<PAGE> 1
As filed with the Securities and Exchange Commission on September 11, 1996
REGISTRATION NO. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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AETNA INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
DELAWARE 3465 38-200-7550
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.)
incorporation or organization) Classification Code Number)
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24331 SHERWOOD AVENUE
P.O. BOX 3067
CENTERLINE, MICHIGAN 48015-0067
(810) 759-2200
(Address, including zip code, and telephone number, including area code, of
registrant's and co-registrants' principal executive offices)
HAROLD BROWN
CHIEF FINANCIAL OFFICER AND SECRETARY
AETNA INDUSTRIES, INC.
24331 SHERWOOD AVENUE
P.O. BOX 3067
CENTERLINE, MICHIGAN 48015-0067
(810) 759-2200
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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WITH COPIES TO:
PHILIP H. WERNER, ESQ.
MORGAN, LEWIS & BOCKIUS LLP
101 PARK AVENUE
NEW YORK, N.Y. 10178-0060
(212) 309-6000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
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
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) REGISTRATION FEE
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<S> <C> <C> <C> <C>
11 7/8% Senior Notes due 2006.............. $85,000,000 100% $85,000,000 $29,311
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Guarantees of 11 7/8% Senior Notes due
2006..................................... (2) (2) (2) (2)
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(1) Estimated pursuant to Rule 457(f) solely for the purposes of calculating the
registration fee.
(2) Pursuant to Rule 457(n), no registration fee is required with respect to the
Guarantees of the Senior Notes registered hereby.
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THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
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, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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TABLE OF ADDITIONAL REGISTRANTS
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I.R.S. EMPLOYEE PRIMARY STANDARD
EXACT NAME OF GUARANTOR REGISTRANT AS IDENTIFICATION INDUSTRIAL
SPECIFIED IN ITS CHARTER JURISDICTION OF INCORPORATION NO. CLASSIFICATION CODE NO.
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MS Acquisition Corp..................... Delaware 13-3379803 3465
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Aetna Holdings, Inc..................... Delaware 38-3306448 3465
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Aetna Export Sales Corp................. United States Virgin Islands 66-0441945 3465
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<PAGE> 2
AETNA INDUSTRIES, INC.
CROSS-REFERENCE SHEET
Pursuant to Item 501(b) of Regulation S-K
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FORM S-4 ITEM NUMBER AND CAPTION LOCATION IN PROSPECTUS
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<S> <C>
A. INFORMATION ABOUT THE TRANSACTION
1. Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus... Forepart of the Registration Statement;
Outside Front Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages
of Prospectus............................ Inside Front Cover Page of Prospectus;
Outside Back Cover Page of Prospectus
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information............ Summary; Risk Factors; Summary Financial
Data
4. Terms of the Transaction................... The Exchange Offer; Description of Notes;
Certain Federal Income Tax
Considerations; Plan of Distribution
5. Pro Forma Financial Information............ Selected Financial Data
6. Material Contacts with the Company Being
Acquired................................. Not Applicable
7. Additional Information Required for
Reoffering by Persons and Parties Deemed
to be Underwriters....................... Not Applicable
8. Interests of Named Experts and Counsel..... Not Applicable
9. Disclosure of Commission Position on
Indemnification For Securities Act
Liabilities.............................. Not Applicable
B. INFORMATION ABOUT THE REGISTRANT
10. Information with Respect to S-3
Registrants.............................. Not Applicable
11. Incorporation of Certain Information by
Reference................................ Not Applicable
12. Information with Respect to S-2 or S-3
Registrants.............................. Not Applicable
13. Incorporation of Certain Information by
Reference................................ Not Applicable
14. Information with Respect to Registrants
Other than S-2 or S-3 Registrants........ Summary; Risk Factors; Capitalization;
Selected Financial Data; Management's
Discussion and Analysis of Financial
Condition and Results of Operations;
Business; Management; Capital Stock;
Certain Relationships and Transactions;
Description of Senior Revolving Credit
Facility; Financial Statements
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<PAGE> 3
<TABLE>
<CAPTION>
FORM S-4 ITEM NUMBER AND CAPTION LOCATION IN PROSPECTUS
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<S> <C>
C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED
15. Information with Respect to S-3
Companies................................ Not Applicable
16. Information with Respect to S-2 or S-3
Companies................................ Not Applicable
17. Information with Respect to Companies Other
than S-2 or S-3 Companies................ Not Applicable
D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents or
Authorizations are to be Solicitated..... Not Applicable
19. Information if Proxies, Consents or
Authorizations are not to be Solicited,
or in an Exchange Offer.................. The Exchange Offer; Management; Beneficial
Ownership of Capital Stock; Capital
Stock; Certain Relationships and
Transactions; Description of Senior
Revolving Credit Facility; Description of
Notes
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<PAGE> 4
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 ANY OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY sTATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED , 1996
PROSPECTUS
OFFER FOR ALL OUTSTANDING 11 7/8% SENIOR NOTES DUE 2006
IN EXCHANGE FOR 11 7/8% SENIOR NOTES DUE 2006 OF
[AETNA LOGO]
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME ON , 1996, UNLESS EXTENDED
Aetna Industries, Inc., a Delaware corporation (the "Company"), hereby
offers to exchange an aggregate principal amount of up to $85,000,000 of its
11 7/8% Senior Notes due 2006 (the "New Notes") for a like principal amount of
its 11 7/8% Senior Notes due 2006 (the "Old Notes") outstanding on the date
hereof upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal (which together constitute the
"Exchange Offer"). The New Notes and the Old Notes are collectively hereinafter
referred to as the "Notes." The terms of the New Notes are identical in all
material respects to those of the Old Notes, except for certain transfer
restrictions and registration rights relating to the Old Notes. The New Notes
will be issued pursuant to, and entitled to the benefits of, the Indenture (as
defined herein) governing the Old Notes. The New Notes will be senior unsecured
obligations of the Company ranking pari passu in right of payment with all
existing and future senior obligations of the Company and will be effectively
subordinated in right of payment to all existing and future secured indebtedness
of the Company and its subsidiaries. As of June 30, 1996, on a pro forma basis
after giving effect to the Transactions (as defined herein) and the Exchange
Offer, the Company would have had $85.0 million of senior debt outstanding,
consisting of the New Notes. In addition, the Company would have had available
$35.0 million of undrawn borrowings under its Senior Revolving Credit Facility
(as defined herein). The Company's obligations under the Senior Revolving Credit
Facility will be secured by first liens on substantially all of the property and
assets of the Company (other than interests in real property). Because the Notes
are unsecured, advances under the Senior Revolving Credit Facility effectively
rank senior to the Notes to the extent of the security securing such advances.
See "Description of Senior Revolving Credit Facility" and "Description of
Notes."
The New Notes will be guaranteed on a senior unsecured basis by each of
Aetna Holdings, Inc., the Company's direct parent corporation ("Holdings"), and
MS Acquisition Corp., the direct parent corporation of Holdings ("MS
Acquisition"). MS Acquisition and Holdings currently conduct no business (except
for a Management Agreement between MS Acquisition and the Company) and have no
significant assets other than the capital stock of Holdings and the Company,
respectively. The New Notes will also be guaranteed (the "Subsidiary Guarantee")
on a senior unsecured basis by Aetna Export Sales Corp., a U.S. Virgin Islands
company, and a wholly-owned subsidiary of the Company ("Export" or the
"Subsidiary Guarantor" and, collectively with Holdings and MS Acquisition, the
"Guarantors"). The New Notes will bear interest from and including the date of
consummation of the Exchange Offer. Interest on the New Notes will be payable
semi-annually on April 1 and October 1 of each year, commencing April 1, 1997.
Additionally, interest on the New Notes will accrue from the last interest
payment date on which interest was paid on the Old Notes surrendered in exchange
therefor or, if no interest has been paid on the Old Notes, from the date of
original issue of the Old Notes. See "Description of Notes."
The New Notes are being offered hereunder in order to satisfy certain
obligations of the Company and the Guarantors contained in the Registration
Rights Agreement dated August 13, 1996 (the "Registration Rights Agreement"),
among the Company, Holdings, MS Acquisition, Export and the Initial Purchasers
(as defined herein), with respect to the initial sale of the Old Notes.
The Company will not receive any proceeds from the Exchange Offer. The
Company will pay all the expenses incident to the Exchange Offer. Tenders of Old
Notes pursuant to the Exchange Offer may be withdrawn at any time prior to the
Expiration Date (as defined) for the Exchange Offer. In the event the Company
terminates the Exchange Offer and does not accept for exchange any Old Notes
with respect to the Exchange Offer, the Company will promptly return such Old
Notes to the holders thereof. See "The Exchange Offer."
Each broker-dealer that receives New 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 New Notes. The Letter of Transmittal states
that by so acknowledging and by delivery of a prospectus, a broker-dealer will
not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"). This Prospectus, as
it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of New Notes received in exchange for
Old Notes where such Old Notes were acquired by such broker-dealer as a result
of market-making activities or other trading activities. Each of the Company and
the Guarantors 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 release. See "Plan of Distribution."
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Prior to the Exchange Offer, there has been no public market for the Old
Notes. If a market for the New Notes should develop, such New Notes could trade
at a discount from their principal amount. The Company currently does not intend
to list the New Notes on any securities exchange or to seek approval for
quotation through any automated quotation system and no active public market for
the New Notes is currently anticipated. There can be no assurance that an active
public market for the New Notes will develop.
The Exchange Offer is not conditioned upon any minimum principal amount of
Old Notes being tendered for exchange pursuant to the Exchange Offer.
SEE "RISK FACTORS" COMMENCING ON PAGE 9 FOR A DISCUSSION OF CERTAIN FACTORS THAT
HOLDERS OF NOTES SHOULD CONSIDER IN CONNECTION WITH THE EXCHANGE OFFER.
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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> 5
AVAILABLE INFORMATION
The Company and the Guarantors have filed with the Securities and Exchange
Commission (the "Commission") a Registration Statement on Form S-4 (the
"Exchange Offer Registration Statement," which term shall encompass all
amendments, exhibits, annexes and schedules thereto) pursuant to the Securities
Act, and the rules and regulations promulgated thereunder, covering the New
Notes being offered hereby. This Prospectus does not contain all the information
set forth in the Exchange Offer Registration Statement. For further information
with respect to the Company, the Guarantors and the Exchange Offer, reference is
made to the Exchange Offer Registration Statement. Statements made in this
Prospectus as to the contents of any contract, agreement or other document
referred to are not necessarily complete. With respect to each such contract,
agreement or other document filed as an exhibit to the Exchange Offer
Registration Statement, reference is made to the exhibit for a more complete
description of the document or matter involved, and each such statement shall be
deemed qualified in its entirety by such reference. The Exchange Offer
Registration Statement, including the exhibits thereto, can be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Regional
Offices of the Commission at Seven World Trade Center, Suite 1300, New York, New
York 10048 and at Northwestern Atrium Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. Copies of such materials can be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. In addition, the Commission
maintains a Web site that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission. The address of such Web site is: http://www.sec.gov.
As a result of the Exchange Offer, the Company and the Guarantors will
become subject to the informational requirements of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and in accordance therewith will be
required to file periodic reports and other information with the Commission. In
the event the Company ceases to be subject to the informational requirements of
the Exchange Act, the Company will be required under the Indenture to continue
to file with the Commission the annual and quarterly reports, information,
documents or other reports, including, without limitation, reports on Forms
10-K, 10-Q and 8-K, which would be required pursuant to the informational
requirements of the Exchange Act. The Company will also furnish such other
reports as may be required by law.
This Prospectus includes forward-looking statements which involve risks and
uncertainties as to future events. Actual events or results may differ
materially from those discussed in the forward-looking statements as a result of
various factors, including, without limitation, those set forth under "Risk
Factors".
i
<PAGE> 6
SUMMARY
This Summary is qualified in its entirety by the more detailed information
and financial statements and notes thereto that appear elsewhere in this
Prospectus. Prospective investors are urged to read this Prospectus in its
entirety.
THE COMPANY
Aetna Industries, Inc. (the "Company") is a leading "Tier I" supplier of
high-quality modules, welded subassemblies and stampings used as original
equipment components by original equipment manufacturers ("OEMs") in the North
American automobile industry. The Company's core products, which in 1995
represented over 74% of its net sales, are complex, high value-added modules and
welded subassemblies. With wide-bed press capabilities in excess of 150 inches,
the Company is one of a small group of independent suppliers capable of
producing large bed-size stampings and assemblies. The Company produces over 200
products that are used in the production of 51 different models (23 different
platforms). 86% of the Company's net sales in 1995 were derived from sales of
products manufactured for the light truck sector (consisting of sport utility
vehicles, mini-vans, utility vans and light pick-up trucks), which has recently
experienced stronger growth than the passenger car sector. The Company has been
a direct supplier to Chrysler Corporation ("Chrysler") and General Motors
Corporation ("GM") since 1941, with net production sales to these customers in
1995 accounting for 60% and 36%, respectively, of the Company's net production
sales. Since 1991, the Company has implemented new manufacturing and marketing
practices that management believes have improved the Company's manufacturing
productivity and quality and have enhanced and expanded the Company's customer
relationships. As a result of these efforts, from 1991 to 1995, net sales grew
at a compound annual growth rate ("CAGR") of 14% from $123.7 million in 1991 to
$211.9 million in 1995, and EBITDA (as defined herein) grew at a CAGR of 13%
from $13.5 million in 1991 to $21.9 million in 1995.
Management believes that the Company is benefitting from certain
industry-wide structural developments that are altering the competitive
environment for parts suppliers to OEMs, including cost-driven purchasing by
OEMs of integrated modules and subassemblies. Because of increasing global
competition, OEMs have been upgrading their supplier policies, reducing the
number of strategic suppliers that may bid for awards and outsourcing an
increasing percentage of their production requirements. On new platforms, there
has been an increasing trend toward involving potential suppliers much earlier
in the design and development process in order to encourage the suppliers to
share some of the design and development responsibility. Early involvement in
the design and engineering of new components affords the Company a competitive
advantage in securing new business and provides its customers with significant
cost reduction opportunities.
Management believes that the Company's long-standing industry relationships
are based upon the Company's ability to produce large parts, along with its
performance as a low-cost, on-time supplier of quality products. The Company has
developed and is implementing a business strategy to enhance the effectiveness
of its core operating strengths, to respond to industry-wide structural
developments in the OEM parts supplier industry and to increase sales and
profitability. Key elements of this strategy include (i) focusing on the high
growth light truck sector (in particular sport utility vehicles), a sector of
the North American new car sales market which, in recent years, has experienced
significantly stronger growth than the passenger car sector; (ii) producing more
complex, high value-added modules and assemblies, which generate higher dollar
content per vehicle for the Company than individual stampings, enabling the
Company to utilize its capability to produce large bed-size stampings and
assemblies; and (iii) achieving a low cost structure by maximizing asset
utilization, reducing manufacturing costs and rationalizing the Company's
component parts and services supplier base. At the core of the Company's
business strategy is the "Aetna Production System", a production process based
upon the "Total Elimination of Waste" philosophy and a streamlined, cellular
manufacturing process. All of the Company's manufacturing facilities have
achieved QS 9000 certification, the standard recently adopted by the Automotive
Industry Action Group ("AIAG"), which Chrysler and GM have each stated will be
required of all Tier I suppliers by July 31, 1997 and December 31, 1997,
respectively, in order to bid on new manufacturing business.
1
<PAGE> 7
THE TRANSACTIONS
The Old Notes were issued in connection with a recapitalization (the
"Recapitalization") of the Company's parent corporation ("MS Acquisition"),
which prior to the Recapitalization owned all of the outstanding capital stock
of the Company. In the Recapitalization, Citicorp Venture Capital, Ltd. and
related parties (collectively referred to as "CVC") acquired a significant
equity interest in MS Acquisition from the equityholders of MS Acquisition (the
"Former Stockholders") for cash consideration of $10.0 million. CVC has
significant capital resources through its affiliation with Citibank N.A. and has
invested in over 100 companies since its founding in 1967. CVC has been an
active participant in the automotive industry having completed equity
investments in eight automotive-related companies with revenues aggregating over
$2.0 billion. CVC's automotive and heavy duty portfolio includes investments in
Delco Remy International, Inc., a leading manufacturer of electrical and other
engine-related components, Titan Wheel International, Inc., a leading global
manufacturer of steel wheel and tire assemblies for off-highway vehicles, JAC
Products, Inc., a leading global supplier of original equipment and aftermarket
roof racks, and Sinter Metals, Inc., a producer of sintered powder metal
products for automotive and other applications.
As part of the Recapitalization, MS Acquisition amended its charter to
provide for the reclassification of its capital stock into two new classes
(voting and non-voting) of Common Stock (together, "Common Stock" or "New Common
Stock") and a new class of Preferred Stock ("Preferred Stock" or "New Preferred
Stock"); the Former Stockholders exchanged their MS Acquisition stock, pro rata,
for New Common Stock and New Preferred Stock; and CVC purchased shares of the
New Preferred Stock and the New Common Stock from the Former Stockholders for
$10.0 million cash. Subsequently, MS Acquisition formed Aetna Holdings, Inc., a
Delaware corporation ("Holdings"), and contributed to Holdings all of the shares
of capital stock of the Company. Holdings then purchased from the Former
Stockholders approximately 61% of their MS Acquisition stock in exchange for (i)
$11.1 million in cash and (ii) $8.7 million in principal amount of 11.0% junior
subordinated debentures of Holdings due 2007 (the "Junior Subordinated
Debentures" and together with the $11.1 million cash, the "Holdings
Consideration"). In addition, MS Acquisition paid approximately $650,000 in cash
to terminate certain outstanding employee options. The Former Stockholders
retained (i) $2.36 million in stated value of New Preferred Stock and (ii)
shares of New Common Stock representing 20.6% of the New Common Stock on a
fully-diluted basis.
To the extent dividends to Holdings to fund cash interest payments on the
Junior Subordinated Debentures are not permitted under the Indenture (as defined
herein) or the Senior Revolving Credit Facility (as defined herein), interest on
the Junior Subordinated Debentures may be paid by issuing additional Junior
Subordinated Debentures in an aggregate principal amount equal to the amount of
interest due and payable on any interest payment date. Up to $2.5 million in
aggregate principal amount of the Junior Subordinated Debentures will be
required to be redeemed by Holdings from time to time to the extent dividends to
Holdings by the Company to fund such redemptions are permitted to be paid under
the Indenture and the Senior Revolving Credit Facility.
The New Preferred Stock has a cumulative dividend rate of 11.0%. The New
Preferred Stock has an aggregate stated value of $11.50 million, consisting of
(i) $9.0 million purchased by CVC in connection with the Recapitalization; (ii)
$2.36 million retained by the Former Stockholders and (iii) $0.13 million
received by certain Former Stockholders in connection with the cancellation of
certain existing options. At the option of MS Acquisition, dividends on the New
Preferred Stock may be paid in additional shares of New Preferred Stock.
In connection with the consummation of the foregoing transactions and
pursuant to the terms of the Indenture, on August 13, 1996 the Company issued
the Old Notes in the aggregate principal amount of $85.0 million. The gross
proceeds to the Company from the sale of the Old Notes, being approximately
$82.4 million ($85.0 million less the Initial Purchasers' Discount of
approximately $2.5 million), were and will be used (i) to repay all of the
outstanding indebtedness, accrued interest and prepayment penalties of the
Company ($64.9 million as of June 30, 1996), (ii) to fund the $11.1 million cash
component of the Holdings Consideration, (iii) to pay approximately $650,000 to
terminate certain outstanding employee options as described under "Management --
Stock Option Plan", (iv) to pay fees and expenses of approximately $5.0
2
<PAGE> 8
million in connection with the Transactions and the Exchange Offer, (v) to pay
approximately $570,000 of bonuses and accrued compensation to certain directors
and officers of the Company as described under "Certain Relationships and
Transactions," (vi) to pay $250,000 of accrued management fees to a Former
Stockholder and (vii) for general corporate purposes. After giving effect to the
Transactions, the Company had $35.0 million of available borrowings under its
Senior Revolving Credit Facility. See "Description of Senior Revolving Credit
Facility".
The foregoing transactions, together with the offering of the Old Notes and
the application of the proceeds therefrom, are referred to herein as the
"Transactions".
3
<PAGE> 9
THE EXCHANGE OFFER
Securities Offered............ Up to $85,000,000 aggregate principal amount of
11 7/8% Senior Notes due 2006 (the "New
Notes"). The terms of the New Notes and Old
Notes (collectively, the "Notes") are identical
in all material respects, except for certain
transfer restrictions and registration rights
relating to the Old Notes.
The Exchange Offer............ The New Notes are being offered in exchange for
a like principal amount of Old Notes. Old Notes
may be exchanged only in integral multiples of
$1,000. The issuance of the New Notes is
intended to satisfy obligations of the Company
and the Guarantors contained in the
Registration Rights Agreement.
Expiration Date; Withdrawal of
Tender........................ The Exchange Offer will expire at 5:00 p.m. New
York City time, on , 1996, or such
later date and time to which it may be extended
by the Company. The tender of Old Notes
pursuant to the Exchange Offer may be withdrawn
at any time prior to the Expiration Date. Any
Old Notes not accepted for exchange for any
reason will be returned without expense to the
tendering holder thereof as promptly as
practicable after the expiration or termination
of the Exchange Offer.
Certain Conditions to the
Exchange Offer................ The Company's obligation to accept for
exchange, or to issue New Notes in exchange
for, any Old Notes is subject to certain
customary conditions relating to compliance
with any applicable law, or order of any
governmental agency or any applicable
interpretation by the Staff of the Commission,
which may be waived by the Company in its
reasonable discretion. The Company currently
expects that each of the conditions will be
satisfied and that no waivers will be
necessary. See "The Exchange Offer -- Certain
Conditions to the Exchange Offer."
Procedures for Tendering Old
Notes......................... Each holder of Old Notes wishing to accept the
Exchange Offer must complete, sign and date the
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 such Old Notes and any
other required documentation, to the Exchange
Agent (as defined) at the address set forth
herein. See "The Exchange Offer -- Procedures
for Tendering Old Notes."
Use of Proceeds............... There will be no proceeds to the Company from
the exchange of Notes pursuant to the Exchange
Offer.
Exchange Agent................ Norwest Bank Minnesota, National Association,
is serving as the Exchange Agent in connection
with the Exchange Offer.
Federal Income Tax
Consequences.................. The exchange of Notes pursuant to the Exchange
Offer should not be a taxable event for federal
income tax purposes. See "Certain Federal
Income Tax Considerations."
4
<PAGE> 10
CONSEQUENCES OF EXCHANGING OLD NOTES PURSUANT TO THE EXCHANGE OFFER
Based on certain interpretive letters issued by the staff of the Commission
to third parties in unrelated transactions, the Company is of the view that
holders of Old Notes (other than any holder who is an "affiliate" of the Company
within the meaning of Rule 405 under the Securities Act) who exchange their Old
Notes for New Notes pursuant to the Exchange Offer generally may offer such New
Notes for resale, resell such New Notes, and otherwise transfer such New Notes
without compliance with the registration and prospectus delivery provisions of
the Securities Act, provided such New Notes are acquired in the ordinary course
of the holders' business and such holders have no arrangement with any person to
participate in a distribution of such New Notes. Each broker-dealer that
receives New Notes for its own account in exchange for Old Notes must
acknowledge that it will deliver a prospectus in connection with any resale of
such New Notes. See "Plan of Distribution." In addition, to comply with the
securities laws of certain jurisdictions, if applicable, the New Notes may not
be offered or sold unless they have been registered or qualified for sale in
such jurisdiction or in compliance with an available exemption from registration
or qualification. The Company has agreed, pursuant to the Registration Rights
Agreement and subject to certain specified limitations therein, to register or
qualify the New Notes for offer or sale under the securities or blue sky laws of
such jurisdictions as any holder of the Notes reasonably requests in writing. If
a holder of Old Notes does not exchange such Old Notes for New Notes pursuant to
the Exchange Offer, such Old Notes will continue to be subject to the
restrictions on transfer contained in the legend thereon. In general, the Old
Notes may not be offered or sold, unless registered under the Securities Act,
except pursuant to an exemption from, or in a transaction not subject to, the
Securities Act and applicable state securities laws. Holders of Old Notes do not
have any appraisal or dissenters' rights under Delaware General Corporation Law
in connection with the Exchange Offer. See "The Exchange Offer -- Consequences
of Failure to Exchange; Resales of New Notes."
The Old Notes are currently eligible for trading in the Private Offerings,
Resales and Trading through Automated Linkages ("PORTAL") market. Following
commencement of the Exchange Offer but prior to its consummation, the Old Notes
may continue to be traded in the PORTAL market. Following consummation of the
Exchange Offer, the New Notes will not be eligible for PORTAL trading.
THE NEW NOTES
The terms of the New Notes are identical in all material respects to the
Old Notes, except for certain transfer restrictions and registration rights
relating to the Old Notes.
Issuer........................ Aetna Industries, Inc.
Securities Offered............ $85.0 million aggregate principal amount of
11 7/8% Senior Notes due 2006.
Maturity Date................. October 1, 2006.
Interest Payment Dates........ October 1 and April 1 of each year, commencing
April 1, 1997.
Ranking....................... The New Notes will be senior unsecured
obligations of the Company ranking pari passu
in right of payment with all existing and
future senior obligations of the Company and
will be effectively subordinated in right of
payment to all existing and future secured
indebtedness of the Company and its
subsidiaries. As of June 30, 1996, after giving
effect to the consummation of the Transactions
and the Exchange Offer, the Company would have
had $85.0 million of senior debt outstanding,
consisting of the New Notes. In addition, the
Company would have had available $35.0 million
of undrawn borrowings under its Senior
Revolving Credit Facility. The Senior Revolving
Credit Facility is secured by first liens on
substantially all of the assets of the Company.
See "Description of Senior Revolving Credit
Facility".
Guarantees.................... Like the Old Notes, the New Notes will be
guaranteed on a senior unsecured basis by each
of MS Acquisition and Holdings. MS Acquisition
and Holdings will initially conduct no business
and have
5
<PAGE> 11
no significant assets other than the capital
stock of Holdings and the Company,
respectively. In addition, like the Old Notes,
the New Notes will be guaranteed (each, a
"Subsidiary Guarantee") on a senior unsecured
basis by each material subsidiary of the
Company (each, a "Subsidiary Guarantor").
Currently, the only Subsidiary Guarantor is
Aetna Export Sales Corp., a wholly-owned
subsidiary of the Company ("Export" or the
"Subsidiary Guarantor") and, collectively with
MS Acquisition and Holdings, the "Guarantors").
See "Description of Notes -- Guarantees and
Subsidiary Guarantees".
Optional Redemption........... Except as provided below, the New Notes (like
the Old Notes) are not redeemable at the
Company's option prior to October 1, 2001.
Thereafter, the New Notes (and any outstanding
Old Notes) will be redeemable, in whole or in
part, at the option of the Company, at the
redemption prices set forth herein plus accrued
interest to the date of redemption. In
addition, prior to October 1, 1999, the Company
may, at its option, redeem up to $25.0 million
principal amount of Notes originally issued
with the net proceeds from one or more Public
Equity Offerings (as defined herein) at the
redemption price set forth herein plus accrued
interest to the date of redemption; provided
that at least $60.0 million aggregate principal
amount of Notes would remain outstanding after
giving effect to any such redemption. See
"Description of Notes -- Optional Redemption".
Change of Control............. In the event of a Change of Control (as defined
herein), the Company will be obligated to make
an offer to purchase all of the outstanding
Notes at a redemption price of 101% of the
principal amount thereof plus accrued interest
to the date of purchase. In the event a Change
of Control were to occur, there can be no
assurance that the Company will have available
funds sufficient to repurchase all of the Notes
that holders elect to tender. See "Description
of Notes -- Change of Control".
Offer to Purchase............. The Company is required in certain
circumstances to make an offer to purchase
Notes, at a purchase price equal to 100% of the
principal amount thereof plus accrued interest
to the date of purchase, with the net cash
proceeds of certain asset sales. See
"Description of Notes -- Certain Covenants --
Limitation on Asset Sales".
Certain Covenants............. The indenture governing the Notes (the
"Indenture") contains covenants including, but
not limited to, covenants with respect to
limitations on the following matters: (i) the
incurrence of additional indebtedness, (ii) the
issuance of preferred stock by subsidiaries,
(iii) the creation of liens, (iv) sale and
leaseback transactions, (v) restricted
payments, (vi) the sales of assets and
subsidiary stock, (vii) mergers and
consolidations, (viii) payment restrictions
affecting subsidiaries and (ix) transactions
with affiliates. See "Description of Notes --
Certain Covenants".
RISK FACTORS
Holders of Old Notes should carefully consider all of the information set
forth in this Prospectus and, in particular, should evaluate the specific
factors under "Risk Factors" beginning on page 9 in connection with the Exchange
Offer.
6
<PAGE> 12
SUMMARY FINANCIAL DATA
(AMOUNTS IN THOUSANDS EXCEPT RATIOS AND PRODUCTION DATA)
The following table sets forth (i) summary historical financial data of the
Company for the five years ended December 31, 1995 and the six months ended June
30, 1995 and 1996 and (ii) summary pro forma financial data for the year ended
December 31, 1995 and the six months ended June 30, 1996. The summary financial
data for the years ended December 31, 1993, 1994 and 1995 are derived from the
audited consolidated financial statements of the Company included elsewhere in
this Prospectus. The summary financial data for the years ended December 31,
1991 and 1992 are derived from the audited consolidated financial statements of
the Company. The summary financial data as of June 30, 1996 and for the six
months ended June 30, 1995 and 1996 are derived from unaudited consolidated
financial statements of the Company included elsewhere in this Prospectus which,
in the opinion of management, include all adjustments, consisting of only
normal, recurring adjustments, necessary for a fair presentation of the
financial condition and results of operations of the Company for such periods.
The results of operations for interim periods are not necessarily indicative of
a full year's operations. The summary pro forma financial data are derived from
pro forma unaudited condensed consolidated financial data of the Company for the
six months ended June 30, 1996 and the year ended December 31, 1995 included
elsewhere in this Prospectus. The summary pro forma statement of operations
data, other financial data and production data for the year ended December 31,
1995 and the six months ended June 30, 1996 give effect to the Transactions and
the Exchange Offer as if they occurred on January 1, 1995, and the summary pro
forma balance sheet data at June 30, 1996 gives effect to the Transactions and
the Exchange Offer as if they occurred as of such date. The following table
should be read in conjunction with "Selected Financial Data", "Pro Forma
Unaudited Condensed Consolidated Financial Data", "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the historical
consolidated financial statements of the Company presented elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
--------------------------------------------------------------- ------------------------------
PRO PRO
FORMA FORMA
1991 1992 1993 1994 1995 1995(A) 1995 1996 1996(a)
-------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA
Net sales.............. $123,712 $128,905 $162,908 $204,850 $211,905 $211,905 $119,111 $114,944 $114,944
Cost of sales.......... 110,177 112,830 139,499 172,428 183,542 183,542 100,321 98,472 98,472
Gross profit........... 13,535 16,075 23,409 32,422 28,363 28,363 18,790 16,472 16,472
Selling, general and
administrative
expenses(b).......... 6,079 9,984 12,544 12,898 13,331 13,203 6,835 7,371 7,307
Operating profit....... 7,456 6,091 10,865 19,524 15,032 15,160 11,955 9,101 9,165
Interest expense,
net.................. 9,525 9,206 9,020 8,929 8,579 10,094 4,246 4,132 5,047
Income (loss) before
effect of accounting
changes(c)........... (2,287) (2,768) 915 6,595 4,576 3,674 5,466 2,806 2,253
Net income (loss)...... (2,287) (2,768) (3,856) 6,595 4,576 3,674 5,466 2,806 2,253
OTHER FINANCIAL DATA
EBITDA(d).............. $ 13,522 $ 11,993 $ 17,624 $ 25,924 $ 21,861 $ 21,861 $ 15,506 $ 12,781 $ 12,781
Depreciation and
amortization......... 6,066 5,902 6,009 6,150 6,579 6,701 3,426 3,558 3,619
Capital expenditures... 3,432 1,736 3,474 6,125 10,103 10,103 4,966 2,732 2,732
EBITDA margin.......... 10.9% 9.3% 10.8% 12.7% 10.3% 10.3% 13.0% 11.1% 11.1%
Ratio of earnings to
fixed charges(e)..... -- -- 1.2 2.1 1.7 1.5 2.6 2.0 1.7
Ratio of EBITDA to
interest expense..... 1.4 1.3 1.9 2.9 2.5 2.2 3.7 3.1 2.5
Ratio of long-term debt
to EBITDA............ 5.4 6.3 3.9 2.2 2.6 3.9 3.9 4.8 6.7
PRODUCTION DATA
Adjusted net production
sales per
employee(f).......... $102,683 $108,994 $128,822 $130,157 $129,850 $129,850 $ 67,850 $ 80,125 $ 80,125
Adjusted net production
sales per square
foot(f).............. 170.4 178.9 234.4 251.8 282.7 282.7 147.7 158.7 158.7
</TABLE>
<TABLE>
<CAPTION>
AT JUNE 30,
-------------------
AT DECEMBER 31, PRO
---------------------------------------------------- FORMA
1991 1992 1993 1994 1995 1996 1996(a)
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Total assets.......................... $103,866 $105,414 $109,587 $113,331 $118,242 $122,885 $130,130
Long-term debt........................ 73,417 75,390 69,238 57,744 57,741 61,719 85,000
Stockholder's equity (deficit)........ 2,856 88 (3,768) 2,827 7,402 10,208 (2,925)
</TABLE>
(footnotes on next page)
7
<PAGE> 13
- ------------------------------
(a) Gives pro forma effect to the Transactions in the manner described under
"Pro Forma Unaudited Condensed Consolidated Financial Data".
(b) Included in selling, general and administrative expenses are management fees
of $750, $250, $250, $125, and $125 for 1993, 1994, 1995 and the six months
ended June 30, 1995 and 1996, respectively. Due to reaching selected
thresholds and measurements, selling, general and administrative expenses in
1993 included $500 of management fees relating to prior years. Such
management fees were eliminated upon consummation of the Transactions.
(c) Effective January 1, 1993, the Company adopted SFAS No. 109, "Accounting for
Income Taxes" which resulted in a one-time, non-cash, after tax charge of
$4,771. See note 9 to the Company's consolidated financial statements
appearing elsewhere in this Prospectus.
(d) EBITDA is defined as income before the effect of changes in accounting plus
interest, income taxes, management fees, depreciation and amortization.
EBITDA is presented because it is a widely accepted financial indicator of a
company's ability to incur and service debt. However, EBITDA should not be
considered in isolation as a substitute for net income or cash flow data
prepared in accordance with generally accepted accounting principles or as a
measure of a company's profitability or liquidity.
(e) For purposes of the ratio of earnings to fixed charges, (i) earnings include
earnings before income taxes, the effect of changes in accounting, and fixed
charges and (ii) fixed charges include interest on all indebtedness,
amortization of deferred financing costs and the portion of rental expense
(one-third) that the Company believes to be representative of interest. The
Company's earnings were insufficient to cover fixed charges by $2.1 million
and $3.1 million for the years ended December 31, 1991 and 1992,
respectively.
(f) Adjusted net production sales is defined as net sales excluding (i) net
tooling and prototype sales and (ii) net sales relating to an unusually
large factory assist job which contributed $26.3 million, $16.2 million and
$16.2 million to net sales in 1994, 1995 and the six months ended June 30,
1995, respectively. Adjusted net production sales per employee is based upon
the average of the number of employees at quarter-end during each period
presented.
8
<PAGE> 14
RISK FACTORS
Holders of Old Notes should carefully consider the specific factors set
forth below as well as the other information included in this Prospectus in
connection with the Exchange Offer. The risk factors set forth below are
generally applicable to the Old Notes as well as the New Notes.
SIGNIFICANT LEVERAGE AND DEBT SERVICE
The Company has indebtedness which is substantial in relation to its
stockholder's equity, as well as interest and debt service requirements which
are significant compared to its cash flow from operations. As of June 30, 1996,
on a pro forma basis after giving effect to the Transactions, the Company would
have had $85.0 million of senior debt outstanding, consisting of the Notes. In
addition, the Company would have had available $35.0 million of undrawn
borrowings under the Senior Revolving Credit Facility. For the year ended
December 31, 1995 and the six months ended June 30, 1996, the Company's ratio of
EBITDA (as defined herein) to interest expense was 2.2 to 1 and 2.5 to 1,
respectively, on a pro forma basis after giving effect to the Transactions and
the Exchange Offer.
The level of the Company's indebtedness could have important consequences
to holders of the Notes, including: (i) a substantial portion of the Company's
cash flow from operations must be dedicated to debt service and will not be
available for other purposes; (ii) the Company's ability to obtain additional
debt financing in the future for working capital, capital expenditures or
acquisitions may be limited; and (iii) the Company's level of indebtedness could
limit its flexibility in reacting to changes in the industry and economic
conditions generally.
The Company's ability to pay interest on the Notes and to satisfy its other
obligations will depend upon its future operating performance, which will be
affected by prevailing economic conditions and financial, business and other
factors, certain of which are beyond its control. The Company anticipates that
its operating cash flow, together with available borrowings under the Senior
Revolving Credit Facility, will be sufficient to meet its operating expenses and
to service interest requirements on its debt obligations as they become due. The
Company may be required to refinance the Notes at maturity. No assurance can be
given that, if required, the Company will be able to refinance the Notes on
terms acceptable to it, if at all. If the Company is unable to service its
indebtedness, it will be forced to adopt an alternative strategy that may
include actions such as reducing or delaying capital expenditures, selling
assets, restructuring or refinancing its indebtedness or seeking additional
equity capital. There can be no assurance that any of these strategies could be
effected on satisfactory terms, if at all. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources".
The Indenture contains certain restrictive covenants which affect, and in
many respects significantly limit or prohibit, among other things, the ability
of the Company to incur indebtedness, make prepayments of certain indebtedness,
pay dividends, make investments, engage in transactions with stockholders and
affiliates, create liens, sell assets and engage in mergers and consolidations.
The Senior Revolving Credit Facility contains similar and more restrictive
covenants and also requires the Company to meet certain financial ratios and
tests. These covenants may significantly limit the operating and financial
flexibility of the Company and may limit its ability to respond to changes in
its business or competitive activities. The ability of the Company to comply
with such provisions may be affected by events beyond its control. In the event
of any default under the Senior Revolving Credit Facility, the lenders
thereunder could elect to declare all amounts borrowed under the Senior
Revolving Credit Facility, together with accrued interest, to be due and
payable. If the Company were unable to repay such borrowings, the lenders
thereunder could proceed against the collateral securing the Senior Revolving
Credit Facility, which consists of substantially all of the property and assets
of the Company other than interests in real property. If the indebtedness under
the Senior Revolving Credit Facility were to be accelerated, there can be no
assurance that the assets of the Company would be sufficient to repay such
indebtedness and the Notes in full. See "Description of Senior Revolving Credit
Facility".
Like the Old Notes, the New Notes will be unsecured senior indebtedness of
the Company. In the event of a bankruptcy, liquidation or reorganization of the
Company, holders of secured indebtedness will be entitled to payment out of the
proceeds of their collateral prior to any holders of general unsecured
indebtedness,
9
<PAGE> 15
including the Notes. Substantially all of the property and assets of the Company
(other than interests in real property) are pledged to secure obligations under
the Senior Revolving Credit Facility. To the extent that the value of such
collateral is insufficient to satisfy such secured indebtedness, holders of
amounts remaining outstanding on such secured indebtedness (as well as other
unsubordinated creditors of the Company) would be entitled to share pari passu
with the Notes with respect to any other assets of the Company. The Company may
not have sufficient assets to pay amounts due on any or all of the Notes then
outstanding.
RISK OF FRAUDULENT TRANSFER CONSIDERATIONS
A portion of the net proceeds from the sale of the Old Notes was used by
the Company to pay a dividend of approximately $11.7 million to Holdings as part
of the Transactions. The incurrence by the Company of indebtedness, such as the
Notes, to pay a dividend would be subject to review under relevant federal and
state fraudulent transfer laws in a bankruptcy case or a lawsuit by or on behalf
of unpaid creditors of the Company or a representative of such creditors, such
as a trustee or the Company as debtor-in-possession. Management believes the
indebtedness represented by the Notes was incurred for proper purposes and in
good faith, and that based on present forecasts, asset valuations and other
financial information, immediately prior to and following the consummation of
the Transactions the Company was solvent, had sufficient capital for carrying on
its business and was able to pay its debts as they matured. Notwithstanding
management's belief, if a court were to find that, at the time of the incurrence
of indebtedness represented by the Notes, the Company was insolvent, was
rendered insolvent by reason of such incurrence or such dividend, was engaged in
a business or transaction for which its remaining assets constituted
unreasonably small capital, intended to incur, or believed that it would incur,
debts beyond its ability to pay such debts as they matured, or intended to
hinder, delay or defraud its creditors, such court could, among other things,
void all or a portion of such indebtedness and/or subordinate such indebtedness
to other existing and future indebtedness of the Company, the effect of which
would be to entitle such other creditors to be paid in full before any payment
could be made on the Notes. The measure of insolvency for purposes of the
foregoing will vary depending upon the law of the relevant jurisdiction.
Generally, however, the Company would be considered insolvent for purposes of
the foregoing if the sum of its debts is greater than all its property at a fair
valuation, or if the present fair saleable value of its assets is less than the
amount that will be required to pay its probable liability on its existing debts
as they become absolute and matured.
THE OEM SUPPLIER INDUSTRY
The North American OEM supplier market in which the Company competes is
highly cyclical, depending in large part on the overall strength of consumer
demand for light trucks and passenger cars. There can be no assurance that the
automotive industry for which the Company supplies parts will not experience
downturns in the future. A recession typically impacts highly leveraged
companies such as the Company more than less leveraged companies. A decrease in
overall consumer demand for light trucks or passenger cars or a general
recession could have a material adverse effect on the Company.
The automotive industry is characterized by a small number of OEM customers
that are able to exert considerable pressure on component suppliers to reduce
costs, improve quality and provide additional engineering capabilities. In the
past, OEMs have demanded price reductions and measurable increases in quality
through more competitive selection processes, rating programs and various other
arrangements. Through increased partnering on platform work, OEMs have required
more design engineering input at earlier stages, the costs of which have, in
some cases, been absorbed by component suppliers. There can be no assurance that
price reductions or increased quality or additional engineering capabilities
required by OEMs will not have a material adverse effect on the Company.
DEPENDENCE ON KEY CUSTOMERS AND PRODUCTS
The Company's primary customers are Chrysler and GM, which accounted for
60% and 36%, respectively, of the Company's total 1995 net production sales. Net
sales to Chrysler and GM are not made pursuant to long-term contractual
arrangements, but are competitively awarded for specific projects in the case of
both platform and factory assist work. Strong customer relationships are
critical to platform revenues,
10
<PAGE> 16
which are increasingly contingent on whether the Company is chosen by an OEM to
participate on a platform development team. There can be no assurance that
business from these OEMs will continue at comparable levels in the future or
that Chrysler and GM will not experience setbacks in their operations, such as
labor difficulties or unsuccessful vehicle models. In addition, a substantial
portion of the Company's revenues is derived from platform work for the Chrysler
Jeep Cherokee and Chrysler Jeep Grand Cherokee vehicle models. The loss of
either Chrysler or GM as a customer, or a significant reduction in business
generated by either OEM, would have a material adverse effect on the Company.
Moreover, changing consumer vehicle preferences could have a material adverse
effect on the Company.
Each of the Company's primary customers, Chrysler and GM, has major
contracts with the United Auto Workers (the "UAW"). Because of the OEM's
dependence on a single union, labor difficulties and work stoppages at an OEM's
facilities have an immediate adverse impact on the Company. For example, during
a 17-day work stoppage in March 1996 at two Dayton, Ohio GM plants that resulted
in shutdowns at other GM facilities, certain production lines of the Company
dedicated to factory assist work for GM vehicles were shut down within a period
ranging from one day to 14 days after the related GM facility stopped
operations. Although the Company took steps to minimize the consequences of this
unplanned work stoppage, there was an adverse effect on production, and
therefore on the Company's financial performance for the period involved. The
Chrysler and GM contracts with the UAW expire in September 1996. The UAW has
publicly announced that it plans to negotiate with the OEMs to reduce dependence
upon outsourcing, or the production of vehicle parts by outside suppliers rather
than by the OEMs themselves, in connection with upcoming contract negotiations
scheduled for September 14, 199 . If the UAW's efforts
with respect to outsourcing are successful, this could result in an adverse
effect on the Company's future growth. Although it cannot be known at this time
whether the UAW will be successful in limiting the amount of work outsourced to
suppliers such as the Company, GM has publicly announced its plans to resist any
attempts by the UAW to prevent GM from increasing its use of outsourcing. If
either Chrysler or GM were to strongly resist efforts by the UAW to reduce its
dependence on outsourcing, this resistance as well as any other disagreement
could lead to failed negotiations and resultant work stoppages. The effects of
any prolonged work stoppage could have a material adverse effect on the Company.
COMPETITIVE INDUSTRY
The markets in which the Company competes are highly competitive. The
Company's competitors include large and established national and multinational
companies and smaller companies, as well as production facilities within the
OEMs themselves. Some of these competitors have, and new competitors may have,
greater resources than the Company, including resources to commit to marketing
and product engineering and development. Consequently, there can be no assurance
that the Company will be able to compete effectively in the future. See
"Business -- Competition".
UNION WORKFORCE; PLANT CLOSING
The Company's production work force consists of UAW members, with contracts
that expire at various times at each production facility. While the Company
believes it has maintained good relations with its unions, there can be no
assurance that this will continue to be the case. The collective bargaining
agreement with Local 155 of the UAW covering the approximately 145 hourly
employees of the Company's Plant #7 expired on August 18, 1996. As part of the
Company's continuing efforts to rationalize production and capture efficiencies,
on July 16, 1996 the Company announced plans to shut down in sixty days the
operations of Plant #7. Plant #7 has continued operations since the expiration
of the collective bargaining agreement on August 18 and is currently scheduled
to cease operations as of September 12, 1996. The Company and Local 155 are
currently engaged in the final stages of negotiating an agreement on matters
relating to the effects of the facility's closure on the employees represented
by the UAW local. The Company anticipates that those negotiations will conclude
on or about September 13. Although the Company anticipates that its efforts to
complete the negotiations will be successful, there can be no assurances that a
failure to reach agreement with Local 155 with respect to the effects of the
closure of Plant #7 will not have a material adverse effect on the Company.
While the analysis of the costs associated with the closing of Plant #7 is in a
preliminary stage,
11
<PAGE> 17
management believes that the charges associated with closing Plant #7, if any,
will not have a material adverse effect on the Company, although no assurance to
such effect can be given.
CONTROL OF MS ACQUISITION AND THE COMPANY
MS Acquisition owns, through Holdings, all of the outstanding capital stock
of the Company, and CVC owns New Common Stock representing approximately 49% of
the voting stock of MS Acquisition. Circumstances may occur in which the
interests of CVC, as an equity holder of MS Acquisition, could be in conflict
with the interests of the holders of the Notes. For example, if the Company
encounters financial difficulties, or is unable to pay certain of its debts as
they mature, the interests of MS Acquisition's equity investors might conflict
with those of the holders of the Notes. In addition, the equity investors may
have an interest in pursuing acquisitions, divestitures or other transactions
that, in their judgment, could enhance their equity investment, even though such
transactions might involve risks to the holders of the Notes.
ABSENCE OF PUBLIC MARKET FOR THE NEW NOTES
The New Notes are new securities and there is currently no established
market for the New Notes. Accordingly, there can be no assurance as to the
liquidity of any markets that may develop for the New Notes, the ability of
holders to sell the New Notes or the price at which holders would be able to
sell the New Notes. Future trading prices of the New Notes will depend on many
factors, including, among other things, prevailing interest rates, the Company's
operating results and the market for similar securities. Historically, the
market for securities similar to the New Notes, including non-investment grade
debt, has been subject to disruptions that have caused substantial volatility in
the prices of such securities. There can be no assurance that any market for the
New Notes, if such market develops, will not be subject to similar disruptions.
The Initial Purchasers have advised the Company that they currently intend to
make a market in the New Notes offered hereby. However, the Initial Purchasers
are not obligated to do so and any market making may be discontinued at any time
without notice. The Old Notes currently are eligible for trading by qualified
buyers in the Private Offerings, Resale and Trading through Automated Linkages
(PORTAL) Market. The Company and the Guarantors do not intend to apply for
listing of the New Notes on any national securities exchange or for their
quotation through the National Association of Securities Dealers Automated
Quotation System.
12
<PAGE> 18
USE OF PROCEEDS
There will be no proceeds to the Company from the exchange of the Notes
pursuant to the Exchange Offer.
CAPITALIZATION
(DOLLARS IN THOUSANDS)
The following tables set forth the consolidated cash and capitalization of
the Company and of MS Acquisition (i) as of June 30, 1996 and (ii) as adjusted
to give effect to the Transactions.
THE COMPANY
<TABLE>
<CAPTION>
AS OF JUNE 30, 1996
-----------------------
AS ADJUSTED
FOR THE
ACTUAL TRANSACTIONS
------- ------------
<S> <C> <C>
Cash..................................................... $ 311 $ 2,891
======== ========
Long-term debt...........................................
Senior Revolving Credit Facility(1).................... $18,976 $ 0
Subordinated debt...................................... 42,743
Notes offered hereby................................... 85,000
-------- --------
Total long-term debt................................... 61,719 85,000
-------- --------
Total stockholder's equity............................... 10,208 (2,925)
-------- --------
Total capitalization..................................... $71,927 $ 82,075
======== ========
</TABLE>
MS ACQUISITION
<TABLE>
<CAPTION>
AS OF JUNE 30, 1996
--------------------------
AS ADJUSTED
FOR THE
ACTUAL TRANSACTIONS(2)
------- ---------------
<S> <C> <C>
Cash................................................... $ 311 $ 2,891
======== ========
Long-term debt.........................................
Senior Revolving Credit Facility(1).................. $18,976 $ 0
Subordinated debt.................................... 42,743
Junior subordinated debentures....................... 8,731
Notes offered hereby................................. 85,000
-------- --------
Total long-term debt................................. 61,719 93,731
Preferred stock........................................ 2,580 11,496
-------- --------
Total stockholders' equity............................. 7,628 (23,650)
-------- --------
Total capitalization................................... $71,927 $81,577
======== ========
</TABLE>
- ------------------------------
(1) The Senior Revolving Credit Facility provides for borrowings of up to $35.0
million for working capital, capital expenditures and general corporate
purposes and is secured by liens on substantially all of the property of the
Company other than interests in real property. See "Description of Senior
Revolving Credit Facility."
(2) As adjusted, for MS Acquisition, includes adjustments for the purchase of
shares of New Preferred Stock and New Common Stock by CVC, the exchange of
existing MS Acquisition preferred stock for New Preferred Stock, the
issuance of $8.7 million in principal amount of the Junior Subordinated
Debentures of Holdings due 2007 and $0.5 million in the form of an unfunded
obligation of Holdings to certain option holders.
13
<PAGE> 19
SELECTED FINANCIAL DATA
(DOLLARS IN THOUSANDS EXCEPT RATIOS AND PRODUCTION DATA)
The following table sets forth selected historical financial data of the
Company for the five years ended December 31, 1995 and selected historical
financial data for the six months ended June 30, 1995 and 1996. The selected
financial data for the years ended December 31, 1993, 1994 and 1995 were derived
from the audited consolidated financial statements of the Company included
elsewhere in this Prospectus. The selected financial data for the years ended
December 31, 1991 and 1992 are derived from the audited consolidated financial
statements of the Company. The selected financial data as of June 30, 1996 and
for the six months ended June 30, 1995 and 1996 are derived from unaudited
consolidated financial statements of the Company included elsewhere in this
Prospectus which, in the opinion of management, include all adjustments,
consisting of only normal, recurring adjustments, necessary for a fair
presentation of the financial condition and results of operations of the Company
for such periods. The results of operations for interim periods are not
necessarily indicative of a full year's operations. The following table should
be read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the historical consolidated financial
statements of the Company presented elsewhere in this Prospectus.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
---------------------------------------------------- -------------------
1991 1992 1993 1994 1995 1995 1996
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA
Net sales................ $123,712 $128,905 $162,908 $204,850 $211,905 $119,111 $114,944
Cost of sales............ 110,177 112,830 139,499 172,428 183,542 100,321 98,472
Gross profit............. 13,535 16,075 23,409 32,422 28,363 18,790 16,472
Selling, general and
administrative
expenses(a)........... 6,079 9,984 12,544 12,898 13,331 6,835 7,371
Operating profit......... 7,456 6,091 10,865 19,524 15,032 11,955 9,101
Interest expense, net.... 9,525 9,206 9,020 8,929 8,579 4,246 4,132
Income (loss) before
effect of accounting
changes(b)............ (2,287) (2,768) 915 6,595 4,576 5,466 2,806
Net income (loss)........ (2,287) (2,768) (3,856) 6,595 4,576 5,466 2,806
OTHER FINANCIAL DATA
EBITDA(c)................ $ 13,522 $ 11,993 $ 17,624 $ 25,924 $ 21,861 $ 15,506 $ 12,781
Depreciation and
amortization.......... 6,066 5,902 6,009 6,150 6,579 3,426 3,558
Capital expenditures..... 3,432 1,736 3,474 6,125 10,103 4,966 2,732
EBITDA margin............ 10.9% 9.3% 10.8% 12.7% 10.3% 13.0% 11.1%
Ratio of earnings to
fixed charges(d)...... -- -- 1.2 2.1 1.7 2.6 2.0
Ratio of EBITDA to
interest expense...... 1.4 1.3 1.9 2.9 2.5 3.7 3.1
Ratio of long-term debt
to EBITDA............. 5.4 6.3 3.9 2.2 2.6 3.9 4.8
PRODUCTION DATA
Adjusted net production
sales per
employee(e)........... $102,683 $108,994 $128,822 $130,157 $129,850 $ 67,850 $ 80,125
Adjusted net production
sales per square
foot(e)............... 170.4 178.9 234.4 251.8 282.7 147.7 158.7
</TABLE>
<TABLE>
<CAPTION>
AT DECEMBER 31,
---------------------------------------------------- AT JUNE 30,
1991 1992 1993 1994 1995 1996
-------- -------- -------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA
Total assets....................... $103,866 $105,414 $109,587 $113,331 $118,242 $ 122,885
Long-term debt..................... 73,417 75,390 69,238 57,744 57,741 61,719
Stockholder's equity (deficit)..... 2,856 88 (3,768) 2,827 7,402 10,208
</TABLE>
(footnotes on next page)
14
<PAGE> 20
- ------------------------------
(a) Included in selling, general and administrative expenses are management fees
of $750, $250, $250, $125 and $125 for 1993, 1994, 1995 and the six months
ended June 30, 1995 and 1996, respectively. Due to reaching selected
thresholds and measurements, selling, general and administrative expenses in
1993 included $500 of management fees relating to prior years. Such
management fees were eliminated upon consummation of the Transactions.
(b) Effective January 1, 1993, the Company adopted SFAS No. 109, "Accounting for
Income Taxes", which resulted in a one-time, non-cash, after tax charge of
$4,771. See note 9 to the Company's consolidated financial statements
appearing elsewhere in this Prospectus.
(c) EBITDA is defined herein as income before the effect of changes in
accounting plus interest, income taxes, management fees, and depreciation
and amortization. EBITDA is presented because it is a widely accepted
financial indicator of a company's ability to incur and service debt.
However, EBITDA should not be considered in isolation as a substitute for
net income or cash flow data prepared in accordance with generally accepted
accounting principles or as a measure of a company's profitability or
liquidity.
(d) For purposes of the ratio of earnings to fixed charges, (i) earnings include
earnings before income taxes, the effect of changes in accounting, and fixed
charges and (ii) fixed charges include interest on all indebtedness,
amortization of deferred financing costs and the portion of rental expense
(one-third) that the Company believes to be representative of interest. The
Company's earnings were insufficient to cover fixed charges by $2.1 million
and $3.1 million for the years ended December 31, 1991 and 1992,
respectively.
(e) Adjusted net production sales is defined as net sales excluding (i) net
tooling and prototype sales and (ii) net sales relating to an unusually
large factory assist job which contributed $26.3 million, $16.2 million and
$16.2 million to net sales in 1994, 1995 and the six months ended June 30,
1995, respectively. Adjusted net production sales per employee is based upon
the average of the number of employees at quarter-end during each period
presented.
15
<PAGE> 21
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company is a leading Tier I supplier of high-quality modules, welded
subassemblies and stampings used as original equipment components by OEMs in the
production of sport utility vehicles, mini-vans, utility vans, light pick-up
trucks and passenger cars. The Company's core products include complex, high
value-added modules and welded subassemblies, such as rear floor pan modules
that form a section of a vehicle underbody, and individual stampings, such as
oil pans, wheel retainers, headlight brackets, crossmembers, rails, heat shields
and door hinge pillars. The Company's manufacturing processes include roll
forming, blanking and stamping and, since 1991, the Company has implemented new
manufacturing processes including a cellular manufacturing strategy that has
increased production capacity and labor efficiency. The Company regularly
pursues and receives long-term OEM factory assist jobs, producing components of
existing vehicle models previously made by an OEM in-house. OEM factory assist
jobs can be the result of (i) short term production requirements prior to or
during model change-overs which allow the OEMs to retool their plants, (ii) cost
reduction initiatives resulting in increased outsourcing by OEMs or (iii)
capacity constraints after the introduction of a new platform. The Company also
participates with its OEM customers in process engineering activities.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the Company's
statement of operations expressed as a percentage of net sales. This table and
subsequent discussions should be read in conjunction with the consolidated
financial statements and related notes thereto of the Company included elsewhere
in this Prospectus.
AS PERCENTAGE OF NET SALES
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------- ---------------
1993 1994 1995 1995 1996
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net sales............................. 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales......................... 85.6 84.2 86.6 84.2 85.7
Gross profit.......................... 14.4 15.8 13.4 15.8 14.3
SG&A expenses......................... 7.7 6.3 6.3 5.7 6.4
Operating profit...................... 6.7 9.5 7.1 10.0 7.9
Interest expense...................... 5.5 4.4 4.0 3.6 3.6
Income before cumulative effect of
change in accounting and income
taxes............................... 1.1 5.2 3.0 6.5 4.3
Income tax provision.................. 0.6 2.0 0.9 1.9 1.9
Net income (loss)..................... (2.4)% 3.2% 2.2% 4.6% 2.4%
</TABLE>
SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO SIX MONTHS ENDED JUNE 30, 1995:
NET SALES: Net sales for the six months ended June 30, 1996 were $114.9 million,
a decrease of 3.5% from net sales of $119.1 million for the same period in 1995.
The decrease was principally due to the planned successful completion of a
factory assist job for Chrysler which ran for 16 months from early 1994 to
mid-1995. This factory assist job contributed $16.2 million of net sales for the
six month period ended June 30, 1995. Partially offsetting this decrease was an
increase of 11.3% in net sales to Chrysler (excluding factory assist work) for
the six months ended June 30, 1996 compared to the similar period for 1995. In
addition, net sales to GM increased 2.9% due to strong mini-van and small car
shipments, despite the planned phase out of a van program.
16
<PAGE> 22
GROSS PROFIT: Gross profit was $16.5 million, or 14.3% of net sales, for the six
months ended June 30, 1996, compared to $18.8 million, or 15.8% of net sales,
for the six months ended June 30, 1995. Gross margins for the 1996 period are
slightly lower compared to the 1995 period due to the decrease in the Chrysler
factory assist work from 1995 to 1996 as discussed above. Additionally, gross
profit was negatively affected by a 17-day March 1996 work stoppage at two GM
plants located in Dayton, Ohio.
SELLING, GENERAL AND ADMINISTRATIVE ("SG&A") EXPENSES: SG&A expenses were $7.4
million, or 6.4% of net sales, for the six months ended June 30, 1996, compared
to $6.8 million, or 5.7% of net sales for the six months ended June 30, 1995.
The increase in SG&A expenses, as a percentage of net sales, was primarily
attributable to engineering expenses which have increased $0.6 million over the
same period in 1995 primarily as a result of establishing an engineering project
team to launch a 1999 sports utility platform.
INTEREST EXPENSE: Interest expense for the six months ended June 30, 1996 was
$4.1 million, or 3.6% of net sales, compared to $4.2 million, or 3.6% of net
sales, for the six months ended June 30, 1995. The decrease in interest expense
was attributable to lower levels of debt outstanding in 1996 as compared to the
same period in the prior year.
INCOME TAXES: The provision for income taxes for the six months ended June 30,
1996 was $2.2 million with an effective rate of 43.5%, as compared to $2.2
million with an effective tax rate of 29.0% in the same period of the prior
year. The increase in the effective rate is due primarily to the effect of
graduated rates coupled with non-deductible amortization of cost in excess of
assets acquired.
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994:
NET SALES: Net sales for the year ended December 31, 1995 were $211.9 million,
an increase of $7.0 million, or 3.4%, from $204.9 million in 1994. The increase
was principally the result of continued strong consumer demand in the North
American automotive market for sport utility vehicles, with total sport utility
vehicle production increasing 26.6% in 1995. Net tooling and prototype sales
were $4.4 million in 1995, down 46.3% from 1994 net tooling and prototype sales
of $8.2 million. In 1994, the Company completed the installation of a mini-van
radiator support assembly which contributed $5.0 million to net tooling and
prototype sales. Net production sales to Chrysler and GM as a percentage of
total net production sales were 60% and 36% in 1995, respectively, as compared
to 62% and 35%, respectively, in 1994.
GROSS PROFIT: Gross profit was $28.4 million, or 13.4% of net sales, in 1995,
compared to $32.4 million, or 15.8% of net sales, in 1994. Gross margins were
unfavorably impacted by the need to execute a major assembly line overhaul to
meet increased demand for the Chrysler Jeep Grand Cherokee. This overhaul, which
was implemented while the Company remained in full production, was required as
the result of running an assembly line at a rate 20 to 25 percent greater than
its originally designed maximum capability for over two years due to high
product demand. Additionally, gross profit was adversely affected by start-up
costs on a new weld assembly job and delays in receiving anticipated factory
assist work.
SG&A: SG&A expenses, which were $13.3 million in 1995, compared to $12.9 million
in 1994, remained constant as a percentage of net sales at 6.3%.
INTEREST EXPENSE: Interest expense for the year ended December 31, 1995 was $8.6
million, or 4.0% of net sales, compared to $8.9 million, or 4.4% of net sales,
for the year ended December 31, 1994. Weighted average interest rates were 12.9%
and 12.3% in 1995 and 1994, respectively. The decrease in interest expense is
attributable to lower levels of debt outstanding.
INCOME TAXES: The provision for income taxes for the year ended December 31,
1995 was $1.9 million, with an effective income tax rate of 29.0%, as compared
to $4.0 million, with an effective tax rate of 37.8% in the same period of the
prior year. The decrease in the effective rate is due principally to the effect
of the rate change on deferred tax balances and the reversal of tax reserves no
longer required.
17
<PAGE> 23
YEAR ENDED DECEMBER 31, 1994 COMPARED TO YEAR ENDED DECEMBER 31, 1993
NET SALES: Net sales for the year ended December 31, 1994 were $204.9 million,
an increase of $42.0 million, or 25.8%, from $162.9 million in 1993. The
increase was principally the result of a factory assist job for Chrysler as well
as increased consumer demand for light trucks. Net tooling and prototype net
sales were $8.2 million in 1994, up 91% from $4.3 million in 1993 primarily as a
result of a $5.0 million mini-van radiator support assembly tooling project in
1994. Net production sales to Chrysler and GM as a percentage of total net
production sales were 62% and 35%, respectively, in 1994, compared to 59% and
39%, respectively, in 1993.
GROSS PROFIT: Gross profit was $32.4 million, or 15.8% of net sales, in 1994,
compared to $23.4 million, or 14.4% of net sales, in 1993. The improvement in
gross margins was primarily attributable to a better sales mix of higher margin
production jobs, including factory assist work.
SG&A: SG&A expenses were $12.9 million, or 6.3% of net sales, in 1994, compared
to $12.5 million, or 7.7% of net sales, in 1993. The decrease in SG&A, as a
percent of net sales, occurred because the Company was able to take in a large
number of factory assist jobs in 1994 without a significant increase in support
staff. In addition, due to reaching selected thresholds and measurements, SG&A
for 1993 included $0.5 million or 0.3% of net sales, of management fees relating
to prior years.
INTEREST EXPENSE: Interest expense for the year ended December 31, 1994 was $8.9
million, or 4.4% of net sales, compared with $9.0 million, or 5.5% of net sales,
for the year ended December 31, 1993. Weighted average interest rates were 12.3%
and 11.3% in 1994 and 1993, respectively. The decrease in interest expense is
attributable to lower levels of debt outstanding.
INCOME TAXES: The provision for income taxes for the year ended December 31,
1994 was $4.0 million with an effective tax rate of 37.8%, compared to $0.9
million with an effective tax rate of 50.4% in the same period of the prior
year. The effective tax rate in both 1993 and 1994 was affected by the
amortization of non-deductible cost in excess of net assets acquired.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal capital requirements are to fund working capital
needs, to meet required debt payments, and to complete planned maintenance and
expansion expenditures. The Company anticipates that its operating cash flow,
together with available borrowings under the Senior Revolving Credit Agreement,
will be sufficient to meet its working capital requirements and capital
expenditure requirements and service interest requirements on its debt
obligations. As of June 30, 1996, on a pro forma basis after giving effect to
the Transactions, the Company would have had $85.0 million of debt outstanding
and would have had the ability to borrow an additional $35.0 million for working
capital and capital expenditure requirements under the Senior Revolving Credit
Facility.
Net cash flow from operations aggregated $1.9 million for the six months
ended June 30, 1996 as compared to $5.8 million for the same period in the prior
year. The decrease was primarily attributable to a $2.7 million and $2.2 million
decrease in net income and working capital, respectively, partially offset by an
increase in depreciation and deferred interest of $0.1 million and $0.7 million,
respectively.
Net cash flow from operating activities totaled $14.6 million for the year
ended December 31, 1995 as compared to $22.0 million for the prior year. The
decrease in operating cash flow in 1995 compared to 1994 is attributable to net
income decreasing $2.0 million, working capital decreasing $2.5 million,
depreciation and amortization increasing $0.4 million, deferred interest
decreasing $1.7 million and deferred income taxes decreasing $0.2 million.
The Company currently expects that its capital expenditures (exclusive of
any potential acquisitions) will be approximately $7.0 million to $10.0 million
in each of the five fiscal years subsequent to December 31, 1995, including
maintenance capital expenditures of approximately $4.5 million to $5.0 million
each year. However, the Company's capital expenditures will be affected by, and
may be greater than currently anticipated depending upon, the size and nature of
new business opportunities.
18
<PAGE> 24
Capital expenditures for the six months ended June 30, 1996 were $2.7
million as compared to $5.0 million for the same period in the prior year.
Capital expenditures in the year ended December 31, 1995 were $10.1 million,
compared with $6.1 million in 1994 and $3.5 million in 1993. Major capital
projects for 1995 included completion of a platform specific control arm
project, continued expenditures related to a plant modernization program, and
start-up costs related to a new rear suspension project. Major capital projects
for 1994 included expenses related to a plant modernization program and initial
plant refurbishment costs associated with a platform specific control arm
project awarded in October 1994.
Cash provided by financing activities for the six months ended June 30,
1996 was $0.7 million as compared to cash used for financing activities of $0.5
million for the same period in the prior year. The increase in cash provided by
financing primarily represents the impact of the timing of the payment of
certain debt obligations, and, in 1996, the refinancing of the Company's Senior
Revolving Credit Facility.
Cash used for financing activities for the years ended December 31, 1995,
1994, and 1993 totalled $4.2 million, $15.4 million and $9.4 million,
respectively, and consisted primarily of principal payments on long-term debt.
The Company's average working capital borrowings under its credit agreement
were $11.7 million, $11.5 million and $7.4 million for the years ended December
31, 1995, 1994 and 1993, respectively. The Company's maximum working capital
borrowings outstanding were $19.2 million, $19.0 million and $10.6 million,
respectively, in those same periods.
To the extent dividends to Holdings to fund cash interest payments on the
Junior Subordinated Debentures and cash payments on the unfunded contractual
obligations to former option holders are permitted under the Indenture and the
Senior Revolving Credit Facility, interest on the Junior Subordinated Debentures
and the contractual obligations will be funded by cash dividends by the Company
to Holdings. Such dividends would be approximately $1.0 million annually.
Additionally, up to $2.5 million in aggregate principal amount of the Junior
Subordinated Debentures will be required to be redeemed by Holdings from time to
time to the extent dividends to Holdings are permitted to be paid under the
Indenture and the Senior Revolving Credit Facility.
The Company's liquidity is affected by both the cyclical nature of its
business and levels of net sales with its two major customers. The Company's
ability to meet its working capital requirements and capital expenditure
requirements and service its debt obligations will depend upon its future
operating performance, which will be affected by prevailing economic conditions
and financial, business and other factors, certain of which are beyond its
control.
INFLATION
The Company does not believe that inflation has had any material effect on
the Company's business over the past three years.
RECENT ACCOUNTING PRONOUNCEMENTS
FAS 109: Effective January 1, 1993, the Company prospectively adopted the
provisions of Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes". The statement requires a change from the deferred method to
the asset and liability method of accounting for income taxes. Previously, the
Company deferred the past tax effects of timing differences between financial
reporting and taxable income. The asset and liability approach requires the
recognition of deferred tax liabilities and assets for the expected future tax
consequences of temporary differences between the carrying amounts and the tax
basis of the Company's assets and liabilities. Prior year financial statements
have not been restated. As a result of the adoption of this statement, the
Company recorded a charge in 1993 of $4.8 million as the effect of an accounting
change in 1993.
FAS 121: In March 1993, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standard No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of"
(FAS 121). This statement requires companies to evaluate long-lived assets,
certain identifiable intangibles and associated goodwill on a exception basis
when there is evidence that events or changes in circumstances have made
recovery of an asset's carrying value unlikely. The Company adopted FAS 121 at
the beginning of 1995; the effect of this adoption was not material.
19
<PAGE> 25
THE EXCHANGE OFFER
TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING OLD NOTES
Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal (which together constitute the
Exchange Offer), the Company will accept for exchange Old Notes which are
properly tendered on or prior to the Expiration Date and not withdrawn as
permitted below. As used herein, the term "Expiration Date" means 5:00 p.m., New
York City time, on , 1996; provided, however, that if the
Company has extended the period of time for which the Exchange Offer is open,
the term "Expiration Date" means the latest time and date to which the Exchange
Offer is extended.
As of the date of this Prospectus, $85.0 million aggregate principal amount
of the Old Notes are outstanding. This Prospectus, together with the Letter of
Transmittal, is first being sent on or about , 1996 to all
holders of Old Notes known to the Company. The Company's obligation to accept
Old Notes for exchange pursuant to the Exchange Offer is subject to certain
conditions as set forth under "-- Certain Conditions to the Exchange Offer"
below.
The Company expressly reserves the right, at any time or from time to time,
to extend the period of time during which the Exchange Offer is open, and
thereby delay acceptance for any exchange of any Old Notes, by giving notice of
such extension to the holders thereof. During any such extension, all Old Notes
previously tendered will remain subject to the Exchange Offer and may be
accepted for exchange by the Company. Any Old Notes not accepted for exchange
for any reason will be returned without expense to the tendering holder thereof
as promptly as practicable after the expiration or termination of the Exchange
Offer.
The Company expressly reserves the right to amend or terminate the Exchange
Offer, and not to accept for exchange any Old Notes not theretofore accepted for
exchange, upon the occurrence of any of the conditions of the Exchange Offer
specified below under "-- Certain Conditions to the Exchange Offer." The Company
will give notice of any extension, amendment, non-acceptance or termination to
the holders of the Old Notes as promptly as practicable, such notice in the case
of any extension to be issued no later than 9:00 a.m., New York City time, on
the next business day after the previously scheduled Expiration Date.
Holders of Old Notes do not have any appraisal or dissenters' rights under
the Delaware General Corporation Law in connection with the Exchange Offer.
