
(not assuming the exercise of the Senior Management Options, the Diker Option
(as defined in the Stock Subscription Agreement) or the Warrants, the issuance
of Common Stock pursuant to Section 1.5 hereof or the issuance of any grants
under the Stock Incentive Plan or the exercise thereof) are as follows:
-3-
<PAGE> 4
<TABLE>
<CAPTION>
Number of Shares
of Common Stock
Name Held Upon Closing
---- -----------------
<S> <C>
GSCP II 16,760,476.2
GSCP II Offshore 6,662,976.2
GSCP II Germany 618,214.3
Stone 1995 392,102.5
Stone 1996 670,372.7
Bridge 1995 441,230.8
Bridge 1996 454,627.3
Blackstone Fund 1 3,593,528.0
Blackstone Fund 2 1,050,133.0
Blackstone Fund 3 356,339.0
KIA V 4,700,000.0
KEP V 300,000.0
Bain Fund 1 348,472.3
Bain Fund 2 916,077.7
Bain Fund 3 157,110.0
Bain Fund 4 78,340.0
Citibank 300,000.0
Diker 125,000.0
Robert Morin 150,000.0
Douglas Stanard 150,000.0
- --------------------- ------------
Total 38,225,000.0
</TABLE>
G. The individual holdings of Common Stock of each
Stockholder, immediately after the closing of the transactions contemplated in
the Subscription Agreement, the Employment Agreements and the Warrant Agreement
(assuming the exercise of the Senior Management Options, the Diker Option and
the Warrants, but not assuming the issuance of Common Stock pursuant to Section
1.5 hereof or the issuance of any grants under the Stock Incentive Plan (other
than the Diker Option) or the exercise thereof) are as follows:
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<PAGE> 5
<TABLE>
<CAPTION>
Number of Shares
Common Stock
Name Held Upon Closing
- ---- -----------------
<S> <C>
GSCP II 16,760,476.2
GSCP II Offshore 6,662,976.2
GSCP II Germany 618,214.3
GS Group 870,000.0
Stone 1995 392,102.5
Stone 1996 670,372.7
Bridge 1995 441,230.8
Bridge 1996 454,627.3
Blackstone Fund 1 3,593,528.0
Blackstone Fund 2 1,050,133.0
Blackstone Fund 3 356,339.0
KIA V 4,700,000.0
KEP V 300,000.0
Bain Fund 1 348,472.3
Bain Fund 2 916,077.7
Bain Fund 3 157,110.0
Bain Fund 4 78,340.0
Citibank 300,000.0
Diker 225,000.0
Robert Morin 260,000.0
Douglas Stanard 280,000.0
- --------------------- ------------
Total 39,435,000.0
</TABLE>
H. The parties hereto desire to restrict the sale, assignment,
transfer, encumbrance or other disposition of the Common Stock and Warrants
which the parties hereto own or may hereafter acquire, and to provide for
certain rights and obligations in respect thereof as hereinafter provided.
NOW THEREFORE, in consideration of the premises and of the
terms and conditions contained herein, the parties hereto agree as follows:
ARTICLE I
CORPORATE GOVERNANCE
1.1 Board of Directors
1.1.1 Number of Directors. Holdings shall be governed at all
times during the term of this Agreement by a Board of Directors (the "Board").
The Board initially shall consist of nine members; provided, however, that GSCP
shall have the right to increase or decrease, from time to time, the size of the
Board in its discretion and to nominate pursuant to Section
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<PAGE> 6
1.1.3 or otherwise, but not in limitation of the rights of the Governance
Investors pursuant to Section 1.1.3(b), a majority (but not limited to a simple
majority) of the members thereof so long as GSCP and its Permitted Transferees
(as defined herein) shall hold a majority of the outstanding shares of Common
Stock.
1.1.2 Initial Board of Directors. The initial Board
shall consist of the following members, with three seats to be
left vacant:
Richard A. Friedman
Terence M. O'Toole
Peter Sacerdote
Charles M. Diker
Douglas J. Stanard
Robert L. Morin
On the date each Governance Investor shall become entitled to
vote the shares of Common Stock held by such Governance Investor on all
stockholder matters as provided in the Amended Certificate, or as promptly
thereafter as practicable, such Governance Investor shall nominate one member of
the Board (such nomination shall be subject to the consent of GSCP which consent
shall not be unreasonably withheld), and the then current Board of Directors,
subject to their fiduciary duties or, in the absence of such election by the
Board of Directors, the Stockholders shall, at a meeting or by action by written
consent, elect such nominee to fill one of the remaining vacant seats on the
Board. The foregoing named persons, and each other director elected pursuant to
this Agreement shall hold office and shall be subject to reelection by the
Stockholders pursuant to Section 1.2.
1.1.3 Nomination of Directors.
(a) GSCP shall be entitled to nominate five directors. In
addition, so long as GSCP and its Permitted Transferees shall hold a majority of
the outstanding shares of Common Stock, GSCP shall be entitled to nominate a
number of directors as shall constitute a majority (but not limited to a simple
majority) of the Board (each a "GSCP Director"). Of the initial directors listed
in Section 1.1.2, Messrs. Friedman, O'Toole and Sacerdote shall be GSCP
Directors.
(b) Subject to the second paragraph of Section 1.1.2, each
Governance Investor shall be entitled to nominate one director (such nomination
shall be subject to the consent of GSCP which consent shall not be unreasonably
withheld) (each an "Investor Director"); provided, however, that a Governance
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<PAGE> 7
Investor shall not be entitled to nominate any directors if it and its Permitted
Transferees shall at any time hold in the aggregate a number of shares equal to
less than one-half of the sum of (i) the number of shares of Common Stock held
by such Governance Investor and its Permitted Transferees as of the Effective
Date and (ii) if Holdings' right thereunder has been exercised, the number of
shares of Common Stock required to be purchased by such Governance Investor
pursuant to Section 1.5 (in each case, subject to adjustment pursuant to Section
3.6).
1.1.4 Certain Resignations or Removals. In the event that any
director would not continue to be entitled to be nominated by the Stockholder
that nominated such director to be a director pursuant to Section 1.1.2 or
1.1.3, such director shall immediately resign (and the Stockholder that
nominated such director shall use its best efforts to cause such director to
resign) or be subject to removal by a vote of the holders of a majority of the
shares of Common Stock then outstanding and entitled to vote on stockholder
matters. In addition, each of GSCP and each Governance Investor shall at all
times have the exclusive right to recommend the removal, with or without cause,
of any director nominated, respectively, by such Stockholder, and such director
shall immediately resign (and the Stockholder that nominated such director shall
use its best efforts to cause such director to resign) or be subject to removal
by a vote of the holders of a majority of the shares of Common Stock then
outstanding and entitled to vote on stockholder matters. Prior to the occurrence
of an IPO (as hereinafter defined), if any director shall fail to resign as
required by either of the first two sentences of this Section 1.1.4, any
Stockholder holding shares of Common Stock entitled to vote on stockholder
matters and continuing to have the right to nominate a director hereunder shall
have the right to call or to cause Holdings to call a special meeting of
stockholders (or to cause the Stockholders to act by written consent) for the
purpose of removing such director; following an IPO, such matter shall be
considered at the next stockholders meeting otherwise held.
1.1.5 Filling Vacancies. In the event of the death, removal or
resignation of any director nominated by a Stockholder, so long as such
nominating Stockholder continues to have the right pursuant to Section 1.1.3 to
nominate a person for such director's position, the remaining directors, subject
to their fiduciary duties, shall meet within 20 business days of such
Stockholder's nomination for the purpose of, or shall include as the first order
of business at the first meeting of the Board held within such 20 business day
period the matter of, electing such nominee as a director to fill such vacancy.
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<PAGE> 8
The election of a Stockholder's nominee pursuant to the previous sentence shall
be subject to the consent of GSCP, which consent shall not be unreasonably
withheld. If such nominee is not so elected, so long as such nominating
Stockholder continues to have the right pursuant to Section 1.1.3 to nominate a
person for such director's position, prior to the occurrence of an IPO, such
nominating Stockholder shall have the right to call or to cause Holdings to call
a special meeting of stockholders (or to cause the Stockholders to act by
written consent) for the purpose of electing a director nominated by such
Stockholder in accordance with Section 1.1.3 to fill the vacancy created by such
death, removal or resignation. Any party that is entitled pursuant to Section
1.1.3 to nominate a director to fill such vacancy but that has failed to do so
prior to the election of a replacement by the directors or by the stockholders
of Holdings may, at any time, prior to the occurrence of an IPO, call or cause
Holdings to call a special meeting of stockholders (or to cause the Stockholders
to act by written consent) for the purpose of removing the director so elected
and electing its nominee to the Board, or, either prior to or following the
occurrence of an IPO, such party may nominate its nominee in accordance with
Section 1.1.3 for election at the next annual meeting of stockholders to succeed
the director nominated and elected by the directors or by the stockholders of
Holdings, as described above.
1.1.6 Meetings of the Board; Notice of Meetings. A regular
meeting of the Board shall be held in each fiscal quarter on such date and at
such time and place as fixed by the Chairman of the Board at the last preceding
meeting of the Board (or, in his absence, a majority of the directors present),
provided that if not then so fixed, then as thereafter fixed by the Chairman of
the Board. A special meeting of the Board may be called only by the Chairman of
the Board. At least one day's notice shall be given to each member of the Board
prior to any meeting (annual, regular or special) of the Board unless such
notice shall have been waived in accordance with the General Corporation Law of
the State of Delaware ("Delaware Law"). Holdings shall reimburse each member of
the Board for the reasonable out-of-pocket expenses, including, without
limitation, travel and lodging expenses, incurred by such member in attending
any meeting of the Board. No member of the Board who is an employee of Holdings,
or an employee, partner or stockholder of GSCP or any Governance Investor (or is
otherwise an Investor Director), shall receive any compensation or benefit
(other than the reimbursement of reasonable out-of-pocket expenses
contemplated by the preceding sentence) from Holdings or any subsidiary of
Holdings for serving as a member of the Board or for performing his or her
duties as a director of Holdings.
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<PAGE> 9
1.1.7 Executive Committee. At all times during the term of
this Agreement, there shall be an executive committee of the Board (the
"Executive Committee") which shall consist of two members, each of whom shall be
a GSCP Director. The Executive Committee shall be authorized to exercise all of
the powers and authority of the Board to the fullest extent permitted under the
Delaware Law, including the power and authority to declare a dividend, to
authorize the issuance of stock and to adopt a certificate of ownership and
merger pursuant to Section 253 of the Delaware Law, except as otherwise
expressly provided in Section 1.1.8(b) of this Agreement and, in the case of the
matters referred to in Section 1.1.8(c) of this Agreement, only after a meeting
of the Board with respect to such matters.
1.1.8 Certain Actions of the Board.
(a) At all meetings of the Board, a majority of the number of
directors then in office, but not less than one-third the number of directors
constituting the whole Board (including vacancies), including in any case, at
least one GSCP Director, shall constitute a quorum for the transaction of
business thereat. Except as otherwise expressly provided in this Agreement, the
vote of a majority of the directors present at a meeting of the Board at which a
quorum is present shall be the act of the Board.
(b) During the term of this Agreement, without the approval of
(x) a majority of the GSCP Directors (exclusive of any such directors (1) who
are employees of Holdings or its subsidiaries or (2) who are not partners or
employees of Goldman, Sachs & Co. ("Goldman Sachs") or GS Group) and (y) if
there are any Investor Directors nominated by the Special Vote Investors at such
time, at least one such Investor Director nominated by the Special Vote
Investors, Holdings shall not (i) issue any capital stock for consideration
having a value less than the fair market value of such capital stock (as
determined in reasonable good faith by the Executive Committee), (ii) grant or
issue options or warrants exercisable or exchangeable for more than 2,877,151
shares (subject to adjustment pursuant to Section 3.6) of Common Stock (when
adding the options or warrants so proposed to be issued together with all
options or warrants then outstanding or previously exercised or exchanged for
shares of Common Stock), (iii) enter into any transaction or series of related
transactions with any Affiliates of GSCP (other than for the performance of
consulting, financing (including as a principal equity or debt investor or
lender), investment banking or similar services for customary compensation and
on other terms consistent with an arm's length transaction) pursuant to which
Holdings and/or any subsidiary thereof shall
-9-
<PAGE> 10
pay such Affiliates of GSCP consideration in excess of $5 million, it being
acknowledged by the parties hereto that this clause (iii) shall not affect or
restrict the right of Goldman Sachs or any of its Affiliates to purchase, sell,
vote or hold any securities or debt of Holdings or any of its Affiliates; or
(iv) subject to the first proviso to the first sentence of Section 3.9 hereof,
and other than those amendments to this Agreement permitted by the second
sentence of Section 3.9, execute any amendment to this Agreement, the Amended
Certificate or the By-laws of Holdings which would adversely affect the rights
and obligations of any Special Vote Investor hereunder or thereunder, as the
case may be (it being understood that no amendment that adversely affects the
rights and obligations of any Stockholder differently than those of any other
stockholder of Holdings may be made without such affected Stockholder's
consent).
(c) During the term of this Agreement, without a meeting of
the Board having been called and convened for the purpose of discussing any such
action, Holdings shall not (i) commence a voluntary case or consent to the entry
of an order for relief against it in an involuntary case under Chapter 7 or
Chapter 11 of the United States Bankruptcy Code, (ii) acquire (including by
merger) stock or assets of another business (other than assets acquired in the
ordinary course of business), from any seller or group of related sellers in one
transaction or in a series of related transactions, for consideration having a
fair market value in excess of $25 million, (iii) effect an initial public
offering or other sale of Equity Securities (as hereinafter defined), other than
(x) to employees of Holdings or its subsidiaries (but not in excess of $1
million worth of Equity Securities to any one employee), and (y) pursuant to (1)
agreements existing on the Effective Date and (2) options or warrants (including
Equity Securities issuable upon exercise or exchange thereof) approved, or not
requiring approval, under Section 1.1.8(b), (iv) engage in any debt financing
whereby Holdings and any of its subsidiaries, taken together, incur in excess of
$100 million of debt, determined as of the time of such financing, other than
pursuant to the terms of any credit facility then outstanding for purposes of
working capital, or acquisitions or expenditures considered pursuant to clause
(ii) of this Section 1.1.8(c) or those for which such consideration is not
required, (v) hire or terminate the employment of any executive officer of
Holdings, (vi) sell assets not in the ordinary course of business (including by
merger or sale of stock of a subsidiary), to any buyer or group of related
buyers in one transaction or in a series of related transactions, for
consideration having a fair market value in excess of $25 million, or (vii)
designate a designee contemplated by the first sentence of Section 2.4.2.
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<PAGE> 11
1.1.9 Certain Actions of the Stockholders. Each of the
Stockholders hereby agrees that neither it nor any Affiliate controlled by it
(excluding entities not wholly owned by such Stockholders that are actively
engaged in a trade or business and which invest or trade in debt or debt
securities as part of their ordinary course of business) shall purchase or hold
any of Holdings' Senior Subordinated Notes due 2006, Senior Subordinated
Discount Notes due 2006 or any other notes or bonds that Holdings may issue from
time to time after the date hereof, other than bank debt or similar debt or
other original issuances of debt not prohibited hereby; provided, however, that
this Section 1.1.9 will not restrict Goldman Sachs, Citibank or their respective
Affiliates from engaging in transactions with respect to, and holding, such
notes or bonds in the ordinary course of business.
1.2 Covenant to Vote
Each of the Stockholders who holds Common Stock entitled to
vote on stockholder matters shall appear in person or by proxy at any annual or
special meeting of stockholders for the purpose of obtaining a quorum and shall
vote the shares of Common Stock entitled to vote on stockholder matters owned by
such Stockholder, either in person or by proxy, at any annual or special meeting
of stockholders of Holdings called for the purpose of voting on the election or
removal of directors, or shall act by consensual action of stockholders with
respect to the election or removal of directors, in favor of (i) the election of
the directors nominated in accordance with Sections 1.1.2, 1.1.3 and 1.1.5 and
(ii) the removal of directors in accordance with Section 1.1.4. In addition,
each Stockholder who holds Common Stock entitled to vote on stockholder matters
shall appear in person or by proxy at any annual or special meeting of
stockholders for the purpose of obtaining a quorum and shall vote the shares of
Common Stock entitled to vote on stockholder matters owned by such Stockholder,
either in person or by proxy, upon any matter submitted to a vote of the
stockholders of Holdings, or shall act by consensual action of stockholders, in
a manner so as to be consistent and not in conflict with, and to implement and
effect, the terms of this Agreement.
1.3 No Voting or Conflicting Agreements
No Stockholder shall grant any proxy or enter into or agree to
be bound by any voting trust with respect to the Common Stock nor shall any
Stockholder enter into any stockholder agreements or arrangements of any kind
with any Person with respect to the Common Stock inconsistent with the
provisions of this Agreement (whether or not such agreements and arrangements
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<PAGE> 12
are with other Stockholders or holders of Common Stock that are not parties to
this Agreement). The foregoing prohibition includes, but is not limited to,
agreements or arrangements with respect to the acquisition, disposition or
voting of shares of Common Stock inconsistent with the provisions of this
Agreement. No Stockholder shall act, for any reason, as a member of a group or
in concert with any other Persons in connection with the acquisition,
disposition or voting of shares of Common Stock in any manner which is
inconsistent with the provisions of this Agreement.
1.4 Action by Stockholders
The Stockholders by their execution of this Agreement, hereby
approve the Stock Incentive Plan, a copy of which is attached hereto as Exhibit
A.
1.5 Certain Subsequent Sales to GSCP and Investors
GSCP and the Investors other than Diker (the "Funding
Investors") hereby agree and commit that for a period of two years from the
Effective Date, Holdings (by action of the Board) shall have the right to
require GSCP and the Funding Investors, on at least 30 days' prior notice (which
notice shall contain a general description of the transaction, to the extent
appropriate under the circumstances, and, to the extent available and
appropriate under the circumstances, pro forma capitalization information), to
subscribe for and to purchase from time to time additional shares of Common
Stock from Holdings, for the sole purposes of financing acquisitions of
businesses or assets, capital expenditures, investments in partnerships or joint
ventures or other investments in the business of Holdings and its subsidiaries,
or any similar transactions or expenditures that have been funded or are planned
to be funded within 180 days before or after the giving of notice to GSCP and
the Funding Investors of Holdings' intent to exercise its right under this
Section 1.5; such required investments shall not exceed the respective aggregate
commitments of each of the Groups (as defined herein) as set forth on Schedule
II hereto, shall be made at a purchase price of $10.00 per share, shall be
required by Holdings to be made on a pro rata basis (based on the relative
aggregate commitment of each such Group as set forth on Schedule II) and
otherwise shall be made pursuant to subscription agreements in forms generally
consistent with the Subscription Agreement (but reflecting the difference in the
transactions and any other appropriate changes in circumstances); provided,
however, that the share commitments set forth on Schedule II and the purchase
price per share referred to in this Section 1.5 shall be appropriately adjusted
to reflect any change in the Common Stock by reason of any stock
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<PAGE> 13
dividend, stock split, reverse stock split, combination, recapitalization,
reclassification, merger, consolidation or similar transaction such that the
aggregate investment by each of GSCP and each of the Funding Investors that may
be required pursuant to this Section 1.5 shall remain in the same proportions
and at the same maximum investment amount as in effect on the Effective Date;
and provided further, that if any Person (other than GSCP, any Investor or any
Management Investor) has purchased or is purchasing, substantially concurrent
with such investment pursuant to this Section 1.5, shares of Common Stock, the
price per share referred to in this Section 1.5 shall be less than or equal to
the price per share paid or being paid by such other Person. The allocation of
the shares of Common Stock required to be purchased by GSCP or any Funding
Investor pursuant to this Section 1.5 among the members of their respective
Groups shall be determined by and at the sole discretion of the Acting
Stockholder (as defined herein) thereof. The default by any Stockholder (other
than GSCP) of its obligations pursuant to this Section 1.5 shall not excuse the
required performance by any other Stockholder of its obligations pursuant to
this Section 1.5.
ARTICLE II
RESTRICTIONS ON TRANSFERS OF STOCK
2.1 General Prohibition on Transfers
(a) Prohibition on Transfers Generally. No Stockholder shall,
at any time, directly or indirectly, sell, assign, pledge or encumber or
otherwise transfer (any such transaction, whether or not for consideration,
being referred to hereinafter as a "Transfer" and all Persons to whom a Transfer
is made, regardless of the method of Transfer, shall be referred to collectively
as "Transferees" and individually as a "Transferee") any shares of Common Stock,
unless such Transfer is made in accordance with Section 2.3, 2.4 or 2.5 or in
accordance with the Registration Rights Agreement. No such Transfer, other than
pursuant to Section 2.3 or 2.5, shall be permitted pursuant to this Agreement
prior to the earlier of (i) an IPO and (ii) with respect to GSCP and the
Investors, the second anniversary of the Effective Date. In addition, the
Management Investors may Transfer shares of Common Stock prior to an IPO
pursuant to the Tag-Along Rights (as defined herein) contemplated by Section
2.4.
(b) Recordation. Holdings shall not record upon its books any
Transfer of shares of Common Stock held or owned by
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<PAGE> 14
any of the Stockholders or any other Person to any other Person except Transfers
in accordance with this Agreement.
(c) Obligations of Transferees. No Transfer of shares of
Common Stock by a Stockholder (other than pursuant to the Registration Rights
Agreement) shall be effective unless (x) the Transferee (including a Permitted
Transferee (as defined below) pursuant to Section 2.3) shall have executed an
appropriate document in form and substance reasonably satisfactory to Holdings
confirming that (i) the Transferee takes such shares subject to all the terms
and conditions of this Agreement to the same extent as its transferor was bound
by and entitled to the benefits of such provisions (except as specifically
provided herein), (ii) the Transferee agrees to comply with the obligations of a
"Stockholder" under Section 1.7 of the Registration Rights Agreement to the same
extent as its transferor was bound by and entitled to the benefits of such
provisions (except as specifically provided therein) and (iii) the shares shall
bear legends, substantially in the forms required by Section 2.7, and (y) such
document shall have been delivered to and approved (as described above) by
Holdings prior to such Transferee's acquisition of shares of Common Stock.
(d) Transfers to Competitors. Notwithstanding anything to the
contrary in this Agreement, no Stockholder shall, at any time, directly or
indirectly, Transfer any shares of Common Stock to any Person who is a
competitor of Holdings (it being understood that a financial institution that is
a passive investor in bowling centers shall not be considered to be a competitor
by virtue of such passive investment) or to any Affiliate of such a competitor
(other than Transfers to Holdings and its Affiliates), unless such Transfer (i)
would result in the exercise of a Drag-Along Right (as defined herein) pursuant
to Section 2.5, in which event such sale may be effected only in accordance with
Section 2.5, or (ii) is made pursuant to a widely distributed, underwritten
public offering registered under the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder (the "Securities Act") or pursuant
to a sale effected through an open market, nondirected broker's transaction
pursuant to Rule 144 under the Securities Act ("Rule 144") (in which the seller
does not know that the buyer is a competitor). For purposes of this provision,
the good faith determination of a majority of the entire Board (excepting any
directors nominated by the proposed transferor's Group) that a proposed
Transferee is a "competitor", made within 30 days of written notice to the Board
of the proposed Transfer, shall in all respects be conclusive.
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<PAGE> 15
(e) Warrants. For purposes of this Article II, Transfers of
Warrants shall be treated as Transfers of Common Stock.
2.2 Compliance with Securities Laws
No Stockholder shall Transfer any shares of Common Stock,
unless (a) the Transfer is pursuant to an effective registration statement under
the Securities Act and in compliance with any other applicable federal
securities laws and state securities or "blue sky" laws or (b) such Stockholder
shall have furnished Holdings with an opinion of counsel, if reasonably
requested by Holdings, which opinion and counsel shall be reasonably
satisfactory to Holdings, to the effect that no such registration is required
because of the availability of an exemption from registration under the
Securities Act and under any applicable state securities or "blue sky" laws and
that the Transfer otherwise complies with this Agreement and any other
applicable federal securities laws and state securities or "blue sky" laws.
2.3 Permitted Transfers
2.3.1 Non-Management Investors. The restrictions contained in
Sections 2.1(a), 2.4 and 2.5 of this Agreement with respect to Transfers by
Stockholders of shares of Common Stock shall not apply to any Transfer by a
Stockholder (other than a Management Investor and Diker) to a Person controlled
by, controlling or under common control with (an "Affiliate") such Stockholder
(but, prior to an IPO, no Stockholder shall distribute such shares to its
stockholders, partners or investors generally, except in connection with the
liquidation or expiration of the term of such Stockholder). To the extent a
Permitted Transferee pursuant to Section 2.3.1 is an individual, such Permitted
Transferee shall be permitted to make transfers to the Persons referred to in
clauses (i), (ii) and (iii) of Section 2.3.2, as applied to such individual, as
if such individual were an "Individual Investor" (as defined therein).
2.3.2 Individual Investors. The restrictions contained in
Sections 2.1(a), 2.4 and 2.5 of this Agreement with respect to Transfers by
Stockholders of shares of Common Stock shall not apply to any Transfer by a
Management Investor or Diker (an "Individual Investor"): (i) to or among such
Individual Investor's spouse, children, grandchildren or other living
descendants, or to a trust or family partnership of which there are no principal
(i.e., corpus) beneficiaries or partners other than the grantor or one or more
of such Individual Investor, spouse or described relatives and provided, in the
case of
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<PAGE> 16
a trust, that the existing beneficiaries and/or trustee(s) and/or grantor(s) of
such trust have the power to act with respect to the trust's assets without
court approval and, in the case of a family partnership, that the partners
thereof have the power to act with respect to the partnership's assets without
court approval and the partnership is not permitted to (x) distribute assets to
Persons who are not among the relatives listed above or (y) have partners who
are not among the relatives listed above; (ii) to a legal representative of such
Individual Investor in the event such Individual Investor becomes mentally
incompetent or to such Individual Investor's personal representative following
the death of such Individual Investor; (iii) with the prior written approval of
Holdings, which approval may be granted or withheld by Holdings in its sole and
absolute discretion; (iv) pursuant to a pledge by a Management Investor to
Holdings or an Affiliate thereof for money borrowed to purchase shares of Common
Stock pursuant to Section 3(f)(i) of the Employment Agreements; and (v) pursuant
to Section 3(f)(vii), 3(f)(viii) or 10(c) of an Employment Agreement, or any
analogous provisions of any employment, compensation or benefit agreements or
arrangements.
2.3.3 Permitted Transferees. Transferees to whom Transfers are
permitted pursuant to Section 2.3.1 and pursuant to clauses (i), (ii) and (iii)
of Section 2.3.2 are referred to herein as "Permitted Transferees." Any such
permitted Transfer shall be subject to the terms of this Agreement, including
compliance with Section 2.1(c). In addition, any Permitted Transferee of any
Restricted Stock (as defined in the Employment Agreements, or any analogous
provisions of any employment, compensation or benefit agreements or
arrangements), shall take such shares subject to the terms of the relevant
Employment Agreement or such other agreement or arrangement. If any Transfer
made pursuant to this Agreement is made to an Affiliate of the transferor (or a
prior transferor) based on the fact of such transferee's status as such an
Affiliate, such transferee shall agree, in connection with such Transfer, for
the benefit of Holdings that such transferee will transfer back to the
transferor any shares of Common Stock so transferred, if the transferee at any
time is no longer an Affiliate of such transferor (or any such prior
transferor).
2.3.4 Transfer by Permitted Transferees. The restrictions
contained in Sections 2.1(a), 2.4 and 2.5 of this Agreement with respect to
Transfers by Stockholders of shares of Common Stock shall not apply to any
Transfer by a Permitted Transferee of a Stockholder to such Stockholder or to
another Permitted Transferee of such Stockholder, and any such Transferee shall
also be a "Permitted Transferee," subject to the provisions of Section 2.3.3.
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<PAGE> 17
2.4 Right of First Offer; Tag-Along Rights
2.4.1 Seller's Notice. From and after the second anniversary
of the Effective Date, if any Stockholder proposes to sell any of the Common
Stock owned by it, other than pursuant to Section 2.3 or 2.5 of this Agreement
or pursuant to the Registration Rights Agreement or, after an IPO, other than
sales effected through open market, nondirected broker's transactions pursuant
to Rule 144 (for purposes of this Section 2.4 and any cross-references hereto,
such Stockholder, along with any Affiliates and Permitted Transferees thereof
that are Stockholders, the "Selling Stockholder"), the Selling Stockholder shall
first give written notice (the "Seller's Notice") to Holdings and to each of the
other Stockholders (such other Stockholders, other than the Management
Investors, being referred to herein as the "Offeree Stockholders"), stating that
the Selling Stockholder desires to make such sale, referring to Section 2.4 of
this Agreement, specifying the number of shares of Common Stock proposed to be
sold pursuant to the offer (the "First Offer Shares"), and specifying the price,
in cash (the "First Offer Price"), and the material terms pursuant to which such
sale is proposed to be made (together with the First Offer Price, the "First
Offer Terms"); provided, however, that a Management Investor shall not have any
rights to sell as a Selling Stockholder or to give a Seller's Notice pursuant to
this Section 2.4.1.
2.4.2 Exercise of Option.
(a) Option. Upon receipt of the Seller's Notice, Holdings
and/or its designee(s) (which designee(s) shall, subject to compliance with
Section 1.1.8(c), have been approved by a majority of the Board and shall not be
an Affiliate of any Person who is then a Stockholder) shall have the irrevocable
and (except as provided below) exclusive option to purchase the First Offer
Shares and, to the extent Holdings and/or its designee(s) elect to purchase
fewer than all the First Offer Shares, the Offeree Stockholders shall have the
irrevocable and exclusive option to purchase up to all the remaining First Offer
Shares, in each case, for cash at the First Offer Price; provided, however, that
the Selling Stockholder shall not be required to sell any First Offer Shares
pursuant to this option unless all the First Offer Shares are to be purchased by
Holdings, its designee(s), the Offeree Stockholders or any combination thereof.
Holdings may designate as its designee pursuant to this Section 2.4.2(a) an
Affiliate of a Person who is then a Stockholder if the Offeree Stockholders do
not agree to purchase pursuant to this Section 2.4 all First Offer Shares
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not being purchased by Holdings and any non-Affiliate designee(s). If the
Selling Stockholder is GSCP, Holdings may exercise its rights to purchase First
Offer Shares pursuant to this Section 2.4 only by action of a majority of the
directors of Holdings who are not GSCP Directors and who are not Affiliates of,
or nominees of Affiliates of, GSCP. If the Selling Stockholder is not GSCP,
Holdings may exercise its rights to purchase First Offer Shares pursuant to this
Section 2.4 only by action of the Executive Committee or a majority of the
directors of Holdings other than a director nominated by the Selling
Stockholder, and other than any directors who are Affiliates of, or nominees of
Affiliates of, the Selling Stockholder (including the Selling Stockholder, if an
individual).
(b) Holdings Notice. Promptly upon receipt of the
Seller's Notice, Holdings shall deliver to each Stockholder, other than the
Selling Stockholder, a notice ("Holdings' Notice") stating the number of First
Offer Shares to be sold and the First Offer Terms, describing in reasonable
detail the nature of the information to be included in the notice required
pursuant to Section 2.4.2(c), and, in the case of notices to Offeree
Stockholders, stating (i) the number of shares of Common Stock owned by such
Offeree Stockholder and (ii) the number of shares of Common Stock owned by all
Offeree Stockholders as a group.
(c) First Offer Election; Tag-Along Election. Within
seven days of the date of the Holdings' Notice, each Stockholder,
other than the Selling Stockholder, shall deliver to Holdings a
written notice stating:
(1) in the case of any Offeree Stockholder, (A)
whether it elects to purchase any First Offer Shares and (B) the
maximum number of such shares (up to all the First Offer Shares) that
it is willing to purchase, in each case, at the First Offer Price; and
(2) in the case of any Stockholder (including Offeree
Stockholders), other than the Selling Stockholder, whether the
Stockholder elects, in the event that the First Offer Shares are not
purchased by Holdings, its designee(s) and/or the Offeree Stockholders,
and the Selling Stockholder sells the First Offer Shares to a Proposed
Transferee (as defined below) pursuant to Section 2.4.3, to sell a pro
rata portion of its Common Stock (equal to (A) the total number of
shares of Common Stock owned by such Stockholder, plus the total number
of shares of Common Stock then issuable upon exercise of Warrants
and/or vested Options (as hereinafter defined) then exercisable by such
Stockholder, multiplied by (B) a fraction, (i) the
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numerator of which is the number of First Offer Shares and (ii) the
denominator of which is the total number of shares of Common Stock held
by the Selling Stockholder plus the total number of shares of Common
Stock then issuable upon exercise of Warrants and/or vested Options, if
applicable, then exercisable by such Selling Stockholder) to such
Proposed Transferee on the same terms and conditions as such Selling
Stockholder (with respect to each Stockholder, its "Tag-Along Shares").
A notice pursuant to clause (1) above shall constitute an irrevocable commitment
to purchase on the First Offer Terms such shares, if any, as are allocated to
such Offeree Stockholder pursuant to this Section 2.4.2, up to the maximum
number of shares set forth therein. An election pursuant to clause (2) above
shall constitute an irrevocable commitment to sell such Common Stock to the
Proposed Transferee if the sale of First Offer Shares to the Proposed Transferee
occurs on the terms contemplated hereby.
(d) Allocation of Remaining Shares. If Holdings and its
designee(s), if any, determine to purchase fewer than all the First Offer
Shares, then Holdings shall allocate the remaining First Offer Shares (the
"Remaining Shares") among the Offeree Stockholders expressing a desire to
purchase First Offer Shares pursuant to Section 2.4.2(c)(1) as follows:
(1) first, by allocating to each such Offeree Stockholder a
number of shares equal to its proportionate share of the Remaining
Shares (in the proportion that the number of shares such Offeree
Stockholder owns bears to the total number of shares owned by all
Offeree Stockholders), but, in any case, such allocation shall not
exceed the maximum number of shares actually subscribed for (pursuant
to such clause (c)(1)) by such Offeree Stockholder (to the extent less
than such Stockholder's proportionate share);
(2) second, to the extent that any Offeree Stockholder has
indicated that it will not fully subscribe for its proportionate share
of the Remaining Shares as described above, Holdings shall allocate all
such Remaining Shares not so subscribed for to the Offeree Stockholders
who have subscribed for more shares than their proportionate share of
the Remaining Shares (the "Fully Participating Stockholders") in the
proportion that the number of shares each owns bears to the total
number of shares owned by all such Fully Participating Stockholders;
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(3) third, if the number of shares so allocated to any Fully
Participating Stockholders exceeds the respective maximum number of
shares that any such Stockholders have indicated in their notices to
Holdings that such respective Stockholders are willing to subscribe
for, then Holdings shall allocate any excess over such maximums among
all Fully Participating Stockholders who have subscribed for a maximum
number of shares which exceeds the number of shares allocated to them
pursuant to the preceding clauses (1) and (2), in the proportion that
their respective holdings bear to the total number of shares owned by
all such remaining Fully Participating Stockholders; and
(4) fourth, Holdings shall follow the procedure set forth in
clause (3), if necessary, until all shares available for purchase by
the Offeree Stockholders have been allocated to them or until all such
maximums have been filled.
In case all maximums are filled without all such First Offer Shares being
allocated, Holdings may permit its designee(s), whether or not an Affiliate of
any Person who is then a Stockholder, to elect to purchase any remaining First
Offer Shares, or Holdings may elect to purchase such Shares (subject to the
procedures set forth in the last two sentences of Section 2.4.2(a)). In the case
of any allocation of shares of Common Stock pursuant to this Section 2.4.2 to an
Offeree Stockholder, such Offeree Stockholder shall have the right, in its sole
discretion, to reallocate such allocation in any proportion among any of its
Permitted Transferees.
(e) Notice of Final Allocation. Holdings shall, within 30 days
of the Seller's Notice, notify the Selling Stockholder and each Offeree
Stockholder in writing concerning the final allocation of the First Offer
Shares, or that Holdings and the Offeree Stockholders are not prepared to
purchase all of the First Offer Shares at the First Offer Price. If such notice
by Holdings to the Selling Stockholder is a notice of purchase by Holdings, its
designee(s) and/or the Offeree Stockholders, such notice shall be deemed the
irrevocable exercise of such options to purchase the First Offer Shares (as so
allocated) on behalf of each purchaser named therein on the First Offer Terms.
If such notice states that Holdings, its designee(s) and the Offeree
Stockholders are willing to buy fewer than all of the First Offer Shares (an
"Undersubscription Notice"), such notice shall state how many First Offer Shares
such Persons are willing to purchase and the allocation thereof and such notice
shall be an irrevocable offer to purchase such First Offer Shares on the First
Offer Terms by the allocated
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purchasers, and the Selling Stockholder shall have five days to elect to agree
to sell such number of shares of Common Stock to such Persons on the First Offer
Terms.
2.4.3 Seller's Rights to Transfer.
(a) Third Party Sale; Tag-Along Buyer. If the Seller's Notice
shall be duly given, and if Holdings, its designee(s) and the Offeree
Stockholders shall not exercise their options to purchase all of the First Offer
Shares at the First Offer Price as provided in Section 2.4.2, and the Selling
Stockholder does not elect to sell fewer than all of the First Offer Shares
pursuant to an Undersubscription Notice, then the Selling Stockholder shall be
free, for a period of 120 days from the earlier of (i) the 30th day following
the date of the Seller's Notice and (ii) the date the Selling Stockholder shall
have received the Undersubscription Notice (such earlier date being the "Release
Date"), to sell the First Offer Shares to any Proposed Transferee, as long as
all of the First Offer Shares are sold in a private transaction for cash,
payable upon sale, at a price equal to or greater than 95% of the First Offer
Price and on all other material terms not more favorable to the Proposed
Transferee than the First Offer Terms. In addition, a sale to a Proposed
Transferee shall only be consummated if the Proposed Transferee shall purchase,
concurrently with and on the same terms and conditions and at the same price as
the First Offer Shares, all of each other Stockholder's Tag-Along Shares with
respect to such sale, in accordance with their elections pursuant to clause (2)
of Section 2.4.2(c) (the "Tag-Along Right").
(b) Sale Agreement. Each Stockholder electing to sell
Tag-Along Shares (a "Tag-Along Seller") agrees to cooperate in consummating such
a sale, including, without limitation, by becoming a party to the sales
agreement and all other appropriate related agreements, delivering at the
consummation of such sale, stock certificates and other instruments for such
Common Stock duly endorsed for transfer, free and clear of all liens and
encumbrances, and voting or consenting in favor of such transaction (to the
extent a vote or consent is required) and taking any other necessary or
appropriate action in furtherance thereof, including the execution and delivery
of any other appropriate agreements, certificates, instruments and other
documents. The foregoing notwithstanding, in connection with such sale, a
Tag-Along Seller shall not be required to make any representations and
warranties with respect to Holdings or Holdings' business or with respect to any
other seller.
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In addition, each Tag-Along Seller shall be severally responsible for its
proportionate share of the expenses of sale incurred by the sellers in
connection with such sale and the obligations and liabilities incurred by the
sellers in connection with such sale. Such obligations and liabilities shall
include (to the extent such obligations are incurred) obligations and
liabilities for indemnification (including for (x) breaches of representations
and warranties made in connection with such sale by Holdings or any other seller
with respect to Holdings or Holdings' business, (y) breaches of covenants and
(z) other matters), and shall also include amounts paid into escrow or subject
to holdbacks, and amounts subject to post-closing purchase price adjustments.
The foregoing notwithstanding, (1) without the written consent of a Tag-Along
Seller, the amount of such obligations and liabilities for which such Tag-Along
Seller shall be responsible shall not exceed the gross proceeds received by such
Tag-Along Seller in such sale and (2) a Tag-Along Seller shall not be
responsible for the fraud of any other seller or for any indemnification
obligations and liabilities for breaches of representations and warranties made
by any other seller with respect to such other seller's (i) ownership of and
title to shares of capital stock of Holdings, (ii) organization, (iii) authority
and (iv) conflicts and consents.
(c) Proposed Transferee. "Proposed Transferee" means a Person
or group as defined in Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), other than any Stockholders or their Affiliates
(whether any such Affiliate is such prior to or upon consummation of such
Transfer, but not solely by virtue of becoming a party to this Agreement), to
whom Common Stock is proposed to be Transferred pursuant to the terms of Section
2.4.3(a) or 2.5 of this Agreement.
(d) No Liability. Notwithstanding any other provision
contained in this Section 2.4.3, there shall be no liability on the part of
Holdings or the Selling Stockholder in the event that the sale pursuant to this
Section 2.4.3 is not consummated for any reason whatsoever. The decision whether
to effect a Transfer pursuant to this Section 2.4.3 shall be in the sole and
absolute discretion of the Selling Stockholder.
2.4.4 Closing Date. In the case of a purchase by Holdings, its
designee(s) and/or any Offeree Stockholders of any First Offer Shares pursuant
to Section 2.4, the parties to such purchase shall mutually determine a closing
date (the "First Offer Closing Date") which shall not be (except as otherwise
required by the terms of this Agreement) more than 30 days after the date upon
which Holdings delivers the notice
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pursuant to Section 2.4.2(e), or if any such day is not a business day, then the
first business day thereafter, subject, in any case, to extension until
expiration or termination of any applicable regulatory waiting periods
(including pursuant to HSR) and satisfaction of all other applicable regulatory
conditions (provided that if such extension lasts more than 90 days, the Selling
Stockholder (or purchasers obligated to purchase a majority of the shares of
Common Stock pursuant to such proposed transaction) may terminate such agreement
upon written notice (unless the purchasers for whom no approvals remain
outstanding, either pro rata or as they agree among themselves, agree to
purchase and purchase all such shares within 10 days following such written
notice of termination) and such termination shall be treated as if it were an
Undersubscription Notice electing not to purchase any First Offer Shares given
prior to the 30th day following the date of the Seller's Notice). The closing
shall be held at 12:00 Noon, local time, at the principal executive office of
Holdings, or at such other time or place as the parties may agree.
2.4.5 Deliveries at Closing; Method of Payment of Purchase
Price. On a First Offer Closing Date, the Selling Stockholder shall deliver
certificates, free and clear of all liens and encumbrances, with appropriate
transfer tax stamps affixed and with stock powers endorsed in blank,
representing the shares of Common Stock to be purchased by the Persons
exercising their rights of first offer hereunder, each of whom shall deliver to
such Selling Stockholder his portion of the purchase price in cash (or certified
or cashier's check). In addition, if the Person selling Common Stock is the
personal representative of a deceased Stockholder, the personal representative
shall also deliver to the purchaser or purchasers (i) copies of letters
testamentary or letters of administration evidencing his appointment and
qualification, (ii) a certificate issued by the Internal Revenue Service
pursuant to Section 6325 of Internal Revenue Code of 1986, as amended (the
"Code"), discharging the shares being sold from liens imposed by the Code (or,
if it is impossible to obtain such certificate by the First Offer Closing Date,
the sale of such Common Stock may be consummated and the proceeds placed in
escrow pending receipt thereof) and (iii) an estate tax waiver issued by the
state of the decedent's domicile.
2.5 Drag-Along Right
2.5.1 Exercise. If Stockholders owning fifty-one percent (51%)
or more of the then issued and outstanding shares of Common Stock propose to
make a bona fide sale of all of the shares of Common Stock held by such
Stockholders to a Proposed
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Transferee, pursuant to a stock sale, merger, business combination,
recapitalization, consolidation, reorganization, restructuring or similar
transaction, such Stockholders shall have the right (a "Drag-Along Right"),
exercisable upon fifteen (15) days' prior written notice to the other
Stockholders, to require the other Stockholders to sell all of their shares of
Common Stock and Warrants and, at the election of such proposing Stockholders,
options to purchase shares of Common Stock (whether vested or unvested) issued
pursuant to the Employment Agreements or the Stock Incentive Plan or otherwise
("Options"), to the Proposed Transferee on the same terms and conditions and at
the same price (in the case of the Warrants or Options, as the case may be, the
purchase price of each Warrant or Option shall be equal to the purchase price
attributable to the number of shares of Common Stock issuable upon exercise of
such Warrant or Option less the exercise price thereof) as the Stockholders
exercising the Drag-Along Right.
2.5.2 Sale Agreement. Each Stockholder selling shares of
Common Stock pursuant to a transaction contemplated by this Section 2.5 (a
"Drag-Along Seller"), agrees to cooperate in consummating such a sale,
including, without limitation, by becoming a party to the sales agreement and
all other appropriate related agreements, delivering at the consummation of such
sale, stock certificates and other instruments for such shares of Common Stock
duly endorsed for transfer, free and clear of all liens and encumbrances, and
voting or consenting in favor of such transaction (to the extent a vote or
consent is required) and taking any other necessary or appropriate action in
furtherance thereof, including the execution and delivery of any other
appropriate agreements, certificates, instruments and other documents. The
foregoing notwithstanding, in connection with such sale, a Drag-Along Seller
shall not be required to make any representations and warranties with respect to
Holdings or Holdings' business or with respect to any other seller. In addition,
each Drag-Along Seller shall be severally responsible for its proportionate
share of the expenses of sale incurred by the proposing Stockholders in
connection with such sale and the obligations and liabilities incurred by the
seller in connection with such sale. Such obligations and liabilities shall
include (to the extent such obligations are incurred) obligations and
liabilities for indemnification (including for (x) breaches of representations
and warranties made in connection with such sale by Holdings or any other seller
with respect to Holdings or Holdings' business, (y) breaches of covenants and
(z) other matters), and shall also include amounts paid into escrow or subject
to holdbacks, and amounts subject to post-closing purchase price adjustments.
The foregoing notwithstanding, (1) without the written consent
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of a Drag-Along Seller, the amount of such obligations and liabilities for which
such Drag-Along Seller shall be responsible shall not exceed the gross proceeds
received by such Drag-Along Seller in such sale and (2) a Drag-Along Seller
shall not be responsible for the fraud of any other seller or any
indemnification obligations and liabilities for breaches of representations and
warranties made by any other seller with respect to such other seller's (i)
ownership of and title to shares of capital stock of Holdings, (ii)
organization, (iii) authority and (iv) conflicts and consents.
2.5.3 No Liability. Notwithstanding any other provision
contained in this Section 2.5, there shall be no liability on the part of
Holdings or the proposing Stockholders in the event that the sale pursuant to
this Section 2.5 is not consummated for any reason whatsoever. The decision
whether to effect a Transfer pursuant to this Section 2.5 shall be in the sole
and absolute discretion of the proposing Stockholders.
2.6 Preemptive Rights
2.6.1 Covered Equity Securities; Exceptions. Each Stockholder
(other than the Management Investors) shall have the pre-emptive right of
subscription provided in this Section 2.6 with respect to all issuances by
Holdings of equity securities of Holdings, or securities convertible into or
exchangeable or exercisable for equity securities of Holdings (collectively,
"Equity Securities"), made prior to the termination of the applicability of this
Section 2.6 pursuant to Section 3.1. The foregoing notwithstanding, the
pre-emptive rights provided in this Section 2.6 shall not be applicable to any
issuance: (i) in connection with an acquisition, purchase of stock or assets,
merger, business combination, recapitalization, consolidation, reorganization,
restructuring or similar transaction, including any transaction contemplated by
Section 2.5 hereof; (ii) pursuant to any stock option, stock purchase or similar
employee, director or other benefit plan, program or agreement of Holdings not
effected for the primary purpose of raising equity capital for Holdings; (iii)
pursuant to the exercise of any Senior Management Option, the conversion or
issuance of the Warrants or any issuance pursuant to Section 1.5; (iv) of Equity
Securities with an aggregate value not in excess of $50 million to a Person that
is not an Affiliate of Holdings, a Stockholder or an Affiliate of any
Stockholder, and which Equity Securities are being acquired by such Person as a
strategic rather than a speculative investment (as determined in reasonable good
faith by the Board); (v) of Equity Securities with an aggregate value not in
excess of $5 million to any individual director who is not an Affiliate of any
Stockholder; (vi) pursuant to a public offering. Equity Securities other
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than those described in clauses (i) through (vi) above are referred to herein as
"Covered Equity Securities." If any Covered Equity Securities proposed to be
issued consist of or are convertible into or exchangeable or exercisable for
voting securities, any Special Vote Investor then holding shares of Common Stock
not entitled to vote on stockholder matters shall have the right to subscribe
for Covered Equity Securities that are identical to the Covered Equity
Securities proposed to be issued but that are, or are convertible into or
exchangeable or exercisable for, respectively, non-voting securities.
2.6.2 Subscriptions. If Holdings shall at any time propose to
issue any Covered Equity Securities, it shall deliver to each Stockholder (other
than the Management Investors) a notice to that effect, which notice shall set
forth the amount and class of Covered Equity Securities proposed to be issued,
the proposed issuance price and the other material terms of such proposed
issuance. During the period of 15 days following the date of such notice (the
"Subscription Period"), each Stockholder (other than the Management Investors)
shall have the right to deliver to Holdings an irrevocable notice (a
"Subscription Notice") electing to purchase, at the proposed issuance price, and
on the described terms, an amount of such Covered Equity Securities determined
in accordance with Section 2.6.3, subject to any lower maximum provided in such
Subscription Notice.
2.6.3 Purchase. If the proposed issuance of the Covered Equity
Securities is consummated, each Stockholder delivering a Subscription Notice
shall be required to purchase from Holdings, and Holdings shall be required to
sell to each such Stockholder, at the proposed issuance price, and on the
described terms, an amount of Covered Equity Securities (rounded to avoid
fractional Covered Equity Securities), but subject to the maximum set forth in
such respective Stockholder's Subscription Notice, such that after the sale of
all of the Covered Equity Securities (i) giving rise to the pre-emptive rights
contemplated by this Section 2.6 and (ii) sold pursuant to such pre-emptive
rights (assuming maximum subscription by such Stockholder), such Stockholder and
its Affiliates shall have the same percentage ownership interest in the fully
diluted shares of Common Stock as such Stockholder and its Affiliates had
immediately prior to any such sale. The closing of such sale shall occur at
12:00 Noon on the fifth business day which follows the later of (i) the day of
consummation of the issuance of such Covered Equity Securities to Persons other
than the Stockholder and (ii) the day that is fifteen days after the expiration
of the Subscription Period, in each case, at the principal executive office of
Holdings, or at such other time or place as Holdings and the Stockholders
exercising their
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pre-emptive rights shall mutually agree, subject to extension until expiration
or termination of any applicable regulatory waiting periods (including pursuant
to HSR) and satisfaction of all other applicable regulatory conditions (provided
that if such extension lasts more than 90 days either Holdings or the proposed
purchasing Stockholder may terminate such agreement upon written notice and the
securities subject to such termination shall be treated as Covered Equity
Securities proposed to be issued and not purchased by a Stockholder pursuant to
this Section 2.6.3.
2.6.4 Nonsubscribed Stock. Any Covered Equity Securities
proposed to be issued and not purchased by a Stockholder pursuant to the
provisions of Section 2.6.3 above may be sold by Holdings to any other Person
(without any further compliance with this Section 2.6) at a price not lower than
the proposed issuance price specified in the notice to Stockholders described in
Section 2.6.2 above, and on material terms no less favorable to Holdings than
the terms of the proposed issuance.
2.6.5 Purchase Price. In the event that Holdings accepts
consideration other than cash in connection with any issuance of Covered Equity
Securities, for purposes of determining the exercise price of any pre-emptive
right pursuant to this Section 2.6, the value of the non-cash portion of the
purchase price paid by any Person to whom Covered Equity Securities are issued
or sold shall be determined in reasonable good faith by the Board. The exercise
price of each pre-emptive right of subscription granted pursuant to this Section
2.6 shall be payable in cash.
2.6.6 Equity of Subsidiaries and Debt. In the event that
Holdings proposes to (i) sell any shares of capital stock in any majority-owned,
direct or indirect, subsidiary of Holdings or (ii) issue any debt (provided it
is a new issuance of such debt), in either case, to a Stockholder, each
Stockholder (other than the Management Investors) shall have a pre-emptive right
of subscription with respect to such sale or issuance on terms consistent with
the terms of their pre-emptive rights of subscription with respect to Covered
Equity Securities contemplated by Section 2.6.
2.7 Restrictions on Transfers of Stock
2.7.1 Legends. Each of the Stockholders hereby agrees that
each outstanding certificate representing shares of Common Stock, any
certificate representing shares of Common Stock acquired in accordance with the
provisions of this Agreement and any certificates representing shares of Common
Stock issued upon exercise of the Warrants or upon exercise of the
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Senior Management Options or other Options to purchase shares of Common Stock
issued pursuant to the Stock Incentive Plan or otherwise, in any case, subject
to the provisions of this Agreement and issued prior to the date when the
applicable restrictions are terminated pursuant to Section 2.7.3, shall bear
endorsements reading substantially as follows:
(a) The securities represented by this certificate
have not been registered under the Securities Act of 1933, as amended,
or under the securities laws of any state and may not be transferred,
sold or otherwise disposed of except while such a registration is in
effect or pursuant to an exemption from registration under said Act and
applicable state securities laws.
(b) The securities represented by this certificate
are subject to the terms and conditions set forth in a Stockholders
Agreement, dated as of April 30, 1996, copies of which may be obtained
from the issuer or from the holder of this security. No transfer of
such securities will be made on the books of the issuer unless
accompanied by evidence of compliance with the terms of such agreement.
Each outstanding certificate representing shares of Common
Stock shall also bear any legend required by the terms of the Registration
Rights Agreement, the Management Notes, the Stock Pledge Agreements, the Warrant
Agreement, the Employment Agreements or the Stock Incentive Plan or as Holdings
may otherwise deem appropriate.
2.7.2 Copy of Agreement. A copy of this Agreement shall be
filed with the corporate secretary of Holdings and kept with the records of
Holdings and shall be made available for inspection by any stockholder of
Holdings at the principal executive offices of Holdings.