PROCEDURES FOR TENDERING OLD NOTES
The tender to the Company of Old Notes by a holder thereof as set forth
below and the acceptance thereof by the Company will constitute a binding
agreement between the tendering holder and the Company upon the terms and
subject to the conditions set forth in this Prospectus and in the accompanying
Letter of Transmittal. Except as set forth below, a holder who wishes to tender
Old Notes for exchange pursuant to the Exchange Offer must transmit a properly
completed and duly executed Letter of Transmittal, including all other documents
required by such Letter of Transmittal, to Norwest Bank Minnesota, National
Association, (the "Exchange Agent") at one of the addresses set forth below
under "Exchange Agent" on or prior to the Expiration Date. In addition, either
(i) certificates for such Old Notes must be received by the Exchange Agent along
with the Letter of Transmittal, or (ii) a timely confirmation of a book-entry
transfer (a "Book-Entry Confirmation") of such Old Notes, if such procedure is
available, into the Exchange Agent's account at The Depository Trust Company
(the "Book-Entry Transfer Facility") pursuant to the procedure for book-entry
transfer described below, must be received by the Exchange Agent prior to the
Expiration Date, or the holder must comply with the guaranteed delivery
procedures described below. THE METHOD OF DELIVERY OF OLD NOTES, LETTER OF
TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE
HOLDER. IF SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL,
PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. NO LETTERS OF
TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE COMPANY.
20
<PAGE> 26
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed unless the Old Notes surrendered for exchange
pursuant thereto are tendered (i) by a registered holder of the Old Notes who
has not completed the box entitled "Special Issuance Instruction" or "Special
Delivery Instructions" on the Letter of Transmittal or (ii) for the account of
an Eligible Institution (as defined below). In the event that signatures on a
Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantees must be by a firm which is a member
of a registered national securities exchange or a member of the National
Association of Securities Dealers, Inc. or by a commercial bank or trust company
having an office or correspondent in the United States (collectively, "Eligible
Institutions"). If Old Notes are registered in the name of a person other than a
signer of the Letter of Transmittal, the Old Notes surrendered for exchange must
be endorsed by, or be accompanied by a written instrument or instruments of
transfer or exchange, in satisfactory form as determined by the Company in its
sold discretion, duly executed by, the registered holder with the signature
thereon guaranteed by an Eligible Institution.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of Old Notes tendered for exchange will be determined by
the Company in its sole discretion, which determination shall be final and
binding. The Company reserves the absolute right to reject any and all tenders
of any particular Old Notes not properly tendered or to not accept any
particular Old Notes which acceptance might, in the judgment of the Company or
its counsel, be unlawful. The Company also reserves the absolute right to waive
any defects or irregularities or conditions of the Exchange Offer as to any
particular Old Notes either before or after the Expiration Date (including the
right to waive the ineligibility of any holder who seeks to tender Old Notes in
the Exchange Offer). The interpretation of the terms and conditions of the
Exchange Offer as to any particular Old Notes either before or after the
Expiration Date (including the Letter of Transmittal and the instructions
thereto) by the Company shall be final and binding on all parties. Unless
waived, any defects or irregularities in connection with tenders of Old Notes
for exchange must be cured within such reasonable period of time as the Company
shall determine. Neither the Company, the Exchange Agent nor any other person
shall be under any duty to give notification of any defect or irregularity with
respect to any tender of Old Notes for exchange, nor shall any of them incur any
liability for failure to give such notification.
If the Letter of Transmittal or any Old Notes or powers of attorney are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and, unless waived by
the Company, proper evidence satisfactory to the Company of their authority to
so act must be submitted.
By tendering, each broker-dealer holder will represent to the Company that,
among other things, the New Notes acquired pursuant to the Exchange Offer are
being obtained in the ordinary course of business of the holder and any
beneficial holder, that neither the holder nor any such beneficial holder has an
arrangement or understanding with any person to participate in the distribution
of such New Notes and that neither the holder nor any such other person is an
"affiliate," as defined under Rule 405 of the Securities Act, of the Company. If
the holder is not a broker-dealer, the holder must represent that it is not
engaged in nor does it intend to engage in a distribution of the New Notes.
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
For each Old Note accepted for exchange, the holder of such Old Note will
receive a New Note having a principal amount equal to that of the surrendered
Old Note. For purposes of the Exchange Offer, the Company shall be deemed to
have accepted properly tendered Old Notes for exchange when, as and if the
Company has given oral and written notice thereof to the Exchange Agent.
In all cases, issuance of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of certificates for such Old Notes or a timely Book-Entry
Confirmation of such Old Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility, a properly completed and duly executed Letter of
Transmittal and all other required documents. If any tendered Old Notes are not
accepted for any reason set forth in the terms and conditions of the Exchange
Offer or if Old Notes are submitted for a greater principal amount than the
holder
21
<PAGE> 27
desires to exchange, such unaccepted or non-exchanged Old Notes will be returned
without expense to the tendering holder thereof (or, in the case of Old Notes
tendered by book-entry transfer into the Exchange Agent's account at the
Book-Entry Transfer Facility pursuant to the book-entry transfer procedures
described below, such non-exchanged Old Notes will be credited to an account
maintained with such Book-Entry Transfer Facility) as promptly as practicable
after the expiration of the Exchange Offer.
BOOK-ENTRY TRANSFER
Any financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of Old Notes by causing the
Book-Entry Transfer Facility to transfer such Old Notes into the Exchange
Agent's account at the Book-Entry Transfer Facility in accordance with such
Book-Entry Transfer Facility's procedures for transfer. However, although
delivery of Old Notes may be effected through book-entry transfer at the
Book-Entry Transfer Facility, the Letter of Transmittal or facsimile thereof
with any required signature guarantees and any other required documents must, in
any case, be transmitted to and received by the Exchange Agent at one of the
addresses set forth below under "Exchange Agent" on or prior to the Expiration
Date or the guaranteed delivery procedures described below must be complied
with.
GUARANTEED DELIVERY PROCEDURES
If a registered holder of the Old Notes desires to tender such Old Notes
and the Old Notes are not immediately available, or time will not permit such
holder's Old Notes or other required documents to reach the Exchange Agent
before the Expiration Date, or the procedure for book-entry transfer cannot be
completed on a timely basis, a tender may be effected if (i) the tender is made
through an Eligible Institution, (ii) prior to the Expiration Date, the Exchange
Agent received from such Eligible Institution a properly competed and duly
executed Letter of Transmittal (or a facsimile thereof) and Notice of Guaranteed
Delivery, substantially in the form provided by the Company (by telegram, telex,
facsimile and transmission, mail or hand delivery), setting forth the name and
address of the holder of Old Notes and the amount of Old Notes tendered, stating
that the tender is being made thereby and guaranteeing that within five New York
Stock Exchange ("NYSE") trading days after the date of execution of the Notice
of Guaranteed Delivery, the certificates for all physically tendered Old Notes,
in proper form for transfer, or a confirmation of book-entry transfer of such
Old Notes into the Exchange Agent's account at the Book-Entry Transfer Facility
(a "Book-Entry Confirmation"), as the case may be, and any other documents
required by the Letter of Transmittal will be deposited by the Eligible
Institution with the Exchange Agent and (iii) the certificates for all
physically tendered Old Notes, in proper form for transfer, or a Book-Entry
Confirmation, as the case may be, and all other documents required by the Letter
of Transmittal are received by the Exchange Agent within five NYSE trading days
after the date of execution of the Notice of Guaranteed Delivery.
WITHDRAWAL RIGHTS
Tenders of Old Notes may be withdrawn at any time prior to the Expiration
Date. For a withdrawal to be effective, a written notice of withdrawal must be
received by the Exchange Agent at one of the addresses set forth below under
"Exchange Agent." Any such notice of withdrawal must specify the name of the
person having tendered the Old Notes to be withdrawn, identify the Old Notes to
be withdrawn (including the principal amount of such Old Notes), and (where
certificates for Old Notes have been transmitted) specify the name in which such
Old Notes are registered, if different from that of the withdrawing holder. If
certificates for Old Notes have been delivered or otherwise identified to the
Exchange Agent, then, prior to the release of such certificates, the withdrawing
holder must also submit the serial numbers of the particular certificates to be
withdrawn and a signed notice of withdrawal with signatures guaranteed by an
Eligible Institution unless such holder is an Eligible Institution. If Old Notes
have been tendered pursuant to the procedure for book-entry transfer described
above, any notice of withdrawal must specify the name and number of the account
at the Book-Entry Transfer Facility to be credited with the withdrawn Old Notes
and otherwise comply with the procedures of such facility. All questions as to
the validity, form and eligibility (including time of receipt) of such notices
will be determined by the Company, whose determination shall be final and
binding on all parties. Any Old Notes so withdrawn will be deemed not to have
been validly tendered for exchange for purposes of the Exchange Offer. Any Old
Notes which have been tendered for exchange but which are not exchanged for any
reason will be returned to the holder thereof without cost to such holder (or,
22
<PAGE> 28
in the case of Old Notes tendered by book-entry transfer into the Exchange
Agent's account at the Book-Entry Transfer Facility pursuant to the book entry
transfer described above, such Old Notes will be credited to an account
maintained with such Book-Entry Transfer Facility for the Old Notes) as soon as
practicable after withdrawal, rejection of tender or termination of the Exchange
Offer. Properly withdrawn Old Notes may be retendered by following one of the
procedures described under "-- Procedures for Tendering Old Notes" above at any
time on or prior to the Expiration Date.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, the Company
shall not be required to accept for exchange, or to issue New Notes in exchange
for, any Old Notes and may terminate or amend the Exchange Offer if at any time
before the acceptance of such Old Notes for exchange or the exchange of New
Notes for such Old Notes, the Company determines that the Exchange Offer
violates applicable law, any applicable interpretation of the staff of the
Commission or any order of any governmental agency or court of competent
jurisdiction.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to any such
condition or may be waived by the Company in whole or in part at any time and
from time to time in its reasonable discretion. The failure by the Company at
any time to exercise any of the foregoing rights shall not be deemed a waiver of
such right and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time.
In addition, the Company will not accept for exchange any Old Notes
tendered, and no New Notes will be issued in exchange for any such Old Notes, if
at such time any stop order shall be threatened or in effect with respect to the
Registration Statement of which this Prospectus constitutes a part or the
qualification of the Indenture under the Trust Indenture Act of 1939, as amended
(the "TIA"). In any such event the Company is required to use every reasonable
effort to obtain the withdrawal of any stop order at the earliest possible time.
EXCHANGE AGENT
Norwest Bank Minnesota, National Association, has been appointed as the
Exchange Agent for the Exchange Offer. All executed Letters of Transmittal
should be directed to the Exchange Agent at one of the addresses set forth
below. Questions and requests for assistance, requests for additional copies of
this Prospectus or of the Letter of Transmittal and requests for Notices of
Guaranteed Delivery should be directed to the Exchange Agent addressed as
follows:
<TABLE>
<CAPTION>
By Registered or Certified
By Hand: Mail: By Overnight Courier:
- ----------------------------- ----------------------------- -----------------------------
<S> <C> <C>
Norwest Bank Minnesota, Norwest Bank Minnesota, Norwest Bank Minnesota,
National Association National Association National Association
Corporate Trust Operations Corporate Trust Operations Corporate Trust Operations
Norwest Center P.O. Box 1517 Norwest Center
South and Marquette Minneapolis, MN 55480-1517 South and Marquette
Minneapolis, MN 55479-0113 Attn: Curtis Schwegman Minneapolis, MN 55479-0113
Attn: Curtis Schwegman Attn: Curtis Schwegman
<CAPTION>
Via Facsimile:
-----------------------------
<S> <C> <C>
Norwest Bank Minnesota,
National Association
Corporate Trust Operations
(612) 667-4927
Attn: Curtis Schwegman
Confirm by telephone:
(612) 667-9764
</TABLE>
DELIVERY OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID
DELIVERY.
23
<PAGE> 29
FEES AND EXPENSES
The Company will not make any payments to brokers, dealers or others
soliciting acceptances of the Exchange Offer. The principal solicitation is
being made by mail; however, additional solicitations may be made in person or
by telephone by officers and employees of the Company.
The expenses to be incurred in connection with the Exchange Offer will be
paid by the Company. Such expenses include fees and expenses of the Exchange
Agent and Trustee, accounting and legal fees and printing costs, among others.
ACCOUNTING TREATMENT
The New Notes will be recorded at the same carrying value as the Old Notes,
which is the principal amount as reflected in the Company's accounting records
on the date of the exchange. Accordingly, no gain or loss for accounting
purposes will be recognized. The expenses of the Exchange Offer will be
capitalized for accounting purposes.
TRANSFER TAXES
Holders who tender their Old Notes for exchange will not be obligated to
pay any transfer taxes in connection therewith, except that holders who instruct
the Company to register New Notes in the name of, or request that Old Notes not
tendered or not accepted in the Exchange Offer be returned to, a person other
than the registered tendering holder will be responsible for the payment of any
applicable transfer tax thereon.
CONSEQUENCES OF FAILURE TO EXCHANGE; RESALES OF NEW NOTES
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes as set forth in the legend thereon as a
consequence of the issuance of the Old Notes pursuant to the exemptions from, or
in transactions not subject to, the registration requirements of, the Securities
Act and applicable state securities law. Old Notes not exchanged pursuant to the
Exchange Offer will continue to accrue interest at 11 7/8% per annum and will
otherwise remain outstanding in accordance with their terms. Holders of Old
Notes do not have any appraisal or dissenters' rights under Delaware General
Corporation Law in connection with the Exchange Offer. In general, the Old Notes
may not be offered or sold unless registered under the Securities Act, except
pursuant to an exemption from, or in a transaction not subject to, the
Securities Act and applicable state securities laws. The Company does not
currently anticipate that it will register the Old Notes under the Securities
Act. However, (i) if the Initial Purchasers so request with respect to Old Notes
not eligible to be exchanged for New Notes in the Exchange Offer and held by
them following consummation of the Exchange Offer or (ii) if any holder of Old
Notes is not eligible to participate in the Exchange Offer or, in the case of
any holder of Old Notes that participates in the Exchange Offer, does not
receive freely tradable New Notes in exchange for Old Notes, the Company is
obligated to file a registration statement on the appropriate form under the
Securities Act relating to the Old Notes held by such persons.
Based on certain interpretive letters issued by the staff of the Commission
to third parties in unrelated transactions, the Company is of the view that New
Notes issued pursuant to the Exchange Offer may be offered for resale, resold or
otherwise transferred by holders thereof (other than (i) any such holder which
is an "affiliate' of the Company within the meaning of Rule 405 under the
Securities Act or (ii) any broker-dealer that purchases Notes from the Company
to resell pursuant to Rule 144A or any other available exemption) without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that such New Notes are acquired in the ordinary course
of such holders' business and such holders have no arrangement or understanding
with any person to participate in the distribution of such New Notes. If any
holder has any arrangement or understanding with respect to the distribution of
the New Notes to be acquired pursuant to the Exchange Offer, such holder (i)
could not rely on the applicable interpretations of the staff of the Commission
and (ii) must comply with the registration and prospectus delivery requirements
of the Securities Act in connection with a secondary resale transaction. A
broker-dealer who holds Old Notes that were acquired for its own account as a
result of market-making or other trading activities may be deemed
24
<PAGE> 30
to be an "underwriter" within the meaning of the Securities Act and must,
therefore, deliver a prospectus meeting the requirements of the Securities Act
in connection with any resale of New Notes. Each such broker-dealer that
receives New Notes for its own account in exchange for Old Notes, where such Old
Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities, must acknowledge in the Letter of
Transmittal that it will deliver a prospectus in connection with any resale of
such New Notes. See "Plan of Distribution."
In addition, to comply with the securities laws of certain jurisdictions,
if applicable, the New Notes may not be offered or sold unless they have been
registered or qualified for sale in such jurisdiction or an exemption from
registration or qualification is available and is complied with. The Company has
agreed, pursuant to the Registration Rights Agreement and subject to certain
specified limitations therein, to register or qualify the New Notes for offer or
sale under the securities or blue sky laws of such jurisdictions as any holder
of the Notes reasonably requests in writing.
25
<PAGE> 31
BUSINESS
The Company is a leading Tier I supplier of high-quality modules, welded
subassemblies and stampings used as original equipment components by OEMs in the
North American automobile industry. The Company's core products, which in 1995
represented over 74% of its net sales, are complex, high value-added modules and
welded subassemblies. With wide-bed press capabilities in excess of 150 inches,
the Company is one of a small group of independent suppliers capable of
producing large bed-size stampings and assemblies. The Company produces over 200
products that are used in the production of 51 different models (23 different
platforms). 86% of the Company's 1995 net sales were derived from sales of
products manufactured for the light truck sector (consisting of sport utility
vehicles, mini-vans, utility vans and light pick-up trucks), which has recently
experienced stronger growth than the passenger car sector. The Company has been
a direct supplier to Chrysler and GM since 1941, with net production sales to
these customers in 1995 accounting for 60% and 36%, respectively, of the
Company's net production sales. Since 1991, the Company has implemented new
manufacturing and marketing practices that management believes have improved the
Company's manufacturing productivity and quality and have enhanced and expanded
the Company's customer relationships. As a result of these efforts, from 1991 to
1995, net sales grew at a CAGR of 14% from $123.7 million in 1991 to $211.9
million in 1995, and EBITDA grew at a CAGR of 13% from $13.5 million in 1991 to
$21.9 million in 1995.
THE OEM SUPPLIER INDUSTRY
Management believes that the Company is benefitting from certain
industry-wide structural developments that are altering the competitive
environment for parts suppliers to OEMs, including cost-driven purchasing by
OEMs of integrated modules and subassemblies. Because of increasing global
competition, OEMs have been upgrading their supplier policies, reducing the
number of strategic suppliers that may bid for awards and outsourcing an
increasing percentage of their production requirements. Chrysler and GM have
indicated that by July 31, 1997 and December 31, 1997, respectively, only Tier I
suppliers with QS 9000 certification will be allowed to bid on new manufacturing
business. The Company is already QS 9000 certified at all of its manufacturing
facilities.
Strategic suppliers to Chrysler and GM are invited to bid on the
manufacture and assembly of specific products to be incorporated in both new and
existing automotive platforms. If the model or platform already exists, the
current supplier may be favored by the OEM because of the supplier's familiarity
with the existing product as well as its existing investment in the
manufacturing process and tooling. As a result, it is considered unusual for
incumbent suppliers to be removed from existing contracts, particularly if they
have consistently been able to deliver the existing products on time, within
agreed quality levels and at competitive prices.
On new platforms, there has been an increasing trend toward involving
potential suppliers much earlier in the design and development process in order
to encourage the suppliers to share some of the design and development
responsibility. Management believes that early involvement in the design and
engineering of new components affords the Company a competitive advantage in
securing new business and provides its customers with significant cost reduction
opportunities. Once selected, an OEM supplier generally manufactures and/or
purchases the necessary tooling and supplies the product on a sole-source basis
for the life of a vehicle model or platform, which typically ranges from five to
seven years. In most cases, it will be at least two years before a Tier I OEM
supplier sees its products incorporated into new models or platforms.
Consequently, the key success factors for suppliers to OEMs have changed from
pure cost minimization to total program management that encompasses
state-of-the-art design, manufacture and delivery of high quality products at
competitive prices.
26
<PAGE> 32
BUSINESS STRATEGY
The Company has developed and is implementing a business strategy to
enhance the effectiveness of its core operating strengths, to respond to
industry-wide structural developments in the OEM parts supplier industry and to
increase sales and profitability. Key elements of this strategy are as follows:
- FOCUS ON HIGH GROWTH VEHICLE CATEGORIES. While the Company's products are
generally used on a diverse group of automotive platforms (23) and models
(51), the Company's sales and marketing efforts have been directed
towards sectors of the automotive market that have experienced strong
consumer demand and growth in sales. In 1995, 86% or $181.4 million of
the Company's net sales were derived from sales of products manufactured
for sport utility vehicles, mini-vans, utility vans and light pick-up
trucks, versus 60% or $73.7 million in 1991. In recent years the light
truck sector (consisting of sport utility vehicles, mini-vans, utility
vans and light pick-up trucks) experienced comparatively stronger growth
in production units than the passenger car sector, with a 1991-1995 CAGR
of approximately 13% for the light truck sector and 7% for the passenger
car sector. Production for the sport utility vehicle market has been the
fastest growing sector in the North American new car sales market with a
1991-1995 CAGR of approximately 23%. 48% of the Company's net sales in
1995 were derived from sales of products manufactured for sport utility
vehicles, as compared to 27% in 1991.
- PRODUCTION OF MORE COMPLEX, HIGH VALUE-ADDED ASSEMBLIES. The Company's
business strategy includes seeking awards for more complex, high
value-added modules and welded subassemblies which typically generate
higher dollar content per vehicle for the Company than individual
stampings. In 1995, modules and welded subassemblies accounted for
approximately 74% of the Company's total net sales, versus 56% in 1991.
Structural changes within the automotive manufacturing industry have
substantially increased the reliance of OEMs on purchasing integrated
modules and subassemblies from independent suppliers such as the Company.
Management believes that this continuing shift will create new
opportunities for the Company to utilize its capability to produce large
bed-size stampings and assemblies, along with its broad range of
services, including process and design engineering capabilities and
low-cost, quality manufacturing. For example, after seven years of
collaboration with Chrysler, the Company was recently awarded the rear
floor pan module for the new generation Chrysler Jeep Grand Cherokee due
out in model year 1999, an example of a complex module with sophisticated
engineering requirements.
- LOW COST STRUCTURE. An integral part of the Company's business strategy
has been to achieve a low cost structure by maximizing asset utilization,
reducing manufacturing costs and rationalizing the Company's component
parts and services supplier base. Over the past four years, the Company's
manufacturing initiatives have significantly improved its productivity
and asset utilization and have enabled the Company to achieve, in 1995,
adjusted net production sales per employee and per square foot of
manufacturing space of $129,850 and $282.7, respectively, compared to
$102,683 and $170.4, respectively, in 1991. By maximizing productivity,
the Company has been able to rapidly adjust its operations to changes in
market demand and manufacturing volumes. In addition, the Company's
average labor rate for hourly employees of approximately $15 per hour,
inclusive of benefits, is substantially below the comparable average
labor rate of approximately $40 per hour of its OEM customers. This low
labor cost structure enables the Company to provide its customers with a
cost effective source of modules and welded subassemblies and has enabled
the Company to participate in the OEMs' outsourcing of an increasing
percentage of their component needs. The Company has also benefitted from
steel purchasing arrangements with Chrysler and GM that allow the Company
to pass through price changes to these customers. As a result of these
arrangements, the effect of changes in the cost of steel, which
represented 36% of the Company's net sales in 1995, has been
substantially mitigated. Moreover, the Company purchases certain
component parts and services for its modules and subassemblies, which in
1995 represented approximately 16% of net sales. The Company believes
that it will be able to achieve further cost reductions by implementing
its strategy of reducing its supplier base to those suppliers who are
able to provide continuous quality improvement on a cost effective basis.
27
<PAGE> 33
- AETNA PRODUCTION SYSTEM. The Company has implemented the "Aetna
Production System", a production process which is based upon the "Total
Elimination of Waste" manufacturing philosophy. The Company's
manufacturing processes have been realigned to streamline work flow,
achieve flexibility, promote quality and lower manufacturing costs. The
Company has developed a cellular manufacturing strategy by producing and
assembling in a single location all of the stampings that comprise a
module or subassembly. As a result of the Company's commitment to quality
and its investment in quality assurance education and control systems,
none of the Company's products has been subject to a recall. All of the
Company's manufacturing facilities have achieved QS 9000 certification,
the standard recently adopted by AIAG. Chrysler and GM have indicated
that by July 1, 1997 and December 31, 1997, respectively, they will allow
only Tier I suppliers with QS 9000 certification to bid on new
manufacturing business.
PRODUCTS
The Company manufactures, assembles and assists in the design of its core
products which consist of a broad range of complex, high value-added modules and
welded subassemblies, including floor pans and ladders, radiator supports, frame
extensions, bumpers and crossmembers. In recent years, the Company has focused
on producing modules and welded subassemblies as OEMs have increasingly relied
on outside suppliers of these components in order to contain rising labor and
production costs. Over 74% of the Company's 1995 net sales, compared to 56% in
1991, were generated by complex, high value-added modules and welded
subassemblies. The Company produces over 200 products on 23 different platforms
(51 different models) in its nine plants at five manufacturing locations. 86% of
the Company's 1995 net sales were derived from products manufactured for sport
utility vehicles, mini-vans, utility vans and light pick-up trucks, compared to
60% in 1991.
The Company's multiple press lines and flexible manufacturing capacity
enable it to produce a broad array of products, including smaller stampings,
such as oil pans, wheel retainers and headlight brackets, and intermediate-sized
stampings, such as crossmembers, rails, heat shields, wheelhouses and door hinge
pillars. The Company's wide-bed presses (i.e., over 150 inches) make it one of
approximately six independent suppliers capable of producing large bed-size
stampings and assemblies. The Company also has extensive roll-forming production
capabilities, which are utilized in conjunction with the manufacturing of
complete modules and subassemblies. Roll-forming processes have been used for
many years to produce various sizes and shapes of window channels.
Set forth below are examples of modules, subassemblies, detailed stampings
and roll sections currently produced by the Company:
<TABLE>
<CAPTION>
MODULES MODEL PLATFORM
- -------------------------------------------------------- -------------------- -----------
<S> <C> <C>
Chrysler Rear Floor Pan Assembly........................ Jeep Grand Cherokee ZJ
GM Rear Suspension Assembly............................. Aurora, Riviera G
GM Radiator Support Assembly............................ Astro, Safari M Van
GM Rear Bumper Assembly................................. Astro, Safari M Van
</TABLE>
<TABLE>
<CAPTION>
ASSEMBLIES MODEL PLATFORM
- -------------------------------------------------------- -------------------- -----------
<S> <C> <C>
Chrysler Rear Sill Subassembly.......................... Jeep Cherokee XJ/XJU
Chrysler Wheelhouse Subassembly......................... Jeep Grand Cherokee ZJ
Chrysler "A" Front Pillar............................... Cirrus, Stratus JA
GM Cross Member Subassembly............................. Astro, Safari M Van
GM Control Arm Subassembly.............................. Cavalier, Corsica J,L,N
GM Transmission Support Subassembly..................... Blazer, Tahoe, Jimmy GMT 410/420
GM Fuel Tank Shield Assembly............................ Blazer, Tahoe, Jimmy GMT 410/420
GM Rear Impact Bumper................................... Astro, Safari M Van
</TABLE>
28
<PAGE> 34
<TABLE>
<CAPTION>
DETAILED STAMPINGS MODEL PLATFORM
- -------------------------------------------------------- -------------------- -----------
<S> <C> <C>
Chrysler Front Sills.................................... Jeep Cherokee XJ/XJU
Chrysler Transmission Pan............................... Jeep Cherokee XJ/XJU
Chrysler Wheelhouse Panel............................... Jeep Wrangler YJ/TJ
GM Bumper Reinforcement................................. Astro, Safari M Van
GM Front Door Inner Panel............................... Beretta, Regal L,W
</TABLE>
<TABLE>
<CAPTION>
ROLL SECTIONS MODEL PLATFORM
- -------------------------------------------------------- -------------------- -----------
<S> <C> <C>
GM Front Door Side Impact Beam.......................... S10/S15 Sonoma S/T Pickup
GM Retainer with Windshield Reveal...................... Regal W
GM Rear Door Sash....................................... Astro, Safari M Van
</TABLE>
CUSTOMERS
Management believes that the Company's long-standing industry relationships
are based on its reputation for low cost, quality products and on-time service.
The Company's primary customers are Chrysler and GM, which accounted for
approximately 60% and 36% of 1995 net production sales, respectively. The
Company has been a direct supplier to GM and Chrysler since 1941, and the
Company has longstanding relationships with buying and engineering personnel at
both companies. For both Chrysler and GM, the Company has been designated a
"strategic supplier" for stamping and assembly work, as part of a limited group
of preferred suppliers invited to bid for platform work. The Company believes
that in the 1995 model year it was the 27th largest (based on annual model year
sales) of Chrysler's 1,298 suppliers. The Company has been producing the rear
floor pan module for the Jeep Grand Cherokee underbody since the model's
introduction in 1992, and produces modules and subassemblies for Chrysler's
standard Jeep Cherokee and other vehicles. More recently, the Company was also
awarded the rear floor pan module for the new generation Jeep Grand Cherokee due
out in model year 1999. The Company is also one of GM's strategic stamping
suppliers, and produces modules, subassemblies and details for GM's passenger
car, mini-van and light truck divisions. The Company is responsible for a number
of critical parts for GM, including the module for the 1995 M-Van radiator
support assembly, as well as the GM CK transmission supports.
The Company also produces roll-form jobs for window channels for the
principal automotive window manufacturers, including PPG Industries, Inc.,
Libbey-Owens-Ford and Guardian Industries Corp. In addition, in recent years the
Company has begun to explore collaborative production efforts with foreign
automobile manufacturers, including CAMI, the North American joint venture
between GM and Suzuki Motor Corporation, whose products include Geo Metro,
Suzuki Sidekick and Geo Tracker.
The following table sets forth the Company's major customers and the
vehicles to which it supplied products during 1995:
CHRYSLER
<TABLE>
<CAPTION>
TYPE MODEL PLATFORM
-------------------------------------- ------------------------ ---------------
<S> <C> <C>
Sport Utility......................... Jeep Wrangler YJ/TJ
Jeep Grand Cherokee ZJ
Jeep Cherokee XJ/XJU
Vans.................................. Ram Van B Van
Trucks................................ Ram Pick-up T300
Dakota N
Passenger Cars........................ Cirrus/Stratus JA
</TABLE>
29
<PAGE> 35
GENERAL MOTORS
<TABLE>
<CAPTION>
TYPE MODEL PLATFORM
-------------------------------------- ------------------------ ---------------
<S> <C> <C>
Sport Utility......................... GMC Jimmy S Blazer-Jimmy S
Chevy Blazer S Blazer-Jimmy S
Chevy Blazer/Tahoe GMT 419/420
GMC Jimmy/Yukon GMT 410/420
GMC/Suburban Suburban
Vans.................................. Chevy Van GMT 600
Sport Van G Van
Vandura Rally G Van
Mini-Vans............................. Chevy Astro M Van
GMC Safari M Van
Trucks................................ Sonoma S/T Pick-Up
Chevy S10/S15
Passenger Cars........................ Buick Park Avenue C
Olds Ninety Eight C
Buick LeSabre H
Pontiac Bonneville H
Olds Delta Eighty Eight H
Chevy Corsica/Beretta L
Buick Regal W
Chevy Cavalier J
Olds Aurora G
Buick Riviera G
</TABLE>
CAMI
<TABLE>
<CAPTION>
TYPE MODEL PLATFORM
-------------------------------------- ------------------------ ---------------
<S> <C> <C>
Sport Utility......................... Sidekick J1
Tracker J1
</TABLE>
SALES AND MARKETING
The Company's marketing efforts are currently concentrated on the light
truck sector (consisting of sport utility vehicles, mini-vans, utility vans and
light pick-up trucks), one of the fastest growing sectors in vehicle sales. The
Company's combined net sales of products used on sport utility vehicles,
mini-vans, utility vans and light pick-up trucks increased from $73.7 million in
1991 to $181.4 million in 1995. Management believes that this strong sales
performance has been based on its established reputation for low cost, on-time
and high quality production.
The Company competes for work both at the beginning of the development of
new model platforms and upon the redesign of existing models. New model
development generally begins two to four years prior to the marketing of these
models to the public. Module, subassembly and stamping jobs are generally
awarded one to three years prior to the initial production period. Once a
producer has been designated to supply parts to a new program, it will generally
continue to be a sole source supplier for these parts for the life of the
program. In the case of Chrysler and GM, anticipated production volumes are
generally confirmed three months in advance, and releases are given to the
Company on a weekly basis. Typically, these arrangements remain in place for the
production life of a car or truck platform and continue through a platform's
redesign period. Production generally runs five to seven years, but on occasion
can be substantially longer or shorter, and then ceases with the discontinuance
of the respective model.
The Company has increasingly been partnering with OEMs during the early
stages of platform development. OEMs have focused on shortening design cycles
and reducing design and production costs, and have involved component suppliers
earlier in the process of designing a vehicle. The Company has been increasingly
given the opportunity to participate in the design of subassemblies, such as the
floor pan and
30
<PAGE> 36
ladder subassembly, radiator supports and crossmember assemblies, which are
designed at an early stage in the development of new vehicles or model
revisions. This has resulted in opportunities to add additional value by
furnishing engineering and process design services and managing the subassembly
process for the manufacturer. It also creates opportunities for early
identification of a broad range of components and related subassemblies which
could be manufactured by the Company. Partnering also involves sharing with the
OEMs tooling, design and other start-up costs.
The Company also seeks work producing components of existing vehicle models
previously made by an OEM in-house. Production by outside suppliers allows OEMs
to free-up critical capacity which can be redeployed in other areas, in
particular during the final years of model production when additional in-house
capacity is required for the try-out of an OEM's new vehicle models. The
Company's sales of value-added modules and subassemblies have increased in part
as a result of its availability for and successful completion of this type of
"factory assist" work. For example, the Company's factory assist work on the
standard Chrysler Jeep Cherokee led to its selection for subsequent platform
work in connection with the Chrysler Jeep Grand Cherokee and the redesigned
Chrysler Jeep Grand Cherokee platforms.
The Company does not issue express warranties to the purchasers of its
products. However, the Company may be subject to warranty obligations as part of
standard purchasing terms and conditions used by its OEM customers. For example,
Chrysler's Facilities & Materials Purchasing General Terms and Conditions
provide that suppliers to Chrysler are to indemnify and hold Chrysler harmless
against all claims and liabilities resulting from negligence of the supplier,
its employees or its subcontractors. None of the Company's products has ever
been subject to a recall.
MANUFACTURING
The Company has supported its "Total Elimination of Waste" philosophy by
instituting the "Aetna Production System", a closed loop production planning
methodology based on QS 9000 quality standards, and by realigning its
manufacturing processes in order to monitor more effectively and control labor
and overhead costs and to ensure the maximum utilization of production
resources. In addition, the Company has introduced a cellular manufacturing
strategy which has consisted of consolidating all detailed stampings that
comprise a module or subassembly into a single production location. For example,
the Company relocated its roll-forming equipment from separate locations,
allowing the Company to increase its production capacity while reducing
production space. The Company believes these changes in its production system
have improved scheduling flexibility, lowered inventory carrying costs,
increased the utilization of manufacturing floor space, improved scheduling
efficiencies and productivity and reduced fixed costs and product costs. As a
result of the implementation of these changes, the Company achieved, in 1995,
adjusted net production sales per employee and per square foot of manufacturing
space of $129,850 and $282.7, respectively, compared to $102,683 and $170.4,
respectively, in 1991. Three key programs have been instituted as part of the
Aetna Production System:
JUST-IN-TIME MANUFACTURING. The Company has implemented a progressive
production strategy based on a just-in-time ("Just-in-Time" or "JIT")
manufacturing process specifically designed to promote efficient production and
eliminate various unnecessary costs. Just-in-Time manufacturing is characterized
by flexible work center scheduling as well as vendor scheduling, quality "in
place" as opposed to inspection of vendor deliveries and reduced work queues and
inventory levels. These productivity improvements in the manufacturing process
have helped lower indirect labor costs associated with setup time.
CERTIFIED QUALITY STANDARDS. As a result of the Company's commitment to
quality and its investment in quality assurance education and control systems,
none of the Company's products has been subject to a recall. All of the
Company's manufacturing facilities have achieved the QS 9000 certification, the
standard recently adopted by the AIAG. Chrysler and GM have indicated that by
July 1, 1997 and December 31, 1997, respectively, they will allow only Tier I
suppliers with QS 9000 certification to bid on new manufacturing business.
MANUFACTURING RESOURCE PLANNING II. As OEMs continue to rely on outside
suppliers for modules and subassemblies, production planning and inventory
management have become increasingly important factors in the Company's
competitiveness. In order to control costs, respond to shifting OEM production
demands and
31
<PAGE> 37
develop a more efficient inventory management and production planning process,
the Company has instituted a closed loop manufacturing resource planning program
which uses OEM releases to generate forecasts and assign the material and labor
required for production on a weekly basis.
SUPPLIERS AND RAW MATERIALS
Since 1994, the Company has participated in Chrysler's "Extended
Enterprise" program, a collaborative program undertaken by Chrysler with its
Tier I suppliers designed to promote, between such Tier I suppliers and their
respective Tier II suppliers, production and sales practices which are
comparable to those required by Chrysler of its Tier I suppliers. As a result,
the Company has recently begun to rationalize its component parts and services
supplier base. The Company believes that it will be able to achieve further cost
reduction by implementing its strategy of reducing its supplier base to those
suppliers who are able to provide continuous quality improvement on a
cost-effective basis.
The Company's principal raw material is steel, which represented 36% of the
Company's net sales in 1995. The Company's purchasing department typically buys
approximately 15,000 tons per month of flat-rolled steel. Steel coil purchases
include quantities of hot-rolled, cold-rolled, high strength galvanized,
aluminized and stainless, depending upon production requirements.
The Company currently participates in steel buying programs with both
Chrysler and GM under which the Company has substantially mitigated the effects
of steel price volatility and is provided a steady source of steel. The Company
believes that on a going forward basis, both Chrysler and GM will continue these
arrangements so that the Company will not recognize a steel price increase
unless it receives a matching sales price increase from the OEM.
COMPETITION
The Company currently competes for large-scale production work with a
limited group of approximately five independent suppliers that have the physical
assets and technical skills to produce large bed-size stampings and assemblies.
Competitors with wide bed-size presses (i.e., over 150 inches) and substantial
technical resources include The Budd Company, Lobdell-Emery Corporation, Magna
International Inc., Active Tool & Manufacturing Co., Inc. and Checker Motors
Corporation. Moreover, the Company believes that the high fixed asset and set-up
costs associated with production of large-sized metal stamping and subassemblies
are likely to limit the number of OEM parts suppliers entering the large-scale
stampings market.
EMPLOYEES
As of June 30, 1996, the Company's workforce included 1,722 employees, of
which 260 were salaried workers and 1,462 were hourly paid employees.
The Company's hourly employees are covered by six collective bargaining
agreements with two locals of the UAW. Of the six collective bargaining
agreements, two will expire within one year and are thus subject to
renegotiation at the option of the Company or the UAW. The collective bargaining
agreement covering the 145 hourly employees of the Company's Plant #7 expired on
August 18, 1996. The collective bargaining agreement covering 53 hourly
employees of the Company's Plant #5 expires on February 9, 1997. In the last
round of negotiations in 1995, the Company reached early contract settlements
with four of its UAW contingents. The contracts' four-to five-year terms provide
a significant benefit to the Company in its efforts to plan its future
operations.
The Company believes that relations with its employees are good. However,
the Company continually seeks to reduce costs and improve the efficiencies of
its operations. For example, on July 16, 1996 the Company announced plans to
shut down the operations of its Plant #7 in sixty days. The facility's
approximately 145 employees are members of Local 155 of the UAW. Although Plant
#7 has continued operations since the expiration of the collective bargaining
agreement on August 18, the facility is scheduled to cease operations on
September 12, 1996. The Company and Local 155 are currently engaged in the final
stages of negotiating an agreement on matters relating to the effects of the
facility's closure on the employees
32
<PAGE> 38
represented by the UAW local. The Company anticipates that those negotiations
will conclude on or about September 13. Although the Company anticipates that
its efforts to complete the negotiations will be successful, there can be no
assurance that a failure to reach an agreement with Local 155 with respect to
the closure of Plant #7 will not have a material adverse effect on the Company.
While the analysis of the costs associated with the closing of Plant #7 is in a
preliminary stage, management believes that the charges associated with closing
Plant #7, if any, will not have a material adverse effect on the Company,
although no assurance to such effect can be given.
PROPERTIES
The Company is headquartered in Centerline, Michigan, a suburb of Detroit.
The Company currently owns or leases a total of approximately seventeen
properties used for various purposes, including three parcels of land. The
Company's facilities house its blanking, stamping, roll-forming and assembly
operations, as well as its warehousing and shipping functions and administrative
offices for various functional departments. All but one of the Company's
manufacturing facilities are located within one mile of its headquarters, while
the remaining manufacturing facility and the product development center are
located within eight miles of its headquarters. The Company continually seeks to
reduce its costs and increase the efficiency of its operations through
maximizing utilization of its facilities. Management believes that the Company's
facilities and equipment are in good condition and are adequate for the
Company's present and anticipated future operations.
ENVIRONMENTAL MATTERS
The Company is subject to a wide range of evolving federal, state and local
environmental laws and regulations relating to the protection of the
environment, worker health and safety and the emission, discharge, storage,
treatment and disposal of hazardous materials. The laws include the Clean Air
Act, the Resource Conservation and Recovery Act, the Federal Water Pollution
Control Act and the Comprehensive Environmental Response, Compensation and
Liability Act ("Superfund" or "CERCLA").
The Company believes that it is in material compliance with applicable
federal, state and local environmental laws and regulations. Compliance with
these laws and regulations has not in the past had any material adverse effect
on the Company's financial condition or results of operations; however, the
effect of such compliance on the Company in the future cannot be determined.
CERCLA imposes strict, joint and several liability upon owners or operators
of facilities at, from or to which a release of hazardous substances has
occurred, upon parties who generated hazardous substances that were released at
such facilities and upon parties who arranged for the transportation or disposal
of hazardous substances to such facilities. A majority of states have adopted
"Superfund" statutes similar to and, in some cases, more stringent than CERCLA.
Due to the Company's current and historic use, generation and disposal of
hazardous substances and petroleum products, the possibility exists that spills
and releases of such substances may have occurred at certain of the Company's
facilities with respect to which the Company could incur liability under CERCLA
or similar state laws. The Company could also be subject to liability under
CERCLA or similar state laws as a result of its generation and off-site disposal
of such substances. To date, the Company's liability under CERCLA and similar
state laws has not had a material adverse effect on the Company's financial
condition or results of operations; however, the effect of any such liabilities
on the Company in the future cannot be determined.
LEGAL PROCEEDINGS
The Company is from time to time involved in routine litigation incident to
its operations. The Company believes that the litigation currently pending or
threatened against it will not have a material adverse effect on its
consolidated financial condition or results of operations.
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<PAGE> 39
MANAGEMENT
The following table sets forth certain information and ages as of September
1, 1996 for each of the directors and executive officers of the Company. Each
individual serves in the same capacities with MS Acquisition and Holdings. There
are no arrangements or understandings between any officer and any other person
pursuant to which the officer was or is to be selected.
<TABLE>
<CAPTION>
NAME AND AGE POSITION WITH COMPANY
-------------------------------------- --------------------------------------
<S> <C>
Ueli Spring, 46....................... Director, President and CEO
Harold Brown, 46...................... Director*, Chief Financial Officer,
Vice President, Finance and Secretary
Gary Easterly, 48..................... Vice President, Manufacturing
Daniel Pierce, 54..................... Vice President, Human Resources
Edward Lawson, 42..................... Vice President, Quality Assurance
David Thal, 38........................ Vice President, Product Development
Ralph Bredenbeck, 56.................. Vice President, Tool and Assembly
Engineering
Michael Delaney, 42................... Director*
David Howe, 32........................ Director*
John Wurster, 62...................... Director*
</TABLE>
- ------------------------------
* Appointment became effective on August 13, 1996. Messrs. Spring, Brown,
Delaney, Howe and Wurster also serve (since August 1996) as directors of MS
Acquisition and Holdings.
The Board of Directors of the Company, Holdings and MS Acquisition each
consists of five directors who serve until the next annual meeting of
stockholders or until a successor is duly elected. Executive officers of the
Company, Holdings and MS Acquisition serve at the discretion of the Board of
Directors.
The Board of Directors of Export consists of four directors who serve until
the next annual meeting of stockholders or until a successor is duly elected.
The current directors of Export are Ueli Spring, Harold Brown, Graham Dunn, age
43, and Edward Rogers, age 37. They have been directors of Export since March 3,
1993 and August 13, 1991, respectively. Mr. Spring is the President of Export.
Mr. Brown is Treasurer and Secretary of Export. Each of Mr. Dunn and Mr. Rogers
serves as an Assistant Secretary of Export, Executive Officers of Export serve
at the discretion of its Board of Directors.
Mr. Ueli Spring has served as Chief Executive Officer and President of the
Company since 1994. From 1990 to 1994, Mr. Spring served as Executive Vice
President and Chief Operating Officer of the Company. Mr. Spring has been a
director of the Company since September 1990. From 1986 to 1987, he served as
President of Magna International Inc.'s Cosma International Group and then
served as Chief Operating Officer of Magna International Inc.'s Cosma
International Group from 1987 to 1990. From 1984 to 1986, he served as Director
of Manufacturing with Magna International Inc. In 1972, Mr. Spring joined the
Oetiker operations and later became Vice President from 1980 to 1984. Mr. Spring
received his degree in Tool & Die Engineering from the University Ticinese di
Trevano, Switzerland.
Mr. Harold Brown has served as Vice President of Finance of the Company
since joining the Company in 1992. From 1990 to 1992, he was Controller in
charge of U.S. operations at AVX Kyocera Corp. From 1985 to 1989, Mr. Brown
served as Vice President of Finance at APV Baker Perkins plc after serving as
Manager of Financial Analysis from 1982 to 1985. From 1977 to 1982, Mr. Brown
held various planning, marketing and sales positions with Cooper Industries Inc.
Mr. Brown received an AB in Economics from the University of North Carolina and
an MBA from Duke University. From 1972 to 1975, he served as a Lieutenant,
Supply Corps in the United States Naval Reserve.
Mr. Gary Easterly has served as Vice President of Manufacturing of the
Company since 1988 and has been employed by the Company since 1987. From 1966 to
1987, Mr. Easterly served as Director of Quality Assurance, Quality Engineering
and Production Superintendent for GM's Buick Motor Division. Mr. Easterly
received a BS degree in Industrial Engineering from GMI Institute and an MA
degree in Administration from Central Michigan University.
34
<PAGE> 40
Mr. Daniel Pierce has served as Vice President of Human Resources of the
Company since 1987 and has been employed by the Company since 1973. From 1968 to
1973, Mr. Pierce was Employee Relations Manager at the Demco Division of
Indianhead Corp. Mr. Pierce holds an MA degree in Industrial Relations from the
University of Michigan.
Mr. Edward Lawson has served as Vice President of Quality Assurance of the
Company since 1989 and has been employed by the Company since 1986. From 1980 to
1985, Mr. Lawson was Director of Quality Assurance at Regal Stamping Co. He
received a BS degree in Mechanical Engineering from Mid-Warwickshire College in
England.
Mr. David Thal has served as Vice President of Product Development since
1995 and has been employed by the Company since 1980, also serving as Sherwood
Plant Manager, Quality Assurance Manager, Manufacturing Project Engineer,
Engineering Manager and Sales Manager. Mr. Thal received a BGS degree in
Psychology and Computer Science from the University of Michigan.
Mr. Ralph Bredenbeck has served as Vice President of Tool and Assembly
Engineering of the Company since 1995. From 1989 to 1995, Mr. Bredenbeck served
as Chief Die Engineer of the Company. Before joining the Company, Mr. Bredenbeck
served in various positions at Spartanburg Steel Products Inc. (formerly,
Firestone Steel Products Inc.) from 1967 to 1989, including Director of
Engineering and Manager of Production Engineering. Mr. Bredenbeck received a BS
degree in Mechanical Engineering from Ohio University and is a registered
Professional Engineer.
Mr. Michael Delaney has been a Vice President of Citicorp Venture Capital,
Ltd. since 1989. From 1986 through 1989 he was Vice President of Citicorp
Mergers and Acquisitions. Mr. Delaney serves on the board of directors of Delco
Remy International, Inc., JAC Holdings, Sybron Chemicals, Inc., Palomar
Technologies, Inc., Farm Fresh Inc., AmeriSource Health Corporation, GVC
Holdings, Cort Business Services, Inc., Enterprise Media Inc., FF Holdings
Corporation, SC Processing, Inc. and Triumph Holdings, Inc. Mr. Delaney is a
graduate of Penn State University and The Wharton School.
Mr. David Howe has been employed at Citicorp Venture Capital, Ltd. since
1993 as an investment professional. From 1990 through 1993 he was employed at
Butler Capital Corp. as an investment professional. He serves on the board of
directors of Copes-Vulcan Inc., Cable Systems International Inc., Sinter Metals
Inc., Milk Specialties Company, America-Italian Pasta Company and Brake-Pro Inc.
He also represents Citicorp at the board of directors of Del Monte Foods
Company. Mr. Howe is a graduate of Harvard College and Harvard Business School.
Mr. John Wurster has served as Director of Business Planning -- Chrysler de
Mexico since 1995. From 1992 to 1995, he served as Staff Executive -- Vice
President and Controller's Office for Chrysler de Mexico. From 1989 to 1992, he
served as Director of Source Planning & Asset Management of the Controller's
Office of Chrysler. He has served in various capacities for Chrysler since 1979.
Mr. Wurster received a degree in Business Administration from the Detroit
Institute of Technology.
Mr. Graham Dunn has been an Administration Manager and Financial Controller
of Trident Trust Company (V.I.) Ltd. since July 1992. Prior to joining Trident
Trust Company Mr. Dunn was self-employed.
Mr. Edward Rogers has been a Manager and Vice President of Trident Trust
Company (V.I.) Ltd. since August 1991. Prior to joining Trident Trust Company
Mr. Rogers was employed as an offshore company trust administrator in the Isle
of-Man..
DIRECTOR COMPENSATION
Directors do not receive compensation other than reimbursement of expenses
for attending meetings of the Board of Directors or committee meetings.
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<PAGE> 41
EXECUTIVE COMPENSATION
The table below shows information concerning cash and noncash compensation
for the Company's Chief Executive Officer and the four most highly compensated
executive officers (other than the Chief Executive Officer) of the Company in
office on December 31, 1995 for each of the last three fiscal years.
AETNA INDUSTRIES, INC.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
--------------------------------------
AWARDS PAYOUTS
ANNUAL COMPENSATION ----------------------- ------------
-------------------------------- RESTRICTED SECURITIES LONG-TERM
NAME AND OTHER ANNUAL STOCK UNDERLYING INCENTIVE ALL OTHER
PRINCIPAL SALARY BONUS COMPENSATION AWARDS OPTIONS PLAN PAYOUTS COMPENSATION
POSITION YEAR ($) ($) ($) ($) (#)(1) ($) ($)
- -------------------------- ---- ------- ------- ------------ ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ueli Spring,.............. 1995 222,117 200,000 -- -- -- -- --
President and 1994 150,000 150,000 -- -- -- -- --
Chief Executive Officer 1993 150,000 60,000 -- -- -- -- --
Harold Brown,............. 1995 104,755 65,000 -- -- -- -- --
VP Finance 1994 101,098 45,000 -- -- 800 -- --
1993 93,621 -- -- -- 10,000 -- --
Gary Easterly,............ 1995 100,172 65,000 -- -- -- -- --
VP Manufacturing 1994 96,380 45,000 -- -- 800 -- --
1993 93,439 6,000 -- -- -- -- --
David Smith,.............. 1995 111,992 90,000 -- -- -- -- --
VP Engineering(2) 1994 108,429 25,000 -- -- 800 -- --
1993 105,688 6,000 -- -- -- -- --
Daniel Pierce,............ 1995 87,735 40,000 -- -- -- -- --
VP Human Resources 1994 85,048 25,000 -- -- 800 -- --
1993 81,893 6,000 -- -- -- -- --
</TABLE>
- ------------------------------
Notes:
1. Shares of Class A Common Stock (as defined) of MS Acquisition.
2. Retired June 30, 1996.
BONUS PROGRAM
The Company maintains a Quality Assurance Bonus Program under which
Production Managers and Plant Floor Managers (collectively, "Managers") are
eligible to receive an annual bonus of up to $20,000 each (the "Maximum
Amount"). Pursuant to this program, each Manager will receive a bonus in the
Maximum Amount in respect of services rendered in any year in which no Qualified
Customer Complaint (as defined herein) is made with respect to his or her unit.
A "Qualified Customer Complaint" is a customer complaint that has been reviewed,
and found to be accurate, by the Company's Vice President of Quality Assurance
with respect to the quality of any product manufactured by such Manager's
production unit. The bonus amount that each Manager is eligible to receive in
any year will be reduced by $5,000 for each Qualified Customer Complaint made
with respect to his or her unit.
In addition to the Quality Assurance Bonus Program, the Company also
annually awards discretionary bonuses to members of its management and certain
of its salaried employees. Such bonuses, which are typically paid in January of
each year in respect of services rendered by recipients during the preceding
year, are awarded based on a variety of factors, including individual and
Company performance.
STOCK OPTION PLAN
Executive officers, directors, employees and other key persons of the
Company are eligible to participate in the MS Acquisition Corp. Executive Stock
Option Plan (the "Plan"). Options granted under the Plan may be either incentive
stock options ("Incentive Options") as defined in Section 422 of the Internal
Revenue Code of 1986, as amended, or nonqualified stock options ("Nonqualified
Options"). Options to purchase an aggregate of 110,000 shares of Class A Common
Stock, par value $.01 per share, of MS Acquisition ("Class A Common Stock") may
be issued under the Plan. The Plan is administered by a committee (the "Option
Committee") of not less than three directors appointed by the Board of Directors
of MS Acquisition.
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<PAGE> 42
All options granted under the Plan are granted pursuant to individual stock
option agreements executed by MS Acquisition and each option recipient. In
general, options granted under the Plan are exercisable in such installments
(which need not be equal) and at such times as are designated by the Option
Committee, but in no event may the term of an option exceed the tenth
anniversary of the date on which the option was granted. No option may be
granted under the Plan after the tenth anniversary of the effective date of the
Plan, March 3, 1989.
The purchase price per share of Class A Common Stock subject to Incentive
Options must equal or exceed the fair market value of the Class A Common Stock
on the date such options are granted. The aggregate fair market value of the
Class A Common Stock with respect to which Incentive Options are exercisable for
the first time by an optionee during any calendar year shall not exceed
$100,000. The purchase price per share of Class A Common Stock subject to a
Nonqualified Option shall be as determined by the Option Committee. Options
granted under the Plan may not be transferred other than by will or by the laws
of descent.
Immediately prior to the consummation of the Transactions, there were a
total of 96,000 shares of Class A Common Stock subject to outstanding options
held by 20 employees, and each option had an exercise price of $16.2162 per
share. On August 13, 1996, in connection with the consummation of the
Transactions, all then outstanding options (whether or not vested) were
canceled. Options held by certain option holders were exchanged for
consideration substantially similar to that consideration they would have
received had they actually owned the shares (i.e., cash, New Common Stock, New
Preferred Stock and Junior Subordinated Debentures), provided that the cash
portion was reduced by the aggregate exercise price of the options, as well as
the amount necessary to satisfy tax withholding obligations, resulting in
consideration consisting of (i) $0.2 million in cash, (ii) an unfunded
obligation of Holdings to pay $0.5 million on a basis similar to the terms of
the Junior Subordinated Debentures, (iii) $0.1 million in stated value of New
Preferred Stock and (iv) shares of New Common Stock representing 1.2% of the New
Common Stock on a fully diluted basis. With respect to other option holders,
their options were canceled in exchange for all cash of approximately $650,000,
representing an amount equal to the difference between the value of the shares
subject to the options and the aggregate exercise price for the shares. Such
amounts are subject to withholding taxes.
Immediately after the consummation of the Transactions, certain employees
were granted new options under the Plan to purchase shares of New Common Stock
that in the aggregate represent up to 10% of the total number of shares of New
Common Stock (on a fully diluted basis). These options have an exercise price of
$0.75 per underlying share and become exercisable in equal installments over
five years of continued employment, subject to acceleration upon a change in
control of the Company. The grants are subject to stockholder approval.
OPTION GRANTS IN LAST FISCAL YEAR
During the fiscal year ended December 31, 1995, no grants of stock options
were made to any executive officers of the Company.
EXECUTIVE EMPLOYMENT AGREEMENTS
In connection with the offering of the Old Notes, the Company and MS
Acquisition jointly entered into an employment agreement (collectively, the
"Brown and Easterly Employment Agreements") with each of Messrs. Brown and
Easterly and entered into negotiations with Mr. Spring with respect to an
employment agreement (the "Spring Employment Agreement" and, together with the
Brown and Easterly Employment Agreements, the "Employment Agreements") (each of
Messrs. Brown, Easterly and Spring, an "Executive"). The Brown and Easterly
Employment Agreements became effective upon consummation of the Offering of the
Old Notes. The Company and MS Acquisition are currently negotiating the final
terms of the Spring Employment Agreement with Mr. Spring. The Company expects
these negotiations to conclude shortly. The Brown and Easterly Employment
Agreements set forth the basic terms of employment for each of Messrs. Brown and
Easterly and the Spring Employment Agreement will set forth the basic terms of
employment for Mr. Spring, including base salary, bonus and benefits, as well as
the benefits to which each Executive will be entitled if his employment is
terminated for various reasons.
The Employment Agreement with Mr. Spring will have an initial term of three
years commencing August 13, 1996 and provide for a base salary of $225,000 and a
discretionary annual bonus of up to 100% of Mr. Spring's annual base salary. The
discretionary bonus is to be determined based upon the achievement of
37
<PAGE> 43
annual company and individual performance goals to be set by the Board of
Directors, in consultation with Mr. Spring, and included in the Company's annual
business plan. The Employment Agreement will provide that Mr. Spring is entitled
to a one time termination payment equal to the remaining payments of base salary
due him through the end of the term of the Employment Agreement (and in no event
for a period of less than 12 months) and an additional payment equal to the
greater of (x) the bonus received by Mr. Spring for the fiscal year of the
Company preceding the year in which Mr. Spring's employment is terminated and
(y) 50% of his base salary for the fiscal year in which termination occurs, if
his employment is terminated by the Company without cause or if he voluntarily
terminates his employment with the Company for good reason.
The Employment Agreement with Mr. Brown has an initial term of three years
commencing August 13, 1996 and provides for a base salary of $115,000 and a
discretionary annual bonus of up to 60% of Mr. Brown's annual base salary. The
discretionary bonus is to be determined based upon the achievement of annual
company and individual performance goals to be set by the Board of Directors.
The Employment Agreement provides that Mr. Brown is entitled to severance
payments through the end of the term (and in no event for a period of less than
12 months) if his employment is terminated by the Company without cause or if he
voluntarily terminates his employment with the Company for good reason.
The Employment Agreement with Mr. Easterly has an initial term of three
years and provides for a base salary of $105,000 and a discretionary annual
bonus of up to 60% of Mr. Easterly's annual base salary. The discretionary bonus
is to be determined based upon the achievement of annual company and individual
performance goals to be set by the Board of Directors. The Employment Agreement
provides that Mr. Easterly is entitled to severance payments through the end of
the term (and in no event for a period of less than 12 months) if his employment
is terminated by the Company without cause or if he voluntarily terminates his
employment with the Company for good reason.
Each Employment Agreement contains non-competition, non-solicitation and
confidentiality provisions.
OPTION EXERCISES AND YEAR-END OPTION VALUES
The following table sets forth certain information concerning stock options
exercised during the year ended December 31, 1995 and the number and value of
unexercised stock options held by each of the named executive officers as of
December 31, 1995:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES(1)
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
ACQUIRED OPTIONS AT FISCAL YEAR-END FISCAL YEAR-END
ON VALUE (#) ($)(2)
EXERCISE REALIZED ---------------------------- ----------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ueli Spring.................... 0 0 30,000 0 406,080 0
Harold Brown................... 0 0 6,320 4,480 85,548 60,641
Gary Easterly.................. 0 0 4,820 980 65,244 13,265
David Smith.................... 0 0 4,820 980 65,244 13,265
Daniel Pierce.................. 0 0 4,820 980 65,244 13,265
</TABLE>
- ------------------------------
(1) Options are for shares of Class A Common Stock.
(2) Year-end value based on the consideration paid for a share of Common Stock
in connection with the Transactions less the option exercise price of
$16.2162 per share.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Compensation of the Company's executive officers has historically been
determined by the Company's Board of Directors. Ueli Spring is the only employee
or present or former officer of the Company who participated in deliberations of
the Company's Board concerning executive officer compensation during the
Company's last completed fiscal year. In August 1996, the Company and the
Guarantors each established a compensation committee consisting of three
members: Michael Delaney, Ueli Spring and John Wurster. Mr. Spring is the
President and Chief Executive Officer of the Company and the Guarantors.
There are no interlocks between the Company and other entities involving
the Company's executive officers and board members who serve as executive
officers or board members of other entities, except with respect to Export,
Holdings and MS Acquisition. The officers and directors of the Company also
serve as officers and directors of Holdings and MS Acquisition. Mr. Spring and
Mr. Brown, who are officers and directors of the Company, Holdings and MS
Acquisition, also serve as officers and directors of Export.
38
<PAGE> 44
BENEFICIAL OWNERSHIP OF CAPITAL STOCK
All of the outstanding capital stock of the Company is currently owned by
Holdings, and all of the outstanding capital stock of Holdings is currently
owned by MS Acquisition. The following table sets forth certain information
regarding the equity ownership of MS Acquisition as of September 9, 1996 by (i)
each person or entity who owns five percent or more of any class of voting
securities of MS Acquisition, (ii) each director of the Company, (iii) the Chief
Executive Officer of the Company and the four most highly compensated executive
officers (other than the Chief Executive Officer) of the Company as of December
31, 1995, and (iv) the directors and officers of the Company as a group. Unless
otherwise specified, all shares are directly held. Shares of Class B Common
Stock are non-voting. Each share of Class A Common Stock is convertible into one
share of Class B Common Stock and each share of Class B Common Stock is
convertible into one share of Class A Common Stock.
<TABLE>
<CAPTION>
CLASS A COMMON STOCK CLASS B COMMON STOCK
-------------------------- -----------------------
AMOUNT OF PERCENT OF AMOUNT OF PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP(1) CLASS OWNERSHIP CLASS
------------------------------------- ------------ ---------- --------- ----------
<S> <C> <C> <C> <C>
Citicorp Venture Capital, Ltd. ...... 187,871(2) 49.0% 516,590 100.0%
399 Park Avenue
New York, NY 10043
The Prudential Life Insurance Company
of America, as Asset Manager for
The Gateway Recovery Trust(3)...... 65,175 17.0 -- --
c/o Financial Restructuring Group
Gateway Center Four
100 Mulberry Street
Newark, NJ 07102
The Berkshire Fund(4)................ 59,636 15.6 -- --
One Boston Place
Suite 3425
Boston, MA 02108
State Treasurer of the State of
Michigan, Custodian of the Public
School Employees' Retirement System;
State Employees' Retirement System,
Michigan State Police Retirement
System; Judges' Retirement System;
and Probate Judges' Retirement
System............................... 27,077 7.1 -- --
c/o Michigan Department of
Treasury
450 West Allegan
Lansing, MI 48922
Ueli Spring.......................... 5,093 1.3 -- --
Aetna Industries, Inc.
24331 Sherwood Avenue
Centerline, MI 48015-0067
Harold A. Brown...................... 1,834 * -- --
Aetna Industries, Inc.
24331 Sherwood Avenue
Centerline, MI 48015-0067
Gary Easterly........................ 984 * -- --
Aetna Industries, Inc.
24331 Sherwood Avenue
Centerline, MI 48015-0067
</TABLE>
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<PAGE> 45
<TABLE>
<CAPTION>
CLASS A COMMON STOCK CLASS B COMMON STOCK
-------------------------- -----------------------
AMOUNT OF PERCENT OF AMOUNT OF PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER OWNERSHIP(1) CLASS OWNERSHIP CLASS
------------------------------------- ------------ ---------- --------- ----------
<S> <C> <C> <C> <C>
All directors and officers as a group
(10 persons)....................... 10,588 2.8 -- --
</TABLE>
- ------------------------------
* Represents less than 1%.
(1) Does not include shares of Class B Common Stock convertible into Class A
Common Stock.
(2) Upon conversion of all of the 516,590 shares of Class B Common Stock owned
by CVC into shares of Class A Common Stock, CVC would own 704,461 shares of
Class A Common Stock, constituting 78.3% of the shares of Class A Common
Stock. Citicorp Venture Capital intends to transfer a portion of the Class A
Common Stock and Class B Common Stock set forth above to a group comprised
of officers of Citicorp Venture Capital (including Michael Delaney and David
Howe) and to certain officers of Citicorp Venture Capital individually.
(3) The Prudential Life Insurance Company of America, as Asset Manager for The
Gateway Recovery Trust, has voting and dispositive power with respect to all
65,175 shares of Class A Common Stock and, accordingly, may be deemed to be
the beneficial owner thereof.
(4) Berkshire Capital Associates Limited Partnership ("BCALP") is the General
Partner of The Berkshire Fund and, consequently, has the power to control
the exercise of votes with respect to the shares of Class A Common Stock
held by The Berkshire Fund. Each of Carl Ferenbach, Bradley M. Bloom, James
Christopher Clifford, Russell L. Epker and Richard K. Lubin is a General
Partner of BCALP and thereby has the ability to control the activities of
BCALP. Each of them, therefore, has the power to control the exercise of
votes with respect to the shares of Class A Common Stock held by The
Berkshire Fund. Each of them also owns directly 478 shares of Class A Common
Stock and therefore has the power to control the exercise of votes with
respect to 60,114 shares of MS Acquisition, constituting 15.7% of the
aggregate outstanding shares of Class A Common Stock. Each of the general
partners of BCALP disclaims beneficial ownership of the 59,636 shares of
Class A Common Stock held by The Berkshire Fund.
CAPITAL STOCK
CAPITALIZATION OF MS ACQUISITION
The Company is a wholly-owned subsidiary of Holdings which is, in turn, a
wholly-owned subsidiary of MS Acquisition. The following is a summary
description of the capitalization of MS Acquisition and is subject to and
qualified in its entirety by reference to the Restated Certificate of
Incorporation of MS Acquisition (the "Restated Charter").
The authorized capital stock of MS Acquisition consists of (i)
2,293,123.320 authorized shares of preferred stock ("Preferred Stock"),
consisting of (A) 293,123.320 shares of Series A Preferred Stock ("Series A
Preferred Stock") and (B) 2,000,000 additional shares of authorized preferred
stock which may be issued in one or more series upon such terms as may be set
forth by the Board of Directors of MS Acquisition subject to the terms of the
Restated Charter and any applicable agreement, and (ii) 10,000,000 shares of
common stock, par value $.01 per share ("Common Stock"), consisting of 5,000,000
shares of Class A Common Stock and 5,000,000 shares of Class B Common Stock.
Series A Preferred Stock
Each share ("Share") of Series A Preferred Stock has a stated value of $100
per share. Dividends accrue on each Share at a rate per annum equal to 11% of
the stated value thereof and are payable, when, as and if declared by the Board
and to the extent funds are legally available, semi-annually on the 13th day of
February and August of each year, commencing on February 13, 1997. Dividends on
the Shares, which are cumulative, began to accrue on August 13, 1996, the date
of issuance of the Shares.
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<PAGE> 46
In the event of the liquidation, dissolution or winding up of MS
Acquisition, each Share is entitled to a liquidation preference over all other
classes of MS acquisition capital stock equal to the sum of its stated value and
all accrued but unpaid dividends thereon.
On any business day prior to February 13, 2007, MS Acquisition may redeem
the Shares at the "Redemption Price," which equals for each Share the sum of its
stated value and all accrued but unpaid dividends thereon. In addition, to the
extent funds are legally available, MS Acquisition shall be obligated to redeem
all issued and outstanding Shares at the Redemption Price, upon the earlier of
February 13, 2007 and the date upon which a "Sale of the Company" occurs. See
"-- MS Acquisition Stockholders Agreement -- Drag-Along Rights."
So long as any Shares are outstanding, MS Acquisition agrees, subject to
certain exceptions, not to pay any dividend or make any distribution on, or to
redeem any shares of, any Common Stock or other class or series of stock of MS
Acquisition ranking junior to the Series A Preferred Stock. In addition, so long
as any Shares are outstanding, MS Acquisition agrees not to issue any class or
series of Preferred Stock which will be senior or pari passu with respect to
payment of dividends, other distributions, preference on redemption or
liquidation rights or otherwise, without the consent of the holders of a
majority of the Shares (excluding from such vote any holders who will also hold
securities of such senior or pari passu class or series).
Shares of Series A Preferred Stock do not have any voting rights, except in
certain circumstances, as set forth in the Restated Charter, where the
preferences or rights of the Shares could be adversely affected or as required
by law.
Upon the occurrence of a "Qualifying Offering" (an underwritten public
offering of Common Stock resulting in at least $20 million of aggregate gross
proceeds to the Company), at the option of the holders of a majority of the
Shares then outstanding, the Shares shall become convertible for shares of Class
A Common Stock or Class B Common Stock. In such event, each holder of Shares
would determine whether to convert its Shares and, if so, whether to convert
such Shares into shares of Class A Common Stock or Class B Common Stock. The
number of shares into which each Share would be convertible is determined by
dividing (i) the sum of the stated value of such Share and all accrued but
unpaid dividends thereon, by (ii) the price per share of Common Stock paid by
the public in connection with the Qualifying Offering. The Restated Charter
provides for adjustments and protections in the event of a stock split or
combination or a recapitalization, reorganization, consolidation or merger
between the time of the Qualifying Offering and the exercise of conversion
rights.
COMMON STOCK
Each holder of record of shares of Class A Common Stock is entitled to one
vote per share. Except as required by law or provided in the Restated Charter,
holders of Class B Common Stock are not entitled to voting rights and, to the
extent they are entitled to voting rights, vote together as a single class with
holders of Class A Common Stock.
Each share of Class A Common Stock is convertible into one share of Class B
Common Stock at the option of the holder. Each share of Class B Common Stock is
convertible into one share of Class A Common Stock at the option of the holder,
if the holder determines that its ownership of Class A Common Stock violates any
law or regulation.
Class A Common Stock and Class B Common Stock are in all other respects
identical. In the event of a stock split or combination with respect to one
class of Common Stock, shares of the other class of Common Stock will be
proportionately subdivided or combined.
MS ACQUISITION STOCKHOLDERS AGREEMENT
As part of the Transactions, MS Acquisition and Holdings have entered into
an agreement (the "Stockholders Agreement") with Citicorp Venture Capital, Ltd.
("CVC"), the institutional stockholders of MS Acquisition (other than CVC) and
certain persons affiliated with such institutional stockholders (collectively
with their respective permitted transferees, the "Institutional Stockholders"),
and certain present and former management persons of Holdings and Aetna. The
following is a summary description of the principal terms of the Stockholders
Agreement and is subject to and qualified in its entirety by reference to the
41
<PAGE> 47
Stockholders Agreement. The term "CVC Stockholders" refers to CVC and each of
its permitted transferees under the terms of the Stockholders Agreement. The
term "Management Stockholders" refers to members of management of Holdings and
Aetna as of the date of the Agreement, together with their respective permitted
transferees under the terms of the Stockholders Agreement. The term "Individual
Stockholders" refers to the Management Stockholders and former members of
management and their respective permitted transferees under the terms of the
Stockholders Agreement.
Board of Directors. Pursuant to the Stockholders Agreement, each
Institutional Stockholder and each Individual Stockholder agrees to vote its
shares and take all other actions necessary to ensure that the Board of
Directors of MS Acquisition shall consist of five directors, with two directors
to be designated by the CVC Stockholders (so long as the CVC Stockholders
continue to own at least ten percent of the outstanding common stock of MS
Acquisition on a diluted basis), one director to be designated by the Management
Stockholders, and two disinterested directors to be designated by a majority
vote of the nominating committee. Pursuant to the terms of the Stockholders
Agreement, the nominating committee shall consist of three members, one
designated by the CVC Stockholders, one designated by the Management
Stockholders, and one disinterested director. With the consent of the CVC
Stockholders, one or both of the disinterested directors may be a member of
management.
The current directors of Holding and Aetna are Michael Delaney and David
Howe (the CVC nominees), Ueli Spring (the management nominee) and John Wurster
and Harold Brown (the disinterested director nominees). Mr. Brown is the Chief
Financial Officer, Vice President, Finance and Secretary of the Company. The
current members of the nominating committee are Michael Delaney, Ueli Spring and
John Wurster.