2.7.3 Termination of Restrictions. The restriction
referred to in the endorsement required pursuant to Section 2.7.1(a) shall cease
and terminate as to any particular shares of Common Stock (a) when, in the
reasonable opinion of counsel for Holdings, such restriction is no longer
required in order to assure compliance with the Securities Act, or (b) when such
shares shall have been effectively registered under the Securities Act. Holdings
or Holdings' counsel, at their election, may request from any Stockholder a
certificate or an opinion of such Stockholder's counsel with respect to any
relevant matters in connection with the removal of the endorsement set forth in
Section 2.7.1(a) from such Stockholder's stock certificates, any such
certificate or opinion of counsel to be reasonably
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satisfactory to Holdings and its counsel. The restrictions referred to in
Section 2.7.1(b) shall cease and terminate as to any particular shares of Common
Stock when, in the opinion of counsel for Holdings, the provisions of this
Agreement are no longer applicable to such shares or this Agreement shall have
terminated in accordance with its terms. Any other restrictions referred to in
any other legends required pursuant to Section 2.7.1 shall cease and terminate
when, in the reasonable opinion of counsel for Holdings, such restrictions are
no longer applicable. Whenever such restrictions shall cease and terminate as to
any shares of Common Stock, the Stockholder holding such shares shall be
entitled to receive from Holdings, without expense (other than applicable
transfer taxes, if any, if such unlegended shares are being delivered and
transferred to any Person other than the registered holder thereof), new
certificates for a like number of shares of Common Stock not bearing the
relevant legend(s) set forth or referred to in Section 2.7.1.
ARTICLE III
MISCELLANEOUS
3.1 Effectiveness; Term
This Agreement shall become effective (the "Effective Date")
simultaneously with the closing of the transactions under the Subscription
Agreement and shall terminate without liability or penalty on the part of any
party or its directors, officers, fiduciaries, employees and stockholders or
general and limited partners (and the directors, officers, fiduciaries,
employees and stockholders or general and limited partners thereof) to any other
party or such other party's Affiliates upon termination of the Subscription
Agreement pursuant to the last sentence of Section 1.3 thereof. Unless
theretofore terminated pursuant to the preceding sentence, the rights of the
Stockholders under this Agreement shall terminate upon the closing of an
underwritten initial public offering or public offerings (on a cumulative
basis) of shares of Common Stock pursuant to a registration statement or
registration statements under the Securities Act with aggregate gross proceeds
to Holdings of at least $100 million (collectively, an "IPO"); provided,
however, that the provisions contained in Sections 1.1 through 1.3 and 1.5, the
provisions contained in Article III (other than Section 3.2), the relevant terms
and conditions herein relating to the Tag-Along Rights (but not the rights of
first offer) and Drag-Along Rights and the related obligations of the
Stockholders under this Agreement shall continue to remain in full force and
effect, following the occurrence of an
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<PAGE> 30
IPO, until the first of the following shall occur: (i) GSCP, the Investors and
their respective Permitted Transferees shall hold in the aggregate less than 50%
of the sum of (x) the number of shares of Common Stock outstanding, on a fully
diluted basis, immediately after giving effect to the transactions contemplated
by the Subscription Agreement and (y) the number of shares, if any, issued
pursuant to Section 1.5, and (ii) GSCP, the Investors and their respective
Permitted Transferees shall, at any time, hold in the aggregate less than 40% of
the fully diluted shares of Common Stock then outstanding. Notwithstanding the
foregoing, in the event Holdings enters into any agreement to merge with or into
any other Person or adopts any other plan of recapitalization, consolidation,
reorganization or other restructuring transaction as a result of which the
Stockholders and their respective Permitted Transferees shall own less than a
majority of the outstanding voting power of the entity surviving such
transaction, this Agreement shall terminate.
3.2 Information Rights
3.2.1 Financial Information. Holdings will furnish to each
Investor the following information: (i) within 20 days after the end of each
month and within 45 days after the end of each fiscal quarter of AMF Group Inc.,
a Delaware corporation and a wholly owned subsidiary of AGHI ("AGI"), the
summary consolidated financial statements of AGI (certified by an officer of AGI
or Holdings) for the respective month or quarter just ended, as the case may be,
accompanied by a letter from the management of AGI or Holdings (a "Management
Letter") discussing the revenues and operations of AGI for the respective month
or quarter just ended, as the case may be; (ii) within 90 days after the end of
each fiscal year of Holdings, its annual audited consolidated financial
statements, accompanied by a report thereon from a "Big Six" accounting firm,
together with a Management Letter relating to the respective fiscal year; (iii)
promptly after filing, copies of any documents filed by Holdings or its
subsidiaries with the Securities and Exchange Commission; (iv) promptly after
mailing or otherwise sending to its senior lenders, copies of all financial
materials so mailed or sent thereto; and (v) promptly after available, any other
financial information reasonably requested by such Investor.
3.2.2 Access. Holdings shall provide to each Investor upon
such Investor's written request, reasonable access to Holdings' books and
records for the purpose of such Investor's conducting an annual appraisal of the
value of such Investor's shares of Common Stock, and Holdings shall cause its
management to cooperate with such Investor for such purpose.
-30-
<PAGE> 31
3.3 Specific Performance
The parties hereto acknowledge that there would be no adequate
remedy at law if any party fails to perform any of its obligations hereunder,
and accordingly agree that each party, in addition to any other remedy to which
it may be entitled at law or in equity, shall be entitled to compel specific
performance of the obligations of any other party under this Agreement in
accordance with the terms and conditions of this Agreement. Any remedy under
this Section 3.3 is subject to certain equitable defenses and to the discretion
of the court before which any proceedings therefor may be brought.
3.4 Notices
All notices, statements, instructions or other documents
required to be given hereunder shall be in writing and shall be given either
personally or by mailing the same in a sealed envelope, first-class mail,
postage prepaid and either certified or registered, return receipt requested, or
by telecopy, addressed to Holdings at its principal offices and to the other
parties at their addresses reflected on the signature pages hereto. Each party
hereto, by written notice given to the other parties hereto in accordance with
this Section 3.4, may change the address to which notices, statements,
instructions or other documents are to be sent to such party. All notices,
statements, instructions and other documents hereunder that are mailed or
telecopied shall be deemed to have been given on the date of mailing or, in the
case of telecopying, upon confirmation of receipt. Any notice given to an Acting
Stockholder shall be deemed to be notice to each member of such Acting
Stockholder's Group.
3.5 Successors and Assigns
This Agreement shall be binding upon and shall inure to the
benefit of the parties, and their respective successors and assigns. If any
Stockholder or any Affiliate thereof or any Transferee of any Stockholder shall
acquire any shares of Common Stock or Warrants, in any manner, whether by
operation of law or otherwise, such shares or Warrants shall be held subject to
all of the terms of this Agreement (to the extent applicable, in the case of
Warrants), and by taking and holding such shares or Warrants 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 (to the extent applicable, in the case of
Warrants).
-31-
<PAGE> 32
3.6 Recapitalizations and Exchanges Affecting Common Stock
The provisions of this Agreement shall apply, to the full
extent set forth herein with respect to Common Stock and Warrants, to any and
all shares of capital stock or equity securities of Holdings or any successor or
assign of Holdings (whether by merger, consolidation, sale of assets or
otherwise) which may be issued in respect of, in exchange for, or in
substitution of, the Common Stock or Warrants, or which may be issued by reason
of any stock dividend, stock split, reverse stock split, combination,
recapitalization, reclassification or otherwise. Upon the occurrence of any of
such events, numbers of shares and amounts hereunder shall be appropriately
adjusted.
3.7 Governing Law
This Agreement shall be governed and construed and enforced in
accordance with the laws of the State of New York, without regard to the
principles of conflicts of law thereof.
3.8 Descriptive Headings, Etc.
The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning of terms
contained herein. Unless the context of this Agreement otherwise requires,
references to "hereof," "herein," "hereby," "hereunder" and similar terms shall
refer to this entire Agreement.
3.9 Amendment; Waiver; Bylaws
This Agreement may not be amended or supplemented except by an
instrument in writing signed by Holdings and by Stockholders holding a majority
of the then outstanding shares of Common Stock held by all Stockholders;
provided that any amendment, supplement or modification of this Agreement which
adversely affects the rights and obligations of any Stockholder (an "Affected
Holder") differently than those of any other Stockholder shall also require the
approval of such Affected Holder; provided further, the foregoing proviso
notwithstanding, any amendment, supplement or modification of this Agreement
that adversely affects the Management Investors (or a group thereof) as a class
may be approved by Management Investors (or members of such group, as the case
may be) holding Common Stock or Options to purchase Common Stock, which together
represent a majority of the sum of the total number of (x) the shares of such
Common Stock and (y) the shares of Common Stock issuable upon exercise of such
Options held by all
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<PAGE> 33
the Management Investors (or such group, as the case may be). The foregoing
notwithstanding, Holdings, without the consent of any other party hereto, may
amend Schedule I and the signature pages hereto, in order to add any Investor or
Management Investor or any other party that becomes a holder of Common Stock or
securities convertible into or exercisable for Common Stock.
3.10 Severability
If any term or provision of this Agreement shall to any extent
be invalid or unenforceable, the remainder of this Agreement shall not be
affected thereby, and each term and provision of this Agreement shall be valid
and enforceable to the fullest extent permitted by law. Upon the determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties shall negotiate in good faith to modify this Agreement so
as to effect their original intent as closely as possible in an acceptable
manner to the end that transactions contemplated hereby are fulfilled to the
extent possible.
3.11 Further Assurances
The parties hereto shall from time to time execute and deliver
all such further documents and do all acts and things as the other party may
reasonably require to effectively carry out or better evidence or perfect the
full intent and meaning of this Agreement, including, to the extent necessary or
appropriate, using all reasonable efforts to cause the amendment of the Amended
Certificate or the By-Laws in order to provide for the enforcement of this
Agreement in accordance with its terms. In furtherance and not in limitation of
the foregoing, in the event of any amendment, modification or termination of
this Agreement in accordance with its terms, the Stockholders shall cause the
Board to meet within thirty days following such amendment, modification or
termination or as soon thereafter as is practicable for the purpose of amending
the Amended Certificate and By-Laws, as may be required as a result of such
amendment, modification or termination, and, to the extent required by law,
proposing such amendments to the stockholders of Holdings entitled to vote
thereon, and such action shall be the first action to be taken at such meeting.
3.12 Complete Agreement; Counterparts
This Agreement (together with the Subscription Agreement, the
Registration Rights Agreement, the Stock Incentive Plan and the other agreements
referred to herein and therein) constitutes the entire agreement and supersedes
all other agreements and understandings, both written and oral, among the
-33-
<PAGE> 34
parties or any of them, with respect to the subject matter hereof. This
Agreement may be executed by any one or more of the parties hereto in any number
of counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same instrument.
3.13 Certain Transactions
The parties hereto agree that Goldman Sachs shall have the
exclusive right to perform all consulting, financing, investment banking and
similar services for Holdings and its subsidiaries (including as lead
underwriter or in any analogous role in connection with any public or private
offering of securities or debt), for customary compensation and on other terms
that are customary for similar engagements with unaffiliated third parties, and
neither Holdings nor its subsidiaries shall engage any other Person to perform
such services during the term of this Agreement except to the extent Goldman
Sachs shall consent thereto or shall decline, at its sole election, to perform
such services.
3.14 No Third Party Beneficiaries
The provisions of this Agreement shall be only for the benefit
of the parties to this Agreement, and no other Person (other than Goldman Sachs
with respect to Section 3.13) shall have any third party beneficiary or other
right hereunder.
3.15 Actions by Groups
As used herein, the term "Group" shall mean each of: (i) the
entities comprising GSCP, taken as a group; (ii) the entities comprising
Blackstone, taken as a group; (iii) the entities comprising Kelso, taken as a
group; (iv) the entities comprising Bain, taken as a group; and (v) Citibank, in
each case, together with the respective transferees of GSCP, Blackstone, Kelso,
Bain or Citibank, as the case may be, to which they may transfer any Common
Stock or Warrants in accordance with the restrictions of this Agreement. All
actions, determinations and agreements by, and all notices by or to, GSCP,
Blackstone, Kelso, Bain or Citibank, or any member of their respective Groups,
shall be deemed validly taken or made (in the case of actions, determinations or
agreements) or given (in the case of notices) if taken, made or given, as the
case may be, by or to GSCP II (in the case of the GSCP Group), by or to
Blackstone Fund 1 (in the case of the Blackstone Group), by or to KIA V (in the
case of the Kelso Group), by or to Bain Fund 1 (in the case of the Bain Group)
or by or to Citibank (in the
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<PAGE> 35
case of the Citibank Group) (collectively, the "Acting Stockholders" and each,
an "Acting Stockholder"), and shall be binding upon all members of any such
Group for all purposes of this Agreement. Each member of each Group hereby
appoints its respective Acting Stockholder to act, to make determinations and
agreements and to give and receive notices on its behalf as contemplated hereby
and agrees that all actions, determinations, agreements and notices to be taken,
made, received or given on behalf of its Group hereunder shall be taken, made,
received or given by its Acting Stockholder. In addition, each member of each
Group hereby agrees that each other party hereto may rely on the actions,
determinations and agreements, and receipt of notice, of or by such member's
respective Acting Stockholder pursuant hereto as such member's action,
determination or agreement, or receipt of notice, as applicable, hereunder. If
any Acting Stockholder (or any successor thereto pursuant to this sentence) is
no longer in existence or no longer beneficially owns any Common Stock or
Warrants, but its Group (or a permitted successor or assign thereof) continues
to have rights and/or obligations hereunder, such Acting Stockholder shall
appoint one such continuing entity as its successor as the Acting Stockholder
for such Group. To the extent any Stockholder is required to take any action
hereunder, it agrees to use its reasonable best efforts to cause the other
members of its Group, if any, to take such action.
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<PAGE> 36
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be duly executed on the date first written above.
AMF HOLDINGS INC.
By: /s/ Richard A. Friedman
-------------------------------------
Name: Richard A. Friedman
Title: President
Address: c/o Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004
Attn: David J. Greenwald
Telecopier No.: (212) 357-5505
GS CAPITAL PARTNERS II, L.P.
By: GS Advisors, L.P.
General Partner
By: GS Advisors Inc., its
General Partner
By: /s/ Richard A. Friedman
-------------------------------------
Name: Richard A. Friedman
Title: President
Address: c/o Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004
Attn: David J. Greenwald
Telecopier No.: (212) 357-5505
<PAGE> 37
GS CAPITAL PARTNERS II OFFSHORE, L.P.
By: GS Advisors II (Cayman), L.P.
General Partner
By: GS Advisors II, Inc., its
General Partner
By: /s/ Richard A. Friedman
------------------------------------
Name: Richard A. Friedman
Title: President
Address: c/o Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004
Attn: David J. Greenwald
Telecopier No.: (212) 357-5505
GOLDMAN, SACHS & CO. VERWALTUNGS GMBH
By: /s/ Richard A. Friedman
------------------------------------
Name: Richard A. Friedman
Title: Managing Director
By: /s/ C.H. Skodinski
------------------------------------
Name: C.H. Skodinski
Title: Registered Agent
Address: c/o Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004
Attn: David J. Greenwald
Telecopier No.: (212) 357-5505
<PAGE> 38
THE GOLDMAN SACHS GROUP, L.P.
By: /s/ Richard A. Friedman
------------------------------------
Name: Richard A. Friedman
Title: Partner
Address: c/o Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004
Attn: David J. Greenwald
Telecopier No.: (212) 357-5505
STONE STREET FUND 1995, L.P.
By: Stone Street Value Corp., its
General Partner
By: /s/ Richard A. Friedman
------------------------------------
Name: Richard A. Friedman
Title: Vice President
Address: c/o Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004
Attn: David J. Greenwald
Telecopier No.: (212) 357-5505
STONE STREET FUND 1996, L.P.
By: Stone Street Empire Corp., its
General Partner
By: /s/ Richard A. Friedman
------------------------------------
Name: Richard A. Friedman
Title: Vice President
Address: c/o Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004
Attn: David J. Greenwald
Telecopier No.: (212) 357-5505
<PAGE> 39
BRIDGE STREET FUND 1995, L.P.
By: Stone Street Value Corp., its
Managing General Partner
By: /s/ Richard A. Friedman
------------------------------------
Name: Richard A. Friedman
Title: Vice President
Address: c/o Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004
Attn: David J. Greenwald
Telecopier No.: (212) 357-5505
BRIDGE STREET FUND 1996, L.P.
By: Stone Street Empire Corp., its
Managing General Partner
By: /s/ Richard A. Friedman
------------------------------------
Name: Richard A. Friedman
Title: Vice President
Address: c/o Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004
Attn: David J. Greenwald
Telecopier No.: (212) 357-5505
<PAGE> 40
BLACKSTONE CAPITAL PARTNERS II MERCHANT
BANKING FUND L.P.
By: Blackstone Management Associates
II L.L.C., its General Partner
By: /s/ Howard A. Lipson
------------------------------------
Name: Howard A. Lipson
Title: Member
Address: 345 Park Avenue
19th Floor
New York, NY 10154
Attn: Howard A. Lipson
Telecopier No.: (212) 754-8725
BLACKSTONE OFFSHORE CAPITAL PARTNERS
II L.P.
By: Blackstone Management Associates
II L.L.C., its General Partner
By: /s/ Howard A. Lipson
------------------------------------
Name: Howard A. Lipson
Title: Member
Address: 345 Park Avenue
19th Floor
New York, NY 10154
Attn: Howard A. Lipson
Telecopier No.: (212) 754-8725
BLACKSTONE FAMILY INVESTMENT
PARTNERSHIP L.P.
By: Blackstone Management Associates
II L.L.C., its General Partner
By: /s/ Howard A. Lipson
------------------------------------
Name: Howard A. Lipson
Title: Member
Address: 345 Park Avenue
19th Floor
New York, NY 10154
Attn: Howard A. Lipson
Telecopier No.: (212) 754-8725
<PAGE> 41
KELSO INVESTMENT ASSOCIATES V, L.P.
By: Kelso Partners V, L.P., its
General Partner
By: /s/ Frank T. Nichols
------------------------------------
Name: Frank T. Nichols
Title: General Partner
Address: 320 Park Avenue, 24th Floor
New York, NY 10022
Attn: James J. Connors, II
Telecopier No.: (212) 223-2379
KELSO EQUITY PARTNERS V, L.P.
By: /s/ Frank T. Nichols
------------------------------------
Name: Frank T. Nichols
Title: General Partner
Address: 320 Park Avenue, 24th Floor
New York, NY 10022
Attn: James J. Connors, II
Telecopier No.: (212) 223-2379
<PAGE> 42
BAIN CAPITAL FUND V, L.P.
By: Bain Capital Partners V, L.P., its
General Partner
By: Bain Capital Investors V, Inc., its
General Partner
By: /s/ Paul B. Edgerley
------------------------------------
Name: Paul B. Edgerley
Title: Managing Director
Address: 2 Copley Plaza
Boston, MA 02116
Attn: Paul Edgerley
Telecopier No.: (617) 572-3000
BAIN CAPITAL FUND V-B, L.P.
By: Bain Capital Partners V, L.P., its
General Partner
By: Bain Capital Investors V, Inc., its
General Partner
By: /s/ Paul B. Edgerley
------------------------------------
Name: Paul B. Edgerley
Title: Managing Director
Address: 2 Copley Plaza
Boston, MA 02116
Attn: Paul Edgerley
Telecopier No.: (617) 572-3000
<PAGE> 43
BCIP ASSOCIATES
By: /s/ Paul B. Edgerley
------------------------------------
Name: Paul B. Edgerley
Title: A General Partner
Address: 2 Copley Plaza
Boston, MA 02116
Attn: Paul Edgerley
Telecopier No.: (617) 572-3000
BCIP TRUST ASSOCIATES, L.P.
By: /s/ Paul B. Edgerley, its
------------------------------------
General Partner
Address: 2 Copley Plaza
Boston, MA 02116
Attn: Paul Edgerley
Telecopier No.: (617) 572-3000
<PAGE> 44
CITICORP NORTH AMERICA, INC.
By: /s/ Jeroen Fikke
------------------------------------
Name: Jeroen Fikke
Title: Vice President
Address: 399 Park Avenue
6th Floor
New York, NY 10043
Attn: Jeroen Fikke
Telecopier No.: (212) 559-0292
<PAGE> 45
/s/ Charles Diker
------------------------------------
Charles M. Diker
Charles M. Diker Associates
One New York Plaza
31st Floor
New York, NY 10004
Telecopier No.: (212) 908-0176
<PAGE> 46
/s/ Robert Morin
------------------------------------
Robert Morin
6008 Treyburn Place
Glen Allen, VA 23060
Telecopier No.: (804) 730-4327
<PAGE> 47
/s/ Douglas Stanard
------------------------------------
Douglas Stanard
2114 Hanover Avenue
Richmond, VA 23220
Telecopier No.: (804) 559-8671
<PAGE> 48
Schedule I
Management Investors
Robert Morin
Douglas Stanard
<PAGE> 49
Schedule II
Subsequent Shares
<TABLE>
<CAPTION>
Number of Shares
Name of Group of Common Stock Maximum Investment
- ------------- --------------- ------------------
<S> <C> <C>
GSCP 5,200,000 $52,000,000
Blackstone 1,000,000 10,000,000
Kelso 1,000,000 10,000,000
Bain 300,000 3,000,000
Citibank 60,000 600,000
--------- -----------
Total 7,560,000 $75,600,000
===========
</TABLE>
<PAGE> 50
EXHIBIT A
AMF HOLDINGS INC.
1996 STOCK INCENTIVE PLAN
SECTION 1. PURPOSE; DEFINITIONS
The purpose of the Plan is to give Holdings and its Affiliates (as
defined below) a competitive advantage in attracting, retaining and motivating
officers, employees and non-employee directors, and to provide Holdings and its
subsidiaries with a stock plan providing incentives linked to the financial
results of Holdings' businesses and increases in shareholder value.
For purposes of the Plan, the following terms are defined as set forth
below:
a. "Affiliate" of a Person means a Person controlled by, controlling
or under common control with such Person.
b. "Award" means a Stock Appreciation Right, Stock Option or
Restricted Stock.
c. "Award Agreement" means a Restricted Stock Agreement or Option
Agreement. An Award Agreement may consist of provisions of an employment
agreement.
d. "Board" means the Board of Directors of Holdings.
e. "Change in Control" shall mean (1) the acquisition by any Person or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act)
other than GSCP (as defined in the Stockholders Agreement) and its Affiliates
of a majority of the outstanding voting stock of Holdings or (2) the sale of or
other disposition (other than by way of merger or consolidation) of all or
substantially all of the assets of Holdings and its subsidiaries taken as a
whole to any Person or group (as defined above). For all purposes of the Plan,
the sale of one of Holdings' two main businesses (i.e., (x) manufacturing and
related activities and (y) operation of bowling centers) is not a Change in
Control.
f. "Code" means the Internal Revenue Code of 1986, as amended from
time to time, and any successor thereto.
g. "Commission" means the Securities and Exchange Commission or any
successor agency.
<PAGE> 51
h. "Committee" means (a) before an Initial Public Offering, the
Executive Committee of the Board, or such other committee of the Board as the
Board may designate for such purpose, and (b) after an Initial Public Offering,
such committee of the Board as the Board may designate, which shall be composed
of not less than two Disinterested Persons, each of whom shall be appointed by
and serve at the pleasure of the Board.
i. "Common Stock" means common stock, par value $0.01 per share, of
Holdings.
j. "Disability" means, unless otherwise defined in an applicable
Restricted Stock Agreement or Option Agreement, permanent and total disability
as determined under procedures established by the Committee for purposes of the
Plan.
k. "Disinterested Person" means a member of the Board who qualifies as
a disinterested person as defined in Rule 16b--3(c)(2), as promulgated by the
Commission under the Exchange Act, or any successor definition adopted by the
Commission.
l. "Employment" means, unless otherwise defined in an applicable
Restricted Stock Agreement or Option Agreement, employment with, or service as
a director of, Holdings or any of its Affiliates.
m. "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor thereto.
n. "Fair Market Value" of the Common Stock means, except as provided
in Sections 5(g) and 6(b)(ii)(2), as of any given date, the mean between the
highest and lowest reported sales prices of the Common Stock on the New York
Stock Exchange or, if not listed on such exchange, on any other national
securities exchange on which the Common Stock is listed or, if not so listed,
on NASDAQ. If such sales prices are not so available, the Fair Market Value of
the Common Stock shall be determined by the Committee in good faith.
o. "Holdings" means AMF Holdings Inc., a Delaware corporation.
p. "Incentive Stock Option" means any Stock Option designated as, and
qualified as, an "incentive stock option" within the meaning of Section 422 of
the Code.
q. "Initial Public Offering" means the consummation of a registered
underwritten public offering or offerings of Common Stock with gross proceeds
to Holdings in the aggregate of at least $100 million.
2
<PAGE> 52
r. "Nonqualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
s. "Option Agreement" means an agreement setting forth the terms and
conditions of an Award of Stock Options and, if applicable, Stock Appreciation
Rights.
t. "Person" means an individual, corporation, partnership, joint
venture, trust, unincorporated organization, government (or any department or
agency thereof) or other entity.
u. "Plan" means the AMF Holdings Inc. 1996 Stock Incentive Plan, as
set forth herein and as hereinafter amended from time to time.
v. "Restricted Stock" means an award granted under Section 7.
w. "Restricted Stock Agreement" means an agreement setting forth the
terms and conditions of an Award of Restricted Stock.
x. "Rule 13d-3" means Rule 13d-3, as promulgated by the Commission
under the Exchange Act, as amended from time to time.
y. "Securities Act" means the Securities Act of 1933, as amended from
time to time, and any successor thereto.
z. "Rule 16b-3" means Rule 16b-3, as promulgated by the Commission
under Section 16(b) of the Exchange Act, as amended from time to time.
aa. "Stock Appreciation Right" means a right granted under Section 6.
ab. "Stock Option" means an option granted under Section 5.
ac. "Stockholders Agreement" has the meaning as set forth in Section
12(a).
In addition, certain other terms used herein have definitions
otherwise ascribed to them herein.
SECTION 2. ADMINISTRATION
The Plan shall be administered by the Committee.
3
<PAGE> 53
Among other things, the Committee shall have the authority, subject to
the terms of the Plan, to:
(a) select the Participants (as defined below) to whom Awards may from
time to time be granted;
(b) determine whether and to what extent Incentive Stock Options,
Nonqualified Stock Options, Stock Appreciation Rights and Restricted Stock or
any combination thereof are to be granted hereunder;
(c) determine the number of shares of Common Stock to be covered by
each Award granted hereunder;
(d) determine the terms and conditions of any Award granted hereunder
(including, but not limited to, the option price, any vesting conditions,
restrictions or limitations (which may be related to the performance of the
Participant, Holdings or any of its Affiliates) and any acceleration of vesting
or waiver of forfeiture regarding any Award and the shares of Common Stock
relating thereto, based on such factors as the Committee shall determine;
(e) modify, amend or adjust the terms and conditions of any Award, at
any time or from time to time;
(f) determine to what extent and under what circumstances Common Stock
and other amounts payable with respect to an Award shall be deferred;
(g) determine under what circumstances an Award may be settled in cash
or Common Stock under Section 5(g);
(h) adopt, alter and repeal such administrative rules, guidelines and
practices governing the Plan as it shall from time to time deem advisable;
(i) interpret the terms and provisions of the Plan and any Award
issued under the Plan (and any agreement relating thereto); and
(j) otherwise supervise the administration of the Plan.
The Committee may act only by a majority of its members then in
office, except that the members thereof may authorize any one or more of their
number or any officer of Holdings to execute and deliver documents on behalf of
the Committee.
4
<PAGE> 54
Any dispute or disagreement which may arise under, or as a result of,
or in any way relate to, the interpretation, construction or application of the
Plan or an Award (or related Award Agreement) granted hereunder shall be
determined by the Committee. Any determination made by the Committee pursuant
to the provisions of the Plan with respect to the Plan, any Award or Award
Agreement shall be made in the sole discretion of the Committee and, with
respect to an Award, at the time of the grant of the Award or, unless in
contravention of any express term of the Plan, at any time thereafter. All
decisions made by the Committee shall be final and binding on all persons,
including Holdings and the Participants.
SECTION 3. COMMON STOCK SUBJECT TO PLAN
The total number of shares of Common Stock reserved and available for
grant under the Plan shall be 1,767,151. Shares subject to an Award under the
Plan may be authorized and unissued shares or may be treasury shares.
If any shares of Restricted Stock are forfeited for which the
Participant did not receive any benefits of ownership (as such phrase is
construed by the Commission or its Staff), or if any Stock Option (and related
Stock Appreciation Right, if any) terminates without being exercised, or if any
Stock Appreciation Right is exercised for cash, the shares subject to such
Awards shall again be available for distribution in connection with Awards
under the Plan.
In the event of any merger, reorganization, consolidation,
recapitalization, spinoff, stock dividend, stock split, reverse stock split,
extraordinary distribution with respect to the Common Stock or other change in
corporate structure affecting the Common Stock, the Committee or Board may make
such substitution or adjustment in the aggregate number and kind of shares
reserved for issuance under the Plan, in the number, kind and Exercise Price
(as defined herein) of shares subject to outstanding Stock Options and Stock
Appreciation Rights, in the number and kind of shares subject to Restricted
Stock Awards, and/or such other equitable substitution or adjustments as it may
determine to be fair and appropriate in its sole discretion; provided, however,
that the number of shares subject to any Award shall always be a whole number.
Any such adjusted Exercise Price shall also be used to determine the amount
payable by Holdings upon the exercise of any Stock Appreciation Right
associated with any Stock Option.
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SECTION 4. PARTICIPANTS
Officers, employees, consultants and non-employee directors of
Holdings and its Affiliates who are responsible for or contribute to the
management, growth and profitability of the business of Holdings and its
Affiliates shall be "Participants" eligible to be granted Awards under the
Plan.
SECTION 5. STOCK OPTIONS
The Committee shall have the authority to grant any Participant
Incentive Stock Options, Nonqualified Stock Options or both types of Stock
Options (in each case with or without Stock Appreciation Rights). Incentive
Stock Options may be granted only to employees of Holdings and its subsidiaries
(within the meaning of Section 424(f) of the Code). To the extent that any
Stock Option is not designated as an Incentive Stock Option or even if so
designated does not qualify as an Incentive Stock Option, it shall constitute a
Nonqualified Stock Option.
Stock Options shall be evidenced by Option Agreements, which shall
include such terms and provisions as the Committee may determine from time to
time. An Option Agreement shall expressly indicate whether it is intended to
be an agreement for an Incentive Stock Option or a Nonqualified Stock Option.
The grant of a Stock Option shall occur on the date the Committee by resolution
selects an individual to be a Participant in any grant of a Stock Option,
determines the number of shares of Common Stock to be subject to such Stock
Option to be granted to such individual and specifies the terms and provisions
of the Stock Option, or on such other date as the Committee may determine.
Holdings shall notify a Participant of any grant of a Stock Option, and a
written Option Agreement shall be duly executed and delivered by Holdings to
the Participant. Subject to Section 12(a), such agreement shall become
effective upon execution by Holdings and the Participant.
Anything in the Plan to the contrary notwithstanding, no term of the
Plan relating to Incentive Stock Options shall be interpreted, amended or
altered, nor shall any discretion or authority granted under the Plan be
exercised, so as to disqualify the Plan under Section 422 of the Code or,
without the consent of the Participant affected, to disqualify any Incentive
Stock Option under such Section 422.
Stock Options shall be subject to the following terms and conditions
and shall contain such additional terms and conditions as the Committee shall
deem desirable:
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(a) Exercise Price. The price per share of Common Stock purchasable
under a Stock Option shall be determined by the Committee and set forth in the
Option Agreement (the "Exercise Price").
(b) Option Term. The term of each Stock Option shall be fixed by the
Committee. Absent any such term being fixed by the Committee, pursuant to an
Option Agreement or otherwise, such term shall be ten years.
(c) Exercisability. Except as otherwise provided herein, Stock
Options shall be exercisable at such time or times and subject to such terms
and conditions as shall be determined by the Committee. If the Committee
provides that any Stock Option is exercisable only in installments, the
Committee may at any time waive such installment exercise provisions, in whole
or in part, based on such factors as the Committee may determine. In addition,
the Committee may at any time accelerate the exercisability of any Stock
Option.
(d) Method of Exercise. Subject to the provisions of this Section 5,
vested Stock Options may be exercised, in whole or in part, at any time during
the option term by giving written notice of exercise to Holdings specifying the
number of shares of Common Stock subject to the Stock Option to be purchased.
Such notice shall be accompanied by payment in full of the purchase
price by certified or bank check or such other instrument as Holdings may
accept. If approved by the Committee, payment, in full or in part, may also be
made in the form of unrestricted Common Stock already owned by the Participant
of the same class as the Common Stock subject to the Stock Option (based on the
Fair Market Value of the Common Stock on the date the Stock Option is
exercised); provided, however, that, in the case of an Incentive Stock Option
the right to make a payment in the form of already owned shares of Common Stock
of the same class as the Common Stock subject to the Stock Option may be
authorized only at the time the Stock Option is granted.
In the discretion of the Committee, after an Initial Public Offering,
payment for any shares subject to a Stock Option may also be made by delivering
a properly executed exercise notice to Holdings, together with a copy of
irrevocable instructions to a broker to deliver promptly to Holdings the amount
of sale or loan proceeds to pay the purchase price, and, if requested by
Holdings, the amount of any federal, state, local or foreign withholding taxes.
To facilitate the foregoing, Holdings may enter into agreements for coordinated
procedures with one or more brokerage firms.
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In addition, in the discretion of the Committee, payment for any
shares subject to a Stock Option may also be made by instructing the Committee
to withhold a number of such shares having a Fair Market Value on the date of
exercise equal to the aggregate exercise price of such Stock Option.
No shares of Common Stock shall be issued until full payment therefor
has been made. Except as otherwise provided in the Stockholders Agreement or
the applicable Option Agreement, subject to a Participant's compliance with
Section 12(a) hereof, a Participant shall have all of the rights of a
stockholder of Holdings holding the class or series of Common Stock that is
subject to such Stock Option (including, if applicable, the right to vote the
shares and the right to receive dividends and distributions), when the
Participant has given written notice of exercise, has paid in full for such
shares and, if requested, has given the representations referred to in Section
12(c).
(e) Nontransferability of Stock Options. No Stock Option shall be
transferable by the Participant other than (i) by will or by the laws of
descent and distribution or (ii) in the case of a Nonqualified Stock Option,
pursuant to a qualified domestic relations order (as defined in the Code or
Title I of the Employee Retirement Income Security Act of 1974, as amended, or
the rules thereunder). All Stock Options shall be exercisable, subject to the
terms of this Plan, during the Participant's lifetime, only by the Participant
or by the legal representative of the Participant or, in the case of a
Nonqualified Stock Option, the Participant's alternative payee pursuant to such
a qualified domestic relations order. The term "Participant" includes the
estate of the Participant or the legal representative of the Participant named
in the Option Agreement and any person to whom an Option is transferred by will
or the laws of descent and distribution or, in the case of a Nonqualified Stock
Option, pursuant to a qualified domestic relations order; provided, however,
that references herein to Employment of a Participant or termination of
Employment of a Participant shall continue to refer to the Employment or
termination of Employment of the applicable grantee of an Award hereunder.
(f) Termination of Employment. (i) Upon the Participant's death or
when the Participant's Employment is terminated for any reason, the
Participant:
a. shall forfeit all Stock Options that have not
previously vested;
b. shall have three months to exercise the
Participant's vested Stock Options that are vested on
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<PAGE> 58
the date of the Participant's termination of Employment if
such termination is for any reason other than the
Participant's death; and
c. shall have one year to exercise the
Participant's vested Stock Options that are vested on the date
of death if the Participant's termination of Employment is due
to the Participant's death.
Any vested Stock Options not exercised within the permissible period of time
shall be forfeited by the Participant.
(g) Cashing Out of Stock Option. On receipt of written notice of
exercise, the Committee may elect to cash out all or any portion of the shares
of Common Stock for which a Stock Option is being exercised by paying the
Participant an amount, in cash or Common Stock, equal to the excess of the Fair
Market Value of one share of Common Stock over the Exercise Price per share
times the number of shares of Common Stock for which the Option is being
exercised on the effective date of such cash-out.
Cash-outs pursuant to this Section 5(g) relating to Options held by
Participants who are actually or potentially subject to Section 16(b) of the
Exchange Act shall comply with the "window period" provisions of Rule 16b-3, to
the extent applicable, and, in the case of cash-outs of Non-Qualified Stock
Options held by such Participants, the Committee may determine Fair Market
Value under the pricing rule set forth in Section 6(b)(ii)(2).
SECTION 6. STOCK APPRECIATION RIGHTS
(a) Grant and Exercise. Stock Appreciation Rights may be granted in
conjunction with all or part of any Stock Option granted under the Plan. In
the case of a Nonqualified Stock Option, such rights may be granted either at
or after the time of grant of such Stock Option. In the case of an Incentive
Stock Option, such rights may be granted only at the time of grant of such
Stock Option. A Stock Appreciation Right shall terminate and no longer be
exercisable upon the termination or exercise of the related Stock Option. In
either case, the terms and conditions of a Stock Appreciation Right shall be
set forth in the Option Agreement for the related Stock Option or an amendment
thereto.
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A Stock Appreciation Right may be exercised by a Participant in
accordance with Section 6(b) by surrendering the applicable portion of the
related Stock Option in accordance with procedures established by the
Committee. Upon such exercise and surrender, the Participant shall be entitled
to receive an amount determined in the manner prescribed in Section 6(b).
Stock Options which have been so surrendered shall no longer be exercisable to
the extent the related Stock Appreciation Rights have been exercised.
(b) Terms and Conditions. Stock Appreciation Rights shall be subject
to such terms and conditions as shall be determined by the Committee, including
the following:
(i) Stock Appreciation Rights shall be exercisable only
at such time or times and to the extent that the Stock Options to
which they relate are exercisable in accordance with the provisions of
Section 5 and this Section 6; provided, however, that a Stock
Appreciation Right shall not be exercisable during the first six
months of its term by a Participant who is actually or potentially
subject to Section 16(b) of the Exchange Act, except that this
limitation shall not apply in the event of death or Disability of the
Participant prior to the expiration of the six-month period;
(ii) upon the exercise of a Stock Appreciation Right, a
Participant shall be entitled to receive an amount equal to the
product of (a) the excess of the Fair Market Value of one share of
Common Stock over the Exercise Price per share specified in the
related Stock Option times (b) the number of shares in respect of
which the Stock Appreciation Right shall have been exercised, in cash,
shares of Common Stock or both, with the Committee having the right to
determine the form of payment;
In the case of Stock Appreciation Rights relating to Stock
Options held by Participants who are actually or potentially subject
to Section 16(b) of the Exchange Act, the Committee:
(1) may require that such Stock Appreciation Rights
be exercised for cash only in accordance with the applicable
"window period" provisions of Rule 16b-3; and
(2) in the case of Stock Appreciation Rights relating
to Nonqualified Stock Options, may provide that the amount to
be paid in cash upon exercise of such Stock Appreciation
Rights during a Rule 16b-3
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"window period" shall be based on the highest of the daily
means between the highest and lowest reported sales prices of
the Common Stock on the New York Stock Exchange or other
national securities exchange on which the shares are listed or
on NASDAQ, as applicable, on any day during such "window
period";
(iii) Stock Appreciation Rights shall be transferable only
with the related Stock Option in accordance with Section 5(e); and
(iv) upon the exercise of a Stock Appreciation Right, the
Stock Option or part thereof to which such Stock Appreciation Right is
related shall be deemed to have been exercised for the purpose of the
limitation set forth in Section 3 on the number of shares of Common
Stock to be issued under the Plan, but only to the extent of the
number of shares covered by the Stock Appreciation Right at the time
of exercise.
SECTION 7. RESTRICTED STOCK
The Committee shall determine the Participants to whom and the time or
times at which grants of Restricted Stock will be awarded, the number of shares
to be awarded to any Participant, the conditions for vesting, the time or times
within which such Awards may be subject to forfeiture and restrictions on
transfer and any other terms and conditions of the Awards (including provisions
(i) relating to placing legends on certificates representing shares of
Restricted Stock, (ii) permitting Holdings to require that shares of Restricted
Stock be held in custody by Holdings with a stock power from the owner thereof
until restrictions lapse and (iii) relating to any rights to purchase the
Restricted Stock on the part of Holdings and its Affiliates), in addition to
those contained in the Stockholders Agreement. The terms and conditions of
Restricted Stock Awards shall be set forth in a Restricted Stock Agreement,
which shall include such terms and provisions as the Committee may determine
from time to time. Except as provided in this Section 7, the Restricted Stock
Agreement, the Stockholders Agreement and any other relevant agreements, the
Participant shall have, with respect to the shares of Restricted Stock, all of
the rights of a stockholder of Holdings holding the class or series of Common
Stock that is the subject of the Restricted Stock Award, including, if
applicable, the right to vote the shares and the right to receive any cash
dividends or distributions (but, subject to the third paragraph of Section 3,
not the right to receive non-cash dividends or distributions). If so
determined by the Committee in the applicable Restricted Stock Agreement,
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cash dividends and distributions on the class or series of Common Stock that is
the subject of the Restricted Stock Award shall be automatically deferred and
reinvested in additional Restricted Stock, held subject to the vesting of the
underlying Restricted Stock, or held subject to meeting conditions applicable
only to dividends and distributions.
SECTION 8. TAX OFFSET BONUSES
At the time an Award is made hereunder or at any time thereafter, the
Committee may grant to the Participant receiving such Award the right to
receive a cash payment in an amount specified by the Committee, to be paid at
such time or times (if ever) as the Award results in compensation income to the
Participant, for the purpose of assisting the Participant to pay the resulting
taxes, all as determined by the Committee, and on such other terms and
conditions as the Committee shall determine.
SECTION 9. CHANGE IN CONTROL PROVISIONS
Notwithstanding any other provision of the Plan to the contrary,
unless otherwise provided in the applicable Award Agreement or the Stockholders
Agreement, in the event of a Change in Control:
(a) immediately prior to the occurrence of a Change in
Control, all Stock Options and Stock Appreciation Rights outstanding
as of such date, and which are not then exercisable and vested, shall
become fully exercisable and vested to the full extent of the original
grant; provided, however, that in the case of a Participant holding
Stock Appreciation Rights who is subject to Section 16(b) of the
Exchange Act, such Stock Appreciation Rights shall vest only to the
extent such Stock Appreciation Rights have been outstanding for at
least six months at the date such Change in Control is determined to
have occurred; and
(b) the restrictions and deferral limitations applicable
to any Restricted Stock shall lapse, and such Restricted Stock shall
become free of all restrictions, fully vested and transferable to the
full extent of the not theretofore forfeited portion of the original
grant.
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SECTION 10. TERM, AMENDMENT AND TERMINATION
The Plan will terminate 10 years after the effective date of the Plan.
Awards outstanding as of such date shall not be affected or impaired by the
termination of the Plan.
The Board may amend, alter, or discontinue the Plan, prospectively or
retroactively, but no amendment, alteration or discontinuation shall be made
which would (i) impair the rights of any Participant under an Award theretofore
granted without the Participant's consent, except such an amendment made in
connection with or after Section 16 of the Exchange Act becoming applicable to
Awards, or the grant, exercise or termination thereof, to cause the Plan to
qualify for the exemption provided by Rule 16b-3, or (ii) after Section 16 of
the Exchange Act becoming applicable to Awards or the grant, exercise or
termination thereof, disqualify the Plan from the exemption provided by Rule
16b-3.
The Committee may amend the terms of any Award theretofore granted,
prospectively or retroactively, but no such amendment shall be made which would
impair the rights of any Participant thereunder without the Participant's
consent, except such an amendment made in connection with or after Section 16
of the Exchange Act becoming applicable to Awards or the grant, exercise or
termination thereof, to cause the Plan or Award to qualify for the exemption
provided by Rule 16b-3.
SECTION 11. UNFUNDED STATUS OF PLAN
It is presently intended that the Plan constitute an "unfunded" plan
for incentive and deferred compensation. The Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Common Stock or make payments; provided, however, that
unless the Committee otherwise determines, the existence of such trusts or
other arrangements is consistent with the "unfunded" status of the Plan.
SECTION 12. GENERAL PROVISIONS
(a) Stockholders Agreement. Unless the Committee determines
otherwise, it shall be a condition to receiving any Award under the Plan, that
a Participant shall become a party to the Stockholders Agreement, dated as of
April 30, 1996, among Holdings and certain stockholders of Holdings, as amended
from time to time (the "Stockholders Agreement"), and such Participant shall
become a Management Investor" thereunder.
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(b) Awards and Certificates. Shares of Restricted Stock and shares of
Common Stock issuable upon the exercise of a Stock Option or Stock Appreciation
Right (together, "Plan Shares") shall be evidenced in such manner as the
Committee may deem appropriate, including book-entry registration or issuance
of one or more stock certificates. Any certificate issued in respect of Plan
Shares shall be registered in the name of such Participant and shall bear
appropriate legends referring to the terms, conditions, and restrictions
applicable to such Award, substantially in the following form:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms, conditions and
restrictions (including forfeiture) of the AMF Holdings Inc.
1996 Stock Incentive Plan and [a Restricted Stock Agreement] [an
Option Agreement] between the issuer and the registered holder
hereof. Copies of such Plan and Agreement are on file at the
offices of AMF Holdings Inc. [address]."
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or
under the securities laws of any state, and may not be sold or
otherwise disposed of except pursuant to an effective
registration statement under said Act and applicable state
securities laws or an applicable exemption to the registration
requirements of such Act and laws."
Such shares may bear other legends to the extent the Committee or the Board
determines it to be necessary or appropriate, including any required by the
Stockholders Agreement or pursuant to any applicable Restricted Stock Agreement
or Option Agreement. If and when all restrictions expire without a prior
forfeiture of the Plan Shares theretofore subject to such restrictions, new
certificates for such shares shall be delivered to the Participant without the
first legend listed above.
The Committee may require that any certificates evidencing Plan Shares
be held in custody by Holdings until the restrictions thereon shall have lapsed
and that the Participant deliver a stock power, endorsed in blank, relating to
the Plan Shares.
(c) Representations and Warranties. The Committee may require each
person purchasing or receiving Plan Shares to (i)
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<PAGE> 64
represent to and agree with Holdings in writing that such person is acquiring
the shares without a view to the distribution thereof and (ii) make any other
representations and warranties that the Committee deems appropriate.
(d) Additional Compensation. Nothing contained in the Plan shall
prevent Holdings or any of its Affiliate thereof from adopting other or
additional compensation arrangements for its employees.
(e) No Right of Employment. Adoption of the Plan or grant of any
Award shall not confer upon any employee any right to continued Employment, nor
shall it interfere in any way with the right of Holdings or any of its
Affiliate thereof to terminate the Employment of any employee at any time.
(f) Withholding Taxes. No later than the date as of which an amount
first becomes includible in the gross income of a Participant for federal
income tax purposes with respect to any Award under the Plan, such Participant
shall pay to Holdings or, if appropriate, any of its Affiliates, or make
arrangements satisfactory to the Committee regarding the payment of, any
federal, state, local or foreign taxes of any kind required by law to be
withheld with respect to such amount. If approved by the Committee,
withholding obligations may be settled with Common Stock, including Common
Stock that is part of the Award that gives rise to the withholding requirement.
The obligations of Holdings under the Plan shall be conditional on such payment
or arrangements, and Holdings and its Affiliates shall, to the extent permitted
by law, have the right to deduct any such taxes from any payment otherwise due
to the Participant. The Committee may establish such procedures as it deems
appropriate, including making irrevocable elections, for the settlement of
withholding obligations with Common Stock.
(g) Beneficiaries. The Committee shall establish such procedures as
it deems appropriate for a Participant to designate a beneficiary to whom any
amounts payable in the event of the Participant's death are to be paid or by
whom any rights of the Participant, after the Participant's death, may be
exercised.
(h) Pooling of Interests. Notwithstanding any other provision of this
Plan, if any right granted pursuant to this Plan would make a Change in Control
transaction ineligible for pooling-of-interests accounting under APB No. 16
that but for the nature of such grant or grants would otherwise be eligible for
such accounting treatment, the Committee shall have the ability to substitute
for the cash payable pursuant to such
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<PAGE> 65
grant or grants Common Stock with a Fair Market Value equal to the cash that
would otherwise be payable hereunder.
(i) Governing Law. The Plan and all Awards made and actions taken
thereunder shall be governed by and construed and enforced in accordance with
the laws of the State of New York without regard to the principles of conflicts
of law thereof.
(j) Compliance with Laws. If any law or any regulation of any
commission or agency having jurisdiction shall require Holdings or a
Participant seeking to exercise Stock Options or Stock Appreciation Rights to
take any action with respect to the Plan Shares to be issued upon the exercise
of Stock Options or Stock Appreciation Rights then the date upon which Holdings
shall issue or cause to be issued the certificate or certificates for the Plan
Shares shall be postponed until full compliance has been made with all such
requirements of law or regulation; provided, that Holdings shall use its
reasonable efforts to take all necessary action to comply with such
requirements of law or regulation. Moreover, in the event that Holdings shall
determine that, in compliance with the Securities Act or other applicable
statutes or regulations, it is necessary to register any of the Plan Shares
with respect to which an exercise of a Stock Option or Stock Appreciation Right
has been made, or to qualify any such Plan Shares for exemption from any of the
requirements of the Securities Act or any other applicable statute or
regulation, no Stock Options or Stock Appreciation Rights may be exercised and
no Plan Shares shall be issued to the exercising Participant until the required
action has been completed; provided, that Holdings shall use its reasonable
efforts to take all necessary action to comply with such requirements of law or
regulation. Notwithstanding anything to the contrary contained herein, neither
the Board nor the members of the Committee owes a fiduciary duty to any
Participant in his or her capacity as such.
SECTION 13. EFFECTIVE DATE OF PLAN
The Plan shall be effective as of the date it is approved by the
holders of a majority of the outstanding shares of Common Stock.
16
<PAGE> 1
EXHIBIT 10.5
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of April 30, 1996, by
and among AMF HOLDINGS INC., a Delaware corporation ("Holdings"), GS CAPITAL
PARTNERS II, L.P., a Delaware limited partnership ("GSCP II"), GS CAPITAL
PARTNERS II OFFSHORE, L.P., a Cayman Islands exempt limited partnership ("GSCP
II Offshore"), GOLDMAN, SACHS & CO. VERWALTUNGS GMBH, a corporation recorded in
the Commercial Register Frankfurt, as nominee for GS Capital Partners II
Germany C.L.P. ("GSCP II Germany"), THE GOLDMAN SACHS GROUP, L.P., a Delaware
limited partnership ("GS Group"), STONE STREET FUND 1995, L.P., a Delaware
limited partnership ("Stone 1995"), STONE STREET FUND 1996, L.P., a Delaware
limited partnership ("Stone 1996"), BRIDGE STREET FUND 1995, L.P., a Delaware
limited partnership ("Bridge 1995"), BRIDGE STREET FUND 1996, L.P., a Delaware
limited partnership ("Bridge 1996" and, together with GSCP II, GSCP II
Offshore, GSCP II Germany, GS Group, Stone 1995, Stone 1996 and Bridge 1995,
"GSCP"), BLACKSTONE CAPITAL PARTNERS II MERCHANT BANKING FUND L.P., a Delaware
limited partnership ("Blackstone Fund 1"), BLACKSTONE OFFSHORE CAPITAL PARTNERS
II L.P., a Delaware limited partnership ("Blackstone Fund 2"), BLACKSTONE
FAMILY INVESTMENT PARTNERSHIP L.P., a Delaware limited partnership ("Blackstone
Fund 3" and together with Blackstone Fund 1 and Blackstone Fund 2,
"Blackstone"), KELSO INVESTMENT ASSOCIATES V, L.P., a Delaware limited
partnership ("KIA V"), KELSO EQUITY PARTNERS V, L.P., a Delaware limited
partnership ("KEP V," and together with KIA V, "Kelso"), BAIN CAPITAL FUND V,
L.P., a Delaware limited partnership ("Bain Fund 1"), BAIN CAPITAL FUND V-B,
L.P., a Delaware limited partnership ("Bain Fund 2"), BCIP ASSOCIATES, a
Delaware general partnership ("Bain Fund 3"), BCIP TRUST ASSOCIATES, L.P., a
Delaware limited partnership ("Bain Fund 4," and together with Bain Fund 1,
Bain Fund 2 and Bain Fund 3, "Bain") (Blackstone, Kelso and Bain are herein
referred to collectively as the "Demand Investors" or individually as a "Demand
Investor"), CITICORP NORTH AMERICA, INC., a Delaware corporation ("Citibank"),
CHARLES M. DIKER ("Diker") (Blackstone, Kelso, Bain, Citibank and Diker are
herein collectively referred to as the "Investors" and each individually an
"Investor"), ROBERT MORIN ("Morin") and DOUGLAS STANARD ("Stanard" and,
together with Morin and such other Persons (as defined herein) who become
parties hereto pursuant to the last sentence of Section 2.4, the "Management
Investors" and, together with GSCP and the Investors, the "Stockholders").
<PAGE> 2
W I T N E S S E T H
WHEREAS, Holdings, GSCP and the Investors have entered into a
stock subscription agreement (the "Subscription Agreement"), pursuant to which
GSCP and each Investor have agreed to purchase from Holdings, and Holdings has
agreed to sell to GSCP and each Investor, shares of Common Stock, par value
$0.01 per share, of Holdings ("Common Stock");
WHEREAS, Diker has been granted options to purchase additional
shares of common stock (the "Diker Option");
WHEREAS, Holdings and certain subsidiaries thereof intend to
enter into an employment agreement (the "Employment Agreements") with each of
Morin and Stanard pursuant to which, among other things, Morin and Stanard will
acquire shares of Common Stock and options to purchase additional shares of
Common Stock;
WHEREAS, an affiliate of GSCP is acquiring warrants (the
"Warrants") to purchase 870,000 shares of Common Stock; and
WHEREAS, prior to the execution of the Subscription
Agreement, GSCP had purchased shares of Common Stock (the "Prior Shares").
NOW THEREFORE, in consideration of the premises and the
representations, warranties and agreements contained herein, and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. Registration Rights.
1.1. Definitions.
(a) "1933 Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations thereunder.
(b) "1934 Act" shall mean the Securities Exchange Act of
1934, as amended, and the rules and regulations thereunder.
(c) "Affiliate" of a Person (as defined in Section
1.9(a)) shall mean a Person directly or indirectly controlled by, controlling
or under common control with such Person.
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<PAGE> 3
(d) "Common Shares" shall mean the Prior Shares, the
shares of Common Stock which the Stockholders have agreed, or have the right,
to purchase from Holdings pursuant to the Subscription Agreement, the
Employment Agreements and the Warrants, any shares of Common Stock which shall
be purchased by Stockholders from Holdings pursuant to Section 1.5 of the
Stockholders Agreement (as defined below) or which the Stockholders shall
otherwise purchase from Holdings, any shares of Common Stock issued or issuable
to any Stockholder upon the exercise of any options, rights or securities
acquired pursuant to the Holdings 1996 Stock Incentive Plan (including pursuant
to the Diker Option), and any shares of Common Stock received by any
Stockholder as a dividend, distribution or interest in respect of the foregoing
shares of Common Stock.
(e) "Form S-1," "Form S-3," "Form S-4" and "Form S-8"
shall mean such respective forms under the 1933 Act as in effect on the date
hereof or any successor registration forms to Form S-1, Form S-3, Form S-4 and
Form S-8, respectively, under the 1933 Act subsequently adopted by the SEC.
(f) "Initiating Investor" shall have the meaning ascribed
thereto in Section 1.2(b) hereof.
(g) "NASD" shall have the meaning ascribed thereto in
Section 1.4(o) hereof.
(h) "Register," "registered," and "registration" refer to
a registration effected by preparing and filing a registration statement or
similar document in compliance with the 1933 Act, and the automatic
effectiveness or the declaration or ordering of effectiveness of such
registration statement or document.
(i) "Registrable Securities" shall mean the Common
Shares; provided, however, that any Common Shares that are sold to the public
pursuant to a registered public offering or pursuant to Rule 144 under the 1933
Act or another exemption from the registration requirements of the 1933 Act
pursuant to which the Common Shares are thereafter freely tradeable without
restriction under the 1933 Act, or that cease to be outstanding, shall cease to
be Registrable Securities; provided further, however, that any Registrable
Securities acquired by any Stockholder or Affiliate thereof from another
Stockholder or Affiliate thereof shall continue to be Registrable Securities.
(j) "SEC" shall mean the Securities and Exchange
Commission and any successor thereto.
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(k) "Stockholders Agreement" means the Stockholders
Agreement dated as of the date hereof among Holdings and the Stockholders.
1.2. Demand Registration.
(a) If Holdings shall receive, at any time after the
earlier of (x) the sixth anniversary of the date upon which this Agreement
becomes effective pursuant to Section 2.8 hereof and (y) the consummation of an
underwritten initial public offering or offerings by Holdings of shares of
Common Stock the gross proceeds to Holdings of which exceed $100 million, a
written request by any Demand Investor or GSCP that Holdings effect the
registration under the 1933 Act of Registrable Securities then outstanding
(which written request shall specify the number of shares of Registrable
Securities to be sold by the Initiating Investor and the means of
distribution), then Holdings shall, within five days of the receipt thereof,
give written notice of such request (a "Demand Notice") to all Stockholders and
shall, subject to the limitations of this Section 1.2, use its reasonable best
efforts to effect such a registration as soon as practicable and in any event
to file with the SEC within 90 days of the receipt of such request a
registration statement under the 1933 Act covering all the Registrable
Securities which the Stockholders shall request in writing to be included in
such registration (which written requests by the remaining Stockholders shall
specify the number of shares of Registrable Securities requested to be included
and, if the Initiating Investor did not propose to sell through an underwritten
offering, the means of distribution, and which written request shall be given
within 10 days of receipt of the Demand Notice), and Holdings shall use its
reasonable best efforts to have such registration statement become effective;
provided, however, that Holdings shall not be required to effect any
registration requested pursuant to this Section 1.2 unless: (i) shares of
Common Stock representing at least 5% of the sum (subject to adjustment
pursuant to Section 1.12) of (x) the number of Prior Shares, (y) the number of
shares of Common Stock issued pursuant to the Subscription Agreement and (z)
the number of shares of Common Stock purchased by Stockholders pursuant to
Section 1.5 of the Stockholders Agreement, shall be included in such
registration; and (ii) (x) in the case of an initial public offering of shares
of Common Stock, the aggregate offering price for the shares of Registrable
Securities to be included in such registration shall be at least $100 million
(based on the midpoint of the range of the fair market value of the offered
securities at the time of the offering as estimated in good faith by the
managing underwriters), or (y) in the case of an offering of shares of Common
Stock other than an initial public offering, the aggregate offering price for
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<PAGE> 5
the shares of Registrable Securities to be included in such registration shall
be at least $50 million (based on the then current market price); provided,
further, that Holdings shall be obligated to effect such registration on Form
S-1 only if (I) Form S-3 is not available for such offering by the Stockholders
or (II) notwithstanding that Form S-3 is available, the managing underwriters
shall determine that it is in the best interests of the selling Stockholders to
effect such registration on Form S-1. The foregoing notwithstanding, a Demand
Investor shall not be permitted to initiate a registration pursuant to this
Section 1.2 if the Registrable Securities sought to be registered by such Demand
Investor are freely saleable under Rule 144 under the 1933 Act (or any successor
provision thereto) and such Demand Investor does not own more than 5% of the
then outstanding shares of Common Stock.
(b) Subject to Section 1.2(a), the Demand Investor or
GSCP initiating the registration request hereunder (the "Initiating Investor")
and the other selling Stockholders responding to a Demand Notice may distribute
the Registrable Securities covered by their request by means of an underwritten
offering or any other means reasonably acceptable to Holdings and, if the
Initiating Investor requests an underwritten offering, Holdings shall state in
the Demand Notice that the distribution must be made by means of an
underwritten offering; provided, however, that any initial public offering of
shares of Registrable Securities registered pursuant to this Section 1.2 shall
be underwritten on a firm commitment basis. The right of any Stockholder to
include its Registrable Securities in such a registration where an underwritten
offering was requested shall be conditioned, if applicable, upon such
Stockholder's participation in such underwriting and the inclusion of such
Stockholder's Registrable Securities in the underwriting to the extent provided
herein. If applicable, all Stockholders proposing to distribute their
securities through such underwriting shall enter into an agreement in customary
form with the underwriter or underwriters selected for such underwriting by
Holdings and reasonably acceptable to Stockholders participating in such
registration holding a majority of the securities requested to be so
registered. Holdings shall be permitted in its discretion to select Goldman,
Sachs & Co. and/or any of its Affiliates as the sole, or as a, managing
underwriter for customary compensation and otherwise on arm's length terms, and
the Stockholders hereby agree that, if so selected, such selection is and shall
be automatically deemed reasonably acceptable to such Stockholders. If
applicable, notwithstanding any other provision of this Section 1.2, if, in the
case of a registration request pursuant to Section 1.2(a) where an underwritten
offering was requested, the underwriter advises Holdings that marketing factors
require a limitation of
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<PAGE> 6
the number of shares to be underwritten, then Holdings shall so advise all
Stockholders of Registrable Securities which would otherwise be included in the
registration statement pursuant hereto, and the number of shares of Registrable
Securities that may be included in the registration statement shall be
allocated pro rata among the Stockholders participating in such registration
based on the number of shares of Registrable Securities held by such
participating Stockholders as reflected on the stock records of Holdings
(provided that any shares thereby allocated to any such participating
Stockholder that exceed such Stockholder's request shall be reallocated among
the other participating Stockholders in a like manner) (a "Cutback") (for
purposes of such calculation, all Stockholders that are Persons that comprise a
single Investor or GSCP shall be treated together as a single Stockholder).
The foregoing notwithstanding, in the event Holdings will not, by virtue of
this paragraph, include in any such registration all of the Registrable
Securities of any Stockholder requested to be included in such registration,
such Stockholder may, upon written notice to Holdings given within five days of
the time such Stockholder first is notified of such matter, reduce the amount
of Registrable Securities it desires to have included in such registration,
whereupon only the Registrable Securities, if any, it desires to have included
will be so included.
(c) Each Demand Investor (i.e., subject to Section 1.11,
each Demand Investor being all the entities comprising each of Blackstone (as a
group), Kelso (as a group) and Bain (as a group)) shall be permitted to
initiate only one registration; provided that if any such Demand Investor is
limited pursuant to a Cutback under Section 1.2(b) to registering or selling
less than 50% of the number of Registrable Securities it initially sought to
register as an Initiating Investor, and GSCP participated in such registration,
then such Demand Investor may initiate an additional registration pursuant to
this Section 1.2. The foregoing notwithstanding, Holdings shall not be
obligated to effect more than a total of six (6) registrations under this
Section 1.2 initiated by Demand Investors. Holdings shall not be obligated to
effect more than a total of five (5) registrations under this Section 1.2
initiated by GSCP. Holdings also shall not be obligated to effect any
registration under this Section 1.2 within 180 days of the effective date under
the 1933 Act of any other registration of shares of Common Stock other than on
Form S-8. A registration shall not be deemed to have been effected, nor shall
it be sufficient to reduce the number of registrations available under this
Section 1.2, unless such registration becomes effective pursuant to the 1933
Act; provided that no registration shall be deemed to have been effected, nor
shall it reduce the number of registrations available under this Section 1.2,
if (i) such
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<PAGE> 7
registration is interfered with by any stop order, injunction or other order or
requirement of the SEC or other governmental authority, or the sale of
Registrable Securities pursuant to such registration is otherwise terminated or
abandoned at the instance of Holdings, in either case, for any reason other
than an act or omission of the Initiating Investor (or another Demand Investor,
in which case it shall reduce the number of registrations available under this
Section 1.2 to such other Demand Investor) thereunder; or (ii) the conditions
to closing specified in the purchase agreement or underwriting agreement
entered into in connection with such registration are not satisfied by Holdings
other than by reason of an act or omission by the Initiating Investor (or
another Demand Investor, in which case it shall reduce the number of
registrations available under this Section 1.2 to such other Demand Investor).
(d) Notwithstanding the foregoing, (i) Holdings shall not
be obligated to effect a registration pursuant to this Section 1.2 during the
period starting with the date which is 60 days prior to the date which Holdings
in good faith estimates (as certified in a writing by an officer of Holdings
delivered to the Initiating Investor) will be the date of filing of, and ending
on the date 180 days (or such lesser period as the managing underwriters may
permit) following the effective date of, a registration statement (other than
on Form S-8) pertaining to an underwritten public offering of securities for
the account of Holdings, and (ii) if Holdings shall furnish to the Initiating
Investor a certificate signed by an officer of Holdings stating that, in the
reasonable good faith judgment of the Board of Directors of Holdings, it would
not be in the best interests of Holdings and its stockholders for such
registration to be effected (because Holdings is engaging in or intends to
engage in an acquisition, divestiture or other material transaction or due to
other extraordinary events relating to Holdings, but, in any case, not
including for purposes of Holdings avoiding its obligations hereunder), then
Holdings shall have the right to defer such registration for a period of not
more than 90 days after receipt of the request of the Initiating Investor;
provided, however, that (A) Holdings shall not be entitled to defer its
obligation to effect a registration pursuant to the foregoing clause (ii) for
an aggregate of more than 180 days within any 365-day period and (B) Holdings
shall make and communicate to the selling Stockholders its determinations under
this paragraph in respect of a registration under this Section 1.2 within 15
days of Holdings' receipt of the Demand Notice in respect of such registration
or, to the extent reasonably practicable, promptly after becoming aware of a
transaction or event referred to in the foregoing clause (ii).
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<PAGE> 8
1.3. Holdings Registration. (a) If Holdings proposes to
register for sale by Holdings any securities of the same class as the Common
Stock under the 1933 Act in connection with the public offering of such
securities solely for cash (other than (A) any registration of public sales or
distributions of securities issued pursuant to a registration statement on Form
S-8 or (B) pursuant to Section 1.2), Holdings shall, at each such time,
promptly give written notice of such registration to each Stockholder that
holds Registrable Securities. Upon the written request of any Stockholder
given within 15 days after mailing of such notice by Holdings, Holdings shall,
subject to the provisions of Section 1.8, use its reasonable best efforts to
include or, in the case of an underwritten offering, cause the underwriter or
underwriters to include, in the offering, on the same terms and conditions as
the securities of Holdings included in such offering, all of the Registrable
Securities that each such Stockholder has requested to be registered to become
effective under the 1933 Act; provided, however, that if, at any time after
giving written notice of its intention to register any securities and prior to
the effective date of the registration statement filed in connection with such
registration, Holdings shall determine for any reason not to register or to
delay registration of such securities, Holdings may, at its election, give
written notice of such determination to each Stockholder who has requested
registration pursuant to this Section 1.3 and, thereupon, (A) in the case of a
determination not to register, Holdings shall be relieved of its obligation to
register any Registrable Securities in connection with such registration and of
all liability in connection therewith (other than liability under Section 1.9
and expenses contemplated by Section 1.6) and (B) in the case of a
determination to delay such registration, Holdings shall be permitted to delay
registration of any Registrable Securities requested to be included in such
registration statement for the same period as the delay in registering such
other securities. In the case of any registration of Registrable Securities in
an underwritten offering pursuant to this Section 1.3, all Stockholders
proposing to distribute their securities pursuant to this Section 1.3 shall, at
the request of Holdings, enter into an agreement in customary form with the
underwriter or underwriters selected by Holdings.
(b) If applicable, notwithstanding any other provision of
this Section 1.3, if, in the case of a registration pursuant to Section 1.3(a)
relating to an underwritten offering, the underwriter advises Holdings that
marketing factors require a limitation of the number of shares to be
underwritten, then Holdings shall so advise all Stockholders of Registrable
Securities which would otherwise be included pursuant to
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<PAGE> 9
this Section 1.3, and the number of shares of Registrable Securities that may
be included in the underwriting shall be allocated pro rata among all
Stockholders participating in such registration based on the number of shares
of Registrable Securities held by the participating Stockholders as reflected
on the stock records of Holdings (provided that any shares thereby allocated to
any such participating Stockholder that exceed such Stockholder's request shall
be reallocated among the other participating Stockholders in a like manner)
(for purposes of such calculation, all Stockholders that are Persons that
comprise a single Investor or GSCP shall be treated together as a single
Stockholder). All securities initially proposed to be sold by Holdings (prior
to the exercise of any rights under this Section 1.3) shall be included in any
registration pursuant to this Section 1.3 before any Registrable Securities of
Stockholders are included. The foregoing notwithstanding, in the event
Holdings will not, by virtue of this paragraph, include in any such
registration all of the Registrable Securities of any Stockholder requested to
be included in such registration, such Stockholder may, upon written notice to
Holdings given within 5 days of the time such Stockholder first is notified of
such matter, reduce the amount of Registrable Securities it desires to have
included in such registration, whereupon only the Registrable Securities, if
any, it desires to have included will be so included.
1.4. Obligations of Holdings. Whenever required under
Section 1.2 or 1.3 to effect the registration of any Registrable Securities on
behalf of any Stockholder, Holdings shall, as expeditiously as reasonably
possible: prepare and file with the SEC a registration statement (on a form
selected by Holdings for which Holdings is eligible and, with respect to a
registration under Section 1.2, which is reasonably acceptable to counsel for
the selling Stockholders and the managing underwriter or underwriters and is
appropriate for the intended method of distribution) with respect to such
Registrable Securities and use its reasonable best efforts to cause such
registration statement to become effective; and, upon the request of the
Stockholders of a majority of the Registrable Securities registered thereunder,
keep such registration statement effective for up to 90 days in the case of an
underwritten offering, or 120 days in any other case, unless the distribution
of the securities registered thereunder has been earlier completed; and shall:
(a) prepare and file with the SEC as expeditiously as is
reasonably practicable such amendments and supplements to such
registration statement and the prospectus used in connection with such
registration statement and
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<PAGE> 10
any documents incorporated therein by reference or by filing any other
requested document, and use its reasonable best efforts to cause each
such amendment to become effective, as may be necessary to comply with
the provisions of the 1933 Act with respect to the disposition of all
securities covered by such registration statement;
(b) furnish to each Stockholder selling Registrable
Securities and each underwriter, if any, of such securities such
reasonable number of copies of the registration statement and of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the 1933 Act, including, in each case, all
supplements, amendments and exhibits thereto, and such other documents
as they may reasonably request in order to facilitate the disposition
of Registrable Securities owned by them, and Holdings hereby consents
to the use of any such prospectus by the selling Stockholders and the
underwriter, if any, in connection with any offer and sale covered
thereby;
(c) use its reasonable best efforts to register or
qualify the securities covered by such registration statement under
the securities or blue sky laws of such jurisdictions as shall be
reasonably requested by the selling Stockholders (in light of the
intended plan of distribution of such selling Stockholders) or any
managing underwriters, and do any and all other acts and things which
may be reasonably necessary or desirable to consummate the disposition
of the securities in such jurisdictions; provided that Holdings shall
not be required (i) to register or qualify the Registrable Securities
in any jurisdiction if such registration or qualification in such
jurisdiction would subject Holdings to unreasonable burden or expense
or would unreasonably delay the commencement of an underwritten
offering or (ii) in connection therewith or as a condition thereto, to
qualify to do business, subject itself to taxation in respect of doing
business or file a general consent to service of process or register
as a broker or dealer in any such states or jurisdictions where it has
not otherwise done so;
(d) in the event of any underwritten public offering,
enter into and perform its obligations under an underwriting
agreement, in usual and customary form, with the managing underwriter
of such offering. Each Stockholder participating in such underwriting
shall also enter into and perform its obligations under such an
agreement, including furnishing any opinion of counsel (in form and
substance as is customarily given by counsel to selling stockholders
and addressed to the underwriters, Holdings
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<PAGE> 11
and the Stockholders requesting registration of Registrable
Securities) and entering into a reasonable and customary lock- up
agreement pursuant to Section 1.7 reasonably requested by the managing
underwriter;
(e) promptly notify each Stockholder that holds
Registrable Securities covered by such registration statement, (i)
when such registration statement or any post-effective amendment or
supplement thereto becomes effective, (ii) of the issuance by the SEC
or any state securities authority of any stop order, injunction or
other order or requirement suspending the effectiveness of such
registration statement (and take all reasonable action to prevent the
entry of such stop order or to remove it if entered, or the initiation
of any proceedings for that purpose), or (iii) of the happening of any
event as a result of which the registration statement, as then in
effect, the prospectus related thereto or any document included
therein by reference includes an untrue statement of a material fact
or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light
of the circumstances then existing and promptly file such amendments
and supplements which may be required on account of such event and use
its best efforts to cause each such amendment and supplement to become
effective;
(f) promptly furnish counsel for each underwriter, if
any, and for the selling Stockholders of Registrable Securities copies
of any written request by the SEC or any state securities authority
for amendments or supplements to a registration statement and
prospectus or for additional information;
(g) use reasonable best efforts to obtain the withdrawal
of any order suspending the effectiveness of a registration statement
at the earliest possible time;
(h) cooperate with the selling Stockholders of
Registrable Securities and the underwriter, if any, to facilitate the
timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any restrictive
legends; and enable such Registrable Securities to be in such
denominations (consistent with the provisions of the governing
documents thereof) and registered in such names as the selling
Stockholders or the underwriter, if any, may reasonably request at
least three business days prior to any sale of Registrable Securities;
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<PAGE> 12
(i) furnish, at the request of any Stockholder requesting
registration of Registrable Securities pursuant to this Agreement, on
the date that such Registrable Securities are delivered to the
underwriters for sale in connection with a registration pursuant to
this Agreement, if such securities are being sold through
underwriters, or on the date that the registration statement with
respect to the securities becomes effective, if such securities are
not being sold through underwriters, (i) an opinion, dated such date,
of the counsel representing Holdings for the purposes of such
registration, in form and substance as is customarily given by company
counsel to the underwriters in any underwritten public offering,
addressed to the underwriters, if any, and to the Stockholders
requesting registration of Registrable Securities, and (ii) a letter
dated such date, from the independent certified public accountants of
Holdings, in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the
Stockholders requesting registration of Registrable Securities;
(j) make available for inspection by representatives of
the selling Stockholders who hold Registrable Securities and any
underwriters participating in any disposition pursuant hereto and any
counsel or accountant retained by such Stockholders or underwriters,
all relevant financial and other records, pertinent corporate
documents and properties of Holdings and cause the respective
officers, directors and employees of Holdings to supply all
information reasonably requested by any such representative,
underwriter, counsel or accountant in connection with a registration
pursuant hereto; provided, however, that, with respect to records,
documents or information which Holdings determines, in good faith, to
be confidential and as to which Holdings notifies such
representatives, underwriters, counsel or accountants in writing of
such confidentiality, such representatives, underwriters, counsel or
accountants shall not disclose such records, documents or information
unless (i) the release of such records, documents or information is
ordered pursuant to a subpoena or other order from a court of
competent jurisdiction, or (ii) such records, documents or information
have previously been generally made available to the public, or (iii)
the disclosure of such records, documents or information is necessary,
in the written opinion of outside legal counsel, to avoid or correct a
material misstatement or omission in the registration statement and
then only after reasonable request has been made to Holdings to make
such disclosure and Holdings has denied such request. Each
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selling Stockholder of such Registrable Securities agrees that
information obtained by it as a result of such inspections shall be
deemed confidential and shall not be used by it as the basis for any
market transactions in the securities of Holdings or its Affiliates
(or for such Stockholder's business purposes or for any reason other
than in connection with a registration hereunder) unless and until
such information is made generally available (other than by such
Stockholder or where such Stockholder knows that such information
became publicly available as a result of a breach of any
confidentiality arrangement) to the public. Each selling Stockholder
of such Registrable Securities further agrees that it will, upon
learning that disclosure of such records is sought, give notice to
Holdings and allow Holdings, at its expense, to undertake appropriate
action to prevent disclosure of the records deemed confidential;
(k) within a reasonable time prior to the filing of any
registration statement, any related prospectus, any amendment to such
a registration statement or amendment or supplement to such a
prospectus, provide copies of such document to the selling
Stockholders who hold Registrable Securities and their counsel and to
the underwriter or underwriters, if any; make such reasonable changes
in any such document prior to or after the filing thereof as the
counsel to the Stockholders or the underwriter may request; and make
available for discussion of such document such of the representatives
of Holdings as shall be reasonably requested by the Stockholders who
hold Registrable Securities being registered or by any underwriter;
(l) within a reasonable time prior to the filing of any
document which is to be incorporated by reference into a registration
statement filed pursuant hereto or a related prospectus, provide
copies of such document to counsel for the selling Stockholders of
Registrable Securities; make such reasonable changes in such document
prior to or after the filing thereof as counsel for such selling
Stockholders shall request; and make available for discussion of such
document such of the representatives of Holdings as shall be
reasonably requested by such counsel;
(m) comply with all applicable rules and regulations of
the SEC, and make generally available to its security holders, as soon
as reasonably practicable after the effective date of the registration
statement (and in any event within 16 months thereafter), an earnings
statement (which need not be audited) covering the period of at least
twelve consecutive months beginning with the first
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day of Holdings' first calendar quarter after the effective date of
the registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the 1933 Act and Rule 158 thereunder;
(n) provide a CUSIP number for all Registrable
Securities, not later than the effective date of the related
registration statement;
(o) use its reasonable efforts to (i) cause all such
Registrable Securities covered by such registration statement to be
listed on the principal securities exchange on which similar
securities issued by Holdings are then listed (if any), if the listing
of such Registrable Securities is then permitted under the rules of
such exchange, or (ii) if no similar securities are then so listed,
cause all such Registrable Securities to be listed on a national
securities exchange or secure designation of all such Registrable
Securities as a National Association of Securities Dealers, Inc.
Automated Quotation System (" NASDAQ") "national market system
security" within the meaning of Rule 11Aa2-1 of the SEC, as determined
by Holdings, or, failing that, secure NASDAQ authorization for such
shares and, without limiting the generality of the foregoing, take all
actions that may be required by Holdings as the issuer of such
Registrable Securities in order to facilitate the managing
underwriter's arranging for the registration of at least two market
makers as such with respect to such shares with the National
Association of Securities Dealers, Inc. (the " NASD"); and
(p) cooperate and assist in any filings required to be
made with the NASD and in the performance of any due diligence
investigation by any underwriter, if any (including any "qualified
independent underwriter" that is required to be retained in accordance
with the rules and regulations of the NASD).
Each Stockholder agrees that upon receipt of any notice from Holdings of the
happening of any event of the kind described in clause (iii) of paragraph (e)
of this Section 1.4, such Stockholder will discontinue such Stockholder's
disposition of Registrable Securities pursuant to the registration statement
covering such Registrable Securities until such Stockholder's receipt of the
copies of the supplemented or amended prospectus contemplated by paragraph (e)
of this Section 1.4 and, if so directed by Holdings, will deliver to Holdings
(at Holdings' expense) all copies, other than permanent file copies, then in
such Stockholder's possession of the prospectus covering such
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<PAGE> 15
Registrable Securities that was in effect at the time of receipt of such
notice. In the event Holdings shall give any such notice, the applicable 90-
or 120-day period mentioned in the first paragraph of this Section 1.4 shall be
extended by the number of days during such period from and including the date
of the giving of such notice to and including the date when each Stockholder
then selling Registrable Securities covered by such registration statement
shall have received the copies of the supplemented or amended prospectus
contemplated by paragraph (e) of this Section 1.4.
1.5. Furnish Information. It shall be a condition precedent
to the obligations of Holdings to take any action pursuant to this Agreement
with respect to a selling Stockholder that such selling Stockholder shall
promptly furnish to Holdings such information as shall reasonably be requested
by Holdings in order to effect the registration of its Registrable Securities.
1.6. Expenses of Registration. Holdings shall bear all
expenses incurred in connection with each of the registrations, filings or
qualifications pursuant to Sections 1.2 and 1.3 for each Stockholder,
including, without limitation, all registration, filing and listing fees,
including such fees of the SEC, the NASD and other agencies; fees and expenses
of compliance with federal and state securities laws (including, without
limitation, reasonable fees and disbursements of counsel for the underwriters
in connection with state securities qualifications of the Registrable
Securities under the laws of such jurisdictions as the managing underwriters or
the Initiating Investor may reasonably designate); printing (including, without
limitation, expenses of printing or engraving certificates for the Registrable
Securities in a form eligible for deposit with The Depository Trust Company and
otherwise meeting the requirements of any securities exchange on which they are
listed and of printing registration statements and prospectuses), messenger,
telephone, shipping and delivery expenses; fees and disbursements of counsel
for Holdings (and not counsel for any selling Stockholder, except for
reasonable fees and disbursements of a single counsel for the selling
Stockholders as a group designated by selling Stockholders holding a majority
of the Registrable Securities to be registered); fees and disbursements of all
independent public accountants of Holdings (including, without limitation, the
expenses of any annual or special audit and "cold comfort" letters required by
the managing underwriters); fees and expenses of other Persons reasonably
necessary in connection with the registration, including any experts, retained
by Holdings; internal expenses of Holdings (including, without limitation, all
salaries and expenses of its employees performing legal or accounting duties);
and
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<PAGE> 16
fees and expenses incurred in connection with the listing of the Registrable
Securities on each securities exchange on which the securities of the same
class are then listed; provided, however, that underwriting discounts and
commissions relating to the Registrable Securities shall be borne and paid
ratably by the sellers of such Registrable Securities (based upon the amount of
Registrable Securities to be sold by each such seller).
1.7. Lock-up Agreement. Each Stockholder agrees that upon
prior notice by Holdings to such Stockholder and effective upon the reasonable
request of the underwriters managing a public offering for sale by Holdings of
its securities (or for sale by the Stockholders pursuant to Section 1.2), such
Stockholder shall not, during the 14-day period prior to, and during the
180-day period (or such shorter period as the managing underwriters have agreed
with the sellers in the purchase, underwriting or similar agreement entered
into in connection with such registration, or as the managing underwriters may
otherwise permit) beginning on, the later of (i) the effective date of such
registration or (ii) the commencement of an underwritten offering, offer, sell,
contract to sell or otherwise dispose of any securities of Holdings (other than
the exercise of any options or warrants or the conversion or exchange of any
convertible or exchangeable securities) that are substantially similar to the
Registrable Securities or that are convertible or exchangeable into securities
that are substantially similar to Registrable Securities (other than those
included in the registration), without the prior written consent of such
underwriters.
1.8. Underwriting Requirements. In connection with any
offering involving any underwriting of securities in an offering (a) described
in Section 1.2, Holdings shall not be required to include any Stockholder's
Registrable Securities in such underwriting unless such Stockholder accepts the
terms of the underwriting as agreed upon between the selling Stockholders
holding a majority of the Registrable Securities to be registered and the
underwriters, which terms shall be subject to the approval of Holdings, which
approval shall not be unreasonably withheld, or (b) described in Section 1.3,
Holdings shall not be required to include any Stockholder's Registrable
Securities in such underwriting unless such Stockholder accepts the terms of
the underwriting as agreed upon between Holdings and the underwriters; in
either case, only in such quantities and on such terms as set forth in Sections
1.2 and 1.3.
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<PAGE> 17
1.9. Indemnification.
(a) In the event of any registration of any
Registrable Securities pursuant to this Article 1, Holdings will, and hereby
does, indemnify and hold harmless, to the fullest extent permitted by law, the
seller of any Registrable Securities covered by such registration statement,
its directors, officers, fiduciaries, employees and stockholders or general and
limited partners (and the directors, officers, fiduciaries, employees and
stockholders or general and limited partners thereof), each other individual,
partnership, joint venture, corporation, trust, unincorporated organization or
government or any department or agency thereof (each, a "Person") who
participates as an underwriter or a qualified independent underwriter, if any,
in the offering or sale of such securities, each director, officer, fiduciary,
employee and stockholder or general and limited partner of such underwriter or
qualified independent underwriter, and each other Person (including any such
Person's directors, officers, fiduciaries, employees and stockholders or
general and limited partners), if any, who controls such seller or any such
underwriter or qualified independent underwriter, within the meaning of the
1933 Act, against any and all losses, claims, damages or liabilities, joint or
several, actions or proceedings (whether commenced or threatened) in respect
thereof ("Claims") and expenses (including reasonable fees and expenses of
counsel and any amounts paid in any settlement effected with Holdings' consent,
which consent shall not be unreasonably withheld or delayed) to which each such
indemnified party may become subject under the 1933 Act, the 1934 Act or
otherwise, insofar as such Claims or expenses arise out of or are based upon
any of the following actual or alleged statements, omissions or violations
(each, a "Violation"): (i) any untrue statement or alleged untrue statement of
a material fact contained in any registration statement under which such
securities were registered pursuant to this Agreement under the 1933 Act or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, (ii)
any untrue statement or alleged untrue statement of a material fact contained
in any preliminary, final or summary prospectus or any amendment or supplement
thereto, together with the documents incorporated by reference therein, or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading, or (iii) any
violation by Holdings of any federal, state or common law rule or regulation
applicable to Holdings and relating to action required of or inaction by
Holdings in connection with any
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<PAGE> 18
such registration, and Holdings will reimburse any such indemnified party for
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such Claim as such expenses are
incurred; provided, that Holdings shall not be liable to any such indemnified
party in any such case to the extent such Claim or expense arises out of or is
based upon any Violation which occurs in reliance upon and in conformity with
written information furnished to Holdings or its representatives by or on
behalf of such indemnified party expressly stating that such information is for
use therein. Such indemnity and reimbursement of expenses shall remain in full
force and effect regardless of any investigation made by or on behalf of such
indemnified party and shall survive the transfer of such securities by such
seller.
(b) Each holder of Registrable Securities that are
included in the securities as to which any registration under Section 1.2 or
1.3 is being effected (and, if Holdings requires as a condition to including
any Registrable Securities in any registration statement filed in accordance
with Section 1.2 or 1.3, any underwriter and qualified independent underwriter,
if any) shall, severally and not jointly, indemnify and hold harmless (in the
same manner and to the same extent as set forth in paragraph (a) of this
Section 1.9), to the extent permitted by law, Holdings, its directors,
officers, fiduciaries, employees and stockholders (and the directors, officers,
fiduciaries, employees and stockholders or general and limited partners
thereof) and each Person (including any such Person's directors, officers,
fiduciaries, employees and stockholders or general and limited partners), if
any, controlling Holdings within the meaning of the 1933 Act and all other
prospective sellers and their directors, officers, fiduciaries, employees and
stockholders or general and limited partners and respective controlling Persons
(including any such Person's directors, officers, fiduciaries, employees and
stockholders or general and limited partners) against any and all Claims and
expenses (including reasonable fees and expenses of counsel and any amounts
paid in any settlement effected with the consent of the indemnifying party,
which consent shall not be unreasonably withheld or delayed) to which each such
indemnified party may become subject under the 1933 Act, the 1934 Act or
otherwise, insofar as such Claims or expenses arise out of or are based upon
any Violation which occurs in reliance upon and in conformity with written
information furnished to Holdings or its representatives by or on behalf of
such holder or underwriter or qualified independent underwriter, if any,
expressly stating that such information is for use in connection with any
registration statement, preliminary, final or summary prospectus or amendment
or supplement or document incorporated by reference
-18-
<PAGE> 19
into any of the foregoing; provided, however, that the aggregate amount which
any such holder, underwriter or qualified independent underwriter shall be
required to pay pursuant to this Section 1.9(b) and Sections 1.9(c) and (e)
shall be limited to (x) in the case of any such holder, the amount of the gross
proceeds received by such holder upon the sale of the Registrable Securities
pursuant to the registration statement giving rise to such claim and (y) in the
case of any such underwriter or qualified independent underwriter, the amount
of the total sales price of the Registrable Securities sold through or by it
pursuant to the registration statement giving rise to such claim. Holdings and
the holders of the Registrable Securities hereby acknowledge and agree that,
unless otherwise expressly agreed to in writing by such holders to the
contrary, for all purposes of this Agreement, the only information furnished or
to be furnished to Holdings for use in any such registration statement,
preliminary, final or summary prospectus or amendment or supplement thereto are
statements specifically relating to (a) transactions between such holder and
its Affiliates, on the one hand, and Holdings, on the other hand, (b) the
beneficial ownership of shares of Common Stock by such holder and its
Affiliates and (c) the name and address of such holder. If any additional
information about such holder or the plan of distribution (other than for an
underwritten offering) is required by law to be disclosed in any such document,
then such holder shall not unreasonably withhold its agreement referred to in
the immediately preceding sentence. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of such
indemnified party and shall survive the transfer of such securities by such
holder.
(c) Indemnification similar to that specified in the
preceding paragraphs (a) and (b) of this Section 1.9 (with appropriate
modifications) shall be given by Holdings and each seller of Registrable
Securities (and, if Holdings requires as a condition to including any
Registrable Securities in any registration statement filed in accordance with
Section 1.2 or 1.3, any underwriter and qualified independent underwriter, if
any) with respect to any required registration or other qualification of
securities under any state securities and "blue sky" laws.
(d) Any person entitled to indemnification under
this Agreement shall notify promptly the indemnifying party in writing of the
commencement of any action or proceeding with respect to which a claim for
indemnification may be made pursuant to this Section 1.9, but the failure of
any indemnified party to provide such notice shall not relieve the indemnifying
party of its obligations under the preceding paragraphs of this
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<PAGE> 20
Section 1.9, except to the extent the indemnifying party is materially
prejudiced thereby and shall not relieve the indemnifying party from any
liability which it may have to any indemnified party otherwise than under this
Section 1.9. In case any action or proceeding is brought against an
indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, unless in the reasonable opinion of outside counsel to the
indemnified party a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim, to assume the defense
thereof jointly with any other indemnifying party similarly notified, to the
extent that it chooses, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party that it so chooses, the indemnifying party shall not be
liable to such indemnified party for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof other
than reasonable costs of investigation; provided, however, that (i) if the
indemnifying party fails to take reasonable steps necessary to defend
diligently the action or proceeding within 20 days after receiving notice from
such indemnified party that the indemnified party believes it has failed to do
so; or (ii) if such indemnified party who is a defendant in any action or
proceeding which is also brought against the indemnifying party reasonably
shall have concluded that there may be one or more legal defenses available to
such indemnified party which are not available to the indemnifying party; or
(iii) if representation of both parties by the same counsel is otherwise
inappropriate under applicable standards of professional conduct, then, in any
such case, the indemnified party shall have the right to assume or continue its
own defense as set forth above (but with no more than one firm of counsel for
all indemnified parties in each jurisdiction, except to the extent any
indemnified party or parties reasonably shall have concluded that there may be
legal defenses available to such party or parties which are not available to
the other indemnified parties or to the extent representation of all
indemnified parties by the same counsel is otherwise inappropriate under
applicable standards of professional conduct) and the indemnifying party shall
be liable for any expenses therefor. No indemnifying party shall, without the
written consent of the indemnified party, which consent shall not be
unreasonably withheld, effect the settlement or compromise of, or consent to
the entry of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified party is an actual or potential party
to such action or claim) unless such settlement, compromise or judgment (A)
includes an unconditional release of the indemnified party from all liability
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<PAGE> 21
arising out of such action or claim and (B) does not include a statement as to
or an admission of fault, culpability or a failure to act, by or on behalf of
any indemnified party.
(e) If for any reason the foregoing indemnity is
unavailable or is insufficient to hold harmless an indemnified party under
Section 1.9(a), (b) or (c), then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of any Claim
in such proportion as is appropriate to reflect the relative benefits received
by the indemnifying party on the one hand and the indemnified party on the
other from the relevant offering of securities. If, however, the allocation
provided in the immediately preceding sentence is not permitted by applicable
law, or if the indemnified party failed to give the notice required by
subsection (d) above and the indemnifying party is materially prejudiced
thereby, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
indemnifying party, on the one hand, and the indemnified party, on the other
hand, as well as any other relevant equitable considerations. The relative
fault shall be determined by reference to, among other things, whether the
Violation relates to information supplied by the indemnifying party or the
indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such Violation. The parties
hereto agree that it would not be just and equitable if contributions pursuant
to this Section 1.9(e) were to be determined by pro rata allocation or by any
other method of allocation which does not take account of the equitable
considerations referred to in the preceding sentences of this Section 1.9(e).
The amount paid or payable in respect of any Claim shall be deemed to include
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such Claim. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. Notwithstanding anything in this Section
1.9(e) to the contrary, no indemnifying party (other than Holdings) shall be
required pursuant to this Section 1.9(e) to contribute any amount in excess of
(x) in the case of an indemnifying party that is a holder of Registrable
Securities, the gross proceeds received by such indemnifying party from the
sale of Registrable Securities in the offering to which the losses, claims,
damages or liabilities of the indemnified parties relate, or (y) in the case of
an indemnifying party that is an underwriter or a qualified independent
underwriter, the amount of the total sales price of the Registrable Securities
sold through or by it
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<PAGE> 22
in the offering to which the losses, claims, damages or liabilities of the
indemnified parties relate, less, in any such case referred to in (x) and (y),
the amount of all indemnification and contribution payments made pursuant to
Sections 1.9(b) and (c) and this Section 1.9(e), as the case may be, in
connection with such offering.
(f) The indemnity agreements contained herein shall
be in addition to any other rights to indemnification or contribution which any
indemnified party may have pursuant to law or contract and shall remain
operative and in full force and effect regardless of any investigation made or
omitted by or on behalf of any indemnified party and shall survive the transfer
of the Registrable Securities by any such party.
(g) The indemnification and contribution required by
this Section 1.9 shall be made by periodic payments of the amount thereof
during the course of the investigation or defense, as and when bills are
received or expense, loss, damage or liability is incurred.
(h) In connection with underwritten offerings,
Holdings will use reasonable best efforts to negotiate terms of indemnification
that are reasonably favorable to the various sellers pursuant thereto, as
appropriate under the circumstances.
1.10. Restrictions on Public Sale by Holdings. Holdings
agrees not to effect any public sale or distribution (other than public sales
or distributions solely by and for the account of Holdings of securities issued
(x) pursuant to any employee or director benefit or similar plan or any
dividend reinvestment plan or (y) in any acquisition by Holdings) of any shares
of Common Stock, or any securities convertible into or exchangeable or
exercisable for shares of Common Stock, during the 14-day period prior to, and
during the 180-day period beginning on, (i) the effective date of the
registration statement in connection with a registration requested pursuant to
Section 1.2 hereof or (ii) the commencement of an underwritten offering in
connection with a registration requested pursuant to Section 1.2 hereof, in
each case, if requested by the underwriters managing such underwritten
offering, or for such shorter period as the sole or lead managing underwriter
shall request, in any such case, unless consented to by such underwriters.
1.11. Transfer of Registration Rights. The registration
rights of Stockholders under this Agreement may not be transferred except (i)
by law pursuant to a merger or consolidation of such Stockholder and (ii) to
any transferee of such
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<PAGE> 23
Stockholder to which such Stockholder has transferred Registrable Securities in
accordance with Section 2.3 or 2.4 of the Stockholders Agreement (other than
pursuant to a transaction under Rule 144). In addition, and in limitation of
the foregoing, each of GSCP and each Demand Investor may not transfer its
rights to initiate demand registrations under Section 1.2, except that each of
GSCP and each Demand Investor may designate to Holdings in writing one
transferee pursuant to clause (i) of the preceding sentence or, if an Affiliate
of such Stockholder, pursuant to clause (ii) of such sentence, in either case,
who has validly acquired Registrable Securities of such Stockholder, to become
entitled to exercise, as an Initiating Investor, the remaining demand
registration rights under Section 1.2, if any, of GSCP or such Demand Investor,
as the case may be. No transferee of any Registrable Securities shall have any
rights under this Agreement unless such rights are transferred in accordance
with this Section 1.11, such Registrable Securities are held subject to all of
the terms of this Agreement, and such transferee agrees in writing for the
benefit of Holdings and the other parties hereto to be bound by and to perform
all of the terms and provisions of this Agreement applicable to the transferor;
provided, however, that, unless Holdings otherwise consents, such transferor
shall act as such transferee's agent for all purposes (including notices and
pro rata cutbacks) under this Agreement whether or not such transferor
continues to hold Registrable Securities; provided, further, that if an
Investor or GSCP no longer holds any Registrable Securities it may appoint a
replacement reasonably acceptable to Holdings to act as agent for such
purposes, so long as such replacement agrees in writing for the benefit of
Holdings and the other parties hereto to perform the obligations of such
transferor under this Agreement. Notwithstanding the foregoing, nothing in
this Section 1.11 is intended to enlarge the class of persons entitled to
request demand registrations under Section 1.2 and any transferee of a
Stockholder shall be limited to exercising such rights hereunder in conjunction
with its transferor (i.e., GSCP or the relevant Demand Investor) and shall have
no rights in any individual registration other than the rights such transferor
would have had if such transferor were exercising those rights with respect to
exercises by all of its transferees as a group in such individual registration.
1.12. Recapitalizations, Exchanges, etc., Affecting
Registrable Securities. The provisions of this Agreement shall, to the extent
reasonably practicable, apply, to the full extent set forth herein with respect
to the Registrable Securities, to any and all securities or capital stock (of
Holdings or any successor to Holdings and/or any other issuer thereof) which
may be issued in respect of, in exchange for, or in substitution of such
Registrable Securities, by reason of, and
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<PAGE> 24
shall be appropriately adjusted to reflect, any stock dividend, stock split,
reverse stock split, combination, recapitalization, reclassification, merger,
consolidation or otherwise. In the event that, upon the occurrence of a
transaction contemplated by this Section 1.12, the Stockholders hold securities
of more than one entity, the registration rights contemplated hereby will apply
to each such entity independently of the others and the minimum aggregate
offering prices set forth in clause (ii) of the first proviso to the first
sentence of Section 1.2(a) will be allocated among such entities pro rata in
accordance with the relative equity valuations of such entities immediately
following such transaction (without regard to any additional investments in
connection with such transaction that are not made pro rata by GSCP and the
Demand Investors). Any such allocation shall be made in good faith by the
board of directors of Holdings or its successor and such allocation shall be
binding on the Stockholders. The adjustments contemplated by this paragraph
shall be made cumulative with respect to all such transactions contemplated by
this Section 1.12 that occur from time to time. Any issuer of any such
securities other than Holdings shall be required to assume in writing, to the
extent relevant, Holdings' obligations with respect to the registration rights
granted hereunder or enter into a registration rights agreement substantially
similar to this Agreement and giving effect to the allocations and adjustments
contemplated by this Section 1.12, in connection with any such transaction
pursuant to which the Stockholders shall receive securities of such issuer, as
contemplated by this Section 1.12.
2. Miscellaneous.
2.1. Notices. All notices, requests, demands and other
communications which are required to be or may be given under this Agreement
shall be in writing and shall be given either personally or by mailing the same
in a sealed envelope, first- class mail, postage prepaid and either certified
or registered, return receipt requested, or by telecopy, addressed to Holdings
at its principal offices and to the other parties at their addresses reflected
on the signature pages hereto. Each party hereto, by written notice given to
each of the other parties hereto in accordance with this Section 2.1, may
change the address and telecopier number to which notices, requests, demands
and other communications hereunder are to be sent to such party. All notices,
requests, demands and other communications hereunder that are mailed or
telecopied shall be deemed to have been given on the date of mailing or, in the
case of telecopying, upon confirmation of receipt.
-24-
<PAGE> 25
2.2. Complete Agreement; Counterparts. This Agreement (and
the agreements referred to herein) constitutes the entire agreement and
supersedes all other agreements and understandings, both written and oral,
among the parties or any of them, with respect to the subject matter hereof.
This Agreement may be executed by any one or more of the parties hereto in any
number of counterparts, each of which shall be deemed to be an original, but
all such counterparts shall together constitute one and the same instrument.
2.3. Descriptive Headings, Etc. The headings in this
Agreement are for convenience of reference only and shall not limit or
otherwise affect the meaning of terms contained herein. Unless the context of
this Agreement otherwise requires, references to "hereof," "herein," "hereby,"
"hereunder" and similar terms shall refer to this entire Agreement.
2.4. Governing Law; Amendment; Waiver. This Agreement shall
be governed and construed and enforced in accordance with the laws of the State
of New York, without regard to the principles of conflicts of law thereof. No
amendment, waiver, change, modification or discharge of any provision of this
Agreement shall in any event be effective unless the same shall be in writing
and signed by the party against whom enforcement of any such amendment, waiver,
change, modification or discharge is sought. Employees, directors, consultants
and certain other Persons having significant business relationships with
Holdings and its Affiliates may be issued shares of Common Stock (or other
equity securities of Holdings) or securities convertible into or exchangeable
for Common Stock (or other equity securities of Holdings) and, if so issued,
Holdings, without the consent of any other party hereto, may amend this
Agreement to allow any such Person Holdings so chooses to become an additional
Investor or Management Investor hereunder and to permit such shares of Common
Stock or other appropriate equity interest to become Registrable Securities
hereunder, subject to such Person becoming a signatory to this Agreement.
2.5. Severability. If any term or provision of this
Agreement shall to any extent be invalid or unenforceable, the remainder of
this Agreement shall not be affected thereby, and each term and provision of
this Agreement shall be valid and enforceable to the fullest extent permitted
by law. Upon the determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties shall negotiate in good
faith to modify this Agreement so as to effect their original intent as closely
as possible in an acceptable manner to the end that transactions contemplated
hereby are fulfilled to the extent possible.
-25-
<PAGE> 26
2.6. Specific Performance. The parties hereto acknowledge
that there would be no adequate remedy at law if any party fails to perform any
of its obligations hereunder, and accordingly agree that each party, in
addition to any other remedy to which it may be entitled at law or in equity,
shall be entitled to compel specific performance of the obligations of any
other party under this Agreement in accordance with the terms and conditions of
this Agreement. Any remedy under this Section 2.6 is subject to certain
equitable defenses and to the discretion of the court before which any
proceedings therefor may be brought.
2.7. Further Assurances. The parties hereto shall from time
to time execute and deliver all such further documents and do all acts and
things as the other party may reasonably require to effectively carry out or
better evidence or perfect the full intent and meaning of this Agreement.
2.8. Effectiveness; Termination of Agreement. This Agreement
shall become effective simultaneously with the closing of the transactions
under the Subscription Agreement and shall terminate without liability or
penalty on the part of any party or its directors, officers, fiduciaries,
employees and stockholders or general and limited partners (and the directors,
officers, fiduciaries, employees and stockholders or general and limited
partners thereof) to any other party or such other party's Affiliates upon
termination of the Subscription Agreement pursuant to the last sentence of
Section 1.3 thereof. If not theretofore terminated pursuant to the preceding
sentence, this Agreement shall terminate on the earlier to occur of the
twentieth anniversary of the date hereof and the date on which there are no
longer any Registrable Securities outstanding or issuable or thereafter
available for or subject to issuance to any Stockholder upon exercise or
conversion of any options, warrants, rights or other convertible securities, or
pursuant to Section 1.5 of the Stockholders Agreement.
2.9. Assignment. Except as explicitly provided herein, this
Agreement is not assignable by any of the parties hereto, other than by
Holdings to its successor by operation of law or to an acquiror of all or
substantially all of its assets.
2.10. Additional Rights. Holdings agrees that except in
connection with a sale of shares of Equity Securities (as defined in the
Stockholders Agreement) that is subject to the pre-emptive rights pursuant to
Section 2.6 of the Stockholders Agreement, whether or not exercised, Holdings
will not grant GSCP and its Affiliates registration rights on a basis more
favorable to GSCP or its Affiliates than their rights
-26-
<PAGE> 27
hereunder, unless such rights are offered to the Investors on the same basis.
-27-
<PAGE> 28
IN WITNESS WHEREOF, the parties hereto have signed this
Agreement, or have caused this Agreement to be signed on their behalf by an
officer or representative thereunder duly authorized, as of the date first
written above.
AMF HOLDINGS INC.
By: /s/ Richard A. Friedman
-------------------------------------
Name: Richard A. Friedman
Title: President
Address: c/o Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004
Attn: David J. Greenwald
Telecopier No.: (212) 357-5505
GS CAPITAL PARTNERS II, L.P.
By: GS Advisors, L.P.
General Partner
By: GS Advisors Inc.
General Partner
By: /s/ Richard A. Friedman
-------------------------------------
Name: Richard A. Friedman
Title: President
Address: c/o Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004
Attn: David J. Greenwald
Telecopier No.: (212) 357-5505
<PAGE> 29
GS CAPITAL PARTNERS II OFFSHORE, L.P.
By: GS Advisors II (Cayman), L.P.
General Partner
By: GS Advisors II, Inc., its
General Partner
By: /s/ Richard A. Friedman
-------------------------------------
Name: Richard A. Friedman
Title: President
Address: c/o Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004
Attn: David J. Greenwald
Telecopier No.: (212) 357-5505
GOLDMAN, SACHS & CO. VERWALTUNGS GMBH
By: /s/ Richard A. Friedman
-------------------------------------
Name: Richard A. Friedman
Title: Managing Director
By: /s/ C.H. Skodinski
-------------------------------------
Name: C.H. Skodinski
Title: Registered Agent
Address: c/o Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004
Attn: David J. Greenwald
Telecopier No.: (212) 357-5505
<PAGE> 30
THE GOLDMAN SACHS GROUP, L.P.
By: /s/ Richard A. Friedman
-------------------------------------
Name: Richard A. Friedman
Title: Partner
Address: c/o Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004
Attn: David J. Greenwald
Telecopier No.: (212) 357-5505
STONE STREET FUND 1995, L.P.
By: Stone Street Value Corp., its
General Partner
By: /s/ Richard A. Friedman
-------------------------------------
Name: Richard A. Friedman
Title: Vice President
Address: c/o Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004
Attn: David J. Greenwald
Telecopier No.: (212) 357-5505
STONE STREET FUND 1996, L.P.
By: Stone Street Empire Corp., its
General Partner
By: /s/ Richard A. Friedman
-------------------------------------
Name: Richard A. Friedman
Title: Vice President
Address: c/o Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004
Attn: David J. Greenwald
Telecopier No.: (212) 357-5505
<PAGE> 31
BRIDGE STREET FUND 1995, L.P.
By: Stone Street Value Corp., its
Managing General Partner
By: /s/ Richard A. Friedman
-------------------------------------
Name: Richard A. Friedman
Title: Vice President
Address: c/o Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004
Attn: David J. Greenwald
Telecopier No.: (212) 357-5505
BRIDGE STREET FUND 1996, L.P.
By: Stone Street Empire Corp., its
Managing General Partner
By: /s/ Richard A. Friedman
-------------------------------------
Name: Richard A. Friedman
Title: Vice President
Address: c/o Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004
Attn: David J. Greenwald
Telecopier No.: (212) 357-5505
<PAGE> 32
BLACKSTONE CAPITAL PARTNERS II MERCHANT
BANKING FUND L.P.
By: Blackstone Management Associates
II L.L.C., its General Partner
By: /s/ Howard A. Lipson
-------------------------------------
Name: Howard A. Lipson
Title: Member
Address: 345 Park Avenue
19th Floor
New York, NY 10154
Attn: Howard A. Lipson
Telecopier No.: (212) 754-8725
BLACKSTONE OFFSHORE CAPITAL PARTNERS
II L.P.
By: Blackstone Management Associates
II L.L.C., its General Partner
By: /s/ Howard A. Lipson
-------------------------------------
Name: Howard A. Lipson
Title: Member
Address: 345 Park Avenue
19th Floor
New York, NY 10154
Attn: Howard A. Lipson
Telecopier No.: (212) 754-8725
BLACKSTONE FAMILY INVESTMENT
PARTNERSHIP L.P.
By: Blackstone Management Associates
II L.L.C., its General Partner
By: /s/ Howard A. Lipson
-------------------------------------
Name: Howard A. Lipson
Title: Member
Address: 345 Park Avenue
19th Floor
New York, NY 10154
Attn: Howard A. Lipson
Telecopier No.: (212) 754-8725
<PAGE> 33
KELSO INVESTMENT ASSOCIATES V, L.P.
By: Kelso Partners V, L.P., its
General Partner
By: /s/ Frank T. Nichols
-------------------------------------
Name: Frank T. Nichols
Title: General Partner
Address: 320 Park Avenue, 24th Floor
New York, NY 10022
Attn: James J. Connors, II
Telecopier No.: (212) 223-2379
KELSO EQUITY PARTNERS V, L.P.