The CVC Stockholders are not obligated to vote their shares of Common Stock
or other voting securities in favor of any nominee to the Board of Directors or
any committee other than a CVC nominee.
The Stockholders Agreement further provides that the Institutional
Stockholders and the Individual Stockholders shall, unless otherwise consented
to by CVC, take all action necessary or appropriate to cause MS Acquisition to
have an audit committee and a compensation committee, with each of these
committees to consist of three directors, one nominated by the CVC Stockholders,
one nominated by the Management Stockholders and one disinterested director
nominee. The current members of the audit and compensation committees are
Michael Delaney, Ueli Spring and John Wurster.
The affirmative vote of at least a majority of the members of the Board
(assuming no vacancies), which majority must include one of the directors
nominated by the CVC Stockholders (unless the CVC Stockholders have elected in
writing not to designate a director) is required prior to MS Acquisition or any
of its subsidiaries entering into any "Significant Transaction." A "Significant
Transaction" includes (i) any merger, consolidation or other business
combination of MS Acquisition or any subsidiary with or into any Person, (ii)
any sale, lease, exchange or other disposition by MS Acquisition or any
subsidiary of a significant portion of MS Acquisition's assets on a consolidated
basis, (iii) any amendment to any provision of the Restated Charter or Bylaws of
MS Acquisition (iv) certain acquisitions by MS Acquisition or any subsidiary of
securities or assets, (v) certain increases or reductions of the capital of MS
Acquisition or any subsidiary, (vi) the incurrence by MS Acquisition or any
subsidiary of funded debt or any modification to any extension of such debt,
(vii) dissolution and certain insolvency events, and (viii) any transaction
between MS Acquisition or any subsidiary and one or more of its stockholders not
entered into in the ordinary course of business on an arm's-length basis.
Notwithstanding the foregoing, if the CVC Stockholders determine in their
sole discretion that applicable law permits the CVC Stockholder to have the
right to designate a majority of the directors of the Board or directors having
a majority of the weighted votes on the Board, the CVC Stockholders, rather than
the nominating committee, may designate the disinterested directors to the
Board, and the CVC Stockholders may take all actions permitted or required to be
taken by the nominating committee pursuant to the Stockholders Agreement.
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<PAGE> 48
Pre-Emptive Rights. The Stockholders Agreement provides the Institutional
Stockholders and the Individual Stockholders with the right to participate
ratably, in accordance with their fully-diluted common equity ownership, in any
additional offering of Common Stock of MS Acquisition (or any security
exercisable, exchangeable or convertible for or into common stock) (an "Equity
Equivalent") offered to the CVC Stockholders. A stockholder is not entitled to
any pre-emptive rights if the issuance and sale to the CVC Stockholders is in
conjunction with the borrowing of money from the CVC Stockholders or their
affiliates or the guaranteeing of debt of MS Acquisition or any subsidiary by
the CVC Stockholders or their affiliates, unless such stockholder participates
in the related financing or guarantee on the same terms as the CVC Stockholders
and such affiliates.
Right of First Refusal. Pursuant to the Stockholders Agreement, the
Institution Stockholders and the Individual Stockholders agree not to transfer
their shares of MS Acquisition except to a permitted transferee or otherwise in
accordance with the terms of the Stockholders Agreement. In the event of any
proposed sale of shares ("Offered Shares") by an Institutional Stockholder or an
Individual Stockholder (a "Selling Stockholder") to any Person other than a
permitted transferee (a "Third Party"), such Selling Stockholder shall provide
notice (the "Notice") of such proposed sale of MS Acquisition, the CVC
Stockholders and the other institutional investors (collectively, the
"Prospective Buyers"), MS Acquisition shall have a right of first refusal,
within the time period set forth in the Stockholders Agreement, to purchase such
Offered Shares upon the items set forth in the Notice. In the event that MS
Acquisition does not exercise such right of first refusal for all of the Offered
Shares, the CVC Stockholders and the institutional investors shall have a second
right of refusal, within the time period set forth in the Stockholders
Agreement, for the Offered Shares not elected to be purchased by MS Acquisition.
In the event that such Offered Shares are not accepted in full by the
Prospective Buyers within the time periods specified in the Stockholders
Agreement, the Selling Stockholder then has the right to sell to the Third Party
the shares not by accepted by the Prospective Buyers pursuant to their
respective rights of refusal, at or above the price offered to the Prospective
Buyers and upon the same terms and conditions.
Drag-Along Rights. If the CVC Stockholders, so long as they own at least
thirty-five percent (35%) of the shares of Common Stock of MS Acquisition (on a
diluted basis) or shares of Series A Preferred Stock of MS Acquisition (on a
diluted basis), receive an offer from an unaffiliated third party which would
effect a "Sale of the Company," the CVC Stockholders have the right, under
certain circumstances, to require the other stockholders of MS Acquisition to
sell or transfer all of their Capital Stock and Equity Equivalents of MS
Acquisition to such third party upon the same terms and conditions as are
applicable to the CVC Stockholders. The CVC Stockholders have the right, under
certain circumstances, to require the other stockholders to approve such
transaction and, if applicable, to waive any appraisal rights under Section 262
of the Delaware General Corporation Law. A "Sale of the Company" means the sale
of MS Acquisition or any subsidiary (whether by merger, consolidation,
recapitalization, reorganization, sale of securities, sale of assets or
otherwise) in one transaction or a series of related transactions to a Person or
Persons that is not an affiliate of CVC pursuant to which such Person or Persons
acquires at least a majority of the voting power of all securities of MS
Acquisition or the Company, or all or substantially all of the assets of MS
Acquisition or the Company.
Tag-Along Rights. If a CVC Stockholder proposes to transfer Common Stock,
Preferred Stock or Equity Equivalents to any Person other than a permitted
transferee, the other stockholders of MS Acquisition have the right, under
certain circumstances, to participate in such sale on the same terms and on a
pro-rata basis. This tag-along right does not apply to a registered public
offering or to the extent that all sales by CVC Stockholders to such Persons
other than permitted transferees represent, in the aggregate, less than five
percent of the shares of Common Stock (on a diluted basis) held by the CVC
Stockholders on August 13, 1996.
Management Repurchase. All shares of Common Stock and Preferred Stock held
by a Management Stockholder are subject to repurchase by MS Acquisition for a
specified period of time following the termination of employment of such
Management Stockholder for any reason. The CVC Stockholders have the right for a
specified period to purchase, on a pro-rata basis, such shares not so purchased
by MS Acquisition. Shares so purchased by the CVC Stockholders are, in turn,
subject to a further right of repurchase, at the
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<PAGE> 49
option of MS Acquisition or CVC, in favor of current or future officers,
directors, employees or independent contractors of MS Acquisition or any
subsidiary.
REGISTRATION RIGHTS AGREEMENT
Pursuant to a registration rights agreement, the CVC Stockholders and the
Institutional Stockholders are entitled to require MS Acquisition to effect an
initial public offering of Common Stock of MS Acquisition underwritten on a
firmly committed basis. The CVC Stockholders are entitled to three long-form
registrations and unlimited short-form registrations on demand, in each case at
the expense of MS Acquisition (other than underwriting commissions and
discounts. The Institutional Investors are entitled to one long-form
registration and three short-form registrations on demand, in each case at the
expense of MS Acquisition (other than underwriting commissions and discounts).
In addition, the CVC Stockholders, the Institutional Stockholders and the
Management Stockholders are entitled to include, at the expense of MS
Acquisition, their shares of Common Stock of MS Acquisition in any primary
registration by MS Acquisition or any secondary registration on behalf of other
stockholders on a pro-rata basis, subject to customary underwriter's cutback
rights.
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<PAGE> 50
CERTAIN RELATIONSHIPS AND TRANSACTIONS
Jerome Singer, the former chairman of the Company's Board of Directors,
owns and leases to the Company seven of the 14 facilities currently used by the
Company in its operations. The leases, certain of which expire in 1996 and 1997,
may be extended in certain circumstances. For the year ended December 31, 1995,
the Company paid to Mr. Singer approximately $965,100 in the aggregate in
respect of rental payments under such leases. Management believes that all such
leases, from the Company's perspective, are on terms equal to or better than
current market rates for such properties.
Pursuant to a promissory note, the Company has outstanding to Ueli Spring,
President of the Company, a demand loan in the aggregate principal amount of
$75,000, plus accumulated interest. The loan bears interest at the prime rate
plus 1.0%. As of June 30, 1996, the aggregate amount owed to the Company by Mr.
Spring in respect of the loan was $107,336.
Pursuant to a Management Agreement (the "Berkshire Management Agreement")
between the Company, MS Acquisition and Berkshire Partners, since March 1989,
Berkshire Partners, a shareholder of MS Acquisition, had provided to the Company
and MS Acquisition certain advisory and management consulting services relating
to financial and strategic corporate planning. In consideration for such
services, the Company had paid to Berkshire Partners a fee of $250,000 per annum
and had reimbursed Berkshire Partners' direct, out-of-pocket expenses incurred
in performing such services. The Berkshire Management Agreement was terminated
on August 13, 1996 in connection with the Transactions. In connection with such
termination, the Company paid Berkshire Partners accrued management fees and
current operating expenses of approximately $280,000 with a portion of the
proceeds of the issuance of the Old Notes.
Messrs. Spring, Brown and Easterly and certain other employees of the
Company received in the aggregate bonuses of approximately $350,000 in
connection with the consummation of the Transactions.
Mr. Singer was paid approximately $225,000 of accrued compensation in
connection with the Transactions.
In connection with the Transactions, the Company entered into a management
agreement with MS Acquisition (the "Management Agreement") pursuant to which MS
Acquisition has agreed to provide to the Company and any subsidiary certain
management and administrative services. The initial term of the Management
Agreement extends through December 1997. In consideration for services provided
thereunder, the Company has agreed to reimburse MS Acquisition for the actual
cost of the services rendered. The Company is also responsible for contributing
to the general operating costs of MS Acquisition. The Company's obligations to
reimburse MS Acquisition may be deferred, without interest, if payment of such
reimbursement obligations would be restricted by the Indenture or the Senior
Revolving Credit Facility.
DESCRIPTION OF JUNIOR SUBORDINATED PROMISSORY NOTES DUE 2007
As part of the Transactions, Holdings issued to the Former Stockholders, on
August 13, 1996, Junior Subordinated Promissory Notes Due 2007 in the aggregate
principal amount of approximately $8.7 million (the "Junior Subordinated
Debentures"), having a maturity date of August 13, 2007. The following is a
summary description of the principal terms of the Junior Subordinated Debentures
and is subject to and qualified in its entirety by reference to the Stockholders
Agreement. The Junior Subordinated Debentures accrue interest at the rate of 11%
per annum through the maturity date and at the rate of 13% per annum after the
maturity date. Interest on the Junior Subordinated Debentures is payable
semi-annually on February 13 and August 13 of each year, commencing on February
13, 1997.
In the event that the payment of interest on the Junior Subordinated
Debentures is prohibited under the Credit Agreement or the Indenture or, in the
event that the Company is prohibited, pursuant to the Credit Agreement or the
Indenture, from paying cash dividends to Holdings for the purpose of paying
interest on the Junior Subordinated Debentures, and the aggregate indebtedness
of MS Acquisition and its subsidiaries exceeds $10,000,000, Holdings has agreed
to issue to the holders of the Junior Subordinated Debentures (the "Debenture
Holders") additional 11% junior subordinated debentures ("Secondary Debentures")
in the
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<PAGE> 51
amount of the accrued but unpaid interest on the Junior Subordinated Debentures.
Secondary Debentures shall bear interest from the applicable interest payment
date.
The outstanding principal amount of the Junior Subordinated Debentures and
the Secondary Debentures (collectively, the "Debentures"), together with accrued
interest through the date of repayment, is prepayable in full or in part at any
time at the option of Holdings, subject to any restrictions under the Credit
Agreement or the Indenture or other applicable restrictions. Any prepayment in
part shall be pro rata among holders of the Debentures ("Debentures Holders").
In addition, upon a Sale of the Company (see "Capital Stock -- MS Acquisition
Stockholders Agreement -- Drag-Along Rights"), Holdings shall be obligated to
prepay in full the aggregate outstanding principal amount of the Debentures,
together with accrued interest.
The rights of the Debenture Holders under the Debentures are subordinated
to the rights of the Banks under the Senior Revolving Credit Facility and the
rights of the holders of the Notes under the Indenture.
If the Debenture Holders so elect, the Debentures shall be convertible into
shares of Common Stock of MS Acquisition upon the consummation of a Qualified
Offering. Holdings shall notify the Debenture Holders upon the consummation of a
Qualified Offering. If the holders of a majority in principal amount of the
Debentures then notify Holdings in writing that they elect to convert their
Debentures into shares of Common Stock of MS Acquisition, each Debenture Holder
shall have the right to convert principal amounts outstanding under the
Debentures, together with accrued interest, into shares of Common Stock of MS
Acquisition. For purposes of the conversion, the Common Stock shall be valued at
the price per share of Common Stock paid by the public in connection with the
Qualifying Offering. The Debentures provide for adjustments and protections in
the event of a stock split or combination or recapitalization, reorganization,
consolidation or merger between the time of the Qualifying Offering and the
exercise of conversion rights.
The Debentures restrict the declaration or payment of dividends or the
making of any other distribution by Holdings or any subsidiary, the redemption
of any capital stock by Holdings and the redemption by Holdings of any
obligations which are subordinate to the Debentures, subject to certain
exceptions such as the issuance of shares of Common Stock in connection with a
conversion of Series A Preferred Stock or Debentures upon the consummation of a
Qualifying Offering. The Debentures further restrict the payment by Holdings or
any subsidiary of any management or services fee other than management or
services fees payable to MS Acquisition in an amount not to exceed $300,000 in
any fiscal year of Holdings.
DESCRIPTION OF SENIOR REVOLVING CREDIT FACILITY
In connection with the offering of the Old Notes, on August 13, 1996, the
Company amended its existing Credit Agreement, dated as of May 2, 1996 (the
"Credit Agreement"), by and among the Company, MS Acquisition, Export and NBD
Bank, a Michigan banking corporation ("NBD"), as agent for the banks named
therein (the "Banks"). Pursuant to the amendment, Holdings became a party to the
Credit Agreement. As so amended, the Credit Agreement is referred to in this
Prospectus as the "Senior Revolving Credit Facility". The Senior Revolving
Credit Facility currently has an initial term of five years.
Borrowings under the Senior Revolving Credit Facility will be used by the
Company for working capital and other general corporate purposes. The Senior
Revolving Credit Facility, which includes a letter of credit facility, has an
aggregate principal amount of $35.0 million. As of September 6, 1996 there were
no outstanding advances under the Senior Revolving Credit Facility.
Borrowings under the Senior Revolving Credit Facility bear interest at a
per annum rate equal to a Eurodollar Rate plus a margin ranging from 1.0% to
2.75% (based on the Company's ratio of funded debt to EBITDA); a Floating Rate
equal to the sum of (A) the greater of (i) the Prime Rate (defined in the Senior
Revolving Credit Facility as the per annum rate announced by NBD from time to
time as its "prime rate"), and (ii) the sum of 1.0% per annum plus the Federal
Funds Rate (defined in the Senior Revolving Credit Facility as the per annum
rate that is equal to the average of the rates on overnight federal funds
transactions with members of the Federal Reserve System) and (B) a margin
ranging from zero percent to 1.25%; or a negotiated rate.
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<PAGE> 52
The Senior Revolving Credit Facility is secured by, among other things,
first liens on the inventory, accounts receivable, furniture, fixtures,
machinery and equipment, intellectual property and certain other intangibles of
the Company and Export. MS Acquisition, Holdings and Export have unconditionally
guaranteed repayment of all borrowings of the Company under the Senior Revolving
Credit Facility. The Senior Revolving Credit Facility is secured by a pledge of
all of the outstanding capital stock of Export.
The Senior Revolving Credit Facility contains customary representations and
warranties and events of default and requires compliance with certain covenants
by the Company and its subsidiaries, including, among other things: (i)
maintenance of certain financial ratios and compliance with certain financial
tests and limitations; (ii) limitations on the payment of dividends, incurrence
of additional indebtedness and granting of certain liens; and (iii) restrictions
on mergers, acquisitions, asset sales, capital expenditures and investments.
The availability of the Senior Revolving Credit Facility is subject to
various conditions precedent. Advances will be made under the Senior Revolving
Credit Facility based on a borrowing base comprised of eligible accounts
receivable, production and tooling inventory and net fixed assets at the
following advance rates: 85% of the value of eligible accounts receivable; plus
60% of the value of eligible production inventory; plus 50% of eligible fixed
assets; plus 50% of eligible tooling inventory not to exceed $5.0 million.
Eligible accounts receivable will be reduced by the outstanding payable balances
owed by the Company to Chrysler and GM for coil steel products purchased through
their respective steel resale programs.
Because the Notes are unsecured, advances under the Senior Revolving Credit
Facility effectively rank senior to the Notes to the extent of the security
securing such advances.
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<PAGE> 53
DESCRIPTION OF NOTES
The Old Notes were issued under an indenture (the "Indenture") dated as of
August 1, 1996 by and among the Company, MS Acquisition, Holdings, the
Subsidiary Guarantor and Norwest Bank Minnesota National Association, as Trustee
(the "Trustee"). The terms of the Indenture apply to the Old Notes and to the
New Notes to be issued in exchange therefor pursuant to the Exchange Offer (all
such Notes are referred to herein collectively as the "Notes"). The following
summary of certain provisions of the Indenture does not purport to be complete
and is subject to, and is qualified in its entirety by reference to, the Trust
Indenture Act of 1939, as amended (the "TIA"), and to all of the provisions of
the Indenture, including the definitions of certain terms therein and those
terms made a part of the Indenture by reference to the TIA as in effect on the
date of the Indenture. A copy of the form of Indenture may be obtained from the
Company or the Initial Purchasers. The definitions of certain capitalized terms
used in the following summary are set forth below under "-- Certain
Definitions".
The Notes are senior obligations of the Company, ranking pari passu in
right of payment with all other senior obligations of the Company. The
Guarantees are senior obligations of MS Acquisition and Holdings, ranking pari
passu in right of payment with all other senior obligations of MS Acquisition
and Holdings. The Subsidiary Guarantee is, and any additional Subsidiary
Guarantee will be, a senior obligation of the applicable Subsidiary Guarantor,
ranking pari passu in right of payment with all other senior obligations of such
Subsidiary Guarantor.
The Notes are issued in fully registered form only, without coupons, in
denominations of $1,000 and integral multiples thereof. Initially, the Trustee
is acting as paying agent and registrar for the Notes. The Notes may be
presented for registration of transfer and exchange at the offices of the
registrar, which initially are the Trustee's corporate trust office. The Company
may change any paying agent and registrar without notice to holders of the Notes
(the "Holders"). The Company will pay principal (and premium, if any) on the
Notes at the Trustee's corporate office in New York, New York. At the Company's
option, interest may be paid at the Trustee's corporate trust office or by check
mailed to the registered addresses of the Holders.
PRINCIPAL, MATURITY AND INTEREST
The Notes are limited in aggregate principal amount to $85,000,000 and will
mature on October 1, 2006. Interest on the Notes accrues at the rate of 11 7/8%
per annum and will be payable semi-annually in cash on each April 1 and October
1, commencing on April 1, 1997, to the Persons who are registered Holders at the
close of business on March 15 and September 15, respectively, immediately
preceding the applicable interest payment date. Interest on the Notes accrues
from and including the most recent date to which interest has been paid or, if
no interest has been paid, from and including the date of issuance.
The Notes are not entitled to the benefit of any mandatory sinking fund.
REDEMPTION
Optional Redemption. The Notes are redeemable at the Company's option in
whole at any time or in part from time to time, on and after October 1, 2001,
upon not less than 30 nor more than 60 days' notice, at the following redemption
prices (expressed as percentages of the principal amount thereof) if redeemed
during the twelve-month period commencing on October 1 of the years set forth
below, plus, in each case, accrued and unpaid interest, if any, thereon to the
date of redemption:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
------------------------------------------- ----------
<S> <C>
2001....................................... 105.938%
2002....................................... 103.958%
2003....................................... 101.979%
2004 and thereafter........................ 100.000%
</TABLE>
Optional Redemption upon Public Equity Offerings. At any time, or from time
to time, on or prior to October 1, 1999, the Company may, at its option, use the
net cash proceeds of one or more Public Equity Offerings (as defined below) to
redeem up to $25.0 million aggregate principal amount of Notes at a redemption
price equal to 110.875% of the principal amount thereof, plus accrued and unpaid
interest, if any, thereon to the date of redemption; provided that at least
$60.0 million aggregate principal amount of Notes remains outstanding
immediately after giving effect to any such redemption. In order to effect the
foregoing
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redemption with the proceeds of any Public Equity Offering, the Company shall
make such redemption not more than 90 days after the consummation of any such
Public Equity Offering.
As used in the preceding paragraph, a "Public Equity Offering" means an
underwritten public offering of Qualified Capital Stock of any of MS Acquisition
Corp. ("MS Acquisition"), Aetna Holdings, Inc. ("Holdings") or the Company
pursuant to a registration statement filed with and declared effective by the
Commission in accordance with the Securities Act; provided that, in the event of
a Public Equity Offering by MS Acquisition or Holdings, as the case may be,
there is contributed to the capital of the Company the portion of the net cash
proceeds of such Public Equity Offering necessary to pay the aggregate
redemption price, plus accrued and unpaid interest, if any, to the redemption
date of the Notes to be redeemed pursuant to the preceding paragraph.
SELECTION AND NOTICE OF REDEMPTION
In the event that less than all of the Notes are to be redeemed at any
time, selection of such Notes for redemption will be made by the Trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which the Notes are listed or, if the Notes are not then listed on a
national securities exchange, on a pro rata basis, by lot or by such method as
the Trustee shall deem fair and appropriate; provided, however, that no Notes of
a principal amount of $1,000 or less shall be redeemed in part; and provided,
further, that if a partial redemption is made with the proceeds of a Public
Equity Offering, selection of the Notes or portions thereof for redemption shall
be made by the Trustee only on a pro rata basis or on as nearly a pro rata basis
as is practicable (subject to the procedures of The Depository Trust Company),
unless such method is otherwise prohibited. Notice 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 its 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 a 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, interest will cease to
accrue on Notes or portions thereof called for redemption as long as the Company
has deposited with the paying agent for the Notes funds in satisfaction of the
applicable redemption price pursuant to the Indenture.
GUARANTEES AND SUBSIDIARY GUARANTEE
MS Acquisition, Holdings and the Subsidiary Guarantor (and any additional
Subsidiary Guarantors pursuant to the covenant described under "-- Certain
Covenants -- Additional Subsidiary Guarantees") will unconditionally guarantee,
on a senior basis, jointly and severally, to each Holder and the Trustee, the
full and prompt performance of the Company's obligations under the Indenture and
the Notes, including the payment of principal of and interest on the Notes. The
obligations of MS Acquisition, Holdings and each Subsidiary Guarantor are
limited to the maximum amount which, after giving effect to all other contingent
and fixed liabilities of MS Acquisition, Holdings or such Subsidiary Guarantor
and after giving effect to any collections from or payments made by or on behalf
of MS Acquisition, Holdings or any other Subsidiary Guarantor, as the case may
be, in respect of the obligations of MS Acquisition, Holdings or such other
Subsidiary Guarantor under its Guarantee or Subsidiary Guarantee, as the case
may be, or pursuant to its contribution obligations under the Indenture, will
result in the obligations of MS Acquisition, Holdings or such Subsidiary
Guarantor under its Guarantee or Subsidiary Guarantee, as the case may be, not
constituting a fraudulent conveyance or fraudulent transfer under Federal or
state law. MS Acquisition, Holdings and each Subsidiary Guarantor that makes a
payment or distribution under its Guarantee or Subsidiary Guarantee, as the case
may be, shall be entitled to a contribution from MS Acquisition, Holdings and
each Subsidiary Guarantor, as the case may be, in an amount pro rata, based on
the net assets of MS Acquisition, Holdings and each Subsidiary Guarantor,
determined in accordance with GAAP.
Each Subsidiary Guarantor may consolidate with or merge into or sell its
assets to the Company or another Subsidiary Guarantor, or with other Persons
upon the terms and conditions set forth in the Indenture. See "-- Certain
Covenants -- Merger, Consolidation and Sale of Assets." In the event all of the
Capital Stock of a Subsidiary Guarantor is sold by the Company and/or one or
more of its Subsidiaries and the sale
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complies with the provisions set forth in "-- Certain Covenants -- Limitation on
Asset Sales," such Subsidiary Guarantor's Subsidiary Guarantee will be released.
CHANGE OF CONTROL
The Indenture provides that upon the occurrence of a Change of Control
(unless, on or prior to the date of such Change of Control, the Company shall
have given a notice of redemption with respect to all outstanding Notes), each
Holder will have the right to require that the Company purchase all or a portion
of such Holder's Notes pursuant to the offer described below (the "Change of
Control Offer"), at a purchase price equal to 101% of the principal amount
thereof, plus accrued and unpaid interest, if any, thereon to the date of
purchase.
Within 30 days following the date upon which the Change of Control
occurred, the Company must send, by first class mail, a notice to each Holder,
with a copy to the Trustee, which notice shall govern the terms of the Change of
Control Offer. Such notice shall state, among other things, the purchase date,
which must be no earlier than 30 days nor later than 60 days from the date such
notice is mailed, other than as may be required by law (the "Change of Control
Payment Date"). A Change of Control Offer shall remain open for a period of 20
business days or such longer period as may be required by law. Holders electing
to have a Note purchased pursuant to a Change of Control Offer will be required
to surrender the Note, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Note completed, to the paying agent for the
Notes at the address specified in the notice prior to the close of business on
the third business day prior to the Change of Control Payment Date.
If a Change of Control Offer is made, there can be no assurance that the
Company will have available funds sufficient to pay the Change of Control
purchase price for all the Notes that might be delivered by Holders seeking to
accept the Change of Control Offer. In the event the Company is required to
purchase outstanding Notes pursuant to a Change of Control Offer, the Company
expects that it would seek third party financing to the extent it does not have
available funds to meet its purchase obligations. However, there can be no
assurance that the Company would be able to obtain such financing.
Neither the Board of Directors of the Company nor the Trustee may waive the
covenant relating to the Company's obligation to make a Change of Control Offer.
Restrictions in the Indenture described herein on the ability of the Company and
the Restricted Subsidiaries to incur additional Indebtedness, to grant liens on
their property, to make Restricted Payments and to make Asset Sales may also
make more difficult or discourage a takeover of the Company, whether favored or
opposed by the management of the Company. Consummation of any such transaction
in certain circumstances may require repurchase of the Notes, and there can be
no assurance that the Company or the acquiring party will have sufficient
financial resources to effect such repurchase. Such restrictions and the
restrictions on transactions with Affiliates may, in certain circumstances, make
more difficult or discourage any leveraged buyout of the Company by the
management of the Company. While such restrictions cover a wide variety of
arrangements which have traditionally been used to effect highly leveraged
transactions, the Indenture may not afford the Holders of Notes protection in
all circumstances from the adverse aspects of a highly leveraged transaction,
reorganization, restructuring, merger or similar transaction.
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 Notes pursuant to a Change of Control Offer. To the extent that
the provisions of any securities laws or regulations conflict with the "Change
of Control" provisions of the Indenture, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under the "Change of Control" provisions of the
Indenture by virtue thereof.
CERTAIN COVENANTS
The Indenture contains, among others, the following covenants:
Limitation on Incurrence of Additional Indebtedness. The Company will not,
and will not permit any of the Restricted Subsidiaries to, directly or
indirectly, create, incur, assume, guarantee, acquire, become liable
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<PAGE> 56
with respect to, or otherwise become responsible for payment of (collectively,
"incur") any Indebtedness (other than Permitted Indebtedness); provided,
however, that if no Default or Event of Default shall have occurred and be
continuing at the time of or as a consequence of the incurrence of any such
Indebtedness, the Company or any Subsidiary Guarantor may incur Indebtedness
(including, without limitation, Acquired Indebtedness) and any Restricted
Subsidiary may incur Acquired Indebtedness, in each case, if on the date of the
incurrence of such Indebtedness, after giving effect to the incurrence thereof,
the Consolidated Fixed Charge Coverage Ratio of the Company is greater than (a)
2.0 to 1.0, if the date of such incurrence is on or prior to August 13, 1997 or
(b) 2.25 to 1.0, if the date of such incurrence is after August 13, 1997.
Indebtedness of a Person existing at the time such Person becomes a
Restricted Subsidiary or which is secured by a Lien on an asset acquired by the
Company or a Restricted Subsidiary (whether or not such Indebtedness is assumed
by the acquiring Person) shall be deemed incurred at the time the Person becomes
a Restricted Subsidiary or at the time of the asset acquisition, as the case may
be.
The Company will not, and will not permit any Subsidiary Guarantor to incur
any Indebtedness which by its terms (or by the terms of any agreement governing
such Indebtedness) is subordinated in right of payment to any other Indebtedness
of the Company or such Subsidiary Guarantor unless such Indebtedness is also by
its terms (or by the terms of any agreement governing such Indebtedness)
subordinated in right of payment to the Notes or the Subsidiary Guarantee of
such Subsidiary Guarantor, as the case may be, at least to the same extent and
in the same manner as such Indebtedness is subordinated to any such other
Indebtedness.
Limitation on Restricted Payments. The Company will not, and will not cause
or permit any of the Restricted Subsidiaries to, directly or indirectly, (a)
declare or pay any dividend or make any distribution (other than dividends or
distributions payable in Qualified Capital Stock of the Company) on or in
respect of shares of the Company's Capital Stock to holders of such Capital
Stock, (b) purchase, redeem or otherwise acquire or retire for value any Capital
Stock of the Company, Holdings or MS Acquisition or any warrants, rights or
options to purchase or acquire shares of any class of such Capital Stock, (c)
make any principal payment on, purchase, defease, redeem, prepay, decrease or
otherwise acquire or retire for value, prior to any scheduled final maturity,
scheduled repayment or scheduled sinking fund payment, any Indebtedness of the
Company or a Subsidiary Guarantor that is subordinate or junior in right of
payment to the Notes or such Subsidiary Guarantor's Subsidiary Guarantee, as the
case may be, or (d) make any Investment (other than a Permitted Investment)
(each of the foregoing actions set forth in clauses (a), (b) (c) and (d) being
referred to as a "Restricted Payment"), if at the time of such Restricted
Payment or immediately after giving effect thereto, (i) a Default or an Event of
Default shall have occurred and be continuing or (ii) the Company is not able to
incur at least $1.00 of additional Indebtedness (other than Permitted
Indebtedness) in compliance with the covenant described under "-- Limitation on
Incurrence of Additional Indebtedness" or (iii) the aggregate amount of
Restricted Payments (including such proposed Restricted Payment) made subsequent
to the Issue Date (the amount expended for such purposes, if other than in cash,
being the fair market value of such property as determined reasonably and in
good faith by the Board of Directors of the Company) shall exceed the sum of:
(w) 50% of the cumulative Consolidated Net Income (or if cumulative Consolidated
Net Income shall be a loss, minus 100% of such loss) of the Company earned
subsequent to the Issue Date and on or prior to the date the Restricted Payment
occurs (the "Reference Date") (treating such period as a single accounting
period); plus (x) 100% of the aggregate net cash proceeds received by the
Company from any Person (other than a Subsidiary of the Company) from the
issuance and sale subsequent to the Issue Date and on or prior to the Reference
Date of Qualified Capital Stock of the Company; plus (y) without duplication of
any amounts included in clause (iii)(x) above, 100% of the aggregate net cash
proceeds of any equity contribution received by the Company from a holder of the
Company's Capital Stock (excluding, in the case of clauses (iii)(x) and (y), any
net cash proceeds from a Public Equity Offering to the extent used to redeem the
Notes pursuant to the redemption provisions thereof); plus (z) an amount equal
to the consolidated net Investments on the date of Revocation made by the
Company and/or any of the Restricted Subsidiaries in any Subsidiary of the
Company that has been designated an Unrestricted Subsidiary after the Issue Date
upon its redesignation as a Restricted Subsidiary in accordance with the
covenant described under "-- Limitation on Designations of Unrestricted
Subsidiaries."
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Notwithstanding the foregoing, the provisions set forth in the immediately
preceding paragraph shall not prohibit: (1) the payment of any dividend or
distribution within 60 days after the date of declaration of such dividend or
distribution if the dividend or distribution would have been permitted on the
date of declaration; (2) if no Default or Event of Default shall have occurred
and be continuing, the acquisition of any shares of Capital Stock of the
Company, either (A) solely in exchange for shares of Qualified Capital Stock of
the Company or (B) through the application of net proceeds of a substantially
concurrent sale for cash (other than to a Subsidiary of the Company) of shares
of Qualified Capital Stock of the Company; (3) if no Default or Event of Default
shall have occurred and be continuing, the acquisition of any Indebtedness of
the Company or a Subsidiary Guarantor that is subordinate or junior in right of
payment to the Notes or such Subsidiary Guarantor's Subsidiary Guarantee, as the
case may be, either (A) solely in exchange for shares of Qualified Capital Stock
of the Company, or (B) through the application of net proceeds of a
substantially concurrent sale for cash (other than to a Subsidiary of the
Company) of (I) shares of Qualified Capital Stock of the Company or (II)
Refinancing Indebtedness; (4) the making of payments by the Company to MS
Acquisition or Holdings in an amount not in excess of the federal, state and
local income tax liability that the Company and its Subsidiaries would have been
liable for if the Company, together with its Subsidiaries, had filed its tax
return on a stand-alone basis; provided that such payments shall be made by the
Company no earlier than five days prior to the date on which MS Acquisition or
Holdings is required to make its payments to the Internal Revenue Service or
state or local taxing authorities, as the case may be; (5) if no Default or
Event of Default shall have occurred and be continuing, the making of payments
by the Company to MS Acquisition or Holdings to pay corporate overhead expenses
(including, without limitation, directors' fees and expenses), not to exceed
$250,000 in any fiscal year; (6) if no Default or Event of Default shall have
occurred and be continuing, the making of payments by the Company to MS
Acquisition or Holdings to repurchase Capital Stock of MS Acquisition or
Holdings beneficially owned by directors, officers and employees of the Company,
any of its Subsidiaries, MS Acquisition or Holdings pursuant to the terms of
employment contracts or employee benefit plans of the Company, any of its
Subsidiaries, MS Acquisition or Holdings not to exceed $500,000 in any fiscal
year; and (7) if no Default or Event of Default shall have occurred and be
continuing, the making of other Restricted Payments not to exceed $2.0 million
in the aggregate. In determining the aggregate amount of Restricted Payments
made subsequent to the Issue Date in accordance with clause (iii) of the
immediately preceding paragraph, amounts expended pursuant to clauses (1),
(2)(B), (3)(B)(I), (5), (6) and (7) shall be included in such calculation.
Limitation on Asset Sales. The Company will not, and will not permit any of
the Restricted Subsidiaries to, consummate an Asset Sale unless (a) the Company
or the applicable Restricted Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the fair market
value of the assets sold or otherwise disposed of (as determined in good faith
by the Company's Board of Directors), (b) at least 75% of the consideration
received by the Company or the Restricted Subsidiary, as the case may be, from
such Asset Sale shall be in the form of cash or Cash Equivalents and is received
at the time of such disposition; and (c) upon the consummation of an Asset Sale,
the Company shall commit in writing to apply, or cause such Restricted
Subsidiary to commit in writing to apply, the Net Cash Proceeds relating to such
Asset Sale within 180 days of receipt thereof, and shall apply, or cause such
Restricted Subsidiary to apply, such Net Cash Proceeds within 270 days of
receipt thereof, either (i) to the extent the properties or assets that were the
subject to such Asset Sale secure Indebtedness incurred in accordance with the
Indenture pursuant to a Lien permitted by the Indenture, to prepay any such
Indebtedness, (ii) to make an investment in properties or assets that replace
the properties or assets that were the subject of such Asset Sale or in
properties or assets that will be used in the business of the Company and the
Restricted Subsidiaries as existing on the Issue Date or in businesses
reasonably related thereto ("Replacement Assets"), or (iii) a combination of
prepayment and investment permitted by the foregoing clauses (c)(i) and (c)(ii).
On the 271st day after an Asset Sale or such earlier date, if any, as the Board
of Directors of the Company determines not to apply the Net Cash Proceeds
relating to such Asset Sale as set forth in clauses (c)(i), (c)(ii) and (c)(iii)
of the next preceding sentence (each, a "Net Proceeds Offer Trigger Date"), such
aggregate amount of Net Cash Proceeds which have not been applied on or before
such Net Proceeds Offer Trigger Date as permitted in clauses (c)(i), (c)(ii) and
(c)(iii) of the next preceding sentence (each a "Net Proceeds Offer Amount")
shall be applied by the Company or such Restricted Subsidiary, as the case may
be, to make an
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offer to purchase (a "Net Proceeds Offer") on a date (the "Net Proceeds Offer
Payment Date") not less than 30 nor more than 45 days following the applicable
Net Proceeds Offer Trigger Date, from all Holders on a pro rata basis, that
principal amount of Notes equal to the Net Proceeds Offer Amount at a price
equal to 100% of the principal amount of the Notes to be purchased, plus accrued
and unpaid interest, if any, thereon to the date of purchase; provided, however,
that if at any time any non-cash consideration received by the Company or any
Restricted Subsidiary, as the case may be, in connection with any Asset Sale is
converted into or sold or otherwise disposed of for cash, then such conversion
or disposition shall be deemed to constitute an Asset Sale hereunder and the Net
Cash Proceeds thereof shall be applied in accordance with this covenant. The
Company may defer the Net Proceeds Offer until there is an aggregate unutilized
Net Proceeds Offer Amount equal to or in excess of $5.0 million resulting from
one or more Asset Sales (at which time, the entire unutilized Net Proceeds Offer
Amount, and not just the amount in excess of $5.0 million, shall be applied as
required pursuant to this paragraph).
In the event of the transfer of substantially all (but not all) of the
property and assets of the Company and the Restricted Subsidiaries as an
entirety to a Person in a transaction permitted under "-- Merger, Consolidation
and Sale of Assets," the successor corporation shall be deemed to have sold the
properties and assets of the Company and the Restricted Subsidiaries not so
transferred for purposes of this covenant, and shall comply with the provisions
of this covenant with respect to such deemed sale as if it were an Asset Sale.
In addition, the fair market value of such properties and assets of the Company
or the Restricted Subsidiaries deemed to be sold shall be deemed to be Net Cash
Proceeds for purposes of this covenant.
Notwithstanding the two immediately preceding paragraphs, the Company and
the Restricted Subsidiaries will be permitted to consummate an Asset Sale
without complying with such paragraphs to the extent (a) at least 75% of the
consideration for such Asset Sale constitutes Replacement Assets and (b) such
Asset Sale is for fair market value; provided that any consideration not
constituting Replacement Assets received by the Company or any of the Restricted
Subsidiaries in connection with any Asset Sale permitted to be consummated under
this paragraph shall constitute Net Cash Proceeds subject to the provisions of
the two immediately preceding paragraphs.
Notice of each Net Proceeds Offer will be mailed to the record Holders as
shown on the register of Holders within 30 days following the Net Proceeds Offer
Trigger Date, with a copy to the Trustee, and shall comply with the procedures
set forth in the Indenture. Upon receiving notice of the Net Proceeds Offer,
Holders may elect to tender their Notes in whole or in part in integral
multiples of $1,000 in exchange for cash. To the extent Holders properly tender
Notes with an aggregate principal amount exceeding the Net Proceeds Offer
Amount, Notes of tendering Holders will be purchased on a pro rata basis (based
on principal amounts tendered). A Net Proceeds Offer shall remain open for a
period of 20 business days or such longer period as may be required by law.
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 Notes pursuant to a Net Proceeds Offer. To the extent that the
provisions of any securities laws or regulations conflict with the "Asset Sale"
provisions of the Indenture, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations under the "Asset Sale" provisions of the Indenture by virtue
thereof.
Limitation on Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries. The Company will not, and will not cause or permit any of the
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or
permit to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary to (a) pay dividends or make any other
distributions on or in respect of its Capital Stock; (b) make loans or advances
or to pay any Indebtedness or other obligation owed to the Company or any other
Restricted Subsidiary; or (c) transfer any of its property or assets to the
Company or any other Restricted Subsidiary, except for such encumbrances or
restrictions existing under or by reason of: (i) applicable law; (ii) the
Indenture; (iii) customary non-assignment provisions of any contract, licensing
agreement or any lease governing a leasehold interest of any Restricted
Subsidiary; (iv) any instrument governing Acquired Indebtedness, which
encumbrance or restriction is not applicable to any Person, or the properties or
assets of any Person, other than the Person or the properties or assets of the
Person so acquired;
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(v) agreements existing on the Issue Date to the extent and in the manner such
agreements are in effect on the Issue Date; (vi) agreements of a Restricted
Subsidiary existing at the time such Person became a Subsidiary of the Company
and not entered into in connection with, or in anticipation or contemplation of,
such Person becoming a Subsidiary of the Company; (vii) restrictions contained
in security, pledge or similar agreements granting a Lien permitted by the
covenant described under "-- Limitation on Liens" to the extent such agreements
restrict the transfer of the property subject to any such Lien; (viii) contracts
for the sale of assets in a transaction in compliance with the covenant
described under "-- Limitation on Asset Sales"; or (ix) an agreement governing
Refinancing Indebtedness incurred to Refinance the Indebtedness issued, assumed
or incurred pursuant to an agreement referred to in clause (ii), (iv), (v) or
(vii) above; provided, however, that the provisions relating to such encumbrance
or restriction contained in any such Refinancing Indebtedness are no less
favorable to the Holders in any material respect as determined by the Board of
Directors of the Company in their reasonable and good faith judgment than the
provisions relating to such encumbrance or restriction contained in the
applicable agreement referred to in such clause (ii), (iv), (v) or (vii).
Limitation on Preferred Stock of Restricted Subsidiaries. The Company will
not permit any of the Restricted Subsidiaries to issue any Preferred Stock
(other than to the Company or to a Wholly Owned Restricted Subsidiary) or permit
any Person (other than the Company or a Wholly Owned Restricted Subsidiary) to
own any Preferred Stock of any Restricted Subsidiary.
Limitation on Liens. The Company will not, and will not cause or permit any
of the Restricted Subsidiaries to, directly or indirectly, create, incur, assume
or permit or suffer to exist any Liens of any kind against or upon any property
or assets of the Company or any of the Restricted Subsidiaries, whether owned on
the Issue Date or acquired after the Issue Date, or any proceeds therefrom, or
assign or otherwise convey any right to receive income or profits therefrom
unless (a) in the case of Liens securing Indebtedness that is expressly
subordinate or junior in right of payment to the Notes or any Subsidiary
Guarantee, the Notes or such Subsidiary Guarantee, as the case may be, are
secured by a Lien on such property, assets or proceeds that is senior in
priority to such Liens and (b) in all other cases, the Notes and the Subsidiary
Guarantees are equally and ratably secured, except for (i) Liens existing as of
the Issue Date ; (ii) to the extent not included in clause (i), Liens securing
Indebtedness under the Revolving Credit Facility that do not extend to or cover
categories or types of property or assets not covered by Liens securing the
Revolving Credit Facility as of the Issue Date; (iii) Liens securing the Notes
and Subsidiary Guarantees; (iv) Liens of the Company or a Restricted Subsidiary
on assets of any Restricted Subsidiary; (v) Liens securing Refinancing
Indebtedness which is incurred to Refinance any Indebtedness which has been
secured by a Lien permitted under the Indenture and which has been incurred in
accordance with the provisions of the Indenture; provided, however, that such
Liens do not extend to or cover any property or assets of the Company or any of
the Restricted Subsidiaries not securing the Indebtedness so Refinanced; and
(vi) Permitted Liens.
Limitation on Sale and Leaseback Transactions. The Indenture provides that
the Company will not, and will not permit any Restricted Subsidiary to, directly
or indirectly, enter into any Sale and Leaseback Transaction unless (a)
immediately after giving pro forma effect to such Sale and Leaseback Transaction
(the Attributable Value of such Sale and Leaseback Transaction being deemed to
be Indebtedness of the Company), the Company could incur at least $1.00 of
additional Indebtedness (other than Permitted Indebtedness) in compliance with
the covenant described under "-- Limitation on Incurrence of Additional
Indebtedness" (assuming a market rate of interest with respect to such
additional Indebtedness) and (b) such Sale and Leaseback Transaction complies
with the covenant described under "-- Limitation on Asset Sales."
Merger, Consolidation and Sale of Assets. The Company will not, in a single
transaction or series of related transactions, consolidate or merge with or into
any Person, or sell, assign, transfer, lease, convey or otherwise dispose of (or
cause or permit any Restricted Subsidiary to sell, assign, transfer, lease,
convey or otherwise dispose of) all or substantially all of the Company's assets
(determined on a consolidated basis for the Company and the Restricted
Subsidiaries), whether as an entirety or substantially as an entirety, to any
Person unless: (a) either (i) the Company shall be the surviving or continuing
corporation or (ii) the Person (if other than the Company) formed by such
consolidation or into which the Company is merged or the Person which acquires
by sale, assignment, transfer, lease, conveyance or other disposition the
properties and assets of the Company and the Restricted Subsidiaries
substantially as an entirety (the "Surviving Entity")
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(x) shall be a corporation organized and validly existing under the laws of the
United States or any state thereof or the District of Columbia and (y) shall
expressly assume, by supplemental indenture (in form and substance satisfactory
to the Trustee), executed and delivered to the Trustee, the due and punctual
payment of the principal of, premium, if any, and interest on all of the Notes
and the performance of every covenant of the Notes, the Indenture and the
Registration Rights Agreement on the part of the Company to be performed or
observed; (b) immediately after giving effect to such transaction and the
assumption contemplated by clause (a)(ii)(y) above (including giving effect to
any Indebtedness incurred or anticipated to be incurred in connection with or in
respect of such transaction), the Company or such Surviving Entity, as the case
may be, (i) shall have a Consolidated Net Worth equal to or greater than the
Consolidated Net Worth of the Company immediately prior to such transaction and
(ii) shall be able to incur at least $1.00 of additional Indebtedness (other
than Permitted Indebtedness) pursuant to the covenant described under "--
Limitation on Incurrence of Additional Indebtedness"; (c) immediately before and
immediately after giving effect to such transaction and the assumption
contemplated by clause (a)(ii)(y) above (including, without limitation, giving
effect to any Indebtedness incurred or anticipated to be incurred and any Lien
granted in connection with or in respect of the transaction), no Default or
Event of Default shall have occurred or be continuing; and (d) the Company or
the Surviving Entity, as the case may be, shall have delivered to the Trustee an
officers' certificate and an opinion of counsel, each stating that such
consolidation, merger, sale, assignment, transfer, lease, conveyance or other
disposition and, if a supplemental indenture is required in connection with such
transaction, such supplemental indenture comply with the applicable provisions
of the Indenture and that all conditions precedent in the Indenture relating to
such transaction have been satisfied.
For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise, in a single transaction or series of transactions) of all or
substantially all of the properties or assets of one or more Restricted
Subsidiaries the Capital Stock of which constitutes all or substantially all of
the properties and assets of the Company, shall be deemed to be the transfer of
all or substantially all of the properties and assets of the Company.
Upon any such consolidation, combination or merger or any transfer of all
or substantially all of the assets of the Company in accordance with the
foregoing, in which the Company is not the continuing corporation, the successor
Person formed by such consolidation or into which the Company is merged or to
which such conveyance, lease or transfer is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
the Indenture and the Notes with the same effect as if such surviving entity had
been named as such.
Each of MS Acquisition and Holdings will not, in a single transaction or
series of related transactions, consolidate or merge with or into any Person, or
sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its assets, whether as an entirety or substantially as an
entirety, to any Person unless: (a) either (i) MS Acquisition or Holdings, as
the case may be, shall be the surviving or continuing corporation or (ii) the
Person (if other than MS Acquisition or Holdings, as the case may be) formed by
such consolidation or into which MS Acquisition or Holdings, as the case may be,
is merged or the Person which acquires by sale, assignment, transfer, lease,
conveyance or other disposition the property and assets of MS Acquisition or
Holdings, as the case may be, substantially as an entirety (x) shall be a
corporation organized and validly existing under the laws of the United States
or any State thereof or the District of Columbia and (y) shall expressly assume,
by supplemental indenture (in form and substance satisfactory to the Trustee),
executed and delivered to the Trustee all of the obligations of MS Acquisition
or Holdings, as the case may be, under its Guarantee and the Registration Rights
Agreement on the part of MS Acquisition or Holdings, as the case may be, to be
performed or observed; and (b) MS Acquisition, Holdings or such other Person, as
the case may be, shall have delivered to the Trustee an officers' certificate
and an opinion of counsel, each stating that such consolidation, merger, sale,
assignment, transfer, lease, conveyance or other disposition and, if a
supplemental indenture is required in connection with such transaction, such
supplemental indenture shall comply with the applicable provisions of the
Indenture and that all conditions precedent in the Indenture relating to such
transactions have been satisfied.
Each Subsidiary Guarantor (other than any Subsidiary Guarantor whose
Subsidiary Guarantee is to be released in accordance with the terms of the
Subsidiary Guarantee and the Indenture in connection with any
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transaction complying with the provisions of the Indenture described under "--
Limitation on Asset Sales") will not, and the Company will not cause or permit
any Subsidiary Guarantor to, consolidate with or merge with or into any Person
other than the Company or another Subsidiary Guarantor unless: (a) the entity
formed by or surviving any such consolidation or merger (if other than the
Subsidiary Guarantor) is a corporation organized and existing under the laws of
the United States or any state thereof or the District of Columbia; (b) such
entity assumes by supplemental indenture all of the obligations of the
Subsidiary Guarantor under its Subsidiary Guarantee; (c) immediately after
giving effect to such transaction, no Default or Event of Default shall have
occurred and be continuing; and (d) immediately after giving effect to such
transaction and the use of any net proceeds therefrom on a pro forma basis, the
Company could satisfy the provisions of clause (b) of the first paragraph of
this covenant. Any merger or consolidation of a Subsidiary Guarantor with and
into the Company (with the Company being the surviving entity) or another
Subsidiary Guarantor need only comply with clause (d) of the first paragraph of
this covenant.
Limitations on Transactions with Affiliates. (a) The Company will not, and
will not permit any of the Restricted Subsidiaries to, directly or indirectly,
enter into or permit to exist any transaction or series of related transactions
(including, without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service) with, or for the benefit of, any of
their respective Affiliates (each an "Affiliate Transaction"), other than (i)
Affiliate Transactions permitted under paragraph (b) of this covenant and (ii)
Affiliate Transactions on terms that are no less favorable to the Company or the
applicable Restricted Subsidiary than those that might reasonably have been
obtained in a comparable transaction at such time on an arm's-length basis from
a Person that is not an Affiliate of the Company or such Restricted Subsidiary.
All Affiliate Transactions (and each series of related Affiliate Transactions
which are similar or part of a common plan) involving aggregate payments or
other property with a fair market value in excess of $500,000 shall be approved
by the Board of Directors of the Company, such approval to be evidenced by a
Board Resolution stating that such Board of Directors has determined that such
transaction complies with the foregoing provisions. If the Company or any
Restricted Subsidiary enters into an Affiliate Transaction (or a series of
related Affiliate Transactions related to a common plan) that involves an
aggregate fair market value of more than $5.0 million, the Company shall, prior
to the consummation thereof, obtain a favorable opinion as to the fairness of
such transaction or series of related transactions to the Company or the
relevant Restricted Subsidiary, as the case may be, from a financial point of
view, from an Independent Financial Advisor and file the same with the Trustee.
(b) The restrictions set forth in clause (a) shall not apply to (i)
reasonable fees and compensation paid to and indemnity provided on behalf of,
officers, directors, employees or consultants of the Company or any Restricted
Subsidiary as determined in good faith by the Company's Board of Directors; (ii)
transactions exclusively between or among the Company and any of the Restricted
Subsidiaries or exclusively between or among such Restricted Subsidiaries,
provided such transactions are not otherwise prohibited by the Indenture; and
(iii) Restricted Payments permitted by the Indenture.
Additional Subsidiary Guarantees. If the Company or any of the Restricted
Subsidiaries transfers or causes to be transferred, in one transaction or a
series of related transactions, any property to any Restricted Subsidiary that
is not a Subsidiary Guarantor, or if the Company or any of the Restricted
Subsidiaries shall organize, acquire or otherwise invest in or hold an
Investment in another Restricted Subsidiary that is not a Subsidiary Guarantor
having total consolidated assets with a book value in excess of $500,000, then
such transferee or acquired or other Restricted Subsidiary that is not a
Subsidiary Guarantor shall (a) execute and deliver to the Trustee a supplemental
indenture in form reasonably satisfactory to the Trustee pursuant to which such
Restricted Subsidiary shall unconditionally guarantee all of the Company's
obligations under the Notes and the Indenture on the terms set forth in the
Indenture and (b) deliver to the Trustee an opinion of counsel that such
supplemental indenture has been duly authorized, executed and delivered by such
Restricted Subsidiary and constitutes a legal, valid, binding and enforceable
obligation of such Restricted Subsidiary. Thereafter, such Restricted Subsidiary
shall be a Subsidiary Guarantor for all purposes of the Indenture.
Reports to Holders. The Company will deliver to the Trustee within 15 days
after the filing of the same with the Commission, copies of the quarterly and
annual reports and of the information, documents and other reports, if any,
which the Company is required to file with the Commission pursuant to Section 13
or 15(d) of
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the Exchange Act. Notwithstanding that the Company may not be subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company
will file with the Commission, to the extent permitted, and provide the Trustee
and Holders with such annual reports and such information, documents and other
reports specified in Sections 13 and 15(d) of the Exchange Act. The Company will
also comply with the other provisions of sec. 314(a) of the TIA.
Lines of Business. The Company shall not, and shall not permit any of the
Restricted Subsidiaries to, enter into any business, either directly or through
any Restricted Subsidiary, except (i) for those businesses in which the Company
and the Restricted Subsidiaries were engaged on the Issue Date or businesses
which, in the reasonable good faith judgment of the Board of Directors of the
Company, are related to the automotive industry and (ii) Permitted Investments.
Payments for Consent. Neither the Company nor any of its Subsidiaries
shall, directly or indirectly, pay or cause to be paid any consideration,
whether by way of interest, fee or otherwise, to any holder of any Notes for or
as an inducement to any consent, waiver or amendment of any of the terms or
provisions of the Indenture, the Notes, the Guarantees or any Subsidiary
Guarantee unless such consideration is offered to be paid or agreed to be paid
to all holders of the Notes who so consent, waive or agree to amend in the time
frame set forth in solicitation documents relating to such consent, waiver or
agreement.
Limitation on Designations of Unrestricted Subsidiaries. The Company may
designate any Subsidiary of the Company (other than a Subsidiary of the Company
which owns Capital Stock of a Restricted Subsidiary) as an "Unrestricted
Subsidiary" under the Indenture (a "Designation") only if:
(a) no Default shall have occurred and be continuing at the time of or
after giving effect to such Designation; and
(b) the Company would be permitted under the Indenture to make an
Investment at the time of Designation (assuming the effectiveness of such
Designation) in an amount (the "Designation Amount") equal to the sum of
(i) fair market value of the Capital Stock of such Subsidiary owned by the
Company and the Restricted Subsidiaries on such date and (ii) the aggregate
amount of other Investments of the Company and the Restricted Subsidiaries
in such Subsidiary on such date; and
(c) the Company would be permitted to incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) pursuant to the covenant
described under "-- Limitation on Incurrence of Additional Indebtedness" at
the time of Designation (assuming the effectiveness of such Designation).
In the event of any such Designation, the Company shall be deemed to have
made an Investment constituting a Restricted Payment in the Designation Amount
pursuant to the covenant described under "-- Limitation on Restricted Payments"
for all purposes of the Indenture. The Indenture further provides that the
Company shall not, and shall not permit any Restricted Subsidiary to, at any
time (x) provide direct or indirect credit support for or a guarantee of any
Indebtedness of any Unrestricted Subsidiary (including of any undertaking,
agreement or instrument evidencing such Indebtedness), (y) be directly or
indirectly liable for any Indebtedness of any Unrestricted Subsidiary or (z) be
directly or indirectly liable for any Indebtedness which provides that the
holder thereof may (upon notice, lapse of time or both) declare a default
thereon or cause the payment thereof to be accelerated or payable prior to its
final scheduled maturity upon the occurrence of a default with respect to any
Indebtedness of any Unrestricted Subsidiary (including any right to take
enforcement action against such Unrestricted Subsidiary), except, in the case of
clause (x) or (y), to the extent permitted under the covenant described under
"-- Limitation on Restricted Payments."
The Indenture further provides that the Company may revoke any Designation
of a Subsidiary as an Unrestricted Subsidiary (a "Revocation"), whereupon such
Subsidiary shall then constitute a Restricted Subsidiary, if:
(a) no Default shall have occurred and be continuing at the time of
and after giving effect to such Revocation; and
(b) all Liens and Indebtedness of such Unrestricted Subsidiary
outstanding immediately following such Revocation would, if incurred at
such time, have been permitted to be incurred for all purposes of the
Indenture.
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All Designations and Revocations must be evidenced by Board Resolutions of
the Company delivered to the Trustee certifying compliance with the foregoing
provisions.
EVENTS OF DEFAULT
The following events are defined in the Indenture as "Events of Default":
(a) the failure to pay interest on any Notes for a period of 30 days
after the same becomes due and payable;
(b) the failure to pay the principal on any Notes, when such principal
becomes due and payable, at maturity, upon redemption or otherwise
(including the failure to make a payment to purchase Notes tendered
pursuant to a Change of Control Offer or a Net Proceeds Offer);
(c) a default in the observance or performance of any other covenant
or agreement contained in the Indenture which default continues for a
period of 30 days after the Company receives written notice specifying the
default (and demanding that such default be remedied) from the Trustee or
the Holders of at least 25% of the outstanding principal amount of the
Notes (except in the case of a default with respect to the covenant
described under "-- Certain Covenants -- Merger, Consolidation and Sale of
Assets", which will constitute an Event of Default with such notice
requirement but without such passage of time requirement);
(d) a default under any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced any
Indebtedness of the Company or of any Restricted Subsidiary (or the payment
of which is guaranteed by the Company or any Restricted Subsidiary),
whether such Indebtedness now exists or is created after the Issue Date,
which default (i) is caused by a failure to pay principal of or premium, if
any, on such Indebtedness after any applicable grace period provided in
such Indebtedness on the date of such default (a "principal payment
default") or (ii) results in the acceleration of such Indebtedness prior to
its express maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such
Indebtedness under which there has been a principal payment default or the
maturity of which has been so accelerated, aggregates at least $5.0
million;
(e) one or more judgments in an aggregate amount in excess of $5.0
million shall have been rendered against the Company or any of the
Restricted Subsidiaries and such judgments remain undischarged, unpaid or
unstayed for a period of 60 days after such judgment or judgments become
final and non-appealable;
(f) certain events of bankruptcy affecting the Company or any of its
Significant Subsidiaries; or
(g) any of the Guarantees or the Subsidiary Guarantees ceases to be in
full force and effect or any of the Guarantees or the Subsidiary Guarantees
is declared to be null and void and unenforceable or any of the Guarantees
or the Subsidiary Guarantees is found to be invalid or MS Acquisition,
Holdings or any of the Subsidiary Guarantors denies its liability under its
Guarantee or Subsidiary Guarantee, as the case may be (other than by reason
of release of a Subsidiary Guarantor in accordance with the terms of the
Indenture).
If an Event of Default (other than an Event of Default specified in clause
(f) above) shall occur and be continuing, the Trustee or the Holders of at least
25% in principal amount of outstanding Notes may declare the principal of,
premium, if any, and accrued and unpaid interest on all the Notes to be due and
payable by notice in writing to the Company and the Trustee specifying the
respective Event of Default and that it is a "notice of acceleration", and the
same shall become immediately due and payable. If an Event of Default specified
in clause (f) above occurs and is continuing, then all unpaid principal of, and
premium, if any, and accrued and unpaid interest on all of the outstanding Notes
shall ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holder.
The Indenture provides that, at any time after a declaration of
acceleration with respect to the Notes as described in the preceding paragraph,
the Holders of a majority in principal amount of the Notes then outstanding may
rescind and cancel such declaration and its consequences (a) if the rescission
would not
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conflict with any judgment or decree, (b) if all existing Events of Default have
been cured or waived except nonpayment of principal or interest that has become
due solely because of the acceleration, (c) to the extent the payment of such
interest is lawful, interest on overdue installments of interest and overdue
principal, which has become due otherwise than by such declaration of
acceleration, has been paid, (d) if the Company has paid the Trustee its
reasonable compensation and reimbursed the Trustee for its expenses,
disbursements and advances and (e) in the event of the cure or waiver of an
Event of Default of the type described in clause (f) of the description of
Events of Default above, the Trustee shall have received an officers'
certificate and an opinion of counsel that such Event of Default has been cured
or waived. No such rescission shall affect any subsequent Default or impair any
right consequent thereto.
The Holders of a majority in principal amount of the Notes then outstanding
may waive any existing Default or Event of Default under the Indenture, and its
consequences, except a default in the payment of the principal of or interest on
any Notes.
Holders of the Notes may not enforce the Indenture, the Notes, the
Guarantees or any Subsidiary Guarantee except as provided in the Indenture and
under the TIA. Subject to the provisions of the Indenture relating to the duties
of the Trustee, the Trustee is under no obligation to exercise any of its rights
or powers under the Indenture, the Notes, the Guarantees or any Subsidiary
Guarantee at the request, order or direction of any of the Holders, unless such
Holders have offered to the Trustee reasonable indemnity. Subject to all
provisions of the Indenture and applicable law, the Holders of a majority in
aggregate principal amount of the then outstanding Notes have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred on the
Trustee.
Under the Indenture, the Company is required to provide an officers'
certificate to the Trustee promptly upon any such officer obtaining knowledge of
any Default or Event of Default (provided that such officers shall provide such
certification at least annually whether or not they know of any Default or Event
of Default) that has occurred and, if applicable, describe such Default or Event
of Default and the status thereof.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have its
obligations and the obligations of MS Acquisition, Holdings and all Subsidiary
Guarantors discharged with respect to the outstanding Notes ("Legal
Defeasance"). Such Legal Defeasance means that the Company shall be deemed to
have paid and discharged the entire indebtedness represented by the outstanding
Notes, and satisfied all of its obligations with respect to the Notes, except
for (a) the rights of Holders to receive payments in respect of the principal
of, premium, if any, and interest on the Notes when such payments are due, (b)
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 payments, (c) the rights, powers, trust,
duties and immunities of the Trustee and the Company's obligations in connection
therewith and (d) the Legal Defeasance provisions of the Indenture. In addition,
the Company may, at its option and at any time, elect to have the obligations of
the Company released with respect to certain covenants that are described in the
Indenture ("Covenant Defeasance") and thereafter any omission to comply with
such obligations shall not constitute a Default or Event of Default with respect
to the Notes. In the event Covenant Defeasance occurs, certain events (not
including non-payment, bankruptcy, receivership, reorganization and insolvency
events) described under "-- Events of Default" will no longer constitute an
Event of Default with respect to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (a)
the Company must irrevocably deposit with the Trustee, in trust, for the benefit
of the Holders cash in United States dollars, non-callable United States
government obligations, 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 Notes
on the stated date for payment thereof or on the applicable redemption date, as
the case may be; (b) in the case of Legal Defeasance, the Company shall have
delivered to the Trustee an opinion of counsel in the United States reasonably
acceptable to the Trustee confirming that (i) the Company has received from, or
there has been published by, the Internal Revenue Service a ruling or (ii) since
the date of the Indenture, there has been a change in the applicable federal
income tax law, in either case to the effect
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that, and based thereon such opinion of counsel shall confirm that, the Holders
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 Covenant
Defeasance, the Company shall have delivered to the Trustee an opinion of
counsel in the United States reasonably acceptable to the Trustee confirming
that the Holders 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 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; (e) such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default under, the Indenture
or any other agreement or instrument to which MS Acquisition, Holdings, the
Company or a Subsidiary Guarantor is a party or by which MS Acquisition,
Holdings, the Company or a Subsidiary Guarantor is bound; (f) the Company shall
have delivered to the Trustee an officers' certificate stating that the deposit
was not made by the Company with the intent of preferring the Holders over any
other creditors of MS Acquisition, Holdings, the Company or a Subsidiary
Guarantor or with the intent of defeating, hindering, delaying or defrauding any
other creditors of MS Acquisition, Holdings, the Company or a Subsidiary
Guarantor or others; (g) the Company 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, as the case may be, have been complied with; and (h) the
Company 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
subject to the effect of any applicable bankruptcy, insolvency, reorganization
or similar laws affecting creditors' rights generally.
SATISFACTION AND DISCHARGE
The Indenture will be discharged and will cease to be of further effect
(except as to surviving rights of registration of transfer or exchange of the
Notes, as expressly provided for in the Indenture) as to all outstanding Notes
when (a) either (i) all the Notes theretofore authenticated and delivered
(except lost, stolen or destroyed Notes which have been replaced or paid and
Notes for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Company and thereafter repaid to the Company
or discharged from such trust) have been delivered to the Trustee for
cancellation or (ii) all Notes not theretofore delivered to the Trustee for
cancellation have become due and payable and the Company has irrevocably
deposited or caused to be deposited with the Trustee funds in an amount
sufficient to pay and discharge the entire Indebtedness on the Notes not
theretofore delivered to the Trustee for cancellation, for principal of,
premium, if any, and interest on the Notes to the date of deposit together with
irrevocable instructions from the Company directing the Trustee to apply such
funds to the payment thereof at maturity or redemption, as the case may be; (b)
the Company has paid all other sums payable under the Indenture by the Company;
and (c) the Company has delivered to the Trustee an officers' certificate and an
opinion of counsel stating that all conditions precedent under the Indenture
relating to the satisfaction and discharge of the Indenture have been complied
with.
MODIFICATION OF THE INDENTURE
From time to time, the Company, MS Acquisition, Holdings, the Subsidiary
Guarantor(s) and the Trustee, without the consent of the Holders, may amend the
Indenture, the Guarantees and any Subsidiary Guarantee for certain specified
purposes, including curing ambiguities, defects or inconsistencies, so long as
such change does not, in the opinion of the Trustee, adversely affect the rights
of any of the Holders in any material respect. In formulating its opinion on
such matters, the Trustee will be entitled to rely on such evidence as it deems
appropriate, including, without limitation, solely on an opinion of counsel.
Other modifications and amendments of the Indenture, the Guarantees and any
Subsidiary Guarantee may be made with the consent of the Holders of a majority
in principal amount of the then outstanding Notes issued under the Indenture,
except that, without the consent of each Holder affected thereby, no amendment
may: (a) reduce the amount of Notes whose Holders must consent to an amendment;
(b) reduce the rate of or
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change or have the effect of changing the time for payment of interest,
including defaulted interest, on any Notes; (c) reduce the principal of or
change or have the effect of changing the fixed maturity of any Notes, or change
the date on which any Notes may be subject to redemption or repurchase, or
reduce the redemption or repurchase price therefor; (d) make any Notes payable
in money other than that stated in the Notes; (e) make any change in provisions
of the Indenture protecting the right of each Holder to receive payment of
principal of and interest on such Note on or after the due date thereof or to
bring suit to enforce such payment, or permitting Holders of a majority in
principal amount of Notes to waive Defaults or Events of Default; (f) amend,
change or modify in any material respect the obligation of the Company to make
and consummate a Change of Control Offer in the event of a Change of Control or
make and consummate a Net Proceeds Offer with respect to any Asset Sale that has
been consummated or modify any of the provisions or definitions with respect
thereto; (g) modify or change any provision of the Indenture or the related
definitions affecting ranking of the Notes, the Guarantees or any Subsidiary
Guarantee in a manner which adversely affects the Holders; and (h) release MS
Acquisition, Holdings or any Subsidiary Guarantor from any of its obligations
under its Guarantee or its Subsidiary Guarantee, as the case may be, or the
Indenture otherwise than in accordance with the terms of the Indenture.
GOVERNING LAW
The Indenture provides that the Indenture, the Notes, the Guarantees and
each Subsidiary Guarantee will be governed by, and construed in accordance with,
the laws of the State of New York but without giving effect to applicable
principles of conflicts of law to the extent that the application of the law of
another jurisdiction would be required thereby.
THE TRUSTEE
The Indenture provides that, except during the continuance of an Event of
Default, the Trustee will perform only such duties as are specifically set forth
in the Indenture. During the existence of an Event of Default, the Trustee will
exercise such rights and powers vested in it by the 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.
The Indenture and the provisions of the TIA contain certain limitations on
the rights of the Trustee, should it become a creditor of the Company, MS
Acquisition, Holdings or a Subsidiary Guarantor, to obtain payments of claims in
certain cases or to realize on certain property received in respect of any such
claim as security or otherwise. Subject to the TIA, the Trustee will be
permitted to engage in other transactions; provided that if the Trustee acquires
any conflicting interest as described in the TIA, it must eliminate such
conflict or resign.
CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the form of Indenture for the full definition of
all such terms, as well as any other terms used herein for which no definition
is provided.
"Acquired Indebtedness" means Indebtedness of a Person or any of its
Subsidiaries existing at the time such Person becomes a Restricted Subsidiary or
at the time it merges or consolidates with the Company or any of the Restricted
Subsidiaries or assumed by the Company or a Restricted Subsidiary in connection
with the acquisition of assets by such Person and in each case not incurred in
connection with, or in anticipation or contemplation of, such Person becoming a
Restricted Subsidiary or such acquisition, merger or consolidation.
"Affiliate" means, with respect to any specified Person, any other Person
who directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative of the foregoing.
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"Affiliate Transaction" has the meaning set forth under "-- Certain
Covenants -- Limitation on Transactions with Affiliates."
"Asset Acquisition" means (a) an Investment by the Company or any
Restricted Subsidiary in any other Person pursuant to which such Person shall
become a Restricted Subsidiary, or shall be merged with or into the Company or
any Restricted Subsidiary, or (b) the acquisition by the Company or any
Restricted Subsidiary of the assets of any Person (other than a Restricted
Subsidiary) which constitute all or substantially all of the assets of such
Person or comprises any division or line of business of such Person or any other
properties or assets of such Person other than in the ordinary course of
business.
"Asset Sale" means any direct or indirect sale, issuance, conveyance,
transfer, lease (other than operating leases entered into in the ordinary course
of business), assignment or other transfer for value by the Company or any of
the Restricted Subsidiaries (including any Sale and Leaseback Transaction) to
any Person other than the Company or a Restricted Subsidiary of (a) any Capital
Stock of any Restricted Subsidiary; or (b) any other property or assets of the
Company or any Restricted Subsidiary other than in the ordinary course of
business; provided, however, that Asset Sales shall not include (i) a
transaction or series of related transactions for which the Company or the
Restricted Subsidiaries receive aggregate consideration of less than $250,000,
(ii) the sale, lease, conveyance, disposition or other transfer of all or
substantially all of the assets of the Company as permitted under "-- Certain
Covenants -- Merger, Consolidation and Sale of Assets", (iii) Investment made in
compliance with the covenant described under "-- Limitation on Restricted
Payments" and (iv) the sale, disposition or other transfer of obsolete, damaged,
materially worn or unusable equipment in the ordinary course of business.
"Attributable Value" means, as to any particular lease under which any
Person is at the time liable other than a Capitalized Lease Obligation, and at
any date as of which the amount thereof is to be determined, the total net
amount of rent required to be paid by such Person under such lease during the
remaining term thereof (whether or not such lease is terminable at the option of
the lessee prior to the end of such term), including any period for which such
lease has been, or may, at the option of the lessor, be extended, discounted
from the last date of such term to the date of determination at a rate per annum
equal to the discount rate which would be applicable to a Capitalized Lease
Obligation with a like term in accordance with GAAP. The net amount of rent
required to be paid under any lease for any such period shall be the aggregate
amount of rent payable by the lessee with respect to such period after excluding
amounts required to be paid on account of insurance, taxes, assessments,
utility, operating and labor costs and similar charges. "Attributable Value"
means, as to a Capitalized Lease Obligation under which any Person is at the
time liable and at any date as of which the amount thereof is to be determined,
the capitalized amount thereof that would appear on the face of a balance sheet
of such Person in accordance with GAAP.