By: /s/ Frank T. Nichols
-------------------------------------
Name: Frank T. Nichols
Title: General Partner
Address: 320 Park Avenue, 24th Floor
New York, NY 10022
Attn: James J. Connors, II
Telecopier No.: (212) 223-2379
<PAGE> 34
BAIN CAPITAL FUND V, L.P.
By: Bain Capital Partners V, L.P.,
its General Partner
By: Bain Capital Investors V, Inc.,
its General Partner
By: /s/ Paul B. Edgerley
-------------------------------------
Name: Paul B. Edgerley
Title: Managing Director
Address: 2 Copley Plaza
Boston, MA 02116
Attn: Paul Edgerley
Telecopier No.: (617) 572-3000
BAIN CAPITAL FUND V-B, L.P.
By: Bain Capital Partners V, L.P.,
its General Partner
By: Bain Capital Investors V, Inc.,
its General Partner
By: /s/ Paul B. Edgerley
-------------------------------------
Name: Paul B. Edgerley
Title: Managing Director
Address: 2 Copley Plaza
Boston, MA 02116
Attn: Paul Edgerley
Telecopier No.: (617) 572-3000
<PAGE> 35
BCIP ASSOCIATES
By: /s/ Paul B. Edgerley
-------------------------------------
Name: Paul B. Edgerley
Title: A General Partner
Address: 2 Copley Plaza
Boston, MA 02116
Attn: Paul Edgerley
Telecopier No.: (617) 572-3000
BCIP TRUST ASSOCIATES, L.P.
By: /s/ Paul B. Edgerley
-------------------------------------
General Partner
Address: 2 Copley Plaza
Boston, MA 02116
Attn: Paul Edgerley
Telecopier No.: (617) 572-3000
<PAGE> 36
CITICORP NORTH AMERICA, INC.
By: /s/ Jeroen Fikke
-------------------------------------
Name: Jeroen Fikke
Title: Vice President
Address: 399 Park Avenue
6th Floor
New York, NY 10043
Attn: Jeroen Fikke
Telecopier No.: (212) 559-0292
<PAGE> 37
/s/ Charles Diker
-------------------------------------
Charles M. Diker
Charles M. Diker Associates
One New York Plaza
31st Floor
New York, NY 10004
Telecopier No.: (212) 908-0176
<PAGE> 38
/s/ Robert Morin
-------------------------------------
Robert Morin
6008 Treyburn Place
Glen Allen, VA 23060
Telecopier No.: 804-730-4327
<PAGE> 39
/s/ Douglas Stanard
-------------------------------------
Douglas Stanard
2114 Hanover Avenue
Richmond, VA 23229
Telecopier No.: 804-559-8671
<PAGE> 1
EXHIBIT 10.6
- --------------------------------------------------------------------------------
AMF HOLDINGS INC.
WARRANT AGREEMENT
Dated as of May 1, 1996
- --------------------------------------------------------------------------------
<PAGE> 2
WARRANT AGREEMENT (the "Agreement") dated as of May 1, 1996,
between AMF HOLDINGS INC., a Delaware corporation (the "Company"), and The
Goldman Sachs Group, L.P. (the "Warrantholder").
WHEREAS, the Company proposes to issue 870,000 Warrants (the
"Warrants"), each Warrant entitling the holder thereof to purchase one share of
voting common stock, par value $.01 per share, in the Company (collectively the
"Securities") (as used hereinafter, the term "Shares" refers to the Company's
Securities and to equity shares or equity interests in the Company or any other
equity security of or equity interests in any other class into which such
Securities may hereafter be changed);
WHEREAS, the Company proposes to issue the Warrants to the
Warrantholder in consideration of certain services provided by the Warrantholder
in connection with the sale of AMF Bowling, Inc., AMF Bowling Centers, Inc. and
certain related entities (the "AMF Entities") pursuant to the Engagement Letter,
dated October 20, 1995, as amended, between Goldman, Sachs & Co., an affiliate
of the Warrantholder, and certain stockholders of the AMF Entities; and
WHEREAS, the Warrantholder is entering into a Registration
Rights Agreement and a Stockholders Agreement (the "Stockholders Agreement")
with the Company and certain stockholders of the Company, and the Shares
issuable upon exercise of the Warrants shall be subject to the terms of, and the
Warrantholder shall be entitled to certain rights and subject to certain
obligations under, such agreements, in each case as provided therein.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereto agree as follows:
SECTION 1. Warrant Certificates. The Warrant Certificates (and
the Forms of Exercise and Assignment attached thereto) shall be substantially in
the form set forth in Exhibit A attached hereto (the "Warrant Certificates").
The Warrant Certificates may have such letters, numbers or other marks of
identification and such legends printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or with any rule or
regulation thereunder or of any stock exchange, if any, on which the Warrants
may be listed, or to conform to usage.
<PAGE> 3
SECTION 2. Execution and Countersignature of Warrant
Certificates. The Warrant Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its President or a Vice President and
attested under the corporate seal by its Secretary or an Assistant Secretary.
The signature of any such officer on any Warrant Certificate may be manual or
facsimile. Warrant Certificates bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company notwithstanding that such individuals, or any of them, ceased to be
such officers subsequent to the execution thereof or were not such officers at
the date of this Agreement.
SECTION 3. Initial Issuance of Warrant Certificates. The
Company shall, promptly after the execution and delivery of this Agreement,
issue and deliver to the Warrantholder a Warrant Certificate representing the
number of Warrants and registered in the name of the Warrantholder.
SECTION 4. Registration; Transfers and Exchanges. Initially,
Warrant Certificates shall be registered in the name of the Warrantholder. The
Company will, as transactions occur, register the transfer of any outstanding
Warrant Certificates upon the records to be maintained by it for that purpose
(the "Warrant Register").
The Company may deem and treat the registered holder of each
Warrant Certificate as the absolute owner thereof (notwithstanding any notation
of ownership or other writing thereon made by anyone), for the purpose of any
exercise or conversion thereof, any distribution to the holders thereof, and for
all other purposes, and the Company shall not be affected by any notice or
knowledge to the contrary.
Each Warrant Certificate shall be transferable, in whole or in
part, on the Warrant Register, upon surrender of the Warrant Certificate to the
Company at its principal executive offices (the "Office") (which initially shall
be at the address listed in Section 15, or at such other address as the Company
shall notify the registered holders of Warrants in accordance with the terms of
this Agreement), together with a written assignment of the Warrant Certificate,
duly executed by the registered holder thereof or his duly appointed legal
representative, and together with funds to pay any transfer or other taxes or
governmental charges payable in connection with such transfer or the issuance of
a new Warrant Certificate. Upon such surrender and payment, a new Warrant
Certificate, in the name of the assignee and in the denomination or
denominations specified in such instrument of
- 2 -
<PAGE> 4
assignment, shall be issued and delivered. If less than all of the Warrants
evidenced by the Warrant Certificate are being transferred, a new Warrant
Certificate or Certificates shall be issued for the portion of the Warrant
Certificates not being transferred.
A Warrant Certificate may be divided or combined with other
Warrant Certificates upon surrender thereof at the Office, together with a
written notice specifying the names and denominations in which new Warrant
Certificates are to be issued, signed by the registered holder thereof or his
duly appointed legal representative and together with the funds to pay any
transfer or other taxes or governmental charges payable in connection with such
division or combination or the issuance of new Warrant Certificates. Upon such
surrender and payment, a new Warrant Certificate or Certificates representing,
in the aggregate, the same number of Warrants represented by the surrendered
Certificates shall be issued and delivered in accordance with such notice.
The Company shall make no service or other charge in
connection with any such transfer or exchange of Warrant Certificates, except
for any transfer or other taxes or governmental charges payable in connection
therewith or in connection with the issuance of new Warrant Certificates.
SECTION 5. Duration and Exercise of Warrants; Company to
Reaffirm Obligations. The Warrants shall expire at 5:00 p.m., New York City
time, on the tenth anniversary of the date of this Agreement (the "Expiration
Date"). Each Warrant may be exercised on any business day on or prior to 5:00
p.m., New York City time, on the Expiration Date, at which time unexercised
Warrants will become wholly void and of no value.
Subject to the provisions of this Agreement, the holder of
each Warrant shall have the right to purchase from the Company (and the Company
shall issue and sell to such holder) one fully paid and nonassessable Share at
the exercise price (the "Exercise Price") at the time in effect hereunder, upon
surrender to the Company, at the Office, of the Warrant Certificate evidencing
such Warrant, with the Form of Exercise attached thereto duly completed and
signed, and upon payment of the Exercise Price in lawful money of the United
States of America by certified check payable to the order of, or by wire
transfer to, the Company. The Exercise Price, as of the initial issuance of the
Warrants, shall be $.01 per Share. The Exercise Price and the number of Shares
purchasable upon exercise of a Warrant shall be subject to adjustment as
provided in Section 11. No adjustments shall be made
- 3 -
<PAGE> 5
for any cash dividends on Shares issuable on the exercise of a Warrant, except
as provided in Section 11.
Subject to Section 7, upon such surrender of a Warrant
Certificate (with the Form of Exercise being duly completed and executed) and
payment of the Exercise Price at the time in effect hereunder, the Company shall
issue and deliver, or if there is a transfer agent for the Shares, request the
transfer agent to issue and deliver, to or upon the written order of the
registered holder of such Warrant Certificate and in the name of the registered
holder of the Warrant Certificate or, such other name or names as such
registered holder may designate, a certificate for the Share or Shares issuable
upon the exercise of the Warrant or Warrants evidenced by such Warrant
Certificate. Following such surrender, the surrendered Warrant Certificate shall
be cancelled. Such certificate for the Share or Shares shall be deemed to have
been issued and any person so designated to be named therein shall be deemed to
have become the holder of record of such Share or Shares as of the date of the
surrender of such Warrant Certificate and payment of the Exercise Price.
The Warrants evidenced by a Warrant Certificate shall be
exercisable, at the election of the registered holder thereof, either as an
entirety or from time to time for part only of the number of Warrants evidenced
by the Warrant Certificate. In the event that less than all of the Warrants
evidenced by a Warrant Certificate surrendered upon the exercise of Warrants are
exercised, a new Warrant Certificate or Certificates shall be issued for the
remaining number of Warrants evidenced by the Warrant Certificate so
surrendered.
SECTION 6. Warrantholders' Covenants. Each holder of any
Warrants hereby agrees that such Warrantholder shall not offer to sell or
distribute the Warrants except in compliance with all applicable state and
Federal securities laws and in accordance with the terms of the Stockholders
Agreement.
SECTION 7. Payment of Taxes. The Company shall pay all
documentary stamp taxes, if any, attributable to the issuance of Shares or other
securities upon the exercise of any Warrant; provided, however, that the Company
shall not be required to pay any tax or taxes or governmental charges which may
be payable in respect of any transfer involved in the issuance of any
certificates for Shares in a name other than that of the registered holder of a
Warrant Certificate surrendered upon the exercise of a Warrant and the Company
- 4 -
<PAGE> 6
shall not be required to issue or deliver such certificates unless or until the
persons requesting the issuance thereof shall have paid to the Company the
amount of such tax, taxes or charges or shall have established to the
satisfaction of the Company that such tax, taxes or charges have been paid or
are not payable.
SECTION 8. Mutilated or Missing Warrant Certificates. If any
Warrant Certificate shall be mutilated, lost, stolen or destroyed, the Company
shall issue, in exchange and substitution for and upon cancellation of such
Warrant Certificate, if mutilated, a new Warrant Certificate representing an
equivalent number of Warrants, and, in the case of any lost, stolen or destroyed
Warrant Certificate, a new Warrant Certificate representing the same number of
Warrants evidenced by the Warrant Certificate lost, stolen or destroyed upon
receipt of evidence of such loss, theft or destruction reasonably satisfactory
to the Company or, if requested by the Company, upon receipt of a duly executed
indemnification agreement or bond of indemnity reasonably satisfactory to the
Company.
SECTION 9. Reservation of Shares. The Company will at all
times reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued Shares or its authorized and issued
Shares held in its treasury, for the purpose of enabling it to satisfy any
obligation to issue Shares upon exercise of Warrants, the full number of Shares
deliverable upon the exercise of all outstanding Warrants.
The Company covenants that all Shares that may be issued upon
the exercise of Warrants will, upon issuance, be (to the extent the following
terms are applicable to the forms of such Shares at such time) validly issued,
fully paid and nonassessable and free from all taxes, liens, charges and
security interests with respect to the issue thereof. In furtherance of the
provisions of this Section 9, in the case of any adjustment to the Exercise
Price or the number or type of Shares for which the Warrants are exercisable,
the Company and each holder of Warrants agree to cooperate to provide for
reasonable alternative arrangements or, if no reasonable alternative is
available, the exercise of the Warrants by the holder thereof, so that the
Company shall be able to comply with its obligations under this Section 9 and
the holder shall be provided with the economic benefits of the Warrants,
including such adjustments, as they may be adjusted pursuant to this Agreement.
- 5 -
<PAGE> 7
SECTION 10. Obtaining of Governmental Qualifications. The
Company will in good faith and as expeditiously as possible take all action
which may be necessary to obtain and keep effective any and all registrations,
qualifications, permits, consents and approvals of governmental agencies and
authorities, and will make any and all filings under federal and state
securities laws, necessary in connection with the issuance, distribution and
transfer of Warrant Certificates, the exercise of the Warrants, and the
issuance, sale, transfer and delivery of Shares upon exercise of Warrants.
SECTION 11. Adjustment of Exercise Price; Number of Shares
Purchasable and Number of Warrants. The Exercise Price and either the number or
kinds of Shares purchasable upon the exercise of each Warrant or the number of
Warrants outstanding are subject to adjustment from time to time as provided in
this Section 11.
(a) In case the Company shall at any time after the date of
this Agreement declare a Share dividend or other distribution on the Shares in
Shares, the Exercise Price in effect at the opening of business on the day
following the date fixed for determination of shareholders entitled to receive
such dividend or other distribution shall be reduced to a price determined by
multiplying such Exercise Price by a fraction, the numerator of which shall be
the number of Shares outstanding at the close of business on the date fixed for
such determination and the denominator of which shall be the sum of such number
of Shares outstanding at the close of business on the date fixed for such
determination and the total number of Shares constituting such dividend or
distribution, such reduction to become effective immediately as of the opening
of business on the day following the date fixed for such determination. For
purposes of this subsection (a) of this Section 11, the number of Shares at any
time outstanding shall not include Shares held in the treasury of the Company
(unless the Company pays such dividend or makes such distribution on Shares held
in the treasury of the Company) but shall include Shares issuable in respect of
scrip certificates issued in lieu of fractional Shares.
(b) INTENTIONALLY OMITTED
(c) In case the outstanding Shares shall be subdivided, split
or otherwise converted into a greater number of Shares, the Exercise Price in
effect at the opening of business on the day following the day upon which such
subdivision becomes effective shall be proportionately reduced, and, conversely,
in case the outstanding Shares shall each be combined into a smaller number of
Shares, the Exercise Price in
- 6 -
<PAGE> 8
effect at the opening of business on the day following the day upon which such
combination becomes effective shall be proportionately increased, such reduction
or increase, as the case may be, to become effective immediately as of the
opening of business on the day following the day upon which such subdivision or
combination becomes effective.
(d) In case the Company shall, by dividend or otherwise,
distribute to all holders of Shares evidences of its indebtedness or assets
(including securities, but excluding any regular periodic dividend paid in cash
out of the retained earnings of the Company and any dividend or distribution
referred to in subsection (a) of this Section 11; and further excluding
distributions of its assets referred to in subsection (k) of this Section 11),
the Exercise Price shall be adjusted so that the same shall equal the price
determined by multiplying the Exercise Price in effect immediately prior to the
close of business on the date fixed for the determination of holders of Shares
entitled to receive such dividend or distribution by a fraction, the numerator
of which shall be the current market price per Share (determined as provided in
subsection (f) of this Section 11) on the date fixed for such determination,
less the then fair market value (as determined in good faith by the Board of
Directors of the Company, whose determination shall be conclusive) of the
portion of assets or evidences of indebtedness so distributed applicable to one
Share, and the denominator of which shall be such current market price per
Share, such adjustment to become effective immediately as of the opening of
business on the day following the date fixed for the determination of
shareholders entitled to receive such distribution.
(e) The reclassification of Shares into a different number of
Shares or into other property or assets including securities other than Shares
shall be deemed to involve (i) a subdivision or combination, as the case may be,
of the number of Shares outstanding immediately prior to such reclassification
into the number of Shares outstanding immediately thereafter and, to the extent
applicable, shall be governed by subsection (c) of this Section 11 and/or,
without duplication, (ii) a distribution of such other property or assets which,
to the extent applicable, shall be governed by subsection (d) of this Section
11.
(f) For the purpose of any computation under subsection (d) of
this Section 11, the current market price per Share on any date shall be deemed
to be the average of the closing prices per Share for the 20 consecutive trading
days before the day in question. The closing price for each day shall be the
last reported sale price regular way or, in case
- 7 -
<PAGE> 9
no such reported sale takes place on such day, the average of the reported
closing bid and asked prices regular way for such day, in either case on the New
York Stock Exchange (the "NYSE"), or, if the Shares are not listed or admitted
to trading on the NYSE, the last reported sales price regular way, or in case no
such reported sale takes place on such day, the average of the reported closing
bid and asked prices regular way, on the NASDAQ National Market System (the
"NMS") or on the principal national securities exchange on which the Shares are
listed or admitted to trading, or if the Shares are not listed or admitted to
trading on the NMS or on any national securities exchange, the average of the
closing bid and asked prices in the over-the-counter market as reported by
NASDAQ or any comparable system, or if not listed on NASDAQ or a comparable
system, the average of the closing bid and asked prices as furnished by two
members of the National Association of Securities Dealers, Inc. selected from
time to time by the Board of Directors of the Company for that purpose. If the
Shares are not publicly traded at such time, or such prices are not available,
the market price per share shall be determined in good faith by the Board of
Directors of the Company, whose determination shall be conclusive.
(g) No adjustment in the Exercise Price shall be required
pursuant to subsections (a) through (e) of this Section 11 unless such
adjustment would require an increase or decrease of at least 1% in such price;
provided, however, that any adjustments which by reason of this subsection (g)
of this Section 11 are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or the nearest one-hundredth of a
Share, as the case may be.
(h) In the event that at any time, as a result of an
adjustment made pursuant to this Section 11, the holder of any Warrant
thereafter exercised shall become entitled to receive any shares of the Company
other than Shares, thereafter the number of such other shares so receivable upon
exercise of any Warrant shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Shares contained in this Section 11 and Sections 5, 7, 9, 10 and
12 with respect to the Shares shall apply on the like terms to any such other
shares.
(i) Upon each adjustment of the Exercise Price pursuant to
this Section 11, each Warrant outstanding immediately prior to such adjustment
shall thereafter constitute the right to purchase, at the adjusted Exercise
Price per
- 8 -
<PAGE> 10
Share, an adjusted number of Shares determined (to the nearest hundredth) by
multiplying the number of Shares purchasable upon exercise of a Warrant
immediately prior to such adjustment by a fraction, the numerator of which shall
be the Exercise Price in effect immediately prior to such adjustment and the
denominator of which shall be the Exercise Price in effect immediately after
such adjustment; provided, however, that the Company may elect, in substitution
for the adjustment in the number of Shares pursuant to this subsection (i) of
this Section 11 to adjust the number of Warrants pursuant to subsection (j) of
this Section 11.
(j) In substitution for any adjustment in the number of Shares
purchasable upon the exercise of a Warrant as provided in subsection (i) of this
Section 11, the Company may elect to adjust the number of Warrants so that each
Warrant outstanding after such adjustment in number of Warrants shall be
exercisable for one Share. Each Warrant held of record immediately prior to such
adjustment of the number of Warrants shall become that number of Warrants
determined (to the nearest hundredth) by multiplying the number of Shares
purchasable upon exercise of a Warrant immediately prior to such adjustment by a
fraction, the numerator of which shall be the Exercise Price in effect
immediately prior to such adjustment and the denominator of which shall be the
Exercise Price in effect immediately after such adjustment. The Company shall
give notice to the registered holders of Warrants (at the respective addresses
listed on the Warrant Register) of its election to adjust the number of
Warrants, indicating the record date for the adjustment and, if known at the
time, the amount of the adjustment to be made in the number of Warrants. This
record date may be the date on which the Exercise Price is adjusted or any day
thereafter, but shall be at least 10 days later than the date of the earlier of
the public announcement or notice to the holders of Warrants. Upon each
adjustment of the number of Warrants pursuant to this subsection (j) the Company
shall, as promptly as practicable, cause to be distributed to holders of record
of Warrant Certificates on such record date Warrant Certificates evidencing,
subject to Section 12, the additional Warrants to which such holders shall be
entitled as a result of such adjustment or, at the option of the Company, shall
cause to be distributed to such holders of record in substitution and
replacement for the Warrant Certificates held by such holders prior to the date
of adjustment, and upon surrender thereof, if required by the Company, new
Warrant Certificates evidencing all the Warrants to which such holders shall be
entitled after such adjustment. Warrant Certificates to be so distributed may,
at the option of the Company, bear the adjusted Exercise Price and shall be
registered in the names of the
- 9 -
<PAGE> 11
holders of record of Warrant Certificates on the record date specified in the
public announcement.
(k) If the Company consolidates or merges with or into, or
transfers or leases all or substantially all its properties or assets (including
pursuant to a liquidation) to, any person or group of persons (other than a
merger or consolidation which does not result in any reclassification,
conversion, exchange or cancellation of outstanding Shares), then, upon
consummation of such transaction, the Warrants shall automatically become
exercisable for the kind and amount of securities, cash or other assets which
the holder of a Warrant would have owned immediately after the consolidation,
merger, transfer or lease if the holder had exercised the Warrant immediately
before the effective date of the transaction. Concurrently with the consummation
of a merger or consolidation transaction referred to in the immediately
preceding sentence, the Company shall require that the corporation formed by or
surviving any such transaction, if other than the Company, shall enter into a
supplemental Warrant Agreement so providing and further providing for (1)
adjustments which shall be as nearly equivalent as may be practical to the
adjustments provided for in this Section 11 and (2) the assumption of all of the
Company's obligations and responsibilities under this Agreement pursuant to
subsection (p) of this Section 11. Concurrently with the consummation of a
transfer or lease of all or substantially all of the properties or assets of the
Company (including pursuant to a liquidation) referred to in the first sentence
of this subsection (k) of this Section 11, the Company shall make adequate
provision for the ability of the holders of Warrants to receive the
consideration to which they are entitled under this subsection (k) of this
Section 11.
(l) Except as provided in this Section 11, no adjustment in
respect of any dividends or distribution on the Shares shall be made during the
term of a Warrant or upon the exercise of a Warrant.
(m) Irrespective of any adjustments in the Exercise Price, the
number or kind of shares purchasable upon the exercise of the Warrants or the
number of Warrants outstanding, Warrant Certificates theretofore or thereafter
issued may continue to express the same Exercise Price per Share, number and
kind of Shares and number of Warrants as are stated on the Warrant Certificates
initially issuable pursuant to this Agreement.
(n) Anything in this Section 11 to the contrary
notwithstanding, the Company may make such reductions in the
- 10 -
<PAGE> 12
Exercise Price, in addition to those adjustments required by this Section 11, as
it considers to be advisable in order that any event occurring in respect of, or
relating to, the Warrants or the Shares shall not be taxable to the holders
thereof.
(o) INTENTIONALLY OMITTED
(p) Notwithstanding anything contained in this Agreement to
the contrary, the Company will not effect any merger or consolidation
transaction described in subsection (k) of this Section 11 unless, prior to the
consummation thereof, each person (other than the Company) which may be required
to deliver any stock, securities, cash or property upon the exercise of any
Warrant as provided herein shall assume, by written instrument delivered to each
holder of a Warrant, (1) the obligations of the Company under this Agreement
(and if the Company shall survive the consummation of such transaction, such
assumption shall be in addition to, and shall not release the Company from, any
continuing obligations of the Company under this Agreement), and (2) the
obligation to deliver to such holder such shares of stock, securities, cash or
property as, in accordance with the provisions of this Agreement, such holder
may be entitled to receive.
(q) In case any other securities shall be issued or sold or
shall become subject to issuance or sale upon the conversion or exchange of any
stock (or other securities) of the Company (or any issuer of other securities or
any other person referred to in subsections (k) or (p) of this Section 11) or to
subscription, purchase or other acquisition pursuant to any options issued or
granted by the Company (or any such other issuer or person) for a consideration
such as to dilute the purchase rights granted by this Agreement (but, in any
case, excluding any issuances of equity securities of the Company issued or sold
or subject to issuance, sale, subscription, purchase or other acquisition
pursuant to any employee stock options, any employee stock purchase plan or any
similar employee or director benefit plan not effected for the primary purpose
of raising equity capital for the Company), on a basis consistent with the
standards established in the other provisions of this Section 11 (but not
otherwise governed by any of such other provisions), then, and in each such
case, the computations, adjustments and readjustments provided for in this
Section 11 with respect to the Exercise Price and the number of Shares issuable
pursuant to exercise shall be made as nearly as possible in the manner so
provided and applied to determine the amount of other securities from time to
time receivable upon the exercise of the Warrants, so
- 11 -
<PAGE> 13
as to protect the holders of the Warrants against the effect of such dilution.
(r) In case any event shall occur as to which the provisions
of this Section 11 are not strictly applicable but the failure to make any
adjustment would not fairly protect the purchase rights represented by this
Agreement in accordance with the essential intent and principles of such
provisions, then, in each such case, the Company shall appoint a firm of
independent certified public accountants of recognized national standing (which
may be the regular auditors of the Company), which shall give their opinion upon
the adjustment, if any, on a basis consistent with the essential intent and
principles established in this Section 11, necessary to preserve, without
dilution, the purchase rights represented by this Agreement. Upon receipt of
such opinion, the Company will promptly mail a copy thereof to each holder of
the Warrants and shall make the adjustments described therein.
(s) The Company will not, by amendment of its certificate of
incorporation or through any consolidation, merger, reorganization, transfer of
assets, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this
Agreement, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of each holder of the Warrants
against dilution or other impairment. Without limiting the generality of the
foregoing, and subject to Section 9 hereof, the Company (1) will not permit the
par value of any Shares (if the term par value applies to such Shares at such
time) or other securities receivable upon the exercise of a Warrant to exceed
the amount payable therefor upon such exercise and (2) will take all such action
as may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable Shares on the exercise of the
Warrants from time to time outstanding.
SECTION 12. Fractional Warrants and Fractional Shares. (a) The
Company shall not issue fractions of Warrants on any distribution of Warrants to
holders of Warrant Certificates pursuant to subsection (j) of Section 11 or
distribute Warrant Certificates which evidence fractional Warrants. In lieu of
such fractional Warrants or Warrant Certificates, there shall be paid to the
registered holders of Warrant Certificates with regard to which such fractional
Warrants would otherwise be issuable, an amount in cash equal to the same
fraction of the current market value (as defined
- 12 -
<PAGE> 14
in the next sentence) of a whole Warrant on the day immediately prior to the
date on which such fractional Warrant otherwise would have been issuable. For
purposes of this subsection (a) of this Section 12, the current market value of
a Warrant on any day shall be the fair market value of the Warrants on such day,
as determined in good faith by the Board of Directors of the Company. Such
determination shall be conclusive, absent manifest error.
(b) The Company shall not be required to issue fractions of
Shares upon exercise of the Warrants or to distribute Share certificates which
evidence fractional Shares. In lieu of fractional Shares, there shall be paid to
the registered holders of Warrant Certificates at the time such Warrants are
exercised an amount in cash equal to the same fraction of the current market
price per Share as determined pursuant to subsection (f) of Section 11 hereof on
the day immediately prior to the date of such exercise.
SECTION 13. Notices to Warrantholders. (a) Except as set forth
in subsection (b) of this Section 13, in the case of any adjustment of the
Exercise Price, or the number or kind of shares purchasable upon exercise of a
Warrant or the number of Warrants outstanding pursuant to Section 11, the
Company within 5 business days thereafter shall cause notice of such adjustment
to be mailed by first-class mail, postage prepaid, to each registered holder of
a Warrant Certificate at his address appearing on the Warrant Register. Where
appropriate, such notice may be mailed in advance and included as a part of any
notice required to be mailed under any other provision of this Section 13.
(b) In case:
(i) the Company shall authorize the granting to the holders
of Shares of rights, options, convertible securities or warrants to
subscribe for or purchase any Shares or any other rights; or
(ii) the Company shall declare a dividend (or any other
distribution) on its Shares other than a regular periodic dividend
payable in cash out of retained earnings (if such term applies to such
Shares at such time); or
(iii) of any reclassification of the Shares (other than a
subdivision or combination of its Shares) or of any consolidation or
merger to which the Company is a party, or of the sale, transfer or
disposition of all or substantially all of the assets of the Company;
or
- 13 -
<PAGE> 15
(iv) of the voluntary or involuntary dissolution, liquidation
or winding-up of the Company;
then the Company shall cause to be mailed to each of the registered holders of
the Warrant Certificates at his address appearing on the Warrant Register, at
least 10 days prior to the applicable record date hereinafter specified, by
first-class mail, postage prepaid, a written notice stating (i) the date on
which a record is to be taken for the purpose of any such rights, options,
convertible securities, warrants, dividends or distributions or, if a record is
not to be taken, the date as of which the holders of Shares of record shall be
entitled to such rights, options, convertible securities, warrants, dividends or
distributions are to be determined, or (ii) the date on which such
reclassification, consolidation, merger, sale, transfer, disposition,
dissolution, liquidation or winding-up is expected to become effective, and the
date as of which it is expected that holders of record of Shares shall be
entitled to exchange their Shares for securities, cash or other property, if
any, deliverable upon such reclassification, consolidation, merger, sale,
transfer, disposition, dissolution, liquidation or winding-up.
Nothing contained in this Agreement or in any of the Warrant
Certificates shall be construed as conferring upon the holders thereof the right
to vote or receive dividends or distributions or to be deemed for any purpose
the holder of Shares or of any other securities of the Company which may at any
time be issuable on the exercise of the Warrant or Warrants evidenced by the
Warrant Certificates, nor shall anything contained herein or in the Warrant
Certificates be construed to confer upon the holders thereof, as such, any of
the rights of a holder of Shares of the Company or any right to vote upon any
matter submitted to holders of Shares at any meeting thereof, or to give or
withhold consent to any action (whether upon any recapitalization, issue of
stock (or other securities), reclassification of stock (or other securities),
change of par value (if such term applies to such Shares at such time),
consolidation, merger, sale, transfer or disposition or otherwise) or, except as
provided herein, to receive notice of meetings, or to receive dividends or
subscription rights or otherwise, until the Warrant or Warrants evidenced by the
Warrant Certificates shall have been exercised as provided herein. Failure to
give any notice required hereunder shall not affect the validity of the action
taken giving rise to such requirement of notice.
SECTION 14. Issuance of New Warrant Certificates.
Notwithstanding any of the provisions of this Agreement or of the Warrants to
the contrary, the Company may, at its option,
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<PAGE> 16
issue new Warrant Certificates evidencing Warrants in such form as may be
approved by its Board of Directors to reflect any adjustment or change in the
Exercise Price per Share and the number or kind or class of shares of stock or
other securities or property purchasable under the Warrant Certificates made in
accordance with the provisions of this Agreement.
SECTION 15. Notices to Company and Registered Holders. Any
notice pursuant to this Agreement to be given by the registered holder of any
Warrant Certificate to the Company shall be in writing and be sufficiently given
if delivered or sent by first-class mail, postage prepaid, addressed to the
Company as follows:
AMF Holdings Inc.
c/o Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004
Attention: Corporate Secretary
With a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Attention: Mitchell S. Presser, Esq.
(or to such other address as such entities may have furnished in writing to the
registered holders for this purpose).
Any notice pursuant to this Agreement to be given to any
registered holder of any Warrant Certificate shall be in writing and be
sufficiently given, except as otherwise provided in Section 13, if delivered or
sent by first-class mail, postage prepaid, addressed to such holder as his
address appears on the Warrant Register (or to such other address as such holder
may have furnished in writing to the Company for this purpose).
SECTION 16. Supplements and Amendments. This Agreement may be
supplemented or amended only in a writing signed by the Company and all
registered holders of Warrants at the time such writing is signed.
SECTION 17. Successors. All the covenants and provisions of
this Agreement by or for the benefit of the Company or the Warrantholders shall
bind and inure to the benefit of their respective successors and assigns
hereunder.
- 15 -
<PAGE> 17
SECTION 18. Termination. This Agreement shall terminate at
5:00 p.m., New York City time, on the Expiration Date. Notwithstanding the
foregoing, this Agreement will terminate on any earlier date when all Warrants
have been exercised.
SECTION 19. Governing Law. This Agreement and each Warrant
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of New York and for all purposes shall be governed by and
construed and enforced in accordance with the laws of the State of New York,
without regard to the principles of conflicts of law thereof.
SECTION 20. Legends. If appropriate the Warrant Certificates
will bear any legend which, in the Company's judgment is required by law,
including, if appropriate, the following legends:
THE WARRANTS REPRESENTED BY THIS WARRANT CERTIFICATE ARE ISSUED PURSUANT TO AND
ARE SUBJECT TO A WARRANT AGREEMENT WHICH FIXES THE RIGHTS AND OBLIGATIONS OF THE
COMPANY AND THE HOLDER OF THE WARRANTS. A COPY OF THE WARRANT AGREEMENT IS ON
FILE AT THE COMPANY'S PRINCIPAL EXECUTIVE OFFICE.
THE WARRANTS REPRESENTED BY THIS WARRANT CERTIFICATE AND THE SHARES PURCHASABLE
UPON EXERCISE OF THE WARRANTS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN
COMPLIANCE WITH THE ACT, THE RULES AND REGULATIONS PROMULGATED THEREUNDER AND
ANY APPLICABLE STATE SECURITIES LAWS.
The certificates representing Shares shall bear such legends
required by the Stockholders Agreement and any other legends the Company
believes are necessary or appropriate under the circumstances.
SECTION 21. Benefits of This Agreement. Nothing in this
Agreement shall be construed to give to any person or corporation other than the
Company and the registered holders of the Warrant Certificates any legal or
equitable right, remedy or claim under this Agreement; and this Agreement shall
be for the sole and exclusive benefit of the Company and the registered holders
of the Warrant Certificates.
SECTION 22. Counterparts. This Agreement may be executed in
any number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
- 16 -
<PAGE> 18
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, as of the day and year first above written.
AMF HOLDINGS INC.
By /s/ Terence M. O'Toole
---------------------------
THE GOLDMAN SACHS GROUP, L.P.
By /s/ Terence M. O'Toole
---------------------------
Address for notices:
85 Broad Street
New York, NY 10004
Attn: David J. Greenwald
- 17 -
<PAGE> 19
EXHIBIT A
THE WARRANTS REPRESENTED BY THIS WARRANT CERTIFICATE ARE ISSUED PURSUANT TO AND
ARE SUBJECT TO A WARRANT AGREEMENT WHICH FIXES THE RIGHTS AND OBLIGATIONS OF THE
COMPANY AND THE HOLDER OF THE WARRANTS. A COPY OF THE WARRANT AGREEMENT IS ON
FILE AT THE COMPANY'S PRINCIPAL EXECUTIVE OFFICE.
THE WARRANTS REPRESENTED BY THIS WARRANT CERTIFICATE AND THE SHARES PURCHASABLE
UPON EXERCISE OF THE WARRANTS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN
COMPLIANCE WITH THE ACT, THE RULES AND REGULATIONS PROMULGATED THEREUNDER AND
ANY APPLICABLE STATE SECURITIES LAWS.
[FORM OF WARRANT CERTIFICATE]
[FACE]
EXERCISABLE ONLY
ON OR BEFORE ________ __, 2006
No. W- ___ Warrants
WARRANT CERTIFICATE
AMF HOLDINGS INC.
This Warrant Certificate certifies that __________ , or
registered assigns, is the registered holder of __________ Warrants (the
"Warrants") expiring _______________ , 2006 to purchase shares of voting
common stock, par value $.01 per share ("Shares"), in AMF HOLDINGS INC.,
a Delaware corporation (the "Company"). Each Warrant entitles the holder to
purchase from the Company, on or before 5:00 p.m., New York City time
on __________ ___ , 2006, one fully paid and nonassessable Share of the Company
at the exercise price (the "Exercise Price") at the time in effect under the
Warrant Agreement dated as of ________ __, 1996 (the "Warrant Agreement") ($.01
per Share, at the time of the initial issuance of the Warrants), payable in
lawful money of the United States of America, upon surrender of this Warrant
Certificate and payment of such Exercise Price at the principal executive
offices of the Company, but subject to the conditions set forth herein and in
the Warrant Agreement; provided, however, that the number or kind of Shares (or
in certain events other property) purchasable upon exercise of the Warrants, the
number of Warrants evidenced hereby and the Exercise Price referred to on the
reverse hereof may as of
A-1
<PAGE> 20
the date of this Warrant Certificate have been, or may after such date be,
adjusted as a result of the occurrence of certain events, as more fully provided
in the Warrant Agreement. Payment of the Exercise Price shall be made by
certified check payable to the order of the Company.
No Warrant may be exercised after 5:00 p.m. New York City time
on _______________, ____ 2006 (the "Expiration Date").
Reference is hereby made to the further provisions of the
Warrant Agreement and of this Warrant Certificate set forth on the reverse
hereof and such further provisions shall for all purposes have the same effect
as though fully set forth at this place.
IN WITNESS WHEREOF, AMF HOLDINGS INC. has caused this Warrant
Certificate to be duly executed.
AMF HOLDINGS INC.
Dated: By
----------------------------------------
Attest:
- --------------------------
Secretary
Void after __________ __, 2006 or such earlier date as may be
fixed under the circumstances set forth in the Warrant Agreement and described
on the reverse hereof.
A-2
<PAGE> 21
[FORM OF WARRANT CERTIFICATE]
[REVERSE]
AMF HOLDINGS INC.
The Warrants evidenced by this Warrant Certificate are part of a
duly authorized issue of Warrants issued pursuant to a Warrant Agreement dated
as of ____________ __, 1996 (the "Warrant Agreement") between the Company and a
certain warrantholder who is a party thereto, which Warrant Agreement is hereby
incorporated by reference in and made a part of this instrument and is hereby
referred to for a description of the rights, limitation of rights, obligations,
duties and immunities thereunder of the Company and the holders (the words
"holders" or "holder" meaning the registered holders or registered holder) of
the Warrants.
The holder of Warrants evidenced by this Warrant Certificate may
exercise them by surrendering the Warrant Certificate, with the Form of Exercise
set forth hereon properly completed and executed, together with payment of the
Exercise Price at the time in effect, at the Office (as defined in the Warrant
Agreement). In the event that upon any exercise of Warrants evidenced hereby the
number of Warrants exercised shall be less than the total number of Warrants
evidenced hereby, there shall be issued to the holder hereof or his valid
assignee a new Warrant Certificate evidencing the number of Warrants not
exercised.
The Warrant Agreement provides that upon the occurrence of
certain events, the Exercise Price, the number or kinds of shares purchasable
upon exercise of a Warrant or the number of Warrants outstanding may, subject to
certain conditions, be adjusted and under certain circumstances the Warrant may
become exercisable for securities or other assets other than the Shares referred
to on the face hereof. The Warrant Agreement provides that in such events, at
the election of the Company, either (i) the number of Shares purchasable upon
the exercise of each Warrant shall be adjusted or (ii) each outstanding Warrant
shall be adjusted to become a different number of Warrants. In the case of (ii),
the Company will cause to be distributed to registered holders of Warrant
Certificates either Warrant Certificates representing the additional Warrants
issuable pursuant to the adjustment, or substitute Warrant Certificates to
replace all outstanding Warrant Certificates. No fractional Warrant will be
issued upon any such adjustment but the persons entitled to such fractional
interest will be paid, as provided in the Warrant
A-3
<PAGE> 22
Agreement, an amount in cash equal to the current market value of such
fractional Warrant, as determined in good faith by the Board of Directors of the
Company.
This Warrant Certificate is transferable, in whole or in part,
on the register maintained by the Company for such purpose, upon surrender of
this Warrant Certificate at the Office, together with a written assignment of
the Warrant Certificate, on the Form of Assignment set forth hereon or in other
form satisfactory to the Company, duly executed by the holder or his duly
appointed legal representative, and together with funds to pay any transfer or
other taxes or governmental charges payable in connection with such transfer or
issuance of new Warrant Certificates. Upon such surrender and payment, a new
Warrant Certificate shall be issued and delivered in the name of the valid
assignee and in the denomination or denominations specified in such instrument
of assignment. If less than all of the Warrants evidenced by this Warrant
Certificate are being transferred, a new Warrant Certificate or Certificates
shall be issued for the Warrants not being transferred.
This Warrant Certificate may be divided or combined with other
Warrant Certificates upon surrender hereof at the Office, together with a
written notice specifying the names and denominations in which new Warrant
Certificates are to be issued, signed by the holder hereof or his duly appointed
legal representative, together with the funds to pay any transfer or other taxes
or governmental charges payable in connection with such transfer or issuance of
new Warrant Certificates. Upon such surrender and payment, a new Warrant
Certificate or Certificates shall be issued and delivered in accordance with
such notice.
The Company shall make no service or other charge in connection
with any such transfer of this Warrant Certificate or issuance of new Warrant
Certificates except for any transfer or other taxes or governmental charges
payable in connection therewith.
The Company may deem and treat the registered holder hereof as
the absolute owner of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, any distribution to the holder hereof, and for all other
purposes, and the Company shall not be affected by any notice or knowledge to
the contrary.
A-4
<PAGE> 23
[FORM OF EXERCISE]
(To be executed upon exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase __________ Shares and
herewith tenders payment for such Shares to the order of AMF Holdings Inc. in
the amount of $_________ in accordance with the terms hereof. The undersigned
requests that a certificate for such Shares be registered in its name. The
address of the undersigned is ________________________________________________.
If said number of Shares is less than all of the Shares purchasable hereunder,
the undersigned requests that a new Warrant Certificate representing the
remaining balance of the Shares be registered in its name and that such Warrant
Certificate be returned to the undersigned at the address set forth above:
Dated: Signature:____________________________
(Signature must conform in all
respects to name of holder as
specified on the face of the Warrant
Certificate.)
________________________________
(Insert Social Security or
Taxpayer Identification Number
of Holder)
Signature Guaranteed:
________________________________
A-5
<PAGE> 24
[FORM OF ASSIGNMENT]
(To be executed to transfer the Warrant Certificate)
FOR VALUE RECEIVED _____________________________ hereby sells,
assigns and transfers unto (Please print name and address of transferee)
______________________________________ this Warrant Certificate, together with
all right, title and interest therein, and does hereby irrevocably constitute
and appoint _____________________ Attorney, to transfer the within Warrant
Certificate on the books of the within-named Company, with full power of
substitution.
Dated: Signature:____________________________
(Signature must conform in all
respects to name of holder as
specified on the face of the Warrant
Certificate.)
________________________________
(Insert Social Security or Tax-
payer Identification Number of
Assignee)
Signature Guaranteed:
________________________________
A-6
<PAGE> 1
EXHIBIT 10.7
EMPLOYMENT AGREEMENT
AGREEMENT (the "Agreement") by and among, AMF Holdings Inc., a
Delaware corporation ("Holdings"), AMF Bowling, Inc., a Virginia corporation
(the "Company"), and Robert L. Morin (the "Executive"), dated as of the 1st day
of May, 1996.
WHEREAS, AMF Group Holdings Inc., a Delaware corporation ("AMF
Group Holdings"), has, simultaneously with the execution and delivery of this
Agreement, directly or indirectly, acquired all of the outstanding common stock
of the Company, along with the capital stock and/or assets of certain related
entities (the "Transaction") pursuant to that certain Stock Purchase Agreement
dated February 16, 1996 (the "Stock Purchase Agreement");
WHEREAS, the Executive is currently employed as the
President and Chief Executive Officer of the Company;
WHEREAS, the Boards of Directors of Holdings and the Company
have determined that it will be in the best interests of Holdings, the Company
and their respective shareholders to continue the employment of the Executive as
President and Chief Executive Officer of the Company after the Transaction and
the Executive desires to continue to serve in that capacity;
<PAGE> 2
WHEREAS, Holdings desires to obtain for its benefit, through
its ownership of the Company, the benefit of the Executive's services as set
forth in this Agreement;
WHEREAS, the Executive desires to participate in the
Transaction as an equity investor in Holdings;
WHEREAS, the Executive is joining the Board of Directors
of Holdings; and
WHEREAS, Holdings, the Company and the Executive desire to set
forth in a written agreement the terms and conditions under which the Executive
will acquire an equity interest in Holdings in connection with the Transaction
and will continue to be employed by the Company after the Transaction;
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Employment Period. The Company shall employ the Executive,
and the Executive agrees to, and shall, serve the Company, on the terms and
conditions set forth in this Agreement, for the period commencing on the date
hereof and ending on the third anniversary of such date (the "Employment
Period").
-2-
<PAGE> 3
2. Position and Duties. (a) During the Employment Period, the
Executive shall be the President and Chief Executive Officer of the Company with
such duties and responsibilities as are assigned to him by the Board of
Directors of the Company (the "Board") consistent with his position as Chief
Executive Officer of the Company, including, as the Board may request, to serve
as an officer or director of certain affiliated entities of the Company.
(b) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive shall
devote his full attention and time during normal business hours to the business
and affairs of the Company and shall perform his services primarily at the
Company's headquarters, wherever the Board may from time to time designate them
to be, but in any case, within a 50 mile radius of Richmond, Virginia, and to
the extent necessary to discharge the responsibilities assigned to the Executive
under this Agreement, use the Executive's reasonable best efforts to carry out
such responsibilities faithfully and efficiently. It shall not be considered a
violation of the foregoing for the Executive to (i) serve on civic or charitable
boards or committees, (ii) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (iii) manage personal investments, so long
as such activities do not compete with and are not provided to or for any entity
that competes with or
-3-
<PAGE> 4
intends to compete with the Company or any of its subsidiaries and affiliates
and do not interfere significantly with the performance of the Executive's
responsibilities as an employee of the Company in accordance with this
Agreement.
3. Compensation. (a) Base Salary. During the Employment
Period, the Executive shall receive from the Company an annual base salary
("Annual Base Salary") of $250,000, payable in equal installments at intervals
not less frequent than monthly. Executive's Annual Base Salary may be increased
by the Board which shall review it annually. Executive's Annual Base Salary
shall not be reduced below $250,000 and the term Annual Base Salary as utilized
in this Agreement shall refer to Annual Base Salary as so increased.
(b) Other Compensation. In addition to the Annual Base Salary,
for each fiscal year or portion of a fiscal year ending during the Employment
Period, the Executive shall earn an annual bonus (the annual bonus from time to
time in effect for the then current fiscal year is referred to as the "Annual
Bonus") equal to 50% of the Executive's Annual Base Salary if certain
operational and financial targets determined by the Board (the "Targets") are
attained (such Annual Bonus to be reduced pro rata with respect to each fiscal
year during the Employment Period for which such bonus would be payable to the
-4-
<PAGE> 5
extent that the full fiscal year is not included in the Employment Period (based
on the actual number of days of such fiscal year that were included in the
Employment Period)). The Company will structure the Annual Bonus so that the
Executive will earn an Annual Bonus to be determined by the Board that will be
less than 50% of the Executive's Annual Base Salary if less than 100% but at
least 90% of the Targets are attained (reduced in the same manner as the full
Annual Bonus with respect to fiscal years which are not fully included in the
Employment Period). The Targets, and the bonus percentage if the Targets are not
fully achieved but are at least 90% achieved, as described above, shall be
determined by the Board each year prior to the end of the first fiscal quarter
for the year to which such Targets and bonus percentage shall apply; provided,
however, that such Targets and bonus percentage for 1996 shall be determined
within 90 days after the date hereof. Each Annual Bonus shall be paid in a
single cash lump sum no later than 30 days after Holdings' audited consolidated
financial statements with respect to the fiscal year for which the Annual Bonus
is awarded are available.
Notwithstanding the foregoing provisions of this paragraph
3(b), for purposes of determining Executive's Annual Bonus for 1996, the Targets
set by the Board shall be no higher
-5-
<PAGE> 6
than the operational and financial goals contained in the Goldman, Sachs & Co.
Base Case Model for 1996, as previously reviewed by the Company and the
Executive.
(c) Other Benefits. During the Employment Period: (i) the
Executive shall be entitled to participate in all incentive, savings and
retirement plans, practices, policies and programs of the Company to the same
extent as peer executives; and (ii) the Executive and/or the Executive's family,
as the case may be, shall be eligible for participation in, and shall receive
all benefits under, all welfare benefit plans, practices, policies and programs
provided by the Company (including, to the extent provided, without limitation,
medical, prescription, dental, disability, salary continuance, employee life
insurance, group life insurance, accidental death and travel accident insurance
plans and programs) to the same extent as peer executives; provided, however,
that nothing in this Agreement shall impose on the Company any obligation to
offer to the Executive participation in any stock, stock option, bonus or other
incentive award, plan, practice, policy or program other than the awards made
pursuant to paragraphs (b), (f) and (g) of this Section 3. The term "peer
executives" means the chief operating officer, chief financial officer and/or
chief
-6-
<PAGE> 7
legal officer of the Company, to the extent such positions exist. Executive
shall be entitled to retain for his own personal use any frequent flyer miles
and similar travel awards obtained with respect to the Executive's travel.
(d) Expenses. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all reasonable travel and
other expenses incurred by the Executive in carrying out the Executive's duties
under this Agreement, provided that the Executive complies with the policies,
practices and procedures of the Company for submission of expense reports,
receipts, or similar documentation of such expenses. Executive shall be
reimbursed up to $5,000 for his legal fees incurred in connection with or
attributable to the negotiation, execution and delivery of this Agreement and
all other agreements to which he is a party relating to or arising out of the
Transaction.
(e) Vacation. The Executive shall be entitled to 4 weeks of
paid vacation during 1996 and for each subsequent full fiscal year in the
Employment Period and a pro rata portion thereof during each partial fiscal year
in the Employment Period. For 1996, Executive's 4 weeks of paid vacation shall
include paid vacation time taken in 1996 and prior to the date hereof. Up to an
aggregate of 2 weeks of unused vacation may be carried forward to the next
fiscal year in the Employment
-7-
<PAGE> 8
Period and used therein and any unused vacation in excess of 2 weeks shall
lapse.
(f) Restricted Stock. (i) The Executive hereby agrees to
purchase simultaneously with or promptly following the Closing (as defined in
the Stock Purchase Agreement) 150,000 shares of Holdings' common stock, par
value $.01 per share, at a purchase price of $10.00 per share (the "Original
Price") for an aggregate purchase price of $1,500,000 (the shares so purchased
together with any shares acquired pursuant to the exercise of Options (as
defined in Section 3(g) of this Agreement) are collectively referred to herein
as the "Restricted Stock"). The Executive shall make payment therefor, at the
Closing, to Holdings by check, money order or wire transfer. At the Closing, the
Executive is borrowing $1,000,000 from Holdings or an affiliate thereof in order
to fund the portion of his purchase of Restricted Stock pursuant to this
Subparagraph (f) in excess of $500,000. The borrowing shall be secured by, among
other things, all of the Restricted Stock purchased by the Executive pursuant to
this Subparagraph (f) and the Restricted Stock acquired pursuant to the exercise
of Options, and shall be evidenced by a nonrecourse promissory note. The form of
note and related stock pledge agreement are attached hereto as Exhibit A. The
Executive has entered into or is entering into a Stockholders Agreement, by and
among
-8-
<PAGE> 9
Holdings, the Executive and certain other stockholders of Holdings (the
"Stockholders Agreement").
(ii) Shares of Restricted Stock shall be evidenced by issuance
of one or more stock certificates registered in the name of the Executive and
bearing appropriate legends referring to the terms, conditions, and restrictions
applicable to such Restricted Stock, substantially in the following form:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms, conditions and
restrictions (including forfeiture) of an Employment Agreement
between the issuer and the registered holder hereof. Copies of
such Employment Agreement are on file at the offices of AMF
Holdings Inc. [address]"
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or
under the securities laws of any state, and may not be sold or
otherwise disposed of except pursuant to an effective
registration statement under said Act and applicable state
securities laws or an applicable exemption to the
registration requirements of such Act and laws."
Such shares may bear other legends to the extent the Board or the Board of
Directors of Holdings determines it to be necessary or appropriate, including
any required by Section 2.7 of the Stockholders Agreement. In addition to the
stock pledge referred to in clause (i) of this Subparagraph (f), the Board
-9-
<PAGE> 10
or the Board of Directors of Holdings may require that the certificates
evidencing such shares be held in custody by the Company or Holdings until the
restrictions thereon shall have lapsed and that the participant deliver a stock
power, endorsed in blank, relating to the shares of Restricted Stock.
(iii) The Executive shall not be permitted to sell, assign,
transfer, pledge or otherwise encumber any shares of Restricted Stock or
Options, except as provided in Sections 3(f)(vii) and (viii) or as provided in
Sections 2.3, 2.4 and 2.5 of the Stockholders Agreement.
(iv) Except as otherwise provided in this paragraph (f) or as
may be provided in the Stockholders Agreement, the note or the stock pledge
agreement referred to in Subparagraph (i) of paragraph (f) of this Section 3,
the Executive shall have, with respect to the shares of Restricted Stock, all of
the rights of a stockholder of Holdings holding the class of stock that is the
subject of the Restricted Stock, including the right to vote the shares and the
right to receive any dividends and distributions.
(v) The number and kind of shares included in the Restricted
Stock and issuable upon the exercise of the Options (and the exercise price of
the Options) shall be adjusted to reflect any merger, reorganization,
consolidation, recapitalization, spinoff, stock dividend, stock split,
extraordinary
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<PAGE> 11
distribution with respect to Holdings' common stock or other change in corporate
structure affecting such common stock, as the Board of Directors of Holdings or
a committee thereof shall deem fair and appropriate.
(vi) If and when all restrictions expire without a prior
forfeiture of the Restricted Stock theretofore subject to such restrictions, new
certificates for such shares shall be delivered to the Executive bearing a
legend in substantially the following form:
"The securities represented by this certificate have
not been registered under the Securities Act of 1933,
as amended, or under the securities laws of any state,
and may not be sold or otherwise disposed of except
pursuant to an effective registration statement under
said Act and applicable state securities laws or an
applicable exemption to the registration requirements
of such Act and laws."
Such shares may bear other legends to the extent the Board or the Board of
Directors of Holdings determines it to be necessary or appropriate, including
any required by Section 2.7 of the Stockholders Agreement.
(vii) If, prior to the consummation of an IPO (as defined in
this Subparagraph (vii)), the Executive dies or if the Executive's employment by
the Company terminates due to a Disability (as defined in Section 5(a)) or for
any other reason,
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<PAGE> 12
Holdings shall have the right, at its election, to purchase all (but not less
than all) of the Executive's Restricted Stock within 6 months after the Date of
Termination (as defined in Section 5(c) hereof) at a price equal to the Fair
Market Value (as defined hereafter in this paragraph) of such Restricted Stock
determined as of, in all cases other than the death of the Executive, the Date
of Termination and, in the case of the Executive's death, as of the date of
death. As used in this Agreement, the term "Fair Market Value" means fair value
as determined by Goldman, Sachs & Co. in light of all circumstances including
comparable recent bona fide third party sales. To the extent the funds for such
purchase are permitted under the indebtedness of Holdings and its affiliates and
under applicable law to be dividended to Holdings from AMF Group Inc.
(indirectly by a dividend from AMF Group Inc. to AMF Group Holdings Inc. and
then by a dividend from AMF Group Holdings Inc. to Holdings, or otherwise in
accordance with Holdings' then existing corporate structure (collectively, an
"AMF Group Dividend")), Holdings shall pay the purchase price in cash. Holdings
shall fund any amount not permitted to be funded through an AMF Group Dividend
by a Buy-Out Note (as defined hereafter). A "Buy-Out Note" is an unsecured
promissory note of Holdings or a direct or indirect subsidiary thereof which
shall have a stated maturity of 5 years, shall accrue interest at seven percent
per annum, shall be prepayable at the option
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<PAGE> 13
of Holdings or such subsidiary at any time, in whole or in part, at its
principal amount plus accrued and unpaid interest, shall provide for the
reimbursement of reasonable expenses incurred by the holder to enforce the note
and shall accelerate upon the earlier of a Change in Control (as defined in
Section 3(g)(ii) of this Agreement) or the consummation of an IPO. Holdings may,
in its discretion, assign its rights and obligations under this Subparagraph
(vii) to any other person, but no such assignment shall relieve Holdings of its
primary obligations hereunder to the extent not satisfied by such assignee. For
all purposes of this Agreement, the term "IPO" means the consummation of the
registered underwritten public offering or offerings of the common stock of
Holdings with gross proceeds to Holdings in the aggregate of at least $100
million.
(viii) If, prior to the consummation of an IPO, the Executive
dies or if the Executive's employment by the Company is terminated by the
Company due to a Disability or for any other reason, the Executive or the
Executive's legal representative, as the case may be, shall have the right,
within three months after such event (or one year if the event is the
Executive's death), to require Holdings to purchase all (but not less than all)
of the Executive's Restricted Stock at a price equal to (A) in the case of such
death or Disability, the Fair Market Value thereof determined as of the Date of
Termination and (B) in the case of termination by the Company for any other
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<PAGE> 14
reason, the product of (x) the number of shares of Restricted Stock and (y) the
Original Price (subject to adjustment, to the extent appropriate, to reflect any
adjustments to the Restricted Stock made pursuant to Subparagraph (v) of this
Section 3(f)). To the extent the funds for such purchase are permitted under the
indebtedness of Holdings and its affiliates and applicable law to be funded
through an AMF Group Dividend, Holdings shall pay the purchase price in cash.
Holdings shall pay any amount not permitted to be funded through an AMF Group
Dividend with a Buy-Out Note. Holdings may, in its discretion, assign its
rights and obligations under this Subparagraph (viii) to any other person, but
no such assignment shall relieve Holdings of its primary obligations hereunder
to the extent not satisfied by such assignee.
(ix) The restrictions placed on the Executive's right to
transfer the Restricted Stock under this Section 3(f), Holdings' right to
purchase the Executive's Restricted Stock under Section 3(f)(vii), and the
Executive's right to require Holdings to purchase his Restricted Stock under
Section 3(f)(viii), shall terminate on the consummation of an IPO. Any
restrictions under the Stockholders Agreement shall be governed by the terms
thereof and shall survive the termination of the transfer restrictions pursuant
to this Section 3(f).
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<PAGE> 15
(x) Any transfer of Restricted Stock otherwise permitted
pursuant to this Agreement shall remain subject to the terms of the note and
stock pledge agreement referred to in clause (i) of this Subparagraph (f) (or
any amendment of such note or stock pledge agreement or any successor thereto)
and the Stockholders Agreement, and shall not be permitted (and any Restricted
Stock pledged pursuant to the stock pledge agreement shall not be released)
other than in accordance with the terms thereof, notwithstanding any provision
of this Agreement that would otherwise permit such transfer.
(g) Options. (i) Upon the Closing (as defined in the Stock
Purchase Agreement) the Executive is hereby granted options to purchase 110,000
shares of Holdings' common stock (the "Options"). The Executive may exercise any
vested Options granted under this paragraph (g) of Section 3 by payment of the
Original Price per share (as it may be adjusted pursuant to Subparagraph (v) of
Section 3(f) hereof), along with an accompanying written notice of exercise.
Executive may make payment upon the exercise of vested Options by certified or
bank check or such other instrument as Holdings may accept. Promptly after an
IPO, Holdings will establish appropriate procedures to permit so-called
"cashless exercise" of the Options by Executive. Unless sooner exercised or
forfeited as provided for in this Agreement, the Options shall expire on the
tenth anniversary of the date of this Agreement. To the extent not
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<PAGE> 16
inconsistent herewith, the Options shall be governed consistent with the
provisions of Holdings' 1996 Stock Incentive Plan (as if this Agreement were an
"Option Agreement" thereunder).
(ii) The Options shall vest according to the following
schedule:
<TABLE>
<CAPTION>
Years of Employment
Since the date of
the Closing (as
defined in the Stock
Purchase Agreement) Vested Percentage
-------------------- -----------------
<S> <C>
Less than 1 year 0 percent
At least 1 year,
but less than 2 years 20 percent
At least 2 years,
but less than 3 years 40 percent
At least 3 years,
but less than 4 years 60 percent
At least 4 years,
but less than 5 years 80 percent
5 years or more 100 percent
</TABLE>
However, immediately prior to the occurrence of a Change in Control, all Options
shall vest. For purposes of this Agreement, the term "Change in Control" means
(1) the acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act) other than GSCP (as defined in
the Stockholders Agreement) and their affiliates of a majority of the
outstanding voting stock of Holdings or the Company (2) the sale of or other
disposition (other than by way of merger or consolidation) of all or
substantially all of the assets of either (x) Holdings and its subsidiaries
taken as a
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<PAGE> 17
whole or of the Company and its subsidiaries taken as a whole to any individual,
entity or group (as defined above). Notwithstanding any contrary provision
herein, for all purposes of this Agreement, the sale of one of Holdings' two
main businesses (i.e., (x) manufacturing and related activities and (y)
operation of bowling centers) is not a sale of substantially all of the assets
of Holdings and its subsidiaries taken as a whole.
(iii) Any shares of Holdings' common stock obtained by the
Executive (or the Executive's legal representative) by exercise of the
Executive's vested Options shall be deemed to be Restricted Stock for all
purposes of this Agreement and, without limitation, shall be subject to the
terms, restrictions and conditions that Restricted Stock is subjected to under
Section 3(f), the note and stock pledge agreement referred to in clause (i) of
this Section 3(f) and the Stockholders Agreement.
(iv) Upon the Executive's death or when the Executive's
employment is terminated for any reason, the Executive or the Executive's estate
or legal representative:
A. shall forfeit all Options that have not pre-
viously vested;
B. shall have three months to exercise the Exe-
cutive's vested Options that are vested on the date of
the Executive's termination of employment if such
termination is for any reason other than the Execu-
tive's death; and
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<PAGE> 18
C. shall have one year to exercise the Executive's
vested Options that are vested on the date of death if the
Executive's termination of employment is due to the
Executive's death.
Any vested Options not exercised within the permissible period of time shall be
forfeited by the Executive or the Executive's estate or legal representative. If
the Executive's Options are exercised after the Executive's death as provided
for in this Agreement, then, solely for purposes of Section 3(f)(vii) of this
Agreement, the Executive shall be deemed to have survived until the date of such
exercise (the "Post-Death Exercise Date") and to have died immediately
thereafter and for purposes of said Section 3(f)(vii) the Date of Termination
shall be the Post-Death Exercise Date.
4. Executive's Representations, Warranties and Agreements.
The Executive hereby makes the following representations, warranties and
agreements (which, with respect to Restricted Stock hereafter acquired pursuant
to exercise of Options, shall be deemed to be made as of the date of such
exercise, to the extent appropriate):
(a) Investment Intention; No Resales. The Executive represents
and warrants that such Executive is acquiring the Restricted Stock for
investment purposes only, solely for his own account and not with a view to, or
for resale in connection with, the distribution or other disposition thereof or
with any
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<PAGE> 19
present intention of distributing or reselling any Restricted Stock thereof,
except for such distributions and dispositions as are both explicitly permitted
under this Agreement and the Stockholders Agreement and effected in compliance
with the Securities Act of 1933, as amended (the "Securities Act") and the rules
and regulations thereunder and all applicable state securities, or "blue sky,"
laws. The Executive agrees and acknowledges that such Executive will not,
directly or indirectly, offer, transfer, sell, assign, pledge, hypothecate or
otherwise dispose of any Restricted Stock, or solicit any offers to purchase or
otherwise acquire or take a pledge of any Restricted Stock, other than
transfers, sales, assignments, pledges, hypothecations or other dispositions
explicitly permitted by Paragraph (f) of Section 3 and by the Stockholders
Agreement and provided that any such transfer, sale, assignment, pledge,
hypothecation or other disposition is in accordance with the terms and
provisions of such Paragraph and the Stockholders Agreement and (i) the
transfer, sale, assignment, pledge, hypothecation or other disposition is
pursuant to an effective registration statement under the Securities Act and has
been registered under all applicable state securities, or "blue sky," laws, or
(ii) the Executive shall have furnished Holdings with an opinion of counsel
(which counsel and the form and substance of which opinion shall be reasonably
satisfactory to Holdings), to the effect that no such registration is required
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<PAGE> 20
because of the availability of an exemption from registration under the
Securities Act and the rules and regulations in effect thereunder and under all
applicable state securities, or "blue sky," laws.
(b) Stock Unregistered. The Executive acknowledges and
represents that such Executive has been advised that (i) the Restricted Stock
has not been registered under the Securities Act; (ii) the Restricted Stock must
be held for an indefinite period and such Executive must continue to bear the
economic risk of the investment in the Restricted Stock unless it is
subsequently registered under the Securities Act or an exemption from such
registration is available; (iii) there is no, and it is not anticipated that
there will be any, public market for the Restricted Stock; (iv) Rule 144
promulgated under the Securities Act ("Rule 144") is not currently available
with respect to the sales of any securities of Holdings, and Holdings has made
no covenant to make such Rule 144 available; (v) if and when the Restricted
Stock may be disposed of without registration in reliance on Rule 144, such
disposition can be made only in limited amounts in accordance with the terms and
conditions of such Rule 144; (vi) if the Rule 144 exemption is not available,
public offer or sale without registration will require the availability of an
exemption under the Securities Act; (vii) a restrictive legend or legends in the
forms set forth in this Agreement and the Stockholders Agreement shall be
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<PAGE> 21
placed on the certificates representing the Restricted Stock; (viii) this
Agreement and the Stockholders Agreement restrict the sale or transfer of shares
of Restricted Stock other than at specified times and under specified
circumstances; and (ix) a notation shall be made in the appropriate records of
Holdings indicating that the Restricted Stock is subject to restrictions on
transfer and, if Holdings should at some time in the future engage the services
of a securities transfer agent, appropriate stop-transfer instructions may be
issued to such transfer agent with respect to the Restricted Stock.
(c) Additional Investment Representations. The Executive
represents and warrants that (i) the Executive's financial situation is such
that the Executive can afford to bear the economic risk of holding the
Restricted Stock for an indefinite period of time and suffer complete loss of
the Executive's investment in the Restricted Stock; (ii) the Executive's
knowledge and experience in financial and business matters are such that the
Executive is capable of evaluating the merits and risks of the Executive's
investment in the Restricted Stock; (iii) the Executive understands that the
Restricted Stock is a speculative investment which involves a high degree of
risk of loss of the Executive's investment therein, that there are substantial
restrictions on the transferability of the Restricted Stock and that on the date
of this Agreement and for an indefinite period following such date there will be
no public market
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<PAGE> 22
for the Restricted Stock and, accordingly, it may not be possible to liquidate
the Executive's investment in Holdings at all, including in case of emergency;
(iv) the Executive and the Executive's representatives, including the
Executive's professional, tax and other advisors, have carefully reviewed the
financial and other information with respect to each of Holdings, AMF Group
Holdings, and its subsidiaries (including with respect to the Transaction)
supplied to them and the Executive understands and has taken cognizance of (or
has been advised by the Executive's representatives as to) all the risks related
to an investment in the Restricted Stock; (v) in making the Executive's decision
to invest in the Restricted Stock hereunder, the Executive has relied upon
independent investigations made by the Executive and, to the extent believed by
the Executive to be appropriate, the Executive's representatives, including the
Executive's own professional, tax and other advisors; (vi) the Executive and the
Executive's representatives have received and read this Agreement, the
Stockholders Agreement, the Stock Subscription Agreement, the Registration
Rights Agreement, Holdings 1996 Stock Incentive Plan and all other documents
related to and executed or to be executed in connection with the transactions
contemplated hereby and thereby and the Executive and his representatives have
received and read the Offering Circular, dated March 7, 1996, relating to the
offering and sale of senior subordinated notes issued by a subsidiary of
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<PAGE> 23
Holdings and the Memorandum to the prospective senior lenders to AMF Group Inc.,
dated April 17, 1996, and have been given the opportunity to examine for a
reasonable time prior to the date hereof all documents and to ask questions of,
and to receive answers from, Holdings and its representatives concerning the
terms and conditions of the investment in the Restricted Stock and to obtain any
additional information which Holdings possesses or can acquire without
unreasonable effort or expense, necessary to verify the accuracy of the
information supplied to them, and the Executive and the Executive's
representatives have received all additional information requested by them, and
no representations have been made to the Executive or such representatives
concerning the Restricted Stock, Holdings, AMF Group Holdings, the Company,
their respective affiliates and subsidiaries, their businesses or prospects or
other matters, except as set forth in this Agreement; and (g) the Executive is
an officer of the Company and has significant business experience in the bowling
or similar business and, in any such case, expects, after the Transaction, to be
an officer of the Company.
5. Termination of Employment. (a) Death or Disability.
The Executive's employment shall terminate automatically upon the Executive's
death during the Employment Period.
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<PAGE> 24
The Company shall be entitled to terminate the Executive's employment because of
the Executive's Disability during the Employment Period. "Disability" means that
the Executive has been unable, for a period of (i) 120 consecutive days or (ii)
an aggregate of 180 days in a period of 365 consecutive days, to perform his
duties under this Agreement, as a result of physical or mental illness or
injury. A termination of the Executive's employment by the Company for
Disability shall be communicated to the Executive by written notice, and shall
be effective on the 30th day after receipt of such notice by the Executive (the
"Disability Effective Date"), unless the Executive returns to full-time
performance of the Executive's duties in accordance with the provisions of
Section 2 before the Disability Effective Date. In the event of a dispute as to
whether Executive has suffered a Disability, the final determination shall be
made by a licensed physician selected by the Board and acceptable to Executive
in Executive's reasonable judgment.
(b) Not Death or Disability. The Company may terminate the
Executive's employment at any time during the Employment Period with or without
cause. The Executive may terminate his employment at any time during the
Employment Period with or without good reason.
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<PAGE> 25
(c) Date of Termination. Except as provided in Section
3(g)(iv) hereof, the "Date of Termination" means the date of the Executive's
death, the Disability Effective Date, or the date on which the termination of
the Executive's employment by the Company, or by the Executive, is effective, as
the case may be.
6. Obligations of the Company Upon Termination. (a) By the
Company, Other Than for Death or Disability. If, during the Employment Period,
the Company terminates the Executive's employment other than due to the
Executive's death or Disability, the Company shall (x) pay the amounts
described in subparagraph (i) below to the Executive in a lump sum in cash
within 30 days after the Date of Termination; (y) shall continue the benefits
described in subparagraph (ii) below until the first anniversary of the Date of
Termination and (z) if, following receipt of the audited consolidated financial
statements of Holdings with respect to the fiscal year during which the
Executive's employment was so terminated by the Company, it is determined that
the Targets for such fiscal year were met, pay to Executive, within 30 days
after such audited consolidated financial statements are available, the
Allocable Bonus Amount as defined in paragraph (iii) below:
(i) The amounts to be paid in a lump sum as described above
are:
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<PAGE> 26
A. The Executive's accrued but unpaid cash
compensation (the "Accrued Obligations"), which shall equal
the sum of (1) any portion of the Executive's Annual Base
Salary through the Date of Termination that has not yet been
paid; (2) any compensation previously deferred by the
Executive (together with any accrued interest or earnings
thereon) that has not yet been paid; and (3) any accrued but
unpaid vacation pay; and
B. Severance pay equal to the Annual Base Salary.
(ii) The benefits to be continued as described above and
in paragraph (b) below are benefits to the Executive and/or the Executive's
family at least as favorable as those that would have been provided to them
under Subparagraph (ii) of paragraph (c) of Section 3 of this Agreement if the
Executive's employment had continued until the first anniversary of the Date of
Termination; provided, however, that during any period when the Executive is
eligible to receive such benefits under another employer-provided plan, the
benefits provided by the Company under this subparagraph may be made secondary
to those provided under such other plan; and provided further, however, that the
Company shall not be required to continue any life insurance on the life of the
Executive unless such continuation is provided for or permitted under the
applicable plan or policy. For purposes of determining eligibility (but not the
time of commencement of benefits) of the Executive for retiree benefits under
this Subparagraph (ii), the Executive shall be
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<PAGE> 27
deemed to have retired on the first anniversary of the Date of Termination.
(iii) The "Allocable Bonus Amount" is the amount of Annual
Bonus, based on the actual results for the entire fiscal year, that Executive
would have received for the fiscal year in which his employment was terminated
by the Company or, for purposes of paragraph (b) below, for the fiscal year in
which Executive dies or in which the Executive's employment is terminated due to
Disability, had the Executive been employed for such entire fiscal year,
multiplied by a fraction, (x) the numerator of which is the number of days
during such fiscal year during which the Executive was employed hereunder and
(y) the denominator of which is 365.
(b) Death or Disability. If the Executive's employment is
terminated by reason of the Executive's death or Disability during the
Employment Period, the Company shall (x) pay the Accrued Obligations to the
Executive or the Executive's estate or legal representative, as applicable, in a
lump sum in cash within 30 days after the Date of Termination; (y) pay to the
Executive or the Executive's estate or legal representative the amount, if any,
of the Allocable Bonus Amount within 30 days after Holdings' audited
consolidated financial statements for the fiscal year during which the
Executive's employment terminated due to death or Disability are available; and
(z)
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<PAGE> 28
continue the benefits described in Subparagraph (ii) of paragraph (a) of Section
6 on the terms and conditions therein contained until the first anniversary of
Executive's Date of Termination, and the Company shall have no further
obligations under this Agreement except as set forth in Sections 3(f)(vii) and
3(f)(viii).
(c) By the Executive. If the Executive terminates his
employment with the Company, the Company shall pay to the Executive in a lump
sum in cash any portion of Executive's Annual Base Salary through the Date of
Termination that has not yet been paid, and the Company shall have no further
obligations under this Agreement.
(d) Effect of Employment of Executive by Certain Stock or
Asset Purchaser. If all or substantially all of the stock or assets of the
Company is sold or otherwise disposed of to a third party not affiliated with
Holdings, and the Executive is not employed by Holdings or one of its continuing
affiliates immediately thereafter, then, for all purposes of this Agreement, the
Executive's employment shall be deemed to have been terminated by the Company
effective as of the date of such sale or other disposition; provided, however,
that the Company and Holdings shall have no obligations to the Executive under
Section 6 of this Agreement if the Executive is hired by the
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<PAGE> 29
purchaser of the stock or assets of the Company or if the Executive's employment
is continued by the Company.
7. Full Settlement. The Company's and Holdings' obligations
to make the payments provided for in, and otherwise to perform their obligations
under, this Agreement shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action that the Company or Holdings
may have against the Executive or others. In no event shall the Executive be
obligated to seek other employment or take any other action by way of mitigation
of the amounts payable to the Executive under any of the provisions of this
Agreement and, except as specifically provided in Subparagraph (ii) of paragraph
(a) of Section 6, such amounts shall not be reduced, regardless of whether the
Executive obtains other employment.
8. Confidential Information. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company, Holdings or any company
affiliated with either and their respective businesses that the Executive
obtains during the Executive's employment by the Company and that is not public
knowledge (other than as a result of the Executive's violation of this Section
8) ("Confidential Information"). The Executive shall not communicate, divulge or
disseminate Confidential Information at any time during or after the Executive's
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<PAGE> 30
employment with the Company, except with the prior written consent of the
Company or Holdings, as the case may be, or as otherwise required by law.
9. Noncompetition; Nonsolicitation. (a) Unless Executive's
employment is terminated by the Company without cause, during the Employment
Period and during the two-year period following any termination of the
Executive's employment with the Company and any of its affiliates, including due
to expiration of the Employment Period or, if longer, during the five-year
period from and after the Closing (the longer of such periods are hereinafter
referred to as the "Restriction Period"), the Executive shall not directly or
indirectly participate in or permit his name directly or indirectly to be used
by or become associated with (including as an advisor, representative, agent,
promoter, independent contractor, provider of personal services or otherwise)
any person, corporation, partnership, firm, association or other enterprise or
entity that is, or intends to be, engaged in any business which is in
competition with the business of the Company, Holdings or any of their
respective subsidiaries or controlled affiliates in any country in which the
Company, Holdings or any of their respective subsidiaries or controlled
affiliates operate, compete or are engaged in such business or at such time
intend so
-30-
<PAGE> 31
to operate, compete or become engaged in such business (a "Competitor"). For
purposes of this Agreement, the term "participate" includes any direct or
indirect interest, whether as an officer, director, employee, partner, sole
proprietor, trustee, beneficiary, agent, representative, independent contractor,
consultant, advisor, provider of personal services, creditor, owner (other than
by ownership of less than five percent of the stock of a publicly-held
corporation whose stock is traded on a national securities exchange or in the
over-the-counter market).
(b) Unless Executive's employment is terminated by the Company
without cause, during the portion of the Restriction Period following any
termination of the Executive's employment with the Company and any of its
affiliates, the Executive shall not, directly or indirectly, encourage or
solicit, or assist any other person or firm in encouraging or soliciting, any
person that during the two-year period preceding such termination of the
Executive's employment with the Company is or was engaged in a business
relationship with the Company, Holdings or any of their respective subsidiaries
or controlled affiliates to terminate its relationship with the Company,
Holdings or any of their respective subsidiaries or controlled affiliates or to
engage in a business relationship with a Competitor.
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<PAGE> 32
(c) During the portion of the Restriction Period following any
termination of the Executive's employment with the Company and any of its
affiliates, the Executive will not, except with the prior written consent of the
Company or Holdings, as the case may be, directly or indirectly, induce any
employee of the Company, Holdings or any of their respective subsidiaries or
controlled affiliates to terminate employment with such entity, and will not,
directly or indirectly, either individually or as owner, agent, employee,
consultant or otherwise, employ, offer employment or cause employment to be
offered to any person (including employment as an independent contractor) who is
or was employed by the Company, Holdings or any of their respective subsidiaries
or controlled affiliates unless such person shall have ceased to be employed by
such entity for a period of at least 9 months.
(d) Promptly following the Executive's termination of
employment, including due to expiration of the Employment Period, the Executive
shall return to the Company and Holdings all property of the Company, Holdings
and their respective subsidiaries and affiliates, and all copies thereof in the
Executive's possession or under his control, including, without limitation, all
Confidential Information in whatever media such Confidential Information is
maintained.
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<PAGE> 33
(e) The Executive acknowledges and agrees that the Restriction
Period and the covenants and obligations of the Executive in Section 8 and this
Section 9 with respect to noncompetition, nonsolicitation and confidentiality
and with respect to the property of the Company, Holdings and their respective
subsidiaries and controlled affiliates, and the territories covered thereby, are
fair and reasonable and the result of negotiation. The Executive further
acknowledges and agrees that the covenants and obligations of the Executive in
Section 8 and this Section 9 with respect to noncompetition, nonsolicitation and
confidentiality and with respect to the property of the Company, Holdings and
their respective subsidiaries and controlled affiliates, and the territories
covered thereby, relate to special, unique and extraordinary matters and that a
violation of any of the terms of such covenants and obligations will cause the
Company, Holdings and their respective subsidiaries and affiliates irreparable
injury for which adequate remedies are not available at law. Therefore, the
Executive agrees that the Company and Holdings shall be entitled to an
injunction, restraining order or such other equitable relief as a court of
competent jurisdiction may deem necessary or appropriate to restrain the
Executive from committing any violation of such covenants and obligations. These
injunctive remedies are cumulative and are in addition to any other rights and
remedies the Company and Holdings may have at law or in
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<PAGE> 34
equity. If, at the time of enforcement of Section 8 and/or this Section 9, a
court holds that the restrictions stated herein are unreasonable under
circumstances then existing, the parties hereto agree that the maximum period,
scope, or geographical area legally permissible under such circumstances will be
substituted for the period, scope or area stated herein.
10. Successors. (a) This Agreement is personal to the
Executive and, without the prior written consent of the Company, shall not be
assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by
the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company, Holdings and their respective successors and assigns.
(c) Each of the Company and Holdings, as the case may be,
shall require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise (an "Acquisition")) to all or substantially all of
the business and/or assets of the Company or Holdings, as the case may be,
expressly to assume and agree to perform this Agreement in the same manner and
to the same extent that the Company or Holdings, as the case may be, would have
been required to perform it if no
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<PAGE> 35
such succession had taken place (or, with respect to Restricted Stock and
Options, by substituting for such Restricted Stock and/or Options new restricted
stock and/or stock options, based upon the stock of such successor, having a
value, in the case of Restricted Stock, or an aggregate spread between the Fair
Market Value of the underlying stock and the Original Price thereof, and the
same term, in the case of Options, immediately after such substitution, equal to
the value (in the case of Restricted Stock), or spread on, and the term of (in
the case of Options), such Restricted Stock and/or Options immediately before
such substitution); provided, however, that Holdings or its successor may, at
its option, at the time of or promptly after such Acquisition (whether with
respect to Holdings or the Company), terminate all of its obligations hereunder
with respect to the Restricted Stock and/or Options by paying to the Executive
or the Executive's successors or assigns an amount equal to the product of (i)
the number of shares then subject to the restrictions of Section 3(f) and, if
applicable, Options and (ii) the Fair Market Value per share (which, to the
extent applicable, shall be determined by giving appropriate consideration to
the consideration paid in any such Acquisition) of the shares underlying such
Restricted Stock and such Options at the time of such Acquisition less, in the
case of each Option, the amount of such Option's exercise price (but not in
excess of such Fair Market Value per share), in either case, in exchange
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for such Executive's Restricted Stock and/or Options. As used in this Agreement,
"Company" shall mean both the Company as defined above and any such successor
that assumes and agrees to perform this Agreement, by operation of law or
otherwise, and "Holdings" shall mean both Holdings as defined above and any such
successor that assumes and agrees to perform this Agreement, by operation of law
or otherwise.
11. Miscellaneous. (a) This Agreement shall be governed by,
and construed in accordance with, the laws of the State of New York, without
reference to principles of conflict of laws. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified except by a written agreement executed
by the parties hereto or their respective successors and legal representatives.
(b) All notices and other communications under this Agreement
shall be in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Executive:
Robert L. Morin
6008 Treyburn Place
Glen Allen, VA 23060
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<PAGE> 37
If to the Company:
AMF Bowling, Inc.
8800 AMF Drive
Mechanicsville, VA 23111
Attention: Corporate Secretary
If to Holdings:
c/o Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004
Attention: David J. Greenwald, Esq.
or to such other address as either party furnishes to the other in writing in
accordance with this paragraph (b) of Section 11. Notices and communications
shall be effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) Notwithstanding any other provision of this Agreement,
the Company and/or Holdings, as appropriate, may withhold from amounts payable
under this Agreement all Federal, state, local and foreign taxes that are
required to be withheld by applicable laws or regulations. No later than any
date as of which an amount first becomes includible in the gross income of the
Executive for federal income tax purposes with respect to any Options, the
Executive shall pay to the Company and/or
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Holdings, as appropriate, or make arrangements satisfactory to the Company
and/or Holdings, as appropriate, regarding the payment of, all federal, state,
local and foreign taxes that are required by applicable laws and regulations to
be withheld with respect to such amount. If the Executive desires to use
unrestricted, unencumbered stock to pay any required withholding taxes, the
Company and/or Holdings will cooperate with the Executive in that regard. The
obligations of the Company and/or Holdings, as appropriate, under paragraph (g)
of Section 3 of this Agreement shall be subject to this paragraph (d).
(e) The Executive's or the Company's, or Holdings' failure to
insist upon strict compliance with any provision of, or to assert any right
under, this Agreement shall not be deemed to be a waiver of such provision or
right or of any other provision of or right under this Agreement.
(f) The Executive, the Company and Holdings each acknowledges
that this Agreement (together with the Stockholders Agreement and the other
agreements referred to herein and therein) supersedes all other agreements and
understandings, both written and oral, among the parties or any of them
concerning the subject matter hereof, and any prior employment agreement between
the Executive and any direct or indirect subsidiary of Holdings, after giving
effect to the consummation of the Transaction, is hereby terminated.
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<PAGE> 39
(g) The parties hereto agree that, notwithstanding anything
to the contrary herein, the purchase and sale of the Restricted Stock
contemplated by Section 3(f)(i) of this Agreement, including the execution and
delivery of the note and related stock pledge agreement referred to in Section
3(f)(i), may be consummated within one day of the execution and delivery hereof.
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<PAGE> 40
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization of their respective Board of
Directors, each of the Company and AMF Group Holdings has caused this Agreement
to be executed in its name on its behalf, all as of the day and year first above
written.
/s/ R.L. Morin
------------------------------------
Robert L. Morin
AMF BOWLING, INC.
By /s/ R.L. Morin
---------------------------------
Its President
----------------------------
AMF HOLDINGS INC.
By /s/ Terence M. O'Toole
---------------------------------
Its Vice President
----------------------------
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<PAGE> 41
EXHIBIT A
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (the "Stock Pledge Agreement") dated May 2,
1996 is made and entered into by and between AMF Holdings Inc., a Delaware
corporation ("Holdings"), and Robert L. Morin (the "Pledgor").
W I T N E S S E T H:
WHEREAS, Holdings and Pledgor have entered into a certain Employment
Agreement dated as of the date hereof by and among the Pledgor, Holdings and a
subsidiary of Holdings (as such agreement may be amended from time to time, the
"Employment Agreement") whereby Holdings has agreed to issue and sell 150,000
shares of common stock, par value $0.01 per share, of Holdings (the "Initial
Pledged Shares," and together with the Additional Pledged Shares (as defined
below), the "Shares") to the Pledgor, all of which Shares are (or, in the case
of the Additional Pledged Shares upon their acquisition by Pledgor, will be)
subject to this Stock Pledge Agreement. Capitalized terms used herein and not
otherwise defined shall have the same meanings ascribed to them in the
Employment Agreement;
WHEREAS, in consideration of the loan by Holdings to the Pledgor of
$1,000,000, receipt of which by the Pledgor is hereby acknowledged, to enable
the Pledgor to purchase certain of the Initial Pledged Shares, the Pledgor is
delivering to Holdings a duly executed Non-Recourse Secured Promissory Note of
the Pledgor (as referred to in Section 3(f) of the Employment Agreement) in the
principal amount of $1,000,000 dated as of the date hereof (as such note may be
amended from time to time, the "Management Note");
WHEREAS, the Pledgor wishes to grant further security and assurance to
Holdings in order to secure the payment of the principal of, interest on and all
fees, expenses and other amounts owing in respect of, the Management Note and to
pledge to Holdings the Initial Pledged Shares along with any and all additional
Shares, which shall be issued or sold to the Pledgor at any time after the date
of this Agreement as a result of the exercise of the options granted to the
Pledgor on the date hereof and at any time hereafter, or any other Shares
otherwise acquired by Pledgor from and after the date hereof (collectively, the
"Additional Pledged Shares"), and certain additional collateral as provided in
this Agreement; and
<PAGE> 42
WHEREAS, Pledgor, Holdings and certain other stockholders of Holdings
have entered into a Stockholders Agreement, dated as of April 30, 1996, with
respect to certain matters relating to Holdings and its common stock (the
"Stockholders Agreement").
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
Section 1. Pledge. As collateral security for the full and timely
payment of the principal of, interest on, and all fees, expenses and other
amounts owing in respect of, the Management Note, the Pledgor hereby delivers,
deposits, pledges, transfers and assigns to Holdings, in form transferable for
delivery, and creates in Holdings a continuing security interest in (i) the
Initial Pledged Shares, all Additional Pledged Shares and all certificates or
other instruments or documents evidencing any of the above now owned or
hereafter acquired by the Pledgor (together with any securities or property to
be delivered to the Pledgor pursuant to Section 2(b) hereof, the "Pledged
Securities") (ii) all dividends, payments and distributions of every kind due
and payable or distributable in respect of all or any of the Pledged Securities
(the "Pledged Dividends") and (iii) all other property, assets, accounts and
moneys received by Pledgor in respect of the Pledged Securities or the sale,
transfer, assignment, encumbrance or other disposition thereof (together with
the Pledged Securities and Pledged Dividends, the "Collateral").
The Pledgor hereby delivers to Holdings appropriate undated security
transfer powers duly executed in blank for the Pledged Securities set forth
above and will deliver appropriate undated security transfer powers duly
executed in blank for the Pledged Securities to be pledged hereunder from time
to time hereafter.
Section 2. Administration of Collateral. The following provisions shall
govern the administration of the Collateral:
(a) So long as no Event of Default has occurred and is continuing (as
used herein, "Event of Default" shall mean the occurrence of any Event of
Default under the Management Note), the Pledgor shall be entitled to act with
respect to the Pledged Securities in any manner not inconsistent with this Stock
Pledge Agreement, the Stockholders Agreement, the Employment Agreement or the
Management Note, including voting
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<PAGE> 43
the Pledged Securities and, subject to its prepayment obligations under the
Management Note, receiving all cash Pledged Dividends and giving consents,
waivers and ratifications in respect thereof.
(b) If, while this Stock Pledge Agreement is in effect, the Pledgor (or
any of the Pledgor's Permitted Transferees (as such term is defined in the
Management Note)) shall become entitled to receive or shall receive any debt or
equity security certificate (including, without limitation, any certificate
representing a stock dividend or a distribution in connection with any
reclassification, increase or reduction of capital, or issued in connection with
any reorganization), option or right, whether as a dividend or distribution in
respect of, in substitution of, or in exchange for any Pledged Securities, or in
the event of a recapitalization, reclassification or similar transaction, the
Pledgor and each of the Pledgor's Permitted Transferees agrees to accept the
same as Holdings's agent and to hold the same in trust on behalf of and for the
benefit of Holdings and to deliver the same forthwith to Holdings in the exact
form received, with the endorsement of the Pledgor and the Pledgor's Permitted
Transferees when necessary and/or appropriate undated security transfer powers
duly executed in blank, to be held by Holdings, subject to the terms of this
Stock Pledge Agreement, as additional collateral security for the Management
Note. Notwithstanding the foregoing, it is agreed that the Pledgor or any of the
Pledgor's Permitted Transferees may exercise any option or right received as
contemplated in the preceding sentence, and Holdings will exercise any such
option or right upon receipt of written instructions to such effect, accompanied
by any required payments or documents from the Pledgor or the Pledgor's
Permitted Transferees, and the securities received upon such exercise of any
such option or right shall thereafter be held by Holdings or, if received by the
Pledgor or such Pledgor's Permitted Transferees, be delivered to Holdings
forthwith as contemplated by the preceding sentence.
(c) The Pledgor and each of the Pledgor's Permitted Transferees shall
immediately upon request by Holdings and in confirmation of the security
interests hereby created, execute and deliver to Holdings such further
instruments, deeds, transfers, assurances and agreements, in such form and
substance as Holdings shall request, including any financing statements and
amendments thereto, or any other documents, required under New York law and any
other applicable law to protect the security interests created hereunder.
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<PAGE> 44
(d) Subject to any sale by Holdings or other disposition by Holdings of
the Pledged Securities or other Collateral pursuant to this Stock Pledge
Agreement, and subject to Section 5 below, the Collateral shall be returned to
the Pledgor upon payment in full of the unpaid principal of, accrued interest
on, and all fees, expenses and other amounts owing in respect of the Management
Note.
(e) Holdings shall have the right to release the Collateral or a
portion thereof, at any time, including in connection with any right of Holdings
or any affiliate thereof to acquire such Collateral pursuant to this Stock
Pledge Agreement, the Stockholders Agreement, the Employment Agreement or
otherwise, but the determination to release such Collateral at any time shall be
in the sole discretion of Holdings and Holdings shall not be required to do so,
except to the extent otherwise specifically provided in this Stock Pledge
Agreement.
Section 3. Remedies in Case of an Event of Default.
(a) In case an Event of Default shall have occurred and be continuing,
Holdings shall have in each case all of the remedies of a secured party under
the New York Uniform Commercial Code, and, without limiting the foregoing, shall
have the right, in its sole discretion, to sell, resell, assign and deliver all
or, from time to time, any part of the Collateral, including without limitation,
the Pledged Securities, and any interest in or option or right to purchase any
part thereof, on any securities exchange on which the Pledged Securities or any
of them may be listed, at any private sale or public auction, with or without
demand of performance or other demand, advertisement or notice of the time or
place of sale or adjournment thereof or otherwise (except that Holdings shall
give ten days' notice to the Pledgor of the time and place of any sale pursuant
to this Section 3), for cash, on credit or for other property, for immediate or
future delivery, and for such price or prices and on such terms as Holdings
shall, in its sole discretion, determine, the Pledgor and the Pledgor's
Permitted Transferees hereby waiving and releasing any and all right or equity
of redemption whether before or after sale hereunder. At any such sale Holdings
may bid for and purchase the whole or any part of the Collateral so sold free
from any such right or equity of redemption. Holdings shall apply the proceeds
of any such sale first to the payment of all costs and expenses, including
reasonable attorneys' fees, incurred by Holdings in enforcing its rights under
this Stock Pledge Agreement, second to the payment of all fees, expenses and
other amounts
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<PAGE> 45
owing in respect of the Management Note, third to the accrued and unpaid
interest on the Management Note and fourth to the unpaid principal of the
Management Note.
(b) The Pledgor and the Pledgor's Permitted Transferees recognize that
Holdings may be unable to effect a public sale of all or a part of the
Collateral by reason of certain prohibitions contained in the Securities Act of
1933, as amended (the "Securities Act"), or in the rules and regulations
promulgated thereunder or in applicable state securities, or "blue sky," laws,
but may be compelled to resort to one or more private sales to a restricted
group of purchasers who will be obliged to agree, among other things, to acquire
the Collateral for their own account, for investment and not with a view to the
distribution or resale thereof. The Pledgor and the Pledgor's Permitted
Transferees agree that private sales so made may be at prices and on other terms
less favorable to the seller than if the Collateral was sold at public sale, and
that Holdings has no obligation to delay the sale of the Collateral for the
period of time necessary to permit the registration of the Pledged Securities or
other Collateral for public sale under the Securities Act and under applicable
state securities, or "blue sky," laws. The Pledgor and the Pledgor's Permitted
Transferees agree that a private sale or sales made under the foregoing
circumstances shall be deemed to have been made in a commercially reasonable
manner.
(c) If any consent, approval or authorization of any state, municipal
or other governmental department, agency or authority should be necessary to
effectuate any sale or disposition by Holdings pursuant to this Section 3 of the
Collateral, the Pledgor and each of the Pledgor's Permitted Transferees will
execute all such applications and other instruments as may be required in
connection with securing any such consent, approval or authorization, and will
otherwise use their best efforts to secure the same.
(d) Neither failure nor delay on the part of Holdings to exercise any
right, remedy, power or privilege provided for herein or by statute or at law or
in equity shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, remedy, power or privilege preclude any other or
further exercise thereof or the exercise of any other right, remedy, power or
privilege.
Section 4. Pledgor's Obligations Not Affected. The obligations of the
Pledgor and each of the Pledgor's Permitted Transferees under this Stock Pledge
Agreement shall remain in full force and effect without regard to, and shall
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<PAGE> 46
not be impaired or affected by (a) any subordination, amendment or modification
of or addition or supplement to the Employment Agreement, the Stockholders
Agreement or the Management Note, or any assignment or transfer of any thereof;
(b) any exercise or non-exercise by Holdings of any right, remedy, power or
privilege under or in respect of this Stock Pledge Agreement, the Stockholders
Agreement, the Employment Agreement or the Management Note, or any waiver of any
such right, remedy, power or privilege; (c) any waiver, consent, extension,
indulgence or other action or inaction in respect of this Stock Pledge
Agreement, the Stockholders Agreement, the Employment Agreement or the
Management Note, or any assignment or transfer of any thereof; or (d) any
bankruptcy, insolvency, reorganization, arrangement, readjustment, composition,
liquidation or the like, of Holdings, whether or not the Pledgor and the
Pledgor's Permitted Transferees shall have notice or knowledge of any of the
foregoing.
Section 5. Transfer by Pledgor. The Pledgor and the Pledgor's Permitted
Transferees will not sell, assign, transfer or otherwise dispose of, grant any
option with respect to, or mortgage, pledge or otherwise encumber the Pledged
Securities or any interest therein except as provided in the Employment
Agreement or the Stockholders Agreement. In the event of a sale, assignment,
transfer or other disposition of or mortgage, pledge or other encumbrance of
Pledged Securities pursuant to the Employment Agreement or the Stockholders
Agreement, the Pledged Securities so sold, assigned, transferred or otherwise
disposed of or mortgaged, pledged or otherwise encumbered shall remain subject
to the provisions of this Stock Pledge Agreement, except as provided in the next
succeeding sentence, and no such sale, assignment, transfer or other disposition
of or mortgage, pledge or other encumbrance of Pledged Securities may be
effected unless and until the proposed purchaser, assignee, transferee or other
acquiror, mortgagee or pledgee shall agree in writing, in form and substance
satisfactory to Holdings in its sole discretion, to be bound by all the terms of
this Stock Pledge Agreement with the same force and effect as if such transferee
were a party hereto. If the Pledgor (or any of the Pledgor's Permitted
Transferees) shall sell, assign, transfer or otherwise dispose of any Shares to
anyone other than a Permitted Transferee in accordance with the terms of this
Stock Pledge Agreement, the Stockholders Agreement and the Employment Agreement,
Holdings shall release such Shares from the pledge hereunder to the extent that,
(i) after such release, the fair market value of Shares (as determined by the
Board of Directors of Holdings) owned by the Pledgor and the
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<PAGE> 47
Pledgor's Permitted Transferees and subject to the liens created by this Stock
Pledge Agreement exceeds 125% of the principal amount of the Management Note of
the Pledgor then outstanding (the "Management Note Amount") and (ii) the Pledgor
complies with its prepayment obligations under Section 1 of the Management Note
in connection with such sale, assignment, transfer or other disposition.
Section 6. Attorney-in-Fact. Holdings is hereby appointed the
attorney-in-fact of the Pledgor and the Pledgor's transferees for the purpose of
carrying out the provisions of this Stock Pledge Agreement and taking any action
and executing any instrument that Holdings reasonably may deem necessary or
advisable to accomplish the purposes hereof, including without limitation, the
execution of the applications and other instruments described in Section 3(c)
hereof, which appointment as attorney-in-fact is irrevocable as one coupled with
an interest.
Section 7. Termination. Upon the indefeasible payment in full of the
unpaid principal of, accrued interest on, and all fees, expenses and other
amounts owing in respect of, the Management Note, or upon the sale of all
Collateral (provided that there is no ongoing obligation to further pledge any
additional Collateral in the future) and, in either case, upon the due
performance of and compliance with all the provisions of this Stock Pledge
Agreement, the Stockholders Agreement, the Employment Agreement and the
Management Note, this Stock Pledge Agreement and all liabilities of Pledgor
hereunder shall terminate and the Pledgor shall be entitled to the return of
such of the Pledged Securities and other Collateral as have not theretofore been
sold, released pursuant to Section 5 hereof or otherwise applied pursuant to the
provisions of this Stock Pledge Agreement free of the lien and security interest
in such Pledged Securities and other Collateral created hereunder in favor of
Holdings.
Section 8. Notices. All notices or other communications required or
permitted to be given hereunder shall be delivered as provided in the Employment
Agreement.
Section 9. Binding Effect, Successors and Assigns. This Stock Pledge
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns and nothing herein is intended or
shall be construed to give any other person any right, remedy or claim under, to
or in respect of this Stock Pledge Agreement. Other than transfers satisfying
the requirements of the last sentence of Section 5 hereof for release of Shares
from the pledge hereunder, no transfer of Pledged Securities
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<PAGE> 48
of the Pledgor (including, without limitation, to the Pledgor's Permitted
Transferees) shall be permitted hereunder, and any such transfer shall be null
and void, unless and until each such transferee (including, without limitation,
a Permitted Transferee) agrees in writing, in form and substance satisfactory to
Holdings in its sole discretion, to become bound by this Stock Pledge Agreement
with respect to the Pledged Securities so transferred.
Section 10. Miscellaneous. Holdings and its assigns shall have no
obligation in respect of the Pledged Securities, except to hold and dispose of
the same in accordance with the terms of this Stock Pledge Agreement. Neither
this Stock Pledge Agreement nor any provision hereof may be amended, modified,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the amendment, modification,
waiver, discharge or termination is sought. The provisions of this Stock Pledge
Agreement shall be binding upon the successors and assigns of the Pledgor and
each of the Pledgor's Permitted Transferees. The captions in this Stock Pledge
Agreement are for convenience of reference only and shall not define or limit
the provisions hereof. This Stock Pledge Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York,
without regard to the principles of conflicts of law thereof. This Stock Pledge
Agreement may be executed simultaneously in counterparts, each of which is an
original, but all of which together shall constitute one instrument.
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<PAGE> 49
IN WITNESS WHEREOF, the parties hereto have caused this Stock Pledge
Agreement to be executed and delivered on the date first written above.
PLEDGOR:
/s/ R.L. Morin
--------------------------------------
Robert L. Morin
PLEDGEE:
AMF HOLDINGS INC.
By /s/ Terence M. O'Toole
--------------------------------------
Name: Terence M. O'Toole
Title: Vice President
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<PAGE> 1
EXHIBIT 10.8
EMPLOYMENT AGREEMENT
AGREEMENT (the "Agreement") by and among, AMF Holdings Inc., a
Delaware corporation ("Holdings"), AMF Group Inc., a Delaware corporation (the
"Company"), and Douglas Stanard (the "Executive"), dated as of the 1st day of
May, 1996.
WHEREAS, AMF Group Holdings Inc., a Delaware corporation ("AMF
Group Holdings"), has, simultaneously with the execution and delivery of this
Agreement, directly or indirectly, acquired all of the outstanding common stock
of the Company, along with the capital stock and/or assets of certain related
entities (the "Transaction") pursuant to that certain Stock Purchase Agreement
dated February 16, 1996 (the "Stock Purchase Agreement");
WHEREAS, the Boards of Directors of Holdings and the Company
have determined that it will be in the best interests of Holdings, the Company
and their respective shareholders to retain the employment of the Executive as
Chief Operating Officer of the Company after the Transaction and the Executive
desires to serve in that capacity;
WHEREAS, Holdings desires to obtain for its benefit, through
its ownership of the Company, the benefit of the Executive's services as set
forth in this Agreement;
<PAGE> 2
WHEREAS, the Executive desires to participate in the
Transaction as an equity investor in Holdings;
WHEREAS, the Executive is joining the Board of Directors of
Holdings; and
WHEREAS, Holdings, the Company and the Executive desire to set
forth in a written agreement the terms and conditions under which the Executive
will acquire an equity interest in Holdings in connection with the Transaction
and will continue to be employed by the Company after the Transaction;
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. Employment Period. The Company shall employ the Executive,
and the Executive agrees to, and shall, serve the Company, on the terms and
conditions set forth in this Agreement, for the period commencing on the date
hereof and ending on the third anniversary of such date (the "Employment
Period").
2. Position and Duties. (a) During the Employment Period, the
Executive shall be the Chief Operating Officer of the Company with such duties
and responsibilities as are assigned to him by the Board of Directors of the
Company (the "Board") consistent with his position as Chief Operating Officer of
the Company, including, as the Board may request, to serve as an officer or
director of certain affiliated entities
-2-
<PAGE> 3
of the Company or Holdings including as President of AMF Bowling Centers, Inc.
(b) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive shall
devote his full attention and time during normal business hours to the business
and affairs of the Company and shall perform his services primarily at the
Company's headquarters, wherever the Board may from time to time designate them
to be, but in any case, within a 50 mile radius of Richmond, Virginia, and to
the extent necessary to discharge the responsibilities assigned to the Executive
under this Agreement, use the Executive's reasonable best efforts to carry out
such responsibilities faithfully and efficiently. It shall not be considered a
violation of the foregoing for the Executive to (i) serve on civic or charitable
boards or committees, (ii) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (iii) manage personal investments, so long
as such activities do not compete with and are not provided to or for any entity
that competes with or intends to compete with the Company or any of its
subsidiaries and affiliates and do not interfere significantly with the
performance of the Executive's responsibilities as an employee of the Company in
accordance with this Agreement.
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<PAGE> 4
3. Compensation. (a) Base Salary. During the Employment
Period, the Executive shall receive from the Company an annual base salary
("Annual Base Salary") of $350,000, payable in equal installments at intervals
not less frequent than monthly. Executive's Annual Base Salary may be increased
by the Board which shall review it annually. Executive's Annual Base Salary
shall not be reduced below $350,000, and the term Annual Base Salary as utilized
in this Agreement shall refer to Annual Base Salary as so increased.
(b) Other Compensation. In addition to the Annual Base Salary,
for each fiscal year or portion of a fiscal year ending during the Employment
Period, the Executive shall earn an annual bonus (the annual bonus from time to
time in effect for the then current fiscal year is referred to as the "Annual
Bonus") equal to 50% of the Executive's Annual Base Salary if certain
operational and financial targets determined by the Board (the "Targets") are
attained (such Annual Bonus to be reduced pro rata with respect to each fiscal
year during the Employment Period for which such bonus would be payable to the
extent that the full fiscal year is not included in the Employment Period (based
on the actual number of days of such fiscal year that were included in the
Employment Period)). The Company will structure the Annual Bonus so that the
Executive will earn an Annual Bonus to be determined by the Board that will be
less than 50% of the Executive's Annual Base Salary if less
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<PAGE> 5
than 100% but at least 90% of the Targets are attained (reduced in the same
manner as the full Annual Bonus with respect to fiscal years which are not fully
included in the Employment Period). The Targets, and the bonus percentage if the
Targets are not fully achieved but are at least 90% achieved, as described
above, shall be determined by the Board each year prior to the end of the first
fiscal quarter for the year to which such Targets and bonus percentage shall
apply; provided, however, that such Targets and bonus percentage for 1996 shall
be determined within 90 days after the date hereof. Each Annual Bonus shall be
paid in a single cash lump sum no later than 30 days after Holdings' audited
consolidated financial statements with respect to the fiscal year for which the
Annual Bonus is awarded are available.
Notwithstanding the foregoing provisions of this paragraph
3(b), for purposes of determining Executive's Annual Bonus for 1996, the Targets
set by the Board shall be no higher than the operational and financial goals
contained in the Goldman, Sachs & Co. Base Case Model for 1996, as previously
reviewed by the Company and the Executive.
(c) Other Benefits. During the Employment Period: (i) the
Executive shall be entitled to participate in all incentive, savings and
retirement plans, practices, policies and programs of the Company to the same
extent as peer executives;
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<PAGE> 6
and (ii) the Executive and/or the Executive's family, as the case may be, shall
be eligible for participation in, and shall receive all benefits under, all
welfare benefit plans, practices, policies and programs provided by the Company
(including, to the extent provided, without limitation, medical, prescription,
dental, disability, salary continuance, employee life insurance, group life
insurance, accidental death and travel accident insurance plans and programs) to
the same extent as peer executives; provided, however, that nothing in this
Agreement shall impose on the Company any obligation to offer to the Executive
participation in any stock, stock option, bonus or other incentive award, plan,
practice, policy or program other than the awards made pursuant to paragraphs
(b), (f) and (g) of this Section 3. The term "peer executives" means the chief
financial officer and/or chief legal officer of the Company, to the extent such
positions exist. Executive shall be entitled to retain for his own personal use
any frequent flyer miles and similar travel awards obtained with respect to the
Executive's travel.
(d) Expenses. During the Employment Period, the Executive
shall be entitled to receive prompt reimbursement for all reasonable travel and
other expenses incurred by the Executive in carrying out the Executive's duties
under this Agreement, provided that the Executive complies with the policies,
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<PAGE> 7
practices and procedures of the Company for submission of expense reports,
receipts, or similar documentation of such expenses. Executive shall be
reimbursed up to $5,000 for his legal fees incurred in connection with or
attributable to the negotiation, execution and delivery of this Agreement and
all other agreements to which he is a party relating to or arising out of the
Transaction.