"Berkshire" means, individually and collectively, The Berkshire Fund,
Berkshire Partners and each of their respective Permitted Transferees.
"Board of Directors" means, as to any Person, the board of directors of
such Person or any duly authorized committee thereof.
"Board Resolution" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
"Capitalized Lease Obligation" means, as to any Person, the obligations of
such Person under a lease that are required to be classified and accounted for
as capital lease obligations under GAAP, and the amount of such obligations at
any date shall be the capitalized amount of such obligations at such date,
determined in accordance with GAAP.
"Capital Stock" means (a) with respect to any Person that is a corporation,
any and all shares, interests, participations or other equivalents (however
designated and whether or not voting) of corporate stock, including each class
of Common Stock and Preferred Stock of such Person and (b) with respect to any
Person that is not a corporation, any and all partnership or other equity
interests of such Person.
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"Cash Equivalents" means (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof; (b)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either Standard & Poor's Corporation ("S&P") or Moody's
Investors Service, Inc. ("Moody's"); (c) commercial paper maturing no more than
one year from the date of creation thereof and, at the time of acquisition,
having a rating of at least A-1 from S&P or at least P-1 from Moody's; (d)
certificates of deposit or bankers' acceptances maturing within one year from
the date of acquisition thereof issued by any bank organized under the laws of
the United States of America or any state thereof or the District of Columbia or
any United States branch of a foreign bank having at the date of acquisition
thereof combined capital and surplus of not less than $250.0 million; (e)
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clause (a) above entered into with any bank
meeting the qualifications specified in clause (d) above; and (f) investments in
money market funds which invest substantially all their assets in securities of
the types described in clauses (a) through (e) of this definition.
"Change of Control" means the occurrence of any of the following events:
(a) prior to the first public offering of Voting Stock of MS
Acquisition, Holdings or the Company, any person or group, as such terms
are used in Sections 13(d) and 14(d) of the Exchange Act, other than one or
more of the Permitted Holders, shall be entitled (by "beneficial ownership"
(as defined in Rules 13d-3 and 13d-5 under the Exchange Act) of Voting
Stock, by contract or otherwise) to designate for election directors of MS
Acquisition, Holdings or the Company having a majority of the total voting
power of the Board of Directors of MS Acquisition, Holdings or the Company,
as the case may be;
(b) prior to the first public offering of Voting Stock of the Company,
MS Acquisition shall cease to own 100% of the issued and outstanding Voting
Stock of Holdings or Holdings shall cease to own 100% of the Voting Stock
of the Company, whether as a result of the issuance of securities of
Holdings or the Company, any merger, consolidation, liquidation or
dissolution of Holdings or the Company, or any direct or indirect transfer
of securities by MS Acquisition or Holdings or otherwise, provided that
notwithstanding any other provision of the Indenture, including this clause
(b), to the contrary, Holdings may cease to exist, whether as a result of
merger, consolidation, liquidation, dissolution or by any other means, so
long as thereafter (but prior to the first public offering of Voting Stock
of the Company), MS Acquisition, Holdings owns 100% of the issued and
outstanding Voting Stock of the Company;
(c) after the first public offering of Voting Stock of MS Acquisition,
Holdings or the Company, any person or group (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act), other than one or more of
the Permitted Holders, is or becomes the beneficial owner (as defined in
clause (a) above), directly or indirectly, of Voting Stock that represents
more than a majority of the aggregate ordinary voting power of all classes
of the Voting Stock of the Company, Holdings or MS Acquisition, voting
together as a single class;
(d) after the first public offering of Voting Stock of MS Acquisition,
Holdings or the Company, during any period of not greater than two
consecutive years beginning after the Issue Date, individuals who at the
beginning of such period constituted the Board of Directors of the Company,
Holdings or MS Acquisition, as the case may be (together with any new
directors whose election by such Board of Directors or whose nomination for
election by the shareholders of the Company, Holdings or MS Acquisition, as
the case may be, was approved by a vote of a majority of the directors of
the Company, Holdings or MS Acquisition, as the case may be, then still in
office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved), cease for
any reason to have a majority of the total voting power of the Board of
Directors of the Company, Holdings or MS Acquisition, as the case may be;
or
(e) any sale, lease, exchange or other transfer (in one transaction or
a series of related transactions) of all or substantially all of the assets
of the Company to any person or group (as such terms are used in Sections
13(d) and 14(d) of the Exchange Act).
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"Change of Control Offer" has the meaning set forth under "-- Change of
Control".
"Change of Control Payment Date" has the meaning set forth under "-- Change
of Control".
"Common Stock" of any Person means any and all shares, interests or other
participations in, and other equivalents (however designated and whether voting
or non-voting) of such Person's common stock, whether outstanding on the Issue
Date or issued after the Issue Date, and includes, without limitation, all
series and classes of such common stock.
"Commission" means the Securities and Exchange Commission.
"Company" means Aetna Industries, Inc.
"Consolidated EBITDA" means, for any period, the sum (without duplication)
of (a) Consolidated Net Income and (b) to the extent Consolidated Net Income has
been reduced thereby, (i) all income taxes of the Company and the Restricted
Subsidiaries paid or accrued in accordance with GAAP for such period (other than
income taxes attributable to extraordinary, unusual or nonrecurring gains or
losses or taxes attributable to sales or dispositions outside the ordinary
course of business), (ii) Consolidated Interest Expense, (iii) Consolidated
Non-cash Charges, less any non-cash items increasing Consolidated Net Income for
such period, all as determined on a consolidated basis for the Company and the
Restricted Subsidiaries in accordance with GAAP, (iv) bonuses paid on the Issue
Date to officers and directors of MS Acquisition, Holdings and the Company not
to exceed $350,000 in the aggregate and (v) any prepayment penalty on
Indebtedness of the Company retired on the Issue Date.
"Consolidated Fixed Charge Coverage Ratio" means, with respect to the
Company, the ratio of Consolidated EBITDA of the Company during the four full
fiscal quarters (the "Four Quarter Period") ending on or prior to the date of
the transaction giving rise to the need to calculate the Consolidated Fixed
Charge Coverage Ratio (the "Transaction Date") to Consolidated Fixed Charges of
the Company for the Four Quarter Period. In addition to and without limitation
of the foregoing, for purposes of this definition, "Consolidated EBITDA" and
"Consolidated Fixed Charges" shall be calculated after giving effect on a pro
forma basis for the period of such calculation to (a) the incurrence or
repayment of any Indebtedness of the Company or any of the Restricted
Subsidiaries (and the application of the proceeds thereof) giving rise to the
need to make such calculation and any incurrence or repayment of other
Indebtedness (and the application of the proceeds thereof), other than the
incurrence or repayment of Indebtedness in the ordinary course of business for
working capital purposes pursuant to working capital facilities, occurring
during the Four Quarter Period or at any time subsequent to the last day of the
Four Quarter Period and on or prior to the Transaction Date, as if such
incurrence or repayment, as the case may be (and the application of the proceeds
thereof), occurred on the first day of the Four Quarter Period and (b) any Asset
Sales or Asset Acquisitions (including, without limitation, any Asset
Acquisition giving rise to the need to make such calculation as a result of the
Company or one of the Restricted Subsidiaries (including any Person who becomes
a Restricted Subsidiary as a result of the Asset Acquisition) incurring,
assuming or otherwise being liable for Acquired Indebtedness and also including
any Consolidated EBITDA attributable to the assets which are the subject of the
Asset Acquisition or Asset Sale during the Four Quarter Period) occurring during
the Four Quarter Period or at any time subsequent to the last day of the Four
Quarter Period and on or prior to the Transaction Date, as if such Asset Sale or
Asset Acquisition (including the incurrence, assumption or liability for any
such Acquired Indebtedness) occurred on the first day of the Four Quarter
Period. If the Company or any of the Restricted Subsidiaries directly or
indirectly guarantees Indebtedness of a third Person, the preceding sentence
shall give effect to the incurrence of such guaranteed Indebtedness as if the
Company or the Restricted Subsidiary, as the case may be, had directly incurred
or otherwise assumed such guaranteed Indebtedness. Furthermore, in calculating
"Consolidated Fixed Charges" for purposes of determining the denominator (but
not the numerator) of this "Consolidated Fixed Charge Coverage Ratio," (i)
interest on outstanding Indebtedness determined on a fluctuating basis as of the
Transaction Date and which will continue to be so determined thereafter shall be
deemed to have accrued at a fixed rate per annum equal to the rate of interest
on such Indebtedness in effect on the Transaction Date; (ii) if interest on any
Indebtedness actually incurred on the Transaction Date may optionally be
determined at an interest rate based upon a factor of a prime or similar rate, a
eurocurrency interbank offered rate, or other rates, then the interest rate in
effect on the Transaction Date will be deemed to have been in effect during the
Four Quarter Period; and (iii) notwithstanding
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clause (i) above, interest on Indebtedness determined on a fluctuating basis, to
the extent such interest is covered by agreements relating to Obligations under
Interest Rate Agreements, shall be deemed to accrue at the rate per annum
resulting after giving effect to the operation of such agreements.
"Consolidated Fixed Charges" means, with respect to the Company for any
period, the sum, without duplication, of (a) Consolidated Interest Expense
(including any premium or penalty paid in connection with redeeming or retiring
Indebtedness of the Company and the Restricted Subsidiaries prior to the stated
maturity thereof pursuant to the agreements governing such Indebtedness), plus
(b) the product of (i) the amount of all dividend payments on any series of
Preferred Stock of the Company (other than dividends paid in Qualified Capital
Stock) paid, accrued or scheduled to be paid or accrued during such period times
and (ii) a fraction, the numerator of which is one and the denominator of which
is one minus the then current effective consolidated federal, state and local
income tax rate of such Person, expressed as a decimal.
"Consolidated Interest Expense" means, with respect to the Company for any
period, the sum of, without duplication: (a) the aggregate of the interest
expense of the Company and the Restricted Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP, including without
limitation, (i) any amortization of original issue discount, (ii) Obligations
under Interest Rate Agreements, (iii) all capitalized interest and (iv) the
interest portion of any deferred payment obligation; and (b) the interest
component of Capitalized Lease Obligations paid, accrued and/or scheduled to be
paid or accrued by the Company and the Restricted Subsidiaries during such
period as determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, with respect to the Company for any
period, the aggregate net income (or loss) of the Company and the Restricted
Subsidiaries for such period on a consolidated basis, determined in accordance
with GAAP; provided that there shall be excluded therefrom (a) after-tax gains
from Asset Sales or abandonments or reserves relating thereto, (b) after-tax
items classified as extraordinary or nonrecurring gains, (c) the net income of
any Person acquired in a "pooling of interests" transaction accrued prior to the
date it becomes a Restricted Subsidiary or is merged or consolidated with the
Company or any Restricted Subsidiary, (d) the net income (but not loss) of any
Restricted Subsidiary to the extent that the declaration of dividends or similar
distributions by that Restricted Subsidiary of that income is restricted by a
contract, operation of law or otherwise, (e) the net income of any Person, other
than a Restricted Subsidiary, except to the extent of cash dividends or
distributions paid to the Company or to a Restricted Subsidiary by such Person,
(f) income or loss attributable to discontinued operations (including, without
limitation, operations disposed of during such period whether or not such
operations were classified as discontinued), and (g) in the case of a successor
to the Company by consolidation or merger or as a transferee of the Company's
assets, any net income (or loss) of the successor corporation prior to such
consolidation, merger or transfer of assets.
"Consolidated Net Worth" of any Person means the consolidated stockholders'
equity of such Person, determined on a consolidated basis in accordance with
GAAP, less (without duplication) amounts attributable to Disqualified Capital
Stock of such Person.
"Consolidated Non-cash Charges" means, with respect to the Company, for any
period, the aggregate depreciation, amortization and other non-cash expenses of
the Company and the Restricted Subsidiaries reducing Consolidated Net Income of
the Company for such period, determined on a consolidated basis in accordance
with GAAP (excluding any such charges constituting an extraordinary item or loss
or any such charge which requires an accrual of or a reserve for cash charges
for any future period).
"Covenant Defeasance" has the meaning set forth under "-- Legal Defeasance
and Covenant Defeasance".
"CVC" means Citicorp Venture Capital, Ltd., a New York corporation.
"CVC Group" means CVC and its Permitted Transferees.
"Default" means an event or condition the occurrence of which is, or with
the lapse of time or the giving of notice or both would be, an Event of Default.
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"Designation" has the meaning set forth under "-- Certain Covenants --
Limitation on Designations of Unrestricted Subsidiaries".
"Designation Amount" has the meaning set forth under "-- Certain Covenants
- -- Limitation on Designations of Unrestricted Subsidiaries".
"Disqualified Capital Stock" means that portion of any Capital Stock which,
by its terms (or by the terms of any security into which it is convertible or
for which it is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the sole option of the holder thereof on or prior to the final
maturity date of the Notes.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any successor statute or statutes thereto.
"fair market value" means, with respect to any asset or property, the price
which could be negotiated in an arm's-length, free market transaction, for cash,
between a willing seller and a willing buyer, neither of whom is under undue
pressure or compulsion to complete the transaction. Fair market value shall be
determined by the Board of Directors of the Company acting reasonably and in
good faith and shall be evidenced by a Board Resolution of the Company delivered
to the Trustee.
"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 may be approved by a significant segment of the accounting
profession of the United States, which are in effect as of the Issue Date.
"Guarantees" means the unconditional guarantees by MS Acquisition and
Holdings, on a senior basis, to each Holder and the Trustee of the full and
prompt performance of the Company's obligations under the Indenture and the
Notes, including the payment of principal of and interest on the Notes.
"Holdings" has the meaning set forth under "-- Redemption -- Optional
Redemption upon Public Equity Offerings".
"incur" has the meaning set forth under "-- Certain Covenants -- Limitation
on Incurrence of Additional Indebtedness".
"Indebtedness" means with respect to any Person, without duplication, (a)
all Obligations of such Person for borrowed money, (b) all Obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (c)
all Capitalized Lease Obligations of such Person, (d) all Obligations of such
Person issued or assumed as the deferred purchase price of property, all
conditional sale obligations and all Obligations under any title retention
agreement (but excluding trade accounts payable and other accrued liabilities
arising in the ordinary course of business that are not overdue by 90 days or
more or are being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted), (e) all Obligations for the reimbursement
of any obligor on any letter of credit, banker's acceptance or similar credit
transaction, (f) guarantees and other contingent obligations in respect of
Indebtedness referred to in clauses (a) through (e) above and clause (h) below,
(g) all Obligations of any other Person of the type referred to in clauses (a)
through (f) above which are secured by any Lien on any property or asset of such
Person, the amount of such Obligation being deemed to be the lesser of the fair
market value of such property or asset or the amount of the Obligation so
secured, (h) all Obligations under currency exchange agreements and Interest
Rate Agreements of such Person and (i) all Disqualified Capital Stock issued by
such Person with the amount of Indebtedness represented by such Disqualified
Capital Stock being equal to the greater of its voluntary or involuntary
liquidation preference and its maximum fixed repurchase price. For purposes
hereof, the "maximum fixed repurchase price" of any Disqualified Capital Stock
which does not have a fixed repurchase price shall be calculated in accordance
with the terms of such Disqualified Capital Stock as if such Disqualified
Capital Stock were purchased on any date on which Indebtedness shall be required
to be determined pursuant to the Indenture, and if such price is based upon, or
measured by, the fair market value
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of such Disqualified Capital Stock such fair market value shall be determined
reasonably and in good faith by the Board of Directors of the Company.
"Independent Financial Advisor" means a firm (a) which does not, and whose
directors, officers and employees or Affiliates do not, have a direct or
indirect material financial interest in the Company and (b) which, in the
judgment of the Board of Directors of the Company, is otherwise independent and
qualified to perform the task for which it is to be engaged.
"Initial Purchasers" means Smith Barney Inc., Schroder Wertheim & Co.
Incorporated and First Chicago Capital Markets, Inc.
"Interest Rate Agreement" means an agreement governing any interest rate
swap transaction, interest rate cap, collar or floor transaction, interest rate
future, any option on any of the above or any similar transaction.
"Investment" means, with respect to any Person, any direct or indirect loan
or other extension of credit (including, without limitation, a guarantee) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition by such Person of any Capital Stock,
bonds, notes, debentures or other securities or evidences of Indebtedness issued
by, any Person. "Investment" shall exclude extensions of trade credit by the
Company and the Restricted Subsidiaries on commercially reasonable terms in
accordance with normal trade practices of the Company or such Restricted
Subsidiary, as the case may be. If the Company or any Restricted Subsidiary
sells or otherwise disposes of any Capital Stock of any Restricted Subsidiary
such that, after giving effect to any such sale or disposition, it ceases to be
a Subsidiary of the Company, 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 Capital Stock of such Restricted Subsidiary not sold or disposed
of. The amount of any Investment shall not be adjusted for increases or
decreases in value of write-ups or write-downs with respect to such Investment.
"Issue Date" means the date of original issuance of the Notes.
"Legal Defeasance" has the meaning set forth under "-- Legal Defeasance and
Covenant Defeasance".
"Lien" means any lien, mortgage, deed of trust, pledge, security interest,
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof and any agreement to give
any security interest).
"Management" means, individually and collectively, any officer, director or
employee of the Company, Holdings, MS Acquisition or a Subsidiary of the Company
who acquires Voting Stock of the Company, Holdings or MS Acquisition on or after
the Issue Date and each of their respective Permitted Transferees.
"Michigan" means, individually and collectively, the State of Michigan, any
political subdivision thereof and any pension fund for employees of the State of
Michigan or any political subdivision thereof.
"MS Acquisition" has the meaning set forth under "-- Redemption -- Optional
Redemption upon Public Equity Offerings".
"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds in
the form of cash or Cash Equivalents including payments in respect of deferred
payment obligations when received in the form of cash or Cash Equivalents (other
than the portion of any such deferred payment constituting interest) received by
the Company or any of the Restricted Subsidiaries from such Asset Sale net of
(a) reasonable out-of-pocket expenses and fees relating to such Asset Sale
(including, without limitation, legal, accounting and investment banking fees,
underwriters or placement agent fees and commissions, brokerage, filing and
registration fees and trustee's fees), (b) taxes paid or payable after taking
into account any reduction in consolidated tax liability due to available tax
credits or deductions and any tax sharing arrangements, (c) repayment of
Indebtedness that is required to be repaid in connection with such Asset Sale
and (d) appropriate amounts to be provided by the Company or any Restricted
Subsidiary, as the case may be, as a reserve, in accordance with GAAP, against
any liabilities associated with such Asset Sale and retained by the Company or
any Restricted Subsidiary, as the case may be, after such Asset Sale, including,
without limitation, pension and other
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post-employment benefit liabilities, liabilities related to environmental
matters and liabilities under any indemnification obligations associated with
such Asset Sale.
"Net Proceeds Offer" has the meaning set forth under "-- Certain Covenants
- -- Limitation on Asset Sales".
"Net Proceeds Offer Amount" has the meaning set forth under "-- Certain
Covenants -- Limitation on Asset Sales".
"Net Proceeds Offer Payment Date" has the meaning set forth under "--
Certain Covenants -- Limitation on Asset Sales".
"Net Proceeds Offer Trigger Date" has the meaning set forth under "--
Certain Covenants -- Limitation on Asset Sales".
"Obligations" means all obligations for principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages and other liabilities
payable under the documentation governing any Indebtedness.
"Permitted Holders" means Michigan, Berkshire, Prudential, Management and
the CVC Group; provided that Michigan, Berkshire, Prudential, Management and the
CVC Group (other than CVC, Citicorp or any direct or indirect Wholly Owned
Subsidiary of Citicorp, in each case, individually or on behalf of the CVC
Group, each of which may be a Permitted Holder irrespective of any such
entitlement), shall not be a Permitted Holder if it is entitled by "beneficial
ownership" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), by
contract or otherwise, to designate for election directors of MS Acquisition,
Holdings or the Company having a majority of the total voting power of the Board
of Directors of MS Acquisition, Holdings or the Company, as the case may be.
"Permitted Indebtedness" means, without duplication, each of the following:
(a) Indebtedness under the Notes, the Indenture, the Guarantees and
any Subsidiary Guarantee;
(b) Indebtedness incurred pursuant to the Revolving Credit Facility in
an aggregate principal amount at any time outstanding not to exceed the
greater of (a) the sum of (i) 85% of the net book value of accounts
receivable of the Company and the Restricted Subsidiaries and (ii) 60% of
the net book value of inventory of the Company and the Restricted
Subsidiaries and (b) $35.0 million, in each case reduced by any required
permanent repayments (which are accompanied by a corresponding permanent
commitment reduction) thereunder;
(c) Obligations under Interest Rate Agreements of the Company or a
Subsidiary Guarantor covering Indebtedness of the Company or any of the
Restricted Subsidiaries and Obligations under Interest Rate Agreements of
any Restricted Subsidiary (other than a Subsidiary Guarantor) covering
Indebtedness of such Restricted Subsidiary; provided, however, that such
Interest Rate Agreements are entered into to protect the Company and the
Restricted Subsidiaries from fluctuations in interest rates on Indebtedness
incurred in accordance with the Indenture, to the extent the notional
amount (or, if applicable, contract amount) of such Obligation does not
exceed the principal amount of the Indebtedness to which such Obligation
relates;
(d) Indebtedness of a Restricted Subsidiary to the Company or to
another Restricted Subsidiary for so long as such Indebtedness is held by
the Company or a Restricted Subsidiary, in each case subject to no Lien
held by a Person other than the Company or a Restricted Subsidiary;
provided that if as of any date any Person other than the Company or a
Restricted Subsidiary owns or holds any such Indebtedness or holds a Lien
in respect of such Indebtedness, such date shall be deemed the incurrence
of Indebtedness not constituting Permitted Indebtedness by the issuer of
such Indebtedness;
(e) Indebtedness of the Company to a Restricted Subsidiary for so long
as such Indebtedness is held by a Restricted Subsidiary, in each case
subject to no Lien; provided that (i) any Indebtedness of the Company to
any Restricted Subsidiary that is not a Subsidiary Guarantor is unsecured
and subordinated, pursuant to a written agreement, to the Company's
obligations under the Indenture and the Notes and (ii) if as of any date
any Person other than a Restricted Subsidiary owns or holds any such
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Indebtedness or holds a Lien in respect of such Indebtedness, such date
shall be deemed the date of an incurrence of Indebtedness not constituting
Permitted Indebtedness by the Company;
(f) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument inadvertently
(except in the case of daylight overdrafts) drawn against insufficient
funds in the ordinary course of business; provided, however, that such
Indebtedness is extinguished within five business days of incurrence;
(g) Indebtedness of the Company or any of the Restricted Subsidiaries
represented by letters of credit for the account of the Company or such
Restricted Subsidiary, as the case may be, in order to provide security for
workers' compensation claims, payment obligations in connection with
self-insurance or similar requirements in the ordinary course of business;
(h) Refinancing Indebtedness; and
(i) additional Indebtedness of the Company or any Subsidiary Guarantor
in an aggregate principal amount not to exceed $5.0 million at any one time
outstanding.
"Permitted Investments" means (a) Investments by the Company or any
Restricted Subsidiary in any Person that is or will become immediately after
such Investment a Restricted Subsidiary or that will merge or consolidate into
the Company or a Restricted Subsidiary; (b) Investments in the Company by any
Restricted Subsidiary; provided that any Indebtedness evidencing any such
Investment held by a Restricted Subsidiary that is not a Subsidiary Guarantor is
unsecured and subordinated, pursuant to a written agreement, to the Company's
obligations under the Notes and the Indenture; (c) investments in cash and Cash
Equivalents; (d) loans and advances to employees and officers of the Company or
any of the Restricted Subsidiaries in the ordinary course of business for bona
fide business purposes not in excess of $1.0 million at any one time
outstanding; (e) Obligations under Interest Rate Agreements, provided, however,
that such Interest Rate Agreements are entered into to protect the Company, or,
if applicable, Restricted Subsidiaries from fluctuations in interest rates on
Indebtedness incurred in accordance with the Indenture; (f) Investments in
Unrestricted Subsidiaries not to exceed $1.0 million at any one time
outstanding; (g) Investments in securities of trade creditors or customers
received pursuant to any plan of reorganization or similar arrangement upon the
bankruptcy or insolvency of such trade creditors or customers; (h) Investments
made by the Company or the Restricted Subsidiaries as a result of consideration
received in connection with an Asset Sale made in compliance with the covenant
described under "-- Certain Covenants -- Limitation on Asset Sales" covenant;
(i) Investments in the Notes; and (j) Investments not to exceed $1.0 million at
any one time outstanding in Persons a majority of whose revenues are derived
from businesses which, in the reasonable good faith judgment of the Board of
Directors of the Company, are related to the automotive industry.
"Permitted Liens" means the following types of Liens:
(a) Liens for taxes, assessments or governmental charges or claims
either (i) not delinquent or (ii) contested in good faith by appropriate
proceedings and as to which the Company or a Restricted Subsidiary, as the
case may be, shall have set aside on its books such reserves as may be
required pursuant to GAAP;
(b) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen and other Liens imposed by law
incurred in the ordinary course of business for sums not yet delinquent or
being contested in good faith, if such reserve or other appropriate
provision, if any, as shall be required by GAAP shall have been made in
respect thereof;
(c) Liens incurred or deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance and other
types of social security, including any Lien securing letters of credit
issued in the ordinary course of business consistent with past practice in
connection therewith, or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government contracts,
performance and return-of-money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed money);
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(d) judgment Liens not giving rise to an Event of Default so long as
such Lien is adequately bonded and any appropriate legal proceedings which
may have been duly initiated for the review of such judgment shall not have
been finally terminated or the period within which such proceedings may be
initiated shall not have expired;
(e) easements, rights-of-way, zoning restrictions and other similar
charges or encumbrances in respect of real property not interfering in any
material respect with the ordinary conduct of the business of the Company
or any of the Restricted Subsidiaries;
(f) any interest or title of a lessor under any Capitalized Lease
Obligation; provided that such Liens do not extend to any property or
assets which is not leased property subject to such Capitalized Lease
Obligation;
(g) Liens securing Purchase Money Indebtedness of the Company or any
Restricted Subsidiary; provided, however, that (i) the Purchase Money
Indebtedness shall not be secured by any property or assets of the Company
or any Restricted Subsidiary other than the property and assets so acquired
and (ii) the Lien securing such Indebtedness shall be created within 180
days of such acquisition;
(h) Liens securing reimbursement obligations with respect to
commercial letters of credit which encumber documents and other property
relating to such letters of credit and products and proceeds thereof;
(i) Liens encumbering deposits made to secure obligations arising from
statutory, regulatory, contractual, or warranty requirements of the Company
or any of the Restricted Subsidiaries, including rights of offset and
set-off;
(j) Liens securing Obligations under Interest Rate Agreements, which
Obligations relate to Indebtedness that is otherwise permitted under the
Indenture; and
(k) Liens securing Acquired Indebtedness incurred in accordance with
the covenant described under "-- Certain Covenants -- Limitation on
Incurrence of Additional Indebtedness;" provided that (i) such Liens
secured such Acquired Indebtedness at the time of and prior to the
incurrence of such Acquired Indebtedness by the Company or a Restricted
Subsidiary and were not granted in connection with, or in anticipation of,
the incurrence of such Acquired Indebtedness by the Company or a Restricted
Subsidiary and (ii) such Liens do not extend to or cover any property or
assets of the Company or of any of the Restricted Subsidiaries other than
the property or assets that secured the Acquired Indebtedness prior to the
time such Indebtedness became Acquired Indebtedness of the Company or a
Restricted Subsidiary.
"Permitted Transferee" means (a) with respect to CVC, (i) Citicorp, any
direct or indirect Wholly Owned Subsidiary of Citicorp and any officer, director
or employee of CVC, Citicorp or any Wholly Owned Subsidiary of Citicorp, (ii)
any spouse or lineal descendent (including by adoption and stepchildren) of the
officers, directors and employees referred to in clause (a)(i) above, (iii) any
trust, corporation or partnership 100% in interest of the beneficiaries,
stockholders or partners of which consists of one or more of the Persons
described in clause (a)(i) or (ii) above; (b) with respect to the Berkshire
Fund, Berkshire Partners, Prudential Insurance Co. and Pruco Life Insurance Co.,
each of their respective direct or indirect Wholly Owned Subsidiaries; and (c)
with respect to each officer, director and employee of the Company, Holdings, MS
Acquisition or a Subsidiary of the Company, (i) any spouse or lineal descendent
(including by adoption and stepchildren) of such officer, director or employee
and (ii) any trust, corporation or partnership 100% in interest of the
beneficiaries, stockholders or partners of which consists of one or more of any
such officer, director or employee or any of the persons described in clause
(c)(i) above.
"Person" means an individual, partnership, corporation, unincorporated
organization, trust or joint venture, or a governmental agency or political
subdivision thereof.
"Preferred Stock" of any Person means any Capital Stock of such Person that
has preferential rights to any other Capital Stock of such Person with respect
to dividends or redemptions or upon liquidation.
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"Prudential" means, individually and collectively, Prudential Insurance
Co., Pruco Life Insurance Co. and each of their respective Permitted
Transferees.
"Public Equity Offering" has the meaning set forth under "-- Redemption --
Optional Redemption upon Public Equity Offerings".
"Purchase Money Indebtedness" means Indebtedness the net proceeds of which
are used for the purchase of property or assets acquired in the normal course of
business by the Person incurring such Indebtedness.
"Qualified Capital Stock" means any Capital Stock that is not Disqualified
Capital Stock.
"Reference Date" has the meaning set forth under "-- Certain Covenants --
Limitation on Restricted Payments".
"Refinance" means, in respect of any security or Indebtedness, to
refinance, extend, renew, refund, replace, repay, prepay, redeem, defease or
retire, or to issue a security or Indebtedness in exchange or replacement for,
such security or Indebtedness in whole or in part. "Refinanced" and
"Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means any Refinancing by the Company or any
Restricted Subsidiary of the Company of Indebtedness incurred in accordance with
the covenant described under "-- Certain Covenants -- Limitation on Incurrence
of Additional Indebtedness" covenant (other than pursuant to clause (b), (c),
(d), (e), (f), (g) or (i) of the definition of Permitted Indebtedness), in each
case that does not (i) result in an increase in the aggregate principal amount
of Indebtedness of such Person as of the date of such proposed Refinancing (plus
the amount of any premium required to be paid under the terms of the instrument
governing such Indebtedness and plus the amount of reasonable expenses incurred
by the Company and the Restricted Subsidiaries in connection with such
Refinancing) or (ii) create Indebtedness with (x) a Weighted Average Life to
Maturity that is less than the Weighted Average Life to Maturity of the
Indebtedness being Refinanced or (y) a final maturity earlier than the final
maturity of the Indebtedness being Refinanced; provided that (1) if such
Indebtedness being Refinanced is Indebtedness of the Company or a Subsidiary
Guarantor, then such Refinancing Indebtedness shall be Indebtedness solely of
the Company and/or such Subsidiary Guarantor and (2) if such Indebtedness being
Refinanced is subordinate or junior to the Notes or a Subsidiary Guarantee, then
such Refinancing Indebtedness shall be subordinate to the Notes or such
Subsidiary Guarantee, as the case may be, at least to the same extent and in the
same manner as the Indebtedness being Refinanced.
"Registration Rights Agreement" means the Registration Rights Agreement
dated as of the Issue Date among the Company, MS Acquisition, Holdings, the
Subsidiary Guarantor and the Initial Purchasers.
"Replacement Assets" has the meaning set forth under "-- Certain Covenants
- -- Limitation on Asset Sales".
"Restricted Payment" has the meaning set forth under "-- Certain Covenants
- -- Limitation on Restricted Payments".
"Restricted Subsidiary" means any Subsidiary of the Company that has not
been designated by the Board of Directors of the Company, by a Board Resolution
delivered to the Trustee, as an Unrestricted Subsidiary pursuant to and in
compliance with the covenant described under "-- Certain Covenants -- Limitation
on Designations of Unrestricted Subsidiaries." Any such Designation may be
revoked by a Board Resolution of the Company delivered to the Trustee, subject
to the provisions of such covenant.
"Revocation" has the meaning set forth under "-- Certain Covenants --
Limitation on Designations of Unrestricted Subsidiaries".
"Revolving Credit Facility" means the Credit Agreement dated as of May 2,
1996, as amended by the First Amendment thereto dated as of August 13, 1996,
among the Company, MS Acquisition, Holdings, the Subsidiary Guarantor and NBD,
together with the related documents thereto (including, without limitation, any
guarantee agreements and security documents), in each case as such agreements
may be amended or further amended (including any amendment and restatement
thereof), supplemented or otherwise modified
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from time to time, including any agreement extending the maturity of,
refinancing, replacing or otherwise restructuring (including increasing the
amount of available borrowings thereunder (provided that such increase in
borrowings is permitted by the covenant described under "-- Certain Covenants --
Limitation on Incurrence of Additional Indebtedness") or adding Subsidiaries of
the Company as additional borrowers or guarantors thereunder) all or any portion
of the Indebtedness under such agreement or any successor or replacement
agreement and whether by the same or any other agent, lender or group of
lenders.
"Sale and Leaseback Transaction" means any direct or indirect arrangement
with any Person or to which any such Person is a party, providing for the
leasing to the Company or a Restricted Subsidiary of any property, whether owned
by the Company or any Restricted Subsidiary at the Issue Date or later acquired,
which has been or is to be sold or transferred by the Company or such Restricted
Subsidiary to such Person or to any other Person from whom funds have been or
are to be advanced by such Person on the security of such property.
"Significant Subsidiary" shall have the meaning set forth in Rule 1.02(v)
of Regulation S-X under the Securities Act.
"Subsidiary", with respect to any Person, means (a) any corporation of
which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors under ordinary circumstances
shall at the time be owned, directly or indirectly, by such Person or (b) any
other Person of which at least a majority of the voting interest under ordinary
circumstances is at the time, directly or indirectly, owned by such Person.
"Subsidiary Guarantee" means the unconditional guarantee by a Subsidiary
Guarantor, on a senior basis, to each Holder and the Trustee of the full and
prompt performance of the Company's obligations under the Indenture and the
Notes, including the payment of principal of and interest on the Notes.
"Subsidiary Guarantor" means (a) the Company's Subsidiary as of the Issue
Date and (b) each of the Company's Subsidiaries that in the future executes a
supplemental indenture in which such Subsidiary agrees to be bound by the terms
of the Indenture as a Subsidiary Guarantor; provided that any Person
constituting a Subsidiary Guarantor as described above shall cease to constitute
a Subsidiary Guarantor when its Subsidiary Guarantee is released in accordance
with the terms of the Indenture.
"Surviving Entity" has the meaning set forth under "-- Certain Covenants --
Merger, Consolidation and Sale of Assets".
"Unrestricted Subsidiary" means any Subsidiary of the Company designated as
such pursuant to and in compliance with the covenant described under "-- Certain
Covenants -- Limitation on Designations of Unrestricted Subsidiaries." Any such
designation may be revoked by a Board Resolution of the Company delivered to the
Trustee, subject to the provisions of such covenant.
"Voting Stock" of a corporation means all classes of Capital Stock of such
corporation then outstanding and normally entitled to vote in the election of
the directors of such corporation.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (a) the then outstanding
aggregate principal amount of such Indebtedness into (b) the sum of the total of
the products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"Wholly Owned Restricted Subsidiary" means any Restricted Subsidiary of
which all the outstanding voting securities (other than in the case of a foreign
Restricted Subsidiary, directors' qualifying shares or an immaterial amount of
shares required to be owned by other Persons pursuant to applicable law) are
owned by the Company or another Wholly Owned Restricted Subsidiary.
"Wholly Owned Subsidiary" of any Person means a corporation of which all
the outstanding voting securities (other than in the case of a foreign
corporation, director's qualifying shares or an immaterial amount
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of shares required to be owned by other Persons pursuant to applicable laws) are
owned by such Person or a Wholly Owned Subsidiary of such Person.
BOOK ENTRY; DELIVERY AND FORM
Except as described in the next paragraph, the New Notes initially will be
represented by a single, permanent global certificate in definitive, fully
registered form (the "Global Note"). The Global Note will be deposited with, or
on behalf of, DTC and registered in the name of a nominee of DTC. The Global
Note will be subject to certain restrictions on transfer set forth therein and
will bear the legend regarding such restrictions set forth under the heading
"Transfer Restrictions" herein.
THE GLOBAL NOTE
The Company expects that pursuant to procedures established by DTC (i) upon
the issuance of the Global Note, DTC or its custodian will credit, on its
internal system, the principal amount of New Notes of the individual beneficial
interest represented by such Global Note to the respective accounts for persons
who have accounts with DTC and (ii) ownership of beneficial interest in the
Global Note will be shown on, and the transfer of such ownership will be
effected only through, records maintained by DTC or its nominee (with respect to
interests of persons who have accounts with DTC ("Participants")) and the
records of Participants (with respect to interests of persons other than
Participants). Such accounts initially will be designated by or on behalf of the
Initial Purchasers and ownership of beneficial interests in the Global Note will
be limited to Participants or persons who hold interest through Participants.
So long as DTC or its nominee is the registered owner or holder of the
Global Note, DTC or such nominee, as the case may be, will be considered the
sole owner or holder of the New Notes represented by such Global Note for all
purposes under the Indenture. No beneficial owner of an interest in the Global
Note will be able to transfer that interest except in accordance with DTC's
procedures, in addition to those provided for under the Indenture.
Payments of the principal of, premium, if any, and interest (including
Additional Interest) on, the Global Note will be made to DTC or its nominee, as
the case may be, as the registered owner thereof. None of the Company, the
Trustee or any paying agent of the Trustee will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in the Global Note or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interest.
The Company expects that DTC or its nominee, upon receipt of any payment of
principal, premium, if any, or interest (including Additional Interest) in
respect of the Global Note, will credit Participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of the Global Note as shown on the records of DTC or its nominee. The
Company also expects that payments by Participants to owners of beneficial
interest in the Global Note held through such Participants will be governed by
standing instructions and customary practice, as is now the case with securities
held for the accounts of customers registered in the names of nominees for such
customers. Such payments will be the responsibility of such Participants.
Transfers between Participants in DTC will be effected in the ordinary way
in accordance with DTC rules and will be settled in clearinghouse funds. If a
holder requires physical delivery of a New Note issued in registered
certificated form (a "Certificated Note") for any reason, including to sell New
Notes to persons in states which required physical delivery of the Certificated
Notes, or to pledge such securities, such holder must transfer its interest in
the Global Note in accordance with the normal procedures of DTC and with the
procedures set forth in the Indenture.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of New Notes (including the presentation of New Notes for
exchange as described below) only at the direction of one or more Participants
to whose account the DTC interests in the Global Note are credited and only in
respect of such portion of the aggregate principal amount of New Notes as to
which such Participant or Participants
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has or have given such direction. However, if there is an Event of Default under
the Indenture, DTC will exchange the Global Note for Certificated Notes, which
it will distribute to its Participants.
DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under laws of the State of New York, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the Uniform
Commercial Code and a "clearing agency" registered pursuant to the provisions of
Section 17A of the Exchange Act. DTC was created to hold securities for its
Participants and facilitate the clearance and settlement of securities
transactions between Participants through electronic book entry changes in
accounts of its Participants, thereby eliminating the need for physical movement
of certificates. Participants include securities brokers and dealers, banks,
trust companies and clearing corporations and certain other organizations.
Indirect access to the DTC system is available to others such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Note among Participants of DTC, it is under
no obligation to perform such procedures, and such procedures may be
discontinued at any time. None of the Company, the Initial Purchasers or the
Trustee will have any responsibility for the performance by DTC or its
Participants or indirect participants of their respective obligations under the
rules and procedures governing their operations.
CERTIFICATED NOTES
If DTC is at any time unwilling or unable to continue as a depositary for
the Global Note and a successor depositary is not appointed by the Company
within 90 days, Certificated Notes will be issued in exchange for the Global
Note.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
In the opinion of Morgan, Lewis & Bockius LLP, counsel to the Company, the
following discussion summarizes the material United States federal income tax
consequences of the Exchange Offer to a holder of Old Notes that is an
individual citizen or resident of the United States or a United States
corporation that purchased the Old Notes pursuant to their original issue (a
"U.S. Holder"). It is based on the Internal Revenue Code of 1986, as amended to
the date hereof (the "Code"), existing and proposed Treasury regulations, and
judicial and administrative determinations, all of which are subject to change
at any time, possibly on a retroactive basis. Moreover, U.S. Holders should note
that there are no Treasury Regulations, judicial decisions or other authority
that have considered a transaction closely comparable to the Exchange Offer and
there can be no assurance that the Internal Revenue Service (the "IRS") will not
take a contrary position to the positions taken herein. The following relates
only to the Old Notes, and the New Notes received therefor, that are held as
"capital assets" within the meaning of Section 1221 of the Code by U.S. Holders.
It does not discuss state, local, or foreign tax consequences, nor does it
discuss tax consequences to categories of holders that are subject to special
rules, such as foreign persons, tax-exempt organizations, insurance companies,
banks, and dealers in stocks and securities. Tax consequences may vary depending
on the particular status of an investor. No rulings will be sought from the IRS
with respect to the federal income tax consequences of the Exchange Offer.
THIS SECTION DOES NOT PURPORT TO DEAL WITH ALL ASPECTS OF FEDERAL INCOME
TAXATION THAT MAY BE RELEVANT TO AN INVESTOR'S DECISION TO EXCHANGE OLD NOTES
FOR NEW NOTES. EACH INVESTOR SHOULD CONSULT WITH ITS OWN TAX ADVISOR CONCERNING
THE APPLICATION OF THE FEDERAL INCOME TAX LAWS AND OTHER TAX LAWS TO ITS
PARTICULAR SITUATION BEFORE DETERMINING WHETHER TO EXCHANGE OLD NOTES FOR NEW
NOTES.
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THE EXCHANGE OFFER
The exchange of Old Notes pursuant to the Exchange Offer should be treated
as a continuation of the corresponding Old Notes because the terms of the New
Notes are not materially different from the terms of the Old Notes. Accordingly,
such exchange should not constitute a taxable event to U.S. Holders and,
therefore, (i) no gain or loss should be realized by a U.S. Holder upon receipt
of a New Note, (ii) the holding period of the New Note should include the
holding period of the Old Note exchange therefor and (iii) the adjusted tax
basis of the New Note should be the same as the adjusted tax basis of the Old
Note exchanged therefor immediately before the exchange.
STATED INTEREST
Stated interest on a Note will be taxable to a U.S. Holder as ordinary
interest income at the time that such interest accrues or is received, in
accordance with the U.S. Holder's regular method of accounting for federal
income tax purposes. The Notes are not considered to have been issued with
original issue discount ("OID") for federal income tax purposes.
SALE, EXCHANGE OR RETIREMENT OF THE NOTES
A U.S. Holder's tax basis in a Note generally will be its cost. A U.S.
Holder generally will recognize gain or loss on the sale, exchange or retirement
of a Note in an amount equal to the difference between the amount realized on
the sale, exchange or retirement and the tax basis of the Note. Gain or loss
recognized on the sale, exchange or retirement of a Note (excluding amounts
received in respect of accrued interest, which will be taxable as ordinary
interest income) generally will be capital gain or loss and will be long-term
capital gain or loss if the Note was held for more than one year.
BACKUP WITHHOLDING
Under certain circumstances, a U.S. Holder of a Note may be subject to
"backup withholding" at a 31% rate with respect to payments of interest thereon
or the gross proceeds from the disposition thereof. This withholding generally
applies if the U.S. Holder fails to furnish his or her social security number or
other taxpayer identification number ("TIN") in the specified manner and in
certain other circumstances. Any amount withheld from a payment to a U.S. Holder
under the backup withholding rules is allowable as a credit against such U.S.
Holder's federal income tax liability, provided that the required information is
furnished to the IRS. Corporations and certain other entities described in the
Code and Treasury regulations are exempt from backup withholding if their exempt
status is properly established.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Notes received in exchange for Old Notes where
such Old Notes were acquired as a result of market-making activities or other
trading activities. Each of the Company and the Guarantors has agreed that, for
a period of 180 days after the Effective 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 the
date of this Prospectus), all dealers effecting transactions in the New Notes
may be required to deliver a prospectus.
Neither the Company nor any of the Guarantors will receive any proceeds
from any sale of New Notes by broker-dealers. New Notes received by
broker-dealers for their own account pursuant to the Exchange Offer may be sold
from time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the New Notes or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may
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receive compensation in the form of commissions or concessions from any such
broker-dealer or the purchasers of any such New Notes. Any broker-dealer that
resells New Notes that were received by it for its own account pursuant to the
Exchange Offer and any broker or dealer that participates in a distribution of
such New Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of New Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that, by acknowledging that it will deliver and by delivering 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 and each of the Guarantors has jointly
and severally agreed to pay all expenses incident to the Exchange Offer
(including the expenses of one counsel for the holders of the Old Notes) other
than commissions or concessions of any brokers or dealers and will indemnify the
holders of the Old Notes (including any broker-dealers) against certain
liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
The validity of the New Notes offered hereby will be passed upon for the
Company by Morgan, Lewis & Bockius LLP, New York, New York.
EXPERTS
The financial statements of the Company and MS Acquisition as of December
31, 1994 and 1995 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.
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INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AETNA INDUSTRIES, INC.
Report of Independent Accountants.................................................... F-2
Consolidated Balance Sheets as of December 31, 1994 and 1995
and June 30, 1996 (unaudited)...................................................... F-3
Consolidated Statements of Operations for the three years ended December 31, 1995
and the six months ended June 30, 1995 and 1996 (unaudited)........................ F-4
Consolidated Statements of Cash Flows for the three years ended December 31, 1995
and six months ended June 30, 1995 and 1996 (unaudited)............................ F-5
Notes to Consolidated Financial Statements for the three years ended December 31,
1995
and the six months ended June 30, 1995 and 1996.................................... F-6
MS ACQUISITION CORP.
Report of Independent Accountants.................................................... F-15
Consolidated Balance Sheets as of December 31, 1994 and 1995
and June 30, 1996 (unaudited)...................................................... F-16
Consolidated Statements of Operations for the three years ended December 31, 1995
and the six months ended June 30, 1995 and 1996 (unaudited)........................ F-17
Consolidated Statements of Cash Flows for the three years ended December 31, 1995
and six months ended June 30, 1995 and 1996 (unaudited)............................ F-18
Notes to Consolidated Financial Statements for the three years ended December 31,
1995
and the six months ended June 30, 1995 and 1996.................................... F-19
PRO FORMA UNAUDITED CONDENSED CONSOLIDATED FINANCIAL DATA
AETNA INDUSTRIES, INC.
Pro Forma Unaudited Condensed Consolidated Statement of Operations Data.............. F-28
Notes to the Pro Forma Unaudited Condensed Consolidated Statement of Operations
Data............................................................................... F-29
Pro Forma Unaudited Consolidated Balance Sheet at June 30, 1996...................... F-30
Notes to the Pro Forma Unaudited Consolidated Balance Sheet.......................... F-31
MS ACQUISITION CORP.
Pro Forma Unaudited Condensed Consolidated Statement of Operations Data.............. F-32
Notes to the Pro Forma Unaudited Condensed Consolidated Statement of Operations...... F-33
Pro Forma Unaudited Consolidated Balance Sheet at June 30, 1996...................... F-34
Notes to the Pro Forma Unaudited Consolidated Balance Sheet.......................... F-35
</TABLE>
F-1
<PAGE> 83
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Stockholder of
Aetna Industries, Inc.
In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations and of cash flows present fairly,
in all material respects, the financial position of Aetna Industries, Inc. and
its subsidiary at December 31, 1995 and 1994, and the results of their
operations and their 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 the Company'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.
As discussed in Note 9 to the consolidated financial statements, the
Company changed its method of accounting for income taxes in the year ended
December 31, 1993.
Price Waterhouse LLP
Detroit, Michigan
February 12, 1996, except for
Notes 11 and 12 which are as of May 2, 1996
and August 13, 1996, respectively
F-2
<PAGE> 84
AETNA INDUSTRIES, INC.
(A WHOLLY OWNED SUBSIDIARY OF MS ACQUISITION CORP.)
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- JUNE 30,
1994 1995 1996
-------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets
Cash........................................................ $ 163 $ 291 $ 311
Accounts receivable (less allowance for doubtful accounts of
$158, $240 and $265, respectively)....................... 28,638 28,522 33,960
Inventories................................................. 9,410 8,659 9,795
Tooling..................................................... 869 2,658 1,579
Prepaid income taxes........................................ 359 360
Prepaid expenses............................................ 196 142 373
Deferred income taxes....................................... 277 518 759
-------- -------- --------
Total current assets................................... 39,912 41,150 46,777
-------- -------- --------
Property, plant and equipment
Land........................................................ 1,652 1,652 1,588
Buildings and improvements.................................. 11,386 11,082 10,831
Machinery and equipment..................................... 50,417 54,480 61,690
Construction-in-progress.................................... 3,090 9,434 4,832
-------- -------- --------
Total property, plant and equipment.................... 66,545 76,648 78,941
Less -- accumulated depreciation............................ (22,862) (27,775) (30,383)
-------- -------- --------
Net property, plant and equipment...................... 43,683 48,873 48,558
-------- -------- --------
Other assets
Deferred costs and other assets............................. 2,359 1,644 1,375
Cost in excess of net assets acquired....................... 27,377 26,575 26,175
-------- -------- --------
Total other assets..................................... 29,736 28,219 27,550
-------- -------- --------
$113,331 $118,242 $ 122,885
======== ======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities
Accounts payable............................................ $ 28,612 $ 31,566 $ 31,095
Accrued expenses............................................ 9,205 10,109 10,876
Current portion of long-term debt........................... 5,400 2,500
-------- -------- --------
Total current liabilities.............................. 43,217 44,175 41,971
-------- -------- --------
Long-term debt, less current portion.......................... 17,083 15,799 18,976
-------- -------- --------
Subordinated debt............................................. 40,661 41,942 42,743
-------- -------- --------
Deferred income taxes......................................... 9,543 8,924 8,987
-------- -------- --------
Commitments and contingencies (Note 10)
Stockholder's equity
Common stock -- $.01 par value; 1,000 issued and
outstanding, respectively
Contributed capital......................................... 9,024 9,024 9,024
Retained earnings (accumulated deficit)..................... (6,197) (1,622) 1,184
-------- -------- --------
2,827 7,402 10,208
-------- -------- --------
$113,331 $118,242 $ 122,885
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE> 85
AETNA INDUSTRIES, INC.
(A WHOLLY OWNED SUBSIDIARY OF MS ACQUISITION CORP.)
CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
-------------------------------- --------------------
1993 1994 1995 1995 1996
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net sales................................. $162,908 $204,850 $211,905 $119,111 $114,944
Cost of sales............................. 139,499 172,428 183,542 100,321 98,472
Selling, general and administrative
expenses................................ 12,544 12,898 13,331 6,835 7,371
--------- --------- --------- --------- ---------
Operating income.......................... 10,865 19,524 15,032 11,955 9,101
--------- --------- --------- --------- ---------
Interest expense, net..................... 9,020 8,929 8,579 4,246 4,132
--------- --------- --------- --------- ---------
Income before cumulative effect of
change in method of accounting and
income taxes......................... 1,845 10,595 6,453 7,709 4,969
Income tax provision...................... 930 4,000 1,877 2,243 2,163
--------- --------- --------- --------- ---------
Income before cumulative effect of
change in method of accounting....... 915 6,595 4,576 5,466 2,806
Cumulative effect of change in method of
accounting for income taxes............. (4,771)
--------- --------- --------- --------- ---------
Net income (loss)....................... $ (3,856) $ 6,595 $ 4,576 $ 5,466 $ 2,806
========= ========= ========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE> 86
AETNA INDUSTRIES, INC.
(A WHOLLY OWNED SUBSIDIARY OF MS ACQUISITION CORP.)
CONSOLIDATED STATEMENTS OF CASH FLOW
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------ ------------------
1993 1994 1995 1995 1996
------- ------- -------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)............................. $(3,856) $ 6,595 $ 4,576 $ 5,466 $ 2,806
Adjustments to reconcile net income (loss) to
net cash provided by operating activities --
Depreciation and amortization............... 6,009 6,150 6,579 3,426 3,558
Deferred interest........................... 3,249 2,995 1,281 (65) 801
Deferred income taxes....................... 7,129 748 (860) 178
Other....................................... (2,116)
Changes in assets and liabilities
Accounts receivable...................... (1,148) (6,159) 116 (4,967) (5,438)
Inventories.............................. (3,538) (503) 750 881 (1,136)
Tooling.................................. 3,830 (1,790) (470) 1,079
Income taxes refundable.................. (360)
Prepaid expenses......................... (119) 38 54 29 (231)
Income taxes payable..................... 305 (761) (530)
Accounts payable......................... 5,118 9,073 2,954 2,214 (471)
Accrued expenses......................... 2,483 394 904 (172) 767
------- ------- -------- ------- -------
NET CASH PROVIDED BY OPERATING
ACTIVITIES.......................... 13,516 22,040 14,564 5,812 1,913
------- ------- -------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment,
net......................................... (3,474) (6,125) (10,103) (4,966) (2,732)
Other, net.................................... (863) (329) (149) 162
------- ------- -------- ------- -------
NET CASH USED FOR INVESTING
ACTIVITIES.......................... (4,337) (6,454) (10,252) (4,966) (2,570)
------- ------- -------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term debt, net..... (9,401) (15,433) (4,184) (2,900) (7,250)
Net increase in line of credit................ 2,396 7,927
------- ------- -------- ------- -------
NET CASH PROVIDED BY (USED FOR)
FINANCING ACTIVITIES................ (9,401) (15,433) (4,184) (504) 677
------- ------- -------- ------- -------
Net increase (decrease) in cash............... (222) 153 128 342 20
Cash -- beginning of year..................... 232 10 163 163 291
------- ------- -------- ------- -------
Cash -- end of period......................... $ 10 $ 163 $ 291 $ 505 $ 311
======= ======= ======== ======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid during the period for interest...... $ 5,850 $12,027 $ 4,480
======= ======= ========
Cash paid during the period for income
taxes....................................... $ 788 $ 4,350 $ 2,750
======= ======= ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE> 87
AETNA INDUSTRIES, INC.
(A WHOLLY OWNED SUBSIDIARY OF MS ACQUISITION CORP.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS)
1. ORGANIZATION AND BASIS OF PRESENTATION
Aetna Industries, Inc. (Aetna or the Company) is a wholly owned subsidiary
of MS Acquisition Corp. (MS Acquisition). MS Acquisition was formed for the sole
purpose of purchasing Aetna and does not have any significant assets or
liabilities, other than all of the outstanding common stock of Aetna and two
series of mandatorily redeemable preferred stock discussed below.
The preferred stock referred to in Note 7 of the consolidated financial
statements of MS Acquisition has not been included in the accompanying Aetna
balance sheet. The carrying value of the Company's assets and liabilities other
than the redeemable preferred stock is that of its parent, MS Acquisition.
2. SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES
Description of operations and major customers
The Company's primary business operations are the manufacture of automotive
stampings and assemblies used as original equipment components by North American
automotive manufacturers in the production of sport utility vehicles, mini-vans,
other light trucks and passenger cars.
The Company's financial condition and results of operations depend
significantly on two major automotive manufacturers, Chrysler Corporation
(Chrysler) and General Motors Corporation (GM). Following is a summary of net
production sales to such key customers, as a percentage of net production sales:
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS
DECEMBER 31, ENDED JUNE 30,
------------------------ --------------
1993 1994 1995 1995 1996
---- ---- ---- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Chrysler.............................................. 59 % 62 % 60 % 63 % 59 %
GM.................................................... 39 35 36 33 36
Other................................................. 2 3 4 4 5
--- --- --- --- ---
100 % 100 % 100 % 100 % 100 %
=== === === === ===
</TABLE>
Principles of consolidation
The consolidated financial statements include the accounts of the Company
and a foreign sales corporation which is a wholly owned subsidiary of Aetna. All
significant intercompany transactions and account balances have been eliminated
in consolidation.
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect reported assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
Cash and cash equivalents
The Company considers cash on hand, deposits in banks and short-term
marketable securities with maturities of 90 days or less as cash and cash
equivalents for the purpose of the statement of cash flows.
F-6
<PAGE> 88
AETNA INDUSTRIES, INC.
(A WHOLLY OWNED SUBSIDIARY OF MS ACQUISITION CORP.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS)
2. SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Financial instruments
With the exception of long-term debt and stockholder's equity, the Company
records all financial instruments, including accounts receivable and accounts
payable, at cost, which approximates market value.
Revenue recognition
Revenue from sales and the corresponding receivables are recorded upon
shipment of product to the customer.
Inventories
Inventories of stampings and assemblies are valued at the lower of cost,
determined by the last-in, first-out (LIFO) method, or market. Inventories of
purchased parts and purchased labor are valued at the lower of cost, as
determined by the first-in, first-out (FIFO) method, or market.
Property, plant and equipment
Property, plant and equipment are stated at cost. The Company provides for
depreciation principally using the straight-line method over the following
estimated useful lives:
<TABLE>
<CAPTION>
YEARS
-----
<S> <C>
Buildings and improvements............................................ 20-30
Machinery and equipment............................................... 5-15
</TABLE>
Upon retirement or disposal, the asset cost and related accumulated
depreciation is removed from the accounts and the net amount, less proceeds, is
charged or credited to income. Expenditures for renewals and betterments are
capitalized. Expenditures for maintenance and repairs are charged against income
as incurred.
Cost in excess of net assets acquired
Cost in excess of net assets acquired is being amortized over forty years
using the straight-line method. Accumulated amortization aggregated $4,674,
$5,475 and $5,875 at December 31, 1994 and 1995 and June 30, 1996, respectively.
The Company periodically evaluates the eventual recoverability of the cost in
excess of net assets acquired based on estimated future operating results and
cash flows.
Start-up and preoperating expenses
Incremental costs incurred relating to the start-up of a new production
facility have been capitalized as deferred costs and are being amortized over a
five-year period commencing January 1992. Accumulated amortization aggregated
$1,271, $1,694 and $1,906 at December 31, 1994 and 1995 and June 30, 1996,
respectively.
Income taxes
Income tax provisions are based upon Statement of Financial Accounting
Standards No. 109, (FAS 109), "Accounting for Income Taxes". Deferred tax assets
and liabilities are provided for the expected future tax consequence of
temporary differences between the carrying amounts and the tax basis of the
Company's assets and liabilities. Prior to January 1, 1993, the Company utilized
the provisions of Accounting
F-7
<PAGE> 89
AETNA INDUSTRIES, INC.
(A WHOLLY OWNED SUBSIDIARY OF MS ACQUISITION CORP.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS)
2. SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Principles Bulletin No. 11, "Accounting for Income Taxes" and provided deferred
taxes on nonpermanent differences between financial statement and taxable
income.
Interim financial information
The accompanying unaudited interim consolidated financial statements do not
include all the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of the
Company, all adjustments, consisting of only normal, recurring adjustments,
necessary to present the financial position of the Company at June 30, 1996 and
the results of its operations and its cash flows for the six months ended June
30, 1995 and 1996 have been included. Operating results for the interim periods
are not necessarily indicative of results that may be expected for the year
ending December 31, 1996.
3. INVENTORIES
Inventories are comprised of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------- JUNE 30,
1994 1995 1996
------ ------ -----------
(UNAUDITED)
<S> <C> <C> <C>
Inventories valued at LIFO
Raw materials.................................................. $3,516 $2,034 $2,355
Work-in-process................................................ 2,624 2,989 3,607
Finished goods................................................. 1,818 2,273 2,151
------ ------ ------
7,958 7,296 8,113
LIFO reserve................................................... (240) (240) (240)
------ ------ ------
7,718 7,056 7,873
------ ------ ------
Inventories valued at FIFO
Purchased parts and purchased labor............................ 1,692 1,603 1,922
------ ------ ------
Total inventories................................................ $9,410 $8,659 $9,795
====== ====== ======
</TABLE>
4. ACCRUED EXPENSES
Accrued expenses are comprised of the following:
<TABLE>
<CAPTION>
JUNE 30,
DECEMBER 31, 1996
----------------- -----------
1994 1995
------ ------- (UNAUDITED)
<S> <C> <C> <C>
Accrued workers' compensation expense........................... $2,666 $ 2,618 $ 3,024
Other........................................................... 6,539 7,491 7,852
------ ------- -------
$9,205 $10,109 $10,876
====== ======= =======
</TABLE>
5. SUBORDINATED DEBT
Subordinated debt at December 31, 1994 and 1995 and June 30, 1996 consists
of $30,500 of principal and $10,161, $11,442 and $12,243 of deferred interest,
respectively. The principal of $30,500 consists of two 14.0% notes payable by
the Company in two annual aggregate principal payments of $6,100 commencing
March 1,
F-8
<PAGE> 90
AETNA INDUSTRIES, INC.
(A WHOLLY OWNED SUBSIDIARY OF MS ACQUISITION CORP.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS)
5. SUBORDINATED DEBT (CONTINUED)
1997 with a final payment of $18,300 on March 1, 1999. Payments of interest
accrued from 1990 to 1995 were deferred until the Company has available cash
flows as defined in the agreements. As a result, $2,995 and $1,281 of interest
expense on subordinated debt incurred during 1994 and 1995, respectively, have
been included with subordinated debt as a noncurrent liability. The deferred
interest bears interest at a rate of 14.0%. Based upon quoted market prices for
similar debt, the fair value of the subordinated debt approximated $45,000 at
December 31, 1995.
The subordinated debt agreements contain, among other provisions, covenants
relating to the levels of operating income and net worth and the ratio of
operating income to interest expense.
Unamortized commitment and legal fees of $267 and $203 at December 31, 1994
and 1995, respectively, relating to the subordinated debt have been deferred and
are being amortized over the term of the debt agreements using the interest
method.
6. RELATED PARTY TRANSACTIONS
The Company leases certain real property from a stockholder at less than
fair market value rates under lease agreements expiring in 2006. Approximately
$2,425, which represents the present value at the date of acquisition of the
favorable lease terms using a 13.0% interest rate, has been recorded as
property, plant and equipment and is being amortized on a straight-line basis
over the lease terms. Rent expense under these lease agreements aggregated $879,
$919 and $965 during 1993, 1994 and 1995, respectively. Future minimum rental
payments due under these lease agreements are as follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31
--------------------------------------------------------------------
<S> <C>
1996.............................................................. $ 1,018
1997.............................................................. 892
1998.............................................................. 937
1999.............................................................. 984
2000.............................................................. 1,033
Thereafter........................................................ 7,378
--------
$12,242
========
</TABLE>
The Company has a management agreement with a related party whereby it is
charged an annual fee of $250 for management services. The management fees for
the years ended December 31, 1994 and 1995 were recorded and paid during the
year. Due to reaching selected thresholds and other measurements, the Company
recorded management fees aggregating $750, including $500 for 1991 and 1992,
during the year ended December 31, 1993.
F-9
<PAGE> 91
AETNA INDUSTRIES, INC.
(A WHOLLY OWNED SUBSIDIARY OF MS ACQUISITION CORP.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS)
7. STOCKHOLDER'S EQUITY
The changes in stockholder's equity were as follows:
<TABLE>
<CAPTION>
RETAINED
EARNINGS TOTAL
CONTRIBUTED (ACCUMULATED STOCKHOLDER'S
CAPITAL DEFICIT) EQUITY
----------- ------------ --------------
<S> <C> <C> <C>
Balance at January 1, 1993............................... $9,024 $ (8,936) $ 88
Net loss............................................... (3,856) (3,856)
------ -------- --------
Balance at December 31, 1993............................. 9,024 (12,792) (3,768)
------ -------- --------
Net income............................................. 6,595 6,595
------ -------- --------
Balance at December 31, 1994............................. 9,024 (6,197) 2,827
------ -------- --------
Net income............................................. 4,576 4,576
------ -------- --------
Balance at December 31, 1995............................. 9,024 (1,622) 7,402
------ -------- --------
(unaudited)
Net income............................................. 2,806 2,806
------ -------- --------
Balance at June 30, 1996................................. $9,024 $ 1,184 $ 10,208
====== ======== ========
</TABLE>
Certain stockholders of the MS Acquisition were also stockholders of the
predecessor company prior to the acquisition by MS Acquisition. Due to this
partial continuation of control, the acquisition was recorded by the Company
using a combination of (1) the historical basis to the extent of continuing
ownership and (2) the purchase method of accounting for the remaining portion of
assets and liabilities. The purchase method requires that assets and the
liabilities be recorded at their estimated fair market value. The amount by
which the fair market value exceeded this historical cost of the net assets
acquired attributable to the stockholders with continuing interests of $7,276 is
recorded as a reduction of contributed capital in the accompanying consolidated
balance sheets.
8. EMPLOYEE BENEFIT PLANS
The Company has four defined benefit pension plans covering the majority of
its hourly employees. The Company's funding policy is to fund costs as required
under the Employee Retirement Income Security Act of 1974, as amended. The
plans' assets are invested in a master trust.
F-10
<PAGE> 92
AETNA INDUSTRIES, INC.
(A WHOLLY OWNED SUBSIDIARY OF MS ACQUISITION CORP.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS)
8. EMPLOYEE BENEFIT PLANS (CONTINUED)
The following table sets forth the plans' funded status and amounts
recognized in the Company's consolidated balance sheets at December 31, 1994 and
1995:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1994 1995
------------ --------------------------
ASSETS ASSETS ACCUMULATED
EXCEED EXCEED BENEFITS
ACCUMULATED ACCUMULATED EXCEED
BENEFITS BENEFITS ASSETS
------------ ----------- -----------
<S> <C> <C> <C>
Actuarial present value of benefit obligations
Accumulated benefit obligation, including vested benefits
of $1,068, $278 and $1,063, respectively............... $1,138 $ 1,145 $ 287
====== ======= ======
Plan assets at fair value................................ $1,171 $ 1,157 $ 277
Projected benefit obligation for service rendered to
date................................................... 1,138 1,145 287
------ ------- ------
Plan assets in excess of (less than) projected benefit
obligation............................................. 33 12 (10)
Unrecognized loss from prior experience.................. 521 426 142
------ ------- ------
Prepaid pension cost included in deferred costs and other
assets................................................. $ 554 $ 438 $ 132
====== ======= ======
Weighted average discount rate......................... 8.75% 7.00% 7.00%
====== ======= ======
Estimated long-term rate of return on assets........... 9.50% 9.50% 9.50%
====== ======= ======
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1993 1994 1995
---- ----- -----
<S> <C> <C> <C>
Pension costs include:
Service cost..................................................... $ 97 $ 116 $ 102
Interest cost.................................................... 80 92 88
Actual return on assets.......................................... (3) 126 262
Net amortization................................................. (94) (233) (360)
---- ----- -----
$ 80 $ 101 $ 92
==== ===== =====
</TABLE>
The Company also maintains a 401(k) plan for all eligible nonunion
employees, and a 401(k) plan for certain union employees not covered by the
defined benefit plans above. During the years ended December 31, 1993, 1994 and
1995, the Company incurred $37, $101 and $130, respectively, of expense related
to 401(k) plans.
9. INCOME TAXES
The Company is included in the consolidated United States federal income
tax return filed by MS Acquisition. Accordingly, the provision for federal
income taxes and the related payments or refunds of tax are determined on a
consolidated basis. The Company's income tax provisions compiled on a separate
return basis would have been consistent with those recorded in its financial
statements.
F-11
<PAGE> 93
AETNA INDUSTRIES, INC.
(A WHOLLY OWNED SUBSIDIARY OF MS ACQUISITION CORP.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS)
9. INCOME TAXES (CONTINUED)
The income tax provision (benefit) comprises the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------
1993 1994 1995
------ ------ ------
<S> <C> <C> <C>
Current income taxes payable...................... $1,201 $3,252 $2,782
Deferred income taxes............................. (271) 748 (905)
------ ------ ------
$ 930 $4,000 $1,877
====== ====== ======
</TABLE>
Deferred tax assets and liabilities are comprised of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
1994 1995
------ ------
<S> <C> <C>
DEFERRED TAX ASSETS
Workers' compensation........................................ $1,145 $1,105
Other........................................................ 699 727
------ ------
Gross deferred tax assets.................................. 1,844 1,832
------ ------
DEFERRED TAX LIABILITIES
Depreciation................................................. 9,135 8,494
Inventory.................................................... 1,243 1,225
Deferred costs and other..................................... 732 519
------ ------
Gross deferred tax liabilities............................. 11,110 10,238
------ ------
Net deferred tax liability................................... $9,266 $8,406
====== ======
</TABLE>
Effective January 1, 1993, the Company prospectively adopted the provisions
of FAS 109. The impact of adoption of this standard was to reduce retained
earnings by $4,771.
A reconciliation of the U.S. federal statutory rate to the Company's
effective rate is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
----------------------
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
U.S. federal statutory rate.............................. 35.0% 35.0% 35.0%
Effect of graduated rates................................ (1.0) (1.0)
Non-deductible goodwill.................................. 14.8 2.7 4.2
Reversal of tax reserves no longer required.............. (2.9) (2.7)
Effect of 1% increase (decrease) in federal rate on
deferred tax balances.................................. 2.5 (3.9)
Other.................................................... 1.6 0.5 (2.6)
---- ---- ----
50.4% 37.8% 29.0%
==== ==== ====
</TABLE>
10. CONTINGENCIES AND LEASE COMMITMENT
The Company leases a production facility under a lease agreement accounted
for as an operating lease. The lease agreement calls for annual rent of
approximately $594 through December 1997 and provides for three five-year
renewal options. Additionally, the Company leases certain machinery and
equipment under
F-12
<PAGE> 94
AETNA INDUSTRIES, INC.
(A WHOLLY OWNED SUBSIDIARY OF MS ACQUISITION CORP.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS)
10. CONTINGENCIES AND LEASE COMMITMENT (CONTINUED)
operating leases. Future minimum rental payments on the machinery and equipment
are as follows: 1996 -- $151; 1997 -- $134; 1998 -- $73; 1999 -- $12.
11. LONG-TERM DEBT
A summary of long-term debt is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1994 1995
------- -------
<S> <C> <C>
Note payable to bank in quarterly principal installments of
$1,250 and a final payment of $3,500 originally due
October 31, 1996, refinanced on May 2, 1996. The note
bears interest at the prime rate (8.5% at December 31,
1995) plus 2.0%.......................................... $12,250 $ 7,250
Note payable to bank under an equipment loan facility
payable in quarterly principal installments of $336 and a
final payment of $64 due on June 30, 1995................ 400
Note payable to bank under a revolving line of credit
facility. The note bears interest at the prime rate (8.5%
at December 31, 1995) plus 1.5%.......................... 9,833 11,049
------- -------
22,483 18,299
Less -- current portion.................................... (5,400) (2,500)
------- -------
$17,083 $15,799
======= =======
</TABLE>
At December 31, 1995 and 1994, the Company had $9,799 and $9,833,
respectively, outstanding under a revolving line of credit facility whereby it
may borrow, based upon available collateral, up to $25,000. The Company is
charged a monthly fee equal to 0.5% per annum of the average daily unused credit
facility. All assets of the Company are pledged as collateral for the debt
agreements. As part of this credit facility, the Company had available a $1,500
letter of credit facility from the same bank. At December 31, 1995, $1,370 of
letters of credit were outstanding which, if exercised, bear interest at 1.5%
over the bank's prime rate.
On May 2, 1996, the Company executed a new credit agreement relating to a
working capital facility. Under this new credit agreement, the Company may
borrow, based upon available collateral as defined in the agreement (principally
inventory, tooling and accounts receivable), up to $35,000 at either (i) a
Floating Rate, defined as the greater of the Prime Rate or the sum of 1.0% plus
the Federal Funds Rate, or (ii) a Eurodollar Rate plus a margin agreed to by the
banks. The Company is also charged a monthly fee equal to 0.5% per annum of the
daily average unused amount of the credit agreement.
As part of the new credit agreement discussed above, the Company has
available at May 2, 1996, a $3,000 letter of credit facility under which the
bank will issue irrevocable standby letters of credit. Such irrevocable standby
letters of credit, if exercised, bear interest at either the Floating Rate or
the Eurodollar Rate, as defined above. The credit facility is due to expire on
May 2, 1997, but may be extended by the consent of both parties.
In connection with the execution of this credit agreement, the Company
repaid the remaining note payable to bank due October 31, 1996 and the note
payable to bank under a revolving line of credit facility which aggregated
$29,054 on May 2, 1996, with the borrowings under its new credit agreement. As a
result of
F-13
<PAGE> 95
AETNA INDUSTRIES, INC.
(A WHOLLY OWNED SUBSIDIARY OF MS ACQUISITION CORP.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS)
11. LONG-TERM DEBT (CONTINUED)
the new credit agreement, amounts outstanding at December 31, 1995 under the
prior credit agreement and revolving line of credit have been classified as
long-term.
The new credit agreement contains, among other provisions, covenants
relating to the ratios of (i) debt to earnings before income taxes, interest and
depreciation and amortization (EBITDA) and (ii) interest expense to EBITDA.
Unamortized commitment and legal fees of $315 and $692 at December 31, 1995
and 1994, respectively, relating to the long-term debt have been deferred and
are being amortized over the term of the debt agreements using the interest
method. As a result of the execution of the new credit agreement, the remaining
unamortized commitment and legal fees were charged to expense in 1996.
12. THE TRANSACTIONS
On August 13, 1996, the Company's parent, MS Acquisition completed a
recapitalization. MS Acquisition amended its charter to provide for the
reclassification of its capital stock into two new classes of common stock
(voting and non-voting) (together, New Common) and a new class of preferred
stock (New Preferred). Existing MS Acquisition stockholders exchanged their
existing MS Acquisition shares, pro rata, for New Common and New Preferred.
Citibank Venture Capital, Ltd. purchased shares of New Preferred and New Common
for $10,000 in cash from the existing MS Acquisition stockholders. MS
Acquisition formed Aetna Holdings, Inc. (Holdings) and contributed to Holdings
all of the capital stock to the Company. Holdings then purchased from existing
stockholders approximately 61% of their existing MS Acquisition stock in
exchange for (i) $11,064 in cash and (ii) $8,731 in principal amount of 11.0%
junior subordinated debentures of Holdings due in 2007. In addition, MS
Acquisition paid approximately (i) $651 in cash to terminate certain employee
options. The former stockholders retained (i) $2.36 million in stated value of
New Preferred and (ii) shares of New Common representing 20.6% of the New Common
on a fully diluted basis.
In connection with this recapitalization, the MS Acquisition, the Company
and NBD Bank amended and restated the Company's existing working capital
facility with NBD Bank. The covenants described in Note 11 remained
substantially unchanged.
F-14
<PAGE> 96
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Stockholders of
MS Acquisition Corp.
In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations and of cash flows present fairly,
in all material respects, the financial position of MS Acquisition Corp. and its
subsidiaries at December 31, 1995 and 1994, and the results of their operations
and their 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 the Company'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.
As discussed in Note 9 to the consolidated financial statements, the
Company changed its method of accounting for income taxes in the year ended
December 31, 1993.
Price Waterhouse LLP
Detroit, Michigan
February 12, 1996, except for
Notes 12 and 13 which are as of May 2, 1996
and August 13, 1996, respectively
F-15
<PAGE> 97
MS ACQUISITION CORP.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- JUNE 30,
1994 1995 1996
-------- -------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets
Cash.................................................................. $ 163 $ 291 $ 311
Accounts receivable (less allowance for doubtful accounts of $158,
$240 and $265, respectively)........................................ 28,638 28,522 33,960
Inventories........................................................... 9,410 8,659 9,795
Tooling............................................................... 869 2,658 1,579
Prepaid income taxes.................................................. 359 360
Prepaid expenses...................................................... 196 142 373
Deferred income taxes................................................. 277 518 759
-------- -------- --------
Total current assets.............................................. 39,912 41,150 46,777
-------- -------- --------
Property, plant and equipment
Land.................................................................. 1,652 1,652 1,588
Buildings and improvements............................................ 11,386 11,082 10,831
Machinery and equipment............................................... 50,417 54,480 61,690
Construction-in-progress.............................................. 3,090 9,434 4,832
-------- -------- --------
Total property, plant and equipment............................... 66,545 76,648 78,941
Less -- accumulated depreciation...................................... (22,862) (27,775) (30,383)
-------- -------- --------
Net property, plant and equipment................................. 43,683 48,873 48,558
-------- -------- --------
Other assets
Deferred costs and other assets....................................... 2,359 1,644 1,375
Cost in excess of net assets acquired................................. 27,377 26,575 26,175
-------- -------- --------
Total other assets................................................ 29,736 28,219 27,550
-------- -------- --------
$113,331 $118,242 $ 122,885
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable...................................................... $ 28,612 $ 31,566 $ 31,095
Accrued expenses...................................................... 9,205 10,109 10,876
Current portion of long-term debt..................................... 5,400 2,500
-------- -------- --------
Total current liabilities......................................... 43,217 44,175 41,971
-------- -------- --------
Long-term debt, less current portion.................................... 17,083 15,799 18,976
-------- -------- --------
Subordinated debt....................................................... 40,661 41,942 42,743
-------- -------- --------
Deferred income taxes................................................... 9,543 8,924 8,987
-------- -------- --------
Commitments and contingencies (Note 10)
Redeemable preferred stock
Series A, -- $.01 par value; 80,168 shares authorized, issued and
outstanding......................................................... 1 1 1
Series B, -- $.01 par value; 250,000 shares authorized; 49,251,
68,341, and 78,917 shares issued and outstanding, respectively...... 1 1
Additional paid-in capital............................................ 2,097 2,407 2,578
Stockholders' equity
Class A, common stock -- $.01 par value; 1,040,000 shares authorized;
525,000 shares issued and outstanding............................... 5 5 5
Class B, common stock -- $.01 par value; 1,040,000 shares authorized,
400,000 shares issued and outstanding............................... 4 4 4
Additional paid-in capital............................................ 14,991 14,991 14,991
Accumulated deficit................................................... (6,996) (2,730) (96)
Fair market value in excess of historical cost of net assets acquired
from entities partially under common control........................ (7,276) (7,276) (7,276)
-------- -------- --------
728 4,994 7,628
-------- -------- --------
$113,331 $118,242 $ 122,885
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-16
<PAGE> 98
MS ACQUISITION CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
-------------------------------- --------------------
1993 1994 1995 1995 1996
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net sales................................. $162,908 $204,850 $211,905 $119,111 $114,944
Cost of sales............................. 139,499 172,428 183,542 100,321 98,472
Selling, general and administrative
expenses................................ 12,544 12,898 13,331 6,835 7,371
-------- -------- -------- -------- --------
Operating income.......................... 10,865 19,524 15,032 11,955 9,101
-------- -------- -------- -------- --------
Interest expense, net..................... 9,020 8,929 8,579 4,246 4,132
-------- -------- -------- -------- --------
Income before cumulative effect of
change in method of accounting and
income taxes......................... 1,845 10,595 6,453 7,709 4,969
Income tax provision...................... 930 4,000 1,877 2,243 2,163
-------- -------- -------- -------- --------
Income before cumulative effect of
change in method of accounting....... 915 6,595 4,576 5,466 2,806
Cumulative effect of change in method of
accounting for income taxes............. (4,771)
-------- -------- -------- -------- --------
Net income (loss)....................... $ (3,856) $ 6,595 $ 4,576 $ 5,466 $ 2,806
======== ======== ======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-17
<PAGE> 99
MS ACQUISITION CORP.
CONSOLIDATED STATEMENTS OF CASH FLOW
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------- ------------------
1993 1994 1995 1995 1996
------- -------- -------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)............................ $(3,856) $ 6,595 $ 4,576 $ 5,466 $ 2,806
Adjustments to reconcile net income (loss) to
net cash provided by operating activities
--
Depreciation and amortization.............. 6,009 6,150 6,579 3,426 3,558
Deferred interest.......................... 3,249 2,995 1,281 (65) 801
Deferred income taxes...................... 7,129 748 (860) 178
Other...................................... (2,116)
Changes in assets and liabilities
Accounts receivable..................... (1,148) (6,159) 116 (4,967) (5,438)
Inventories............................. (3,538) (503) 750 881 (1,136)
Tooling................................. 3,830 (1,790) (470) 1,079
Income taxes refundable................. (360)
Prepaid expenses........................ (119) 38 54 29 (231)
Income taxes payable.................... 305 (761) (530)
Accounts payable........................ 5,118 9,073 2,954 2,214 (471)
Accrued expenses........................ 2,483 394 904 (172) 767
------- -------- -------- ------- -------
NET CASH PROVIDED BY OPERATING
ACTIVITIES......................... 13,516 22,040 14,564 5,812 1,913
------- -------- -------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment,
net........................................ (3,474) (6,125) (10,103) (4,966) (2,732)
Other, net................................... (863) (329) (149) 162
------- -------- -------- ------- -------
NET CASH USED FOR INVESTING
ACTIVITIES......................... (4,337) (6,454) (10,252) (4,966) (2,570)
------- -------- -------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term debt, net.... (9,401) (15,433) (4,184) (2,900) (7,250)
Net increase in line of credit............... 2,396 7,927
------- -------- -------- ------- -------
NET CASH PROVIDED BY (USED FOR)
FINANCING ACTIVITIES............... (9,401) (15,433) (4,184) (504) 677
------- -------- -------- ------- -------
Net increase (decrease) in cash.............. (222) 153 128 342 20
Cash -- beginning of year.................... 232 10 163 163 291
------- -------- -------- ------- -------
Cash -- end of period........................ $ 10 $ 163 $ 291 $ 505 $ 311
======= ======== ======== ======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid during the year for interest....... $ 5,850 $ 12,027 $ 4,480
======= ======== ========
Cash paid during the year for income taxes... $ 788 $ 4,350 $ 2,750
======= ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-18
<PAGE> 100
MS ACQUISITION CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS)
1. SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES
Description of operations and major customers
MS Acquisition Corp. (MS Acquisition or the Company) was formed for the
sole purpose of purchasing Aetna Industries, Inc. (Aetna) and does not have any
significant assets or liabilities, other than all of the outstanding common
stock of Aetna and two series of mandatorily redeemable preferred stock
described in Note 7 below.
The Company's primary business operations are, through its wholly owned
subsidiary Aetna, the manufacture of automotive stampings and assemblies used as
original equipment components by North American automotive manufacturers in the
production of sport utility vehicles, mini-vans, other light trucks and
passenger cars.
The Company's financial condition and results of operations depend
significantly on two major automotive manufacturers, Chrysler Corporation
(Chrysler) and General Motors Corporation (GM). Following is a summary of net
production sales to such key customers, as a percentage of net production sales:
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS
DECEMBER 31, ENDED JUNE 30,
------------------------ --------------
1993 1994 1995 1995 1996
---- ---- ---- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Chrysler.............................................. 59% 62% 60% 63% 59%
GM.................................................... 39 35 36 33 36
Other................................................. 2 3 4 4 5
--- --- --- --- ---
100% 100% 100% 100% 100%
=== === === === ===
</TABLE>
Principles of consolidation
The consolidated financial statements include the accounts of the Company,
Aetna and a foreign sales corporation which is a wholly owned subsidiary of
Aetna. All significant intercompany transactions and account balances have been
eliminated in consolidation.
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect reported assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
Cash and cash equivalents
The Company considers cash on hand, deposits in banks and short-term
marketable securities with maturities of 90 days or less as cash and cash
equivalents for the purpose of the statement of cash flows.
Financial instruments
With the exception of long-term debt and stockholders' equity, the Company
records all financial instruments, including accounts receivable and accounts
payable, at cost, which approximates market value.
F-19
<PAGE> 101
MS ACQUISITION CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS)
1. SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Revenue recognition
Revenue from sales and the corresponding receivables are recorded upon
shipment of product to the customer.
Inventories
Inventories of stampings and assemblies are valued at the lower of cost,
determined by the last-in, first-out (LIFO) method, or market. Inventories of
purchased parts and purchased labor are valued at the lower of cost, as
determined by the first-in, first-out (FIFO) method, or market.
Property, plant and equipment
Property, plant and equipment are stated at cost. The Company provides for
depreciation principally using the straight-line method over the following
estimated useful lives:
<TABLE>
<CAPTION>
YEARS
-------
<S> <C>
Buildings and improvements........................................... 20 - 30
Machinery and equipment.............................................. 5 - 15
</TABLE>
Upon retirement or disposal, the asset cost and related accumulated
depreciation is removed from the accounts and the net amount, less proceeds, is
charged or credited to income. Expenditures for renewals and betterments are
capitalized. Expenditures for maintenance and repairs are charged against income
as incurred.
Cost in excess of net assets acquired
Cost in excess of net assets acquired is being amortized over forty years
using the straight-line method. Accumulated amortization aggregated $4,674,
$5,475 and $5,875 at December 31, 1994 and 1995 and June 30, 1996, respectively.
The Company periodically evaluates the eventual recoverability of the cost in
excess of net assets acquired based on estimated future operating results and
cash flows.
Start-up and preoperating expenses
Incremental costs incurred relating to the start-up of a new production
facility have been capitalized as deferred costs and are being amortized over a
five-year period commencing January 1992. Accumulated amortization aggregated
$1,271, $1,694 and $1,906 at December 31, 1994 and 1995 and June 30, 1996,
respectively.
Income taxes
Income tax provisions are based upon Statement of Financial Accounting
Standards No. 109, (FAS 109), "Accounting for Income Taxes". Deferred tax assets
and liabilities are provided for the expected future tax consequence of
temporary differences between the carrying amounts and the tax basis of the
Company's assets and liabilities. Prior to January 1, 1993, the Company utilized
the provisions of Accounting Principles Bulletin No. 11, "Accounting for Income
Taxes" and provided deferred taxes on nonpermanent differences between financial
statement and taxable income.
Interim financial information
The accompanying unaudited interim consolidated financial statements do not
include all the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the
F-20
<PAGE> 102
MS ACQUISITION CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS)
1. SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
opinion of the Company, all adjustments, consisting of only normal, recurring
adjustments, necessary to present the financial position of the Company at June
30, 1996 and the results of its operations and its cash flows for the six months
ended June 30, 1995 and 1996 have been included. Operating results for the
interim periods are not necessarily indicative of results that may be expected
for the year ending December 31, 1996.
2. INVENTORIES
Inventories are comprised of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------- JUNE 30,
1994 1995 1996
------ ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Inventories valued at LIFO
Raw materials................................... $3,516 $2,034 $2,355
Work-in-process................................. 2,624 2,989 3,607
Finished goods.................................. 1,818 2,273 2,151
------ ------ ------
7,958 7,296 8,113
LIFO reserve.................................... (240) (240) (240)
------ ------ ------
7,718 7,056 7,873
------ ------ ------
Inventories valued at FIFO
Purchased parts and purchased labor............. 1,692 1,603 1,922
------ ------ ------
Total inventories................................. $9,410 $8,659 $9,795
====== ====== ======
</TABLE>
3. ACCRUED EXPENSES
Accrued expenses are comprised of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------- JUNE 30,
1994 1995 1996
------ ------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Accrued workers' compensation expense............. $2,666 $ 2,618 $ 3,024
Other............................................. 6,539 7,491 7,852
------ ------- -------
$9,205 $10,109 $10,876
====== ======= =======
</TABLE>
4. SUBORDINATED DEBT
Subordinated debt at December 31, 1994 and 1995 and June 30, 1996 consists
of $30,500 of principal and $10,161, $11,442 and $12,243 of deferred interest,
respectively. The principal of $30,500 consists of two 14.0% notes payable by
the Company in two annual aggregate principal payments of $6,100 commencing
March 1, 1997 with a final payment of $18,300 on March 1, 1999. Payments of
interest accrued from 1990 to 1995 were deferred until the Company has available
cash flows as defined in the agreements. As a result, $2,995 and $1,281 of
interest expense on subordinated debt incurred during 1994 and 1995,
respectively, have been included with subordinated debt as a noncurrent
liability. The deferred interest bears interest at a rate of 14.0%. Based upon
quoted market prices for similar debt, the fair value of the subordinated debt
approximated $45,000 at December 31, 1995.
F-21
<PAGE> 103
MS ACQUISITION CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS)
SUBORDINATED DEBT (CONTINUED)
The subordinated debt agreements contain, among other provisions, covenants
relating to the levels of operating income and net worth and the ratio of
operating income to interest expense.
Unamortized commitment and legal fees of $267 and $203 at December 31, 1994
and 1995, respectively, relating to the subordinated debt have been deferred and
are being amortized over the term of the debt agreements using the interest
method.
5. RELATED PARTY TRANSACTIONS
The Company leases certain real property from a stockholder at less than
fair market value rates under lease agreements expiring in 2006. Approximately
$2,425, which represents the present value at the date of acquisition of the
favorable lease terms using a 13.0% interest rate, has been recorded as
property, plant and equipment and is being amortized on a straight-line basis
over the lease terms. Rent expense under these lease agreements aggregated $879,
$919 and $965 during 1993, 1994 and 1995, respectively. Future minimum rental
payments due under these lease agreements are as follows:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
------------
<S> <C>
1996....................................................... $ 1,018
1997....................................................... 892
1998....................................................... 937
1999....................................................... 984
2000....................................................... 1,033
Thereafter................................................. 7,378
-------
$12,242
=======
</TABLE>
The Company has a management agreement with a related party whereby it is
charged an annual fee of $250 for management services. The management fees for
the years ended December 31, 1994 and 1995 were recorded and paid during the
year. Due to reaching selected thresholds and other measurements, the Company
recorded management fees aggregating $750 including $500 for 1991 and 1992,
during the year ended December 31, 1993.
6. REDEEMABLE PREFERRED STOCK
During 1991, the Company issued shares of Series A preferred stock for
$1,300. Series A shares of preferred stock have full voting rights with
cumulative dividends payable at 14.0% in the form of cash or shares of Series B
preferred stock. Series B shares of preferred stock are nonvoting with
cumulative dividends payable at 14.0%. Stock dividends of Series B preferred
stock, valued at $235, $270, $310 and $172, were declared and issued to the
Series A and Series B preferred stockholders during 1993, 1994, 1995 and the six
months ended June 30, 1996, respectively. In addition, preferred stockholders
would receive additional dividends per share equal to any common stock dividends
declared.
Shares of Series A and Series B preferred stock are redeemable, at the
option of the preferred stockholders, at $16.2162 per share plus accrued
dividends provided that such redemption is permitted under the Company's
long-term debt and subordinated debt agreements. All shares of Series B
preferred stock must be redeemed before any shares of Series A preferred stock
can be redeemed. Shares of Series A and Series B preferred stock have
liquidation preferences on $16.2162 per share plus accrued dividends.
The Company's ability to pay dividends is solely dependent upon the results
of operations and financial condition of Aetna.
F-22
<PAGE> 104
MS ACQUISITION CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS)
7. STOCKHOLDERS' EQUITY
The changes in stockholders' equity were as follows:
<TABLE>
<CAPTION>
FAIR MARKET
VALUE IN
CLASS CLASS RETAINED EXCESS OF
A B CAPITAL EARNINGS HISTORICAL TOTAL
COMMON COMMON IN EXCESS (ACCUMULATED COST OF STOCKHOLDERS'
STOCK STOCK OF PAR DEFICIT) NET ASSETS EQUITY
------ ------ --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1993........ $5 $4 $ 14,991 $ (9,230) $(7,276) $ (1,506)
---- ---- -------- -------- ------- --------
Net loss..................... (3,856) (3,856)
Preferred dividends.......... (235) (235)
---- ---- -------- -------- ------- --------
Balance at December 31, 1993...... 5 4 14,991 (13,321) (7,276) (5,597)
---- ---- -------- -------- ------- --------
Net income................... 6,595 6,595
Preferred dividends.......... (270) (270)
---- ---- -------- -------- ------- --------
Balance at December 31, 1994...... 5 4 14,991 (6,996) (7,276) 728
---- ---- -------- -------- ------- --------
Net income................... 4,576 4,576
Preferred dividends.......... (310) (310)
---- ---- -------- -------- ------- --------
Balance at December 31, 1995...... 5 4 14,991 (2,730) (7,276) 4,994
---- ---- -------- -------- ------- --------
(Unaudited)
Net income................... 2,806 2,806
Preferred dividends.......... (172) (172)
---- ---- -------- -------- ------- --------
Balance at June 30, 1996..... $5 $4 $ 14,991 $ (96) $(7,276) $ 7,628
==== ==== ======== ======== ======= ========
</TABLE>
The shares of Class A common stock have full voting rights. The shares of
Class B common stock are nonvoting and are convertible into shares of Class A
common stock at the option of the holder on a one-for-one basis. Dividends
cannot be declared on shares of Class A or Class B common stock until all
accrued dividends on preferred stock have been paid.
The Company has a stock option plan under which options for a maximum of
115,000 shares of Class A common stock may be issued. As of December 31, 1995,
96,000 options have been granted at a per share price of $16.2162 of which
70,450 options are exercisable and none have been exercised.
The Company has agreements with each of its management stockholders whereby
the Company has an option to purchase the shares of common stock owned by the
management stockholder upon the management stockholder's death, disability or
other termination of employment at a specified purchase price, as defined in the
agreements. In addition, the management stockholders have the right, commencing
April 1994, to put their shares to the Company whereby the purchase price is the
greater of a formula based on the Company's earnings or stockholders' equity
book value, as defined in the agreements.
Certain stockholders of the Company were also stockholders of the
predecessor company prior to the acquisition by MS Acquisition Corp. Due to this
partial continuation of control, the acquisition was recorded by the Company
using a combination of (1) the historical basis to the extent of continuing
ownership and
F-23
<PAGE> 105
MS ACQUISITION CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS)
8. EMPLOYEE BENEFIT PLANS
The Company has four defined benefit pension plans covering the majority of
its hourly employees. The Company's funding policy is to fund costs as required
under the Employee Retirement Income Security Act of 1974, as amended. The
plans' assets are invested in a master trust.
The following table sets forth the plans' funded status and amounts
recognized in the Company's consolidated balance sheets at December 31, 1994 and
1995:
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1994 1995
------------ --------------------------
ASSETS ASSETS ACCUMULATED
EXCEED EXCEED BENEFITS
ACCUMULATED ACCUMULATED EXCEED
BENEFITS BENEFITS ASSETS
------------ ----------- -----------
<S> <C> <C> <C>
Actuarial present value of benefit obligations
Accumulated benefit obligation, including vested benefits
of $1,068, $278 and $1,063, respectively............... $1,138 $ 1,145 $ 287
====== ======= ======
Plan assets at fair value................................ $1,171 $ 1,157 $ 277
Projected benefit obligation for service rendered to
date................................................... 1,138 1,145 287
------ ------- ------
Plan assets in excess of (less than) projected benefit
obligation............................................. 33 12 (10)
Unrecognized loss from prior experience.................. 521 426 142
------ ------- ------
Prepaid pension cost included in deferred costs and other
assets................................................. $ 554 $ 438 $ 132
====== ======= ======
Weighted average discount rate...................... 8.75% 7.00% 7.00%
====== ======= ======
Estimated long-term rate of return on assets........ 9.50% 9.50% 9.50%
====== ======= ======
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
----------------------
1993 1994 1995
---- ----- -----
<S> <C> <C> <C>
Pension costs include:
Service cost........................................................ $ 97 $ 116 $ 102
Interest cost....................................................... 80 92 88
Actual return on assets............................................. (3) 126 262
Net amortization.................................................... (94) (233) (360)
----- ------ ------
$ 80 $ 101 $ 92
===== ====== ======
</TABLE>
The Company also maintains a 401(k) plan for all eligible nonunion
employees, and a 401(k) plan for certain union employees not covered by the
defined benefit plans above. During the years ended December 31, 1993, 1994 and
1995, the Company incurred $37, $101 and $130, respectively, of expense related
to 401(k) plans.
F-24
<PAGE> 106
MS ACQUISITION CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS)
9. INCOME TAXES
The income tax provision (benefit) comprises the following:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------
1993 1995 1994
------ ------ ------
<S> <C> <C> <C>
Current income taxes payable........................................ $1,201 $3,252 $2,782
Deferred income taxes............................................... (271) 748 (905)
------- ------- -------
$ 930 $4,000 $1,877
======= ======= =======
</TABLE>
Deferred tax assets and liabilities are comprised of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1994 1995
------- -------
<S> <C> <C>
DEFERRED TAX ASSETS
Workers' compensation................................................ $ 1,145 $ 1,105
Other................................................................ 699 727
------- -------
Gross deferred tax assets.......................................... 1,844 1,832
------- -------
DEFERRED TAX LIABILITIES
Depreciation......................................................... 9,135 8,494
Inventory............................................................ 1,243 1,225
Deferred costs and other............................................. 732 519
------- -------
Gross deferred tax liabilities..................................... 11,110 10,238
------- -------
Net deferred tax liability........................................... $ 9,266 $ 8,406
======= =======
</TABLE>
Effective January 1, 1993, the Company prospectively adopted the provisions
of FAS 109. The impact of adoption of this standard was to reduce retained
earnings by $4,771.
A reconciliation of the U.S. federal statutory rate to the Company's
effective rate is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER
31,
----------------------
1993 1994 1995
---- ---- ----
<S> <C> <C> <C>
U.S. federal statutory rate......................................... 35.0% 35.0% 35.0%
Effect of graduated rates........................................... (1.0) (1.0)
Non-deductible goodwill............................................. 14.8 2.7 4.2
Reversal of tax reserves no longer required......................... (2.9) (2.7)
Effect of 1% increase (decrease) in federal rate on deferred tax
balances.......................................................... 2.5 (3.9)
Other............................................................... 1.6 0.5 (2.6)
---- ---- ----
50.4% 37.8% 29.0%
==== ==== ====
</TABLE>
10. CONTINGENCIES AND LEASE COMMITMENT
The Company leases a production facility under a lease agreement accounted
for as an operating lease. The lease agreement calls for annual rent of
approximately $594 through December 1997 and provides for three five-year
renewal options. Additionally, the Company leases certain machinery and
equipment under operating leases. Future minimum rental payments on the
machinery and equipment are as follows: 1996 -- $151; 1997 -- $134; 1998 -- $73;
1999 -- $12.
F-25
<PAGE> 107
MS ACQUISITION CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS)
11. SUMMARIZED FINANCIAL INFORMATION OF AETNA
<TABLE>
<CAPTION>
DECEMBER 31,
------------------ JUNE 30,
1994 1995 1996
------- ------- ------------
(UNAUDITED)
<S> <C> <C> <C>
Balance Sheet
Current assets............................................... $39,912 $41,150 $ 46,777
Noncurrent assets............................................ 73,419 77,092 76,108
Current liabilities.......................................... 43,217 44,175 41,971
Noncurrent liabilities....................................... 67,287 66,665 70,706
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
-------------------------------- --------------------
1993 1994 1995 1995 1996
-------- -------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net sales................................. $162,908 $204,850 $211,905 $119,111 $114,944
Gross profit.............................. 23,409 32,422 28,363 18,790 16,472
Income before cumulative effect of change
in accounting principle................. 915 6,595 4,576 5,466 2,806
</TABLE>
12. LONG-TERM DEBT
A summary of long-term debt is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1994 1995
------- -------
<S> <C> <C>
Note payable to bank in quarterly principal installments of $1,250 and a
final payment of $3,500 originally due October 31, 1996, refinanced on
May 2, 1996. The note bears interest at the prime rate (8.5% at December
31, 1995) plus 2.0%..................................................... $12,250 $ 7,250
Note payable to bank under an equipment loan facility payable in quarterly
principal installments of $336 and a final payment of $64 due on June
30, 1995................................................................ 400
Note payable to bank under a revolving line of credit facility. The note
bears interest at the prime rate (8.5% at December 31, 1995) plus
1.5%.................................................................... 9,833 11,049
-------- --------
22,483 18,299
Less -- current portion................................................... (5,400) (2,500)
-------- --------
$17,083 $15,799
======== ========
</TABLE>
At December 31, 1995 and 1994, the Company had $9,799 and $9,833,
respectively, outstanding under a revolving line of credit facility whereby it
may borrow, based upon available collateral up to $25,000. The Company is
charged a monthly fee equal to 0.5% per annum of the average daily unused credit
facility. All assets of the Company are pledged as collateral for the debt
agreements. As part of this credit facility, the Company had available a $1,500
letter of credit facility from the same bank. At December 31, 1995, $1,370 of
letters of credit were outstanding which, if exercised, bear interest at 1.5%
over the bank's prime rate.
On May 2, 1996, the Company executed a new credit agreement relating to a
working capital facility. Under this new credit agreement, the Company may
borrow, based upon available collateral as defined in the agreement (principally
inventory, tooling and accounts receivable), up to $35,000 at either (i) a
Floating Rate, defined as the greater of the Prime Rate or the sum of 1.0% plus
the Federal Funds Rate, or (ii) a
F-26
<PAGE> 108
MS ACQUISITION CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS)
12. LONG-TERM DEBT (CONTINUED)
Eurodollar Rate plus a margin agreed to by the banks. The Company is also
charged a monthly fee equal to 0.5% per annum of the daily average unused amount
of the credit agreement.
As part of the new credit agreement discussed above, the Company has
available at May 2, 1996, a $3,000 letter of credit facility under which the
bank will issue irrevocable standby letters of credit. Such irrevocable standby
letters of credit, if exercised, bear interest at either the Floating Rate or
the Eurodollar Rate, as defined above. The credit facility is due to expire on
May 2, 1997, but may be extended by the consent of both parties.
In connection with the execution of this credit agreement, the Company
repaid the remaining note payable to bank due October 31, 1996 and the note
payable to bank under a revolving line of credit facility which aggregated
$29,054 on May 2, 1996, with the borrowings under its new credit agreement. As a
result of the new credit agreement, amounts outstanding at December 31, 1995
under the prior credit agreement and revolving line of credit have been
classified as long-term.
The new credit agreement contains, among other provisions, covenants
relating to the ratios of (i) debt to earnings before income taxes, interest and
depreciation and amortization (EBITDA) and (ii) interest expense to EBITDA.
Unamortized commitment and legal fees of $315 and $692 at December 31, 1995
and 1994, respectively, relating to the long-term debt have been deferred and
are being amortized over the term of the debt agreements using the interest
method. As a result of the execution of the new credit agreement, the remaining
unamortized commitment and legal fees will be charged to expense in 1996.
13. THE TRANSACTIONS
On August 13, 1996, the Company completed a recapitalization. The Company
amended its charter to provide for the reclassification of its capital stock
into two classes of common stock (voting and non-voting) (together, New Common)
and a new class of preferred stock (New Preferred). Existing stockholders
exchanged their existing MS Acquisition shares, pro rata, for New Common and New
Preferred. Citibank Venture Capital, Ltd. purchased shares of New Preferred and
New Common for $10,000 in cash from the existing stockholders. MS Acquisition
formed Aetna Holdings, Inc. (Holdings) and contributed to Holdings all of the
capital stock of Aetna. Holdings then purchased from existing stockholders
approximately 61% of their existing capital stock of the Company in exchange for
(i) $11,064 in cash and (ii) $8,731 in principal amount of 11.0% junior
subordinated debentures of Newco due in 2007. In addition, the Company paid
approximately $651 in cash to terminate certain employee options. The former
stockholders retained (i) $2.36 million in stated value of New Preferred and
(ii) shares of New Common representing 20.6% of the New Common on a fully
diluted basis.
In connection with this recapitalization, the Company and NBD Bank will
amend and restate the Company's existing working capital facility with NBD Bank.
The covenants described in Note 12 above remained substantially unchanged.
F-27
<PAGE> 109
AETNA INDUSTRIES, INC.
(AMOUNTS IN THOUSANDS)
PRO FORMA UNAUDITED CONDENSED CONSOLIDATED FINANCIAL DATA
The following unaudited pro forma condensed consolidated financial information
(the "Pro Forma Statements") is based upon the historical financial statements
of the Company for the year ended December 31, 1995 and the six months ended
June 30, 1996 included elsewhere in this Prospectus adjusted to give effect to
the Transactions, including (i) the Offering and (ii) the Recapitalization. The
Pro Forma Unaudited Condensed Consolidated Statement of Operations Data give
effect to the Transactions as if they had occurred as of January 1, 1995 and the
Pro Forma Unaudited Consolidated Balance Sheet Data give effect to the
Transactions as if they had occurred as of June 30, 1996. The Transactions and
the related adjustments are described in the accompanying notes. The pro forma
adjustments are based upon available information and certain assumptions that
management believes are reasonable. The Pro Forma Statements do not purport to
represent what the Company's results of operations or financial condition would
actually have been had the Transactions in fact occurred on such dates or to
project the Company's results of operations or financial condition for any
future period or date. The Pro Forma Statements should be read in conjunction
with the historical consolidated financial statements of the Company included
elsewhere in this Prospectus and "Management's Discussion and Analysis of
Financial Condition and Results of Operations".
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
--------------------------------------
ACTUAL ADJUSTMENTS PRO FORMA
-------- ----------- ---------
<S> <C> <C> <C>
PRO FORMA UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Net sales.................................................. $211,905 $ -- $ 211,905
Cost of sales.............................................. 183,542 183,542
Selling, general and administrative expenses............... 13,331 (128)(a) 13,203
-------- ----- --------
Operating profit........................................... 15,032 (128) 15,160
-------- ----- --------
Interest expense, net...................................... 8,579 1,515 (b) 10,094
-------- ----- --------
Income (loss) before income taxes.......................... 6,453 1,387 5,066
-------- ----- --------
Income tax provision (benefit)........................... 1,877 485 (c) 1,392
-------- ----- --------
Net income............................................ $ 4,576 $ 902 $ 3,674
-------- ----- --------
Dividends paid to Holdings............................ 1,015 (d) 1,015
-------- ----- --------
Net increase in retained earnings..................... $ 4,576 $ 1,917 $ 2,659
======== ===== ========
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1996
--------------------------------------
ACTUAL ADJUSTMENTS PRO FORMA
-------- ----------- ---------
<S> <C> <C> <C>
Net sales.................................................. $114,944 $ -- $ 114,944
Cost of sales.............................................. 98,472 98,472
Selling, general and administrative expenses............... 7,371 (64)(a) 7,307
-------- ----- --------
Operating profit........................................... 9,101 (64) 9,165
-------- ----- --------
Interest expense, net...................................... 4,132 915 (b) 5,047
-------- ----- --------
Income (loss) before income taxes.......................... 4,969 851 4,118
-------- ----- --------
Income tax provision (benefit)........................... 2,163 298 (c) 1,865
-------- ----- --------
Net income............................................ $ 2,806 $ 553 $ 2,253
-------- ----- --------
Dividends paid to Holdings............................ 508 (d) 508
-------- ----- --------
Net increase in retained earnings..................... $ 2,806 $11,061 $ 1,745
======== ===== ========
</TABLE>
See notes to the pro forma unaudited condensed consolidated statement of
operations.
F-28
<PAGE> 110
NOTES TO PRO FORMA UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS DATA
(a) The pro forma adjustments to selling, general and administrative
expenses reflect the following:
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1995 JUNE 30, 1996
----------------- ----------------
<S> <C> <C>
Elimination of the management fees............ $(250) $ (125)
Elimination of amortization on prior debt
issuance costs.............................. (378) (189)
Amortization associated with the estimated
debt issuance costs related to the Offering
(estimated)................................. 500 250
------- ------
$(128) $ (64)
======= ======
</TABLE>
(b) The pro forma adjustments to interest expense reflect the following:
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1995 JUNE 30, 1996
----------------- ----------------
<S> <C> <C>
Elimination of historical interest expense on
existing borrowings.......................... $(8,579) $ (4,132)
Interest on the Notes at an interest rate of
11 7/8%...................................... 10,094 5,047
------- ------
$ 1,515 $ 915
======= ======
</TABLE>
(c) The pro forma adjustments to income taxes reflect the effect of the
transactions discussed above using a 35% income tax rate.
(d) The pro forma adjustments to dividends reflects the following:
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1995 JUNE 30, 1996
----------------- ----------------
<S> <C> <C>
Dividend to Holdings to fund cash interest on
the Junior Subordinated Debentures and
unfunded contractual obligations (i)......... $ 1,015 $ 508
======= ======
</TABLE>
(i) To the extent dividends by the Company to Holdings to fund cash
interest payments on the Junior Subordinated Debentures and cash
payments on the unfunded contractual obligations to former option
holders are permitted under the Indenture and the Senior Revolving
Credit Facility, interest on the Junior Subordinated Debentures
and the contractual obligations will be funded by cash dividends
by the Company to Holdings.
F-29
<PAGE> 111
PRO FORMA UNAUDITED CONSOLIDATED BALANCE SHEET DATA
<TABLE>
<CAPTION>
AT JUNE 30, 1996
-----------------------------------------------------------
PRO
ACTUAL OFFERING RECAPITALIZATION FORMA
-------- -------- ---------------- --------
<S> <C> <C> <C> <C>
ASSETS
Current assets
Cash.................................... $ 311 $ 80,000 (a) $(11,715)(g)
(63,142)(c)
(1,747)(d)
(816)(e) $ 2,891
Accounts receivable, net................ 33,960 33,960
Inventories............................. 9,795 9,795
Tooling................................. 1,579 1,579
Prepaid expenses........................ 373 373
Deferred income taxes................... 759 759
-------- -------- ---------- --------
Total current assets.................... 46,777 14,295 (11,715) 49,357
-------- -------- ---------- --------
Property, plant and equipment, net...... 48,558 48,558
Other assets............................ 27,550 5,000 (a)
(335)(b) 32,215
-------- -------- ---------- --------
Total assets............................ $122,885 $ 18,960 $(11,715) $130,130
======== ======== ========== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities
Accounts payable and accrued expenses... $ 41,971 $ (118)(b) $ -- $ 39,068
(1,423)(c)
(611)(d)
(588)(e)
(163)(f)
-------- -------- ---------- --------
Total current liabilities............... 41,971 (2,903) 39,068
-------- -------- ---------- --------
Long-term debt:
Notes................................... 85,000 (a) 85,000
Senior Revolving Credit Facility........ 18,976 (18,976)(c)
Subordinated debt....................... 42,743 (42,743)(c)
Deferred income taxes................... 8,987 8,987
-------- -------- ---------- --------
Total liabilities....................... 112,677 20,378 133,055
-------- -------- ---------- --------
Stockholder's equity
Contributed capital..................... 9,024 9,024
Retained earnings (accumulated
deficit)............................. 1,184 (217)(b) (11,715)(g)(h) (11,949)
(1,136)(d)
(228)(e)
163 (f)
-------- -------- ---------- --------
10,208 (1,418) (11,715) (2,925)
-------- -------- ---------- --------
$122,885 $ 18,960 $(11,715) $130,130
======== ======== ========== ========
</TABLE>
See notes to the pro forma unaudited consolidated balance sheet.
F-30
<PAGE> 112
AETNA INDUSTRIES, INC.
NOTES TO THE PRO FORMA UNAUDITED CONSOLIDATED BALANCE SHEET
(AMOUNTS IN THOUSANDS)
OFFERING
(a) To reflect the issuance of the Notes as follows:
<TABLE>
<S> <C>
Estimated net proceeds............................................. $ 80,000
Estimated debt issuance costs...................................... 5,000
-------
Notes.............................................................. $ 85,000
=======
</TABLE>
(b) To writeoff the unamortized debt issuance costs relating to prior debt
issuances, net of applicable income taxes at 35%:
<TABLE>
<S> <C>
Debt issuance costs (other assets)................................. $ 335
Accounts payable and accrued expenses.............................. (118)
Retained earnings (accumulated deficit)............................ (217)
</TABLE>
(c) To reflect the repayments on existing debt from the proceeds of the
Offering:
<TABLE>
<S> <C>
Subordinated debt.................................................. $ 42,743
Interest on subordinated debt...................................... 1,423
Senior Revolving Credit Facility................................... 18,976
--------
$ 63,142
========
</TABLE>
(d) To reflect the prepayment penalty associated with early retirement of
the subordinated debt, net of applicable income taxes at 35%.
<TABLE>
<S> <C>
Cash................................................................ $ 1,747
Accounts payable and accrued expenses............................... $ (611)
Retained earnings (accumulated deficit)............................. $(1,136)
</TABLE>
(e) To reflect the payment of certain one time costs associated with the
Offering:
<TABLE>
<S> <C>
Cash................................................................. $(816)
Accounts payable and accrued expenses................................ 588
Retained earnings (accumulated deficit).............................. 228
</TABLE>
(f) To reflect the reversal of management fees previously accrued which
will be forgiven, net of applicable income taxes at 35%.
<TABLE>
<S> <C>
Accounts payable and accrued expenses................................ $(163)
Retained earnings (accumulated deficit).............................. 163
</TABLE>
The pro forma statement of operations data above excludes the effect of
non-recurring charges of $1,744, net of applicable taxes, relating to the
transactions discussed in (b), (d), (e) and (f).
RECAPITALIZATION
(g) To reflect the dividend paid to Holdings to fund the cash portion of
the Holdings Consideration:
<TABLE>
<S> <C>
Dividend to Newco.................................................. $ 11,715
Retained earnings (accumulated deficit)............................ $(11,715)
</TABLE>
(h) Up to $2.5 million in aggregate principal amount of the Junior
Subordinated Debentures will be required to be redeemed by Holdings
from time to time, to the extent that cash dividends from the Company
to fund such redemptions are permitted to be paid by the Indenture and
Senior Revolving Credit Facility. The pro forma unaudited consolidated
balance sheet data does not include the potential dividends payable of
$2.5 million.
F-31
<PAGE> 113
MS ACQUISITION CORP.
(AMOUNTS IN THOUSANDS)
PRO FORMA UNAUDITED CONDENSED CONSOLIDATED FINANCIAL DATA
The following unaudited pro forma condensed consolidated financial information
(the "Pro Forma Statements") is based upon the historical financial statements
of MS Acquisition for the year ended December 31, 1995 and the six months ended
June 30, 1996 included elsewhere in this Prospectus adjusted to give effect to
the Transactions, including (i) the Offering and (ii) the Recapitalization. The
Pro Forma Unaudited Condensed Consolidated Statement of Operations Data give
effect to the Transactions as if they had occurred as of January 1, 1995 and the
Pro Forma Unaudited Consolidated Balance Sheet Data give effect to the
Transactions as if they had occurred as of June 30, 1996. The Transactions and
the related adjustments are described in the accompanying notes. The pro forma
adjustments are based upon available information and certain assumptions that
management believes are reasonable. The Pro Forma Statements do not purport to
represent what MS Acquisition's results of operations or financial condition
would actually have been had the Transactions in fact occurred on such dates or
to project MS Acquisition's results of operations or financial condition for any
future period or date. The Pro Forma Statements should be read in conjunction
with the historical consolidated financial statements of MS Acquisition included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
--------------------------------------
ACTUAL ADJUSTMENTS PRO FORMA
-------- ----------- ---------
<S> <C> <C> <C>
PRO FORMA UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Net sales.................................................. $211,905 $ -- $ 211,905
Cost of sales.............................................. 183,542 183,542
Selling, general and administrative expenses............... 13,331 (128)(a) 13,203
-------- ------- ---------
Operating profit........................................... 15,032 (128) 15,160
-------- ------- ---------
Interest expense, net...................................... 8,579 2,530(b) 11,109
-------- ------- ---------
Income (loss) before income taxes.......................... 6,453 2,402 4,051
-------- ------- ---------
Income tax provision (benefit)........................... 1,877 841(c) 1,036
-------- ------- ---------
Net income............................................ $ 4,576 $ 1,561 $ 3,015
-------- ------- ---------
Preferred dividends................................... 310 955(d) 1,265
-------- ------- ---------
Net income attributable to common stockholders........ $ 4,266 $ 2,516 $ 1,750
======== ======= =========
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1996
--------------------------------------
ACTUAL ADJUSTMENTS PRO FORMA
-------- ----------- ---------
<S> <C> <C> <C>
Net sales.................................................. $114,944 $ -- $ 114,944
Cost of sales.............................................. 98,472 98,472
Selling, general and administrative expenses............... 7,371 (64)(a) 7,307
-------- ------- ---------
Operating profit........................................... 9,101 (64) 9,165
-------- ------- ---------
Interest expense, net...................................... 4,132 1,423(b) 5,555
-------- ------- ---------
Income (loss) before income taxes.......................... 4,969 1,359 3,610
-------- ------- ---------
Income tax provision (benefit)........................... 2,163 476(c) 1,687
-------- ------- ---------
Net income............................................ $ 2,806 $ 883 $ 1,923
-------- ------- ---------
Preferred dividends................................... 172 461(d) 633
-------- ------- ---------
Net income attributable to common stockholders........ $ 2,634 $ 1,344 $ 1,290
======== ======= =========
</TABLE>
See notes to the pro forma unaudited condensed consolidated statement of
operations.
F-32
<PAGE> 114
NOTES TO PRO FORMA UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS DATA
(a) The pro forma adjustments to selling, general and administrative
expenses reflect the following:
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1995 JUNE 30, 1996
----------------- ----------------
<S> <C> <C>
Elimination of the management fees............ $(250) $ (125)
Elimination of amortization on prior debt
issuance costs.............................. (378) (189)
Amortization associated with the estimated
debt issuance costs related to the Offering
(estimated)................................. 500 250
------ --------
$(128) $ (64)
====== ========
</TABLE>
(b) The pro forma adjustments to interest expense reflect the following:
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1995 JUNE 30, 1996
----------------- ----------------
<S> <C> <C>
Elimination of historical interest expense on
existing borrowings.......................... $(8,579) $ (4,132)
Interest on the Notes at an interest rate of
11 7/8%...................................... 10,094 5,047
Interest on Junior Subordinated Debentures and
unfunded contractual obligations............. 1,015 508
------- --------
$ 2,530 $ 1,423
======= ========
</TABLE>
(c) The pro forma adjustments to income taxes reflect the effect of the
transactions discussed above using a 35% income tax rate.
(d) The pro forma adjustments to preferred dividends reflect the following:
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1995 JUNE 30, 1996
----------------- ----------------
<S> <C> <C>
Elimination of historical preferred dividends
to Series A and Series B preferred
stockholders................................. $ (310) $ (172)
Preferred dividends associated with New
Preferred Stock.............................. 1,265 633
------- ------
$ 955 $ 461
======= ======
</TABLE>
F-33
<PAGE> 115
MS ACQUISITION CORP.
PRO FORMA UNAUDITED CONSOLIDATED BALANCE SHEET DATA
<TABLE>
<CAPTION>
AT JUNE 30, 1996
-----------------------------------------------------------
PRO
ACTUAL OFFERING RECAPITALIZATION FORMA
-------- -------- ---------------- --------
<S> <C> <C> <C> <C>
ASSETS
Current assets
Cash.................................... $ 311 $ 80,000(a) $(11,715)(g)
(63,142)(c) 10,000(h)
(1,747)(d) (10,000)(i)
(816)(e) $ 2,891
Accounts receivable, net................ 33,960 33,960
Inventories............................. 9,795 9,795
Tooling................................. 1,579 1,579
Prepaid expenses........................ 373 373
Deferred income taxes................... 759 759
---------- -------- ---------- ----------
Total current assets.................... 46,777 14,295 (11,715) 49,357
---------- -------- ---------- ----------
Property, plant and equipment, net...... 48,558 48,558
Other assets............................ 27,550 5,000(a)
(335)(b) 32,215
---------- -------- ---------- ----------
Total assets............................ $122,885 $ 18,960 $(11,715) $130,130
========== ======== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses... $ 41,971 $ (118)(b) $ 498(i) $ 39,566
(1,423)(c)
(611)(d)
(588)(e)
(163)(f)
---------- -------- ---------- ----------
Total current liabilities............... 41,971 (2,903) 498 39,566
---------- -------- ---------- ----------
Long-term debt:
Notes................................... 85,000(a) 85,000
Senior Revolving Credit Facility........ 18,976 (18,976)(c)
Subordinated debt....................... 42,743 (42,743)(c)
Junior Subordinated Debentures.......... 8,731(i) 8,731
Deferred income taxes................... 8,987 8,987
---------- -------- ---------- ----------
Total liabilities....................... 112,677 20,378 9,229 142,284
---------- -------- ---------- ----------
Redeemable preferred stock................ 2,580
9,000(h) 11,496
2,496(i)
(2,580)(j)
Stockholders' equity
Common stock............................ 10 1,000(h)
268(i) 1,278
14,990
Additional paid in capital.............. 14,990
Fair market value in excess of
historical cost...................... (7,276) (7,276)
Accumulated deficit..................... (96) (217)(b) (11,715)(g) (32,642)
(1,136)(d) (21,993)(i)
(228)(e) 2,580(j)
163(f)
---------- -------- ---------- ----------
7,628 (1,418) (29,860) (23,650)
---------- -------- ---------- ----------
$122,885 $ 18,960 $(11,715) $130,130
========== ======== ========== ==========
</TABLE>
See notes to the pro forma unaudited consolidated balance sheet.
F-34
<PAGE> 116
MS ACQUISITION CORP.
NOTES TO THE PRO FORMA UNAUDITED CONSOLIDATED BALANCE SHEET
(AMOUNTS IN THOUSANDS)
OFFERING
(a) To reflect the issuance of the Notes as follows:
<TABLE>
<S> <C>
Estimated net proceeds............................................. $ 80,000
Estimated debt issuance costs...................................... 5,000
-------
Notes.............................................................. $ 85,000
=======
</TABLE>
(b) To writeoff the unamortized debt issuance costs relating to prior debt
issuances, net of applicable income taxes at 35%:
<TABLE>
<S> <C>
Debt issuance costs (other assets)................................. $ 335
Accounts payable and accrued expenses.............................. (118)
Retained earnings (accumulated deficit)............................ (217)
</TABLE>
(c) To reflect the repayments on existing debt from the proceeds of the
Offering:
<TABLE>
<S> <C>
Subordinated debt.................................................. $ 42,743
Interest on subordinated debt...................................... 1,423
Senior Revolving Credit Facility................................... 18,976
--------
$ 63,142
========
</TABLE>
(d) To reflect the prepayment penalty associated with early retirement of
the subordinated debt, net of applicable income taxes at 35%.
<TABLE>
<S> <C>
Cash............................................................... $ 1,747
Accounts payable and accrued expenses.............................. $ (611)
Retained earnings (accumulated deficit)............................ $ (1,136)
</TABLE>
(e) To reflect the payment of certain one time costs associated with the
Offering:
<TABLE>
<S> <C>
Cash............................................................... $ (816)
Accounts payable and accrued expenses.............................. 588
Retained earnings (accumulated deficit)............................ 228
</TABLE>
(f) To reflect the reversal of management fees previously accrued which
will be forgiven, net of applicable income taxes at 35%.
<TABLE>
<S> <C>
Accounts payable and accrued expenses.............................. $ (163)
Retained earnings (accumulated deficit)............................ 163
</TABLE>
The pro forma statement of operations data above excludes the effect of
non-recurring charges of $1,744, net of applicable taxes, relating to the
transactions discussed in (b), (d), (e) and (f).
RECAPITALIZATION
(g) To reflect the dividend paid to Holdings to fund the cash portion of
the Holdings Consideration:
<TABLE>
<S> <C>
Dividend to Newco.................................................. $ 11,715
Retained earnings (accumulated deficit)............................ $(11,715)
</TABLE>
(h) To reflect the capital contribution by CVC:
<TABLE>
<S> <C>
Redeemable preferred stock......................................... $ (9,000)
Common stock....................................................... (1,000)
--------
Cash............................................................... $(10,000)
========
</TABLE>
F-35
<PAGE> 117
MS ACQUISITION CORP.
Notes to the Pro Forma Unaudited Consolidated Balance Sheet (Continued)
(amounts in thousands)
(i) To reflect the merger consideration provided to existing stockholders:
<TABLE>
<S> <C>
Cash................................................................ $10,000
Junior Subordinated Notes due 2007.................................. 8,731
Unfunded promise to pay............................................. 498
New Preferred Stock to existing stockholders........................ 2,496
New Common Stock to existing stockholders, net...................... 268
-------
Paid-in capital..................................................... $21,993
=======
</TABLE>
(j) To reflect the retirement of the existing MS Acquisition preferred
stock:
<TABLE>
<S> <C>
Preferred stock..................................................... $(2,578)
=======
Additional paid-in capital.......................................... $ 2,578
=======
</TABLE>
F-36
<PAGE> 118
================================================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER CONTAINED
HEREIN OTHER THAN THOSE 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 ANY INITIAL PURCHASER. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER OR A SOLICITATION OF ANY OFFER TO BUY ANY SECURITY OTHER
THAN THOSE TO WHICH IT RELATES, NOR DOES IT CONSTITUTE AN OFFER TO SELL, OR THE
SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO THE DATE HEREOF.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. i
Summary............................... 1
Risk Factors.......................... 9
Use of Proceeds....................... 13
Capitalization........................ 13
Selected Financial Data............... 14
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 16
The Exchange Offer.................... 20
Business.............................. 26
Management............................ 34
Beneficial Ownership of Capital
Stock............................... 39
Capitalization........................ 40
Certain Relationships and
Transactions........................ 45
Description of Senior Revolving Credit
Facility............................ 46
Description of Notes.................. 48
Book Entry; Delivery and Form......... 73
Certain Federal Income Tax
Consequences........................ 74
Plan of Distribution.................. 75
Legal Matters......................... 76
Experts............................... 76
Index to Financial Statements......... F-1
</TABLE>
================================================================================
================================================================================
$85,000,000
AETNA LOGO
11 7/8% SENIOR NOTES DUE 2006
------------
PROSPECTUS
------------
OFFER TO EXCHANGE 11 7/8%
SENIOR NOTES DUE 2006
FOR 11 7/8% SENIOR NOTES
DUE 2006
SEPTEMBER , 1996
================================================================================
<PAGE> 119
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law (the "DGCL") provides
that a Delaware corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative (a
"proceeding") (other than an action by or in the right of the corporation) by
reason of the fact that such person is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding if
such person acted in good faith and in a manner such person reasonably believed
to be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
his or her conduct was unlawful. A Delaware corporation may indemnify any person
under such section in connection with an action or suit by or in the right of
the corporation to procure judgment in its favor, against expenses (including
attorneys' fees) actually and reasonably incurred by such person in connection
with the defense or settlement of such action or suit if such person acted in
good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of the corporation, except that no indemnification
shall be made in respect thereof of any claim, issue or matter as to which such
person shall have been adjudged to be liable to the corporation unless, and only
to the extent that, a court of competent jurisdiction determines upon
application that such person is fairly and reasonably entitled to indemnity for
such expenses as the court deems proper. A Delaware corporation must indemnify
any person against expenses (including attorneys' fees) actually and reasonably
incurred by such person who was successful on the merits or otherwise in defense
of any action, suit or proceeding or in defense of any claim, issue or matter
therein, by reason of the fact that such person is or was a director, officer,
employee or agent of the corporation or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise. A Delaware corporation
may pay for the expenses (including attorneys' fees) incurred by an officer or
director in defending a proceeding in advance of the final disposition of such
proceeding upon receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it ultimately shall be determined that he or she
is not entitled to be indemnified by the corporation.
The By-laws of Aetna Industries, Inc. (the "Company"), MS Acquisition
Corp., a co-registrant ("MS Acquisition"), and Aetna Holdings, Inc., a
co-registrant ("Holdings"), each of which is a Delaware corporation, provide for
indemnification of directors and officers consistent with that permitted by
Section 145 of the DGCL. The By-laws of Aetna Export Sales Corp., a
co-registrant and a U.S. Virgin Islands corporation, provides for
indemnification of directors and officers, substantially to the same extent and
under the same conditions that such indemnification is permitted under Section
145 of the DGCL.
Section 102(b)(7) of the DGCL provides that a Delaware corporation may in
its certificate of incorporation eliminate or limit the personal liability of a
director to the corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director except for liability: for any breach of the
director's duty of loyalty to the corporation or its stockholders; for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law; under Section 174 of the DGCL (pertaining to certain
prohibited acts including unlawful payment of dividends or unlawful purchase or
redemption of the corporation's capital stock); or for any transaction from
which the director derived an improper personal benefit. The Company's
Certificate of Incorporation and the Certificate of the Incorporation of
Holdings eliminate the liability of a director for monetary damages for breach
of fiduciary duty as a director unless such director is liable (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,
or (iv) for any transaction from which the director derived an improper personal
benefit. Similarly, the Restated Certificate of Incorporation of MS Acquisition
provides
II-1
<PAGE> 120
that to the fullest extent permitted by the DGCL, as may be amended, the
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director will be eliminated.
The DGCL permits a Delaware corporation to purchase insurance on behalf of
directors and officers against any liability asserted against directors and
officers and incurred by such persons in such capacity, or arising out of their
status as such, whether or not the corporation would have the power to indemnify
directors and officers against such liability. None of the co-registrants has
purchased such insurance.
The foregoing summaries of the DGCL and the charters and the by-laws of the
co-registrants are qualified in their entirety by reference to the relevant
provisions of the DGCL and by reference to the relevant provisions of the
charters (filed as Exhibits 3.1 to 3.4) and by-laws (filed as Exhibits 3.5 to
3.8) of the co-registrants.
See Item 22 for a statement of the co-registrants' undertaking as to the
Securities and Exchange Commission's position respecting indemnification for
liabilities arising under the Securities Act of 1933, as amended.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION OF EXHIBITS PAGE NO.
- ------ -------------------------------------------------------------------------- ----------
<S> <C> <C>
3.1 Certificate of Incorporation of Aetna Industries, Inc. (the "Company")
3.2 Amended and Restated Certificate of Incorporation of MS Acquisition Corp.
("MS Acquisition")
3.3 Certificate of Incorporation of Aetna Holdings, Inc. ("Holdings")
3.4 Certificate of Incorporation of Aetna Export Sales Corp. ("Export")
3.5 By-laws of the Company
3.6 By-laws of MS Acquisition
3.7 By-laws of Holdings
3.8 By-laws of Export
4 Indenture dated as of August 1, 1996 by and among the Company, Holdings,
MS Acquisition, Export and Norwest Bank Minnesota, National Association,
as Trustee
5 Opinion of Morgan, Lewis & Bockius LLP*
8 Opinion of Morgan, Lewis & Bockius LLP regarding tax matters*
10.1 Recapitalization and Stock Purchase Agreement dated as of August 13, 1996
among Citicorp Venture Capital, Ltd., MS Acquisition and the stockholders
listed therein*
10.2 Stock Purchase Agreement dated as of August 13, 1996 among MS Acquisition,
Holdings and the stockholders and optionees listed therein*
10.3 Credit Agreement dated as of May 2, 1996 among MS Acquisition, the
Company, and NBD Bank, as Lender and Agent (the "Credit Agreement")
10.4 First Amendment to Credit Agreement dated as of August 13, 1996
10.5 Security Agreement dated as of May 2, 1996 by the Company in favor of NBD
Bank, as Lender and Agent
10.6 Security Agreement dated as of May 2, 1996 by Export in favor of NBD Bank,
as Lender and Agent
10.7 Pledge Agreement and Irrevocable Proxy dated as of May 2, 1996 by the
Company in favor of NBD Bank, as Lender and Agent
</TABLE>
II-2
<PAGE> 121
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION OF EXHIBITS PAGE NO.
- ------ -------------------------------------------------------------------------- ----------
<S> <C> <C>
10.8 Registration Rights Agreement dated as of August 13, 1996 by and among the
Company, MS Acquisition, Holdings, Export and the Initial Purchasers
10.9 Stockholders Agreement dated as of August 13, 1996 among MS Acquisition
and its stockholders
10.10 Registration Rights Agreement dated as of August 13, 1996 among MS
Acquisition and its stockholders
10.11 Management Agreement dated as of August 13, 1996 by and between MS
Acquisition and the Company
10.12 Form of 11% Junior Subordinated Promissory Notes Due 2007 of Holdings
dated August 13, 1996
10.13 Agreement to Indemnify dated as of August 13, 1996 between the Company and
each of R. Epker, R. Small, J. Bakken, D. Thal and J. Singer*
10.14 Amended and Restated Executive Stock Option Plan of MS Acquisition
10.15 Form of Stock Option Agreement
10.16 Form of Employment Agreement dated as of August 13, 1996 among the
Company, MS Acquisition and Ueli Spring*
10.17 Employment Agreement dated as of August 13, 1996 among the Company, MS
Acquisition and Harold Brown
10.18 Employment Agreement dated as of August 13, 1996 among the Company, MS
Acquisition and Gary Easterly
10.19 Form of Purchase Order with General Motors Corporation
10.20 Form of Purchase Order with Chrysler Corporation
12 Statement of Ratio of Earnings to Fixed Charges
21 Subsidiary of the Company
23.1 Consent of Morgan, Lewis & Bockius LLP (included in Exhibits 5 and 8)
23.2 Consent of Price Waterhouse LLP for the Company
23.3 Consent of Price Waterhouse LLP for MS Acquisition
24 Power of Attorney (included on signature page)
25 Statement of Eligibility and Qualification, Form T-1, of Norwest Bank
Minnesota, National Association
27 Financial Data Schedules
99.1 Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed Delivery
</TABLE>
- ------------------------------
* To be filed by amendment.
(b) Financial Statement Schedules
None.
All financial statement schedules are omitted as they are not applicable or
the required information is included in the consolidated financial statements of
the registrants.
II-3
<PAGE> 122
ITEM 22. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
co-registrants pursuant to the provisions described under Item 20 or otherwise,
the co-registrants have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by a
co-registrant of expenses incurred or paid by a director, officer or controlling
person of such co-registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, such co-registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned co-registrants hereby undertake:
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.
To supply by means of a post-effective amendment all information concerning
a transaction, and the company being acquired involved therein, that was not the
subject of and included in the registration statement when it became effective.
II-4
<PAGE> 123
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, 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 the day of September, 1996.
AETNA INDUSTRIES, INC.
By: /s/ UELI SPRING
------------------------------------
Ueli Spring
President and
Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below appoints Ueli Spring and Harold
Brown, any of whom may act without the joinder of the other, as his true and
lawful attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto
and all other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or their substitute or substitutes may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities at the above-named registrant and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------- ---------------------------------- -------------------
<C> <S> <C>
/s/ UELI SPRING Director, President and Chief September , 1996
- ------------------------------------- Executive Officer
Ueli Spring (principal executive officer)
/s/ HAROLD BROWN Director, Chief Financial Officer, September , 1996
- ------------------------------------- Vice President, Finance and
Harold Brown Secretary
(principal financial and
accounting officer)
/s/ MICHAEL DELANEY Director September , 1996
- -------------------------------------
Michael Delaney
/s/ DAVID HOWE Director September , 1996
- -------------------------------------
David Howe
/s/ JOHN WURSTER Director September , 1996
- -------------------------------------
John Wurster
</TABLE>
II-5
<PAGE> 124
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, 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 the day of September, 1996.
MS ACQUISITION CORP.
By: /s/ UELI SPRING
------------------------------------
Ueli Spring
President and
Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below appoints Ueli Spring and Harold
Brown, any of whom may act without the joinder of the other, as his true and
lawful attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto
and all other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or their substitute or substitutes may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities at the above-named registrant and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------- ---------------------------------- -------------------
<C> <S> <C>
/s/ UELI SPRING Director, President and Chief September , 1996
- ------------------------------------- Executive Officer
Ueli Spring (principal executive officer)
/s/ HAROLD BROWN Director, Chief Financial Officer, September , 1996
- ------------------------------------- Vice President, Finance and
Harold Brown Secretary
(principal financial and
accounting officer)
/s/ MICHAEL DELANEY Director September , 1996
- -------------------------------------
Michael Delaney
/s/ DAVID HOWE Director September , 1996
- -------------------------------------
David Howe
/s/ JOHN WURSTER Director September , 1996
- -------------------------------------
John Wurster
</TABLE>
II-6
<PAGE> 125
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, 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 the day of September, 1996.
AETNA HOLDINGS, INC.
By: /s/ UELI SPRING
------------------------------------
Ueli Spring
President and
Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below appoints Ueli Spring and Harold
Brown, any of whom may act without the joinder of the other, as his true and
lawful attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto
and all other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or their substitute or substitutes may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities at the above-named registrant and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------- ---------------------------------- -------------------
<C> <S> <C>
/s/ UELI SPRING Director, President and Chief September , 1996
- ------------------------------------- Executive Officer
Ueli Spring (principal executive officer)
/s/ HAROLD BROWN Director, Chief Financial Officer, September , 1996
- ------------------------------------- Vice President, Finance and
Harold Brown Secretary
(principal financial and
accounting officer)
/s/ MICHAEL DELANEY Director September , 1996
- -------------------------------------
Michael Delaney
/s/ DAVID HOWE Director September , 1996
- -------------------------------------
David Howe
/s/ JOHN WURSTER Director September , 1996
- -------------------------------------
John Wurster
</TABLE>
II-7
<PAGE> 126
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, 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 the day of September, 1996.
AETNA EXPORT SALES CORP.
By: /s/ UELI SPRING
------------------------------------
Ueli Spring
President
POWER OF ATTORNEY
Each person whose signature appears below appoints Ueli Spring and Harold
Brown, any of whom may act without the joinder of the other, as his true and
lawful attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto
and all other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or their substitute or substitutes may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities at the above-named registrant and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------- ---------------------------------- -------------------
<S> <C> <C>
/s/ UELI SPRING Director and President September , 1996
- ------------------------------------- (principal executive officer)
Ueli Spring
/s/ HAROLD BROWN Director, Treasurer and Secretary September , 1996
- ------------------------------------- (principal financial and
Harold Brown accounting officer)
/s/ EDWARD J. ROGERS Director September , 1996
- -------------------------------------
Edward J. Rogers
/s/ GRAHAM J. DUNN Director September , 1996
- -------------------------------------
Graham J. Dunn
</TABLE>
II-8
<PAGE> 127
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION OF EXHIBITS PAGE NO.
- ------ -------------------------------------------------------------------------- ----------
<S> <C> <C>
3.1 Certificate of Incorporation of Aetna Industries, Inc. (the "Company")
3.2 Amended and Restated Certificate of Incorporation of MS Acquisition Corp.
("MS Acquisition")
3.3 Certificate of Incorporation of Aetna Holdings, Inc. ("Holdings")
3.4 Certificate of Incorporation of Aetna Export Sales Corp. ("Export")
3.5 By-laws of the Company
3.6 By-laws of MS Acquisition
3.7 By-laws of Holdings
3.8 By-laws of Export
4 Indenture dated as of August 1, 1996 by and among the Company, Holdings,
MS Acquisition, Export and Norwest Bank Minnesota, National Association,
as Trustee
5 Opinion of Morgan, Lewis & Bockius LLP*
8 Opinion of Morgan, Lewis & Bockius LLP regarding tax matters*
10.1 Recapitalization and Stock Purchase Agreement dated as of August 13, 1996
among Citicorp Venture Capital, Ltd., MS Acquisition and the stockholders
listed therein*
10.2 Stock Purchase Agreement dated as of August 13, 1996 among MS Acquisition,
Holdings and the stockholders and optionees listed therein*
10.3 Credit Agreement dated as of May 2, 1996 among MS Acquisition, the
Company, and NBD Bank, as Lender and Agent (the "Credit Agreement")
10.4 First Amendment to Credit Agreement dated as of August 13, 1996
10.5 Security Agreement dated as of May 2, 1996 by the Company in favor of NBD
Bank, as Lender and Agent
10.6 Security Agreement dated as of May 2, 1996 by Export in favor of NBD Bank,
as Lender and Agent
10.7 Pledge Agreement and Irrevocable Proxy dated as of May 2, 1996 by the
Company in favor of NBD Bank, as Lender and Agent
10.8 Registration Rights Agreement dated as of August 13, 1996 by and among the
Company, MS Acquisition, Holdings, Export and the Initial Purchasers
10.9 Stockholders Agreement dated as of August 13, 1996 among MS Acquisition
and its stockholders
10.10 Registration Rights Agreement dated as of August 13, 1996 among MS
Acquisition and its stockholders
10.11 Management Agreement dated as of August 13, 1996 by and between MS
Acquisition and the Company
10.12 Form of 11% Junior Subordinated Promissory Notes Due 2007 of Holdings
dated August 13, 1996
10.13 Agreement to Indemnify dated as of August 13, 1996 between the Company and
each of R. Epker, R. Small, J. Bakken, D. Thal and J. Singer*
10.14 Amended and Restated Executive Stock Option Plan of MS Acquisition
10.15 Form of Stock Option Agreement
10.16 Employment Agreement dated as of August 13, 1996 among the Company, MS
Acquisition and Ueli Spring
</TABLE>
<PAGE> 128
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION OF EXHIBITS PAGE NO.
- ------ -------------------------------------------------------------------------- ----------
<S> <C> <C>
10.17 Employment Agreement dated as of August 13, 1996 among the Company, MS
Acquisition and Harold Brown
10.18 Employment Agreement dated as of August 13, 1996 among the Company, MS
Acquisition and Gary Easterly
10.19 Form of Purchase Order with General Motors Corporation
10.20 Form of Purchase Order with Chrysler Corporation
12 Statement of Ratio of Earnings to Fixed Charges
21 Subsidiary of the Company
23.1 Consent of Morgan, Lewis & Bockius LLP (included in Exhibit 5)
23.2 Consent of Price Waterhouse LLP for the Company
23.3 Consent of Price Waterhouse LLP for MS Acquisition
24 Power of Attorney (included on signature page)
25 Statement of Eligibility and Qualification on Form T-1 of Norwest Bank
Minnesota, National Association
27 Financial Data Schedules
99.1 Form of Letter of Transmittal
99.2 Form of Notice of Guaranteed Delivery
</TABLE>
- ------------------------------
* To be filed by amendment.
(b) Financial Statement Schedules
None.
All financial statement schedules are omitted as they are not applicable or
the required information is included in the consolidated financial statements of
the registrants.
<PAGE> 1
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
AETNA INDUSTRIES, INC.
The undersigned incorporator, for the purpose of incorporating or
organizing a corporation under the General Corporation Law of the State of
Delaware, certifies:
FIRST: The name of the corporation is: Aetna Industries, Inc.
SECOND: The address of the Corporation's registered office in the
State of Delaware is Corporation Trust Center, 1209 Orange Street in the City of
Wilmington, County of New Castle, 19801. The name of its registered agent at
such address in The Corporation Trust Company.
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 the State of Delaware.
FOURTH: The total number of shares of capital stock which the
Corporation shall have authority to issue is Three Thousand (3,000) shares, all
of such shares will be Common Stock, par value $.01 per share.
FIFTH: The name and mailing address of the incorporator is Sonia
Lopez, Morgan, Lewis & Bockius LLP, 101 Park Avenue, New York, New York 10178.
SIXTH: Elections of directors need not be by ballot unless the
By-Laws of the Corporation shall so provide.
SEVENTH: The Board of Directors of the Corporation may make By-Laws
and from time to time may alter, amend or repeal By-Laws.
EIGHTH: No director of the Corporation shall be 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 Delaware General Corporation
Law, or (iv) for any transaction from which the director derived an improper
personal benefit.
NINTH: 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 stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the
<PAGE> 2
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 to 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 for 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 creditors, and/on all the
stockholders or class of stockholders, of this Corporation, as the case may be,
and also on this Corporation.
<PAGE> 3
IN WITNESS WHEREOF, I have signed this Certificate this on July 24,
1996.
/s/ Sonia Lopez
-------------------------
Sonia Lopez
<PAGE> 1
EXHIBIT 3.2
RESTATED CERTIFICATE OF INCORPORATION
OF
MS ACQUISITION CORP.
MS ACQUISITION CORP., a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "GCL"), does hereby
certify that:
1. The name of the corporation is MS ACQUISITION CORP. (the
"Corporation"). The Corporation was originally incorporated under the name PWC
Acquisition Corp., and the original Certificate of Incorporation of the
Corporation was filed with the Secretary of State of the State of Delaware on
May 2, 1986 being thereafter amended and restated.
2. This Restated Certificate of Incorporation (i) has been adopted
in accordance with the provisions of Section 228 (with the written consent of
the stockholders of the Corporation), 242 and 245 of the GCL and (ii) amends,
restates and integrates the provisions of the Certificate of Incorporation of
the Corporation as in effect immediately prior to the filing hereof.
3. The Certificate of Incorporation of the Corporation is hereby
amended and restated to read in its entirety as follows:
FIRST: The name of the corporation is MS Acquisition Corp.
(hereinafter the "Corporation").
SECOND: The address of the Corporation's registered office in the
State of Delaware is Corporation Trust Center, 1209 Orange Street, City of
Wilmington, County of New Castle. The name of its registered agent at such
address is The Corporation Trust Company.