(e) Vacation. The Executive shall be entitled to 4 weeks of
paid vacation during 1996 and for each subsequent full fiscal year in the
Employment Period and a pro rata portion thereof during each partial fiscal year
in the Employment Period. For 1996, Executive's 4 weeks of paid vacation shall
include paid vacation time taken in 1996 and prior to the date hereof. Up to an
aggregate of 2 weeks of unused vacation may be carried forward to the next
fiscal year in the Employment Period and used therein and any unused vacation in
excess of 2 weeks shall lapse.
(f) Restricted Stock. (i) The Executive hereby agrees to
purchase simultaneously with or promptly following the Closing (as defined in
the Stock Purchase Agreement) 150,000 shares of Holdings' common stock, par
value $.01 per share, at a purchase price of $10.00 per share (the "Original
Price") for an aggregate purchase price of $1,500,000 (the shares so purchased
together with any shares acquired pursuant
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<PAGE> 8
to the exercise of Options (as defined in Section 3(g) of this Agreement) are
collectively referred to herein as the "Restricted Stock"). The Executive shall
make payment therefor, at the Closing, to Holdings by check, money order or wire
transfer. At the Closing, the Executive is borrowing $1,000,000 from Holdings or
an affiliate thereof in order to fund the portion of his purchase of Restricted
Stock pursuant to this Subparagraph (f) in excess of $500,000. The borrowing
shall be secured by, among other things, all of the Restricted Stock purchased
by the Executive pursuant to this Subparagraph (f) and the Restricted Stock
acquired pursuant to the exercise of Options, and shall be evidenced by a
nonrecourse promissory note. The form of note and related stock pledge agreement
are attached hereto as Exhibit A. The Executive has entered into or is entering
into a Stockholders Agreement, by and among Holdings, the Executive and certain
other stockholders of Holdings (the "Stockholders Agreement").
(ii) Shares of Restricted Stock shall be evidenced by issuance
of one or more stock certificates registered in the name of the Executive and
bearing appropriate legends referring to the terms, conditions, and restrictions
applicable to such Restricted Stock, substantially in the following form:
"The transferability of this certificate and the shares of stock
represented hereby are
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<PAGE> 9
subject to the terms, conditions and restrictions (including
forfeiture) of an Employment Agreement between the issuer and
the registered holder hereof. Copies of such Employment
Agreement are on file at the offices of AMF Holdings Inc.
[address]"
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or
under the securities laws of any state, and may not be sold or
otherwise disposed of except pursuant to an effective
registration statement under said Act and applicable state
securities laws or an applicable exemption to the registration
requirements of such Act and laws."
Such shares may bear other legends to the extent the Board or the Board of
Directors of Holdings determines it to be necessary or appropriate, including
any required by Section 2.7 of the Stockholders Agreement. In addition to the
stock pledge referred to in clause (i) of this Subparagraph (f), the Board or
the Board of Directors of Holdings may require that the certificates evidencing
such shares be held in custody by the Company or Holdings until the restrictions
thereon shall have lapsed and that the participant deliver a stock power,
endorsed in blank, relating to the shares of Restricted Stock.
(iii) The Executive shall not be permitted to sell, assign,
transfer, pledge or otherwise encumber any shares of Restricted Stock or
Options, except as provided in Sections 3(f)(vii) and (viii) or as provided in
Sections 2.3, 2.4 and 2.5 of the Stockholders Agreement.
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<PAGE> 10
(iv) Except as otherwise provided in this paragraph (f) or as
may be provided in the Stockholders Agreement, the note or the stock pledge
agreement referred to in Subparagraph (i) of paragraph (f) of this Section 3,
the Executive shall have, with respect to the shares of Restricted Stock, all of
the rights of a stockholder of Holdings holding the class of stock that is the
subject of the Restricted Stock, including the right to vote the shares and the
right to receive any dividends and distributions.
(v) The number and kind of shares included in the Restricted
Stock and issuable upon the exercise of the Options (and the exercise price of
the Options) shall be adjusted to reflect any merger, reorganization,
consolidation, recapitalization, spinoff, stock dividend, stock split,
extraordinary distribution with respect to Holdings' common stock or other
change in corporate structure affecting such common stock, as the Board of
Directors of Holdings or a committee thereof shall deem fair and appropriate.
(vi) If and when all restrictions expire without a prior
forfeiture of the Restricted Stock theretofore subject to such restrictions, new
certificates for such shares shall be delivered to the Executive bearing a
legend in substantially the following form:
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<PAGE> 11
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or
under the securities laws of any state, and may not be sold or
otherwise disposed of except pursuant to an effective
registration statement under said Act and applicable state
securities laws or an applicable exemption to the registration
requirements of such Act and laws."
Such shares may bear other legends to the extent the Board or the Board of
Directors of Holdings determines it to be necessary or appropriate, including
any required by Section 2.7 of the Stockholders Agreement.
(vii) If, prior to the consummation of an IPO (as defined in
this Subparagraph (vii)), the Executive dies or if the Executive's employment by
the Company terminates due to a Disability (as defined in Section 5(a)) or for
any other reason, Holdings shall have the right, at its election, to purchase
all (but not less than all) of the Executive's Restricted Stock within 6 months
after the Date of Termination (as defined in Section 5(c) hereof) at a price
equal to the Fair Market Value (as defined hereafter in this paragraph) of such
Restricted Stock determined as of, in all cases other than the death of the
Executive, the Date of Termination and, in the case of the Executive's death, as
of the date of death. As used in this Agreement, the term "Fair Market Value"
means fair value as determined by Goldman, Sachs & Co. in light of all
circumstances
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<PAGE> 12
including comparable recent bona fide third party sales. To the extent the funds
for such purchase are permitted under the indebtedness of Holdings and its
affiliates and under applicable law to be dividended to Holdings from AMF Group
Inc. (indirectly by a dividend from AMF Group Inc. to AMF Group Holdings Inc.
and then by a dividend from AMF Group Holdings Inc. to Holdings, or otherwise in
accordance with Holdings' then existing corporate structure (collectively, an
"AMF Group Dividend")), Holdings shall pay the purchase price in cash. Holdings
shall fund any amount not permitted to be funded through an AMF Group Dividend
by a Buy-Out Note (as defined hereafter). A "Buy-Out Note" is an unsecured
promissory note of Holdings or a direct or indirect subsidiary thereof which
shall have a stated maturity of 5 years, shall accrue interest at seven percent
per annum, shall be prepayable at the option of Holdings or such subsidiary at
any time, in whole or in part, at its principal amount plus accrued and unpaid
interest, shall provide for the reimbursement of reasonable expenses incurred by
the holder to enforce the note and shall accelerate upon the earlier of a Change
in Control (as defined in Section 3(g)(ii) of this Agreement) or the
consummation of an IPO. Holdings may, in its discretion, assign its rights and
obligations under this Subparagraph (vii) to any other person, but no such
assignment shall relieve Holdings of its primary obligations hereunder to the
extent not satisfied by such assignee. For
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<PAGE> 13
all purposes of this Agreement, the term "IPO" means the consummation of the
registered underwritten public offering or offerings of the common stock of
Holdings with gross proceeds to Holdings in the aggregate of at least $100
million.
(viii) If, prior to the consummation of an IPO, the Executive
dies or if the Executive's employment by the Company is terminated by the
Company due to a Disability or for any other reason, the Executive or the
Executive's legal representative, as the case may be, shall have the right,
within three months after such event (or one year if the event is the
Executive's death), to require Holdings to purchase all (but not less than all)
of the Executive's Restricted Stock at a price equal to (A) in the case of such
death or Disability, the Fair Market Value thereof determined as of the Date of
Termination and (B) in the case of termination by the Company for any other
reason, the product of (x) the number of shares of Restricted Stock and (y) the
Original Price (subject to adjustment, to the extent appropriate, to reflect any
adjustments to the Restricted Stock made pursuant to Subparagraph (v) of this
Section 3(f)). To the extent the funds for such purchase are permitted under the
indebtedness of Holdings and its affiliates and applicable law to be funded
through an AMF Group Dividend, Holdings shall pay the purchase price in cash.
Holdings shall pay any amount not permitted to be funded through an AMF Group
Dividend with a Buy-Out Note. Holdings may, in its discretion,
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<PAGE> 14
assign its rights and obligations under this Subparagraph (viii) to any other
person, but no such assignment shall relieve Holdings of its primary obligations
hereunder to the extent not satisfied by such assignee.
(ix) The restrictions placed on the Executive's right to
transfer the Restricted Stock under this Section 3(f), Holdings' right to
purchase the Executive's Restricted Stock under Section 3(f)(vii), and the
Executive's right to require Holdings to purchase his Restricted Stock under
Section 3(f)(viii), shall terminate on the consummation of an IPO. Any
restrictions under the Stockholders Agreement shall be governed by the terms
thereof and shall survive the termination of the transfer restrictions pursuant
to this Section 3(f).
(x) Any transfer of Restricted Stock otherwise permitted
pursuant to this Agreement shall remain subject to the terms of the note and
stock pledge agreement referred to in clause (i) of this Subparagraph (f) (or
any amendment of such note or stock pledge agreement or any successor thereto)
and the Stockholders Agreement, and shall not be permitted (and any Restricted
Stock pledged pursuant to the stock pledge agreement shall not be released)
other than in accordance with the terms thereof, notwithstanding any provision
of this Agreement that would otherwise permit such transfer.
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<PAGE> 15
(g) Options. (i) Upon the Closing (as defined in the Stock
Purchase Agreement) the Executive is hereby granted options to purchase 130,000
shares of Holdings' common stock (the "Options"). The Executive may exercise any
vested Options granted under this paragraph (g) of Section 3 by payment of the
Original Price per share (as it may be adjusted pursuant to Subparagraph (v) of
Section 3(f) hereof), along with an accompanying written notice of exercise.
Executive may make payment upon the exercise of vested Options by certified or
bank check or such other instrument as Holdings may accept. Promptly after an
IPO, Holdings will establish appropriate procedures to permit so-called
"cashless exercise" of the Options by Executive. Unless sooner exercised or
forfeited as provided for in this Agreement, the Options shall expire on the
tenth anniversary of the date of this Agreement. To the extent not inconsistent
herewith, the Options shall be governed consistent with the provisions of
Holdings' 1996 Stock Incentive Plan (as if this Agreement were an "Option
Agreement" thereunder).
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<PAGE> 16
(ii) The Options shall vest according to the following
schedule:
<TABLE>
<CAPTION>
Years of Employment
Since the date of
the Closing (as
defined in the Stock
Purchase Agreement) Vested Percentage
-------------------- -----------------
<S> <C>
Less than 1 year 0 percent
At least 1 year,
but less than 2 years 20 percent
At least 2 years,
but less than 3 years 40 percent
At least 3 years,
but less than 4 years 60 percent
At least 4 years,
but less than 5 years 80 percent
5 years or more 100 percent
</TABLE>
However, immediately prior to the occurrence of a Change in Control, all Options
shall vest. For purposes of this Agreement, the term "Change in Control" means
(1) the acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act) other than GSCP (as defined in
the Stockholders Agreement) and their affiliates of a majority of the
outstanding voting stock of Holdings or (2) the sale of or other disposition
(other than by way of merger or consolidation) of all or substantially all of
the assets of Holdings and its subsidiaries taken as a whole to any individual,
entity or group (as defined above). Notwithstanding any contrary provision
herein, for all purposes of this Agreement, the sale of one of Holdings' two
main businesses (i.e.,
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<PAGE> 17
(x) manufacturing and related activities and (y) operation of bowling centers)
is not a Change in Control.
(iii) Any shares of Holdings' common stock obtained by the
Executive (or the Executive's legal representative) by exercise of the
Executive's vested Options shall be deemed to be Restricted Stock for all
purposes of this Agreement and, without limitation, shall be subject to the
terms, restrictions and conditions that Restricted Stock is subjected to under
Section 3(f), the note and pledge agreement referred to in clause (i) of this
Section 3(f) and the Stockholders Agreement.
(iv) Upon the Executive's death or when the Executive's
employment is terminated for any reason, the Executive or the Executive's estate
or legal representative:
A. shall forfeit all Options that have not
previously vested;
B. shall have three months to exercise the
Executive's vested Options that are vested on the date of
the Executive's termination of employment if such termination
is for any reason other than the Executive's death; and
C. shall have one year to exercise the Executive's
vested Options that are vested on the date of death if the
Executive's termination of employment is due to the
Executive's death.
Any vested Options not exercised within the permissible period of time shall be
forfeited by the Executive or the Executive's estate or legal representative. If
the Executive's Options are
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<PAGE> 18
exercised after the Executive's death as provided for in this Agreement, then,
solely for purposes of Section 3(f)(vii) of this Agreement, the Executive shall
be deemed to have survived until the date of such exercise (the "Post-Death
Exercise Date") and to have died immediately thereafter and for purposes of said
Section 3(f)(vii) the Date of Termination shall be the Post-Death Exercise Date.
4. Executive's Representations, Warranties and Agreements.
The Executive hereby makes the following representations, warranties and
agreements (which, with respect to Restricted Stock hereafter acquired pursuant
to exercise of Options, shall be deemed to be made as of the date of such
exercise, to the extent appropriate):
(a) Investment Intention; No Resales. The Executive
represents and warrants that such Executive is acquiring the Restricted Stock
for investment purposes only, solely for his own account and not with a view to,
or for resale in connection with, the distribution or other disposition thereof
or with any present intention of distributing or reselling any Restricted Stock
thereof, except for such distributions and dispositions as are both explicitly
permitted under this Agreement and the Stockholders Agreement and effected in
compliance with the Securities Act of 1933, as amended (the "Securities Act")
and the
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<PAGE> 19
rules and regulations thereunder and all applicable state securities, or "blue
sky," laws. The Executive agrees and acknowledges that such Executive will not,
directly or indirectly, offer, transfer, sell, assign, pledge, hypothecate or
otherwise dispose of any Restricted Stock, or solicit any offers to purchase or
otherwise acquire or take a pledge of any Restricted Stock, other than
transfers, sales, assignments, pledges, hypothecations or other dispositions
explicitly permitted by Paragraph (f) of Section 3 and by the Stockholders
Agreement and provided that any such transfer, sale, assignment, pledge,
hypothecation or other disposition is in accordance with the terms and
provisions of such Paragraph and the Stockholders Agreement and (i) the
transfer, sale, assignment, pledge, hypothecation or other disposition is
pursuant to an effective registration statement under the Securities Act and has
been registered under all applicable state securities, or "blue sky," laws, or
(ii) the Executive shall have furnished Holdings with an opinion of counsel
(which counsel and the form and substance of which opinion shall be reasonably
satisfactory to Holdings), to the effect that no such registration is required
because of the availability of an exemption from registration under the
Securities Act and the rules and regulations in effect thereunder and under all
applicable state securities, or "blue sky," laws.
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<PAGE> 20
(b) Stock Unregistered. The Executive acknowledges and
represents that such Executive has been advised that (i) the Restricted Stock
has not been registered under the Securities Act; (ii) the Restricted Stock must
be held for an indefinite period and such Executive must continue to bear the
economic risk of the investment in the Restricted Stock unless it is
subsequently registered under the Securities Act or an exemption from such
registration is available; (iii) there is no, and it is not anticipated that
there will be any, public market for the Restricted Stock; (iv) Rule 144
promulgated under the Securities Act ("Rule 144") is not currently available
with respect to the sales of any securities of Holdings, and Holdings has made
no covenant to make such Rule 144 available; (v) if and when the Restricted
Stock may be disposed of without registration in reliance on Rule 144, such
disposition can be made only in limited amounts in accordance with the terms and
conditions of such Rule 144; (vi) if the Rule 144 exemption is not available,
public offer or sale without registration will require the availability of an
exemption under the Securities Act; (vii) a restrictive legend or legends in the
forms set forth in this Agreement and the Stockholders Agreement shall be placed
on the certificates representing the Restricted Stock; (viii) this Agreement and
the Stockholders Agreement restrict the sale or transfer of shares of Restricted
Stock other than at specified times and under specified circumstances; and (ix)
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<PAGE> 21
a notation shall be made in the appropriate records of Holdings indicating that
the Restricted Stock is subject to restrictions on transfer and, if Holdings
should at some time in the future engage the services of a securities transfer
agent, appropriate stop-transfer instructions may be issued to such transfer
agent with respect to the Restricted Stock.
(c) Additional Investment Representations. The Executive
represents and warrants that (i) the Executive's financial situation is such
that the Executive can afford to bear the economic risk of holding the
Restricted Stock for an indefinite period of time and suffer complete loss of
the Executive's investment in the Restricted Stock; (ii) the Executive's
knowledge and experience in financial and business matters are such that the
Executive is capable of evaluating the merits and risks of the Executive's
investment in the Restricted Stock; (iii) the Executive understands that the
Restricted Stock is a speculative investment which involves a high degree of
risk of loss of the Executive's investment therein, that there are substantial
restrictions on the transferability of the Restricted Stock and that on the date
of this Agreement and for an indefinite period following such date there will be
no public market for the Restricted Stock and, accordingly, it may not be
possible to liquidate the Executive's investment in Holdings at all, including
in case of emergency; (iv) the Executive and the
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<PAGE> 22
Executive's representatives, including the Executive's professional, tax and
other advisors, have carefully reviewed the financial and other information with
respect to each of Holdings, AMF Group Holdings, and its subsidiaries (including
with respect to the Transaction) supplied to them and the Executive understands
and has taken cognizance of (or has been advised by the Executive's
representatives as to) all the risks related to an investment in the Restricted
Stock; (v) in making the Executive's decision to invest in the Restricted Stock
hereunder, the Executive has relied upon independent investigations made by the
Executive and, to the extent believed by the Executive to be appropriate, the
Executive's representatives, including the Executive's own professional, tax and
other advisors; (vi) the Executive and the Executive's representatives have
received and read this Agreement, the Stockholders Agreement, the Stock
Subscription Agreement, the Registration Rights Agreement, Holdings 1996 Stock
Incentive Plan and all other documents related to and executed or to be executed
in connection with the transactions contemplated hereby and thereby and the
Executive and his representatives have received and read the Offering Circular,
dated March 7, 1996, relating to the offering and sale of senior subordinated
notes issued by a subsidiary of Holdings and the Memorandum to the prospective
senior lenders to AMF Group Inc., dated April 17, 1996, and have been given the
opportunity to examine for a reasonable time prior to the
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<PAGE> 23
date hereof all documents and to ask questions of, and to receive answers from,
Holdings and its representatives concerning the terms and conditions of the
investment in the Restricted Stock and to obtain any additional information
which Holdings possesses or can acquire without unreasonable effort or expense,
necessary to verify the accuracy of the information supplied to them, and the
Executive and the Executive's representatives have received all additional
information requested by them, and no representations have been made to the
Executive or such representatives concerning the Restricted Stock, Holdings, AMF
Group Holdings, the Company, their respective affiliates and subsidiaries, their
businesses or prospects or other matters, except as set forth in this Agreement;
and (g) the Executive is an officer of the Company and has significant business
experience in the bowling or similar business and, in any such case, expects,
after the Transaction, to be an officer of the Company.
5. Termination of Employment. (a) Death or Disability. The
Executive's employment shall terminate automatically upon the Executive's death
during the Employment Period. The Company shall be entitled to terminate the
Executive's employment because of the Executive's Disability during the
Employment Period. "Disability" means that the Executive has been unable, for a
period of (i) 120 consecutive days or (ii) an aggregate of 180 days in a period
of 365 consecutive days,
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<PAGE> 24
to perform his duties under this Agreement, as a result of physical or mental
illness or injury. A termination of the Executive's employment by the Company
for Disability shall be communicated to the Executive by written notice, and
shall be effective on the 30th day after receipt of such notice by the Executive
(the "Disability Effective Date"), unless the Executive returns to full-time
performance of the Executive's duties in accordance with the provisions of
Section 2 before the Disability Effective Date. In the event of a dispute as to
whether Executive has suffered a Disability, the final determination shall be
made by a licensed physician selected by the Board and acceptable to Executive
in Executive's reasonable judgment.
(b) Not Death or Disability. The Company may terminate the
Executive's employment at any time during the Employment Period with or without
cause. The Executive may terminate his employment at any time during the
Employment Period with or without good reason.
(c) Date of Termination. Except as provided in Section
3(g)(iv) hereof, the "Date of Termination" means the date of the Executive's
death, the Disability Effective Date, or the date on which the termination of
the Executive's employment by the Company, or by the Executive, is effective, as
the case may be.
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<PAGE> 25
6. Obligations of the Company Upon Termination. (a) By the
Company, Other Than for Death or Disability. If, during the Employment Period,
the Company terminates the Executive's employment other than due to the
Executive's death or Disability, the Company shall (x) pay the amounts
described in subparagraph (i) below to the Executive in a lump sum in cash
within 30 days after the Date of Termination; (y) shall continue the benefits
described in Subparagraph (ii) below until the first anniversary of the Date of
Termination and (z) if, following receipt of the audited consolidated financial
statements of Holdings with respect to the fiscal year during which the
Executive's employment was so terminated by the Company, it is determined that
the Targets for such fiscal year were met, pay to Executive, within 30 days
after such audited consolidated financial statements are available, the
Allocable Bonus Amount as defined in paragraph (iii) below:
(i) The amounts to be paid in a lump sum as described
above are:
A. The Executive's accrued but unpaid cash compensation
(the "Accrued Obligations"), which shall equal the sum of (1)
any portion of the Executive's Annual Base Salary through the
Date of Termination that has not yet been paid; (2) any
compensation previously deferred by the Executive (together
with any accrued interest or earnings thereon) that has not
yet been paid; and (3) any accrued but unpaid vacation pay;
and
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<PAGE> 26
B. Severance pay equal to the Annual Base Salary.
(ii) The benefits to be continued as described above and in
paragraph (b) below are benefits to the Executive and/or the Executive's family
at least as favorable as those that would have been provided to them under
Subparagraph (ii) of paragraph (c) of Section 3 of this Agreement if the
Executive's employment had continued until the first anniversary of the Date of
Termination; provided, however, that during any period when the Executive is
eligible to receive such benefits under another employer-provided plan, the
benefits provided by the Company under this subparagraph may be made secondary
to those provided under such other plan; and provided further, however, that the
Company shall not be required to continue any life insurance on the life of the
Executive unless such continuation is provided for or permitted under the
applicable plan or policy. For purposes of determining eligibility (but not the
time of commencement of benefits) of the Executive for retiree benefits under
this Subparagraph (ii), the Executive shall be deemed to have retired on the
first anniversary of the Date of Termination.
(iii) The "Allocable Bonus Amount" is the amount of Annual
Bonus, based on Holdings' actual results for the entire fiscal year, that
Executive would have received for the fiscal year in which his employment was
terminated by the Company or,
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<PAGE> 27
for purposes of paragraph (b) below, for the fiscal year in which Executive dies
or in which the Executive's employment is terminated due to Disability, had the
Executive been employed for such entire fiscal year, multiplied by a fraction,
(x) the numerator of which is the number of days during such fiscal year during
which the Executive was employed hereunder and (y) the denominator of which is
365.
(b) Death or Disability. If the Executive's employment is
terminated by reason of the Executive's death or Disability during the
Employment Period, the Company shall (x) pay the Accrued Obligations to the
Executive or the Executive's estate or legal representative, as applicable, in a
lump sum in cash within 30 days after the Date of Termination; (y) pay to the
Executive or the Executive's estate or legal representative the amount, if any,
of the Allocable Bonus Amount within 30 days after Holdings' audited
consolidated financial statements for the fiscal year during which the
Executive's employment terminated due to death or Disability are available; and
(z) continue the benefits described in Subparagraph (ii) of paragraph (a) of
Section 6 on the terms and conditions therein contained until the first
anniversary of Executive's Date of Termination, and the Company shall have no
further obligations under this Agreement except as set forth in Sections
3(f)(vii) and 3(f)(viii).
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<PAGE> 28
(c) By the Executive. If the Executive terminates his
employment with the Company, the Company shall pay to the Executive in a lump
sum in cash any portion of Executive's Annual Base Salary through the Date of
Termination that has not yet been paid, and the Company shall have no further
obligations under this Agreement.
(d) Effect of Employment of Executive by Certain Stock or
Asset Purchaser. If all or substantially all of the stock or assets of the
Company is sold or otherwise disposed of to a third party not affiliated with
Holdings, and the Executive is not employed by Holdings or one of its continuing
affiliates immediately thereafter, then, for all purposes of this Agreement, the
Executive's employment shall be deemed to have been terminated by the Company
effective as of the date of such sale or other disposition; provided, however,
that the Company and Holdings shall have no obligations to the Executive under
Section 6 of this Agreement if the Executive is hired by the purchaser of the
stock or assets of the Company or if the Executive's employment is continued by
the Company.
7. Full Settlement. The Company's and Holdings' obligations
to make the payments provided for in, and otherwise to perform their obligations
under, this Agreement shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action that the Company or Holdings
may
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<PAGE> 29
have against the Executive or others. In no event shall the Executive be
obligated to seek other employment or take any other action by way of mitigation
of the amounts payable to the Executive under any of the provisions of this
Agreement and, except as specifically provided in Subparagraph (ii) of paragraph
(a) of Section 6, such amounts shall not be reduced, regardless of whether the
Executive obtains other employment.
8. Confidential Information. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company, Holdings or any company
affiliated with either and their respective businesses that the Executive
obtains during the Executive's employment by the Company and that is not public
knowledge (other than as a result of the Executive's violation of this Section
8) ("Confidential Information"). The Executive shall not communicate, divulge or
disseminate Confidential Information at any time during or after the Executive's
employment with the Company, except with the prior written consent of the
Company or Holdings, as the case may be, or as otherwise required by law.
9. Noncompetition; Nonsolicitation. (a) Unless Executive's
employment is terminated by the Company without cause, during the Employment
Period and during the two-year period following any termination of the
Executive's employment
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<PAGE> 30
with the Company and any of its affiliates, including due to expiration of the
Employment Period or, if longer, during the five-year period from and after the
Closing (the longer of such periods are hereinafter referred to as the
"Restriction Period"), the Executive shall not directly or indirectly
participate in or permit his name directly or indirectly to be used by or become
associated with (including as an advisor, representative, agent, promoter,
independent contractor, provider of personal services or otherwise) any person,
corporation, partnership, firm, association or other enterprise or entity that
is, or intends to be, engaged in any business which is in competition with the
business of the Company, Holdings or any of their respective subsidiaries or
controlled affiliates in any country in which the Company, Holdings or any of
their respective subsidiaries or controlled affiliates operate, compete or are
engaged in such business or at such time intend so to operate, compete or become
engaged in such business (a "Competitor"). For purposes of this Agreement, the
term "participate" includes any direct or indirect interest, whether as an
officer, director, employee, partner, sole proprietor, trustee, beneficiary,
agent, representative, independent contractor, consultant, advisor, provider of
personal services, creditor, owner (other than by ownership of less than five
percent of the stock of a publicly-held corporation whose stock is traded on a
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national securities exchange or in the over-the-counter market).
(b) Unless Executive's employment is terminated by the
Company without cause, during the portion of the Restriction Period following
any termination of the Executive's employment with the Company and any of its
affiliates, the Executive shall not, directly or indirectly, encourage or
solicit, or assist any other person or firm in encouraging or soliciting, any
person that during the two-year period preceding such termination of the
Executive's employment with the Company is or was engaged in a business
relationship with the Company, Holdings or any of their respective subsidiaries
or controlled affiliates to terminate its relationship with the Company,
Holdings or any of their respective subsidiaries or controlled affiliates or to
engage in a business relationship with a Competitor.
(c) During the portion of the Restriction Period following
any termination of the Executive's employment with the Company and any of its
affiliates, the Executive will not, except with the prior written consent of the
Company or Holdings, as the case may be, directly or indirectly, induce any
employee of the Company, Holdings or any of their respective subsidiaries or
controlled affiliates to terminate employment with such entity, and will not,
directly or indirectly, either
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individually or as owner, agent, employee, consultant or otherwise, employ,
offer employment or cause employment to be offered to any person (including
employment as an independent contractor) who is or was employed by the Company,
Holdings or any of their respective subsidiaries or controlled affiliates unless
such person shall have ceased to be employed by such entity for a period of at
least 9 months.
(d) Promptly following the Executive's termination of
employment, including due to expiration of the Employment Period, the Executive
shall return to the Company and Holdings all property of the Company, Holdings
and their respective subsidiaries and affiliates, and all copies thereof in the
Executive's possession or under his control, including, without limitation, all
Confidential Information in whatever media such Confidential Information is
maintained.
(e) The Executive acknowledges and agrees that the Restric-
tion Period and the covenants and obligations of the Executive in Section 8 and
this Section 9 with respect to noncompetition, nonsolicitation and
confidentiality and with respect to the property of the Company, Holdings and
their respective subsidiaries and controlled affiliates, and the territories
covered thereby, are fair and reasonable and the result of negotiation. The
Executive further acknowledges and agrees that the covenants and obligations of
the Executive in
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Section 8 and this Section 9 with respect to noncompetition, nonsolicitation and
confidentiality and with respect to the property of the Company, Holdings and
their respective subsidiaries and controlled affiliates, and the territories
covered thereby, relate to special, unique and extraordinary matters and that a
violation of any of the terms of such covenants and obligations will cause the
Company, Holdings and their respective subsidiaries and affiliates irreparable
injury for which adequate remedies are not available at law. Therefore, the
Executive agrees that the Company and Holdings shall be entitled to an
injunction, restraining order or such other equitable relief as a court of
competent jurisdiction may deem necessary or appropriate to restrain the
Executive from committing any violation of such covenants and obligations. These
injunctive remedies are cumulative and are in addition to any other rights and
remedies the Company and Holdings may have at law or in equity. If, at the time
of enforcement of Section 8 and/or this Section 9, a court holds that the
restrictions stated herein are unreasonable under circumstances then existing,
the parties hereto agree that the maximum period, scope, or geographical area
legally permissible under such circumstances will be substituted for the period,
scope or area stated herein.
10. Successors. (a) This Agreement is personal to the
Executive and, without the prior written consent of the
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Company, shall not be assignable by the Executive otherwise than by will or the
laws of descent and distribution. This Agreement shall inure to the benefit of
and be enforceable by the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be
binding upon the Company, Holdings and their respective successors and assigns.
(c) Each of the Company and Holdings, as the case may be,
shall require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise (an "Acquisition")) to all or substantially all of
the business and/or assets of the Company or Holdings, as the case may be,
expressly to assume and agree to perform this Agreement in the same manner and
to the same extent that the Company or Holdings, as the case may be, would have
been required to perform it if no such succession had taken place (or, with
respect to Restricted Stock and Options, by substituting for such Restricted
Stock and/or Options new restricted stock and/or stock options, based upon the
stock of such successor, having a value, in the case of Restricted Stock, or an
aggregate spread between the Fair Market Value of the underlying stock and the
Original Price thereof, and the same term, in the case of Options, immediately
after such substitution, equal to the value (in the case of Restricted Stock),
or spread on, and the term of (in the case
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<PAGE> 35
of Options), such Restricted Stock and/or Options immediately before such
substitution); provided, however, that Holdings or its successor may, at its
option, at the time of or promptly after such Acquisition (whether with respect
to Holdings or the Company), terminate all of its obligations hereunder with
respect to the Restricted Stock and/or Options by paying to the Executive or the
Executive's successors or assigns an amount equal to the product of (i) the
number of shares then subject to the restrictions of Section 3(f) and, if
applicable, Options and (ii) the Fair Market Value per share (which, to the
extent applicable, shall be determined by giving appropriate consideration to
the consideration paid in any such Acquisition) of the shares underlying such
Restricted Stock and such Options at the time of such Acquisition less, in the
case of each Option, the amount of such Option's exercise price (but not in
excess of such Fair Market Value per share), in either case, in exchange for
such Executive's Restricted Stock and/or Options. As used in this Agreement,
"Company" shall mean both the Company as defined above and any such successor
that assumes and agrees to perform this Agreement, by operation of law or
otherwise, and "Holdings" shall mean both Holdings as defined above and any such
successor that assumes and agrees to perform this Agreement, by operation of law
or otherwise.
11. Miscellaneous. (a) This Agreement shall be governed
by, and construed in accordance with, the laws of the
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State of New York, without reference to principles of conflict of laws. The
captions of this Agreement are not part of the provisions hereof and shall have
no force or effect. This Agreement may not be amended or modified except by a
written agreement executed by the parties hereto or their respective successors
and legal representatives.
(b) All notices and other communications under this Agreement
shall be in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed as follows:
If to the Executive:
Douglas Stanard
2114 Hanover Avenue
Richmond, VA 23220
If to the Company:
AMF Group, Inc.
7313 Bell Creek Road
Mechanicsville, VA 23111
Attention: Corporate Secretary
If to Holdings:
c/o Goldman, Sachs & Co.
85 Broad Street
New York, NY 10004
Attention: David J. Greenwald, Esq.
or to such other address as either party furnishes to the other in writing in
accordance with this paragraph (b) of Section 11.
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<PAGE> 37
Notices and communications shall be effective when actually received by the
addressee.
(c) The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(d) Notwithstanding any other provision of this Agreement,
the Company and/or Holdings, as appropriate, may withhold from amounts payable
under this Agreement all Federal, state, local and foreign taxes that are
required to be withheld by applicable laws or regulations. No later than any
date as of which an amount first becomes includible in the gross income of the
Executive for federal income tax purposes with respect to any Options, the
Executive shall pay to the Company and/or Holdings, as appropriate, or make
arrangements satisfactory to the Company and/or Holdings, as appropriate,
regarding the payment of, all federal, state, local and foreign taxes that are
required by applicable laws and regulations to be withheld with respect to such
amount. If the Executive desires to use unrestricted, unencumbered stock to pay
any required withholding taxes, the Company and/or Holdings will cooperate with
the Executive in that regard. The obligations of the Company and/or Holdings, as
appropriate, under paragraph (g) of Section 3 of this Agreement shall be subject
to this paragraph (d).
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<PAGE> 38
(e) The Executive's or the Company's, or Holdings' failure to
insist upon strict compliance with any provision of, or to assert any right
under, this Agreement shall not be deemed to be a waiver of such provision or
right or of any other provision of or right under this Agreement.
(f) The Executive, the Company and Holdings each acknowledges
that this Agreement (together with the Stockholders Agreement and the other
agreements referred to herein and therein) supersedes all other agreements and
understandings, both written and oral, among the parties or any of them
concerning the subject matter hereof, and any prior employment agreement between
the Executive and any direct or indirect subsidiary of Holdings, after giving
effect to the consummation of the Transaction, is hereby terminated.
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<PAGE> 39
IN WITNESS WHEREOF, the Executive has hereunto set the
Executive's hand and, pursuant to the authorization of their respective Board of
Directors, each of the Company and AMF Group Holdings has caused this Agreement
to be executed in its name on its behalf, all as of the day and year first above
written.
/s/ Douglas Stanard
------------------------------------
Douglas Stanard
AMF GROUP INC.
By /s/ Douglas Stanard
---------------------------------
Its Chief Operating Officer
----------------------------
AMF HOLDINGS INC.
By /s/ Terence M. O'Toole
---------------------------------
Its Vice President
---------------------------
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<PAGE> 40
EXHIBIT A
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT (the "Stock Pledge Agreement") dated May 1,
1996 is made and entered into by and between AMF Holdings Inc., a Delaware
corporation ("Holdings"), and Douglas Stanard (the "Pledgor").
W I T N E S S E T H:
WHEREAS, Holdings and Pledgor have entered into a certain Employment
Agreement dated as of the date hereof by and among the Pledgor, Holdings and a
subsidiary of Holdings (as such agreement may be amended from time to time, the
"Employment Agreement") whereby Holdings has agreed to issue and sell 150,000
shares of common stock, par value $0.01 per share, of Holdings (the "Initial
Pledged Shares," and together with the Additional Pledged Shares (as defined
below), the "Shares") to the Pledgor, all of which Shares are (or, in the case
of the Additional Pledged Shares upon their acquisition by Pledgor, will be)
subject to this Stock Pledge Agreement. Capitalized terms used herein and not
otherwise defined shall have the same meanings ascribed to them in the
Employment Agreement;
WHEREAS, in consideration of the loan by Holdings to the Pledgor of
$1,000,000, receipt of which by the Pledgor is hereby acknowledged, to enable
the Pledgor to purchase certain of the Initial Pledged Shares, the Pledgor is
delivering to Holdings a duly executed Non-Recourse Secured Promissory Note of
the Pledgor (as referred to in Section 3(f) of the Employment Agreement) in the
principal amount of $1,000,000 dated as of the date hereof (as such note may be
amended from time to time, the "Management Note");
WHEREAS, the Pledgor wishes to grant further security and assurance to
Holdings in order to secure the payment of the principal of, interest on and all
fees, expenses and other amounts owing in respect of, the Management Note and to
pledge to Holdings the Initial Pledged Shares along with any and all additional
Shares, which shall be issued or sold to the Pledgor at any time after the date
of this Agreement as a result of the exercise of the options granted to the
Pledgor on the date hereof and at any time hereafter, or any other Shares
otherwise acquired by Pledgor from and after the date hereof (collectively, the
"Additional Pledged Shares"), and certain additional collateral as provided in
this Agreement; and
<PAGE> 41
WHEREAS, Pledgor, Holdings and certain other stockholders of Holdings
have entered into a Stockholders Agreement, dated as of April 30, 1996, with
respect to certain matters relating to Holdings and its common stock (the
"Stockholders Agreement").
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
Section 1. Pledge. As collateral security for the full and timely
payment of the principal of, interest on, and all fees, expenses and other
amounts owing in respect of, the Management Note, the Pledgor hereby delivers,
deposits, pledges, transfers and assigns to Holdings, in form transferable for
delivery, and creates in Holdings a continuing security interest in (i) the
Initial Pledged Shares, all Additional Pledged Shares and all certificates or
other instruments or documents evidencing any of the above now owned or
hereafter acquired by the Pledgor (together with any securities or property to
be delivered to the Pledgor pursuant to Section 2(b) hereof, the "Pledged
Securities") (ii) all dividends, payments and distributions of every kind due
and payable or distributable in respect of all or any of the Pledged Securities
(the "Pledged Dividends") and (iii) all other property, assets, accounts and
moneys received by Pledgor in respect of the Pledged Securities or the sale,
transfer, assignment, encumbrance or other disposition thereof (together with
the Pledged Securities and Pledged Dividends, the "Collateral").
The Pledgor hereby delivers to Holdings appropriate undated security
transfer powers duly executed in blank for the Pledged Securities set forth
above and will deliver appropriate undated security transfer powers duly
executed in blank for the Pledged Securities to be pledged hereunder from time
to time hereafter.
Section 2. Administration of Collateral. The following provisions shall
govern the administration of the Collateral:
(a) So long as no Event of Default has occurred and is continuing (as
used herein, "Event of Default" shall mean the occurrence of any Event of
Default under the Management Note), the Pledgor shall be entitled to act with
respect to the Pledged Securities in any manner not inconsistent with this Stock
Pledge Agreement, the Stockholders Agreement, the Employment Agreement or the
Management Note, including voting
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the Pledged Securities and, subject to its prepayment obligations under the
Management Note, receiving all cash Pledged Dividends and giving consents,
waivers and ratifications in respect thereof.
(b) If, while this Stock Pledge Agreement is in effect, the Pledgor (or
any of the Pledgor's Permitted Transferees (as such term is defined in the
Management Note)) shall become entitled to receive or shall receive any debt or
equity security certificate (including, without limitation, any certificate
representing a stock dividend or a distribution in connection with any
reclassification, increase or reduction of capital, or issued in connection with
any reorganization), option or right, whether as a dividend or distribution in
respect of, in substitution of, or in exchange for any Pledged Securities, or in
the event of a recapitalization, reclassification or similar transaction, the
Pledgor and each of the Pledgor's Permitted Transferees agrees to accept the
same as Holdings's agent and to hold the same in trust on behalf of and for the
benefit of Holdings and to deliver the same forthwith to Holdings in the exact
form received, with the endorsement of the Pledgor and the Pledgor's Permitted
Transferees when necessary and/or appropriate undated security transfer powers
duly executed in blank, to be held by Holdings, subject to the terms of this
Stock Pledge Agreement, as additional collateral security for the Management
Note. Notwithstanding the foregoing, it is agreed that the Pledgor or any of the
Pledgor's Permitted Transferees may exercise any option or right received as
contemplated in the preceding sentence, and Holdings will exercise any such
option or right upon receipt of written instructions to such effect, accompanied
by any required payments or documents from the Pledgor or the Pledgor's
Permitted Transferees, and the securities received upon such exercise of any
such option or right shall thereafter be held by Holdings or, if received by the
Pledgor or such Pledgor's Permitted Transferees, be delivered to Holdings
forthwith as contemplated by the preceding sentence.
(c) The Pledgor and each of the Pledgor's Permitted Transferees shall
immediately upon request by Holdings and in confirmation of the security
interests hereby created, execute and deliver to Holdings such further
instruments, deeds, transfers, assurances and agreements, in such form and
substance as Holdings shall request, including any financing statements and
amendments thereto, or any other documents, required under New York law and any
other applicable law to protect the security interests created hereunder.
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<PAGE> 43
(d) Subject to any sale by Holdings or other disposition by Holdings of
the Pledged Securities or other Collateral pursuant to this Stock Pledge
Agreement, and subject to Section 5 below, the Collateral shall be returned to
the Pledgor upon payment in full of the unpaid principal of, accrued interest
on, and all fees, expenses and other amounts owing in respect of the Management
Note.
(e) Holdings shall have the right to release the Collateral or a
portion thereof, at any time, including in connection with any right of Holdings
or any affiliate thereof to acquire such Collateral pursuant to this Stock
Pledge Agreement, the Stockholders Agreement, the Employment Agreement or
otherwise, but the determination to release such Collateral at any time shall be
in the sole discretion of Holdings and Holdings shall not be required to do so,
except to the extent otherwise specifically provided in this Stock Pledge
Agreement.
Section 3. Remedies in Case of an Event of Default.
(a) In case an Event of Default shall have occurred and be continuing,
Holdings shall have in each case all of the remedies of a secured party under
the New York Uniform Commercial Code, and, without limiting the foregoing, shall
have the right, in its sole discretion, to sell, resell, assign and deliver all
or, from time to time, any part of the Collateral, including without limitation,
the Pledged Securities, and any interest in or option or right to purchase any
part thereof, on any securities exchange on which the Pledged Securities or any
of them may be listed, at any private sale or public auction, with or without
demand of performance or other demand, advertisement or notice of the time or
place of sale or adjournment thereof or otherwise (except that Holdings shall
give ten days' notice to the Pledgor of the time and place of any sale pursuant
to this Section 3), for cash, on credit or for other property, for immediate or
future delivery, and for such price or prices and on such terms as Holdings
shall, in its sole discretion, determine, the Pledgor and the Pledgor's
Permitted Transferees hereby waiving and releasing any and all right or equity
of redemption whether before or after sale hereunder. At any such sale Holdings
may bid for and purchase the whole or any part of the Collateral so sold free
from any such right or equity of redemption. Holdings shall apply the proceeds
of any such sale first to the payment of all costs and expenses, including
reasonable attorneys' fees, incurred by Holdings in enforcing its rights under
this Stock Pledge Agreement, second to the payment of all fees, expenses and
other amounts
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<PAGE> 44
owing in respect of the Management Note, third to the accrued and unpaid
interest on the Management Note and fourth to the unpaid principal of
the Management Note.
(b) The Pledgor and the Pledgor's Permitted Transferees recognize that
Holdings may be unable to effect a public sale of all or a part of the
Collateral by reason of certain prohibitions contained in the Securities Act of
1933, as amended (the "Securities Act"), or in the rules and regulations
promulgated thereunder or in applicable state securities, or "blue sky," laws,
but may be compelled to resort to one or more private sales to a restricted
group of purchasers who will be obliged to agree, among other things, to acquire
the Collateral for their own account, for investment and not with a view to the
distribution or resale thereof. The Pledgor and the Pledgor's Permitted
Transferees agree that private sales so made may be at prices and on other terms
less favorable to the seller than if the Collateral was sold at public sale, and
that Holdings has no obligation to delay the sale of the Collateral for the
period of time necessary to permit the registration of the Pledged Securities or
other Collateral for public sale under the Securities Act and under applicable
state securities, or "blue sky," laws. The Pledgor and the Pledgor's Permitted
Transferees agree that a private sale or sales made under the foregoing
circumstances shall be deemed to have been made in a commercially reasonable
manner.
(c) If any consent, approval or authorization of any state, municipal
or other governmental department, agency or authority should be necessary to
effectuate any sale or disposition by Holdings pursuant to this Section 3 of the
Collateral, the Pledgor and each of the Pledgor's Permitted Transferees will
execute all such applications and other instruments as may be required in
connection with securing any such consent, approval or authorization, and will
otherwise use their best efforts to secure the same.
(d) Neither failure nor delay on the part of Holdings to exercise any
right, remedy, power or privilege provided for herein or by statute or at law or
in equity shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, remedy, power or privilege preclude any other or
further exercise thereof or the exercise of any other right, remedy, power or
privilege.
Section 4. Pledgor's Obligations Not Affected. The obligations of the
Pledgor and each of the Pledgor's Permitted Transferees under this Stock Pledge
Agreement shall remain in full force and effect without regard to, and shall
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<PAGE> 45
not be impaired or affected by (a) any subordination, amendment or modification
of or addition or supplement to the Employment Agreement, the Stockholders
Agreement or the Management Note, or any assignment or transfer of any thereof;
(b) any exercise or non-exercise by Holdings of any right, remedy, power or
privilege under or in respect of this Stock Pledge Agreement, the Stockholders
Agreement, the Employment Agreement or the Management Note, or any waiver of any
such right, remedy, power or privilege; (c) any waiver, consent, extension,
indulgence or other action or inaction in respect of this Stock Pledge
Agreement, the Stockholders Agreement, the Employment Agreement or the
Management Note, or any assignment or transfer of any thereof; or (d) any
bankruptcy, insolvency, reorganization, arrangement, readjustment, composition,
liquidation or the like, of Holdings, whether or not the Pledgor and the
Pledgor's Permitted Transferees shall have notice or knowledge of any of the
foregoing.
Section 5. Transfer by Pledgor. The Pledgor and the Pledgor's Permitted
Transferees will not sell, assign, transfer or otherwise dispose of, grant any
option with respect to, or mortgage, pledge or otherwise encumber the Pledged
Securities or any interest therein except as provided in the Employment
Agreement or the Stockholders Agreement. In the event of a sale, assignment,
transfer or other disposition of or mortgage, pledge or other encumbrance of
Pledged Securities pursuant to the Employment Agreement or the Stockholders
Agreement, the Pledged Securities so sold, assigned, transferred or otherwise
disposed of or mortgaged, pledged or otherwise encumbered shall remain subject
to the provisions of this Stock Pledge Agreement, except as provided in the next
succeeding sentence, and no such sale, assignment, transfer or other disposition
of or mortgage, pledge or other encumbrance of Pledged Securities may be
effected unless and until the proposed purchaser, assignee, transferee or other
acquiror, mortgagee or pledgee shall agree in writing, in form and substance
satisfactory to Holdings in its sole discretion, to be bound by all the terms of
this Stock Pledge Agreement with the same force and effect as if such transferee
were a party hereto. If the Pledgor (or any of the Pledgor's Permitted
Transferees) shall sell, assign, transfer or otherwise dispose of any Shares to
anyone other than a Permitted Transferee in accordance with the terms of this
Stock Pledge Agreement, the Stockholders Agreement and the Employment Agreement,
Holdings shall release such Shares from the pledge hereunder to the extent that,
(i) after such release, the fair market value of Shares (as determined by the
Board of Directors of Holdings) owned by the Pledgor and the
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<PAGE> 46
Pledgor's Permitted Transferees and subject to the liens created by this Stock
Pledge Agreement exceeds 125% of the principal amount of the Management Note of
the Pledgor then outstanding (the "Management Note Amount") and (ii) the Pledgor
complies with its prepayment obligations under Section 1 of the Management Note
in connection with such sale, assignment, transfer or other disposition.
Section 6. Attorney-in-Fact. Holdings is hereby appointed the
attorney-in-fact of the Pledgor and the Pledgor's transferees for the purpose of
carrying out the provisions of this Stock Pledge Agreement and taking any action
and executing any instrument that Holdings reasonably may deem necessary or
advisable to accomplish the purposes hereof, including without limitation, the
execution of the applications and other instruments described in Section 3(c)
hereof, which appointment as attorney-in-fact is irrevocable as one coupled with
an interest.
Section 7. Termination. Upon the indefeasible payment in full of the
unpaid principal of, accrued interest on, and all fees, expenses and other
amounts owing in respect of, the Management Note, or upon the sale of all
Collateral (provided that there is no ongoing obligation to further pledge any
additional Collateral in the future) and, in either case, upon the due
performance of and compliance with all the provisions of this Stock Pledge
Agreement, the Stockholders Agreement, the Employment Agreement and the
Management Note, this Stock Pledge Agreement and all liabilities of Pledgor
hereunder shall terminate and the Pledgor shall be entitled to the return of
such of the Pledged Securities and other Collateral as have not theretofore been
sold, released pursuant to Section 5 hereof or otherwise applied pursuant to the
provisions of this Stock Pledge Agreement free of the lien and security interest
in such Pledged Securities and other Collateral created hereunder in favor of
Holdings.
Section 8. Notices. All notices or other communications required or
permitted to be given hereunder shall be delivered as provided in the Employment
Agreement.
Section 9. Binding Effect, Successors and Assigns. This Stock Pledge
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns and nothing herein is intended or
shall be construed to give any other person any right, remedy or claim under, to
or in respect of this Stock Pledge Agreement. Other than transfers satisfying
the requirements of the last sentence of Section 5 hereof for release of Shares
from the pledge hereunder, no transfer of Pledged Securities
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<PAGE> 47
of the Pledgor (including, without limitation, to the Pledgor's Permitted
Transferees) shall be permitted hereunder, and any such transfer shall be null
and void, unless and until each such transferee (including, without limitation,
a Permitted Transferee) agrees in writing, in form and substance satisfactory to
Holdings in its sole discretion, to become bound by this Stock Pledge Agreement
with respect to the Pledged Securities so transferred.
Section 10. Miscellaneous. Holdings and its assigns shall have no
obligation in respect of the Pledged Securities, except to hold and dispose of
the same in accordance with the terms of this Stock Pledge Agreement. Neither
this Stock Pledge Agreement nor any provision hereof may be amended, modified,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the amendment, modification,
waiver, discharge or termination is sought. The provisions of this Stock Pledge
Agreement shall be binding upon the successors and assigns of the Pledgor and
each of the Pledgor's Permitted Transferees. The captions in this Stock Pledge
Agreement are for convenience of reference only and shall not define or limit
the provisions hereof. This Stock Pledge Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York,
without regard to the principles of conflicts of law thereof. This Stock Pledge
Agreement may be executed simultaneously in counterparts, each of which is an
original, but all of which together shall constitute one instrument.
-8-
<PAGE> 48
IN WITNESS WHEREOF, the parties hereto have caused this Stock Pledge
Agreement to be executed and delivered on the date first written above.
PLEDGOR:
/s/ Douglas Stanard
---------------------------------------
Douglas Stanard
PLEDGEE:
AMF HOLDINGS INC.
By /s/ Terence M. O'Toole
------------------------------------
Name: Terence M. O'Toole
Title: Vice President
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<PAGE> 1
EXHIBIT 10.9
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT ("Agreement") dated as of May 1, 1996
by and between AMF Holdings Inc., a Delaware corporation ("Holdings"), and
Charles M. Diker (the "Director"), who is presently a nonemployee director of
Holdings.
WHEREAS, pursuant to Holdings' 1996 Stock Incentive Plan (the
"Plan"), the Executive Committee of the Board of Directors of Holdings (the
"Board") has decided to award stock options on the terms and conditions set
forth in this Agreement;
NOW, THEREFORE, in order to implement the foregoing and in
consideration of the mutual representations, warranties, covenants and
agreements contained herein, the parties hereto agree as follows:
1. Definitions.
As used in this Agreement, the following terms shall have the
meanings ascribed to them below. Any capitalized term used in this Agreement and
not defined herein shall have the meaning ascribed to it in the Plan.
1.1. "AMF Group Holdings Inc." shall mean AMF Group
Holdings Inc., a Delaware corporation.
1.2. "AMF Group Inc." shall mean AMF Group Inc., a
Delaware corporation.
1.3. "Buy-Out Note" shall have the meaning set forth in
Section 3.3.
1.4. "Common Stock" shall mean the common stock, par value
$0.01 per share, of Holdings, subject to adjustment pursuant to the third
paragraph of Section 3 of the Plan, under certain circumstances.
1.5. "Disability" shall mean that the Director has been
unable, for a period of (A) 90 consecutive days or (B) an aggregate of 180 days
in a period of 365 consecutive days, to perform his duties as a director of
Holdings, as a result of physical or mental illness or injury.
1.6. "Employment" shall mean service as a director of
Holdings.
<PAGE> 2
1.7. "Options" shall have the meaning set forth in
Section 2.1.
1.8. "Person" shall mean an individual, corporation,
partnership, joint venture, trust, unincorporated organization,
government (or any department thereof) or other entity.
1.9. "Plan Shares" shall mean the shares of Common Stock
acquired upon exercise of the Options.
1.10. "Stockholders Agreement" shall mean the Stockholders
Agreement, dated April 30, 1996, between Holdings and certain stockholders of
Holdings, as amended from time to time.
In addition, certain other terms used herein have definitions
otherwise ascribed to them herein.
2. Grant and Terms of Options.
2.1. Grant of Options. Holdings hereby grants to the Director
100,000 nonqualified stock options (the "Options") to purchase one share of
Common Stock per Option on the terms and conditions set forth below, and in
reliance upon the representations and covenants of the Director set forth below.
Unless sooner exercised or forfeited as provided for in the Plan or this
Agreement, the Options shall expire on the tenth anniversary of the date of this
Agreement.
2.2. Exercise Price. The exercise price of the Options is $10
per share of Common Stock subject thereto (the "Exercise Price").