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 the State of Delaware (the "GCL").
FOURTH: The total number of shares of capital stock which the
Corporation shall have authority to issue is 12,293,123.320 shares, consisting
of 10,000,000 shares of Common Stock, par value $.01 per share (the "Common
Stock"); and 2,293,123.320 shares of Preferred Stock, par value $.01 per share
(the "Preferred Stock"). Shares of the Corporation's Series A Preferred Stock,
par value $.01 per share (the "Old Series A Preferred"), Series B
<PAGE> 2
Preferred Stock, par value $.01 per shares (the "Old Series B Preferred", and
collectively with the Old Series A Preferred, the "Old Preferred Stock"), Class
A Common Stock, par value $.01 per share (the "Old Class A Common"), and Class B
Common Stock, par value $.01 per share (the "Old Class B Common", and
collectively with the Old Class A Common, the "Old Common Stock"), which are
issued and outstanding immediately prior to the filing of this Restated
Certificate of Incorporation shall be reclassified as set forth below. The
Common Stock will consist of two classes of Common Stock as follows:
(i) 5,000,000 shares of Class A Common Stock, par value $.01
per share (the "Class A Common");
(ii) 5,000,000 shares of Class B Common Stock, par value $.01
per share (the "Class B Common").
The Preferred Stock will consist of:
(i) 293,123.320 shares of a Class of Preferred Stock
constituting Series A Preferred Stock, par value $.01 per
share (the "Series A Preferred Stock"); and
(ii) 2,000,000 shares of a class of Preferred Stock constituting
New Preferred Stock, par value $.01 per share, in one or
more series, the terms of which may be set forth by
resolution of the Board of Directors, as provided by
Section 1(b) of Part III of Article FOURTH (the "New
Preferred Stock").
Upon the effectiveness of this Certificate of Incorporation, each
share of Old Class A Common Stock, Old Class B Common Stock and Old Preferred
Stock issued and outstanding immediately prior to the filing of this Certificate
of Incorporation shall be changed and reclassified into .34217407 shares of
Class A Common , 1.75384365 shares of Class B Common and .26776881 shares of
Series A Preferred.
I. DEFINITIONS
(1) The following terms shall have the following meanings in this
Certificate of Incorporation (such definitions to be equally applicable to both
singular and plural forms of the terms defined):
"Affiliate" means with respect to any Person, any other
Person that controls, is controlled by or is under common control
with such Person. For the purposes of this definition, "control"
(including its correlative meanings, the terms
-2-
<PAGE> 3
"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 and policies of such Person,
whether through the ownership of securities, by contract or otherwise.
"Board of Directors" means the board of directors of the Corporation.
"Business Day" means a day, other than a Saturday or Sunday, on which banks
in New York, New York are open for business.
"Person" or "person" means an individual, partnership, corporation, limited
liability company or partnership, trust, unincorporated organization, joint
venture, government (or agency or political subdivision thereof) or any other
entity of any kind.
"Qualifying Offering" has the meaning provided in the Stockholders
Agreement.
"Regulatory Problem" means, with respect to any stockholder, any set of
facts or circumstances wherein such stockholder has made a determination that
(i) such stockholder or such stockholder's Affiliates own, control or have
certain power over a quantity of securities of any kind issued by the
Corporation which exceeds any limitation to which it is (or they are) subject,
or which is otherwise not permitted, under any law, rule or regulation of any
governmental authority (including any position to that effect taken by such
governmental authority) or (ii) that restrictions are imposed on such
stockholder as a result of any law, regulation, rule or directive (whether or
not having the force of law) of any governmental or regulatory authority which
make it illegal or unduly burdensome for such stockholder or such stockholder's
Affiliates to continue to own, control or have such power over any securities of
any kind issued by the Corporation.
"Securities Act" means the Securities Act of 1933, as amended from time to
time, and the rules and regulations promulgated thereunder.
"Stockholders Agreement" means the Stockholders Agreement dated as of
August 13, 1996 by and among the Corporation and its stockholders, as in effect
on the date of execution thereof.
"Tax" or "Taxes" means all Federal, state, local or foreign net or gross
income, gross receipts, net proceeds, sales, use, ad valorem, value added,
franchise, bank shares, withholding, payroll, employment, excise, property,
alternative or ad-on minimum, environmental or other taxes, assessments, duties,
fees, levies or other governmental
-3-
<PAGE> 4
charges of any nature whatever, whether disputed or not, together with
any interest, penalties, additions to tax or additional amounts with
respect thereto.
(2) The following terms, when used in this Certificate of
Incorporation, shall have the meanings provided for such terms in the Sections
set forth below (such definitions to be equally applicable to both singular and
plural forms of the terms defined):
Section (Part)
Term of Article FOURTH
---- -----------------
Class A Common preamble
Class B Common preamble
Common Stock preamble
Conversion Price 6(a) (Part III)
Corporation preamble
Date of Issuance 1(c) (Part III)
Dividend Payment Date 2(a) (Part III)
Dividend Period 2(a) (Part III)
Dividend Rate 2(a) (Part III)
GCL preamble
Junior A Stock 2(c)(Part III)
New Preferred Stock preamble
Old Class A Common preamble
Old Class B Common preamble
Old Common Stock preamble
Old Preferred Stock preamble
Old Series A Preferred preamble
Old Series B Preferred preamble
Old Stock preamble
Optional Conversion 6(a) (Part III)
Organic Change 7(a) (Part III)
Parity Securities 2(d) (Part III)
Preferred Liquidation Value 2(b) (Part III)
Preferred Stock preamble
Redemption Date 3(a) (Part III)
Redemption Price 3(a) (Part III)
Series A Preferred preamble
Share 1(c) (Part III)
Stated Value 1(c) (Part III)
-4-
<PAGE> 5
II. COMMON STOCK
Except as otherwise provided herein or as otherwise required by
applicable law, all shares of Common Stock will be identical in all respects and
will entitle the holders thereof to the same rights and privileges.
(1) Voting Rights.
(a) Except as expressly provided herein or as required under
the GCL, on all matters to be voted on by the Corporation's
stockholders, (i) each holder of record of shares of Class A Common
will be entitled to one vote per share so held, and (ii) holders of
shares of Class B Common will be entitled to no voting rights.
(b) Except as expressly required under the GCL, on any matter
on which holders of Class B Common shall be entitled to vote, they
shall be entitled to one vote per share and shall vote together as a
single class with the holders of the Class A Common.
(2) Dividends. When and as dividends are declared or paid on shares
of Common Stock, whether in cash, property or securities, each holder of
record of shares of Common Stock will be entitled to a ratable portion of
such dividend, based upon the number of shares of Common Stock then held of
record by each such holder, provided that (a) if dividends are declared in
shares of Common Stock, such dividends will be declared and paid at the
same rate per share on each class of Common Stock, and, unless the
Corporation obtains the prior affirmative vote or written consent of at
least ninety-five percent (95%) of the issued and outstanding shares of
each class of Common Stock, dividends payable in shares of a specific class
of Common Stock will be payable only to holders of that particular class of
Common Stock; provided, further, that any dividend or distribution payable
to one class of Common Stock entitles the other class of Common Stock to
the same form and distribution amount (except as provided for in (b) below)
on the same date, and (b) if the dividends consist of voting securities of
the Corporation, the Corporation will make available to each holder of
Class B Common, at such holder's request, dividends consisting of
non-voting securities of the Corporation, which are otherwise identical to
the voting securities and which are convertible into or exchangeable for
such voting securities on the same terms as the shares of Class B Common
are convertible into the shares of Class A Common.
-5-
<PAGE> 6
(3) Stock Splits; Combinations. If the Corporation, in any manner,
subdivides or combines (by stock split, stock dividend or otherwise) the
outstanding shares of one class of Common Stock, the issued and outstanding
shares of the other class of Common Stock will be proportionately subdivided or
combined unless the Corporation obtains the prior affirmative vote or consent of
the holders of all of the issued and outstanding shares of Class A Common and
Class B Common voting together as a single class.
(4) Liquidation.
(a) Ratable Participation. The holders of the Common Stock will be
entitled to share ratably, on the basis of the number of shares of Common Stock
then held by each such holder, in all distributions to the holders of the Common
Stock in any liquidation, dissolution or winding up of the Corporation.
(b) Mergers, etc. Neither the voluntary sale, conveyance, exchange
or transfer (for cash, shares of stock, securities or other consideration) of
all or substantially all the property or assets of the Corporation nor the
consolidation, merger or other business combination of the Corporation with or
into one or more corporations shall be deemed to be a liquidation, dissolution
or winding-up, voluntary or involuntary, of the Corporation.
(5) Conversion.
(a) Optional Conversion of Class A Common. Each share of Class A
Common is convertible into one share of Class B Common at the option of the
holder thereof in the event that the holder thereof has determined that it (or
its Affiliates, other than the Corporation) might be subject to a Regulatory
Problem as a result of its holdings of shares of any Class A Common.
(b) Optional Conversion of Class B Common. Each share of Class B
Common is convertible into one share of Class A Common, in each case at the
option of the holder thereof, so long as the holder thereof has determined that
none of it or its Affiliates, other than the Corporation, will be subject to a
Regulatory Problem as a result of its holdings of shares of Class A Common.
(c) Conversion Procedure.
(i) Each conversion of shares of one class of Common Stock into
shares of another class of Common Stock will be effected by the surrender of the
certificate or certificates representing the shares to be converted at the
principal office of the Corporation at any time during normal business hours,
-6-
<PAGE> 7
together with written notice by the holder of such shares stating (x) that the
holder desires to convert the shares, or a stated number of the shares, of a
class of Common Stock represented by such certificate or certificates into such
other class of Common Stock, (y) with respect to any conversion of shares of
Class A Common into Class B Common, that such holder has determined that such
conversion is necessary because of a Regulatory Problem and (z) with respect to
any conversion of Class B Common into Class A Common, that such holder has
determined that such conversion will not result in a Regulatory Problem for any
of such holder or its Affiliates (other than the Corporation). Each conversion
pursuant to Section 5(a) or 5(b) of this Part II will be deemed to have been
effected as of the close of business on the date on which such certificate or
certificates were surrendered and such notice was received. At such time the
rights of the holder of the converted Common Stock as such holder will cease and
the person or persons in whose name or names the certificate or certificates for
shares of such other class of Common Stock are to be issued upon such conversion
will be deemed to have become the holder or holders of record of the shares of
such other class of Common Stock represented thereby.
(ii) Following each surrender of certificates and the receipt of
such written notice, the Corporation will issue and deliver in accordance with
the surrendering holder's instructions (a) the certificate or certificates for
the class of Common Stock issuable upon such conversion and (b) a certificate
representing any Common Stock which was represented by the certificate or
certificates delivered to the Corporation in connection with such conversion but
which was not converted.
(iii) The issuance of certificates for a class of Common Stock
upon conversion of any class of Common Stock will be made without charge to the
holders of such shares for any issuance tax in respect thereof or other cost
incurred by the Corporation in connection with such conversion and the related
issuance of such other class of Common Stock.
(iv) The Corporation will at all times reserve and keep
available out of its authorized but unissued shares of Class A Common and Class
B Common the number of such shares sufficient for issuance upon conversion of
any class of the Common Stock hereunder.
(v) The Corporation will not close its books against the
transfer of any class of Common Stock in any manner which would interfere with
the timely conversion of any class of Common Stock.
-7-
<PAGE> 8
(6) Registration of Transfer. The Corporation will keep at its principal
office (or such other place as the Corporation reasonably designates) a register
for the registration and transfer of shares of Common Stock. Upon the surrender
of any certificate representing shares of any class of Common Stock at such
place, the Corporation will, at the request of the registered holder of such
certificate, execute and deliver a new certificate or certificates in exchange
therefor representing in the aggregate the number of shares of such class
represented by the surrendered certificate, and the Corporation forthwith will
cancel such surrendered certificate. Each such new certificate will be
registered in such name and will represent such number of shares of such class
as is requested by the holder of the surrendered certificate and will be
substantially identical in form to the surrendered certificate.
(7) Replacement. Upon receipt of evidence reasonably satisfactory to the
Corporation (an affidavit of the registered holder will be satisfactory) of the
ownership and the loss, theft, destruction or mutilation of any certificate
evidencing one or more shares of any class of Common Stock, and in the case of
any such loss, theft or destruction, upon receipt of the indemnity reasonably
satisfactory to the Corporation (provided that if the holder is a financial
institution or other institutional investor its own agreement will be
satisfactory with the approval of the Board of Directors or the Corporation),
or, in the case of any such mutilation upon surrender of such certificate, the
Corporation will (at its expense) execute and deliver in lieu of such
certificate a new certificate of like kind representing the number of shares of
such class represented by such lost, stolen, destroyed or mutilated certificate
and dated the date of such lost, stolen, destroyed or mutilated certificate.
(8) Amendment and Waiver. No amendment or waiver of any provision of this
Article Fourth will be effective without the prior approval of the holders of a
majority of the then outstanding Common Stock voting as a single class and the
holders of a majority of the then outstanding Class B Common voting as a single
class.
(9) Merger Consideration. Without the prior affirmative vote or written
consent of the holders of at least ninety-five percent (95%) of each class of
Common Stock, the Corporation will not merge, consolidate or effect a
recapitalization, unless, in connection with any merger, consolidation or
recapitalization in which holders of either class of Common Stock generally
receive, or are given the opportunity to receive, consideration for their
shares, all holders of all classes of Common Stock shall be given the
opportunity to receive the same form and amount of consideration per share.
-8-
<PAGE> 9
III. PREFERRED STOCK
(1) Designation.
(a) Series A Preferred Stock. One class of Preferred Stock is
hereby created with the designations, powers, preferences and rights set forth
herein. The Corporation is authorized to issue a class of Preferred Stock
designated as "Series A Preferred Stock" consisting of 293,123.320 shares,
(b) New Preferred Stock. The Board of Directors is authorized
to issue, in one or more series, shares of New Preferred Stock. The New
Preferred Stock shall have voting powers, full or limited, or no voting powers,
and such designations, preferences and relative, participating, optional or
other special rights, and qualifications, or restrictions thereof, as shall be
stated and expressed in a resolution or resolutions providing for the issuance
of such New Preferred Stock adopted by the Board of Directors. The authority of
the Board of Directors with respect to the New Preferred Stock or any class or
series thereof shall include, without limitation of the foregoing, the right to
determine or fix:
(i) the distinctive designation of such class or series,
the number of shares which constitute such class or series and the stated value
thereof if different from the par value thereof;
(ii) the rate (or method of determining such rate), if any,
at which dividends on the shares of such class or series shall be declared and
paid, or set aside for payment, whether dividends at the rate so determined
shall be cumulative or accruing, and whether the shares of such class or series
shall be entitled to any participating or other dividends in addition to
dividends at the rate so determined, and if so, on what terms;
(iii) the right or obligation, if any, of the Corporation to
redeem shares of a particular class or series of New Preferred Stock and, if
redeemable, the price, terms and manner of such redemption;
(iv) the special and relative rights and preferences, if
any, and the amount or amounts per share, which the shares of any class or
series of New Preferred Stock shall be entitled to receive upon any voluntary or
involuntary liquidation, dissolution or winding-up of the Corporation;
(v) the terms and conditions, if any, upon which shares
of any class or series shall be convertible into, or exchangeable for, shares of
capital stock of any other class or series of stock of the Corporation or of any
other entity, including the price or prices or the rate or rates of conversion
or exchange and the terms of adjustment, if any;
-9-
<PAGE> 10
(vi) the obligation, if any, of the Corporation to retire,
redeem or purchase shares of such class or series pursuant to a sinking fund or
fund of a similar nature or otherwise, and the terms and conditions of such
obligation;
(vii) voting rights, if any, in addition to any voting
rights provided by law, and, if so, the terms of such voting rights which may be
special voting rights and the preference or relation which such voting rights
shall bear to the voting rights of any class of capital stock or other series of
New Preferred Stock;
(viii) limitations, if any, on the issuance of shares of
any New Preferred Stock or series of New Preferred Stock; and
(ix) such other preferences, powers, qualifications,
special or relative rights and privileges thereof as the Board of Directors,
acting in accordance with this Certificate of Incorporation, may deem advisable
and are not inconsistent with law and the provisions of this Certificate of
Incorporation.
(c) Stated Value; Date of Issuance. The shares of Series A
Preferred Stock (individually, a "Share" and, collectively, the "Shares") shall
each have a stated value of $100 per share for the Series A Preferred Stock (the
"Stated Value"). No Shares shall be issued except as part of the original
issuance thereof. The date on which the Corporation initially issues any Share
will be deemed its "Date of Issuance" regardless of the number of times transfer
of such Share is made on the stock records of the Corporation and regardless of
the number of certificates which may be issued to evidence such Share.
(d) Ranking. For so long as any Shares are issued and
outstanding, the Corporation will not issue any series of Preferred Stock which
will be senior or pari passu with respect to payment of dividends, other
distributions, preference on redemption or liquidation rights or otherwise;
provided, however, that a majority of the holders of the Shares, voting as a
series, may consent to the issuance of Preferred Stock ranking senior or pari
passu to the Series A Preferred Stock; provided, further, that any holder of the
Series A Preferred Stock who will also hold (or if any of said holders,
Affiliates, associates, employees or designees who will hold) the Preferred
Stock ranking senior or pari passu with the Series A Preferred Stock will not be
entitled to vote as a holder of Series A Preferred Stock for the purpose of
consenting to the creation of Preferred Stock ranking senior or pari passu with
the Series A Preferred Stock.
(2) Dividends.
(a) Rates; Dates Payable. When, as and if declared by the
Board of Directors, to the extent funds are legally available therefor,
dividends will be payable on each Share, in cash, as provided herein. Dividends
on the Shares will be payable at a rate per annum equal to 11% of the Stated
Value thereof (the "Dividend Rate"). Such
-10-
<PAGE> 11
dividends shall be payable semi-annually on the 13th day of February and August
of each year, commencing on February 13, 1997 (each such date hereinafter
referred to as a "Dividend Payment Date" and each such dividend period
hereinafter referred to as a "Dividend Period"), except that if such date is not
a Business Day, then such dividend shall be payable on the next succeeding
Business Day, to the holders of record as they appear on the register of the
Corporation for the Shares.
(b) Accrual.
(i) Dividends on the Shares shall accrue cumulatively on a
daily basis and shall accrue from the Date of Issuance to and
including the date on which the redemption of such Shares shall
have been effected or on which full payment with respect to such
Shares shall have been made pursuant to any liquidation,
dissolution or winding-up of the Corporation, whether or not such
dividends have been declared and whether or not there shall be
(at the time such dividends became or become payable or any other
time) profits, surpluses or other funds of the Corporation
legally available for the payment of dividends.
(ii) To the extent not paid on any Dividend Payment Date,
all dividends which have accrued on any Series A Preferred Stock
then outstanding during the period from and including the
preceding Dividend Payment Date (or from and including the Date
of Issuance in the case of the initial Dividend Payment Date) to
(but excluding) such Dividend Payment Date shall be added on such
Dividend Payment Date to the Preferred Liquidation Value of such
Series A Preferred Stock (so that, without limitation, dividends
shall thereafter accrue in respect of the amount of such accrued
but unpaid dividends) and shall remain a part thereof until (but
only until) such dividends are paid. The "Preferred Liquidation
Value" of any Share as of a particular date shall be equal to the
sum of $100 plus an amount equal to any accrued and unpaid
dividends (whether or not earned or declared) on such Share added
to the Preferred Liquidation Value of such Share on any Dividend
Payment Date pursuant to this Section (2)(b) and not thereafter
paid.
(c) Priority for Series A Preferred Stock. For so long as any
Shares shall be outstanding, no dividend or distribution, whether in cash, stock
or other property, shall be paid, declared and set apart for payment or made on
any date on or in respect to the Common Stock, or any other class or series of
stock of the Corporation ranking junior to the Series A Preferred Stock
(together with the Common Stock, a "Junior A Stock") as to dividends or
distributions of assets upon liquidation, dissolution or winding up, and no
payment on account of the redemption, purchase or other acquisition or
retirement for
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<PAGE> 12
value by the Corporation of shares of Common Stock or any other Junior A Stock
shall be made on any date unless, in each case, the full amount of unpaid
dividends accrued on all outstanding Shares shall have been paid or
contemporaneously are declared and paid; provided, however, that the foregoing
provisions of this sentence shall not prohibit (i) a dividend payable solely in
shares of Common Stock or any other Junior A Stock, (ii) the acquisition of any
shares of any Common Stock or any other Junior A Stock upon conversion or
exchange thereof into or for any shares of any other class of Common Stock, or
other Junior A Stock or (iii) the acquisition of any shares of Common Stock
pursuant to the Stockholders Agreement.
(d) Pro Rata. If the Corporation pays any dividend on the Series A
Preferred Stock which is less than the total amount of accrued and unpaid
dividends on such series, such payment will be distributed ratably among the
holders of such series and among the holders of any class or series of capital
stock of the Corporation ranking pari passu with respect to dividends and
liquidation preference ("Parity Securities") based on the aggregate accrued but
unpaid dividends on the Shares and the Parity Securities held by each such
holder.
(e) The Board of Directors may fix a record date for the
determination of holders of Shares entitled to receive payment of the dividends
payable pursuant to Section 2(a) of this Part III, which record date shall not
be more than sixty (60) days prior to the Dividend Payment Date.
(3) Redemption.
(a) Redemption by Corporation. To the extent funds are legally
available therefor, on the earlier of (i) February 13, 2007, or if such date is
not a Business Day then on the next Business Day, or (ii) the date on which a
Sale of the Company occurs, the Corporation shall redeem at the Redemption Price
therefor all issued and outstanding Shares. On any Business Day prior to
February 13, 2007, the Corporation, at its option, may redeem at the Redemption
Price therefor the Shares. The date on which Shares are redeemed pursuant to
this Section 3(a) of Part III is referred to herein as the "Redemption Date."
If on the Redemption Date there shall be insufficient funds of the Corporation
legally available for such redemption, such amount of the funds as is legally
available shall be used for the redemption requirement as described in Section
3(a)(i) and (ii) of this Part III. Such redemption requirement shall be
cumulative so that if such requirement shall not be fully discharged for any
reason, funds legally available therefor shall immediately be applied thereto
upon receipt by the Corporation until such requirement is discharged.
The redemption price (the "Redemption Price") for each outstanding
Share to be redeemed pursuant to this Section 3(a) of Part III shall be the sum
of (i) the Stated
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<PAGE> 13
Value thereof plus (ii) an amount equal to all accrued and unpaid dividends
thereon to the Redemption Date.
(b) Payment of Redemption Price. On the Redemption Date, the
Corporation shall pay to the holder of each Share being redeemed, upon surrender
by such holder at the Corporation's principal executive office of the
certificate representing such Share, duly endorsed in blank or accompanied by an
appropriate form of assignment, the Redemption Price.
(c) Redeemed or Otherwise Acquired Shares not to be Reissued. All
Shares redeemed pursuant to this Section 3 of Part III or otherwise acquired by
the Corporation shall be retired and shall not thereafter be reissued.
(d) Determination of Number of Each Holder's Shares to be Redeemed.
If less than all of the outstanding Shares are to be redeemed pursuant to
Section 3(a) of this Part III, the Corporation shall determine the Shares held
by each holder to be redeemed as hereinafter provided. The number of Shares to
be redeemed from each holder thereof shall be the number of Shares determined by
multiplying the total number of Shares to be redeemed by a fraction, the
numerator of which shall be the total number of Shares then held by such holder
and the denominator of which shall be the total number of Shares then
outstanding.
(e) Notice of Redemption. Notice of the redemption of Shares
pursuant to Section 3(a) of this Part III, specifying the time and place of
redemption and the Redemption Price, shall be given to each holder of record of
Shares to be redeemed, at the address for such holder shown on the stock records
of the Corporation not less than fifteen (15) Business Days prior to the date on
which such redemption is to be made; provided, that neither failure to give such
notice nor any defect therein shall affect the validity of the proceeding for
the redemption of any Shares to be redeemed. Such notice shall also specify the
number of Shares of each holder thereof and the certificate numbers thereof
which are to be redeemed. In case less than all the Shares represented by any
certificate are redeemed, a new certificate representing the unredeemed Shares
shall be issued to the holder thereof without cost to such holder.
(f) Dividends After Redemption Date. Unless the Redemption Price is
not made available to the holder of a Share, then from and after its Redemption
Date, no Share shall be entitled to any dividends accruing after such date, all
rights of the holder of such Share, as a stockholder of the Corporation by
reason of the ownership of such Share, shall cease, except the right to receive
the Redemption Price of such Share upon the presentation and surrender of the
certificate representing such Share, and such Share shall not after such date be
deemed to be outstanding for any purpose.
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<PAGE> 14
(4) Liquidation Rights.
(a) Preference for Series A Preferred Stock. Upon the dissolution,
liquidation or winding- up of the Corporation, whether voluntary or
involuntary, the holders of outstanding Shares shall be entitled to receive for
each such Share, out of the assets of the Corporation available for distribution
to stockholders, before any payment or distribution shall be made to the holders
of Common Stock or any other Junior A Stock, an amount in cash equal to the sum
of (i) the Stated Value, plus (ii) all accrued and unpaid dividends on the
Series A Preferred Stock to the date of final distribution. If upon any such
dissolution, liquidation or winding-up of the Corporation, the assets of the
Corporation available for distribution to stockholders shall be insufficient to
provide for the payment in full of the preference accorded to the Series A
Preferred Stock hereunder and the Parity Securities, if any, then such assets
shall be distributed ratably among the holders of such Shares and Parity
Securities, if any, based on the sum of (i) the Stated Value or the stated value
of the Parity Securities, as the case may be, plus (ii) all accrued and unpaid
dividends on the Series A Preferred Stock and the Parity Securities, if any.
(b) Preferences are not Participating. After the payment to the
holders of the Shares of the full preferential amounts provided for in this
Section 4 of Part III, the holders of the Shares as such shall have no right or
claim to any of the remaining assets of the Corporation.
(c) Preferences. In the event the assets of the Corporation
available for distribution to the holders of the Shares upon any dissolution,
liquidation or winding-up of the Corporation, whether voluntary or involuntary,
shall be insufficient to pay in full all amounts to which such holders are
entitled pursuant to Section 4 of this Part III, no such distribution shall be
made on account of any shares of any other class or series of Junior A Stock, if
any, unless the full distributive amount shall be paid on account of the Shares.
If upon any such dissolution, liquidation or winding-up of the Corporation, the
assets of the Corporation available for distribution to stockholders shall be
insufficient to provide for payment in full of the preference accorded to the
Series A Preferred hereunder and the Parity Securities, if any, then such assets
shall be distributed ratably among the Series A Preferred and the Parity
Securities, if any.
(d) Mergers, Etc. Neither the voluntary sale, conveyance, exchange
or transfer (for cash, shares of stock, securities or other consideration) of
all or substantially all the property or assets of the Corporation nor the
consolidation, merger or other business combination of the Corporation with or
into one or more corporations shall be deemed to be a liquidation, dissolution
or winding-up, voluntary or involuntary, of the Corporation.
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<PAGE> 15
(5) Voting.
(a) Generally. Except as required by law, and except as
otherwise specifically provided herein, none of the Shares shall have any
voting rights.
(b) Amendment; Certification of Incorporation. So long as any
Shares remain outstanding, the Corporation shall not, without the
affirmative vote at a meeting or the written consent in lieu of a meeting
of the holders of at least a majority in number of Shares then outstanding,
amend, alter or repeal any of the provisions of this Certificate of
Incorporation so as to affect adversely the preferences, special rights or
powers of the Shares.
(c) Authorized Shares. So long as any Shares remain
outstanding, the Corporation shall not amend this Certificate of Incorporation
so as to increase or decrease the aggregate number of authorized shares of the
Preferred Stock, or increase or decrease the par value of the Preferred Stock,
without the affirmative vote at a meeting or the written consent in lieu of a
meeting of the holders of at least a majority in number of all Shares then
outstanding.
(6) Conversion of Series A Preferred Stock.
The holders of the Series A Preferred shall each have the following
conversion rights:
(a) Right to Convert.
Subject to the provisions for adjustment hereinafter set
forth, each Share shall be convertible, as provided for below, at the option of
the holders of a majority of Shares then outstanding (such conversion, an
"Optional Conversion"), into fully-paid and non-assessable shares of Class A
Common or Class B Common for a period of one hundred eighty (180) days
immediately following the date of consummation of a Qualifying Offering at a
conversion price per share (net of underwriters' fees, commissions and discounts
and of the offering expenses) of Class A Common or Class B Common, as the case
may be, equal to the price per share of Common Stock paid by the public in
connection with such Qualifying Offering (such price shall be the "Conversion
Price" with respect to an Optional Conversion hereunder). The number of shares
of Common Stock into which each Share shall be convertible shall be determined
by dividing (i) the sum of (x) the Stated Value thereof, plus (y) an amount
equal to all accrued but unpaid dividends thereon to the date of conversion,
(ii) by the Conversion Price.
(b) Conversion Procedure
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<PAGE> 16
(i) If the majority holders of Series A Preferred Stock
notify the Corporation in writing during such one hundred eighty (180) day
period that they elect an Optional Conversion, each holder of Shares shall be
promptly notified in writing thereof by the Corporation, and for a period of
twenty (20) days after receipt of such written notice, each such holder shall
have the right to surrender the certificate or certificates for all of such
Shares that it proposes to convert, duly endorsed, at the principal office of
the Corporation or of any transfer agent for the Series A Preferred Stock or
Common Stock, together with written notice of the name or names in which such
holder wishes the certificate or certificates for shares of Common Stock to be
issued if such name or names shall be different than that of such holder. In
case such notice shall specify a name or names other than that of such holder,
such notice shall be accompanied by payment of all transfer Taxes payable upon
the issuance and delivery of shares of Common Stock in such name or names.
Thereupon, the Corporation shall issue and deliver at such office on the second
succeeding Business Day to such holder a certificate or certificates for the
number of validly issued, fully paid and non-assessable shares of Common Stock
to which such holder is entitled if less than the full number of shares of
Series A Preferred Stock evidenced by the surrendered certificate or
certificates are being converted, a new certificate or certificates, for the
number of Shares of evidenced by such surrendered certificate or certificates
less the number of shares converted.
(ii) Each conversion shall be deemed to have been effected
immediately prior to the close of business on the date of such surrender of the
Shares to be converted so that the rights of the holder thereof as to the Shares
being converted shall cease at such time except for the right to receive shares
of Common Stock, any rights trading therewith and any dividends declared,
accrued and unpaid in accordance herewith, and the Person entitled to receive
shares of Common Stock and any dividends declared, accrued and unpaid in
accordance herewith shall be treated for all purposes as the record holder of
such shares of Common stock at such time.
(c) Adjustment for Stock Splits and Combinations. If the
Corporation at any time or from time to time after the date of the Qualifying
Offering and prior to the date of any Optional Conversion (A) subdivides its
issued and outstanding shares of Class A Common or Class B Common, or (B)
combines its issued and outstanding shares of Class A Common or Class B Common
into a smaller number of shares, then, in each such case, the Conversion Price
in effect immediately prior to such event shall be adjusted so that each holder
of Shares shall have the right to convert its Shares into the number of shares
of Common Stock which it would have owned after the event had such Shares of
such Series A Preferred Stock been converted immediately before the happening of
such event. Any adjustment under this Section 6(c) of Part III shall become
effective as of the date and time such event becomes effective.
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<PAGE> 17
(7) Miscellaneous.
(a) Reorganization, Reclassification, Consolidation,
Merger or Sale.
(i) Any recapitalization, reorganization,
reclassification, consolidation, merger, sale of all or
substantially all of the Corporation's assets to another Person
or other transaction, occurring during the one hundred eighty
(180) days after a Qualifying Offering, which is effected in such
a way that holders of Common Stock are entitled to receive
(either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common
Stock is referred to herein as an "Organic Change." Prior to the
consummation of any Organic Change, the Corporation shall make
appropriate provision to insure that each of the holders of the
Shares shall thereafter have the right to acquire and receive in
lieu of or in addition to (as the case may be) the shares of
Class A Common (or Class B Common, as the case may be)
immediately theretofore acquirable and receivable upon the
conversion of such holder's Shares, such shares of stock,
securities or assets as may be issuable or payable with respect
to or in exchange for the number of shares of Common Stock
immediately theretofore acquirable and receivable upon conversion
of such holder's Shares had such Organic Change not taken place.
In any such case, the Corporation shall make appropriate
provision with respect to such holders' rights and interest to
insure that the provisions hereof shall thereafter be applicable
to the Shares (including, in the case of any such consolidation,
merger or sale in which the successor entity or purchasing entity
is other than the Corporation, an immediate adjustment to reflect
the value for the Shares reflected by the terms of such
consolidation, merger or sale, if the value so reflected would
cause a decrease in the Conversion Price in effect immediately
prior to such consolidation, merger or sale).
(ii) Unless the holders of at least ninety-five percent
(95%) of the issued and outstanding Shares vote in favor thereof
or by written consent thereto, the Corporation shall not effect
any such consolidation, merger or sale, unless prior to the
consummation thereof, the successor entity (if other than the
Corporation) resulting from such consolidation or merger or the
corporation purchasing such assets assumes by written instrument
(which may be the agreement of consolidation, merger or sale),
the obligation to deliver to each such holder such shares of
stock, securities or assets as, in accordance with the foregoing
provisions, such holder may be entitled to acquire.
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<PAGE> 18
(b) Fractional Shares Adjustments. Fractional shares may be
issued upon conversion of the Series A Preferred Stock.
(c) Shares to be Reserved. The Corporation shall at all times
reserve and keep available, out of its authorized and unissued stock, solely for
the purpose of effecting the conversion of the Series A Preferred Stock, such
number of shares of Class A Common and Class B Common as shall from time to time
be sufficient to effect the conversion of all of the Series A Preferred Stock
from time to time outstanding. The Corporation shall from time to time, in
accordance with the laws of the State of Delaware, increase the authorized
number of shares of each series of Class A Common and Class B Common if at any
time the number of shares of Class A Common and Class B Common not then
outstanding shall be insufficient to permit the conversion in full of the Series
A Preferred Stock.
(d) Taxes and Charges. The Corporation will pay any and all
Taxes that may be payable in respect of any issuance or delivery of shares of
Common Stock on conversion of the Series A Preferred Stock. The Corporation
shall not, however, be required to pay any Tax which may be payable in respect
of any transfer involved in the issuance or delivery of Common Stock in a name
other than that of the holder of the Series A Preferred Stock, and no such
issuance or delivery shall be made unless and until the Person requesting such
issuance has paid to the Corporation the amount of such Tax or has established,
to the satisfaction of the Corporation, that such Tax has been paid.
(e) Closing of Books. The Corporation will at no time close
its transfer books against the transfer of any Shares of Series A Preferred
Stock or of any shares of Common Stock issued or issuable upon the conversion of
any Shares of Series A Preferred Stock in any manner which interferes with the
timely conversion of such shares of Series A Preferred Stock.
(f) Status of Converted Stock. In the event any shares of
Series A Preferred Stock shall be converted pursuant to Section 6 of this Part
III, the shares so converted shall be retired and the certificates representing
such shares shall be canceled and such shares shall not be issuable by the
Corporation.
FIFTH: The Corporation shall be entitled to treat the person in whose
name any shares of its capital stock are registered as the owner thereof for all
purposes and shall not be bound to recognize any equitable or other claim to, or
interest in, such shares on the part of any other person, whether or not the
Corporation shall have notice thereof, except as required by applicable law.
SIXTH: The business and affairs of the Corporation shall be managed
by or under the direction of the Board of Directors.
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<PAGE> 19
SEVENTH: Terms used in this Article SEVENTH which are not otherwise
defined in this Certificate of Incorporation are used as defined in the
Stockholders Agreement. So long as the CVC Stockholders have the right to
designate directors under Section 5.1(a) of the Stockholders Agreement, the
Corporation (and each of its Subsidiaries) shall not enter into a Significant
Transaction without a prior Affirmative Board Vote.
EIGHTH: In furtherance and not in limitation of the powers conferred
by statute, the Board of Directors is expressly authorized to adopt, alter,
amend or repeal the By-Laws of the Corporation.
NINTH: The Corporation expressly elects not to be governed by Section
203 of the GCL.
TENTH: To the fullest extent permitted by the GCL as the same exists
or may hereafter be amended, a director of the Corporation shall not be liable
to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director. If the GCL is amended after the date of filing of
this Certificate of Incorporation to authorize corporate action further
eliminating or limiting the personal liability of directors, then the liability
of a director of the Corporation shall be eliminated or limited to the fullest
extent permitted by the GCL, as so amended from time to time. No repeal or
modification of this Article TENTH by the stockholders shall adversely affect
any right or protection of a director of the Corporation existing by virtue of
this Article TENTH at the time of such repeal or modification.
ELEVENTH: Except as set forth herein, the Corporation reserves the
right to amend, alter, change or repeal any provision contained in this
Certificate of Incorporation, in the manner now or hereafter prescribed by
statute, and all rights conferred on stockholders herein are granted subject to
this reservation.
TWELFTH: Meetings of stockholders may be held within or without the
State of Delaware, as the By-Laws of the Corporation may provide. The books of
the Corporation may be kept (subject to any provision contained in applicable
law) outside the State of Delaware at such place as may be designated from time
to time by the Board of Directors or in the By-Laws of the Corporation.
THIRTEENTH: Any notice required by the provisions of this Certificate
of Incorporation shall be in writing and shall be deemed given upon delivery, if
delivered personally, or by a recognized commercial courier postage prepaid with
receipt acknowledged, or upon the expiration of one hundred twenty (120) hours
after the same has been deposited in the United States mail, by certified or
registered mail, return receipt requested, postage prepaid, and addressed, in
the case of a notice to any holder of shares of capital stock of the
Corporation, to such holder as such holder's address appears on the books of the
Corporation, or in the case of a notice to the Corporation, at its principal
executive office. Neither the failure to mail any such
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<PAGE> 20
notice to any particular holder nor any defect in any such notice shall affect
the sufficiency of notice with respect to any other Person.
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<PAGE> 21
IN WITNESS WHEREOF, the undersigned, being the Chief Executive
Officer and President of the Corporation, has duly executed this Restated
Certificate of Incorporation on this 13 day of August, 1996.
MS ACQUISITION CORP.
By: /s/ Ueli Spring
-------------------------------
Name: Ueli Spring
Title: Chief Executive Officer
and President
<PAGE> 1
EXHIBIT 3.3
CERTIFICATE OF INCORPORATION
OF
AETNA HOLDINGS, INC.
The undersigned incorporator, for the purpose of incorporating or
organizing a corporation under the General Corporation Law of the State of
Delaware, certifies:
FIRST: The name of the corporation is: Aetna Holdings, Inc.
SECOND: The address of the Corporation's registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street in the City of
Wilmington, County of New Castle, 19801. The name of its registered agent at
such address in The Corporation Trust Company.
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 the State of Delaware.
FOURTH: The total number of shares of capital stock which the Corporation
shall have authority to issue is Three Thousand (3,000) shares, all of such
shares will be Common Stock, par value $.01 per share.
FIFTH: The name and mailing address of the incorporator is Sonia Lopez,
Morgan, Lewis & Bockius LLP, 101 Park Avenue, New York, New York 10178.
SIXTH: Elections of directors need not be by ballot unless the By-Laws of
the Corporation shall so provide.
SEVENTH: The Board of Directors of the Corporation may make By-Laws and
from time to time may alter, amend or repeal By-Laws.
EIGHTH: No director of the Corporation shall be 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 Delaware General Corporation Law, or (iv)
for any transaction from which the director derived an improper personal
benefit.
NINTH: 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 stockholder 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 the
application of trustees in dissolution or of any receiver or receivers
appointed to this Corporation under the
<PAGE> 2
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 for 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 creditors, and/on all the stockholders or class of
stockholders, of this Corporation, as the case may be, and also on this
Corporation.
<PAGE> 3
IN WITNESS WHEREOF, I have signed this Certificate this on July 24, 1996.
/s/ Sonia Lopez
------------------
Sonia Lopez
<PAGE> 1
EXHIBIT 3.4
ARTICLES OF INCORPORATION
OF
AETNA EXPORT SALES CORP.
WE, THE UNDERSIGNED, in order to form a corporation pursuant to the
provisions of the Virginia Islands Code, do hereby certify as follows:
FIRST: The name of the corporation is Aetna Export Sales Corp.
SECOND: The Corporation is organized as a corporation for profit and to
be, after making the appropriate elections, a Foreign Sales Corporation as such
term is defined in Subpart C of Part III of Subchapter N of Chapter 1 of the
United States Internal Revenue of 1954, as amended, and Chapter 12, Title 13 of
the Virgin Islands Code. To that end the corporation may engage in any lawful
activity and have any purpose not specifically prohibited to corporations under
the applicable laws of the United States Virgin Islands.
THIRD: The total number of shares which the corporation is authorized to
issue is one thousand (1,000) shares of common stock without par value.
FOURTH: The minimum amount of capital at the commencement of business
shall be One Thousand Dollars ($1,000.00).
FIFTH: The location of the principal office of the corporation shall be at
the Citibank Building, Veterans Drive, Charlotte Amalie, St. Thomas, U.S.
Virgin Islands and the name of the registered agent in charge thereof is
RoyWest Trust Corporation (U.S. Virgin Islands) Limited.
SIXTH: The duration of the corporation is perpetual.
SEVENTH: The By-Laws shall set the number of directors of the corporation
which shall not be less than three.
EIGHTH: The names and residences of the incorporators are as follows:
NAME RESIDENCE
---- ---------
Richard Scott 1B Skyline Village
St. Thomas, USVI 00801
Julice Thomas Estate Bordeaux # 42
St. Thomas, USVI 00801
<PAGE> 2
NAME RESIDENCE
---- ---------
Janet L. Knight 22A Estate Tutu
St. Thomas, USVI 08801
NINTH: The following provisions are included in these Articles of
Incorporation for the purpose of regulating the business and the conduct of the
affairs of the corporation; provided, however, that nothing herein contained
shall deem to authorize the corporation to carry on any business or conduct its
affairs in any way contrary to the laws under which the corporation is
organized:
(a) All corporate powers except those which by law expressly require the
consent of the shareholders shall be exercised by the Board of Directors.
(b) The Board of Directors shall have power from time to time to fix and
determine and vary the amount of working capital of the corporation and to
direct and determine the use and disposition of any surplus or net profits over
and above capital stock paid in, in such manner and upon such terms of the
Board of Directors shall deem expedient.
(c) The Board of Directors may make By-Laws and from time to time may
alter, amend or repeal any By-Laws, but any By-Laws made by the Board of
Directors may be altered or repealed by the shareholders of the corporation.
IN WITNESS WHEREOF, we have executed these Articles of Incorporation in
triplicate this 7th day of December, 1987.
/s/ Richard Scott
-----------------
Richard Scott
/s/ Julice Thomas
-----------------
Julice Thomas
/s/ Janet L. King
-----------------
Janet L. Knight
<PAGE> 3
CHARLOTTE AMALIE, ST. THOMAS:
UNITED STATES VIRGIN ISLANDS:
BE IT REMEMBERED that on this 7th day of December, 1987, personally came
before me, Notary Public in and for the Territory aforesaid, Richard Scott,
Julice Thomas, and Janet L. Knight, parties to the foregoing Articles of
Incorporation, known to me personally to be such, and severally acknowledged
the said certificate to be the acts and deed of the signers respectively, and
that the facts therein stated are truly set forth.
Given under my hand and seal of office the day and year aforesaid.
/s/ Virginia Monsanto
---------------------
Notary Public
Notary Public. St. Thomas. Virgin Islands.
My Commission Expires April 12, 1989
<PAGE> 4
CONSENT OF AGENT FOR SERVICE OF PROCESS
This writing witnesseth that the undersigned Roywest Trust Corporation
(U.S. Virgin Islands) Limited having been designated by the
AETNA EXPORT SALES CORP.
- --------------------------------------------------------------------------------
Name of Corporation
as agent of the said company upon whom service of process may be made in all
suits arising against the said company in the Courts of the Virgin Islands, do
hereby consent to act as such agent, and that service of process may be made
upon me in accordance with Title 13 of the Virgin Islands Code.
IN WITNESS WHEREOF, I have hereunto set my signature this 7th day of
December, 1987.
/s/ Richard Scott
-----------------------
(Signature of Agent)
Subscribed and sworn to before me this 7th day of December, 1987 at
Charlotte Amalie.
/s/ Virginia Monsanto
------------------------
Notary Public
Notary Public. St. Thomas. Virgin Islands.
My Commission Expires April 12, 1989
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EXHIBIT 3.5
BY-LAWS
OF
AETNA INDUSTRIES, INC.
ARTICLE I
STOCKHOLDERS
SECTION 1. ANNUAL MEETING. The annual meeting of the stockholders of the
Corporation shall be held on such date, at such time and at such place within
or without the State of Delaware as may be designated by the Board of
Directors, for the purpose of electing Directors and for the transaction of
such other business as may be properly brought before the meeting.
SECTION 2. SPECIAL MEETINGS. Except as otherwise provided in the
Certificate of Incorporation, a special meeting of the stockholders of the
Corporation may be called at any time by the Board of Directors and shall be
called by the Chairman, the Chief Executive Officer and President or the
Secretary at the request in writing of stockholders holding together at least
twenty-five percent of the total number of shares of the Corporation's Common
Stock, par value $.01 per share (the "Common Stock"). Any special meeting of
the stockholders shall be held on such date, at such time and at such place
within or without the State of Delaware as the Board of Directors or the
officer calling the meeting may designate. At a special meeting of the
stockholders, no business shall be transacted and no corporate action shall be
taken other than that stated in the notice of the meeting unless all of the
stockholders entitled to notice are present in person or by proxy and consent
thereto, in which case any and all business may be transacted at the meeting
even though the meeting is held without notice.
SECTION 3. NOTICE OF MEETINGS. Except as otherwise provided in these
By-Laws or by law, a written notice of each meeting of the stockholders shall
be given not less than ten (10) nor more than sixty (60) days before the date
of the meeting to each holder of shares of Common Stock at his address as it
appears on the records of the Corporation. The notice shall state the place,
date and hour of the meeting and, in the case of a special meeting, the purpose
or purposes for which the meeting is called.
SECTION 4. QUORUM. At any meeting of the stockholders, the holders of a
majority in number of the total outstanding shares of stock of the Corporation
entitled to vote at such meeting, present in person or represented by proxy,
shall constitute a quorum of the stockholders for all purposes, unless the
representation of a larger number of shares shall be
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required by law, by the Certificate of Incorporation or by these By-Laws, in
which case the representation of the number of shares so required shall
constitute a quorum; provided that at any meeting of the stockholders at which
the holders of any class of stock of the Corporation shall be entitled to vote
separately as a class, the holders of a majority in number of the total
outstanding shares of such class, present in person or represented by proxy,
shall constitute a quorum for purposes of such class vote unless the
representation of a larger number of shares of such class shall be required by
law, by the Certificate of Incorporation or by these By-Laws.
SECTION 5. ADJOURNED MEETINGS. Whether or not a quorum shall be present
in person or represented at any meeting of the stockholders, the holders of a
majority in number of the shares of stock of the Corporation present in person
or represented by proxy and entitled to vote at such meeting may adjourn from
time to time; provided, however, that if the holders of any class of stock of
the Corporation are entitled to vote separately as a class upon any matter at
such meeting, any adjournment of the meeting in respect of action by such class
upon such matter shall be determined by the holders of a majority of the shares
of such class present in person or represented by proxy and entitled to vote at
such meeting. When a meeting is adjourned to another time or place, notice
need not be given of the adjourned meeting if the time and place thereof are
announced at the meeting at which the adjournment is taken. At the adjourned
meeting the stockholders, or the holders of any class of stock entitled to vote
separately as a class, as the case may be, may transact any business which
might have been transacted by them at the original meeting. If the adjournment
is for more than thirty (30) days, or if after the adjournment a new record
date is fixed for the adjourned meeting, a notice of the adjourned meeting
shall be given to each stockholder of record entitled to vote at the adjourned
meeting.
SECTION 6. ORGANIZATION. The Chairman or, in his absence, the President
and Chief Executive Officer or any Vice President shall call all regular
meetings of the stockholders to order, and shall act as Chairman of such
meetings. In the absence of the Chairman, the President and Chief Executive
Officer and all Vice Presidents or in the case of any special meeting, the
holders of a majority in number of the votes of all voting securities of the
Corporation present in person or represented by proxy and entitled to vote at
such meeting shall elect a Chairman.
The Secretary of the Corporation shall act as Secretary of all regular
meetings of the stockholders; but in the absence of the Secretary or in the
case of any special meeting, the Chairman may appoint any person to act as
Secretary of the meeting. It shall be the duty of the Secretary to prepare and
make, at least ten (10) days before every meeting of stockholders, a complete
list of stockholders entitled to vote at such meeting, arranged in alphabetical
order and showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open, 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, for the ten (10) days next preceding the
meeting, to the examination of any stockholder, for any purpose germane to the
meeting, during ordinary business
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hours, and shall be produced and kept at the time and place of the meeting
during the whole time thereof and subject to the inspection of any stockholder
who may be present.
SECTION 7. VOTING. Except as otherwise provided in the Certificate of
Incorporation or by law, each stockholder shall be entitled to one (1) vote for
each share of the capital stock of the Corporation registered in the name of
such stockholder upon the books of the Corporation. Each stockholder entitled
to vote at a meeting of stockholders or to express consent or dissent to
corporate action in writing without a meeting may authorize another person or
persons to act for him by proxy, but no such proxy shall be voted or acted upon
after three (3) years from its date, unless the proxy provides for a longer
period. When directed by the presiding officer or upon the demand of any
stockholder, the vote upon any matter before a meeting of stockholders shall be
by ballot. Except as otherwise provided by law or by the Certificate of
Incorporation, Directors shall be elected by a plurality of the votes cast at a
meeting of stockholders by the stockholders entitled to vote in the election
and, whenever any corporate action, other than the election of Directors is to
be taken, it shall be authorized by a majority of the votes cast at a meeting
of stockholders by the stockholders entitled to vote thereon.
Shares of the capital stock of the Corporation belonging to the
Corporation or to another corporation, if a majority of the shares entitled to
vote in the election of directors of such other corporation is held, directly
or indirectly, by the Corporation, shall neither be entitled to vote nor be
counted for quorum purposes.
SECTION 8. INSPECTORS. When required by law or directed by the presiding
officer or upon the demand of any stockholder entitled to vote, but not
otherwise, the polls shall be opened and closed, the proxies and ballots shall
be received and taken in charge, and all questions touching the qualification
of voters, the validity of proxies and the acceptance or rejection of votes
shall be decided at any meeting of the stockholders by two (2) or more
Inspectors who may be appointed by the Board of Directors before the meeting,
or if not so appointed, shall be appointed by the presiding officer at the
meeting. If any person so appointed fails to appear or act, the vacancy may be
filled by appointment in like manner.
ARTICLE II
BOARD OF DIRECTORS
SECTION 1. NUMBER AND TERM OF OFFICE. The business and affairs of the
Corporation shall be managed by or under the direction of a Board of Directors,
the members of which need not be stockholders of the Corporation. The number
of Directors constituting the Board of Directors shall be fixed from time to
time by resolution passed by a majority of the Board of Directors. The
Directors shall, except as hereinafter otherwise provided for filling
vacancies, be elected at the annual meeting of stockholders, and shall hold
office until their respective successors are elected and qualified or until
their earlier resignation or removal.
SECTION 2. REMOVAL, VACANCIES AND ADDITIONAL DIRECTORS. The stockholders
may, at any special meeting the notice of which shall state that it is called
for
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that purpose, remove, with or without cause, any Director and fill the vacancy;
provided that whenever any Director shall have been elected by the holders of
any class of stock of the Corporation voting separately as a class under the
provisions of the Certificate of Incorporation, such Director may be removed
and the vacancy filled only by the holders of that class of stock voting
separately as a class. Vacancies caused by any such removal and not filled by
the stockholders at the meeting at which such removal shall have been made, or
any vacancy caused by the death or resignation of any Director or for any other
reason, and any newly created directorship resulting from any increase in the
authorized number of Directors, may be filled by the affirmative vote of a
majority of the Directors then in office, although less than a quorum, and any
Director so elected to fill any such vacancy or newly created directorship
shall hold office until his successor is elected and qualified or until his
earlier resignation or removal.
When one (1) or more Directors shall resign effective at a future date, a
majority of the Directors then in office, including those who have so resigned,
shall have power to fill such vacancy or vacancies, the vote thereon to take
effect when such resignation or resignations shall become effective, and each
Director so chosen shall hold office as herein provided in connection with the
filling of other vacancies.
SECTION 3. PLACE OF MEETING. The Board of Directors may hold its meetings
in such place or places in the State of Delaware or outside the state of
Delaware as the Board from time to time shall determine.
SECTION 4. REGULAR MEETINGS. Regular meetings of the Board of Directors
shall be held at such times and places as the Board from time to time by
resolution shall determine. No notice shall be required for any regular
meeting of the Board of Directors; but a copy of every resolution fixing or
changing the time or place of regular meetings shall be mailed to every
Director at least five (5) days before the first meeting held in pursuance
thereof.
SECTION 5. SPECIAL MEETINGS. Special meetings of the Board of Directors
shall be held whenever called by direction of the Chairman, the President and
Chief Executive Officer or by any two (2) of the Directors then in office.
Notice of the day, hour and place of holding of each special meeting shall
be given by mailing the same at least five (5) days before the meeting or by
causing the same to be transmitted by telegraph, cable or wireless at least one
(1) day before the meeting to each Director. Unless otherwise indicated in the
notice thereof, any and all business other than an amendment of these By-Laws
may be transacted at any special meeting, and an amendment of these By-Laws may
be acted upon if the notice of the meeting shall have stated that the amendment
of these By-Laws is one of the purposes of the meeting. At any meeting at
which every Director shall be present, even though without any notice, any
business may be transacted, including the amendment of these By-Laws.
SECTION 6. QUORUM. Subject to the provisions of Section 2 of this Article
II, a majority of the members of the Board of Directors in office (but, unless
the Board shall consist solely of one (1) Director, in no case less than
one-third of the total number of Directors nor less
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than two (2) Directors) shall constitute a quorum for the transaction of
business and the vote of the majority of the Directors present at any meeting
of the Board of Directors at which a quorum is present shall be the act of the
Board of Directors. If at any meeting of the Board there is less than a quorum
present, a majority of those present may adjourn the meeting from time to time.
SECTION 7. ORGANIZATION. The Chairman shall preside at all meetings of
the Board of Directors. In the absence of the Chairman, a Chairman shall be
elected from the Directors present. Unless otherwise determined by a majority
of the members of the Board of Directors present at a meeting at which a quorum
is present, the Secretary of the Corporation shall act as Secretary of all
meetings of the Directors; and in the absence of the Secretary, the Chairman
may appoint any person to act as Secretary of the meeting.
SECTION 8. COMMITTEES. The Board of Directors may, by resolution passed
by a majority of the whole Board, designate one (1) or more committees, each
committee to consist of one (1) or more of the Directors of the Corporation.
The Board may designate one (1) or more Directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. In the absence or disqualification of a member of a committee,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absent or disqualified member. Any such committee, to the extent
provided by resolution passed by a majority of the whole Board, shall have and
may exercise all the powers and authority of the Board of Directors in the
management of the business and the affairs of the Corporation, and may
authorize the seal of the Corporation to be affixed to all papers which may
require it; but no such committee shall have the power or authority in
reference to amending the Certificate of Incorporation, adopting an agreement
of merger or consolidation, recommending to the stockholders the sale, lease or
exchange of all or substantially all of the Corporation's property and assets,
recommending to the stockholders a dissolution of the Corporation or a
revocation of a dissolution, or amending these By-Laws; and unless such
resolution, these By-Laws or the Certificate of Incorporation expressly so
provide, no such committee shall have the power or authority to declare a
dividend or to authorize the issuance of stock.
SECTION 9. CONFERENCE TELEPHONE MEETINGS. Unless otherwise restricted by
the Certificate of Incorporation or by these By-Laws, the members of the Board
of Directors or any committee designated by the Board, may participate in a
meeting of the Board or such committee, as the case may be, by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and such
participation shall constitute presence in person at such meeting.
SECTION 10. CONSENT OF DIRECTORS OR COMMITTEE IN LIEU OF MEETING. Unless
otherwise restricted by the Certificate of Incorporation or by these By-Laws,
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 all
members of the Board or committee, as
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the case may be, consent thereto in writing and the writing or writings are
filed with the minutes of proceedings of the Board or committee, as the case
may be.
ARTICLE III
OFFICERS
SECTION 1. OFFICERS. The officers of the Corporation shall be a Chairman,
the President and Chief Executive Officer, one (1) or more Vice Presidents, a
Secretary and a Treasurer, and such additional officers, if any, as shall be
elected by the Board of Directors pursuant to the provisions of Section 7 of
this Article III. The Chairman, Officer and President and Chief Executive
Officer, one (1) or more Vice Presidents, the Secretary and the Treasurer shall
be elected by the Board of Directors at its first meeting after each annual
meeting of the stockholders. The failure to hold such election shall not of
itself terminate the term of office of any officer. All officers shall hold
office at the pleasure of the Board of Directors. Any officer may resign at
any time upon written notice to the Corporation. Officers may, but need not,
be Directors. Any number of offices may be held by the same person.
All officers, agents and employees shall be subject to removal, with or
without cause, at any time by the Board of Directors. The removal of an
officer without cause shall be without prejudice to his contract rights, if
any. The election or appointment of an officer shall not of itself create
contract rights. All agents and employees other than officers elected by the
Board of Directors shall also be subject to removal, with or without cause, at
any time by the officers appointing them.
Any vacancy caused by the death of any officer, his resignation, his
removal or otherwise, may be filled by the Board of Directors, and any officer
so elected shall hold office at the pleasure of the Board of Directors.
In addition to the powers and duties of the officers of the Corporation as
set forth in these By-Laws, the officers shall have such authority and shall
perform such duties as from time to time may be determined by the Board of
Directors.
SECTION 2. POWERS AND DUTIES OF THE CHAIRMAN OF THE BOARD. The Chairman,
subject to the control of the Board of Directors, shall have general charge and
control of all its business and affairs and shall have all powers and shall
perform all duties incident to the office of Chairman. He shall preside at all
meetings of the stockholders and at all meetings of the Board of Directors and
shall have such other powers and perform such other duties as may from time to
time be assigned to him by these By-Laws or by the Board of Directors.
SECTION 3. POWERS AND DUTIES OF THE PRESIDENT AND CHIEF OPERATING OFFICER.
The President and Chief Executive Officer shall report to the Chairman of the
Corporation or such other officer as the Board of Directors may designate. He
shall have all powers and perform all duties incident to the office of
President, oversee the conduct and affairs of the business of the Corporation
and shall have such other powers and
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perform such other duties as may from time to time be assigned to him by these
By-Laws or by the Board of Directors or the Chairman.
SECTION 4. POWERS AND DUTIES OF THE VICE PRESIDENTS. Each Vice President
shall have all powers and shall perform all duties incident to the office of
Vice President and shall have such other powers and perform such other duties
as may from time to time be assigned to him by these By-Laws or by the Board of
Directors, the Chairman or the President and Chief Executive Officer.
SECTION 5. POWERS AND DUTIES OF THE SECRETARY. The Secretary shall keep
the minutes of all meetings of the Board of Directors and the minutes of all
meetings of the stockholders in books provided for that purpose; he shall
attend to the giving or serving of all notices of the Corporation; he shall
have custody of the corporate seal of the Corporation and shall affix the same
to such documents and other papers as the Board of Directors, the Chairman of
the Board or the President and Chief Executive Officer shall authorize and
direct; he shall have charge of the stock certificate books, transfer books and
stock ledgers and such other books and papers as the Board of Directors, the
Chairman or the President and Chief Executive Officer shall direct, all of
which shall at all reasonable times be open to the examination of any Director,
upon application, at the office of the Corporation during business hours; and
whenever required by the Board of Directors, the Chairman or the President and
Chief Executive Officer shall render statements of such accounts; and he shall
have all powers and shall perform all duties incident to the office of
Secretary and shall also have such other powers and shall perform such other
duties as may from time to time be assigned to him by these By-Laws or by the
Board of Directors, the Chairman or the President and Chief Executive Officer.
SECTION 6. POWERS AND DUTIES OF THE TREASURER. The Treasurer shall have
custody of, and when proper shall pay out, disburse or otherwise dispose of,
all funds and securities of the Corporation which may have come into his hands;
he may endorse on behalf of the Corporation for collection checks, notes and
other obligations and shall deposit the same to the credit of the Corporation
in such bank or banks or depositary or depositaries as the Board of Directors
may designate; he shall sign all receipts and vouchers for payments made to the
Corporation; he shall enter or cause to be entered regularly in the books of
the Corporation kept for the purpose full and accurate accounts of all moneys
received or paid or otherwise disposed of by him and whenever required by the
Board of Directors, the Chairman or the President and Chief Executive Officer
shall render statements of such accounts; he shall, at all reasonable times,
exhibit his books and accounts to any Director of the Corporation upon
application at the office of the Corporation during business hours; and he
shall have all powers and he shall perform all duties incident to the office of
Treasurer and shall also have such other powers and shall perform such other
duties as may from time to time be assigned to him by these By-Laws or by the
Board of Directors, the Chairman or the President and Chief Executive Officer.
SECTION 7. ADDITIONAL OFFICERS. The Board of Directors may from time to
time elect such other officers (who may but need not be Directors), including a
Controller,
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Assistant Treasurers, Assistant Secretaries and Assistant Controllers, as the
Board may deem advisable and such officers shall have such authority and shall
perform such duties as may from time to time be assigned to them by the Board
of Directors, the Chairman or the President.
The Board of Directors may from time to time by resolution delegate to any
Assistant Treasurer or Assistant Treasurers any of the powers or duties herein
assigned to the Treasurer; and may similarly delegate to any Assistant
Secretary or Assistant Secretaries any of the powers or duties herein assigned
to the Secretary.
SECTION 8. GIVING OF BOND BY OFFICERS. All officers of the Corporation,
if required to do so by the Board of Directors, shall furnish bonds to the
Corporation for the faithful performance of their duties, in such penalties and
with such conditions and security as the Board shall require.
SECTION 9. VOTING UPON STOCKS. Unless otherwise ordered by the Board of
Directors, the Chairman or the President and Chief Executive Officer shall have
full power and authority on behalf of the Corporation to attend and to act and
to vote, or in the name of the Corporation to execute proxies to vote, at any
meeting of stockholders of any corporation in which the Corporation may hold
stock, or to execute any consent in lieu of such a meeting, and at any such
meeting or by any such consent shall possess and may exercise, in person or by
proxy, any and all rights, powers and privileges incident to the ownership of
such stock. The Board of Directors may from time to time by resolution confer
like powers upon any other person or persons.
SECTION 10. COMPENSATION OF OFFICERS. The officers of the Corporation
shall be entitled to receive such compensation for their services as shall from
time to time be determined by the Board of Directors.
ARTICLE IV
INDEMNIFICATION OF DIRECTORS AND OFFICERS
SECTION 1. NATURE OF INDEMNITY. The Corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he is or
was or has agreed to become a Director or officer of the Corporation, or is or
was serving or has agreed to serve at the request of the Corporation as a
Director or officer of another corporation, partnership, joint venture, trust
or other enterprise, or by reason of any action alleged to have been taken or
omitted in such capacity, and may indemnify any person who was or is a party or
is threatened to be made a party to such an action, suit or proceeding by
reason of the fact that he is or was or has agreed to become an employee or
agent of the Corporation, or is or was serving or has agreed to serve at the
request of the Corporation as an 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 or on his behalf in connection with
such action,
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suit or proceeding and any appeal therefrom, if he acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful; except that in the case
of an action or suit by or in the right of the Corporation to procure a
judgment in its favor (1) such indemnification shall be limited to expenses
(including attorneys' fees) actually and reasonably incurred by such person in
the defense or settlement of such action or suit, and (2) no indemnification
shall be made in respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable to the Corporation unless and only to the
extent that the Delaware Court of Chancery or the court in which such action or
suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Delaware Court of Chancery or such other court shall deem proper.
The termination of any action, suit or 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 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.
SECTION 2. SUCCESSFUL DEFENSE. 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 Section 1
of this Article IV 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.
SECTION 3. DETERMINATION THAT INDEMNIFICATION IS PROPER. Any
indemnification of a Director or officer of the Corporation under Section 1 of
this Article IV (unless ordered by a court) shall be made by the Corporation
unless a determination is made that indemnification of the Director or officer
is not proper in the circumstances because he has not met the applicable
standard of conduct set forth in Section 1. Any indemnification of an employee
or agent of the Corporation under Section 1 (unless ordered by a court) may be
made by the Corporation upon a determination that indemnification of the
employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in Section 1. Any such determination
shall be made (1) 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 (2) 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 (3) by the stockholders.
SECTION 4. ADVANCE PAYMENT OF EXPENSES. Unless the Board of Directors
otherwise determines in a specific case, expenses incurred by a Director or
officer in defending a civil or criminal action, suit or proceeding shall be
paid by the Corporation in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf of the
Director or officer to repay such amount if it shall ultimately be determined
that he is
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not entitled to be indemnified by the Corporation as authorized in this Article
IV. Such expenses incurred by other employees and agents may be so paid upon
such terms and conditions, if any, as the Board of Directors deems appropriate.
The Board of Directors may authorize the Corporation's legal counsel to
represent such Director, officer, employee or agent in any action, suit or
proceeding, whether or not the Corporation is a party to such action, suit or
proceeding.
SECTION 5. SURVIVAL; PRESERVATION OF OTHER RIGHTS. The foregoing
indemnification provisions shall be deemed to be a contract between the
Corporation and each Director, officer, employee and agent who serves in any
such capacity at any time while these provisions as well as the relevant
provisions of the Delaware General Corporation Law are in effect and any repeal
or modification thereof shall not affect any right or obligation then existing
with respect to any state of facts then or previously existing or any action,
suit, or proceeding previously or thereafter brought or threatened based in
whole or in part upon any such state of facts. Such a contract right may not
be modified retroactively without the consent of such Director, officer,
employee or agent.
The indemnification provided by this Article IV shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any by-law, agreement, vote of stockholders or disinterested Directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a Director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person. The
Corporation may enter into an agreement with any of its Directors, officers,
employees or agents providing for indemnification and advancement of expenses
(including attorneys' fees) that may change, enhance, qualify or limit any
right to indemnification or advancement of expenses created by this Article IV.
SECTION 6. SEVERABILITY. If this Article IV or any portion hereof shall
be invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each Director or officer and may
indemnify each employee or agent of the Corporation as to costs, charges and
expenses (including attorneys' fees), judgment, fines and amounts paid in
settlement with respect to any action, suit or proceeding, whether civil,
criminal, administrative or investigative, including an action by or in the
right of the Corporation, to the fullest extent permitted by any applicable
portion of this Article IV that shall not have been invalidated and to the
fullest extent permitted by applicable law.
SECTION 7. SUBROGATION. In the event of payment of indemnification to a
person described in Section 1 of this Article IV, the Corporation shall be
subrogated to the extent of such payment to any right of recovery such person
may have and such person, as a condition of receiving indemnification from the
Corporation, shall execute all documents and do all things that the Corporation
may deem necessary or desirable to perfect such right of recovery, including
the execution of such documents necessary to enable the Corporation effectively
to enforce any such recovery.
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SECTION 8. NO DUPLICATION OF PAYMENTS. The Corporation shall not be
liable under this Article IV to make any payment in connection with any claim
made against a person described in Section 1 of this Article IV to the extent
such person has otherwise received payment (under any insurance policy, by-law
or otherwise) of the amounts otherwise payable as indemnity hereunder.
ARTICLE V
STOCK-SEAL-FISCAL YEAR
SECTION 1. CERTIFICATES FOR SHARES OF STOCK. The certificates for shares
of stock of the Corporation shall be in such form, not inconsistent with the
Certificate of Incorporation, as shall be approved by the Board of Directors.
All certificates shall be signed by the Chairman or the President and Chief
Executive Officer or a Vice President and by the Secretary or an Assistant
Secretary or the Treasurer or an Assistant Treasurer, and shall not be valid
unless so signed.
In case any officer or officers who shall have signed any such certificate
or certificates shall cease to be such officer or officers of the Corporation,
whether because of death, resignation or otherwise, before such certificate or
certificates shall have been delivered by the Corporation, such certificate or
certificates may nevertheless be issued and delivered as though the person or
persons who signed such certificate or certificates had not ceased to be such
officer or officers of the Corporation.
All certificates for shares of stock shall be consecutively numbered as
the same are issued. The name of the person owning the shares represented
thereby with the number of such shares and the date of issue thereof shall be
entered on the books of the Corporation.
Except as hereinafter provided, all certificates surrendered to the
Corporation for transfer shall be canceled, and no new certificates shall be
issued until former certificates for the same number of shares have been
surrendered and canceled.
SECTION 2. LOST, STOLEN OR DESTROYED CERTIFICATES. Whenever a person
owning a certificate for shares of stock of the Corporation alleges that it has
been lost, stolen or destroyed, he shall file in the office of the Corporation
an affidavit setting forth, to the best of his knowledge and belief, the time,
place and circumstances of the loss, theft or destruction, and, if required by
the Board of Directors, a bond of indemnity or other indemnification sufficient
in the opinion of the Board of Directors to indemnify the Corporation and its
agents against any claim that may be made against it or them on account of the
alleged loss, theft or destruction of any such certificate or the issuance of a
new certificate in replacement therefor. Thereupon the Corporation may cause
to be issued to such person a new certificate in replacement for the
certificate alleged to have been lost, stolen or destroyed. Upon the stub of
every new certificate so issued shall be noted the fact of such issue and the
number, date and the name of the registered owner of the lost, stolen or
destroyed certificate in lieu of which the new certificate is issued.
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<PAGE> 12
SECTION 3. TRANSFER OF SHARES. Shares of stock of the Corporation shall be
transferred on the books of the Corporation by the holder thereof, in person or
by his attorney duly authorized in writing, upon surrender and cancellation of
certificates for the number of shares of stock to be transferred, except as
provided in Section 2 of this Article IV.
SECTION 4. REGULATIONS. The Board of Directors shall have power and
authority to make such rules and regulations as it may deem expedient
concerning the issue, transfer and registration of certificates for shares of
stock of the Corporation.
SECTION 5. 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 to receive payment of any dividend or other distribution
or allotment of any rights or to exercise any rights in respect of any change,
conversion or exchange of stock or for the purpose of any other lawful action,
as the case may be, the Board of Directors may fix, in advance, a record date,
which shall not be (i) more than sixty (60) nor less than ten (10) days before
the date of such meeting, or (ii) in the case of corporate action to be taken
by consent in writing without a meeting, prior to, or more than ten (10) days
after, the date upon which the resolution fixing the record date is adopted by
the Board of Directors, or (iii) more than sixty (60) days prior to any other
action.
If no record date is fixed, 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; the record date for determining stockholders
entitled to express consent to corporate action in writing without a meeting,
when no prior action by the Board of Directors is necessary, shall be the day
on which the first written consent is delivered to the Corporation; and 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 Board of Directors may fix a new record date for
the adjourned meeting.
SECTION 6. DIVIDENDS. Subject to the provisions of the Certificate of
Incorporation, the Board of Directors shall have power to declare and pay
dividends upon shares of stock of the Corporation, but only out of funds
available for the payment of dividends as provided by law.
Subject to the provisions of the Certificate of Incorporation, any
dividends declared upon the stock of the Corporation shall be payable on such
date or dates as the Board of Directors shall determine. If the date fixed for
the payment of any dividend shall in any year fall upon a legal holiday, then
the dividend payable on such date shall be paid on the next day not a legal
holiday.
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<PAGE> 13
SECTION 7. CORPORATE SEAL. The Board of Directors shall provide a
suitable seal, containing the name of the Corporation, which seal shall be kept
in the custody of the Secretary. A duplicate of the seal may be kept and be
used by any officer of the Corporation designated by the Board of Directors or
the Chairman.
SECTION 8. FISCAL YEAR. The fiscal year of the Corporation shall be such
fiscal year as the Board of Directors from time to time by resolution shall
determine.
ARTICLE VI
MISCELLANEOUS PROVISIONS
SECTION 1. CHECKS, NOTES, ETC. All checks, drafts, bills of exchange,
acceptances, notes or other obligations or orders for the payment of money
shall be signed and, if so required by the Board of Directors, countersigned by
such officers of the Corporation and/or other persons as the Board of Directors
from time to time shall designate.
Checks, drafts, bills of exchange, acceptances, notes, obligations and
orders for the payment of money made payable to the Corporation may be endorsed
for deposit to the credit of the Corporation with a duly authorized depository
by the Treasurer and/or such other officers or persons as the Board of
Directors from time to time may designate.
SECTION 2. LOANS. No loans and no renewals of any loans shall be
contracted on behalf of the Corporation except as authorized by the Board of
Directors. When authorized to do so, any officer or agent of the Corporation
may effect loans and advances for the Corporation from any bank, trust company
or other institution or from any firm, corporation or individual, and for such
loans and advances may make, execute and deliver promissory notes, bonds or
other evidences of indebtedness of the Corporation. When authorized to do so,
any officer or agent of the Corporation may pledge, hypothecate or transfer, as
security for the payment of any and all loans, advances, indebtedness and
liabilities of the Corporation, any and all stocks, securities and other
personal property at any time held by the Corporation, and to that end may
endorse, assign and deliver the same. Such authority may be general or
confined to specific instances.
SECTION 3. CONTRACTS. Except as otherwise provided in these By-Laws or by
law or as otherwise directed by the Board of Directors, the Chairman and the
President and Chief Executive Officer shall be authorized to execute and
deliver, in the name and on behalf of the Corporation, all agreements, bonds,
contracts, deeds, mortgages and other instruments, either for the Corporation's
own account or in a fiduciary or other capacity, and the seal of the
Corporation, if appropriate, shall be affixed thereto by any of such officers
or the Secretary or an Assistant Secretary. The Board of Directors, or the
Chairman or the President and Chief Executive Officer may authorize any other
officer, employee or agent to execute and deliver, in the name and on behalf of
the Corporation, agreements, bonds, contracts, deeds, mortgages, and other
instruments, either for the Corporation's own account or in a fiduciary or
other capacity, and, if appropriate, to affix the seal of the Corporation
thereto. The grant of such authority by the Board or any such officer may be
general or confined to specific instances.
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<PAGE> 14
SECTION 4. WAIVERS OF NOTICE. Whenever any notice whatever is required to
be given by law, by the Certificate of Incorporation or by these By-Laws to any
person or persons, a waiver thereof in writing, signed by the person or persons
entitled to the notice, whether before or after the time stated therein, shall
be deemed equivalent thereto.
SECTION 5. OFFICES OUTSIDE OF DELAWARE. Except as otherwise required by
the laws of the State of Delaware, the Corporation may have an office or
offices and keep its books, documents and papers outside of the State of
Delaware at such place or places as from time to time may be determined by the
Board of Directors or the Chairman.
ARTICLE VII
AMENDMENTS
These By-Laws and any amendment thereof may be altered, amended or
repealed, or new By-Laws may be adopted, by the Board of Directors at any
regular or special meeting by the affirmative vote of a majority of all of the
members of the Board provided in the case of any special meeting at which all
of the members of the Board are not present, that the notice of such meeting
shall have stated that the amendment of these By-Laws was one of the purposes
of the meeting; but these By-Laws and any amendment thereof, may be altered,
amended or repealed or new By-Laws may be adopted by the holders of a majority
of the total outstanding stock of the Corporation entitled to vote at any
annual meeting or at any special meeting, provided, in the case of any special
meeting, that notice of such proposed alteration, amendment, repeal or adoption
is included in the notice of the meeting.
[End of By-Laws]
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<PAGE> 1
EXHIBIT 3.6
AMENDED AND RESTATED
AUGUST 13, 1996
AMENDED AND RESTATED BY-LAWS
OF
MS ACQUISITION CORP.
ARTICLE I
STOCKHOLDERS
SECTION 1. ANNUAL MEETING. The annual meeting of the stockholders of
MS Acquisition Corporation (the "Corporation") shall be held on such date, at
such time and at such place within or without the State of Delaware as may be
designated by the Board of Directors of the Corporation (the "Board of
Directors") or the Chairman in the absence of a designation by the Board of
Directors, for the purpose of electing Directors and for the transaction of
such other business as may be properly brought before the meeting.
SECTION 2. SPECIAL MEETINGS. A special meeting of the stockholders of
the Corporation may be called at any time by the Board of Directors and shall
be called by the Chairman, the Chief Executive Officer and President, the Chief
Financial Officer and Vice President - Finance or the Secretary at the request
in writing of stockholders holding together at least ten percent (10% ) of the
total number of issued and outstanding shares of the Corporation's Class A
Common Stock, par value $.01 per share ("Class A Common Stock"), and the
Corporation's Class B Common Stock, par value $.01 per share ("Class B Common
Stock", and together with the Class A Common Stock, the "Common Stock") (taken
together), then issued and outstanding. Any special meeting of the
stockholders shall be held on such date, at such time and at such place within
or without the State of Delaware as the Board of Directors or the officer
calling the meeting may designate. At a special meeting of the stockholders,
no business shall be transacted and no corporate action shall be taken other
than that stated in the notice of the meeting unless all of the stockholders
entitled to notice are present in person or by proxy and consent thereto, in
which case any and all business may be transacted at the meeting even though
the meeting is held without notice.
SECTION 3. NOTICE OF MEETINGS. Except as otherwise provided in these
By-Laws or by law, a written notice of each meeting of the stockholders shall
be given not less than ten (10) nor more than sixty (60) days before the date
of the meeting to each stockholder
<PAGE> 2
entitled to vote at such meeting. The notice shall state the place, date and
hour of the meeting and, in the case of a special meeting, the purpose or
purposes for which the meeting is called.
SECTION 4. QUORUM. At any meeting of the stockholders, the holders of
a majority in number of the total outstanding shares of stock of the
Corporation entitled to vote at such meeting, present in person or represented
by proxy, shall constitute a quorum of the stockholders for all purposes,
unless the representation of a larger number of shares shall be required by law
or by the Certificate of Incorporation, in which case the representation of the
number of shares so required shall constitute a quorum; provided that at any
meeting of the stockholders at which the holders of any class of stock of the
Corporation shall be entitled to vote separately as a class, the holders of a
majority in number of the total outstanding shares of such class, present in
person or represented by proxy, shall constitute a quorum for purposes of such
class vote unless the representation of a larger number of shares of such class
shall be required by law.
SECTION 5. ADJOURNED MEETINGS. Whether or not a quorum shall be
present in person or represented at any meeting of the stockholders, the
holders of a majority in number of the shares of stock of the Corporation
present in person or represented by proxy and entitled to vote at such meeting
may adjourn from time to time; provided, however, that if the holders of any
class of stock of the Corporation are entitled to vote separately as a class
upon any matter at such meeting, any adjournment of the meeting in respect of
action by such class upon such matter shall be determined by the holders of a
majority of the shares of such class present in person or represented by proxy
and entitled to vote at such meeting. When a meeting is adjourned to another
time or place, notice need not be given of the adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the stockholders, or the holders of any class
of stock entitled to vote separately as a class, as the case may be, may
transact any business which might have been transacted by them at the original
meeting. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the adjourned meeting.
SECTION 6. ORGANIZATION. The Chairman or, in his absence, the Chief
Executive Officer and President, the Chief Financial Officer and Vice President
- - Finance or any Vice President shall call all regular meetings of the
stockholders to order, and shall act as Chairman of such meetings. In the
absence of the Chairman, the Chief Executive Officer and President, the Chief
Financial Officer and Vice President - Finance and all Vice Presidents or in
the case of any special meeting, the holders of a majority in number of votes
entitled to vote at such meeting present in person or represented by proxy
shall elect a Chairman.
The Secretary of the Corporation shall act as Secretary of all regular
meetings of the stockholders; but in the absence of the Secretary or in the
case of any special meeting, the Chairman may appoint any person to act as
Secretary of the meeting. It shall be the duty of the Secretary of the
Corporation to prepare and make, at least ten (10) days before every meeting of
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<PAGE> 3
stockholders, a complete list of stockholders entitled to vote at such meeting,
arranged in alphabetical order by class and showing the address of each
stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open, 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,
for the ten (10) days next preceding the meeting, to the examination of any
stockholder, for any purpose germane to the meeting, during ordinary business
hours, and shall be produced and kept at the time and place of the meeting
during the whole time thereof and subject to the inspection of any stockholder
who may be present.
SECTION 7. VOTING. Except as otherwise provided in the Certificate of
Incorporation or by law, each stockholder shall be entitled to one (1) vote for
each share of the capital stock of the Corporation registered in the name of
such stockholder upon the books of the Corporation. Subject to the provisions
of the Certificate of Incorporation, each stockholder entitled to vote at a
meeting of stockholders or to express consent or dissent to corporate action in
writing without a meeting may authorize another person or persons to act for
him by proxy, but no such proxy shall be voted or acted upon after three (3)
years from its date, unless the proxy provides for a longer period. Except as
otherwise provided by law or by the Certificate of Incorporation each Director
shall be elected by a plurality of the votes cast at a meeting of stockholders
by the stockholders entitled to vote in the election and, whenever any
corporate action, other than the election of such Director, is to be taken, it
shall be authorized by a majority of the votes cast at a meeting of
stockholders by the stockholders entitled to vote thereon.
Shares of the capital stock of the Corporation belonging to the
Corporation or to another corporation, if a majority of the shares entitled to
vote in the election of directors of such other corporation is held, directly
or indirectly, by the Corporation, shall neither be entitled to vote nor be
counted for quorum purposes.
ARTICLE II
BOARD OF DIRECTORS
SECTION 1. Generally, the business and affairs of the Corporation
shall be managed by or under the direction of the Board of Directors. The
Directors shall, except as hereinafter otherwise provided for filling
vacancies, be elected at the annual meeting of stockholders entitled to vote
for said members of the Board of Directors and shall hold office until their
respective successors are elected and qualified or until their earlier
resignation or removal. Prior to the occurrence of a Qualifying Offering (as
defined in the Certificate of Incorporation), it shall be a qualification of
each member of the Board of Directors to be elected by the holders of the Class
A Common Stock that such member shall have been designated in accordance with
the procedures set forth in Section 5.1(a) of the Stockholders Agreement (as
defined below).
SECTION 2. REMOVAL AND VACANCIES. The stockholders may remove, with or
without cause, any Director and fill the vacancy thereby created; provided that
whenever any Director shall have been elected by the holders of any class of
stock of the Corporation voting
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<PAGE> 4
separately as a class under the provisions of the Certificate of Incorporation
(i) such Director may be removed without cause and (ii) any vacancy resulting
therefrom may be filled, in the case of both clause (i) and clause (ii), only
by the holders of that class voting separately as a class. Prior to the
occurrence of a Qualifying Offering, the Board of Directors may not fill any
vacancies on the Board of Directors.
SECTION 3. PLACE OF MEETING. The Board of Directors may hold its
meetings in such place or places in the State of Delaware or outside the State
of Delaware as the Board of Directors from time to time shall determine.
SECTION 4. REGULAR MEETINGS. Regular meetings of the Board of
Directors shall be held at such times and places as the Board of Directors from
time to time by resolution shall determine. No notice shall be required for
any regular meeting of the Board of Directors; but a copy of every resolution
fixing or changing the time or place of regular meetings shall be mailed to
every Director at least five (5) days before the first meeting held in
pursuance thereof.
SECTION 5. SPECIAL MEETINGS. Special meetings of the Board of
Directors shall be held whenever called by direction of the Chairman or by any
two of the Directors then in office.
Notice of the day, hour and place of holding of each special meeting
shall be given by delivering the same at least two (2) days before the meeting
or by causing the same to be transmitted by telefax, cable or wireless at least
one (1) day before the meeting to each Director. Unless otherwise indicated in
the notice thereof, any and all business other than an amendment of these
By-Laws may be transacted at any special meeting, and an amendment of these
By-Laws may be acted upon if the notice of the meeting shall have stated that
the amendment of these By-Laws is one of the purposes of the meeting. At any
meeting at which every Director shall be present, even though without any
notice, any business may be transacted, including the amendment of these
By-Laws.
SECTION 6. QUORUM; MAJORITY BOARD VOTE.
(a) Subject to the provisions of Section 2 of this Article II, a
majority of the members of the Board of Directors in office (but, unless the
Board of Directors shall consist solely as one Director, in no case less than
one-third of the total number of Directors nor less than two (2) Directors)
shall constitute a quorum for the transaction of business and the vote of the
majority of Directors present at any meeting of the Board of Directors at which
an quorum is present shall be the act of the Board of Directors.
(b) If at any meeting of the Board of Directors there is less than
a quorum present, a majority of the Directors present may adjourn the meeting
from time to time.
SECTION 7. ORGANIZATION. Prior to the occurrence of a Qualifying
Offering, unless otherwise determined by the Board of Directors present at a
meeting at which a quorum is present, the Chairman shall preside at all
meetings of the Board of Directors and the Secretary of
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<PAGE> 5
the Corporation shall act as Secretary of all meetings of the Board of
Directors; in the absence of the Secretary, the Chairman may appoint any person
to act as Secretary of the meeting. Upon and after the occurrence of a
Qualifying Offering, unless otherwise determined by a majority of the members
of the Board of Directors present at a meeting at which a quorum is present,
the Chairman shall preside at all meetings of the Board of Directors and the
Secretary shall act as Secretary of all meetings of the Board of Directors. In
the absence of the Secretary, the Chairman may appoint any person to act as
Secretary of the meeting.
SECTION 8. COMMITTEES.
(a) Committees, Generally. The Board of Directors may, by
Affirmative Board Vote (as defined in the Stockholders Agreement), designate
one (1) or more committees, each of which, (i) prior to the occurrence of a
Qualifying Offering, shall consist of one (1) Management Director, one (1) CVC
Director and one (1) Disinterested Director (as such terms are defined in the
Stockholders Agreement dated as of August 13, 1996 by and among the
stockholders of the Corporation and the Corporation (the "Stockholders
Agreement")), and (ii) from and after the occurrence of a Qualifying Offering,
one (1) or more of the Directors of the Corporation.
(b) Quorum. In the absence or disqualification of a member of a
committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors (so long as the
provisions of Section 8(a) are complied with) to act at the meeting in the place
of any such absent or disqualified member. Any such committee shall have and
may exercise all the powers and authority of the Board of Directors in the
management of the business and the affairs of the Corporation, to the extent
provided by resolution passed by an Affirmative Board Vote, to the full extent
permitted by law.
SECTION 9. CONFERENCE TELEPHONE MEETINGS. Unless otherwise restricted
by the Certificate of Incorporation, by these By-Laws or by law, the members of
the Board of Directors or any committee designated by the Board of Directors,
may participate in a meeting of the Board of Directors or such committee, as
the case may be, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and such participation shall constitute presence in person at such
meeting.
SECTION 10. CONSENT OF DIRECTORS OR COMMITTEE IN LIEU OF MEETING.
Unless otherwise restricted by the Certificate of Incorporation or by these
By-Laws, 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 all members of the Board or committee, as the case may be, consent thereto
in writing and the writing or writings are filed with the minutes of
proceedings of the Board or committee, as the case may be.
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<PAGE> 6
ARTICLE III
OFFICERS
SECTION 1. OFFICERS. The officers of the Corporation shall be a
Chairman, the Chief Executive Officer and President, the Chief Financial
Officer and Vice President Finance one or more Vice Presidents, a Secretary and
a Treasurer, and such additional officers, if any, as shall be elected by the
Board of Directors pursuant to the provisions of Section 7 of this Article III.
Except for the election of officers prior to the first annual meeting of the
stockholders, the Chairman, the Chief Executive Officer and President, the
Chief Financial Officer and Vice President Finance one or more Vice Presidents,
the Secretary and the Treasurer shall be elected by the Board of Directors at
its first meeting after each annual meeting of the stockholders. The failure
to hold such election shall not of itself terminate the term of office of any
officer. All officers shall hold office at the pleasure of the Board of
Directors. Any officer may resign at any time upon written notice to the
Corporation. Officers may, but need not, be Directors. Any number of offices
may be held by the same person.
All officers, agents and employees shall be subject to removal, with or
without cause, at any time by the Board of Directors. The removal of an officer
without cause shall be without prejudice to his contract rights, if any. The
election or appointment of an officer shall not of itself create contract
rights. All agents and employees other than officers elected by the Board of
Directors shall also be subject to removal, with or without cause, at any time
by the officers appointing them.
Any vacancy caused by the death of any officer, his resignation, his
removal, or otherwise, may be filled by the Board of Directors, and any officer
so elected shall hold office at the pleasure of the Board of Directors.
In addition to the powers and duties of the officers of the Corporation
as set forth in these By-Laws, the officers shall have such authority and shall
perform such duties as from time to time may be determined by the Board of
Directors.
SECTION 2. POWERS AND DUTIES OF THE CHAIRMAN OF THE BOARD. The
Chairman of the Board shall have the responsibility of guiding the Board of
Directors in effectively discharging its responsibilities, including, but not
limited to, providing for the execution of the Corporation's objectives;
safeguarding and furthering stockholders' interests; and appraising the
adequacy of overall results as reported by the President and the Chief
Operating Officer. He shall see that all orders and resolutions of the Board
of Directors are carried into effect and shall from time to time report to the
Board of Directors on matters within his knowledge which the interests of the
Corporation may require to be brought to the attention of the Board of
Directors. The Chairman of the Board shall preside at all meetings of the
Board of Directors and the stockholders at which he is present.
SECTION 3. POWERS AND DUTIES OF THE CHIEF EXECUTIVE OFFICER AND
PRESIDENT. The Chief Executive Officer and President shall be the chief
executive officer and president of the Corporation. The Chief Executive
Officer and President shall be responsible for the management of the business,
affairs and operations of the
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<PAGE> 7
Corporation. He may execute and deliver, in the name of the Corporation,
powers of attorney, contracts, bonds and other obligations and instruments.
The Chief Executive Office and President shall also perform all duties incident
to the office of the Chief Executive Officer and President and shall have such
other powers and perform such other duties as may from time to time be assigned
to him by the Board of Directors.
SECTION 4. POWERS AND DUTIES OF THE CHIEF FINANCIAL OFFICER AND VICE
PRESIDENT FINANCE. The Chief Financial Officer and Vice President Finance
shall be the chief financial officer and vice president finance of the
Corporation. He shall have all powers and perform all duties incident to the
office of Chief Financial Officer and Vice President Finance, and shall have
such other powers and perform such other duties as may from time to time be
assigned to him by the Board of Directors.
SECTION 5. POWERS AND DUTIES OF THE VICE PRESIDENTS. Each Vice
President shall have all powers and shall perform all duties incident to the
office of Vice President and shall have such other powers and perform such
other duties as may from time to time be assigned to him by the Board of
Directors.
SECTION 6. POWERS AND DUTIES OF THE SECRETARY. The Secretary shall
keep the minutes of all meetings of the Board of Directors and the minutes of
all meetings of the stockholders in books provided for that purpose; he shall
attend to the giving or serving of all notices of the Corporation; he shall
have custody of the corporate seal of the Corporation and shall affix the same
to such documents and other papers as the Board of Directors, the Chairman of
the Board, the Chief Executive Officer and President or the Chief Financial
Officer and Vice President Finance shall authorize and direct; he shall have
charge of the stock certificate books, transfer books and stock ledgers and
such other books and papers as the Board of Directors, the Chairman, the Chief
Executive Officer and President or the Chief Financial Officer and Vice
President Finance shall direct, all of which shall at all reasonable times be
open to the examination of any Director, upon application, at the office of the
Corporation during business hours; and whenever required by the Board of
Directors, the Chairman, the Chief Executive Officer and President or the Chief
Financial Officer and Vice President Finance shall render statements of such
accounts; and he shall have all powers and shall perform all duties incident to
the office of Secretary and shall also have such other powers and shall perform
such other duties as may from time to time be assigned to him by these By-Laws
or by the Board of Directors, the Chairman, the Chief Executive Officer and
President, or the Chief Financial Officer and Vice President Finance.R
SECTION 7. POWERS AND DUTIES OF THE TREASURER. The Treasurer shall
have custody of, and when proper shall pay out, disburse or otherwise dispose
of, all funds and securities of the Corporation which may have come into his
hands; he may endorse on behalf of the Corporation for collection checks, notes
and other obligations and shall deposit the same to the credit of the
Corporation in such bank or banks or depositary or depositaries as the Board of
Directors may designate; he shall sign all receipts and vouchers for payments
made to the
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<PAGE> 8
Corporation; he shall enter or cause to be entered regularly in the books of
the Corporation kept for the purpose full and accurate accounts of all moneys
received or paid or otherwise disposed of by him and whenever required by the
Board of Directors, the Chairman, the Chief Executive Officer and President or
the Chief Financial Officer and Vice President Finance shall render statements
of such accounts; he shall, at all reasonable times, exhibit his books and
accounts to any Director of the Corporation upon application at the office of
the Corporation during business hours; and he shall have all powers and he
shall perform all duties incident to the office of Treasurer and shall also
have such other powers and shall perform such other duties as may from time to
time be assigned to him by these By-Laws or by the Board of Directors, the
Chairman, the Chief Executive Officer and President or the Chief Financial
Officer and Vice President Finance.
SECTION 8. ADDITIONAL OFFICERS. The Board of Directors may from time
to time elect such other officers (who may but need not be Directors),
including a Controller, Assistant Treasurers, Assistant Secretaries and
Assistant Controllers, as the Board may deem advisable and such officers shall
have such authority and shall perform such duties as may from time to time be
assigned to them by the Board of Directors, the Chairman, the Chief Executive
Officer and President or the Chief Financial Officer and Vice President
Finance.
The Board of Directors may from time to time by resolution delegate to
any Assistant Treasurer or Assistant Treasurers any of the powers or duties
herein assigned to the Treasurer; and may similarly delegate to any Assistant
Secretary or Assistant Secretaries any of the powers or duties herein assigned
to the Secretary.
SECTION 9. POWER WITH RESPECT TO OWNERSHIP OF STOCK. Unless otherwise
ordered by the Board of Directors, the Chairman, the Chief Executive Officer
and President or the Chief Financial Officer and Vice President Finance shall
have full power and authority on behalf of the Corporation to attend and to act
and to vote, or in the name of the Corporation to execute proxies to vote, at
any meeting of stockholders of any corporation in which the Corporation may
hold stock, or to execute any consent in lieu of such a meeting, and at any
such meeting or by any such consent shall possess and may exercise, in person
or by proxy, any and all rights, powers and privileges incident to the
ownership of such stock. The Board of Directors may from time to time, by
resolution, confer like powers upon any other person or persons.
SECTION 10. COMPENSATION OF OFFICERS. The officers of the Corporation
shall be entitled to receive such compensation for their services as shall from
time to time be determined by the Board of Directors.
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<PAGE> 9
ARTICLE IV
INDEMNIFICATION OF DIRECTORS AND OFFICERS
SECTION 1. NATURE OF INDEMNITY. The Corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he is or
was or has agreed to become a Director or officer of the Corporation, or is or
was serving or has agreed to serve at the request of the Corporation as a
Director or officer of another corporation, partnership, joint venture, trust
or other enterprise, or by reason of any action alleged to have been taken or
omitted in such capacity, and may indemnify any person who was or is a party or
is threatened to be made a party to such an action, suit or proceeding by
reason of the fact that he is or was or has agreed to become an employee or
agent of the Corporation, or is or was serving or has agreed to serve at the
request of the Corporation as an 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 or on his behalf in connection with
such action, suit or proceeding and any appeal therefrom, if he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful; except
that in the case of an action or suit by or in the right of the Corporation to
procure a judgment in its favor (1) such indemnification shall be limited to
expenses (including attorneys' fees) actually and reasonably incurred by such
person in the defense or settlement of such action or suit, and (2) no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the Delaware Court of Chancery or the court
in which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Delaware Court of Chancery or such other court shall deem
proper.
The termination of any action, suit or 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 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.
SECTION 2. SUCCESSFUL DEFENSE. 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
Section 1 of this Article IV 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.
SECTION 3. DETERMINATION THAT INDEMNIFICATION IS PROPER. Any
indemnification of a Director or officer of the Corporation under Section 1 of
this Article IV
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<PAGE> 10
(unless ordered by a court) shall be made by the Corporation unless a
determination is made that indemnification of the Director or officer is not
proper in the circumstances because he has not met the applicable standard of
conduct set forth in Section 1. Any indemnification of an employee or agent of
the Corporation under Section 1 (unless ordered by a court) may be made by the
Corporation upon a determination that indemnification of the employee or agent
is proper in the circumstances because he has met the applicable standard of
conduct set forth in Section 1. Any such determination shall be made (i) 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 (ii) 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
(iii) by the stockholders.
SECTION 4. ADVANCE PAYMENT OF EXPENSES. Unless the Board of Directors
otherwise determines in a specific case, expenses incurred by a Director or
officer in defending a civil or criminal action, suit or proceeding shall be
paid by the Corporation in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf of the
Director or officer to repay such amount if it shall ultimately be determined
that he is not entitled to be indemnified by the Corporation as authorized in
this Article IV. Such expenses incurred by other employees and agents may be
so paid upon such terms and conditions, if any, as the Board of Directors deems
appropriate. The Board of Directors may authorize the Corporation's legal
counsel to represent such Director, officer, employee or agent in any action,
suit or proceeding, whether or not the Corporation is a party to such action,
suit or proceeding.
SECTION 5. SURVIVAL; PRESERVATION OF OTHER RIGHTS. The foregoing
indemnification provisions shall be deemed to be a contract between the
Corporation and each Director and officer who serves in any such capacity at
any time while these provisions as well as the relevant provisions of the
Delaware General Corporation Law are in effect and any repeal or modification
thereof shall not affect any right or obligation then existing with respect to
any state of facts then or previously existing or any action, suit, or
proceeding previously or thereafter brought or threatened based in whole or in
part upon any such state of facts. Such a contract right may not be modified
retroactively without the consent of such Director or officer.
The indemnification provided by this Article IV shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any by-law, agreement, vote of stockholders or disinterested Directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a Director or officer and shall inure to the benefit of
the heirs, executors and administrators of such a person. The Corporation may
enter into an agreement with any of its Directors, officers, employees or
agents providing for indemnification and advancement of expenses, including
attorneys' fees, that may change, enhance, qualify or limit any right to
indemnification or advancement of expenses created by this Article IV.
SECTION 6. SEVERABILITY. If this Article IV or any portion hereof
shall be invalidated on any ground by any court of competent jurisdiction, then
the Corporation shall
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<PAGE> 11
nevertheless indemnify each Director or officer and may indemnify each employee
or agent of the Corporation as to costs, charges and expenses (including
attorneys' fees), judgment, fines and amounts paid in settlement with respect
to any action, suit or proceeding, whether civil, criminal, administrative or
investigative, including an action by or in the right of the Corporation, to
the fullest extent permitted by any applicable portion of this Article IV that
shall not have been invalidated and to the fullest extent permitted by
applicable law.
SECTION 7. SUBROGATION. In the event of payment of indemnification
to a person described in Section 1 of this Article IV, the Corporation shall
be subrogated to the extent of such payment to any right of recovery such
person may have and such person, as a condition of receiving indemnification
from the Corporation, shall execute all documents and do all things that the
Corporation may deem necessary or desirable to perfect such right of recovery,
including the execution of such documents necessary to enable the Corporation
effectively to enforce any such recovery.
SECTION 8. NO DUPLICATION OF PAYMENTS. The Corporation shall not be
liable under this Article IV to make any payment in connection with any claim
made against a person described in Section 1 of this Article IV to the extent
such person has otherwise received payment (under any insurance policy, by-law
or otherwise) of the amounts otherwise payable as indemnity hereunder.
ARTICLE V
STOCK-SEAL-FISCAL YEAR
SECTION 1. CERTIFICATES FOR SHARES OF STOCK. The certificates for
shares of stock of the Corporation shall be in such form, not inconsistent with
the Certificate of Incorporation, as shall be approved by the Board of
Directors. All certificates shall be signed by the Chairman and Chief
Executive Officer or the President and Chief Operating Officer or a Vice
President and by the Secretary or an Assistant Secretary or the Treasurer or an
Assistant Treasurer, and shall not be valid unless so signed. Any or all of
such signatures may be by a facsimile signature.
In case any officer or officers who shall have signed any such
certificate or certificates shall cease to be such officer or officers of the
Corporation, whether because of death, resignation or otherwise, before such
certificate or certificates shall have been delivered by the Corporation, such
certificate or certificates may nevertheless be issued and delivered as though
the person or persons who signed such certificate or certificates had not
ceased to be such officer or officers of the Corporation.
All certificates for shares of stock shall be consecutively numbered as
the same are issued. The name of the person owning the shares represented
thereby with the number of such shares and the date of issue thereof shall be
entered on the books of the Corporation.
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<PAGE> 12
Except as hereinafter provided, all certificates surrendered to the
Corporation for transfer shall be canceled, and no new certificates shall be
issued until former certificates for the same number of shares have been
surrendered and cancelled.
SECTION 2. LOST, STOLEN OR DESTROYED CERTIFICATES. Whenever a person
owning a certificate for shares of stock of the Corporation alleges that it has
been lost, stolen or destroyed, he shall file in the office of the Corporation
an affidavit setting forth, to the best of his knowledge and belief, the time,
place and circumstances of the loss, theft or destruction, and, if required by
the Board of Directors, a bond of indemnity or other indemnification sufficient
in the opinion of the Board of Directors to indemnify the Corporation and its
agents against any claim that may be made against it or them on account of the
alleged loss, theft or destruction of any such certificate or the issuance of a
new certificate in replacement therefor. Thereupon the Corporation may cause to
be issued to such person a new certificate in replacement for the certificate
alleged to have been lost, stolen or destroyed. Upon the stub of every new
certificate so issued shall be noted the fact of such issue and the number,
date and the name of the registered owner of the lost, stolen or destroyed
certificate in lieu of which the new certificate is issued.
SECTION 3. TRANSFER OF SHARES. Subject to the provisions of the
Stockholders Agreement, shares of stock of the Corporation shall be transferred
on the books of the Corporation by the holder thereof, in person or by his
attorney duly authorized in writing, upon surrender and cancellation of
certificates for the number of shares of stock to be transferred, except as
provided in Section 2 of this Article IV.
SECTION 4. REGULATIONS. The Board of Directors shall have power
and authority to make such rules and regulations as it may deem expedient
concerning the issue, transfer and registration of certificates for shares of
stock of the Corporation.
SECTION 5. RECORD DATE. In order that the Corporation may determine
the stockholders entitled to notice of or to vote at any meeting of
stockholders, or to receive payment of any dividend or other distribution or
allotment of any rights or 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 on which the resolution fixing the record date is adopted and
which record date shall not be more than sixty (60) nor less than ten (10) days
before the date of any meeting of stockholders, nor more than sixty (60) days
prior to the time for such other action as hereinbefore described; provided,
however, that if no record date is fixed by the Board of Directors, 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, and, for
determining stockholders entitled to receive payment of any dividend or other
distribution or allotment of rights or to exercise any rights of change,
conversion or exchange of stock or for any other purpose, the record date shall
be at the close of business on the day on which the Board of
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<PAGE> 13
Directors adopts a 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.
In order that the Corporation may determine the stockholders entitled
to consent to corporate action in writing without a meeting, the Board of
Directors may fix a record date, which shall not precede the date upon which
the resolution fixing the record date is adopted by the Board of Directors, and
which record date shall be not more than ten (10) days after the date upon
which the resolution fixing the record date is adopted. If no record date has
been fixed by the Board of Directors and no prior action by the Board of
Directors is required by the Delaware General Corporation Law, the record date
shall be the first date on which a signed written consent setting forth the
action taken or proposed to be taken is delivered to the Corporation in the
manner prescribed by Article I. If no record date has been fixed by the Board
of Directors and prior action by the Board of Directors is required by the
Delaware General Corporation Law with respect to the proposed action by written
consent of the stockholders, the record date for determining stockholders
entitled to consent to corporate action in writing shall be at the close of
business on the day on which the Board of Directors adopts the resolution
taking such prior action.
SECTION 6. DIVIDENDS. Subject to the provisions of the Certificate of
Incorporation, the Board of Directors shall have power to declare and pay
dividends upon shares of stock of the Corporation, which dividends may be paid
either in cash, in property or shares of the capital stock of the Corporation,
but only out of funds available for the payment of dividends as provided by
law.
Subject to the provisions of the Certificate of Incorporation, any
dividends declared upon the stock of the Corporation shall be payable on such
date or dates as the Board of Directors shall determine.
SECTION 7. CORPORATE SEAL. The Board of Directors shall provide a
suitable seal, containing the name of the Corporation, which seal shall be kept
in the custody of the Secretary. A duplicate of the seal may be kept and be
used by any officer of the Corporation designated by the Board of Directors or
the Chairman and Chief Executive Officer and President.
SECTION 8. FISCAL YEAR. The fiscal year of the Corporation shall
be such fiscal year as the Board of Directors from time to time by resolution
shall determine.
ARTICLE VI
MISCELLANEOUS PROVISIONS
SECTION 1. CHECKS, NOTES, ETC. All checks, drafts, bills of exchange,
acceptances, notes or other obligations or orders for the payment of money
shall be signed and, if so required by the Board of Directors, countersigned by
such officers of the Corporation and/or other persons as the Board of Directors
from time to time shall designate.
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<PAGE> 14
Checks, drafts, bills of exchange, acceptances, notes, obligations and
orders for the payment of money made payable to the Corporation may be endorsed
for deposit to the credit of the Corporation with a duly authorized depository
by the Treasurer and/or such other officers or persons as the Board of
Directors from time to time may designate.
SECTION 2. LOANS. No loans and no renewals of any loans shall be
contracted on behalf of the Corporation except as authorized by the Board of
Directors. When authorized so to do, any officer or agent of the Corporation
may effect loans and advances for the Corporation from any bank, trust company
or other institution or from any firm, corporation or individual, and for such
loans and advances may make, execute and deliver promissory notes, bonds or
other evidences of indebtedness of the Corporation. When authorized so to do,
any officer or agent of the Corporation may pledge, hypothecate or transfer, as
security for the payment of any and all loans, advances, indebtedness and
liabilities of the Corporation, any and all stocks, securities and other
personal property at any time held by the Corporation, and to that end may
endorse, assign and deliver the same. Such authority may be general or
confined to specific instances.
SECTION 3. CONTRACTS. Except as otherwise provided in these By-Laws
or by law or as otherwise directed by the Board of Directors, each of the
Chairman and Chief Executive Officer and the President and Chief Operating
Officer shall be authorized to execute and deliver, in the name and on behalf
of the Corporation, all agreements, bonds, contracts, deeds, mortgages, and
other instruments, either for the Corporation's own account or in a fiduciary
or other capacity, and the seal of the Corporation, if appropriate, shall be
affixed thereto by any of such officers or the Secretary or an Assistant
Secretary. The Board of Directors or the Chairman, the Chief Executive Officer
and President or the Chief Financial Officer and Vice President may authorize
any other officer, employee or agent to execute and deliver, in the name and on
behalf of the Corporation, agreements, bonds, contracts, deeds, mortgages, and
other instruments, either for the Corporation's own account or in a fiduciary
or other capacity, and, if appropriate, to affix the seal of the Corporation
thereto. The grant of such authority by the Board of Directors or any such
officer may be general or confined to specific instances.
SECTION 4. WAIVERS OF NOTICE. Whenever any notice is required to be
given by law, by the Certificate of Incorporation or by these By-Laws to any
person or persons, a waiver thereof in writing, signed by the person or persons
entitled to the notice, whether before or after the time stated therein, shall
be deemed equivalent thereto.
SECTION 5. OFFICES OUTSIDE OF DELAWARE. Except as otherwise required
by the laws of the State of Delaware, the Corporation may have an office or
offices and keep its books, documents and papers outside of the State of
Delaware at such place or places as from time to time may be determined by the
Board of Directors, the Chairman and the Chief Executive Officer and President.
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ARTICLE VII
AMENDMENTS
These By-Laws and any amendment thereof may be altered, amended or
repealed, or new By-Laws may be adopted, by the Board of Directors at any
regular or special meeting at which a quorum is present by Affirmative Board
Vote, subject to the additional requirements as may be set forth in the
Certificate of Incorporation; provided that in the case of any special meeting
at which all of the members of the Board of Directors are not present, that the
notice of such meeting shall have stated that the amendment of these By-Laws
was one of the purposes of the meeting. These By-Laws and any amendment
thereof, may be altered, amended or repealed or new By-Laws may be adopted by
the holders of a majority of the total outstanding stock of the Corporation
entitled to vote at any annual meeting or at any special meeting for the
election of directors, provided, in the case of any special meeting, that
notice of such proposed alteration, amendment, repeal or adoption is included
in the notice of the meeting.
[End of By-Laws]
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<PAGE> 1
EXHIBIT 3.7
BY-LAWS
OF
AETNA HOLDINGS, INC.
ARTICLE I
STOCKHOLDERS
SECTION 1. ANNUAL MEETING. The annual meeting of the stockholders of the
Corporation shall be held on such date, at such time and at such place within
or without the State of Delaware as may be designated by the Board of
Directors, for the purpose of electing Directors and for the transaction of
such other business as may be properly brought before the meeting.
SECTION 2. SPECIAL MEETINGS. Except as otherwise provided in the
Certificate of Incorporation, a special meeting of the stockholders of the
Corporation may be called at any time by the Board of Directors and shall be
called by the Chairman, the Chief Executive Officer and President or the
Secretary at the request in writing of stockholders holding together at least
twenty-five percent of the total number of shares of the Corporation's Common
Stock, par value $.0l per share (the "Common Stock"). Any special meeting
of the stockholders shall be held on such date, at such time and at such place
within or without the State of Delaware as the Board of Directors or the
officer calling the meeting may designate. At a special meeting of the
stockholders, no business shall be transacted and no corporate action shall be
taken other than that stated in the notice of the meeting unless all of the
stockholders entitled to notice are present in person or by proxy and consent
thereto, in which case any and all business may be transacted at the meeting
even though the meeting is held without notice.
SECTION 3. NOTICE OF MEETINGS. Except as otherwise provided in these
By-Laws or by law, a written notice of each meeting of the stockholders shall
be given not less than ten (10) nor more than sixty (6O) days before the date
of the meeting to each holder of shares of Common Stock at his address as it
appears on the records of the Corporation. The notice shall state the place,
date and hour of the meeting and, in the case of a special meeting, the purpose
or purposes for which the meeting is called.
SECTION 4. QUORUM. At any meeting of the stockholders, the holders of a
majority in number of the total outstanding shares of stock of the Corporation
entitled to vote at such meeting, present in person or represented by proxy,
shall constitute a quorum of the stockholders for all purposes, unless the
representation of a larger number of shares shall be required by law, by the
Certificate of Incorporation or by these By-Laws, in which case the
representation of the
<PAGE> 2
number of shares so required shall constitute a quorum; provided that at any
meeting of the stockholders at which the holders of any class of stock of the
Corporation shall be entitled to vote separately as a class, the holders of a
majority in number of the total outstanding shares of such class, present in
person or represented by proxy, shall constitute a quorum for purposes of such
class vote unless the representation of a larger number of shares of such class
shall be required by law, by the Certificate of Incorporation or by these
By-Laws.
SECTION 5. ADJOURNED MEETINGS. Whether or not a quorum shall be present in
person or represented at any meeting of the stockholders, the holders of a
majority in number of the shares of stock of the Corporation present in person
or represented by proxy and entitled to vote at such meeting may adjourn from
time to time; provided, however, that if the holders of any class of stock of
the Corporation are entitled to Vote separately as a class upon any matter at
such meeting, any adjournment of the meeting in respect of action by such class
upon such matter shall be determined by the holders of a majority of the shares
of such class present in person or represented by proxy and entitled to vote at
such meeting. When a meeting is adjourned to another time or place, notice
need not be given of the adjourned meeting if the time and place thereof are
announced at the meeting at which the adjournment is taken. At the adjourned
meeting the stockholders, or the holders of any class of stock entitled to vote
separately as a class, as the case may be, may transact any business which
might have been transacted by them at the original meeting. If the adjournment
is for more than thirty (30) days, or if after the adjournment a new record
date is fixed for the adjourned meeting, a notice of the adjourned meeting
shall be given to each stockholder of record entitled to vote at the adjourned
meeting.
SECTION 6. ORGANIZATION. The Chairman or, in his absence, the President
and Chief Executive Officer or any Vice President shall call all regular
meetings of the stockholders to order, and shall act as Chairman of such
meetings. In the absence of the Chairman, the President and Chief Executive
Officer and all Vice Presidents or in the case of any special meeting, the
holders of a majority in number of the votes of all voting securities of the
Corporation present in person or represented by proxy and entitled to vote at
such meeting shall elect a Chairman.
The Secretary of the Corporation shall act as Secretary of all regular
meetings of the stockholders; but in the absence of the Secretary or in the
case of any special meeting, the Chairman may appoint any person to act as
Secretary of the meeting. It shall be the duty of the Secretary to prepare and
make, at least ten (10) days before every meeting of stockholders, a complete
list of stockholders entitled to vote at such meeting, arranged in alphabetical
order and showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open, 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, for the ten (10) days next preceding the
meeting, to the examination of any stockholder, for any purpose germane to the
meeting, during ordinary business hours, and shall be produced and kept at the
time and place of the meeting during the whole time thereof and subject to the
inspection of any stockholder who may be present.
SECTION 7. VOTING. Except as otherwise provided in the Certificate of
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<PAGE> 3
Incorporation or by law, each stockholder shall be entitled to one (1) vote for
each share of the capital stock of the Corporation registered in the name of
such stockholder upon the books of the Corporation. Each stockholder entitled
to vote at a meeting of stockholders or to express consent or dissent to
corporate action in writing without a meeting may authorize another person or
persons to act for him by proxy, but no such proxy shall be voted or acted upon
after three (3) years from its date, unless the proxy provides for a longer
period. When directed by the presiding officer or upon the demand of any
stockholder, the vote upon any matter before a meeting of stockholders shall be
by ballot. Except as otherwise provided by law or by the Certificate of
Incorporation, Directors shall be elected by a plurality of the votes cast at,
a meeting of stockholders by the stockholders entitled to vote in the election
and, whenever any corporate action, other than the election of Directors is to
be taken, it shall be authorized by a majority of the votes cast at a meeting
of stockholders by the stockholders entitled to vote thereon.
Shares of the capital stock of the Corporation belonging to the
Corporation or to another corporation, if a majority of the shares entitled to
vote in the election of directors of such other corporation is held, directly
or indirectly, by the Corporation, shall neither be entitled to Vote nor be
counted for quorum purposes.
SECTION 8. INSPECTORS. When required by law or directed by the presiding
officer or upon the demand of any stockholder entitled to vote, but not
otherwise, the polls shall be opened and closed, the proxies and ballots shall
be received and taken in charge, and all questions touching the qualification
of voters, the validity of proxies and the acceptance or rejection of votes
shall be decided at any meeting of the stockholders by two (2) or more
Inspectors who may be appointed by the Board of Directors before the meeting,
or if not so appointed, shall be appointed by the presiding officer at the
meeting. If any person so appointed fails to appear or act, the vacancy may be
filled by appointment in like manner.
ARTICLE II
BOARD OF DIRECTORS
SECTION 1. NUMBER AND TERM OF OFFICE. The business and affairs of the
Corporation shall be managed by or under the direction of a Board of Directors,
the members of which need not be stockholders of the Corporation. The number
of Directors constituting the Board of Directors shall be fixed from time to
time by resolution passed by a majority of the Board of Directors. The
Directors shall, except as hereinafter otherwise provided for filling
vacancies, be elected at the annual meeting of stockholders, and shall hold
office until their respective successors are elected and qualified or until
their earlier resignation or removal.
SECTION 2. REMOVAL, VACANCIES AND ADDITIONAL DIRECTORS. The stockholders
may, at any special meeting the notice of which shall state that it is called
for that purpose, remove, with or without cause, any Director and fill the
vacancy; provided that whenever any Director shall have been elected by the
holders of any class of stock of the Corporation voting separately as a class
under the provisions of the Certificate of Incorporation,
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<PAGE> 4
such Director may be removed and the vacancy filled only by the holders of
that class of stock voting separately as a class. Vacancies caused by any
such removal and not filled by the stockholders at the meeting at which such
removal shall have been made, or any vacancy caused by the death or resignation
of any Director or for any other reason, and any newly created directorship
resulting from any increase in the authorized number of Directors, may be filled
by the affirmative vote of a majority of the Directors then in office, although
less than a quorum, and any Director so elected to fill any such vacancy or
newly created directorship shall hold office until his successor is elected and
qualified or until his earlier resignation or removal.
When one (1) or more Directors shall resign effective at a future date, a
majority of the Directors then in office, including those who have so resigned,
shall have power to fill such vacancy or vacancies, the vote thereon to take
effect when such resignation or resignations shall become effective, and each
Director so chosen shall hold office as herein provided in connection with the
filling of other vacancies.
SECTION 3. PLACE OF MEETING. The Board of Directors may hold its meetings
in such place or places in the State of Delaware or outside the state of
Delaware as the Board from time to time shall determine.
SECTION 4. REGULAR MEETINGS. Regular meetings of the Board of Directors
shall be held at such times and places as the Board from time to time by
resolution shall determine. No notice shall be required for any regular
meeting of the Board of Directors; but a copy of every resolution fixing or
changing the time or place of regular meetings shall be mailed to every
Director at least five (5) days before the first meeting held in pursuance
thereof.
SECTION 5. SPECIAL MEETINGS. Special meetings of the Board of Directors
shall be held whenever called by direction of the Chairman, the President and
Chief Executive Officer or by any two (2) of the Directors then in office.
Notice of the day, hour and place of holding of each special meeting shall
be given by mailing the same at least five (5) days before the meeting or by
causing the same to be transmitted by telegraph, cable or wireless at least one
(1) day before the meeting to each Director. Unless otherwise indicated in the
notice thereof, any and all business other than an amendment of these By-Laws
may be transacted at any special meeting, and an amendment of these By-Laws may
be acted upon if the notice of the meeting shall have stated that the amendment
of these By-Laws is one of the purposes of the meeting. At any meeting at
which every Director shall be present, even though without any notice, any
business may be transacted, including the amendment of these By-Laws.
SECTION 6. QUORUM. Subject to the provisions of Section 2 of this Article
II, a majority of the members of the Board of Directors in office (but, unless
the Board shall consist solely of one (1) Director, in no case less than
one-third of the total number of Directors nor less than two (2) Directors)
shall constitute a quorum for the transaction of business and the vote of the
majority of the Directors present at any meeting of the Board of Directors at
which a quorum
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<PAGE> 5
is present shall be the act of the Board of Directors. If at any meeting of
the Board there is less than a quorum present, a majority of those present may
adjourn the meeting from time to time.
SECTION 7. ORGANIZATION. The Chairman shall preside at all meetings of the
Board of Directors. In the absence of the Chairman, a Chairman shall be
elected from the Directors present. Unless otherwise determined by a majority
of the members of the Board of Directors present at a meeting at which a quorum
is present, the Secretary of the Corporation shall act as Secretary of all
meetings of the Directors; and in the absence of the Secretary, the Chairman
may appoint any person to act as Secretary of the meeting.
SECTION 8. COMMITTEES. The Board of Directors may, by resolution passed
by a majority of the whole Board, designate one (1) or more committees, each
committee to consist of one (1) or more of the Directors of the Corporation.
The Board may designate one (1) or more Directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. In the absence or disqualification of a member of a committee,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absent or disqualified member. Any such committee, to the extent
provided by resolution passed by a majority of the whole Board, shall have and
may exercise all the powers and authority of the Board of Directors in the
management of the business and the affairs of the Corporation, and may
authorize the seal of the Corporation to be affixed to all papers which may
require it; but no such committee shall have the power or authority in
reference to amending the Certificate of Incorporation, adopting an agreement
of merger or consolidation, recommending to the stockholders the sale, lease or
exchange of all or substantially all of the Corporation's property and assets,
recommending to the stockholders a dissolution of the Corporation or a
revocation of a dissolution, or amending these By-Laws; and unless such
resolution, these By-Laws, or the Certificate of Incorporation expressly so
provided, no such committee shall have the power or authority to declare a
dividend or to authorize the issuance of stock.
SECTION 9. CONFERENCE TELEPHONE MEETINGS. Unless otherwise restricted by
the Certificate of Incorporation or by these By-Laws, the members of the Board
of Directors or any committee designated by the Board, may participate in a
meeting of the Board or such committee, as the case may be, by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and such
participation shall constitute presence in person at such meeting.
SECTION 10. CONSENT OF DIRECTORS OR COMMITTEE IN LIEU OF MEETING. Unless
otherwise restricted by the Certificate of Incorporation or by these By-Laws,
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 all
members of the Board or committee, as the case may be, consent thereto in
writing and the writing or writings are filed with the minutes
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<PAGE> 6
of proceedings of the Board or committee, as the case may be.
ARTICLE III
OFFICERS
SECTION 1. OFFICERS. The officers of the Corporation shall be a Chairman,
the President and Chief Executive Officer, one (1) or more Vice Presidents, a
Secretary and a Treasurer, and such additional officers, if any, as shall be
elected by the Board of Directors pursuant to the provisions of Section 7 of
this Article III. The Chairman, Officer and President and Chief Executive
officer, one (1) or more Vice Presidents, the Secretary and the Treasurer shall
be elected by the Board of Directors at its first meeting after each annual
meeting of the stockholders. The failure to hold such election shall not of
itself terminate the term of office of any officer. All officers shall hold
office at the pleasure of the Board of Directors. Any officer may resign at
any time upon written notice to the Corporation. Officers may, but need not,
be Directors. Any number of offices may be held by the same person.
All officers, agents and employees shall be subject to removal, with or
without cause, at any time by the Board of Directors. The removal of an
officer without cause shall be without prejudice to his contract rights, if
any. The election or appointment of an officer shall not of itself create
contract rights. All agents and employees other than officers elected by the
Board of Directors shall also be subject to removal, with or without cause, at
any time by the officers appointing them.
Any vacancy caused by the death of any officer, his resignation, his
removal, or otherwise, may be filled by the Board of Directors, and any officer
so elected shall hold office at the pleasure of the Board of Directors.
In addition to the powers and duties of the officers of the Corporation as
set forth in these By-Laws, the officers shall have such authority and shall
perform such duties as from time to time may be determined by the Board of
Directors.
SECTION 2. POWERS AND DUTIES OF THE CHAIRMAN OF THE BOARD. The Chairman,
subject to the control of the Board of Directors, shall have general charge and
control of all its business and affairs and shall have all powers and shall
perform all duties incident to the office of Chairman. He shall preside at all
meetings of the stockholders and at all meetings of the Board of Directors and
shall have such other powers and perform such other duties as may from time to
time be assigned to him by these By-Laws or by the Board of Directors.
SECTION 3. POWERS AND DUTIES OF THE PRESIDENT AND CHIEF EXECUTIVE OFFICER.
The President and Chief Executive Officer shall report to the Chairman of the
Corporation or such other officer as the Board of Directors may designate. He
shall have all powers and perform all duties incident to the office of
President, oversee the conduct and affairs of the business of the Corporation
and shall have such other powers and perform such other duties as may from time
to time be assigned to him by these By-Laws or by the Board of Directors or the
Chairman.
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SECTION 4. POWERS AND DUTIES OF THE VICE PRESIDENTS. Each Vice President
shall have all powers and shall perform all duties incident to the office of
Vice President and shall have such other powers and perform such other duties
as may from time to time be assigned to him by these By-Laws or by the Board of
Directors, the Chairman or the President and Chief Executive Officer.
SECTION 5. POWERS AND DUTIES OF THE SECRETARY. The Secretary shall keep
the minutes of all meetings of the Board of Directors and the minutes of all
meetings of the stockholders in books provided for that purpose; he shall
attend to the giving or serving of all notices of the Corporation; he shall
have custody of the corporate seal of the Corporation and shall affix the same
to such documents and other papers as the Board of Directors, the Chairman of
the Board or the President and Chief Executive Officer shall authorize and
direct; he shall have charge of the stock certificate books, transfer books and
stock ledgers and such other books and papers as the Board of Directors, the
Chairman or the President and Chief Executive Officer shall direct, all of
which shall at all reasonable times be open to the examination of any Director,
upon application, at the office of the Corporation during business hours; and
whenever required by the Board of Directors, the Chairman or the President and
Chief Executive Officer shall render statements of such accounts; and he shall
have all powers and shall perform all duties incident to the office of
Secretary and shall also have such other powers and shall perform such other
duties as may from time to time be assigned to him by these By-Laws or by the
Board of Directors, the Chairman or the President and Chief Executive Officer.
SECTION 6. POWERS AND DUTIES OF THE TREASURER. The Treasurer shall have
custody of, and when proper shall pay out, disburse or otherwise dispose of,
all funds and securities of the Corporation which may have come into his hands;
he may endorse on behalf of the Corporation for collection checks, notes and
other obligations and shall deposit the same to the credit of the Corporation
in such bank or banks or depositary or depositories as the Board of Directors
may designate; he shall sign all receipts and vouchers for payments made to the
Corporation; he shall enter or cause to be entered regularly in the books of
the Corporation kept for the purpose full and accurate accounts of all moneys
received or paid or otherwise disposed of by him and whenever required by the
Board of Directors, the Chairman or the President and Chief Executive Officer
shall render statements of such accounts; he shall, at all reasonable times,
exhibit his books and accounts to any Director of the Corporation upon
application at the office of the Corporation during business hours; and he
shall have all powers and he shall perform all duties incident to the office of
Treasurer and shall also have such other powers and shall perform such other
duties as may from time to time be assigned to him by these By-Laws or by the
Board of Directors, the Chairman or the President and Chief Executive Officer.
SECTION 7. ADDITIONAL OFFICERS. The Board of Directors may from time to
time elect such other officers (who may but need not be Directors), including a
Controller, Assistant Treasurers, Assistant Secretaries and Assistant
Controllers, as the Board may deem advisable and such officers shall be such
authority and shall perform such duties as may from time to time be assigned to
them by the Board of Directors, the Chairman or the President.
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<PAGE> 8
The Board of Directors may from time to time by resolution delegate to any
Assistant Treasurer or Assistant Treasurers any of the powers or duties herein
assigned to, the Treasurer; and may similarly delegate to any Assistant
Secretary or Assistant Secretaries any of the powers or duties herein assigned
to the Secretary.
SECTION 8. GIVING OF BOND BY OFFICERS. All officers of the Corporation, if
required to do so by the Board of Directors, shall furnish bonds to the
Corporation for the faithful performance of their duties, in such penalties and
with such conditions and security as the Board shall require.
SECTION 9. VOTING UPON STOCKS. Unless otherwise ordered by the Board of
Directors, the Chairman or the President and Chief Executive Officer shall have
full power and authority on behalf of the Corporation to attend and to act and
to vote, or in the name of the Corporation to execute proxies to vote, at any
meeting of stockholders of any corporation in which the Corporation may hold
stock, or to execute any consent in lieu of such a meeting, and at any such
meeting or by any such consent shall possess and may exercise, in person or by
proxy, any and all rights, powers and privileges incident to the ownership of
such stock. The Board of Directors may from time to time, by resolution,
confer like powers upon any other person or persons.
SECTION 10. COMPENSATION OF OFFICERS. The officers of the Corporation
shall be entitled to receive such compensation for their services as shall from
time to time be determined by the Board of Directors.
ARTICLE IV
INDEMNIFICATION OF DIRECTORS AND OFFICERS
SECTION NATURE OF INDEMNITY. The Corporation shall indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he is or was or has
agreed to become a Director or officer of the Corporation, or is or was serving
or has agreed to serve at the request of the Corporation as a Director or
officer of another corporation, partnership, joint venture, trust or other
enterprise, or by reason of any action alleged to have been taken or omitted in
such capacity, and may indemnify any person who was or is a party or is
threatened to be made a party to such an action, suit or proceeding by reason
of the fact that he is or was or has agreed to become an employee or agent of
the Corporation, or is or was serving or has agreed to serve at the request of
the Corporation as an 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 or on his behalf in connection with such
action, suit or proceeding and any appeal therefrom, if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was
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<PAGE> 9
unlawful; except that in the case of an action or suit by or in the right of
the Corporation to procure a judgment in its favor (1) such indemnification
shall be limited to expenses (including attorneys' fees) actually and reasonably
incurred by such person in the defense or settlement of such actions or suit,
and (2) no indemnification shall be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable to the
Corporation unless and only to the extent that the Delaware Court of Chancery or
the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Delaware Court of Chancery or such other
court shall deem proper.
The termination of any action, suit or 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 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.
SECTION 2. SUCCESSFUL DEFENSE. 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 Section 1
of this Article IV 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.
SECTION 3. DETERMINATION THAT INDEMNIFICATION IS PROPER. Any
indemnification of a Director or officer of the Corporation under Section 1 of
this Article IV (unless ordered by a court) shall be made by the Corporation
unless a determination is made that indemnification of the Director or officer
is not proper in the circumstances because he has not met the applicable
standard of conduct set forth in Section 1. Any indemnification of an employee
or agent of the Corporation under Section 1 (unless ordered by a court) may be
made by the Corporation upon a determination that indemnification of the
employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in Section 1. Any such determination
shall be made (1) 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 (2) 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 (3) by the stockholders.
SECTION 4. ADVANCE PAYMENT OF EXPENSES. Unless the Board of Directors
otherwise determines in a specific case, expenses incurred by a Director or
officer in defending a civil or criminal action, suit or proceeding shall be
paid by the Corporation in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf of the
Director or officer to repay such amount if it shall ultimately be determined
that he is not entitled to be indemnified by the Corporation as authorized in
this Article IV. Such expenses incurred by other employee and agents may be so
paid upon such terms and conditions, if any, as the Board of Directors deems
appropriate. The Board of Directors may authorize the Corporation's legal
counsel to represent such Director, officer, employee or agent in an action,
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<PAGE> 10
suit or proceeding, whether or not the Corporation is a party to such action,
suit or proceeding.
SECTION 5. SURVIVAL; PRESERVATION OF OTHER RIGHTS. The foregoing
indemnification provisions shall be deemed to be a contract between the
Corporation and each Director, officer, employee and agent who serves in any
such capacity at any time while these provisions as well as the relevant
provisions of the Delaware General Corporation Law are in effect and any repeal
or modification thereof shall not affect any right or obligation then existing
with respect to any state of facts then or previously existing or any action,
suit, or proceeding previously or thereafter brought or threatened based in
whole or in part upon any such state of facts. Such a contract right may not
be modified retroactively without the consent of such Director, officer,
employee or agent.
The indemnification provided by this Article IV shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any by-law, agreement, vote of stockholders or disinterested Directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a Director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person. The
Corporation may enter into an agreement with any of its Directors, officers,
employees or agents providing for indemnification and advancement of expenses
(including attorneys' fees) that may change, enhance, qualify or limit any
right to indemnification or advancement of expenses created by this Article IV.
SECTION 6. SEVERABILITY. If this Article IV or any portion hereof shall be
invalidated on any ground by any court of competent jurisdiction, then the
Corporation shall nevertheless indemnify each Director or officer and may
indemnify each employee or agent of the Corporation as to costs, charges and
expenses (including attorneys' fees), judgment, fines and amounts paid in
settlement with respect to any action, suit or proceeding, whether civil,
criminal, administrative or investigative, including an action by or in the
right of the Corporation, to the fullest extent permitted by any applicable
portion of this Article IV that shall not have been invalidated and to the
fullest extent permitted by applicable law.
SECTION 7. SUBROGATION. In the event of payment of indemnification to a
person described in Section 1 of this Article IV, the Corporation shall be
subrogated to the extent of such payment to any right of recovery such person
may have and such person, as a condition of receiving indemnification from the
Corporation, shall execute all documents and do all things that the Corporation
may deem necessary or desirable to perfect such right of recovery, including
the execution of such documents necessary to enable the Corporation effectively
to enforce any such recovery.
SECTION 8. NO DUPLICATION OF PAYMENTS. The Corporation shall not be
liable under this Article IV to make any payment in connection with any claim
made against a person described in Section 1 of this Article IV to the extent
such person has otherwise received payment (under any insurance policy, by-law
or otherwise) of the amounts otherwise payable as indemnity hereunder.
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<PAGE> 11
ARTICLE V
STOCK-SEAL-FISCAL YEAR
SECTION 1. CERTIFICATES FOR SHARES OF STOCK. The certificates for shares
of stock of the Corporation shall be in such form, not inconsistent with the
Certificate of Incorporation, as shall be approved by the Board of Directors.
All certificates shall be signed by the Chairman or the President and Chief
Executive Officer or a Vice President and by the Secretary or an Assistant
Secretary or the Treasurer or an Assistant Treasurer, and shall not be valid
unless so signed.
In case any officer or officers who shall have signed any such certificate
or certificates shall cease to be such officer or officers of the Corporation,
whether because of death, resignation or otherwise, before such certificate or
certificates shall have been delivered by the Corporation, such certificate or
certificates may nevertheless be issued and delivered as though the person or
persons who signed such certificate or certificates had not ceased to be such
officer or officers of the Corporation.
All certificates for shares of stock shall be consecutively numbered as
the same are issued. The name of the person owning the shares represented
thereby with the number of such shares and the date of issue thereto shall be
entered on the books of the Corporation.
Except as hereinafter provided, all certificates surrendered to the
Corporation for transfer shall be canceled, and no new certificates shall be
issued until former certificates for the same number of shares have been
surrendered and canceled.
SECTION 2. LOST, STOLEN OR DESTROYED CERTIFICATES. Whenever a person
owning a certificate for shares of stock of the Corporation alleges that it has
been lost, stolen or destroyed, he shall file in the office of the Corporation
an affidavit setting forth, to the best of his knowledge and belief, the time,
place and circumstances of the loss, theft or destruction, and, if required by
the Board of Directors, a bond of indemnity or other indemnification sufficient
in the opinion of the Board of Directors to indemnify the Corporation and its
agents against any claim that may be made against it or them on account of the
alleged loss, theft or destruction of any such certificate or the issuance of a
new certificate in replacement therefor. Thereupon the Corporation may cause to
be issued to such person a new certificate in replacement for the certificate
alleged to have been lost, stolen or destroyed. Upon the stub of every new
certificate so issued shall be noted the fact of such issue and the number, date
and the name of the registered owner of the lost, stolen or destroyed
certificate in lieu of which the new certificate is issued.
SECTION 3. TRANSFER OF SHARES. Shares of stock of the Corporation shall be
transferred on the books of the Corporation by the holder thereof, in person or
by his attorney duly authorized in writing, upon surrender and cancellation of
certificates for the number of shares of stock to be transferred, except as
provided in Section 2 of this Article IV.
SECTION 4. REGULATIONS. The Board of Directors shall have power and
authority to make such rules and regulations as it may deem expedient
concerning the issue, transfer and
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registration of certificates for shares of stock of the Corporation.
SECTION 5. 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 to receive payment of any dividend or other distribution
or allotment of any rights, or to exercise any rights in respect of any change,
conversion or exchange of stock or for the purpose of any other lawful action,
as the case may be, the Board of Directors may fix, in advance, a record date,
which shall not be (i) more than sixty (60) nor less than ten (10) days before
the date of such meeting, or (ii) in the case of corporate action to be taken
by consent in writing without a meeting, prior to, or more than ten (10) days
after, the date upon which the resolution fixing the record date is adopted by
the Board of Directors, or (iii) more than sixty (60) days prior to any other
action.
If no record date is fixed, 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; the record date for determining stockholders
entitled to express consent to corporate action in writing without a meeting,
when no prior action by the Board of Directors is necessary, shall be the day
on which the first written consent is delivered to the Corporation; and 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 Board of Directors may fix a new record date for
the adjourned meeting.
SECTION 6. DIVIDENDS. Subject to the provisions of the Certificate of
Incorporation, the Board of Directors shall have power to declare and pay
dividends upon shares of stock of the Corporation, but only out of funds
available for the payment of dividends as provided by law.
Subject to the provisions of the Certificate of Incorporation, any
dividends declared upon the stock of the Corporation shall be payable on such
date or dates as the Board of Directors shall determine. If the date fixed for
the payment of any dividend shall in any year fall upon a legal holiday, then
the dividend payable on such date shall be paid on the next day not a legal
holiday.
SECTION 7. CORPORATE SEAL. The Board of Directors shall provide a suitable
seal, containing the name of the Corporation, which seal shall be kept in the
custody of the Secretary. A duplicate of the seal may be kept and be used by
any officer of the Corporation designated by the Board of Directors or the
Chairman.
SECTION 8. FISCAL YEAR. The fiscal year of the Corporation shall be such
fiscal year as the Board of Directors from time to time by resolution shall
determine.
ARTICLE VI
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MISCELLANEOUS PROVISIONS
SECTION 1. CHECKS, NOTES, ETC. All checks, drafts, bills of exchange,
acceptances, notes or other obligations or orders for the payment of money
shall be signed and, if so required by the Board of Directors, countersigned by
such officers of the Corporation and/or other persons as the Board of Directors
from time to time shall designate.
Checks, drafts, bills of exchange, acceptances, notes, obligations and
orders for the payment of money made payable to the Corporation may be endorsed
for deposit to the credit of the Corporation with a duly authorized depository
by the Treasurer and/or such other officers or persons as the Board of
Directors from time to time may designate.
SECTION 2. LOANS. No loans and no renewals of any loans shall be
contracted on behalf of the Corporation except as authorized by the Board of
Directors. When authorized to do so, any officer or agent of the Corporation
may effect loans and advances for the Corporation from any bank, trust company
or other institution or from any firm, corporation or individual, and for such
loans and advances may make, execute and deliver promissory notes, bonds or
other evidences of indebtedness of the Corporation. When authorized to do so,
any officer or agent of the Corporation may pledge, hypothecate or transfer, as
security for the payment of any and all loans, advances, indebtedness and
liabilities of the Corporation, any and all stocks, securities and other
personal property at any time filed by the Corporation, and to that end may
endorse, assign and deliver the same. Such authority may be general or
confined to specific instances.
SECTION 3. CONTRACTS. Except as otherwise provided in these By-Laws or by
law or as otherwise directed by the Board of Directors, the Chairman and the
President and Chief Executive Officer shall be authorized to execute and
deliver, in the name and on behalf of the Corporation, all agreements, bonds,
contracts, deeds, mortgages and other instruments, either for the Corporation's
own account or in a fiduciary or other capacity, and the seal of the
Corporation, if appropriate, shall be affixed thereto by any of such officers
or the Secretary or an Assistant Secretary. The Board of Directors or the
Chairman or the President and Chief Executive Officer may authorize any other
officer, employee or agent to execute and deliver, in the name and on behalf of
the Corporation, agreements, bonds, contracts, deeds, mortgages, and other
instruments, either for the Corporation's own account or in a fiduciary or
other capacity, and, if appropriate, to affix the seal of the Corporation
thereto. The grant of such authority by the Board or any such officer may be
general or confined to specific instances.
SECTION 4. WAIVERS OF NOTICE. Whenever any notice whatever is required to
be given by law, by the Certificate of Incorporation or by these By-Laws to any
person or persons, a waiver thereof in writing, signed by the person or persons
entitled to the notice, whether before or after the time stated therein, shall
be deemed equivalent thereto.
SECTION 5. OFFICES OUTSIDE OF DELAWARE. Except as otherwise required by
the laws of the State of Delaware, the Corporation may have an office or offices
and keep its
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books, documents and papers outside of the State of Delaware at such place or
places as from time to time may be determined by the Board of Directors or the
Chairman.
ARTICLE VII
AMENDMENTS
These By-Laws and any amendment thereof may be altered, amended or
repealed, or new By-Laws may be adopted, by the Board of Directors at any
regular or special meeting by the affirmative vote of a majority of all of the
members of the Board provided in the case of any special meeting at which all
of the members of the Board are not present, that the notice of such meeting
shall have stated that the amendment of these By-Laws was one of the purposes
of the meeting; but these By-Laws and any amendment thereof, may be altered,
amended or repealed or new By-Laws may be adopted by the holders of a majority
of the total outstanding stock of the Corporation entitled to vote at any
annual meeting or at any special meeting, provided, in the case of any special
meeting, that notice of such proposed alteration, amendment, repeal or adoption
is included in the notice of the meeting.
[End of By-Laws]
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EXHIBIT 3.8
BY-LAWS
OF
AETNA EXPORT SALES CORP.
ARTICLE I
OFFICES
SECTION 1. PRINCIPAL OFFICE. The principal office of the corporation in
the Virgin Islands shall be at the Citibank Building, Veterans Drive, Charlotte
Amalie, St. Thomas, United States Virgin Islands and its registered agent at
that address shall be RoyWest Trust Corporation (U.S. Virgin Islands) Limited.
SECTION 2. OTHER OFFICES. The corporation may have such other offices
and places of business, within or without the United States Virgin Islands, as
shall be determined by the Board of Directors.
ARTICLE II
MEETING OF STOCKHOLDERS
SECTION 1. PLACE OF MEETING. Meeting of the shareholders may be held at
such place or places, within or without the United States Virgin Islands, as
shall be fixed by the directors and stated in the notice of the meeting;
provided, however, that no such meeting may be held within the United States or
the Commonwealth of Puerto Rico unless the corporation has elected under
Section 922 (b) (i) of the United States Internal Revenue Code of 1954, as
amended, to be treated as a Small Foreign Sales Corporation (said election is
hereinafter referred to as the "Small FSC Election").
SECTION 2. ANNUAL MEETING. The annual meeting of shareholders shall be
held on the each year at the principal office of the
corporation, or such other location as may be designated in the notice of such
meeting, or if such day be a legal holiday then on the first business day
following, for the election of directors and for the transaction of such other
business as may properly come before the meeting.
SECTION 3. NOTICE OF ANNUAL MEETING. Notice of the time and place of
holding such annual meeting shall be given either personally or by mailing, not
less than ten (10) nor more than forty (40) days before such meeting, postage
prepaid, by notice of such meeting in writing signed by the President or
Vice-President or the Secretary or Assistant Secretary, directed to each
stockholder of record entitled to vote at such meeting, at this address as it
appears on the stock register of the corporation, unless he shall have filed
with the Secretary of the corporation a
<PAGE> 2
written request that notices intended for him be mailed to the address
designated in such request. Such notice shall briefly state the business to be
transacted at the meeting. Any and all notices of the meeting may be waived in
writing by any stockholder.
SECTION 4. QUORUM. The presence of the holders of a majority of the
issued and outstanding stock entitled to vote, present in person or represented
by proxy, shall constitute a quorum at all meetings of shareholders for the
transaction of business. If such majority is not present or represented, those
present in person or by proxy shall have the power to adjourn the meeting.
SECTION 5. SPECIAL MEETINGS. Special meetings of shareholders for any
purpose or purposes may be called by any member of the Board of Directors or by
the President, and shall be called by the President or the Secretary at the
request in writing by the shareholders of record owning a majority of the stock
of the entire capital stock of the corporation then issued and outstanding.
SECTION 6. NOTICE OF SPECIAL MEETINGS. Written notice of a special
meeting of the shareholders stating the time, place and purpose thereof, shall
be served either personally or by mailing in the same manner as the annual
meeting. Stockholders entitled to vote at an annual meeting may vote at a
special meeting. Any and all notices of the meeting may be waived in writing
by any shareholders.
SECTION 7. VOTING. At meetings of shareholders, only such persons shall
be entitled to vote in person or by proxy who appear as shareholders upon the
transfer books of the corporation for twenty (20) days immediately preceding
such meeting.
SECTION 8. ACTION BY WRITTEN CONSENT OF SHAREHOLDERS. Whenever by any
provision of statute of or Articles of Incorporation or of these By-Laws, the
vote of shareholders at a meeting thereof is required or permitted to be taken
in connection with any corporate action, the meeting and vote of shareholders
may be dispensed with provided: a) all the shareholders who would have been
entitled to vote upon the action if such meeting were held consent in writing
to such corporate action being taken; b) the granting of such consent in lieu
of a meeting is permissible under the United States Internal Revenue Code of
1954, as amended, and the regulations issued pursuant thereto and the laws of
United States Virgin Islands applicable to Foreign Sales Corporations.