2.3. Exercisability. The Options shall vest and become
exercisable according to the following schedule:
<TABLE>
<CAPTION>
Number of
Date Vested Options
---------- --------------
<S> <C>
Date of this Agreement 33,333
First Anniversary of
this Agreement 66,666
Second Anniversary
of this Agreement 100,000
</TABLE>
-2-
<PAGE> 3
Options that have become exercisable shall remain exercisable until they
terminate as set forth below. Holdings shall not cash-out the Common Stock
issued upon exercise of the Options pursuant to Section 5(g) of the Plan without
the Director's consent.
3. Plan Shares.
3.1. Transferability of Plan Shares and Options. The Director
shall not be permitted to sell, assign, transfer, pledge or otherwise encumber
any Plan Shares or Options, except as provided in the Plan, Sections 3.2 and 3.3
of this Agreement or, in the case of Plan Shares, as provided in Sections 2.3,
2.4 and 2.5 of the Stockholders Agreement.
Any transfer of Plan Shares otherwise permitted pursuant to
this Agreement shall remain subject to the terms of the Stockholders Agreement,
and shall not be permitted other than in accordance with the terms thereof,
notwithstanding any provision of this Agreement that would otherwise permit such
transfer.
3.2. Call Option. If, prior to the consummation of an Initial
Public Offering, the Director's Employment is terminated voluntarily (which
shall not include any termination due to Disability) by the Director for any
reason, Holdings shall have the right, at its election, to purchase the
Director's Plan Shares within 6 months after the date of termination at a price
equal to the Fair Market Value of such Plan Shares determined as of the date of
termination. Holdings shall pay the purchase price in cash. Holdings may, in its
discretion, assign its rights and obligations under this Section 3.2 to any
other Person, but no such assignment shall relieve Holdings of its primary
obligations hereunder to the extent not satisfied by such assignee.
3.3. Put Option. If, prior to the consummation of an Initial
Public Offering, the Director dies or if the Director's Employment is terminated
by Holdings and its Affiliates due to a Disability or for any other reason
(including, without limitation, failure to reelect or nominate the Director,
other than at the Director's instance), the Director or the Director's legal
representative, as the case may be, shall have the right, within three months
after such event (or one year if the event is the Director's death), to require
Holdings to purchase the Director's Plan Shares at a price equal to (A) in the
case of such death or Disability, the Fair Market Value thereof determined as of
the date of such termination and (B) in the case of termination by Holdings and
its Affiliates for any other reason, the product of
-3-
<PAGE> 4
(x) the number of Plan Shares and (y) $10 (subject to adjustments, to the extent
appropriate, to reflect any adjustment to the Plan Shares made pursuant to the
third paragraph of Section 3 of the Plan). To the extent the funds for such
purchase are permitted under the indebtedness of Holdings and its Affiliates and
under applicable law to be dividended to Holdings from AMF Group Inc.
(indirectly by a dividend from AMF Group Inc. to AMF Group Holdings Inc. and
then by a dividend from AMF Group Holdings Inc. to Holdings, or otherwise in
accordance with Holdings' then existing corporate structure (collectively, an
"AMF Group Dividend")), Holdings shall pay the purchase price in cash. Holdings
shall fund any amount not permitted to be funded through an AMF Group Dividend
by a Buy-Out Note (as defined hereafter). A "Buy-Out Note" is an unsecured
promissory note of Holdings or a direct or indirect subsidiary thereof which
shall have a stated maturity of 5 years, shall accrue interest at seven percent
per annum, shall be prepayable at the option of Holdings or such subsidiary at
any time, in whole or in part, at its principal amount plus accrued and unpaid
interest, and shall accelerate upon the earlier of a Change in Control or the
consummation of an Initial Public Offering. Holdings may, in its discretion,
assign its rights and obligations under this Section 3.3 to any other Person,
but no such assignment shall relieve Holdings of its primary obligations
hereunder to the extent not satisfied by such assignee.
3.4. Expiration of Restrictions Upon Initial Public Offering.
Holdings' right to purchase the Director's Plan Shares under Section 3.2, and
the Director's right to require Holdings to purchase his Plan Shares under
Section 3.3, shall terminate on the effectiveness of an Initial Public Offering.
Any restrictions under the Stockholders Agreement shall be governed by the terms
thereof and shall survive the termination of the transfer restrictions pursuant
to this Section 3.
4. Director's Representations, Warranties and Agreements.
In connection with the exercise of any Options, the Director
shall make to Holdings, in writing, such representations, warranties and
agreements in connection with such exercise and investment in shares of Common
Stock as the Committee shall reasonably request.
5. Successors.
5.1. This Agreement is personal to the Director and, without
the prior written consent of Holdings, shall not be assignable by the Director
otherwise than (i) by will or the laws
-4-
<PAGE> 5
of descent and distribution or (ii) pursuant to a qualified domestic relations
order (as defined in the Code or Title I of the Employee Retirement Income
Security Act of 1974, as amended, or the rules thereunder). This Agreement shall
inure to the benefit of and be enforceable by the Director's legal
representatives.
5.2. This Agreement shall inure to the benefit of and be
binding upon Holdings and its successors and assigns.
5.3. Holdings shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise (an "Acquisition")) to
all or substantially all of the business and/or assets of Holdings expressly to
assume and to agree to perform this Agreement in the same manner and to the same
extent that Holdings would have been required to perform it if no such
succession had taken place (or by substituting for such Options new options,
based upon the stock of such successor, having an aggregate spread between the
Fair Market Value of the underlying stock and the Exercise Price thereof, and
the same term, immediately after such substitution, equal to the spread on, and
the term of, such Options immediately before such substitution); provided,
however, that Holdings or such successor may, at its option, at the time of or
promptly after such Acquisition, terminate all of its obligations hereunder with
respect to the Options by paying to the Director or the Director's successors or
assigns an amount equal to the product of (i) the number of Options and (ii) the
Fair Market Value per share of the shares underlying such Options at the time of
such Acquisition less the amount of such Options' exercise price (but not in
excess of such Fair Market Value per share), in either case, in exchange for the
Director's Options. As used in this Agreement, "Holdings" shall mean both
Holdings as defined above and any such successor that assumes and agrees to
perform this Agreement, by operation of law or otherwise.
6. Miscellaneous.
6.1. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York, without regard to
the principles of conflicts of law thereof. The captions of this Agreement are
not part of the provisions hereof and shall have no force or effect. This
Agreement may not be amended or modified except by a written agreement executed
by the parties hereto or their respective successors and legal representatives.
-5-
<PAGE> 6
6.2. All notices and other communications under this Agreement
shall be in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed if to the Director, at the address set forth on the signature page
hereto, and if to Holdings: c/o Goldman, Sachs & Co., 85 Broad Street, New York,
NY 10004, Attention: David J. Greenwald, Esq., or to such other address as
either party furnishes to the other in writing in accordance with this Section
6.2. Notices and communications shall be effective when actually received by the
addressee.
6.3. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
6.4. No later than the date as of which an amount first
becomes includible in the gross income of the Director for federal income tax
purposes with respect to any Options, the Director shall pay to Holdings, or if
appropriate, any of its Affiliates, or make arrangements satisfactory to the
Committee regarding the payment of, any federal, state, local or foreign taxes
of any kind required by law to be withheld with respect to such amount. If
approved by the Committee, withholding obligations may be settled with Common
Stock, including Common Stock that is part of the Award that gives rise to the
withholding requirement. The obligations of Holdings under the Plan shall be
conditional on such payment or arrangements, and Holdings and its Affiliates
shall, to the extent permitted by law, have the right to deduct any such taxes
from any payment otherwise due to the Director. The Committee may establish such
procedures as it deems appropriate, including making irrevocable elections, for
the settlement of withholding obligations with Common Stock.
6.5. The Director's or Holdings' failure to insist upon strict
compliance with any provision of, or to assert any right under, this Agreement
shall not be deemed to be a waiver of such provision or right or of any other
provision of or right under this Agreement.
6.6. The Options are granted pursuant to the Plan which is
incorporated herein by reference and the Options shall, except as otherwise
expressly provided herein, be governed by the terms thereof. The Director hereby
acknowledges receipt of a copy of the Plan and agrees to be bound by all the
terms and provisions thereof. The Director and Holdings each acknowledges that
this Agreement (together with the Stockholders Agreement, the Plan and the other
agreements referred to
-6-
<PAGE> 7
herein and therein) constitutes the entire agreement and supersedes all other
agreements and understandings, both written and oral, among the parties or
either of them, with respect to the subject matter hereof.
-7-
<PAGE> 8
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
AMF HOLDINGS INC.
By: /s/ Richard A. Friedman
----------------------------
Name: Richard A. Friedman
Title: President
<PAGE> 9
/s/ Charles Diker
Charles M. Diker
Charles M. Diker Associates
One New York Plaza
31st Floor
New York, New York 10004
<PAGE> 1
EXHIBIT 12.1
AMF BOWLING GROUP
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(AMOUNTS IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------------------------------------------- --------------------
1991 1992 1993 1994 1995 1995 1996
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Pre-tax income
(loss) from
continuing
operations ....... $ 62,487 $ 79,515 $ 97,548 $115,755 $108,864 $ 37,845 $ 24,296
Fixed charges:
Interest expense.. 11,982 7,865 5,001 7,394 15,711 3,727 3,802
Amortization of
debt issue
costs on all
indebtedness ..... 201 54 3 11 11 3 3
Rentals: - 33% ..... 4,572 5,104 4,759 4,996 5,600 1,606 1,607
-------- -------- -------- -------- -------- -------- --------
Total fixed
charges .......... 16,755 13,023 9,763 12,401 21,322 5,336 5,412
-------- -------- -------- -------- -------- -------- --------
Earnings
before income
taxes and
fixed charges .... $ 79,242 $ 92,538 $107,311 $128,156 130,186 43,181 29,708
======== ======== ======== ======== ======== ======== ========
Ratio of earnings
to fixed charges.. 4.7 7.1 11.0 10.3 6.1 8.1 5.5
======== ======== ======== ======== ======== ======== ========
</TABLE>
<PAGE> 1
Exhibit 21.1
SUBSIDIARIES OF AMF GROUP INC.
Name Under Which Subsidiary State or Jurisdiction of
Does Business Incorporation
- ------------- -------------
AMF Bowling Holdings Inc. Delaware
AMF Bowling Centers Holdings Inc. Delaware
AMF Bowling, Inc. Virginia
AMF Worldwide Bowling Centers Holdings Delaware
Inc.
AMF Bowling Centers, Inc. Virginia
Bush River Corporation South Carolina
AMF Beverage Company of Oregon, Inc. Oregon
King Louie Lenexa, Inc. Kansas
AMF Beverage Company of W.VA., Inc. West Virginia
AMF Bowling Centers Switzerland Inc. Delaware
AMF Bowling Centers (Aust.) Interna-
tional Inc. (Australia) Virginia
AMF Catering Services Pty. Ltd. Australia
AMF Bowling Centers (Canada) Interna- Virginia
tional, Inc. (Canada)
AMF Bowling Centers (Hong Kong) Virginia
International, Inc. (Hong Kong)
AMF Bowling Centers International, Inc. Virginia
(Japan)
AMF BCO-UK One, Inc. Virginia
AMF BCO-UK Two, Inc. Virginia
AMF BCO-France One, Inc. Virginia
AMF BCO-France Two, Inc. Virginia
AMF Bowling Centers Spain Inc. Delaware
AMF Bowling Mexico Holding, Inc. Delaware
<PAGE> 2
Boliches AMF, Inc. Virginia
AMF BCO-China, Inc. Virginia
AMF Bowling Centers China, Inc. Virginia
AMF Bowling Centers (China) Company Hong Kong
AMF Garden Hotel Bowling Center Company People's Republic of China
AMF Bowling France SNC France
AMF Bowling de Paris SNC France
AMF Bowling de Lyon la Part Dieu SNC France
Boliches AMF y Compania Mexico
Inmuebles Obispado, S.A. Mexico
Inmuebles Minerva, S.A. Mexico
Operadora Mexicana de Boliches, S.A. Mexico
Promotora de Boliches, S.A. de C.V. Mexico
Boliches Mexicanos, S.A. Mexico
AMF Bowling United Kingdom
Worthing North Properties Limited United Kingdom
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made a part of this
registration statement.
/s/ Arthur Andersen LLP
- ----------------------------
ARTHUR ANDERSEN LLP
May 30, 1996
New York, New York
<PAGE> 1
EXHIBIT 23.2
CONSENT OF PRICE WATERHOUSE LLP
We hereby consent to the use in the Prospectus constituting part of
this Registration Statement on Form S-4 of AMF Group Inc. of our report dated
March 1, 1996, except as to the fifth paragraph under Litigation and claims --
Note 9, which is as of March 6, 1996 and Sale transaction under Note 16, which
is as of May 1, 1996, relating to the combined financial statements of AMF
Bowling Group and our report dated January 23, 1996, relating to the
consolidated financial statements of Fair Lanes, Inc. which appear in such
Prospectus. We also consent to the application of such report to the financial
statement schedules for the three years ended December 31, 1995, listed under
Item 21(b) of this Registration Statement when such schedules are read in
conjunction with the financial statements referred to in our report. We also
consent to the references to us under the headings "Experts" in such Prospectus.
/s/ Price Waterhouse LLP
- ------------------------
Price Waterhouse LLP
Norfolk, Virginia
May 30, 1996
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Fair Lanes, Inc.:
We consent to the use of our report dated September 10, 1993 included herein
and to the reference to our firm under the heading "Experts" in the prospectus.
KPMG PEAT MARWICK LLP
/s/ KPMG Peat Marwick LLP
Baltimore, Maryland
May 29, 1996
<PAGE> 1
EXHIBIT 24.1
AMF GROUP INC.
POWER OF ATTORNEY
Know all men by these presents, that each director and officer of AMF Group Inc.
whose signature appears below constitutes and appoints Richard A. Friedman,
Terence M. O'Toole, Douglas J. Stanard and Robert L. Morin and each of them,
with full power to act without the other, his true and lawful attorneys-in-fact
and agents, with full and several power of substitution, for him and in his
name, place and stead, in any and all capacities, to sign any or all amendments,
including post-effective amendments, and supplements to the registration
statement on Form S-4 to be filed initially with the Securities and Exchange
Commission on or about May 31, 1996, and to file the same, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as they or he 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.
Date: May 31, 1996
Name Title
/s/ Richard A. Friedman
- ------------------------------
Richard A. Friedman Director, President and Chief
Executive Officer
/s/ Terence M. O'Toole
- ------------------------------
Terence M. O'Toole Director
/s/ Peter M. Sacerdote
- ------------------------------
Peter M. Sacerdote Director
/s/ Robert L. Morin
- ------------------------------
Robert L. Morin Director
/s/ Douglas J. Stanard
- ------------------------------ Director and Chief Operating
Douglas J. Stanard Officer
/s/ Stephen E. Hare Executive Vice President,
- ------------------------------ Chief Financial Officer and
Stephen E. Hare Chief Accounting Officer
/s/ Charles M. Diker Director
- ------------------------------
Charles M. Diker
/s/ Paul Edgerley Director
- ------------------------------
Paul Edgerley
/s/ Howard A. Lipson Director
- ------------------------------
Howard A. Lipson
<PAGE> 2
AMF GROUP HOLDINGS INC.
POWER OF ATTORNEY
Know all men by these presents, that each director and officer of AMF Group
Holdings Inc. whose signature appears below constitutes and appoints Richard A.
Friedman, Terence M. O'Toole, Douglas J. Stanard and Robert L. Morin and each of
them, with full power to act without the other, his true and lawful
attorneys-in-fact and agents, with full and several power of substitution, for
him and in his name, place and stead, in any and all capacities, to sign any or
all amendments, including post-effective amendments, and supplements to the
registration statement on Form S-4 to be filed initially with the Securities and
Exchange Commission on or about May 31, 1996, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as they or he 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.
Date: May 31, 1996
Name Title
/s/ Richard A. Friedman
- -------------------------------
Richard A. Friedman Director, President and Chief
Executive Officer
/s/ Terence M. O'Toole
- -------------------------------
Terence M. O'Toole Director, Vice President and
Treasurer
<PAGE> 3
AMF BOWLING HOLDINGS INC.
POWER OF ATTORNEY
Know all men by these presents, that each director and officer of AMF Bowling
Holdings Inc. whose signature appears below constitutes and appoints Richard A.
Friedman, Terence M. O'Toole, Douglas J. Stanard and Robert L. Morin and each of
them, with full power to act without the other, his true and lawful
attorneys-in-fact and agents, with full and several power of substitution, for
him and in his name, place and stead, in any and all capacities, to sign any or
all amendments, including post-effective amendments, and supplements to the
registration statement on Form S-4 to be filed initially with the Securities and
Exchange Commission on or about May 31, 1996, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as they or he 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.
Date: May 31, 1996
Name Title
/s/ Robert L. Morin
- ----------------------------------
Robert L. Morin Director, President and
Treasurer
/s/ William W. Flexon
- ----------------------------------
William W. Flexon Director
<PAGE> 4
AMF BOWLING CENTERS HOLDINGS INC.
POWER OF ATTORNEY
Know all men by these presents, that each director and officer of AMF Bowling
Centers Holdings Inc. whose signature appears below constitutes and appoints
Richard A. Friedman, Terence M. O'Toole, Douglas J. Stanard and Robert L. Morin
and each of them, with full power to act without the other, his true and lawful
attorneys-in-fact and agents, with full and several power of substitution, for
him and in his name, place and stead, in any and all capacities, to sign any or
all amendments, including post-effective amendments, and supplements to the
registration statement on Form S-4 to be filed initially with the Securities and
Exchange Commission on or about May 31, 1996, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as they or he 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.
Date: May 31, 1996
Name Title
/s/ Douglas J. Stanard
- -----------------------------------
Douglas J. Stanard Director and President
/s/ Michael P. Bardaro
- -----------------------------------
Michael P. Bardaro Director and Treasurer
-3-
<PAGE> 5
AMF BOWLING, INC.
POWER OF ATTORNEY
Know all men by these presents, that each director and officer of AMF Bowling
Inc. whose signature appears below constitutes and appoints Richard A.
Friedman, Terence M. O'Toole, Douglas J. Stanard and Robert L. Morin and each
of them, with full power to act without the other, his true and lawful
attorneys-in-fact and agents, with full and several power of substitution, for
him and in his name, place and stead, in any and all capacities, to sign any or
all amendments, including post-effective amendments, and supplements to the
registration statement on Form S-4 to be filed initially with the Securities and
Exchange Commission on or about May 31, 1996, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as they or he 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.
Date: May 31, 1996
Name Title
/s/ Robert L. Morin
- --------------------------------
Robert L. Morin Director, President and
Treasurer
/s/ William W. Flexon
- --------------------------------
William W. Flexon Vice President, Secretary and
Assistant Treasurer
-4-
<PAGE> 6
AMF WORLDWIDE BOWLING CENTERS HOLDINGS INC.
POWER OF ATTORNEY
Know all men by these presents, that each director and officer of AMF Worldwide
Bowling Centers Holdings Inc. whose signature appears below constitutes and
appoints Richard A. Friedman, Terence M. O'Toole, Douglas J. Stanard and Robert
L. Morin and each of them, with full power to act without the other, his true
and lawful attorneys-in-fact and agents, with full and several power of
substitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments, including post-effective amendments,
and supplements to the registration statement on Form S-4 to be filed initially
with the Securities and Exchange Commission on or about May 31, 1996, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as they or he 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.
Date: May 31, 1996
Name Title
/s/ Douglas J. Stanard
- ------------------------------
Douglas J. Stanard Director, President and
Treasurer
/s/ Michael P. Bardaro
- ------------------------------
Michael P. Bardaro Director
-5-
<PAGE> 7
AMF BOWLING CENTERS, INC.
POWER OF ATTORNEY
Know all men by these presents, that each director and officer of AMF Bowling
Centers, Inc. whose signature appears below constitutes and appoints Richard A.
Friedman, Terence M. O'Toole, Douglas J. Stanard and Robert L. Morin and each of
them, with full power to act without the other, his true and lawful
attorneys-in-fact and agents, with full and several power of substitution, for
him and in his name, place and stead, in any and all capacities, to sign any or
all amendments, including post-effective amendments, and supplements to the
registration statement on Form S-4 to be filed initially with the Securities and
Exchange Commission on or about May 31, 1996, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as they or he 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.
Date: May 31, 1996
Name Title
/s/ Douglas J. Stanard
- ---------------------------------
Douglas J. Stanard Director, President and Chief
Executive Officer
/s/ Michael P. Bardaro
- ---------------------------------
Michael P. Bardaro Treasurer
-6-
<PAGE> 8
BUSH RIVER CORPORATION
POWER OF ATTORNEY
Know all men by these presents, that each director and officer of Bush River
Corporation whose signature appears below constitutes and appoints Richard A.
Friedman, Terence M. O'Toole, Douglas J. Stanard and Robert L. Morin and each of
them, with full power to act without the other, his true and lawful
attorneys-in-fact and agents, with full and several power of substitution, for
him and in his name, place and stead, in any and all capacities, to sign any or
all amendments, including post-effective amendments, and supplements to the
registration statement on Form S-4 to be filed initially with the Securities and
Exchange Commission on or about May 31, 1996, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as they or he 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.
Date: May 31, 1996
Name Title
/s/ Douglas J. Stanard
- -------------------------------
Douglas J. Stanard Director, President and Chief
Executive Officer
/s/ Michael P. Bardaro
- -------------------------------
Michael P. Bardaro Treasurer
-7-
<PAGE> 9
AMF BEVERAGE COMPANY OF OREGON, INC.
POWER OF ATTORNEY
Know all men by these presents, that each director and officer of AMF Beverage
Company of Oregon, Inc. whose signature appears below constitutes and appoints
Richard A. Friedman, Terence M. O'Toole, Douglas J. Stanard and Robert L. Morin
and each of them, with full power to act without the other, his true and lawful
attorneys-in-fact and agents, with full and several power of substitution, for
him and in his name, place and stead, in any and all capacities, to sign any or
all amendments, including post-effective amendments, and supplements to the
registration statement on Form S-4 to be filed initially with the Securities and
Exchange Commission on or about May 31, 1996, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as they or he 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.
Date: May 31, 1996
Name Title
/s/ Douglas J. Stanard
- -------------------------------
Douglas J. Stanard Director, President and Chief
Executive Officer
/s/ Michael P. Bardaro
- -------------------------------
Michael P. Bardaro Treasurer
-8-
<PAGE> 10
KING LOUIE LENEXA, INC.
POWER OF ATTORNEY
Know all men by these presents, that each director and officer of King Louie
Lenexa, Inc. whose signature appears below constitutes and appoints Richard A.
Friedman, Terence M. O'Toole, Douglas J. Stanard and Robert L. Morin and each of
them, with full power to act without the other, his true and lawful
attorneys-in-fact and agents, with full and several power of substitution, for
him and in his name, place and stead, in any and all capacities, to sign any or
all amendments, including post-effective amendments, and supplements to the
registration statement on Form S-4 to be filed initially with the Securities and
Exchange Commission on or about May 31, 1996, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as they or he 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.
Date: May 31, 1996
Name Title
/s/ Douglas J. Stanard
- ---------------------------------
Douglas J. Stanard Director, President and Chief
Executive Officer
/s/ Michael P. Bardaro
- ---------------------------------
Michael P. Bardaro Treasurer
-9-
<PAGE> 11
AMF BEVERAGE COMPANY OF W.VA., INC.
POWER OF ATTORNEY
Know all men by these presents, that each director and officer of AMF Beverage
Company of W.Va., Inc. whose signature appears below constitutes and appoints
Richard A. Friedman, Terence M. O'Toole, Douglas J. Stanard and Robert L. Morin
and each of them, with full power to act without the other, his true and lawful
attorneys-in-fact and agents, with full and several power of substitution, for
him and in his name, place and stead, in any and all capacities, to sign any or
all amendments, including post-effective amendments, and supplements to the
registration statement on Form S-4 to be filed initially with the Securities and
Exchange Commission on or about May 31, 1996, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as they or he 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.
Date: May 31, 1996
Name Title
/s/ Douglas J. Stanard
- --------------------------------
Douglas J. Stanard Director, President and Chief
Executive Officer
/s/ Michael P. Bardaro
- --------------------------------
Michael P. Bardaro Treasurer
-10-
<PAGE> 12
AMF BOWLING CENTERS SWITZERLAND INC.
POWER OF ATTORNEY
Know all men by these presents, that each director and officer of AMF Bowling
Centers Switzerland, Inc. whose signature appears below constitutes and appoints
Richard A. Friedman, Terence M. O'Toole, Douglas J. Stanard and Robert L. Morin
and each of them, with full power to act without the other, his true and lawful
attorneys-in-fact and agents, with full and several power of substitution, for
him and in his name, place and stead, in any and all capacities, to sign any or
all amendments, including post-effective amendments, and supplements to the
registration statement on Form S-4 to be filed initially with the Securities and
Exchange Commission on or about May 31, 1996, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as they or he 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.
Date: May 31, 1996
Name Title
/s/ Guiseppe Avolio
- -------------------------------
Guiseppe Avolio President and Chief Executive
Officer
/s/ Douglas J. Stanard
- -------------------------------
Douglas J. Stanard Director and Treasurer
Director
/s/ Michael P. Bardaro
- -------------------------------
Michael P. Bardaro
-11-
<PAGE> 13
AMF BOWLING CENTERS (AUST) INTERNATIONAL INC.
POWER OF ATTORNEY
Know all men by these presents, that each director and officer of AMF Bowling
Centers (Aust) International Inc. whose signature appears below constitutes and
appoints Richard A. Friedman, Terence M. O'Toole, and Robert L. Morin and each
of them, with full power to act without the other, his true and lawful
attorneys-in-fact and agents, with full and several power of substitution, for
him and in his name, place and stead, in any and all capacities, to sign any or
all amendments, including post-effective amendments, and supplements to the
registration statement on Form S-4 to be filed initially with the Securities and
Exchange Commission on or about May 31, 1996, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as they or he 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.
Date: May 31, 1996
Name Title
/s/ Douglas J. Stanard
- ---------------------------------
Douglas J. Stanard Director, President, Chief
Executive Officer and
Treasurer
-12-
<PAGE> 14
AMF BOWLING CENTERS (CANADA) INTERNATIONAL INC.
POWER OF ATTORNEY
Know all men by these presents, that each director and officer of AMF Bowling
Centers (Canada) International Inc. whose signature appears below constitutes
and appoints Richard A. Friedman, Terence M. O'Toole, Douglas J. Stanard and
Robert L. Morin and each of them, with full power to act without the other, his
true and lawful attorneys-in-fact and agents, with full and several power of
substitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments, including post-effective amendments,
and supplements to the registration statement on Form S-4 to be filed initially
with the Securities and Exchange Commission on or about May 31, 1996, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as they or he 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.
Date: May 31, 1996
Name Title
/s/ Douglas J. Stanard
- --------------------------------
Douglas J. Stanard Director, President, Chief
Executive Officer and
Treasurer
/s/ Lynda R. Ross
- --------------------------------
Lynda R. Ross Director
/s/ Sandra I. Harris
- --------------------------------
Sandra I. Harris Director
-13-
<PAGE> 15
AMF BOWLING CENTERS (HONG KONG) INTERNATIONAL INC.
POWER OF ATTORNEY
Know all men by these presents, that each director and officer of AMF Bowling
Centers (Hong Kong) International Inc. whose signature appears below constitutes
and appoints Richard A. Friedman, Terence M. O'Toole, and Robert L. Morin and
each of them, with full power to act without the other, his true and lawful
attorneys-in-fact and agents, with full and several power of substitution, for
him and in his name, place and stead, in any and all capacities, to sign any or
all amendments, including post-effective amendments, and supplements to the
registration statement on Form S-4 to be filed initially with the Securities and
Exchange Commission on or about May 31, 1996, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as they or he 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.
Date: May 31, 1996
Name Title
/s/ Douglas J. Stanard
- ----------------------------------
Douglas J. Stanard Director, President, Chief
Executive Officer and
Treasurer
-14-
<PAGE> 16
AMF BOWLING CENTERS INTERNATIONAL INC.
POWER OF ATTORNEY
Know all men by these presents, that each director and officer of AMF Bowling
Centers International Inc. whose signature appears below constitutes and
appoints Richard A. Friedman, Terence M. O'Toole, Douglas J. Stanard and Robert
L. Morin and each of them, with full power to act without the other, his true
and lawful attorneys-in-fact and agents, with full and several power of
substitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments, including post-effective amendments,
and supplements to the registration statement on Form S-4 to be filed initially
with the Securities and Exchange Commission on or about May 31, 1996, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as they or he 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.
Date: May 31, 1996
Name Title
/s/ Takashi Takeshige
- ----------------------------------
Takashi Takeshige Managing Director, President
and Chief Executive Officer
/s/ Douglas J. Stanard
- ----------------------------------
Douglas J. Stanard Director
/s/ Michael P. Bardaro
- ----------------------------------
Michael P. Bardaro Treasurer
-15-
<PAGE> 17
AMF BCO-UK ONE, INC.
POWER OF ATTORNEY
Know all men by these presents, that each director and officer of AMF BCO-UK
One, Inc. whose signature appears below constitutes and appoints Richard A.
Friedman, Terence M. O'Toole, and Robert L. Morin and each of them, with full
power to act without the other, his true and lawful attorneys-in-fact and
agents, with full and several power of substitution, for him and in his name,
place and stead, in any and all capacities, to sign any or all amendments,
including post-effective amendments, and supplements to the registration
statement on Form S-4 to be filed initially with the Securities and Exchange
Commission on or about May 31, 1996, and to file the same, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as they or he 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.
Date: May 31, 1996
Name Title
/s/ Douglas J. Stanard
- ---------------------------------
Douglas J. Stanard Director, President, Chief
Executive Officer and
Treasurer
-16-
<PAGE> 18
AMF BCO-UK TWO, INC.
POWER OF ATTORNEY
Know all men by these presents, that each director and officer of AMF BCO-UK
TWO, Inc. whose signature appears below constitutes and appoints Richard A.
Friedman, Terence M. O'Toole, and Robert L. Morin and each of them, with full
power to act without the other, his true and lawful attorneys-in-fact and
agents, with full and several power of substitution, for him and in his name,
place and stead, in any and all capacities, to sign any or all amendments,
including post-effective amendments, and supplements to the registration
statement on Form S-4 to be filed initially with the Securities and Exchange
Commission on or about May 31, 1996, and to file the same, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as they or he 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.
Date: May 31, 1996
Name Title
/s/ Douglas J. Stanard
- ----------------------------------
Douglas J. Stanard Director, President, Chief
Executive Officer and
Treasurer
-17-
<PAGE> 19
AMF BCO-FRANCE ONE, INC.
POWER OF ATTORNEY
Know all men by these presents, that each director and officer of AMF BCO-France
One, Inc. whose signature appears below constitutes and appoints Richard A.
Friedman, Terence M. O'Toole, and Robert L. Morin and each of them, with full
power to act without the other, his true and lawful attorneys-in-fact and
agents, with full and several power of substitution, for him and in his name,
place and stead, in any and all capacities, to sign any or all amendments,
including post-effective amendments, and supplements to the registration
statement on Form S-4 to be filed initially with the Securities and Exchange
Commission on or about May 31, 1996, and to file the same, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as they or he 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.
Date: May 31, 1996
Name Title
/s/ Douglas J. Stanard
- ---------------------------------
Douglas J. Stanard Director, President, Chief
Executive Officer and
Treasurer
-18-
<PAGE> 20
AMF BCO-FRANCE TWO, INC.
POWER OF ATTORNEY
Know all men by these presents, that each director and officer of AMF BCO-France
Two, Inc. whose signature appears below and the Authorized Representative in the
United States whose signature appears below constitutes and appoints Richard A.
Friedman, Terence M. O'Toole, and Robert L. Morin and each of them, with full
power to act without the other, his true and lawful attorneys-in-fact and
agents, with full and several power of substitution, for him and in his name,
place and stead, in any and all capacities, to sign any or all amendments,
including post-effective amendments, and supplements to the registration
statement on Form S-4 to be filed initially with the Securities and Exchange
Commission on or about May 31, 1996, and to file the same, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as they or he 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.
Date: May 31, 1996
Name Title
/s/ Douglas J. Stanard
- -----------------------------------
Douglas J. Stanard Director, President, Chief
Executive Officer and
Treasurer
-19-
<PAGE> 21
AMF BOWLING CENTERS SPAIN INC.
POWER OF ATTORNEY
Know all men by these presents, that each director and officer of AMF Bowling
Centers Spain Inc. whose signature appears below and the Authorized
Representative in the United States whose signature appears below constitutes
and appoints Richard A. Friedman, Terence M. O'Toole, Douglas J. Stanard and
Robert L. Morin and each of them, with full power to act without the other, his
true and lawful attorneys-in-fact and agents, with full and several power of
substitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments, including post-effective amendments,
and supplements to the registration statement on Form S-4 to be filed initially
with the Securities and Exchange Commission on or about May 31, 1996, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as they or he 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.
Date: May 31, 1996
Name Title
/s/ Asuncion Merinero
- ------------------------------
Asuncion Merinero Managing Director and President
/s/ Douglas J. Stanard
- ------------------------------
Douglas J. Stanard Director and Treasurer
/s/ Michael P. Bardaro
- ------------------------------ Director
Michael P. Bardaro
-20-
<PAGE> 22
AMF BOWLING MEXICO HOLDING, INC.
POWER OF ATTORNEY
Know all men by these presents, that each director and officer of AMF Bowing
Mexico Holding, Inc. whose signature appears below and the Authorized
Representative in the United States whose signature appears below constitutes
and appoints Richard A. Friedman, Terence M. O'Toole, and Robert L. Morin and
each of them, with full power to act without the other, his true and lawful
attorneys-in-fact and agents, with full and several power of substitution, for
him and in his name, place and stead, in any and all capacities, to sign any or
all amendments, including post-effective amendments, and supplements to the
registration statement on Form S-4 to be filed initially with the Securities and
Exchange Commission on or about May 31, 1996, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as they or he 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.
Date: May 31, 1996
Name Title
/s/ Douglas J. Stanard
- ----------------------------------
Douglas J. Stanard Director, President, Chief
Executive Officer and
Treasurer
-21-
<PAGE> 23
BOLICHES AMF, INC.
POWER OF ATTORNEY
Know all men by these presents, that each director and officer of Boliches AMF,
Inc. whose signature appears below and the Authorized Representative in the
United States whose signature appears below constitutes and appoints Richard A.
Friedman, Terence M. O'Toole, and Robert L. Morin and each of them, with full
power to act without the other, his true and lawful attorneys-in-fact and
agents, with full and several power of substitution, for him and in his name,
place and stead, in any and all capacities, to sign any or all amendments,
including post-effective amendments, and supplements to the registration
statement on Form S-4 to be filed initially with the Securities and Exchange
Commission on or about May 31, 1996, and to file the same, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as they or he 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.
Date: May 31, 1996
Name Title
/s/ Douglas J. Stanard
- ---------------------------------
Douglas J. Stanard Director, President, Chief
Executive Officer and
Treasurer
-22-
<PAGE> 24
AMF BCO-CHINA, INC.
POWER OF ATTORNEY
Know all men by these presents, that each director and officer of AMF BCO-China,
Inc. whose signature appears below and the Authorized Representative in the
United States whose signature appears below constitutes and appoints Richard A.
Friedman, Terence M. O'Toole, and Robert L. Morin and each of them, with full
power to act without the other, his true and lawful attorneys-in-fact and
agents, with full and several power of substitution, for him and in his name,
place and stead, in any and all capacities, to sign any or all amendments,
including post-effective amendments, and supplements to the registration
statement on Form S-4 to be filed initially with the Securities and Exchange
Commission on or about May 31, 1996, and to file the same, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as they or he 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.
Date: May 31, 1996
Name Title
/s/ Douglas J. Stanard
- ----------------------------------
Douglas J. Stanard Director, President, Chief
Executive Officer and
Treasurer
-23-
<PAGE> 25
AMF BOWLING CENTERS CHINA, INC.
POWER OF ATTORNEY
Know all men by these presents, that each director and officer of AMF Bowling
Centers China, Inc. whose signature appears below and the Authorized
Representative in the United States whose signature appears below constitutes
and appoints Richard A. Friedman, Terence M. O'Toole, Douglas J. Stanard and
Robert L. Morin and each of them, with full power to act without the other, his
true and lawful attorneys-in-fact and agents, with full and several power of
substitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments, including post-effective amendments,
and supplements to the registration statement on Form S-4 to be filed initially
with the Securities and Exchange Commission on or about May 31, 1996, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as they or he 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.
Date: May 31, 1996
Name Title
/s/ Douglas J. Stanard
- -----------------------------------
Douglas J. Stanard Director, President, Chief
Executive Officer and
Treasurer
-24-
<PAGE> 1
EXHIBIT 25.1
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)
IBJ SCHRODER BANK & TRUST COMPANY
(Exact name of trustee as specified in its charter)
New York 13-5375195
(Jurisdiction of incorporation (I.R.S. employer
or organization if not a U.S. national bank) identification No.)
One State Street, New York, New York 10004
(Address of principal executive offices) (Zip code)
IBJ SCHRODER BANK & TRUST COMPANY
ONE STATE STREET
NEW YORK, NEW YORK 10004
(212) 858-2000
(Name, address and telephone number of agent for service)
AMF GROUP INC.
(Exact name of obligor as specified in its charter)
See Table of Subsidiary Guarantors on Schedule I hereto
Delaware 13-3873272
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
7313 Bell Creek Road
Mechanicsville, Virginia 23111
(Address of principal executive offices) (Zip code)
10 7/8% Senior Subordinated Notes due 2006
(Title of indenture securities)
<PAGE> 2
Item 1. General information
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
New York State Banking Department, Two Rector Street,
New York, New York
Federal Deposit Insurance Corporation, Washington, D.C.
Federal Reserve Bank of New York Second District, 33
Liberty Street, New York, New York
(b) Whether it is authorized to exercise corporate trust powers.
Yes
Item 2. Affiliations with the Obligor.
If the obligor is an affiliate of the trustee, describe each
such affiliation.
The obligor is not an affiliate of the trustee.
Item 13. Defaults by the Obligor.
(a) State whether there is or has been a default with respect to
the securities under this indenture. Explain the nature of
any such default.
None
(b) If the trustee is a trustee under another indenture under
which any other securities, or certificates of interest or
participation in any other securities, of the obligor are
outstanding, or is trustee for more than one outstanding
series of securities under the indenture, state whether there
has been a default under any such indenture or series,
identify the indenture or series affected, and explain the
nature of any such default.
None
2
<PAGE> 3
Item 16. List of exhibits.
List below all exhibits filed as part of this statement of
eligibility.
*1. A copy of the Charter of IBJ Schroder Bank & Trust Company as
amended to date. (See Exhibit 1A to Form T-1, Securities and
Exchange Commission File No. 22- 18460).
*2. A copy of the Certificate of Authority of the trustee to
Commence Business (Included in Exhibit 1 above).
*3. A copy of the Authorization of the trustee to exercise
corporate trust powers, as amended to date (See Exhibit 4 to
Form T-1, Securities and Exchange Commission File No.
22-19146).
*4. A copy of the existing By-Laws of the trustee, as amended to
date (See Exhibit 4 to Form T-1, Securities and Exchange
Commission File No. 22-19146).
5. Not Applicable
6. The consent of United States institutional trustee required
by Section 321(b) of the Act.
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.
* The Exhibits thus designated are incorporated herein by reference as
exhibits hereto. Following the description of such Exhibits is a
reference to the copy of the Exhibit heretofore filed with the
Securities and Exchange Commission, to which there have been no
amendments or changes.
3
<PAGE> 4
NOTE
In answering any item in this Statement of Eligibility which relates to
matters peculiarly within the knowledge of the obligor and its
directors or officers, the trustee has relied upon information
furnished to it by the obligor.
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
trustee of all facts on which to base responsive answers to Item 2, the
answer to said Item are based on incomplete information.
Item 2, may, however, be considered as correct unless amended by an
amendment to this Form T-1.
Pursuant to General Instruction B, the trustee has responded to Items
1, 2 and 16 of this form since to the best knowledge of the trustee as
indicated in Item 13, the obligor is not in default under any indenture
under which the applicant is trustee.
4
<PAGE> 5
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, IBJ Schroder Bank & Trust Company, a corporation organized and existing
under the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York, and State of New York, on the 31st day
of May, 1996.
IBJ SCHRODER BANK & TRUST COMPANY
By: /s/ Irene Teutonico
-----------------------------
Irene Teutonico
Assistant Vice President
5
<PAGE> 6
EXHIBIT 6
CONSENT OF TRUSTEE
Pursuant to the requirements of Section 321(b) of the Trust Indenture
Act of 1939, as amended, in connection with the issue by AMF Group Inc. of its
10 7/8% Senior Subordinated Notes due 2006, we hereby consent that reports of
examinations by Federal, State, Territorial, or District authorities may be
furnished by such authorities to the Securities and Exchange Commission upon
request therefor.
IBJ SCHRODER BANK & TRUST COMPANY
By: /s/ Irene Teutonico
-----------------------------
Irene Teutonico
Assistant Vice President
Dated: May 31, 1996
6
<PAGE> 7
EXHIBIT 7
CONSOLIDATED REPORT OF CONDITION OF
IBJ SCHRODER BANK & TRUST COMPANY
OF NEW YORK, NEW YORK
AND FOREIGN AND DOMESTIC SUBSIDIARIES
REPORT AS OF MARCH 31, 1996
<TABLE>
<CAPTION>
DOLLAR AMOUNTS
IN THOUSANDS
--------------
ASSETS
<S> <C>
Cash and balance due from depository institutions:
Noninterest-bearing balances and currency and coin ........................................... $ 27,805
Interest-bearing balances....................................................................... $ 142,919
Securities: Held to Maturity..................................................................... $ 169,682
Available-for-sale................................................................... $ 23,665
Federal funds sold and securities purchased under
agreements to resell in domestic offices of the bank
and of its Edge and Agreement subsidiaries and in IBFs:
Federal Funds sold.............................................................................. $ 63,801
Securities purchased under agreements to resell................................................. $ -0-
Loans and lease financing receivables:
Loans and leases, net of unearned income..............................................$1,575,250
LESS: Allowance for loan and lease losses.............................................$ 55,396
LESS: Allocated transfer risk reserve.................................................$ -0-
Loans and leases, net of unearned income, allowance, and reserve................................ $1,519,854
Assets held in trading accounts..................................................................... $ 489
Premises and fixed assets........................................................................... $ 7,228
Other real estate owned............................................................................. $ 397
Investments in unconsolidated subsidiaries and associated companies................................. $ -0-
Customers' liability to this bank on acceptances outstanding........................................ $ 155
Intangible assets................................................................................... $ -0-
Other assets........................................................................................ $ 60,135
TOTAL ASSETS........................................................................................ $2,016,130
</TABLE>
<PAGE> 8
LIABILITIES
<TABLE>
<S> <C>
Deposits:
In domestic offices.................................................................. $ 612,376
Noninterest-bearing .................................................. $ 174,044
Interest-bearing ..................................................... $ 438,332
In foreign offices, Edge and Agreement subsidiaries, and IBFs........................ $ 793,288
Noninterest-bearing .................................................. $ 16,090
Interest-bearing ......................................................$ 777,198
Federal funds purchased and securities sold
under agreements to repurchase in domestic offices of the bank and
of its Edge and Agreement subsidiaries, and in IBFs:
Federal Funds purchased.............................................................. $ 57,588
Securities sold under agreements to repurchase....................................... $ -0-
Demand notes issued to the U.S. Treasury................................................. $ 24,522
Trading Liabilities...................................................................... $ 390
Other borrowed money:
a) With original maturity of one year or less........................................ $ 250,333
b) With original maturity of more than one year...................................... $ -0-
Mortgage indebtedness and obligations under capitalized leases........................... $ -0-
Bank's liability on acceptances executed and outstanding................................. $ 155
Subordinated notes and debentures........................................................ $ -0-
Other liabilities........................................................................ $ 68,215
TOTAL LIABILITIES........................................................................ $1,806,867
Limited life preferred stock and related surplus......................................... $ -0-
EQUITY CAPITAL
Perpetual preferred stock................................................................ $ -0-
Common Stock............................................................................. $ 29,649
Surplus.................................................................................. $ 217,008
Undivided profits and capital reserves................................................... $ (37,419)
Plus: Net unrealized gains (losses) on marketable equity securities................... $ 25
Cumulative foreign currency translation adjustments...................................... $ -0-
TOTAL EQUITY CAPITAL..................................................................... $ 209,263
TOTAL LIABILITIES AND EQUITY CAPITAL..................................................... $2,016,130
</TABLE>
<PAGE> 9
Schedule I
TABLE OF SUBSIDIARY GUARANTORS
The address and telephone number of the principal executive offices of each of
the Subsidiary Guarantors listed below are the same as set forth for AMF Group
Inc. All of such Subsidiary Guarantors are direct or indirect subsidiaries of
AMF Group Inc.
<TABLE>
<CAPTION>
STATE OR OTHER
JURISDICTION OF I.R.S. EMPLOYER
EXACT NAME OF REGISTRANT INCORPORATION IDENTIFICATION
AS SPECIFIED IN ITS CHARTER OR ORGANIZATION NUMBER
--------------------------- ----------------- ---------------
<S> <C> <C>
AMF GROUP HOLDINGS INC. DELAWARE 13-3873270
AMF BOWLING HOLDINGS INC. DELAWARE 54-1790126
AMF BOWLING CENTERS HOLDINGS INC. DELAWARE 54-1789642
AMF BOWLING, INC. VIRGINIA 54-1390740
AMF WORLDWIDE BOWLING CENTERS HOLDINGS INC. DELAWARE 54-1789643
AMF BOWLING CENTERS, INC. VIRGINIA 54-1221662
BUSH RIVER CORPORATION SOUTH CAROLINA 57-0707033
AMF BEVERAGE COMPANY OF OREGON, INC. OREGON 54-1634960
KING LOUIE LENEXA, INC. KANSAS 54-1540814
AMF BEVERAGE COMPANYOF W. VA., INC. WEST VIRGINIA 54-1800461
AMF BOWLING CENTERS SWITZERLAND INC. DELAWARE 54-1792353
AMF BOWLING CENTERS (AUST) INTERNATIONAL INC. VIRGINIA 54-1492964
AMF BOWLING CENTERS (CANADA) INTERNATIONAL INC. VIRGINIA 54-1492976
AMF BOWLING CENTERS (HONG KONG) INTERNATIONAL INC. VIRGINIA 54-1493834
AMF BOWLING CENTERS INTERNATIONAL, INC. VIRGINIA 54-1493442
AMF BCO-UK ONE, INC. VIRGINIA 54-1511045
AMF BCO-UK TWO, INC. VIRGINIA 54-1511040
AMF BCO-FRANCE ONE, INC. VIRGINIA 54-1513230
AMF BCO-FRANCE TWO, INC. VIRGINIA 54-1513758
AMF BOWLING CENTERS SPAIN INC. DELAWARE 54-1792351
AMF BOWLING MEXICO, HOLDING, INC. DELAWARE 54-1467931
BOLICHES AMF, INC. VIRGINIA 54-1529631
AMF BCO-CHINA, INC. VIRGINIA 54-1768882
AMF BOWLING CENTERS CHINA, INC. VIRGINIA 54-1768871
</TABLE>
<PAGE> 1
EXHIBIT 25.2
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
-------------------------
FORM T-1
STATEMENT OF ELIGIBILITY AND QUALIFICATION
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
-------------------------
AMERICAN BANK NATIONAL ASSOCIATION
(Exact name of Trustee as specified in its charter)
A National Banking Association 41-0122055
(State of incorporation if (IRS Employer
not a national bank) Identification No.)
101 East Fifth Street
Corporate Trust Department
St. Paul, Minnesota 55101
(Address of principal executive offices) (Zip Code)
AMERICAN BANK NATIONAL ASSOCIATION
101 East Fifth Street
St. Paul, Minnesota 55101
(612) 298-6280
(Exact name, address, and telephone number of agent for service)
-------------------------
AMF Group Inc.
(Exact name of obligor as specified in its charter)
Delaware 13-3873272
(State of incorporation or other (IRS Employer Identification
jurisdiction) incorporation or organization)
7313 Bell Creek Road
Mechanicsville, Virginia 23111
(Address of principal executive offices) (Zip Code)
-------------------------
12 1/4% Senior Subordinated Discount Notes Due 2006
(Title of Indenture securities)
<PAGE> 2
<TABLE>
<CAPTION>
Exact Name of Obligor State or other jurisdiction IRS employer identification number
of incorporation or organization
<S> <C> <C>
AMF Group Holdings Inc. Delaware 13-3873270
AMF Bowling Holdings Inc. Delaware 54-1790126
AMF Bowling Centers
Holdings Inc. Delaware 54-1789642
AMF Bowling, Inc. Virginia 54-1390740
AMF Worldwide Bowling
Centers Holdings Inc. Delaware 54-1789643
AMF Bowling Centers, Inc. Virginia 54-1221662
Bush River Corporation South Carolina 57-0707033
AMF Beverage Company
of Oregon, Inc. Oregon 54-1634960
King Louie Lenexa, Inc. Kansas 54-1540814
AMF Beverage Company
of W. VA, Inc. West Virginia 54-1800461
AMF Bowling Centers
Switzerland Inc. Delaware 54-1792353
AMF Bowling Centers
(Aust) International Inc. Virginia 54-1492964
AMF Bowling Centers
(Canada) International Inc. Virginia 54-1492976
AMF Bowling Centers
(Hong Kong) International Inc. Virginia 54-1493836
AMF Bowling Centers
International Inc. Virginia 54-1493442
AMF BCO-UK One, Inc. Virginia 54-1511045
AMF BCO-UK Two, Inc. Virginia 54-1511040
AMF BCO-UK France
One, Inc. Virginia 54-1513230
AMF BCO-UK France
Two, Inc. Virginia 54-1513758
AMF Bowling Centers
Spain Inc. Delaware 54-1792351
AMF Bowling Mexico
Holding, Inc. Delaware 54-1467931
Boliches AMF, Inc. Virginia 54-1529631
AMF BCO-China, Inc. Virginia 54-1768882
AMF Bowling Centers
China, Inc. Virginia 54-1768871
</TABLE>
<PAGE> 3
Item 1. General Information. Furnish the following information as to the
trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
-Comptroller of the Currency
Treasury Department
Washington, DC
-Federal Deposit Insurance Corporation
Washington, DC
-The Board of Governors of the Federal Reserve System
Washington, DC
(b) The Trustee is authorized to exercise corporate trust powers.
GENERAL
Item 2. Affiliations With Obligor and Underwriters. If the obligor or any
underwriter for the obligor is an affiliate of the Trustee, describe
each such affiliation.
None
See Note following Item 16.
Items 3-15 are not applicable because to the best of the Trustee's knowledge
the obligor is not in default under any Indenture for which the Trustee acts as
Trustee.
Item 16. List of Exhibits. Listed below are all the exhibits filed as a part
of this statement of eligibility and
qualification. Such exhibits are incorporated
by reference from a previous filing under filing
number 333-4402.
Exhibit 1. Copy of Articles of Association of the trustee now in
effect.
Exhibit 2. a. A copy of the certificate of the Comptroller of
Currency dated June 1, 1965, authorizing American
Bank National Association to act as fiduciary.
b. A copy of the certificate of authority of the
trustee to commence business issued June 9, 1903,
by the Comptroller of the Currency to American
Bank National Association.
<PAGE> 4
Exhibit 3. A copy of the authorization of the trustee to exercise
corporate trust powers issued by the Federal Reserve Board.
Exhibit 4. Copy of By-laws of the trustee as now in effect.
Exhibit 5. Copy of each Indenture referred to in Item 4. Not applicable.
Exhibit 6. The consent of the trustee required by Section 321(b) of the
Act.
Exhibit 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.
NOTE
The answers to this statement insofar as such answers relate to what
persons have been underwriters for any securities of the obligor within three
years prior to the date of filing this statement, or what persons are owners of
10% or more of the voting securities of the obligor, or affiliates, are based
upon information furnished to the Trustee by the obligor. While the Trustee has
no reason to doubt the accuracy of any such information, it cannot accept any
responsibility therefor.
<PAGE> 5
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, a national banking association organized and existing under the laws of
the United States, has duly caused this statement of eligibility and
qualification to be signed on its behalf by the undersigned, thereunto duly
authorized, and its seal to be hereunto affixed and attested, all in the City
of Saint Paul and State of Minnesota on the 22nd day of May, 1996.
AMERICAN BANK NATIONAL ASSOCIATION
[SEAL]
/s/ Frank P. Leslie III
----------------------------------
Frank P. Leslie III
Vice President
<PAGE> 6
EXHIBIT 6
CONSENT
In accordance with Section 321(b) of the Trust Indenture Act of 1939,
the undersigned, American Bank National Association, hereby consents that
reports of examination of the undersigned by Federal, State, Territorial or
District authorities may be furnished by such authorities to the Securities and
Exchange Commission upon its request therefor.
Dated: May 22, 1996
AMERICAN BANK NATIONAL ASSOCIATION
/s/ Frank P. Leslie
----------------------------------
Frank P. Leslie
Vice President
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR 3-MOS
<FISCAL-YEAR-END> DEC-31-1995 MAR-31-1996
<PERIOD-END> DEC-31-1995 MAR-31-1996
<CASH> 9,700 12,800
<SECURITIES> 0 0
<RECEIVABLES> 42,400 34,300
<ALLOWANCES> 3,400 3,200
<INVENTORY> 39,800 44,000
<CURRENT-ASSETS> 97,700 105,900
<PP&E> 418,000 422,500
<DEPRECIATION> 158,300 169,000
<TOTAL-ASSETS> 400,400 400,900
<CURRENT-LIABILITIES> 66,500 61,900
<BONDS> 20,600 28,300
0 0
0 0
<COMMON> 1,500 1,500
<OTHER-SE> 160,000 172,000
<TOTAL-LIABILITY-AND-EQUITY> 400,400 400,900
<SALES> 382,000 71,100
<TOTAL-REVENUES> 564,900 123,300
<CGS> 186,700 31,300
<TOTAL-COSTS> 440,500 95,400
<OTHER-EXPENSES> 15,500 3,600
<LOSS-PROVISION> 2,100 0
<INTEREST-EXPENSE> 13,500 3,400
<INCOME-PRETAX> 108,900 24,300
<INCOME-TAX> 12,100 2,700
<INCOME-CONTINUING> 96,800 21,600
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 96,800 21,600
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
<PAGE> 1
EXHIBIT 99.1
FORM OF
LETTER OF TRANSMITTAL
AMF GROUP INC.
Offer to Exchange
10 7/8% Series B Senior Subordinated Notes Due 2006
for any and all of the outstanding
10 7/8% Series A Senior Subordinated Notes Due 2006
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
5:00 P.M., NEW YORK CITY TIME, ON __________, 1996,
UNLESS THE OFFER IS EXTENDED
IBJ Schroder Bank & Trust Company
(the "Exchange Agent")
BY REGISTERED OR CERTIFIED MAIL
OVERNIGHT MAIL OR CARRIER SERVICE
OR IN PERSON BY HAND:
IBJ Schroder Bank & Trust Company
One State Street, Level SC-1
New York, NY 10004
Attention: Corporate Trust Administration
BY FACSIMILE TRANSMISSION
(FOR ELIGIBLE INSTITUTIONS ONLY):
(212) 858-2156
Delivery of this instrument to an address other than as set
forth above or transmission of instructions via a facsimile number other than
the ones listed above will not constitute a valid delivery. The instructions
accompanying this Letter of Transmittal should be read carefully before this
Letter of Transmittal is completed.
The undersigned hereby acknowledges receipt of the Prospectus
dated ________, 1996 (the "Prospectus") of AMF Group Inc. (the "Company") and
this Letter of Transmittal, which together constitute the Company's offer (the
"Exchange Offer") to exchange $1,000 principal amount of its 10 7/8% Senior
Subordinated Notes due 2006 (the "Exchange Notes"), which have been registered
under the Securities Act of 1933, as amended (the
<PAGE> 2
"Securities Act"), pursuant to a Registration Statement of which the Prospectus
is a part, for each $1,000 principal amount of their outstanding 10 7/8% Senior
Subordinated Notes due 2006 (the "Notes"), respectively. The term "Expiration
Date" shall mean 5:00 p.m., New York City time, on ________, 1996, unless the
Company, in their reasonable judgment, extend the Exchange Offer, in which case
the term shall mean the latest date and time to which the Exchange Offer is
extended. Capitalized terms used but not defined herein have the meaning given
to them in the Prospectus.
YOUR BANK OR BROKER CAN ASSIST YOU IN COMPLETING THIS FORM.
THE INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED.
QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS
AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT.
List below the notes to which this Letter of Transmittal
relates. If the space indicated below is inadequate, the Certificate or
Registration Numbers and Principal Amounts should be listed on a separately
signed schedule affixed hereto.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SENIOR SUBORDINATED NOTES TENDERED HEREBY
- -----------------------------------------------------------------------------------------------------------------
Aggregate
Certificate Principal
Name(s) and Address(es) of or Amount Principal
Registered Owner(s) Registration Represented Amount
(Please fill in) Numbers* by Notes Tendered**
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
---------------------- --------------- ----------
---------------------- --------------- ----------
---------------------- --------------- ----------
---------------------- --------------- ----------
Total
- -----------------------------------------------------------------------------------------------------------------
* Need not be completed by Book-entry Holders.
** Unless otherwise indicated, the Holder will be deemed to have
tendered the full aggregate principal amount represented by such
Notes. All tenders must be in integral multiples of $1,000.
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
-2-
<PAGE> 3
This Letter of Transmittal is to be used (i) if certificates
of Notes are to be forwarded herewith, (ii) if delivery of Notes is to be made
by book-entry transfer to an account maintained by the Exchange Agent at The
Depository Trust Company, (the "Depository") pursuant to the procedures set
forth in "The Exchange Offer -- Procedures for Tendering Notes" in the
Prospectus or (iii) tender of the Notes is to be made according to the
guaranteed delivery procedures described in the Prospectus under the caption
"The Exchange Offer -- Guaranteed Delivery Procedures." See Instruction 2.
Delivery of documents to a book-entry transfer facility does not constitute
delivery to the Exchange Agent.
The term "Holder" with respect to the Exchange Offer means any
person in whose name Notes are registered on the books of the Company or any
other person who has obtained a properly completed bond power from the
registered holder. The undersigned has completed, executed and delivered this
Letter of Transmittal to indicate the action the undersigned desires to take
with respect to the Exchange Offer. Holders who wish to tender their Notes must
complete this letter in its entirety.
[ ] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
DEPOSITORY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution
-----------------------
[ ] The Depository Trust Company
Account Number
---------------------------------------
Transaction Code Number
------------------------------
Holders whose Notes are not immediately available or who
cannot deliver their Notes and all other documents required hereby to the
Exchange Agent on or prior to the Expiration Date must tender their Notes
according to the guaranteed delivery procedure set forth in the Prospectus under
the caption "The Exchange Offer -- Guaranteed Delivery Procedures." See
Instruction 2.
[ ] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:
Name of Registered Holder(s)
-----------------------------------
Name of Eligible Institution that Guaranteed Delivery
----------
- ---------------------------------------------------------------
-3-
<PAGE> 4
If delivery by book-entry transfer:
Account Number___________________________________________
Transaction Code Number _________________________________
[ ] 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
--------------------------------------------------------
-4-
<PAGE> 5
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 principal amount of the
Notes indicated above. Subject to, and effective upon, the acceptance for
exchange of such Notes tendered hereby, the undersigned hereby exchanges,
assigns and transfers to, or upon the order of, the Company all right, title and
interest in and to such Notes as are being tendered hereby, including all rights
to accrued and unpaid interest thereon as of the Expiration Date. The
undersigned hereby irrevocably constitutes and appoints the Exchange Agent the
true and lawful agent and attorney-in-fact of the undersigned (with full
knowledge that said Exchange Agent acts as the agent of the Company in
connection with the Exchange Offer) to cause the Notes to be assigned,
transferred and exchanged. The undersigned represents and warrants that it has
full power and authority to tender, exchange, assign and transfer the Notes and
to acquire Exchange Notes issuable upon the exchange of such tendered Notes, and
that when the same are accepted for exchange, the Company will acquire good and
unencumbered title to the tendered Notes, free and clear of all liens,
restrictions, charges and encumbrances and not subject to any adverse claim.
The undersigned represents to the Company that (i) the
Exchange Notes acquired pursuant to the Exchange Offer are being obtained in the
ordinary course of business of the person receiving such Exchange Notes, whether
or not such person is the undersigned, and (ii) neither the undersigned nor any
such other person has an arrangement or understanding with any person to
participate in the distribution of such Exchange Notes. If the undersigned or
the person receiving the Exchange Notes covered hereby is a broker-dealer that
is receiving the Exchange Notes for its own account in exchange for Notes that
were acquired as a result of market-making activities or other trading
activities, the undersigned acknowledges that it or such other person will
deliver a prospectus in connection with any resale of such Exchange Notes;
however, by so acknowledging and by delivering a prospectus, the undersigned
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act. The undersigned and any such other person acknowledge that,
if they are participating in the Exchange Offer for the purpose of distributing
the Exchange Notes, (i) they cannot rely on the position of the staff of the
Securities and Exchange Commission enunciated in Exxon Capital Holdings
Corporation (available April 13, 1989), Morgan Stanley & Co., Inc. (available
June 5, 1991) or similar no-action letters and,
-5-
<PAGE> 6
in the absence of an exemption therefrom, must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with the
resale transaction and (ii) failure to comply with such requirements in such
instance could result in the undersigned or any such other person incurring
liability under the Securities Act for which such persons are not indemnified by
the Company. If the undersigned or the person receiving the Exchange Notes
covered by this letter is an affiliate (as defined under Rule 405 of the
Securities Act) of the Company, the undersigned represents to the Company that
the undersigned understands and acknowledges that such Exchange Notes may not be
offered for resale, resold or otherwise transferred by the undersigned or such
other person without registration under the Securities Act or an exemption
therefrom.
The undersigned also warrants that it will, upon request,
execute and deliver any additional documents deemed by the Exchange Agent or the
Company to be necessary or desirable to complete the exchange, assignment and
transfer of tendered Notes or transfer ownership of such Notes on the account
books maintained by a book-entry transfer facility. The undersigned further
agrees that acceptance of any tendered Notes by the Company and the issuance of
Exchange Notes in exchange therefor shall constitute performance in full by the
Company of its obligations under the Registration Rights Agreement and that the
Company shall have no further obligations or liabilities thereunder for the
registration of the Notes or the Exchange Notes.
The Exchange Offer is subject to certain conditions set forth
in the Prospectus under the caption "The Exchange Offer -- Conditions." The
undersigned recognizes that as a result of these conditions (which may be
waived, in whole or in part, by the Company), as more particularly set forth in
the Prospectus, the Company may not be required to exchange any of the Notes
tendered hereby and, in such event, the Notes not exchanged will be returned to
the undersigned at the address shown below the signature of the undersigned.
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. Tendered Notes may be withdrawn at
any time prior to the Expiration Date.
Unless otherwise indicated in the box entitled "Special
Registration Instructions" or the box entitled "Special Delivery Instruction" in
this Letter of Transmittal, certificates for all Exchange Notes delivered in
exchange for tendered Notes, and any Notes delivered herewith but not exchanged,
will
-6-
<PAGE> 7
be registered in the name of the undersigned and shall be delivered to the
undersigned at the address shown below the signature of the undersigned. If an
Exchange Note is to be issued to a person other than the person(s) signing this
Letter of Transmittal, or if the Exchange Note is to be mailed to someone other
than the person(s) signing this Letter of Transmittal or to the person(s)
signing this Letter of Transmittal at an address different than the address
shown on this Letter of Transmittal, the appropriate boxes of this Letter of
Transmittal should be completed. If Notes are surrendered by Holder(s) that have
completed either the box entitled "Special Registration Instructions" or the box
entitled "Special Delivery Instructions" in this Letter of Transmittal,
signature(s) on this Letter of Transmittal must be guaranteed by an Eligible
Institution (defined in Instruction 4).
-7-
<PAGE> 8
<TABLE>
<CAPTION>
SPECIAL REGISTRATION INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
<S> <C>
To be completed ONLY if the Exchange Notes are to be To be completed ONLY if the Exchange Notes are
issued in the name of someone other than the undersigned. to be sent to someone other than the undersigned,
or to the undersigned at an address other than that
Name:_____________________________________ shown under "Description of Notes Tendered
Hereby."
Address:__________________________________
__________________________________________
Name:___________________________________________
Book-Entry Transfer Facility Account: Address:________________________________________
__________________________________________ ________________________________________________
Employer Identification or Social Security Number:
__________________________________________
(Please print or type) (Please print or type)
</TABLE>
REGISTERED HOLDER(S) OF NOTES SIGN HERE
(In addition, complete Substitute Form W-9 Below)
X______________________________________________________________________________
X______________________________________________________________________________
(Signature(s) of Registered Holder(s))
Must be signed by registered holder(s) exactly as name(s)
appear(s) on the Notes or on a security position listing as the owner of the
Notes or by person(s) authorized to become registered holder(s) by properly
completed bond powers transmitted herewith. If signature is by attorney-in-fact,
trustee, executor, administrator, guardian, officer of a corporation or other
person acting in a fiduciary capacity, please provide the following information.
(Please print or type):
Name and Capacity (full title):_________________________________________________
Address (including zip code):___________________________________________________
___________________________________________________
___________________________________________________
Area Code and Telephone Number:_________________________________________________
Taxpayer Identification or Social Security No.:_________________________________
Dated: ____________________________________
SIGNATURE GUARANTEE (If Required -- See Instruction 4)
Authorized Signature:__________________________________________________________
(Signature of Representative of Signature Guarantor)
Name and Title:________________________________________________________________
Name of Plan:_________________
Area Code and Telephone Number:_______________________________________________
(Please print or type)
Dated: ___________________________
- 8 -
<PAGE> 9
PAYOR'S NAME: AMF GROUP INC.
THIS SUBSTITUTE FORM W-9 MUST BE COMPLETED AND SIGNED
Please provide your social security number or other taxpayer
identification number on the following Substitute Form W-9 and certify therein
that you are subject to backup withholding.
<TABLE>
<S> <C> <C>
Part 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT
AND CERTIFY BY SIGNING AND DATING BELOW. ________________
SOCIAL SECURITY
SUBSTITUTE NUMBER OR
FORM W-9 PART 2 -- CHECK THE BOX IF YOU ARE NOT SUBJECT TO BACKUP EMPLOYEE
DEPARTMENT OF THE WITHHOLDING UNDER THE PROVISIONS OF SECTION IDENTIFICATION
TREASURY INTERNAL 3406(A)(1)(C) OF THE INTERNAL REVENUE CODE NUMBER
REVENUE SERVICE BECAUSE (1) YOU ARE EXEMPT FROM BACKUP WITHHOLDING,
(2) YOU HAVE NOT BEEN NOTIFIED THAT YOU ARE SUBJECT TO
BACKUP WITHHOLDING AS A RESULT OF FAILURE TO REPORT
ALL INTEREST OR DIVIDENDS OR (3) THE INTERNAL REVENUE
SERVICE HAS NOTIFIED YOU THAT YOU ARE NO LONGER
SUBJECT TO BACKUP WITHHOLDING. [ ]
CERTIFICATION: UNDER PENALTIES OF PERJURY, I CERTIFY
THAT THE INFORMATION PROVIDED ON THIS FORM IS TRUE,
CORRECT, AND COMPLETE. Part 3 -
PAYOR'S REQUEST FOR
TAXPAYER IDENTIFICA- SIGNATURE:___________________ DATE:____________ AWAITING TIN [ ]
TION NUMBER ("TIN")
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY CASH PAYMENTS IN EXCESS OF $10.00 MADE TO
YOU.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN
PART 3 OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAX 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 WITHIN 60 DAYS, 31% OF ALL
REPORTABLE PAYMENTS MADE TO ME THEREAFTER WILL BE WITHHELD, UNTIL I PROVIDE A
NUMBER.
- -------------------------------------- ------------------------------------
SIGNATURE DATE
-9-
<PAGE> 10
INSTRUCTIONS
FORMING PART OF THE TERMS AND
CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES.
All physically delivered Notes or confirmation of any
book-entry transfer to the Exchange Agent's account at a book-entry transfer
facility of Notes tendered by book-entry transfer, as well as a properly
completed and duly executed copy of this Letter of Transmittal or facsimile
thereof, and any other documents required by this Letter of Transmittal, must be
received by the Exchange Agent at any of its addresses set forth herein on or
prior to the Expiration Date (as defined in the Prospectus). The method of
delivery of this Letter of Transmittal, the Notes and any other required
documents is at the election and risk of the Holder, and except as otherwise
provided below, the delivery will be deemed made only when actually received by
the Exchange Agent. If such delivery is by mail, it is suggested that registered
mail with return receipt requested, properly insured, be used.
No alternative, conditional, irregular or contingent tenders
will be accepted. All tendering Holders, by execution of this Letter of
Transmittal (or facsimile thereof), shall waive any right to receive notice of
the acceptance of the Notes for exchange.
Delivery to an address other than as set forth herein, or instructions via a
facsimile number other than the ones set forth herein, will not constitute a
valid delivery.
2. GUARANTEED DELIVERY PROCEDURES.
Holders who wish to tender their Notes, but whose Notes are
not immediately available and thus cannot deliver their Notes, the Letter of
Transmittal or any other required documents to the Exchange Agent (or comply
with the procedures for book-entry transfer) prior to the Expiration Date, may
effect a tender if:
(a) the tender is made through a member firm of a registered
national securities exchange or of the National Association of
Securities Dealers, Inc., a commercial bank or trust company
having an office or correspondent in the United States or an
"eligible guarantor institution" within the meaning of Rule
17Ad-15 under the Exchange Act (an "Eligible Institution");
-10-
<PAGE> 11
(b) prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution a properly completed and duly
executed Notice of Guaranteed Delivery (by facsimile
transmission, mail or hand delivery) setting forth the name
and address of the Holder, the registration number(s) of such
Notes and the principal amount of Notes tendered, stating that
the tender is being made thereby and guaranteeing that, within
three New York Stock Exchange trading days after the
Expiration Date, the Letter of Transmittal (or facsimile
thereof), together with the Notes (or a confirmation of
book-entry transfer of such Notes into the Exchange Agent's
account at the Depository) and any other documents required by
the Letter of Transmittal, will be deposited by the Eligible
Institution with the Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal
(or facsimile thereof), as well as all tendered Notes in
proper form for transfer (or a confirmation of book-entry
transfer of such Notes into the Exchange Agent's account at
the Depository) and all other documents required by the Letter
of Transmittal, are received by the Exchange Agent within
three New York Stock Exchange trading days after the
Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed
Delivery will be sent to Holders who wish to tender their Notes according to the
guaranteed delivery procedures set forth above. Any Holder who wishes to tender
Notes pursuant to the guaranteed delivery procedures described above must ensure
that the Exchange Agent receives the Notice of Guaranteed Delivery relating to
such Notes prior to the Expiration Date. Failure to complete the guaranteed
delivery procedures outlined above will not, of itself, affect the validity or
effect a revocation of any Letter of Transmittal form properly completed and
executed by a Holder who attempted to use the guaranteed delivery procedures.
3. PARTIAL TENDERS; WITHDRAWALS.
If less than the entire principal amount of Notes evidenced by
a submitted certificate is tendered, the tendering Holder should fill in the
principal amount tendered in the column entitled "Principal Amount Tendered" of
the box entitled "Description of Notes Tendered Hereby". A newly issued Note for
the principal amount of Notes submitted but not tendered will be sent to such
Holder as soon as practicable after the
-11-
<PAGE> 12
Expiration Date. All Notes delivered to the Exchange Agent will be
deemed to have been tendered in full unless otherwise indicated.
Notes tendered pursuant to the Exchange Offer may be withdrawn
at any time prior to the Expiration Date, after which tenders of Notes are
irrevocable. To be effective, a written, telegraphic or facsimile transmission
notice of withdrawal must be timely received by the Exchange Agent. Any such
notice of withdrawal must (i) specify the name of the person having deposited
the Notes to be withdrawn (the Depositor"), (ii) identify the Notes to be
withdrawn (including the registration number(s) and principal amount of such
Notes, or, in the case of Notes transferred by book-entry transfer, the name and
number of the account at the Depository to be credited), (iii) be signed by the
Holder in the same manner as the original signature on this Letter of
Transmittal (including any required signature guarantees) or be accompanied by
documents of transfer sufficient to have the Trustee with respect to the Notes
register the transfer of such Notes into the name of the person withdrawing the
tender and (iv) specify the name in which any such notes are to be registered,
if different from that of the Depositor. 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 Notes so withdrawn will be deemed not to have been validly tendered for
purposes of the Exchange Offer and no Exchange Notes will be issued with respect
thereto unless the Notes so withdrawn are validly retendered. Any Notes which
have been tendered but which are not accepted for exchange, will be returned to
the Holder thereof without cost to such Holder as soon as practicable after
withdrawal, rejection of tender or termination of Exchange Offer.
4. SIGNATURE ON THIS LETTER OF TRANSMITTAL; WRITTEN INSTRUMENTS AND
ENDORSEMENTS; GUARANTEE OF SIGNATURES.
If this Letter of Transmittal is signed by the registered
Holder(s) of the Notes tendered hereby, the signature must correspond with the
name(s) as written on the face of the certificates without alternation or
enlargement or any change whatsoever. If this Letter of Transmittal is signed by
a participant in the Depository, the signature must correspond with the name as
it appears on the security position listing as the owner of the Notes.
If any of the Notes tendered hereby are owned of record by two
or more joint owners, all such owners must sign this Letter of Transmittal.
-12-
<PAGE> 13
If a number of notes registered in different names are
tendered, it will be necessary to complete, sign and submit as many separate
copies of this Letter of Transmittal as there are different registrations of
Notes.
Signatures of this Letter of Transmittal or a notice of
withdrawal, as the case may be, must be guaranteed by an Eligible Institution
unless the Notes tendered hereby are tendered (i) by a registered Holder who has
not completed the box entitled "Special Registration Instructions or "Special
Delivery Instructions" on the Letter of Transmittal or (ii) for the account of
an Eligible Institution.
If this Letter of Transmittal is signed by the registered
Holder or Holders of Notes (which term, for the purposes described herein, shall
include a participant in the Depository whose name appears on a security listing
as the owner of the Notes) listed and tendered hereby, no endorsements of the
tendered Notes or separate written instruments of transfer or exchange are
required. In any other case, the registered Holder (or acting Holder) must
either properly endorse the Notes or transmit properly completed bond powers
with this Letter of Transmittal (in either case, executed exactly as the name(s)
of the registered Holder(s) appear(s) on the Notes, and, with respect to a
participant in the Depository whose name appears on a security position listing
as the owner of Notes, exactly as the name of the participant appears on such
security position listing), with the signature on the Notes or bond power
guaranteed by an Eligible Institution (except where the Notes are tendered for
the account of an Eligible Institution).
If this Letter of Transmittal, any certificates or separate
written instruments of transfer or exchange are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or other
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 so to act must be submitted.
5. SPECIAL REGISTRATION AND DELIVERY INSTRUCTIONS.
Tendering Holders should indicate, in the applicable box, the
name and address (or account at the Depository) in which the Exchange Notes or
substitute Notes for principal amounts not tendered or not accepted for exchange
are to be issued (or deposited), if different from the names and addresses or
accounts of the person signing this Letter of Transmittal. In the case of
issuance in a different name, the
-13-
<PAGE> 14
employer identification number or social security number of the person named
must also be indicated and the tendering Holder should complete the applicable
box.
If no instructions are given, the Exchange Notes (and any
Notes not tendered or not accepted) will be issued in the name of and sent to
the acting Holder of the Notes or deposited at such Holder's account at the
Depository.
6. TRANSFER TAXES.
The Company shall pay all transfer taxes, if any, applicable
to the transfer and exchange of Notes to it or its order pursuant to the
Exchange Offer. If a transfer tax is imposed for any other reason other than the
transfer and exchange of 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 person) will be payable by the tendering Holder.
If satisfactory evidence of payment of such taxes or exception therefrom is not
submitted herewith, the amount of such transfer taxes will be collected from the
tendering Holder by the Exchange Agent.
Except as provided in this Instruction 6, it will not be
necessary for transfer stamps to be affixed to the Notes listed in this Letter
of Transmittal.
7. WAIVER OF CONDITIONS.
The Company reserves the right, in its reasonable judgment, to
waive, in whole or in part, any of the conditions to the Exchange Offer set
forth in the Prospectus.
8. MUTILATED, LOST, STOLEN OR DESTROYED NOTES.
Any Holder whose Notes have been mutilated, lost, stolen or
destroyed should contact the Exchange Agent at the address indicated above for
further instructions.
9. 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 of Transmittal,
may be directed to the Exchange Agent at the address and telephone number(s) set
forth above. In addition, all questions relating to the Exchange Offer, as well
as requests for assistance or additional copies of the Prospectus and this
Letter of Transmittal, may be directed to AMF Group Inc., 7313 Bell Creek Road,
Mechanicsville, Virginia 23111, telephone (804) 559-8600.
-14-
<PAGE> 15
10. VALIDITY AND FORM.
All questions as to the validity, form, eligibility (including
time of receipt), acceptance of tendered Notes and withdrawal of tendered Notes
will be determined by the Company in its sole discretion, which determination
will be final and binding. The Company reserves the absolute right to reject any
and all Notes not properly tendered or any Notes the Company' acceptance of
which would, in the opinion of counsel for the Company, be unlawful. The Company
also reserves the right, in its reasonable judgment, to waive any defects,
irregularities or conditions of tender as to particular Notes. The Company's
interpretation of the terms and conditions of the Exchange Offer (including the
instructions in this Letter of Transmittal) will be final and binding on all
parties. Unless waived, any defects or irregularities in connection with tenders
of Notes must be cured within such time as the Company shall determine. Although
the Company intends to notify Holders of defects or irregularities with respect
to tenders of Notes, neither the Company, the Exchange Agent nor any other
person shall incur any liability for failure to give such notification. Tenders
of Notes will not be deemed to have been made until such defects or
irregularities have been cured or waived. Any Notes received by the Exchange
Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned by the Exchange
Agent to the tendering Holder as soon as practicable following the Expiration
Date.
IMPORTANT TAX INFORMATION
Under federal income tax law, a Holder tendering Notes is
required to provide the Exchange Agent with such Holder's correct TIN on
Substitute Form W-9 above. If such Holder is an individual, the TIN is the
Holder's social security number. The Certificate of Awaiting Taxpayer
Identification Number should be completed if the tendering Holder has not been
issued a TIN and has applied for a number or intends to apply for a number in
the near future. If the Exchange Agent is not provided with the correct TIN, the
Holder may be subject to a $50 penalty imposed by the Internal Revenue Service.
In addition, payments that are made to such Holder with respect to tendered
Notes may be subject to backup withholding.
Certain Holders (including, among other, all domestic
corporations and certain foreign individuals and foreign entities) are not
subject to these backup withholding and reporting requirements. Such a Holder,
who satisfies one or more of the conditions set forth Part 2 of the Substitute
Form W-9 should execute the certification following such Part 2. In order for
-15-
<PAGE> 16
a foreign Holder to qualify as an exempt recipient, that Holder must submit to
the Exchange Agent a properly completed Internal Revenue Service Form W-9,
signed under penalties of perjury, attesting to that Holder's exempt status.
Such forms can be obtained from the Exchange Agent.
If backup withholding applies, the Exchange Agent is required
to withhold 31% of any amounts otherwise payable to the Holder. Backup
withholding is not an additional tax. Rather, the tax liability of persons
subject to backup withholding will be reduced by the amount of tax withheld. If
withholding results in an overpayment of taxes, a refund may be obtained from
the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a
Holder with respect to Notes tendered for exchange, the Holder is required to
notify the Exchange Agent of his or her correct TIN by completing the form
herein certifying that the TIN provided on Substitute Form W-9 is correct (or
that such Holder is awaiting a TIN) and that (i) each Holder is exempt, (ii)
such Holder has not been notified by the Internal Revenue Service that he or she
is subject to backup withholding as a result of failure to report all interest
or dividends or (iii) the Internal Revenue Service has notified such Holder that
he or she is no longer subject to backup withholding.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
Each Holder is required to give the Exchange Agent the social
security number or employer identification number of the record Holder(s) of the
Notes. If Notes are in more than one name or are not in the name of the actual
Holder, consult the instructions on Internal Revenue Service Form W-9, which may
be obtained from the Exchange Agent, for additional guidance on which number to
report.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
If the tendering Holder has not been issued a TIN and has
applied for a number or intends to apply for a number in the near future, write
"Applied For" in the space for the TIN or Substitute Form W-9, sign and date the
form and the Certificate of Awaiting Taxpayer Identification Number and return
them to the Exchange Agent. If such certificate is completed and the Exchange
Agent is not provided with the TIN within 60 days, the Exchange Agent will
withhold 31% of all payments made thereafter until a TIN is provided to the
Exchange Agent.
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<PAGE> 17
IMPORTANT: This Letter of Transmittal or a facsimile thereof
(together with Notes or confirmation of book-entry transfer and all other
required documents) or a Notice of Guaranteed Delivery must be received by the
Exchange Agent on or prior to the Expiration Date.
-17-
<PAGE> 1
EXHIBIT 99.2
FORM OF
LETTER OF TRANSMITTAL
AMF GROUP INC.
Offer to Exchange
12 1/4% Series B Senior Subordinated Discount Notes due 2006
for any and all of the outstanding
12 1/4% Series A Senior Subordinated Discount Notes due 2006
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
5:00 P.M., NEW YORK CITY TIME, ON __________, 1996,
UNLESS THE OFFER IS EXTENDED
American Bank National Association
(the "Exchange Agent")
By Registered or Certified Mail,
Overnight Mail or Courier Service
or In Person By Hand:
American Bank National Association
101 E. Fifth Avenue
St. Paul, MN 55101-1860
Attention: Corporate Trust Administration
By Facsimile Transmission
(For Eligible Institutions Only):
(612) 229-6415
Delivery of this instrument to an address other than as set
forth above or transmission of instructions via a facsimile number other than
the ones listed above will not constitute a valid delivery. The instructions
accompanying this Letter of Transmittal should be read carefully before this
Letter of Transmittal is completed.
The undersigned hereby acknowledges receipt of the Prospectus
dated ________, 1996 (the "Prospectus") of AMF Group Inc. (the "Company") and
this Letter of Transmittal, which together constitute the Company's offer (the
"Exchange Offer") to exchange $1,000 principal amount of its 12 1/4% Senior
Subordinated Discount Notes due 2006 (the "Exchange Notes"), which have been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
pursuant to a Registration Statement of which the Prospectus is a part, for each
$1,000
<PAGE> 2
principal amount of their outstanding 12 1/4% Senior Subordinated Notes (the
"Notes"), respectively. The term "Expiration Date" shall mean 5:00 p.m., New
York City time, on ________, 1996, unless the Company, in their reasonable
judgment, extend the Exchange Offer, in which case the term shall mean the
latest date and time to which the Exchange Offer is extended. Capitalized terms
used but not defined herein have the meaning given to them in
the Prospectus.
YOUR BANK OR BROKER CAN ASSIST YOU IN COMPLETING THIS FORM.
THE INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED.
QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS
AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT.
List below the notes to which this Letter of Transmittal
relates. If the space indicated below is inadequate, the Certificate or
Registration Numbers and Principal Amounts should be listed on a separately
signed schedule affixed hereto.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SENIOR SUBORDINATED DISCOUNT NOTES TENDERED HEREBY
- -----------------------------------------------------------------------------------------------------------------
Aggregate
Certificate Principal
Name(s) and Address(es) of or Amount Principal
Registered Owner(s) Registration Represented Amount
(Please fill in) Numbers* by Notes Tendered**
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
---------------------- --------------- ----------
---------------------- --------------- ----------
---------------------- --------------- ----------
---------------------- --------------- ----------
Total
</TABLE>
- --------------------------------------------------------------------------------
* Need not be completed by Book-entry Holders.
** Unless otherwise indicated, the Holder will be deemed to have
tendered the full aggregate principal amount represented by such
Notes. All tenders must be in integral multiples of $1,000.
- --------------------------------------------------------------------------------
-2-
<PAGE> 3
This Letter of Transmittal is to be used (i) if certificates
of Notes are to be forwarded herewith, (ii) if delivery of Notes is to be made
by book-entry transfer to an account maintained by the Exchange Agent at The
Depository Trust Company (the "Depository"), pursuant to the procedures set
forth in "The Exchange Offer -- Procedures for Tendering Notes" in the
Prospectus or (iii) tender of the Notes is to be made according to the
guaranteed delivery procedures described in the Prospectus under the caption
"The Exchange Offer -- Guaranteed Delivery Procedures." See Instruction 2.
Delivery of documents to a book-entry transfer facility does not constitute
delivery to the Exchange Agent.
The term "Holder" with respect to the Exchange Offer means any
person in whose name Notes are registered on the books of the Company or any
other person who has obtained a properly completed bond power from the
registered holder. The undersigned has completed, executed and delivered this
Letter of Transmittal to indicate the action the undersigned desires to take
with respect to the Exchange Offer. Holders who wish to tender their Notes must
complete this letter in its entirety.
[ ] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
DEPOSITORY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution _______________________
Account Number______________________________________
Transaction Code Number _____________________________
Holders whose Notes are not immediately available or who
cannot deliver their Notes and all other documents required hereby to the
Exchange Agent on or prior to the Expiration Date must tender their Notes
according to the guaranteed delivery procedure set forth in the Prospectus under
the caption "The Exchange Offer -- Guaranteed Delivery Procedures." See
Instruction 2.
[ ] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED PURSUANT
TO A NOTICE OF GUARANTEED DELIVERY AND COMPLETE THE FOL-
LOWING:
Name of Registered Holder(s)__________________________________
Name of Eligible Institution that Guaranteed Delivery_________
- --------------------------------------------------------------
-3-
<PAGE> 4
If delivery by book-entry transfer:
Account Number___________________________________________
Transaction Code Number _________________________________
[ ] 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_______________________________________________________
-4-
<PAGE> 5
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 principal amount of the
Notes indicated above. Subject to, and effective upon, the acceptance for
exchange of such Notes tendered hereby, the undersigned hereby exchanges,
assigns and transfers to, or upon the order of, the Company all right, title and
interest in and to such Notes as are being tendered hereby, including all rights
to accrued and unpaid interest thereon as of the Expiration Date. The
undersigned hereby irrevocably constitutes and appoints the Exchange Agent the
true and lawful agent and attorney-in-fact of the undersigned (with full
knowledge that said Exchange Agent acts as the agent of the Company in
connection with the Exchange Offer) to cause the Notes to be assigned,
transferred and exchanged. The undersigned represents and warrants that it has
full power and authority to tender, exchange, assign and transfer the Notes and
to acquire Exchange Notes issuable upon the exchange of such tendered Notes, and
that when the same are accepted for exchange, the Company will acquire good and
unencumbered title to the tendered Notes, free and clear of all liens,
restrictions, charges and encumbrances and not subject to any adverse claim.
The undersigned represents to the Company that (i) the
Exchange Notes acquired pursuant to the Exchange Offer are being obtained in the
ordinary course of business of the person receiving such Exchange Notes, whether
or not such person is the undersigned, and (ii) neither the undersigned nor any
such other person has an arrangement or understanding with any person to
participate in the distribution of such Exchange Notes. If the undersigned or
the person receiving the Exchange Notes covered hereby is a broker-dealer that
is receiving the Exchange Notes for its own account in exchange for Notes that
were acquired as a result of market-making activities or other trading
activities, the undersigned acknowledges that it or such other person will
deliver a prospectus in connection with any resale of such Exchange Notes;
however, by so acknowledging and by delivering a prospectus, the undersigned
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act. The undersigned and any such other person acknowledge that,
if they are participating in the Exchange Offer for the purpose of distributing
the Exchange Notes, (i) they cannot rely on the position of the staff of the
Securities and Exchange Commission enunciated in Exxon Capital Holdings
Corporation (available April 13, 1989), Morgan Stanley & Co., Inc. (available
June 5, 1991) or similar no-action letters and,
-5-
<PAGE> 6
in the absence of an exemption therefrom, must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with the
resale transaction and (ii) failure to comply with such requirements in such
instance could result in the undersigned or any such other person incurring
liability under the Securities Act for which such persons are not indemnified by
the Company. If the undersigned or the person receiving the Exchange Notes
covered by this letter is an affiliate (as defined under Rule 405 of the
Securities Act) of the Company, the undersigned represents to the Company that
the undersigned understands and acknowledges that such Exchange Notes may not be
offered for resale, resold or otherwise transferred by the undersigned or such
other person without registration under the Securities Act or an exemption
therefrom.
The undersigned also warrants that it will, upon request,
execute and deliver any additional documents deemed by the Exchange Agent or the
Company to be necessary or desirable to complete the exchange, assignment and
transfer of tendered Notes or transfer ownership of such Notes on the account
books maintained by a book-entry transfer facility. The undersigned further
agrees that acceptance of any tendered Notes by the Company and the issuance of
Exchange Notes in exchange therefor shall constitute performance in full by the
Company of its obligations under the Registration Rights Agreement and that the
Company shall have no further obligations or liabilities thereunder for the
registration of the Notes or the Exchange Notes.
The Exchange Offer is subject to certain conditions set forth
in the Prospectus under the caption "The Exchange Offer -- Conditions." The
undersigned recognizes that as a result of these conditions (which may be
waived, in whole or in part, by the Company), as more particularly set forth in
the Prospectus, the Company may not be required to exchange any of the Notes
tendered hereby and, in such event, the Notes not exchanged will be returned to
the undersigned at the address shown below the signature of the undersigned.
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. Tendered Notes may be withdrawn at
any time prior to the Expiration Date.
Unless otherwise indicated in the box entitled "Special
Registration Instructions" or the box entitled "Special Delivery Instruction" in
this Letter of Transmittal, certificates for all Exchange Notes delivered in
exchange for tendered Notes, and any Notes delivered herewith but not exchanged,
will
-6-
<PAGE> 7
be registered in the name of the undersigned and shall be delivered to the
undersigned at the address shown below the signature of the undersigned. If an
Exchange Note is to be issued to a person other than the person(s) signing this
Letter of Transmittal, or if the Exchange Note is to be mailed to someone other
than the person(s) signing this Letter of Transmittal or to the person(s)
signing this Letter of Transmittal at an address different than the address
shown on this Letter of Transmittal, the appropriate boxes of this Letter of
Transmittal should be completed. If Notes are surrendered by Holder(s) that have
completed either the box entitled "Special Registration Instructions" or the box
entitled "Special Delivery Instructions" in this Letter of Transmittal,
signature(s) on this Letter of Transmittal must be guaranteed by an Eligible
Institution (defined in Instruction 4).
-7-
<PAGE> 8
<TABLE>
<CAPTION>
SPECIAL REGISTRATION INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
<S> <C>
To be completed ONLY if the Exchange Notes are to be To be completed ONLY if the Exchange Notes are
issued in the name of someone other than the undersigned. to be sent to someone other than the undersigned,
or to the undersigned at an address other than that
Name:_____________________________________ shown under "Description of Notes Tendered
Hereby."
Address:__________________________________
__________________________________________
Name:___________________________________________
Book-Entry Transfer Facility Account: Address:________________________________________
__________________________________________ ________________________________________________
Employer Identification or Social Security Number:
__________________________________________
(Please print or type) (Please print or type)
</TABLE>
REGISTERED HOLDER(S) OF NOTES SIGN HERE
(In addition, complete Substitute Form W-9 Below)
X______________________________________________________________________________
X______________________________________________________________________________
(Signature(s) of Registered Holder(s))
Must be signed by registered holder(s) exactly as name(s)
appear(s) on the Notes or on a security position listing as the owner of the
Notes or by person(s) authorized to become registered holder(s) by properly
completed bond powers transmitted herewith. If signature is by attorney-in-fact,
trustee, executor, administrator, guardian, officer of a corporation or other
person acting in a fiduciary capacity, please provide the following information.
(Please print or type):
Name and Capacity (full title):_________________________________________________
Address (including zip code):___________________________________________________
___________________________________________________
___________________________________________________
Area Code and Telephone Number:_________________________________________________
Taxpayer Identification or Social Security No.:_________________________________
Dated: ____________________________________
SIGNATURE GUARANTEE (If Required -- See Instruction 4)
Authorized Signature:__________________________________________________________
(Signature of Representative of Signature Guarantor)
Name and Title:________________________________________________________________
Name of Plan:_________________
Area Code and Telephone Number:_______________________________________________
(Please print or type)
Dated:____________________
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<PAGE> 9
PAYOR'S NAME: AMF GROUP INC.
THIS SUBSTITUTE FORM W-9 MUST BE COMPLETED AND SIGNED
Please provide your social security number or other taxpayer
identification number on the following Substitute Form W-9 and certify therein
that you are subject to backup withholding.
<TABLE>
<S> <C> <C>
Part 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT
AND CERTIFY BY SIGNING AND DATING BELOW. _______________
SOCIAL SECURITY
SUBSTITUTE NUMBER OR
FORM W-9 PART 2 -- CHECK THE BOX IF YOU ARE NOT SUBJECT TO BACKUP EMPLOYEE
DEPARTMENT OF THE WITHHOLDING UNDER THE PROVISIONS OF SECTION IDENTIFICATION
TREASURY INTERNAL 3406(A)(1)(C) OF THE INTERNAL REVENUE CODE NUMBER
REVENUE SERVICE BECAUSE (1) YOU ARE EXEMPT FROM BACKUP WITHHOLDING,
(2) YOU HAVE NOT BEEN NOTIFIED THAT YOU ARE SUBJECT TO
BACKUP WITHHOLDING AS A RESULT OF FAILURE TO REPORT
ALL INTEREST OR DIVIDENDS OR (3) THE INTERNAL REVENUE
SERVICE HAS NOTIFIED YOU THAT YOU ARE NO LONGER
SUBJECT TO BACKUP WITHHOLDING. [ ]
CERTIFICATION: UNDER PENALTIES OF PERJURY, I CERTIFY
THAT THE INFORMATION PROVIDED ON THIS FORM IS TRUE,
CORRECT, AND COMPLETE. Part 3 -
PAYOR'S REQUEST FOR
TAXPAYER IDENTIFICA- SIGNATURE:___________________ DATE:____________ AWAITING TIN [ ]
TION NUMBER ("TIN")
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY CASH PAYMENTS IN EXCESS OF $10.00 MADE TO
YOU.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN
PART 3 OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAX 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 WITHIN 60 DAYS, 31% OF ALL
REPORTABLE PAYMENTS MADE TO ME THEREAFTER WILL BE WITHHELD, UNTIL I PROVIDE A
NUMBER.
- ------------------------------- -------------------------
SIGNATURE DATE
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<PAGE> 10
INSTRUCTIONS
FORMING PART OF THE TERMS AND
CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES.
All physically delivered Notes or confirmation of any
book-entry transfer to the Exchange Agent's account at a book-entry transfer
facility of Notes tendered by book-entry transfer, as well as a properly
completed and duly executed copy of this Letter of Transmittal or facsimile
thereof, and any other documents required by this Letter of Transmittal, must be
received by the Exchange Agent at any of its addresses set forth herein on or
prior to the Expiration Date (as defined in the Prospectus). The method of
delivery of this Letter of Transmittal, the Notes and any other required
documents is at the election and risk of the Holder, and except as otherwise
provided below, the delivery will be deemed made only when actually received by
the Exchange Agent. If such delivery is by mail, it is suggested that registered
mail with return receipt requested, properly insured, be used.
No alternative, conditional, irregular or contingent tenders
will be accepted. All tendering Holders, by execution of this Letter of
Transmittal (or facsimile thereof), shall waive any right to receive notice of
the acceptance of the Notes for exchange.
Delivery to an address other than as set forth herein, or instructions via a
facsimile number other than the ones set forth herein, will not constitute a
valid delivery.
2. GUARANTEED DELIVERY PROCEDURES.
Holders who wish to tender their Notes, but whose Notes are
not immediately available and thus cannot deliver their Notes, the Letter of
Transmittal or any other required documents to the Exchange Agent (or comply
with the procedures for book-entry transfer) prior to the Expiration Date, may
effect a tender if:
(a) the tender is made through a member firm of a registered
national securities exchange or of the National Association of
Securities Dealers, Inc., a commercial bank or trust company
having an office or correspondent in the United States or an
"eligible guarantor institution" within the meaning of Rule
17Ad-15 under the Exchange Act (an "Eligible Institution");
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<PAGE> 11
(b) prior to the Expiration Date, the Exchange Agent re-
ceives from such Eligible Institution a properly com-
pleted and duly executed Notice of Guaranteed Delivery
(by facsimile transmission, mail or hand delivery)
setting forth the name and address of the Holder, the
registration number(s) of such Notes and the principal
amount of Notes tendered, stating that the tender is
being made thereby and guaranteeing that, within three
New York Stock Exchange trading days after the
Expiration Date, the Letter of Transmittal (or
facsimile thereof), together with the Notes (or a
confirmation of book-entry transfer of such Notes into
the Exchange Agent's account at the Depository) and
any other documents required by the Letter of
Transmittal, will be deposited by the Eligible
Institution with the Exchange Agent; and
(c) such properly completed and executed Letter of Trans-
mittal (or facsimile thereof), as well as all tendered
Notes in proper form for transfer (or a confirmation
of book-entry transfer of such Notes into the Exchange
Agent's account at the Depository and all other
documents required by the Letter of Transmittal, are
received by the Exchange Agent within three New York
Stock Exchange trading days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed
Delivery will be sent to Holders who wish to tender their Notes according to the
guaranteed delivery procedures set forth above. Any Holder who wishes to tender
Notes pursuant to the guaranteed delivery procedures described above must ensure
that the Exchange Agent receives the Notice of Guaranteed Delivery relating to
such Notes prior to the Expiration Date. Failure to complete the guaranteed
delivery procedures outlined above will not, of itself, affect the validity or
effect a revocation of any Letter of Transmittal form properly completed and
executed by a Holder who attempted to use the guaranteed delivery procedures.
3. PARTIAL TENDERS; WITHDRAWALS.
If less than the entire principal amount of Notes evidenced by
a submitted certificate is tendered, the tendering Holder should fill in the
principal amount tendered in the column entitled "Principal Amount Tendered" of
the box entitled "Description of Notes Tendered Hereby". A newly issued Note for
the principal amount of Notes submitted but not tendered will be sent to such
Holder as soon as practicable after the Expiration Date. All Notes delivered to
the Exchange Agent
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<PAGE> 12
will be deemed to have been tendered in full unless otherwise indicated.
Notes tendered pursuant to the Exchange Offer may be withdrawn
at any time prior to the Expiration Date, after which tenders of Notes are
irrevocable. To be effective, a written, telegraphic or facsimile transmission
notice of withdrawal must be timely received by the Exchange Agent. Any such
notice of withdrawal must (i) specify the name of the person having deposited
the Notes to be withdrawn (the "Depositor"), (ii) identify the Notes to be
withdrawn (including the registration number(s) and principal amount of such
Notes, or, in the case of Notes transferred by book-entry transfer, the name and
number of the account at the Depository to be credited), (iii) be signed by the
Holder in the same manner as the original signature on this Letter of
Transmittal (including any required signature guarantees) or be accompanied by
documents of transfer sufficient to have the Trustee with respect to the Notes
register the transfer of such Notes into the name of the person withdrawing the
tender and (iv) specify the name in which any such notes are to be registered,
if different from that of the Depositor. 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 Notes so withdrawn will be deemed not to have been validly tendered for
purposes of the Exchange Offer and no Exchange Notes will be issued with respect
thereto unless the Notes so withdrawn are validly retendered. Any Notes which
have been tendered but which are not accepted for exchange, will be returned to
the Holder thereof without cost to such Holder as soon as practicable after
withdrawal, rejection of tender or termination of Exchange Offer.
4. SIGNATURE ON THIS LETTER OF TRANSMITTAL; WRITTEN
INSTRUMENTS AND ENDORSEMENTS; GUARANTEE OF SIGNATURES.
If this Letter of Transmittal is signed by the registered
Holder(s) of the Notes tendered hereby, the signature must correspond with the
name(s) as written on the face of the certificates without alternation or
enlargement or any change whatsoever. If this Letter of Transmittal is signed by
a participant in the Depository, the signature must correspond with the name as
it appears on the security position listing as the owner of the Notes.
If any of the Notes tendered hereby are owned of record by two
or more joint owners, all such owners must sign this Letter of Transmittal.
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<PAGE> 13
If a number of notes registered in different names are
tendered, it will be necessary to complete, sign and submit as many separate
copies of this Letter of Transmittal as there are different registrations of
Notes.
Signatures of this Letter of Transmittal or a notice of
withdrawal, as the case may be, must be guaranteed by an Eligible Institution
unless the Notes tendered hereby are tendered (i) by a registered Holder who has
not completed the box entitled "Special Registration Instructions or "Special
Delivery Instructions" on the Letter of Transmittal or (ii) for the account of
an Eligible Institution.
If this Letter of Transmittal is signed by the registered
Holder or Holders of Notes (which term, for the purposes described herein, shall
include a participant in the Depository whose name appears on a security listing
as the owner of the Notes) listed and tendered hereby, no endorsements of the
tendered Notes or separate written instruments of transfer or exchange are
required. In any other case, the registered Holder (or acting Holder) must
either properly endorse the Notes or transmit properly completed bond powers
with this Letter of Transmittal (in either case, executed exactly as the name(s)
of the registered Holder(s) appear(s) on the Notes, and, with respect to a
participant in the Depository whose name appears on a security position listing
as the owner of Notes, exactly as the name of the participant appears on such
security position listing), with the signature on the Notes or bond power
guaranteed by an Eligible Institution (except where the Notes are tendered for
the account of an Eligible Institution).
If this Letter of Transmittal, any certificates or separate
written instruments of transfer or exchange are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or other
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 so to act must be submitted.
5. SPECIAL REGISTRATION AND DELIVERY INSTRUCTIONS.
Tendering Holders should indicate, in the applicable box, the
name and address (or account at the Depository) in which the Exchange Notes or
substitute Notes for principal amounts not tendered or not accepted for exchange
are to be issued (or deposited), if different from the names and addresses or
accounts of the person signing this Letter of Transmittal. In the case of
issuance in a different name, the employer identification number or social
security number of the
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<PAGE> 14
person named must also be indicated and the tendering Holder should complete the
applicable box.
If no instructions are given, the Exchange Notes (and any
Notes not tendered or not accepted) will be issued in the name of and sent to
the acting Holder of the Notes or deposited at such Holder's account at the
Depository.
6. TRANSFER TAXES.
The Company shall pay all transfer taxes, if any, applicable
to the transfer and exchange of Notes to it or its order pursuant to the
Exchange Offer. If a transfer tax is imposed for any other reason other than the
transfer and exchange of 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 person) will be payable by the tendering Holder.
If satisfactory evidence of payment of such taxes or exception therefrom is not
submitted herewith, the amount of such transfer taxes will be collected from the
tendering Holder by the Exchange Agent.
Except as provided in this Instruction 6, it will not be
necessary for transfer stamps to be affixed to the Notes listed in this Letter
of Transmittal.
7. WAIVER OF CONDITIONS.
The Company reserves the right, in its reasonable judgment, to
waive, in whole or in part, any of the conditions to the Exchange Offer set
forth in the Prospectus.
8. MUTILATED, LOST, STOLEN OR DESTROYED NOTES.
Any Holder whose Notes have been mutilated, lost, stolen or
destroyed should contact the Exchange Agent at the address indicated above for
further instructions.
9. 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 of Transmittal,
may be directed to the Exchange Agent at the address and telephone number(s) set
forth above. In addition, all questions relating to the Exchange Offer, as well
as requests for assistance or additional copies of the Prospectus and this
Letter of Transmittal, may be directed to AMF Group Inc., 7313 Bell Creek Road,
Mechanicsville, Virginia 23111, telephone (804) 559-8600.
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<PAGE> 15
10. VALIDITY AND FORM.
All questions as to the validity, form, eligibility (including
time of receipt), acceptance of tendered Notes and withdrawal of tendered Notes
will be determined by the Company in its sole discretion, which determination
will be final and binding. The Company reserves the absolute right to reject any
and all Notes not properly tendered or any Notes the Company' acceptance of
which would, in the opinion of counsel for the Company, be unlawful. The Company
also reserves the right, in its reasonable judgment, to waive any defects,
irregularities or conditions of tender as to particular Notes. The Company's
interpretation of the terms and conditions of the Exchange Offer (including the
instructions in this Letter of Transmittal) will be final and binding on all
parties. Unless waived, any defects or irregularities in connection with tenders
of Notes must be cured within such time as the Company shall determine. Although
the Company intends to notify Holders of defects or irregularities with respect
to tenders of Notes, neither the Company, the Exchange Agent nor any other
person shall incur any liability for failure to give such notification. Tenders
of Notes will not be deemed to have been made until such defects or
irregularities have been cured or waived. Any Notes received by the Exchange
Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned by the Exchange
Agent to the tendering Holder as soon as practicable following the Expiration
Date.
IMPORTANT TAX INFORMATION
Under federal income tax law, a Holder tendering Notes is
required to provide the Exchange Agent with such Holder's correct TIN on
Substitute Form W-9 above. If such Holder is an individual, the TIN is the
Holder's social security number. The Certificate of Awaiting Taxpayer
Identification Number should be completed if the tendering Holder has not been
issued a TIN and has applied for a number or intends to apply for a number in
the near future. If the Exchange Agent is not provided with the correct TIN, the
Holder may be subject to a $50 penalty imposed by the Internal Revenue Service.
In addition, payments that are made to such Holder with respect to tendered
Notes may be subject to backup withholding.
Certain Holders (including, among other, all domestic
corporations and certain foreign individuals and foreign entities) are not
subject to these backup withholding and reporting requirements. Such a Holder,
who satisfies one or more of the conditions set forth Part 2 of the Substitute
Form W-9 should execute the certification following such Part 2. In order for
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<PAGE> 16
a foreign Holder to qualify as an exempt recipient, that Holder must submit to
the Exchange Agent a properly completed Internal Revenue Service Form W-9,
signed under penalties of perjury, attesting to that Holder's exempt status.
Such forms can be obtained from the Exchange Agent.
If backup withholding applies, the Exchange Agent is required
to withhold 31% of any amounts otherwise payable to the Holder. Backup
withholding is not an additional tax. Rather, the tax liability of persons
subject to backup withholding will be reduced by the amount of tax withheld. If
withholding results in an overpayment of taxes, a refund may be obtained from
the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a
Holder with respect to Notes tendered for exchange, the Holder is required to
notify the Exchange Agent of his or her correct TIN by completing the form
herein certifying that the TIN provided on Substitute Form W-9 is correct (or
that such Holder is awaiting a TIN) and that (i) each Holder is exempt, (ii)
such Holder has not been notified by the Internal Revenue Service that he or she
is subject to backup withholding as a result of failure to report all interest
or dividends or (iii) the Internal Revenue Service has notified such Holder that
he or she is no longer subject to backup withholding.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
Each Holder is required to give the Exchange Agent the social
security number or employer identification number of the record Holder(s) of the
Notes. If Notes are in more than one name or are not in the name of the actual
Holder, consult the instructions on Internal Revenue Service Form W-9, which may
be obtained from the Exchange Agent, for additional guidance on which number to
report.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
If the tendering Holder has not been issued a TIN and has
applied for a number or intends to apply for a number in the near future, write
"Applied For" in the space for the TIN or Substitute Form W-9, sign and date the
form and the Certificate of Awaiting Taxpayer Identification Number and return
them to the Exchange Agent. If such certificate is completed and the Exchange
Agent is not provided with the TIN within 60 days, the Exchange Agent will
withhold 31% of all payments made thereafter until a TIN is provided to the
Exchange Agent.
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<PAGE> 17
IMPORTANT: This Letter of Transmittal or a facsimile thereof
(together with Notes or confirmation of book-entry transfer and all other
required documents) or a Notice of Guaranteed Delivery must be received by the
Exchange Agent on or prior to the Expiration Date.
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