ARTICLE III
DIRECTORS AND OFFICERS
SECTION 1. NUMBER. The affairs of this corporation shall be managed by a
Board of Directors who need not be shareholders. Directors shall be not less
than three (3) in number. Except for the first Board of Directors as elected
by the incorporators of the corporation, directors shall be elected at the
annual meeting of the shareholders to serve for one (1) year and
2
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until successors shall be elected and qualified. The Directors shall be chosen
by a majority vote of the shareholders voting in person or by proxy at such
election.
SECTION 2. VACANCIES. Vacancies in the Board of Directors occurring
during the year shall be filled for the unexpired term by a majority vote of
the remaining directors at any special meeting called for that purpose or at
any regular meeting of the Board. Whenever the number of directors shall be
increased pursuant to law such increase shall be deemed to create vacancies in
the Board and be filled in the manner prescribed herein.
SECTION 3. REMOVAL. The shareholders at a special meeting called for such
purpose by a majority vote may remove any director with or without cause at any
time whether or not the term for which such director was originally elected had
expired, and may also elect another director to fill such vacancy.
SECTION 4. MEETING. Regular meetings of the Board of Directors may be
held without notice at such time and place as shall be determined by the Board
of Directors from time to time both within and without the United States Virgin
Islands, but not within any of the fifty states of the United States or the
Commonwealth of Puerto Rico unless the corporation has made a Small FSC
Election. A director shall be deemed to be present at a meeting if he
participates by telephone or other electronic means and all directors
participating at the meeting are able to hear each other.
SECTION 5. SPECIAL MEETINGS. Special meetings of the Board of Directors
shall be called by the President or Secretary upon three (3) days' notice in
writing on the written request of any director.
SECTION 6. QUORUM. A quorum of the Board of Directors for the
transaction of business shall be constituted by the presence of at least
one-third of the total number of directors; provided, however, that the minimum
number of directors to constitute a quorum shall not be less than two (2)
directors.
SECTION 7. POWERS. Immediately after the annual meeting of shareholders
the Board of Directors shall choose a President, who shall be from their own
number, a Secretary and Treasurer and such other officer, or officers, as they
shall establish who need not be members of the Board of Directors. Any person
may hold more than one office except for the President and Secretary.
The Board of Directors shall have charge of the management of all the
affairs of the corporation and appoint all committees. All of their acts shall
require a majority vote of the members of the Board of Directors present and
voting.
The Board of Directors may adopt such rules and regulations for the
conduct of their meetings and management of the affairs of the corporation as
may be deemed to be proper, and not inconsistent with the laws of the United
States Virgin Islands or the laws of any country, state or municipality which
may be applicable thereto or these By-Laws.
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In addition to the power of these By-Laws expressly conferred upon them,
the Board of Directors may exercise such powers and do such lawful acts and
things as are not by statute or by the Articles of Incorporation or by these
By-Laws required to be exercised by the shareholders.
SECTION 8. VOTING. At all meetings of the Board of Directors, each
director is to have one vote irrespective of the number of shares of stock he
may hold.
SECTION 9. REMUNERATION. The remuneration of the Board of Directors
shall be determined from time to time by the shareholders of the corporation at
the annual meeting. Such remuneration shall be deemed to accrue from day to
day. The directors may also be paid all traveling, hotel and other expense
properly incurred by them in attending and returning from meetings of the Board
of Directors or of the shareholders of the corporation or in connection with
the business of the corporation; provided that nothing herein contained shall
be construed to preclude any director or his firm from serving the corporation
in any other capacity and receiving compensation therefor. Members of special
or standing committees and others who attend, pursuant to direction made by
vote of the Board of Directors, may be allowed a fixed sum and expenses for
attending committee meetings.
SECTION 10. ACTION BY CONSENT. Any action required or permitted to be
taken by a vote of the directors may be taken without a meeting if a consent in
writing, setting forth the action so taken, is signed by all directors entitled
to vote with respect to the subject matter thereof. Such consent shall be
filed with the minutes of the proceedings of the Board and shall have the same
force and effect as a unanimous vote of the Board of Directors. A telex
message from a director expressly consenting to the action taken shall
constitute the required written consent of that director.
ARTICLE IV
OFFICERS AND POWERS OF OFFICERS
SECTION 1. OFFICERS. Officers of the corporation shall be a President,
Secretary and Treasurer, who shall hold office for one year and until their
successors are chosen and qualify in their stead. The president shall be a
director of the corporation. Any two offices may be held by the same person
except the offices of President and Secretary. Any office elected or appointed
by the Board of Directors may be removed at any time by an affirmative vote of
a majority of the Board of Directors. The Board of Directors may at any time
that they shall deem advisable establish additional officerships to those named
herein and elect persons to fill such officerships as hereinafter provided, and
such officers shall hold said offices under the same provisions as provided
with respect to the officership specifically named herein.
SECTION 2. THE PRESIDENT. The President shall be the executive officer of
the Corporation. He shall preside at all meetings of the shareholders and
directors and shall sign such contracts and papers as are requisite for the
proper conduct of the corporation's business.
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SECTION 3. VICE-PRESIDENTS. In the absence or disability of the
President, a Vice-President appointed by the Board of Directors, may perform
the duties and exercise the powers of the President and shall perform such
other duties as may be imposed upon him by the Board of Directors.
SECTION 4. THE SECRETARY. The Secretary shall attend all sessions of the
Board of Directors and all meetings of shareholders and record all votes and
the minutes of all proceedings in a book to be kept for that purpose. He shall
cause to be given notice of all meetings of shareholders and directors and
shall perform such other duties as appertain to this office. He shall keep in
safe custody and seal of the corporation and, when authorized by the Board of
Directors, affix it when required to any instrument. He shall be transfer
agent for the transfer of all certificates of stock.
SECTION 5. ASSISTANT-SECRETARY. In the absence or disability of the
Secretary, an Assistant-Secretary, appointed by the Board of Directors, may
perform the duties and exercise the powers of the Secretary and shall perform
such other powers as may be imposed upon him by the Board.
SECTION 6. THE TREASURER. The Treasurer shall have the custody of all the
corporation's funds and securities, and shall keep full and accurate accounts
of receipts and disbursements in books belonging to the corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation, in such depositories as may be designated by the Board of
Directors. He shall disburse the funds of the corporation as may be ordered by
the Board of Directors, taking proper vouchers for disbursements, and shall
render to the President and Directors, or whenever they may require it, an
account of all his transactions as Treasurer, and of the financial condition of
the corporation.
SECTION 7. VACANCIES. If any office becomes vacant for any reason during
the term thereof, the directors in office, although less than a quorum, by a
majority vote may appoint a qualified successor who shall hold office for the
unexpired term.
SECTION 8. DELEGATION OF DUTIES. Duties of officers may be delegated in
case of the absence of any officer of the corporation or for any other reason
that the Board of Directors may deem sufficient. The Board of Directors may
delegate the powers or duties of such officer to any other officer or to any
director for the time being, provided a majority of the entire Board of
Directors concurs therein.
SECTION 9. REMUNERATION. The officers shall receive such salary or
compensation as may be determined and fixed by the Board of Directors.
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ARTICLE V
CERTIFICATES AND TRANSFER OF STOCK
SECTION 1. FORM AND EXECUTION OF CERTIFICATES. The certificates of stock
of the corporation shall be numbered and registered as they are issued. They
shall exhibit the holder's name and the number of shares. They shall be signed
by the President, Secretary or Treasurer, and sealed with the seal of the
corporation.
SECTION 2. TRANSFERS. Transfers of stock shall be made on the books of
the corporation by the person named in the certificate, or by his attorney
lawfully constituted, and upon surrender of such certificate, such surrender of
stock shall be entered on the stock books of the corporation which shall be
kept at its principal office in the United States Virgin Islands.
SECTION 3. RECORD DATE. The transfer of books by resolution of the Board
of Directors may be closed for a period not exceeding fifty (50) days prior to
any meeting of the shareholders. No transfer shall be made upon the books of
the corporation within twenty (20) days next preceding the annual meeting of
shareholders.
ARTICLE VI
VOTING
Every proxy must be executed in writing by the stockholder himself or by
his duly authorized attorney. No proxy shall be valid after the expiration of
one (1) year from the date of its execution unless it shall have specified
therein the length of time it is to continue in force, which shall be for some
limited period. Every proxy shall be revocable by the person executing it.
ARTICLE VII
DIVIDENDS
SECTION 1. The directors may declare dividends out of the profits of the
corporation at such time and in such amounts as the Board of Directors from
time to time may designate by the majority vote.
SECTION 2. Before payment of any dividends or making any distribution of
profits, there may be set aside out of the net profits of the corporation such
sum or sums as the Directors from time to time in their absolute discretion
think proper as a reserve fund to meet contingencies or for equalizing
dividends or for repairing or maintaining any property of the corporation or
for such other purpose as the Board of Directors shall think conducive to the
interests of the corporation.
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ARTICLE VIII
BILLS, NOTES, ETC.
All bills, notes payable, checks or other negotiable instruments of the
corporation shall be made in the name of the corporation and shall be signed by
officer or officers as the Board of Directors may from time to time designate,
and the funds of the corporation shall be deposited in such depositories, banks
or trust companies as the Board of Directors may designate from time to time.
ARTICLE IX
AMENDMENTS
These By-Laws may be amended by: (a) a majority vote of the holders of
all of the issued and outstanding stock of the corporation entitled to vote at
any annual or special meeting of the shareholders provided that notice of
intention to amend shall have been contained in the notice of the meeting, or
(b) the majority vote of all directors present at a meeting of the Board of
Directors called for that purpose.
ARTICLE X
WAIVER OF NOTICE
SECTION 1. Any stockholder, director or officer may waive in writing, by
telegram, telex or cable any notice required to be given under these By-Laws.
The presence of any person at a meeting shall constitute waiver of notice
thereof as to such person.
SECTION 2. Whenever under the provisions of these By-Laws, notice is
required to be given to any stockholder, director or officer, it shall not be
construed to mean personal notice, but such notice may be given by: (a)
telegram, telex or cable in which event notice shall be deemed to have been
given upon the receipt by the sender of an acknowledgment of receipt of such
telegram, telex or cable, or (b) depositing such notice, postage prepaid, in a
post office or letter box, addressed to such shareholders, director or officer,
to the address as it appears on the books of the corporation and such notice
shall be deemed to have been given ten (10) days after the time said notice was
mailed.
ARTICLE XI
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS
SECTION 1. The corporation shall have power to indemnify any person who
was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
corporation) by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other
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enterprise, against expenses (including attorney fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if:
(a) he acted:
(i) in good faith; and
(ii) in a manner he reasonably believed to be in or
not opposed to the best interest of the corporation; and
(b) with respect to any criminal action or proceeding he had no
reasonable cause to believe his conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent
shall not create, of itself, 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.
SECTION 2. The corporation shall have power to indemnify any person who
was or is a party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorney's fees) actually and reasonably incurred
by him in connection with the defense or settlement of such action or suit if
he acted:
a) in good faith; and
b) in a manner he reasonably believed to be in or not opposed to
the best interest of the corporation.
However, 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
bought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to be indemnified for such expenses which the
court shall deem proper.
SECTION 3. To the extent that a director, officer, employee or agent of
a corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Section 1 or 2 of this Article XI, 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.
SECTION 4. Any indemnification under Sections 1 and 2 of this Article XI
(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 director,
officer, employee or agent is proper in the
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circumstances because he had met the applicable standard of conduct set forth
in said sections. 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;
b) if such 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 stockholders.
SECTION 5. Expenses incurred in defeating a civil or criminal action,
suit or proceeding may be paid by the corporation in advance of the final
disposition of such action, suit or proceeding as authorized by the Board of
Directors in the specific case upon receipt of an undertaking by or on behalf
of the director, officer, employee or agent to repay such amounts unless it
shall ultimately be determined that he is entitled to be indemnified by the
corporation as authorized in this Article XI.
SECTION 6. The indemnification provided by this Article XI shall not be
deemed exclusive of any other rights to which those seeking indemnification may
be entitled under any by-law, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and 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 heirs, executors and administrators of such
persons.
SECTION 7. The corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee
or agent of the corporation, 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 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.
SECTION 8. For the purpose of this Article XI, references to "the
corporation" shall include, in addition to the resulting corporation, any
constituent corporation (including any constituent of a constituent) absorbed
in a consolidation or merger which, if its separate existence had continued,
would have had the power and authority to indemnify its directors, officers,
and employees or agents, so that any person who is or was a director, officer,
employee or agent of such constituent corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise shall stand in the same position under the provisions of this
Section with respect to the resulting or surviving corporation as he would
have with respect to such constituent corporation if its separate existence had
continued.
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ARTICLE XII
SEAL
The seal of the corporation shall be in the form of a circle and shall
bear the name of the corporation and the year of its incorporation.
ARTICLE XIII
FISCAL YEAR
The fiscal year of the corporation shall end on such date as may be set
from time to time by the directors of the corporation.
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EXHIBIT 4
======================================================================
INDENTURE
Dated as of August 1, 1996
among
AETNA INDUSTRIES, INC.,
as Issuer,
MS ACQUISITION CORP.,
AETNA HOLDINGS, INC.,
as Guarantors,
AETNA EXPORT SALES CORP.,
as Subsidiary Guarantor,
and
NORWEST BANK MINNESOTA NATIONAL ASSOCIATION,
as Trustee
________________
$85,000,000
11 7/8% Senior Notes due 2006, Series A
11 7/8% Senior Notes due 2006, Series B
======================================================================
<PAGE> 2
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
- ------- ---------
310 (a)(1) ...................................................... 7.10
(a)(2) ...................................................... 7.10
(a)(3) ...................................................... N.A.
(a)(4) ...................................................... N.A.
(a)(5) ...................................................... 7.10
(b) ......................................................... 7.08; 7.10
(c) ......................................................... N.A.
311 (a) ......................................................... 7.11
(b) ......................................................... 7.11
(c) ......................................................... N.A.
312 (a) ......................................................... 2.05
(b) ......................................................... 11.03
(c) ......................................................... 11.03
313 (a) ......................................................... 7.06
(b)(1) ...................................................... 7.06
(b)(2) ...................................................... 7.06; 7.07
(c) ......................................................... 7.05; 7.06;
11.02
(d) ......................................................... 7.06
314 (a) ......................................................... 4.08; 4.10;
11.02
(b) ......................................................... N.A.
(c)(1) ...................................................... 4.08; 11.04
(c)(2) ...................................................... 11.04
(c)(3) ...................................................... 4.08; 11.04
(d) ......................................................... N.A.
(e) ......................................................... 11.05
(f) ......................................................... N.A.
315 (a) ......................................................... 7.01(b)
(b) ......................................................... 7.05; 11.02
(c) ......................................................... 7.01(a)
(d) ......................................................... 7.01(c)
(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; 9.04
(c) ......................................................... 9.04
317 (a)(1) ...................................................... 6.08
<PAGE> 3
(a)(2) ........................................................ 6.09
(b) ........................................................... 2.04
318(a) ........................................................ 11.01
(c) ........................................................... 11.01
______________________
"N.A." means Not Applicable.
NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE> 4
TABLE OF CONTENTS
Page
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ARTICLE ONE
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01 Definitions ................................................ 1
Section 1.02 Incorporation by Reference of TIA .......................... 25
Section 1.03 Rules of Construction ...................................... 26
ARTICLE TWO
THE SECURITIES
Section 2.01 Form and Dating ............................................ 26
Section 2.02 Execution and Authentication ............................... 27
Section 2.03 Registrar and Paying Agent ................................. 28
Section 2.04 Paying Agent To Hold Assets in Trust ....................... 29
Section 2.05 Securityholder Lists ....................................... 29
Section 2.06 Transfer and Exchange ...................................... 29
Section 2.07 Replacement Securities ..................................... 30
Section 2.08 Outstanding Securities ..................................... 30
Section 2.09 Treasury Securities ........................................ 31
Section 2.10 Temporary Securities ....................................... 31
Section 2.11 Cancellation ............................................... 31
Section 2.12 Defaulted Interest ......................................... 32
Section 2.13 CUSIP Number ............................................... 32
Section 2.14 Deposit of Moneys .......................................... 32
Section 2.15 Book-Entry Provisions for Global Securities ................ 32
Section 2.16 Registration of Transfers and Exchanges .................... 34
Section 2.17 Designation ................................................ 39
ARTICLE THREE
REDEMPTION
Section 3.01 Notices to Trustee ......................................... 39
Section 3.02 Selection of Securities To Be Redeemed ..................... 39
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Page
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Section 3.03 Notice of Redemption ....................................... 40
Section 3.04 Effect of Notice of Redemption ............................. 41
Section 3.05 Deposit of Redemption Price ................................ 41
Section 3.06 Securities Redeemed in Part ................................ 41
ARTICLE FOUR
COVENANTS
Section 4.01 Payment of Securities ...................................... 42
Section 4.02 Maintenance of Office or Agency ............................ 42
Section 4.03 Limitation on Incurrence of Additional
Indebtedness .............................................. 42
Section 4.04 Limitation on Restricted Payments .......................... 43
Section 4.05 Corporate Existence ........................................ 45
Section 4.06 Payment of Taxes and Other Claims .......................... 46
Section 4.07 Maintenance of Properties and Insurance .................... 46
Section 4.08 Compliance Certificate; Notice of Default .................. 47
Section 4.09 Compliance with Laws ....................................... 48
Section 4.10 SEC Reports ................................................ 48
Section 4.11 Waiver of Stay, Extension or Usury Laws .................... 49
Section 4.12 Limitation on Asset Sales .................................. 49
Section 4.13 Limitation on Dividend and Other Payment
Restrictions Affecting Restricted
Subsidiaries .............................................. 52
Section 4.14 Limitation on Preferred Stock of
Restricted Subsidiaries ................................... 53
Section 4.15 Limitation on Liens ........................................ 53
Section 4.16 Limitation on Sale and Leaseback
Transactions .............................................. 54
Section 4.17 Intentionally Omitted ...................................... 54
Section 4.18 Limitations on Transactions with
Affiliates ................................................ 54
Section 4.19 Additional Subsidiary Guarantees ........................... 55
Section 4.20 Intentionally Omitted ...................................... 56
Section 4.21 Lines of Business .......................................... 56
Section 4.22 Payments for Consent ....................................... 56
Section 4.23 Limitation on Designations of
Unrestricted Subsidiaries ................................. 57
Section 4.24 Change of Control .......................................... 57
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Page
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ARTICLE FIVE
SUCCESSOR CORPORATION
Section 5.01 Mergers, Consolidations and Sales of
Assets ...................................................... 60
Section 5.02 Successor Corporation Substituted ............................ 62
ARTICLE SIX
DEFAULT AND REMEDIES
Section 6.01 Events of Default ........................................... 63
Section 6.02 Acceleration ................................................ 65
Section 6.03 Other Remedies .............................................. 66
Section 6.04 Waiver of Past Defaults ..................................... 66
Section 6.05 Control by Majority ......................................... 67
Section 6.06 Limitation on Suits ......................................... 67
Section 6.07 Rights of Holders To Receive Payment ........................ 68
Section 6.08 Collection Suit by Trustee .................................. 68
Section 6.09 Trustee May File Proofs of Claim ............................ 68
Section 6.10 Priorities .................................................. 69
Section 6.11 Undertaking for Costs ....................................... 69
ARTICLE SEVEN
TRUSTEE
Section 7.01 Duties of Trustee ........................................... 70
Section 7.02 Rights of Trustee ........................................... 71
Section 7.03 Individual Rights of Trustee ................................ 72
Section 7.04 Trustee's Disclaimer ........................................ 72
Section 7.05 Notice of Default ........................................... 73
Section 7.06 Reports by Trustee to Holders ............................... 73
Section 7.07 Compensation and Indemnity .................................. 74
Section 7.08 Replacement of Trustee ...................................... 75
Section 7.09 Successor Trustee by Merger, Etc. ........................... 76
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Page
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Section 7.10 Eligibility; Disqualification ............................... 76
Section 7.11 Preferential Collection of Claims Against
Company .................................................... 76
ARTICLE EIGHT
SATISFACTION AND DISCHARGE OF INDENTURE
Section 8.01 Legal Defeasance and Covenant Defeasance .................... 77
Section 8.02 Satisfaction and Discharge .................................. 80
Section 8.03 Survival of Certain Obligations ............................. 81
Section 8.04 Acknowledgment of Discharge by Trustee ...................... 81
Section 8.05 Application of Trust Assets ................................. 82
Section 8.06 Repayment to the Company, Guarantors or
Subsidiary Guarantors; Unclaimed Money ..................... 82
Section 8.07 Reinstatement ............................................... 83
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.01 Without Consent of Holders .................................. 83
Section 9.02 With Consent of Holders ..................................... 84
Section 9.03 Compliance with TIA ......................................... 86
Section 9.04 Revocation and Effect of Consents ........................... 86
Section 9.05 Notation on or Exchange of Securities ....................... 87
Section 9.06 Trustee To Sign Amendments, Etc. ............................ 87
ARTICLE TEN
GUARANTEES
Section 10.01 Unconditional Guarantee .................................... 87
Section 10.02 Severability ............................................... 88
Section 10.03 Release of a Subsidiary Guarantor .......................... 89
Section 10.04 Limitation of a Guarantor's or
Subsidiary Guarantor's Liability .......................... 89
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Page
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Section 10.05 Contribution ............................................... 90
Section 10.06 Waiver of Subrogation ...................................... 90
Section 10.07 Execution of Guarantees and Subsidiary
Guarantees ................................................ 91
Section 10.08 Waiver of Stay, Extension or Usury Laws .................... 92
ARTICLE ELEVEN
MISCELLANEOUS
Section 11.01 TIA Controls ............................................... 92
Section 11.02 Notices .................................................... 92
Section 11.03 Communications by Holders with Other
Holders .................................................. 94
Section 11.04 Certificate and Opinion as to Conditions
Precedent ................................................ 94
Section 11.05 Statements Required in Certificate or
Opinion .................................................. 94
Section 11.06 Rules by Trustee, Paying Agent, Registrar .................. 95
Section 11.07 Legal Holidays ............................................. 95
Section 11.08 Governing Law .............................................. 95
Section 11.09 No Adverse Interpretation of Other
Agreements ............................................... 95
Section 11.10 No Recourse Against Others ................................. 95
Section 11.11 Successors ................................................. 96
Section 11.12 Duplicate Originals ........................................ 96
Section 11.13 Severability ............................................... 96
Signatures ................................................................ 97
Exhibit A - Form of Series A Security
Exhibit B - Form of Series B Security
Exhibit C - Form of Legend for Global Securities
Exhibit D - Transfer Certificate
Exhibit E - Transferee Certificate for Institutional
Accredited Investors
Exhibit F - Transferee Certificate for Regulation S Transfers
Note: This Table of Contents shall not, for any purpose, be deemed to be a
part of the Indenture.
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INDENTURE dated as of August 1, 1996, among AETNA INDUSTRIES, INC., a
Delaware corporation (the "Company"), as Issuer, MS ACQUISITION CORP., a
Delaware corporation, and AETNA HOLDINGS, INC., a Delaware corporation, as
Guarantors (each a "Guarantor" and, collectively, the "Guarantors"), AETNA
EXPORT SALES CORP., a U.S. Virgin Islands corporation, as Subsidiary Guarantor,
and NORWEST BANK MINNESOTA NATIONAL ASSOCIATION, a national banking association
organized under the laws of the United States, as Trustee (the "Trustee").
The Company has duly authorized the creation of an issue of 11 7/8% Senior
Notes due 2006, Series A, and 11 7/8% Senior Notes due 2006, Series B, to be
issued in exchange for the 11 7/8% Senior Notes due 2006, Series A, pursuant to
the Registration Rights Agreement and, to provide therefor, the Company, the
Guarantors, and the Subsidiary Guarantor have duly authorized the execution and
delivery of this Indenture. All things necessary to make the Securities, when
duly issued and executed by the Company and authenticated and delivered
hereunder, the Guarantees and the Subsidiary Guarantees the valid and binding
obligations of the Company, the Guarantors, and the Subsidiary Guarantor,
respectively, and to make this Indenture a valid and binding agreement of the
Company, each of the Guarantors and the Subsidiary Guarantor, have been done.
Each party hereto agrees as follows for the benefit of each other party
and for the equal and ratable benefit of the Holders of the Securities:
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Acquired Indebtedness" means Indebtedness of a Person or any of its
Subsidiaries existing at the time such Person becomes a Restricted Subsidiary
or at the time it merges or consolidates with the Company or any of the
Restricted Subsidiaries or assumed by the Company or a Restricted Subsidiary in
connection with the acquisition of assets by such Person and in each case not
incurred in connection with, or in anticipation or contemplation of, such
Person becoming a Restricted Subsidiary or such acquisition, merger or
consolidation.
"Affiliate" means, with respect to any specified Person, any other Person
who directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person. The
term "control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether
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through the ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative of the
foregoing.
"Affiliate Transaction" has the meaning provided in Section 4.18.
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Asset Acquisition" means (a) an Investment by the Company or any
Restricted Subsidiary in any other Person pursuant to which such Person shall
become a Restricted Subsidiary, or shall be merged with or into the Company or
any Restricted Subsidiary, or (b) the acquisition by the Company or any
Restricted Subsidiary of the assets of any Person (other than a Restricted
Subsidiary) which constitute all or substantially all of the assets of such
Person or comprises any division or line of business of such Person or any
other properties or assets of such Person other than in the ordinary course of
business.
"Asset Sale" means any direct or indirect sale, issuance, conveyance,
transfer, lease (other than operating leases entered into in the ordinary
course of business), assignment or other transfer for value by the Company or
any of the Restricted Subsidiaries (including any Sale and Leaseback
Transaction) to any Person other than the Company or a Restricted Subsidiary of
(a) any Capital Stock of any Restricted Subsidiary; or (b) any other property
or assets of the Company or any Restricted Subsidiary other than in the
ordinary course of business; provided, however, that Asset Sales shall not
include (i) a transaction or series of related transactions for which the
Company or the Restricted Subsidiaries receive aggregate consideration of less
than $250,000, (ii) the sale, lease, conveyance, disposition or other transfer
of all or substantially all of the assets of the Company as permitted under
Section 5.01, (iii) Investments made in compliance with Section 4.04 and (iv)
the sale, disposition or other transfer of obsolete, damaged, materially worn
or unusable equipment in the ordinary course of business.
"Attributable Value" means, as to any particular lease under which any
Person is at the time liable other than a Capitalized Lease Obligation, and at
any date as of which the amount thereof is to be determined, the total net
amount of rent required to be paid by such Person under such lease during the
remaining term thereof (whether or not such lease is terminable at the option
of the lessee prior to the end of such term), including any period for which
such lease has been, or may, at the option of the lessor, be extended,
discounted from the last date of such term to the date of determination at a
rate per annum equal to the discount rate which would be applicable to a
Capitalized Lease Obligation with a like term in accordance with GAAP. The net
amount of rent required to be paid under any lease for any such period shall be
the aggregate amount of rent payable by the lessee with respect to such period
after excluding amounts required to be paid on account of insurance, taxes,
assessments, utility, operating and labor costs and similar charges.
"Attributable
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Value" means, as to a Capitalized Lease Obligation under which any Person is at
the time liable and at any date as of which the amount thereof is to be
determined, the capitalized amount thereof that would appear on the face of a
balance sheet of such Person in accordance with GAAP.
"Bankruptcy Law" means Title 11, U.S. Code or any similar Federal, state
or foreign law for the relief of debtors.
"Berkshire" means, individually and collectively, The Berkshire Fund,
Berkshire Partners and each of their respective Permitted Transferees.
"Board of Directors" means, as to any Person, the board of directors of
such Person or any duly authorized committee thereof.
"Board Resolution" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Trustee.
"Business Day" means any day other than a Saturday, Sunday or any other
day on which banking institutions in the City of New York are required or
authorized by law or other governmental action to be closed.
"Capital Stock" means (a) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock, including
each class of Common Stock and Preferred Stock of such Person and (b) with
respect to any Person that is not a corporation, any and all partnership or
other equity interests of such Person.
"Capitalized Lease Obligation" means, as to any Person, the obligations of
such Person under a lease that are required to be classified and accounted for
as capital lease obligations under GAAP, and the amount of such obligations at
any date shall be the capitalized amount of such obligations at such date,
determined in accordance with GAAP.
"Cash Equivalents" means (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof; (b)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having
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one of the two highest ratings obtainable from either Standard & Poor's
Corporation ("S&P") or Moody's Investors Service, Inc. ("Moody's"); (c)
commercial paper maturing no more than one year from the date of creation
thereof and, at the time of acquisition, having a rating of at least A-1 from
S&P or at least P-1 from Moody's; (d) certificates of deposit or bankers'
acceptances maturing within one year from the date of acquisition thereof
issued by any bank organized under the laws of the United States of America or
any state thereof or the District of Columbia or any United States branch of a
foreign bank having at the date of acquisition thereof combined capital and
surplus of not less than $250,000,000; (e) repurchase obligations with a term
of not more than seven days for underlying securities of the types described in
clause (a) above entered into with any bank meeting the qualifications
specified in clause (d) above; and (f) investments in money market funds which
invest substantially all their assets in securities of the types described in
clauses (a) through (e) of this definition.
"Change of Control" means the occurrence of any of the following
events:
(a) prior to the first public offering of Voting Stock of either of
the Guarantors or the Company, any person or group, as such terms are
used in Sections 13(d) and 14(d) of the Exchange Act, other than one or
more of the Permitted Holders, shall be entitled (by "beneficial
ownership" (as defined in rules 13d-3 and 13d-5 under the Exchange Act)
of Voting Stock, by contract or otherwise) to designate for election
directors of either of the Guarantors or the Company having a majority of
the total voting power of the Board of Directors of either of the
Guarantors or the Company, as the case may be;
(b) prior to the first public offering of Voting Stock of the
Company, MS Acquisition Corp. shall cease to own 100% of the issued and
outstanding Voting Stock of Aetna Holdings, Inc. or Aetna Holdings, Inc.
shall cease to own 100% of the Voting Stock of the Company, whether as a
result of the issuance of securities of Aetna Holdings, Inc. or the
Company, any merger, consolidation, liquidation or dissolution of Aetna
Holdings, Inc. or the Company, or any direct or indirect transfer of
securities by either of the Guarantors or otherwise; provided that
notwithstanding any other provision of this Indenture, including this
clause (b), to the contrary, Aetna Holdings, Inc. may cease to exist,
whether as a result of merger, consolidation, liquidation, dissolution or
by any other means, so long as thereafter (but prior to the first public
offering of Voting Stock of the Company), MS Acquisition Corp. owns 100%
of the issued and outstanding Voting Stock of the Company;
(c) after the first public offering of Voting Stock of either of the
Guarantors or the Company, any person or group (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act), other than one or more of
the Permitted Holders, is or becomes the beneficial owner (as defined in
clause (a) above), directly or indirectly, of Voting Stock that
represents
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more than a majority of the aggregate ordinary voting power of all
classes of the Voting Stock of the Company or either of the Guarantors,
voting together as a single class;
(d) after the first public offering of Voting Stock of either of the
Guarantors or the Company, during any period of not greater than two
consecutive years beginning after the Issue Date, individuals who at the
beginning of such period constituted the Board of Directors of the
Company or either of the Guarantors, as the case may be (together with
any new directors whose election by such Board of Directors or whose
nomination for election by the shareholders of the Company or either of
the Guarantors, as the case may be, was approved by a vote of a majority
of the directors of the Company or either of the Guarantors, as the case
may be, then still in office who were either directors at the beginning
of such period or whose election or nomination for election was
previously so approved), cease for any reason to have a majority of the
total voting power of the Board of Directors of the Company or either of
the Guarantors, as the case may be; or
(e) any sale, lease, exchange or other transfer (in one transaction
or a series of related transactions) of all or substantially all of the
assets of the Company to any person or group (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act).
"Change of Control Offer" has the meaning provided in Section 4.24.
"Change of Control Payment Date" has the meaning provided in Section 4.24.
"Commission" means the Securities and Exchange Commission.
"Common Stock" of any Person means any and all shares, interests or other
participations in, and other equivalents (however designated and whether voting
or non-voting) of such Person's common stock, whether outstanding on the Issue
Date or issued after the Issue Date, and includes, without limitation, all
series and classes of such common stock.
"Company" means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture and thereafter means such
successor.
"Consolidated EBITDA" means, for any period, the sum (without duplication)
of (a) Consolidated Net Income and (b) to the extent Consolidated Net Income
has been reduced thereby, (i) all income taxes of the Company and the
Restricted Subsidiaries paid or accrued in accordance with GAAP for such period
(other than income taxes attributable to extraordinary, unusual or nonrecurring
gains or losses or taxes attributable to sales or dispositions outside the
ordinary course of business), (ii) Consolidated Interest Expense, (iii)
Consolidated Non-cash Charges, less any
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non-cash items increasing Consolidated Net Income for such period, all as
determined on a consolidated basis for the Company and the Restricted
Subsidiaries in accordance with GAAP; (iv) bonuses paid on the Issue Date to
officers and directors of the Guarantors and the Company not to exceed $350,000
in the aggregate and (v) any prepayment penalty on Indebtedness of the Company
retired on the Issue Date.
"Consolidated Fixed Charge Coverage Ratio" means, with respect to the
Company, the ratio of Consolidated EBITDA of the Company during the four full
fiscal quarters (the "Four Quarter Period") ending on or prior to the date of
the transaction giving rise to the need to calculate the Consolidated Fixed
Charge Coverage Ratio (the "Transaction Date") to Consolidated Fixed Charges of
the Company for the Four Quarter Period. In addition to and without limitation
of the foregoing, for purposes of this definition, "Consolidated EBITDA" and
"Consolidated Fixed Charges" shall be calculated after giving effect on a pro
forma basis for the period of such calculation to (a) the incurrence or
repayment of any Indebtedness of the Company or any of the Restricted
Subsidiaries (and the application of the proceeds thereof) giving rise to the
need to make such calculation and any incurrence or repayment of other
Indebtedness (and the application of the proceeds thereof), other than the
incurrence or repayment of Indebtedness in the ordinary course of business for
working capital purposes pursuant to working capital facilities, occurring
during the Four Quarter Period or at any time subsequent to the last day of the
Four Quarter Period and on or prior to the Transaction Date, as if such
incurrence or repayment, as the case may be (and the application of the
proceeds thereof), occurred on the first day of the Four Quarter Period and (b)
any Asset Sales or Asset Acquisitions (including, without limitation, any Asset
Acquisition giving rise to the need to make such calculation as a result of the
Company or one of the Restricted Subsidiaries (including any Person who becomes
a Restricted Subsidiary as a result of the Asset Acquisition) incurring,
assuming or otherwise being liable for Acquired Indebtedness and also including
any Consolidated EBITDA attributable to the assets which are the subject of the
Asset Acquisition or Asset Sale during the Four Quarter Period) occurring
during the Four Quarter Period or at any time subsequent to the last day of the
Four Quarter Period and on or prior to the Transaction Date, as if such Asset
Sale or Asset Acquisition (including the incurrence, assumption or liability
for any such Acquired Indebtedness) occurred on the first day of the Four
Quarter Period. If the Company or any of the Restricted Subsidiaries directly
or indirectly guarantees Indebtedness of a third Person, the preceding sentence
shall give effect to the incurrence of such guaranteed Indebtedness as if the
Company or the Restricted Subsidiary, as the case may be, had directly incurred
or otherwise assumed such guaranteed Indebtedness. Furthermore, in calculating
"Consolidated Fixed Charges" for purposes of determining the denominator (but
not the numerator) of this "Consolidated Fixed Charge Coverage Ratio," (i)
interest on outstanding Indebtedness determined on a fluctuating basis as of
the Transaction Date and which will continue to be so determined thereafter
shall be deemed to have accrued at a fixed rate per annum equal to the rate of
interest on such Indebtedness in effect on the Transaction Date; (ii) if
interest on any Indebtedness actually incurred on the Transaction
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Date may optionally be determined at an interest rate based upon a factor of a
prime or similar rate, a eurocurrency interbank offered rate, or other rates,
then the interest rate in effect on the Transaction Date will be deemed to have
been in effect during the Four Quarter Period; and (iii) notwithstanding clause
(i) above, interest on Indebtedness determined on a fluctuating basis, to the
extent such interest is covered by agreements relating to Obligations under
Interest Rate Agreements, shall be deemed to accrue at the rate per annum
resulting after giving effect to the operation of such agreements.
"Consolidated Fixed Charges" means, with respect to the Company for any
period, the sum, without duplication, of (a) Consolidated Interest Expense
(including any premium or penalty paid in connection with redeeming or retiring
Indebtedness of the Company and the Restricted Subsidiaries prior to the stated
maturity thereof pursuant to the agreements governing such Indebtedness), plus
(b) the product of (i) the amount of all dividend payments on any series of
Preferred Stock of the Company (other than dividends paid in Qualified Capital
Stock) paid, accrued or scheduled to be paid or accrued during such period
times (ii) a fraction, the numerator of which is one and the denominator of
which is one minus the then current effective consolidated Federal, state and
local income tax rate of such Person, expressed as a decimal.
"Consolidated Interest Expense" means, with respect to the Company for any
period, the sum of, without duplication: (a) the aggregate of the interest
expense of the Company and the Restricted Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP, including without
limitation, (i) any amortization of original issue discount, (ii) Obligations
under Interest Rate Agreements, (iii) all capitalized interest and (iv) the
interest portion of any deferred payment obligation; and (b) the interest
component of Capitalized Lease Obligations paid, accrued and/or scheduled to be
paid or accrued by the Company and the Restricted Subsidiaries during such
period as determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, with respect to the Company for any
period, the aggregate net income (or loss) of the Company and the Restricted
Subsidiaries for such period on a consolidated basis, determined in accordance
with GAAP; provided that there shall be excluded therefrom (a) after-tax gains
from Asset Sales or abandonments or reserves relating thereto, (b) after-tax
items classified as extraordinary or nonrecurring gains, (c) the net income of
any Person acquired in a "pooling of interests" transaction accrued prior to
the date it becomes a Restricted Subsidiary or is merged or consolidated with
the Company or any Restricted Subsidiary, (d) the net income (but not loss) of
any Restricted Subsidiary to the extent that the declaration of dividends or
similar distributions by that Restricted Subsidiary of that income is
restricted by a contract, operation of law or otherwise, (e) the net income of
any Person, other than a Restricted Subsidiary, except to the extent of cash
dividends or distributions paid to the Company or to a Restricted Subsidiary by
such Person, (f) income or loss attributable to discontinued operations
(including, without limitation,
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operations disposed of during such period whether or not such operations were
classified as discontinued) and (g) in the case of a successor to the Company
by consolidation or merger or as a transferee of the Company's assets, any net
income (or loss) of the successor corporation prior to such consolidation,
merger or transfer of assets.
"Consolidated Net Worth" of any Person means the consolidated
stockholders' equity of such Person, determined on a consolidated basis in
accordance with GAAP, less (without duplication) amounts attributable to
Disqualified Capital Stock of such Person.
"Consolidated Non-cash Charges" means, with respect to the Company, for
any period, the aggregate depreciation, amortization and other non-cash
expenses of the Company and the Restricted Subsidiaries reducing Consolidated
Net Income of the Company for such period, determined on a consolidated basis
in accordance with GAAP (excluding any such charges constituting an
extraordinary item or loss or any such charge which requires an accrual of or a
reserve for cash charges for any future period).
"Covenant Defeasance" has the meaning provided in Section 8.01.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"CVC" means Citicorp Venture Capital, Ltd., a New York corporation.
"CVC Group" means CVC and its Permitted Transferees.
"Default" means an event or condition the occurrence of which is, or with
the lapse of time or the giving of notice or both would be, an Event of
Default.
"Depository" means, with respect to the Securities issued in the form of
one or more Global Securities, The Depository Trust Company or another Person
designated as Depository by the Company, which must be a clearing agency
registered under the Exchange Act.
"Designation" has the meaning provided in Section 4.23.
"Designation Amount" has the meaning provided in Section 4.23.
"Disqualified Capital Stock" means that portion of any Capital Stock
which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking
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fund obligation or otherwise, or is redeemable at the sole option of the
holder thereof on or prior to the final maturity date of the Securities.
"Event of Default" has the meaning provided in Section 6.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any successor statute or statutes thereto.
"fair market value" means, with respect to any asset or property, the
price which could be negotiated in an arm's-length, free market transaction,
for cash, between a willing seller and a willing buyer, neither of whom is
under undue pressure or compulsion to complete the transaction. Fair market
value shall be determined by the Board of Directors of the Company acting
reasonably and in good faith and shall be evidenced by a Board Resolution of
the Company delivered to the Trustee.
"Final Maturity Date" means October 1, 2006.
"Four Quarter Period" has the meaning provided in the definition of
"Consolidated Fixed Charge Coverage Ratio" above.
"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 may be approved by a significant segment of the accounting
profession of the United States, which are in effect as of the Issue Date.
"Global Security" means a security evidencing all or a part of the
Securities issued to the Depository in accordance with Section 2.01 and bearing
the legend prescribed in Exhibit C.
"Guarantees" means the unconditional guarantees pursuant to Article Ten by
the Guarantors, on a senior basis, to each Holder and the Trustee of the full
and prompt performance of the Company's obligations under this Indenture and
the Securities, including the payment of principal of and interest on the
Securities.
"Guarantors" means the parties named as such in this Indenture until a
successor replaces either of them pursuant to this Indenture and thereafter
means such successor as one of the parties.
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"Holder" or "Securityholder" means a Person in whose name a Security is
registered on the Registrar's books.
"incur" has the meaning provided in Section 4.03.
"Indebtedness" means with respect to any Person, without duplication, (a)
all Obligations of such Person for borrowed money, (b) all Obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (c)
all Capitalized Lease Obligations of such Person, (d) all Obligations of such
Person issued or assumed as the deferred purchase price of property, all
conditional sale obligations and all Obligations under any title retention
agreement (but excluding trade accounts payable and other accrued liabilities
arising in the ordinary course of business that are not overdue by 90 days or
more or are being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted), (e) all Obligations for the reimbursement
of any obligor on any letter of credit, banker's acceptance or similar credit
transaction, (f) guarantees and other contingent obligations in respect of
Indebtedness referred to in clauses (a) through (e) above and clause (h) below,
(g) all Obligations of any other Person of the type referred to in clauses (a)
through (f) above which are secured by any Lien on any property or asset of
such Person, the amount of such Obligation being deemed to be the lesser of the
fair market value of such property or asset or the amount of the Obligation so
secured, (h) all Obligations under currency exchange agreements and Interest
Rate Agreements of such Person and (i) all Disqualified Capital Stock issued by
such Person with the amount of Indebtedness represented by such Disqualified
Capital Stock being equal to the greater of its voluntary or involuntary
liquidation preference and its maximum fixed repurchase price. For purposes
hereof, the "maximum fixed repurchase price" of any Disqualified Capital Stock
which does not have a fixed repurchase price shall be calculated in accordance
with the terms of such Disqualified Capital Stock as if such Disqualified
Capital Stock were purchased on any date on which Indebtedness shall be
required to be determined pursuant to this Indenture, and if such price is
based upon, or measured by, the fair market value of such Disqualified Capital
Stock, such fair market value shall be determined reasonably and in good faith
by the Board of Directors of the Company.
"Indenture" means this Indenture, as amended or supplemented from time to
time in accordance with the terms hereof.
"Independent" when used with respect to any specified Person means such a
Person who (a) is in fact independent; (b) does not have any direct financial
interest or any material indirect financial interest in the Company or any of
its Subsidiaries, or in any Affiliate of the Company or any of its
Subsidiaries; and (c) is not an officer, employee, promoter, underwriter,
trustee, partner, director or Person performing similar functions for the
Company or any of its Subsidiaries. Whenever it is provided in this Indenture
that any Independent Person's opinion or certificate shall
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be furnished to the Trustee, such Person shall be appointed by the Company, and
such opinion or certificate shall state that the signer has read this
definition and that the signer is Independent within the meaning hereof.
"Independent Financial Advisor" means a firm (a) which does not, and whose
directors, officers and employees or Affiliates do not, have a direct or
indirect material financial interest in the Company and (b) which, in the
judgment of the Board of Directors of the Company, is otherwise independent and
qualified to perform the task for which it is to be engaged.
"Initial Purchasers" means Smith Barney Inc., Schroder Wertheim & Co.
Incorporated and First Chicago Capital Markets, Inc.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or
(7) under the Securities Act.
"Interest Payment Date" means the stated maturity of an installment of
interest on the Securities.
"Interest Rate Agreement" means an agreement governing any interest rate
swap transaction, interest rate cap, collar or floor transaction, interest rate
future, any option on any of the above or any similar transaction.
"Investment" means, with respect to any Person, any direct or indirect
loan or other extension of credit (including, without limitation, a guarantee)
or capital contribution to (by means of any transfer of cash or other property
to others or any payment for property or services for the account or use of
others), or any purchase or acquisition by such Person of any Capital Stock,
bonds, notes, debentures or other securities or evidences of Indebtedness
issued by, any Person. "Investment" shall exclude extensions of trade credit
by the Company and the Restricted Subsidiaries on commercially reasonable terms
in accordance with normal trade practices of the Company or such Restricted
Subsidiary, as the case may be. If the Company or any Restricted Subsidiary
sells or otherwise disposes of any Capital Stock of any Restricted Subsidiary
such that, after giving effect to any such sale or disposition, it ceases to be
a Subsidiary of the Company, 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 Capital Stock of such Restricted Subsidiary not sold or disposed
of. The amount of any Investment shall not be adjusted for increases or
decreases in value of write-ups or write-downs with respect to such Investment.
"Issue Date" means the date of original issuance of the Securities.
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"Legal Defeasance" has the meaning provided in Section 8.01.
"Lien" means any lien, mortgage, deed of trust, pledge, security interest,
charge or encumbrance of any kind (including any conditional sale or other
title retention agreement, any lease in the nature thereof and any agreement to
give any security interest).
"Management" means, individually and collectively, any officer, director
or employee of the Company, either of the Guarantors or a Subsidiary of the
Company who acquires Voting Stock of the Company or either of the Guarantors on
or after the Issue Date and each of their respective Permitted Transferees.
"Michigan" means, individually and collectively, the State of Michigan,
any political subdivision thereof and any pension fund for employees of the
State of Michigan or any political subdivision thereof.
"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds in
the form of cash or Cash Equivalents including payments in respect of deferred
payment obligations when received in the form of cash or Cash Equivalents
(other than the portion of any such deferred payment constituting interest)
received by the Company or any of the Restricted Subsidiaries from such Asset
Sale net of (a) reasonable out-of-pocket expenses and fees relating to such
Asset Sale (including, without limitation, legal, accounting and investment
banking fees, underwriter or placement agent fees and commissions, brokerage,
filing and registration fees and trustee fees), (b) taxes paid or payable after
taking into account any reduction in consolidated tax liability due to
available tax credits or deductions and any tax sharing arrangements, (c)
repayment of Indebtedness that is required to be repaid in connection with such
Asset Sale and (d) appropriate amounts to be provided by the Company or any
Restricted Subsidiary, as the case may be, as a reserve, in accordance with
GAAP, against any liabilities associated with such Asset Sale and retained by
the Company or any Restricted Subsidiary, as the case may be, after such Asset
Sale, including, without limitation, pension and other post-employment benefit
liabilities, liabilities related to environmental matters and liabilities under
any indemnification obligations associated with such Asset Sale.
"Net Proceeds Offer" has the meaning provided in Section 4.12.
"Net Proceeds Offer Amount" has the meaning provided in Section 4.12.
"Net Proceeds Offer Payment Date" has the meaning provided in Section
4.12.
"Net Proceeds Offer Trigger Date" has the meaning provided in Section
4.12.
<PAGE> 21
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"Obligations" means all obligations for principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing any Indebtedness.
"Officer" means, with respect to any Person, the Chairman of the Board,
the Chief Executive Officer, the President, any Vice President, the Chief
Financial Officer, the Controller, or the Secretary of such Person.
"Officers' Certificate" means a certificate signed by two Officers of the
Company.
"Opinion of Counsel" means a written opinion from legal counsel which and
who are acceptable to the Trustee.
"Participants" has the meaning provided in Section 2.15.
"Paying Agent" has the meaning provided in Section 2.03.
"Permitted Holders" means Michigan, Berkshire, Prudential, Management and
the CVC Group; provided that Michigan, Berkshire, Prudential, Management and
the CVC Group (other than CVC, Citicorp N.A. or any direct or indirect Wholly
Owned Subsidiary of Citicorp N.A., in each case, individually or on behalf of
the CVC Group, each of which may be a Permitted Holder irrespective of any such
entitlement) shall not be a Permitted Holder if it is entitled by "beneficial
ownership" (as defined in Rule 13d-3 and 13d-5 under the Exchange Act), by
contract or otherwise, to designate for election directors of either of the
Guarantors or the Company having a majority of the total voting power of the
Board of Directors of either of the Guarantors or the Company, as the case may
be.
"Permitted Indebtedness" means, without duplication, each of the
following:
(a) Indebtedness under the Securities, this Indenture, the
Guarantees and any Subsidiary Guarantee;
(b) Indebtedness incurred pursuant to the Revolving Credit Facility
in an aggregate principal amount at any time outstanding not to exceed
the greater of (a) the sum of (i) 85% of the net book value of accounts
receivable of the Company and the Restricted Subsidiaries and (ii) 60% of
the net book value of inventory of the Company and the Restricted
Subsidiaries and (b) $35,000,000, in each case reduced by any required
permanent repayments (which are accompanied by a corresponding permanent
commitment reduction) thereunder;
<PAGE> 22
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(c) Obligations under Interest Rate Agreements of the Company or a
Subsidiary Guarantor covering Indebtedness of the Company or any of the
Restricted Subsidiaries and Obligations under Interest Rate Agreements
of any Restricted Subsidiary (other than a Subsidiary Guarantor) covering
Indebtedness of such Restricted Subsidiary; provided, however, that such
Interest Rate Agreements are entered into to protect the Company and the
Restricted Subsidiaries from fluctuations in interest rates on
Indebtedness incurred in accordance with this Indenture to the extent the
notional amount (or, if acceptable, contract amount) of such Obligation
does not exceed the principal amount of the Indebtedness to which such
Obligation relates;
(d) Indebtedness of a Restricted Subsidiary to the Company or to
another Restricted Subsidiary for so long as such Indebtedness is held by
the Company or a Restricted Subsidiary, in each case subject to no Lien
held by a Person other than the Company or a Restricted Subsidiary;
provided that if as of any date any Person other than the Company or a
Restricted Subsidiary owns or holds any such Indebtedness or holds a Lien
in respect of such Indebtedness, such date shall be deemed the incurrence
of Indebtedness not constituting Permitted Indebtedness by the issuer of
such Indebtedness;
(e) Indebtedness of the Company to a Restricted Subsidiary for so
long as such Indebtedness is held by a Restricted Subsidiary, in each
case subject to no Lien; provided that (i) any Indebtedness of the
Company to any Restricted Subsidiary that is not a Subsidiary Guarantor
is unsecured and subordinated, pursuant to a written agreement, to the
Company's obligations under this Indenture and the Securities and (ii) if
as of any date any Person other than a Restricted Subsidiary owns or
holds any such Indebtedness or holds a Lien in respect of such
Indebtedness, such date shall be deemed the date of an incurrence of
Indebtedness not constituting Permitted Indebtedness by the Company;
(f) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument
inadvertently (except in the case of daylight overdrafts) drawn against
insufficient funds in the ordinary course of business; provided, however,
that such Indebtedness is extinguished within five Business Days of
incurrence;
(g) Indebtedness of the Company or any of the Restricted
Subsidiaries represented by letters of credit for the account of the
Company or such Restricted Subsidiary, as the case may be, in order to
provide security for workers' compensation claims, payment obligations in
connection with self-insurance or similar requirements in the ordinary
course of business;
(h) Refinancing Indebtedness; and
<PAGE> 23
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(i) additional Indebtedness of the Company or any Subsidiary
Guarantor in an aggregate principal amount not to exceed $5,000,000 at
any one time outstanding.
"Permitted Investments" means (a) Investments by the Company or any
Restricted Subsidiary in any Person that is or will become immediately after
such Investment a Restricted Subsidiary or that will merge or consolidate into
the Company or a Restricted Subsidiary; (b) Investments in the Company by any
Restricted Subsidiary; provided that any Indebtedness evidencing any such
Investment held by a Restricted Subsidiary that is not a Subsidiary Guarantor
is unsecured and subordinated, pursuant to a written agreement, to the
Company's obligations under the Securities and this Indenture; (c) investments
in cash and Cash Equivalents; (d) loans and advances to employees and officers
of the Company or any of the Restricted Subsidiaries in the ordinary course of
business for bona fide business purposes not in excess of $1,000,000 at any one
time outstanding; (e) Obligations under Interest Rate Agreements; provided,
however, that such Interest Rate Agreements are entered into to protect the
Company, or, if applicable, Restricted Subsidiaries from fluctuations in
interest rates on Indebtedness incurred in accordance with this Indenture; (f)
Investments in Unrestricted Subsidiaries not to exceed $1,000,000 at any one
time outstanding; (g) Investments in securities of trade creditors or customers
received pursuant to any plan of reorganization or similar arrangement upon the
bankruptcy or insolvency of such trade creditors or customers; (h) Investments
made by the Company or the Restricted Subsidiaries as a result of consideration
received in connection with an Asset Sale made in compliance with Section 4.12;
(i) Investments in the Securities; and (j) Investments not to exceed $1,000,000
at any one time outstanding in Persons a majority of whose revenues are derived
from business which, in the reasonable good faith judgment of the Board of
Directors of the Company, is related to the automotive industry.
"Permitted Liens" means the following types of Liens:
(a) Liens for taxes, assessments or governmental charges or claims
either (i) not delinquent or (ii) contested in good faith by appropriate
proceedings and as to which the Company or a Restricted Subsidiary, as
the case may be, shall have set aside on its books such reserves as may
be required pursuant to GAAP;
(b) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen and other
Liens imposed by law incurred in the ordinary course of business for sums
not yet delinquent or being contested in good faith, if such reserve or
other appropriate provision, if any, as shall be required by GAAP shall
have been made in respect thereof;
<PAGE> 24
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(c) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, including any Lien securing letters
of credit issued in the ordinary course of business consistent with past
practice in connection therewith, or to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids, leases,
government contracts, performance and return-of-money bonds and other
similar obligations (exclusive of obligations for the payment of borrowed
money);
(d) judgment Liens not giving rise to an Event of Default so long as
such Lien is adequately bonded and any appropriate legal proceedings
which may have been duly initiated for the review of such judgment shall
not have been finally terminated or the period within which such
proceedings may be initiated shall not have expired;
(e) easements, rights-of-way, zoning restrictions and other similar
charges or encumbrances in respect of real property not interfering in
any material respect with the ordinary conduct of the business of the
Company or any of the Restricted Subsidiaries;
(f) any interest or title of a lessor under any Capitalized Lease
Obligation; provided that such Liens do not extend to any property or
assets which is not leased property subject to such Capitalized Lease
Obligation;
(g) Liens securing Purchase Money Indebtedness of the Company or any
Restricted Subsidiary; provided, however, that (i) the Purchase Money
Indebtedness shall not be secured by any property or assets of the
Company or any Restricted Subsidiary other than the property and assets
so acquired and (ii) the Lien securing such Indebtedness shall be created
within 180 days of such acquisition;
(h) Liens securing reimbursement obligations with respect to
commercial letters of credit which encumber documents and other property
relating to such letters of credit and products and proceeds thereof;
(i) Liens encumbering deposits made to secure obligations arising
from statutory, regulatory, contractual, or warranty requirements of the
Company or any of the Restricted Subsidiaries, including rights of offset
and set-off;
(j) Liens securing Obligations under Interest Rate Agreements which
Obligations relate to Indebtedness that is otherwise permitted under this
Indenture; and
<PAGE> 25
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(k) Liens securing Acquired Indebtedness incurred in accordance with
Section 4.03; provided that (i) such Liens secured such Acquired
Indebtedness at the time of and prior to the incurrence of such Acquired
Indebtedness by the Company or a Restricted Subsidiary and were not
granted in connection with, or in anticipation of, the incurrence of such
Acquired Indebtedness by the Company or a Restricted Subsidiary and (ii)
such Liens do not extend to or cover any property or assets of the
Company or of any of the Restricted Subsidiaries other than the property
or assets that secured the Acquired Indebtedness prior to the time such
Indebtedness became Acquired Indebtedness of the Company or a Restricted
Subsidiary.
"Permitted Transferee" means (a) with respect to CVC, (i) Citicorp,
any direct or indirect Wholly Owned Subsidiary of Citicorp and any
officer, director or employee of CVC, Citicorp or any Wholly Owned Subsidiary
of Citicorp, (ii) any spouse or lineal descendent (including by adoption and
stepchildren) of the officers, directors and employees referred to in clause
(a)(i) above, (iii) any trust, corporation or partnership 100% in interest of
the beneficiaries, stockholders or partners of which consists of one or more of
the Persons described in clause (a)(i) or (ii) above; (b) with respect to the
Berkshire Fund, Berkshire Partners, Prudential Insurance Co. and Pruco Life
Insurance Co., each of their respective direct or indirect Wholly Owned
Subsidiaries; and (c) with respect to each officer, director and employee of
the Company, either of the Guarantors or a Subsidiary of the Company, (i) any
spouse or lineal descendent (including by adoption and stepchildren) of such
officer, director or employee and (ii) any trust, corporation or partnership
100% in interest of the beneficiaries, stockholders or partners of which
consists of one or more of any such officer, director or employee or any of the
Persons described in clause (c)(i) above.
"Person" means an individual, partnership, corporation,
unincorporated organization, trust or joint venture, or a governmental
agency or political subdivision thereof.
"Physical Securities" has the meaning provided in Section 2.01.
"Preferred Stock" of any Person means any Capital Stock of such
Person that has preferential rights to any other Capital Stock of such
Person with respect to dividends or redemptions or upon liquidation.
"Private Placement Legend" means the legend initially set forth on
the Securities in the form set forth on Exhibit A.
"pro forma" means, with respect to any calculation made or required
to be made pursuant to the terms of this Indenture, a calculation in
accordance with Article 11 of Regulation S-X
<PAGE> 26
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under the Securities Act as interpreted by the Company's Board of Directors in
consultation with its independent certified public accountants.
"Prudential" means, individually and collectively, Prudential Insurance
Co., Pruco Life Insurance Co. and each of their respective Permitted
Transferees.
"Public Equity Offering" has the meaning provided in Paragraph 6 of the
Securities.
"Purchase Agreement" means the purchase agreement dated as of August 8,
1996 by and among the Company, the Guarantors, the Subsidiary Guarantor and the
Initial Purchasers.
"Purchase Money Indebtedness" means Indebtedness the net proceeds of which
are used for the purchase of property or assets acquired in the normal course
of business by the Person incurring such Indebtedness.
"Qualified Capital Stock" means any Capital Stock that is not Disqualified
Capital Stock.
"Qualified Institutional Buyer" or "QIB" shall have the meaning specified
in Rule 144A under the Securities Act.
"Record Date" means the Record Dates specified in the Securities; provided
that if any such date is not a Business Day, the Record Date shall be the first
day immediately preceding such specified day that is a Business Day.
"Redemption Date," when used with respect to any Security to be redeemed,
means the date fixed for such redemption pursuant to this Indenture and the
Securities.
"Redemption Price," when used with respect to any Security to be redeemed,
means the price fixed for such redemption, payable in immediately available
funds, pursuant to this Indenture and the Securities.
"Reference Date" has the meaning provided in Section 4.04.
"Refinance" means, in respect of any security or Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part. "Refinanced" and "Refinancing"
shall have correlative meanings.
<PAGE> 27
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"Refinancing Indebtedness" means any Refinancing by the Company or any
Restricted Subsidiary of the Company of Indebtedness incurred in accordance
with Section 4.03 (other than pursuant to clause (b), (c), (d), (e), (f), (g)
or (i) of the definition of Permitted Indebtedness), in each case that does not
(i) result in an increase in the aggregate principal amount of Indebtedness of
such Person as of the date of such proposed Refinancing (plus the amount of any
premium required to be paid under the terms of the instrument governing such
Indebtedness and plus the amount of reasonable expenses incurred by the Company
and the Restricted Subsidiaries in connection with such Refinancing) or (ii)
create Indebtedness with (x) a Weighted Average Life to Maturity that is less
than the Weighted Average Life to Maturity of the Indebtedness being Refinanced
or (y) a final maturity earlier than the final maturity of the Indebtedness
being Refinanced; provided that (1) if such Indebtedness being Refinanced is
Indebtedness of the Company or a Subsidiary Guarantor, then such Refinancing
Indebtedness shall be Indebtedness solely of the Company and/or such Subsidiary
Guarantor and (2) if such Indebtedness being Refinanced is subordinate or
junior to the Securities or a Subsidiary Guarantee, then such Refinancing
Indebtedness shall be subordinate to the Securities or such Subsidiary
Guarantee, as the case may be, at least to the same extent and in the same
manner as the Indebtedness being Refinanced.
"Registered Exchange Offer" means the offer to exchange the Series B
Securities for all of the outstanding Series A Securities in accordance with
the Registration Rights Agreement.
"Registrar" has the meaning provided in Section 2.03.
"Registration Rights Agreement" means the Registration Rights Agreement
dated as of the Issue Date among the Company, the Guarantors, the Subsidiary
Guarantor and the Initial Purchasers.
"Regulation S" means Regulation S under the Securities Act.
"Replacement Assets" has the meaning provided in Section 4.12.
"Responsible Officer" shall mean, when used with respect to the Trustee,
any officer in the Corporate Trust Services of the Trustee including any vice
president, assistant vice president, assistant secretary, treasurer, assistant
treasurer, or any other officer of the Trustee who customarily performs
functions similar to those performed by the Persons who at the time shall be
such officers, respectively, or to whom any corporate trust matter is referred
because of such officer's knowledge of and familiarity with the particular
subject.
"Restricted Payment" has the meaning provided in Section 4.04.
<PAGE> 28
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"Restricted Security" has the meaning set forth in Rule 144(a)(3) under
the Securities Act; provided that the Trustee shall be entitled to request and
conclusively rely upon an Opinion of Counsel with respect to whether any
Security is a Restricted Security.
"Restricted Subsidiary" means any Subsidiary of the Company that has not
been designated by the Board of Directors of the Company, by a Board Resolution
delivered to the Trustee, as an Unrestricted Subsidiary pursuant to and in
compliance with Section 4.23. Any such Designation may be revoked by a Board
Resolution of the Company delivered to the Trustee, subject to the provisions
of such covenant.
"Revocation" has the meaning provided in Section 4.23.
"Revolving Credit Facility" means the Amended and Restated Credit
Agreement dated as of May 6, 1996, as amended by Amendment No. 1 thereto, among
the Company, the Guarantors, the Subsidiary Guarantor and NBD Bank, N.A., a
Michigan banking corporation, together with the related documents thereto
(including, without limitation, any guarantee agreements and security
documents), in each case as such agreements may be amended (including any
amendment and restatement thereof), supplemented or otherwise modified from
time to time, including any agreement extending the maturity of, refinancing,
replacing or otherwise restructuring (including increasing the amount of
available borrowings thereunder (provided that such increase in borrowings is
permitted under Section 4.03) or adding Subsidiaries of the Company as
additional borrowers or guarantors thereunder) all or any portion of the
Indebtedness under such agreement or any successor or replacement agreement and
whether by the same or any other agent, lender or group of lenders.
"Rule 144A" means Rule 144A under the Securities Act.
"Sale and Leaseback Transaction" means any direct or indirect arrangement
with any Person or to which any such Person is a party, providing for the
leasing to the Company or a Restricted Subsidiary of any property, whether
owned by the Company or any Restricted Subsidiary at the Issue Date or later
acquired, which has been or is to be sold or transferred by the Company or such
Restricted Subsidiary to such Person or to any other Person from whom funds
have been or are to be advanced by such Person on the security of such
property.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Series A Securities and the Series B Securities
treated as a single class of securities, as amended or supplemented from time
to time in accordance with the terms hereof, that are issued pursuant to this
Indenture.
<PAGE> 29
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"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"Series A Securities" means the 11 7/8% Senior Notes due 2006, Series A,
of the Company issued pursuant to this Indenture and sold pursuant to the
Purchase Agreement.
"Series B Securities" means the 11 7/8% Senior Notes due 2006, Series B,
of the Company to be issued in exchange for the Series A Securities pursuant to
the Registered Exchange Offer and the Registration Rights Agreement.
"Significant Subsidiary" shall have the meaning set forth in Rule 1.02(v)
of Regulation S-X under the Securities Act.
"Subsidiary", with respect to any Person, means (a) any corporation of
which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors under ordinary circumstances
shall at the time be owned, directly or indirectly, by such Person or (b) any
other Person of which at least a majority of the voting interest under ordinary
circumstances is at the time, directly or indirectly, owned by such Person.
"Subsidiary Guarantee" means the unconditional guarantee pursuant to
Article Ten by a Subsidiary Guarantor, on a senior basis, to each Holder and
the Trustee of the full and prompt performance of the Company's obligations
under this Indenture and the Securities, including the payment of principal of
and interest on the Securities.
"Subsidiary Guarantor" means (a) the Company's Subsidiary as of the Issue
Date and (b) each of the Company's Subsidiaries that in the future executes a
supplemental indenture in which such Subsidiary agrees to be bound by the terms
of this Indenture as a Subsidiary Guarantor; provided that any Person
constituting a Subsidiary Guarantor as described above shall cease to
constitute a Subsidiary Guarantor when its Subsidiary Guarantee is released in
accordance with the terms of this Indenture.
"Surviving Entity" has the meaning provided in Section 5.01.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Section Section
77aaa-77bbbb), as amended, as in effect on the date of the execution of this
Indenture until such time as this Indenture is qualified under the TIA, and
thereafter as in effect on the date on which this Indenture is qualified under
the TIA, except as otherwise provided in Section 9.03.
<PAGE> 30
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"Trustee" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture and
thereafter means such successor.
"Unrestricted Subsidiary" means any Subsidiary of the Company designated
as such pursuant to and in compliance with Section 4.23. Any such designation
may be revoked by a Board Resolution of the Company delivered to the Trustee,
subject to the provisions of such covenant.
"U.S. Government Obligations" shall have the meaning provided in Section
8.01.
"U.S. Legal Tender" means such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public and private debts.
"U.S. Physical Securities" shall have the meaning set forth in Section
2.01.
"Voting Stock" of a corporation means all classes of Capital Stock of such
corporation then outstanding and normally entitled to vote in the election of
the directors of such corporation.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding aggregate principal amount of such Indebtedness into (b) the sum of
the total of the products obtained by multiplying (i) the amount of each then
remaining installment, sinking fund, serial maturity or other required payment
of principal, including payment at final maturity, in respect thereof, by (ii)
the number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"Wholly Owned Restricted Subsidiary" means any Restricted Subsidiary of
which all the outstanding voting securities (other than in the case of a
foreign Restricted Subsidiary, directors' qualifying shares or an immaterial
amount of shares required to be owned by other Persons pursuant to applicable
law) are owned by the Company or another Wholly Owned Restricted Subsidiary.
"Wholly Owned Subsidiary" of any Person means a corporation of which all
the outstanding voting securities (other than in the case of a foreign
corporation, director's qualifying shares or an immaterial amount of shares
required to be owned by other Persons pursuant to applicable laws) are owned by
such Person or a Wholly Owned Subsidiary of such Person.
SECTION 1.02. Incorporation by Reference of TIA.
<PAGE> 31
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Whenever this Indenture refers to a provision of the TIA, such 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:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Holder or a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company, the Guarantors,
each Subsidiary Guarantor and any other obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them therein.
SECTION 1.013. 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 words in the
plural include the singular;
(5) provisions apply to successive events and transactions; and
(6) "herein," "hereof" and other words of similar import refer to
this Indenture as a whole and not to any particular Article, Section or
other subdivision.
<PAGE> 32
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ARTICLE TWO
THE SECURITIES
SECTION 2.01. Form and Dating.
The Series A Securities and the Trustee's certificate of authentication
thereof shall be substantially in the form of Exhibit A annexed hereto, which
is hereby incorporated in and expressly made a part of this Indenture. The
Series B Securities and the Trustee's certificate of authentication thereof
shall be substantially in the form of Exhibit B annexed hereto, which is hereby
incorporated in and expressly made a part of this Indenture. The Securities
may have notations, legends or endorsements (including notations relating to
the Guarantees and Subsidiary Guarantees, stock exchange rule or usage). The
Company and the Trustee shall approve the form of the Securities and any
notation, legend or endorsement (including notations relating to the Guarantees
and Subsidiary Guarantees) on them. Each Security shall be dated the date of
its issuance and shall show the date of its authentication.
Securities offered and sold in reliance on Rule 144A shall be issued
initially in the form of one or more permanent Global Securities in registered
form, substantially in the form set forth in Exhibit A, deposited with the
Trustee, as custodian for the Depository, and shall bear the legend set forth
on Exhibit C. The aggregate principal amount of any Global Security may from
time to time be increased or decreased by adjustments made on the records of
the Trustee, as custodian for the Depository, as hereinafter provided.
Securities offered and sold in offshore transactions in reliance on
Regulation S shall be issued in the form of certificated Securities in
registered form in substantially the form set forth in Exhibit A (the "Offshore
Physical Securities"). Securities offered and sold in reliance on any other
exemption from registration under the Securities Act other than as described in
the preceding paragraph shall be issued, and Securities offered and sold in
reliance on Rule 144A may be issued, in the form of certificated Securities in
registered form in substantially the form set forth in Exhibit A (the "U.S.
Physical Securities"). The Offshore Physical Securities and the U.S. Physical
Securities are sometimes collectively herein referred to as the "Physical
Securities."
<PAGE> 33
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SECTION 2.02. Execution and Authentication.
Two Officers, or an Officer and an Assistant Secretary, shall sign, or one
Officer shall sign and one Officer or an Assistant Secretary (each of whom
shall, in each case, have been duly authorized by all requisite corporate
actions) shall attest to, the Securities for the Company by manual or facsimile
signature. The Company's seal shall also be reproduced on the Securities.
If an Officer or Assistant Secretary whose signature is on a Security was
an Officer or Assistant Secretary at the time of such execution but no longer
holds that office at the time the Trustee authenticates the Security, the
Security shall be valid nevertheless. Each Guarantor and each Subsidiary
Guarantor shall execute its Guarantee or Subsidiary Guarantee, as the case may
be, in the manner set forth in Section 10.07.
A Security shall not be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been authenticated
under this Indenture.
The Trustee shall authenticate (i) Series A Securities for original issue
in the aggregate principal amount not to exceed $85,000,000 and (ii) Series B
Securities from time to time for issue only in exchange for a like principal
amount of Series A Securities, in each case upon a written order of the Company
in the form of an Officers' Certificate. The Officers' Certificate shall
specify the amount of Securities to be authenticated, the series of Securities
and the date on which the Securities are to be authenticated. The aggregate
principal amount of Securities outstanding at any time may not exceed
$85,000,000, except as provided in Section 2.07. Upon receipt of a written
order of the Company in the form of an Officers' Certificate, the Trustee shall
authenticate Securities in substitution for Securities originally issued to
reflect any name change of the Company.
The Trustee may appoint an authenticating agent reasonably acceptable to
the Company to authenticate Securities. Unless otherwise provided in the
appointment, an authenticating agent may authenticate Securities 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 and Affiliates of the Company.
The Securities shall be issuable only in registered form without coupons
in denominations of $1,000 and any integral multiple thereof.
<PAGE> 34
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SECTION 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency in the Borough of
Manhattan, The City of New York, where (a) Securities may be presented or
surrendered for registration of transfer or for exchange ("Registrar"), (b)
Securities may be presented or surrendered for payment ("Paying Agent") and (c)
notices and demands in respect of the Securities and this Indenture may be
served. The Registrar shall keep a register of the Securities and of their
transfer and exchange. The Company, upon written notice to the Trustee, may
have one or more co-Registrars and one or more additional Paying Agents
reasonably acceptable to the Trustee. The term "Paying Agent" includes any
additional Paying Agent. The Company initially appoints the Trustee as
Registrar and Paying Agent until such time as the Trustee has resigned or a
successor has been appointed. Neither the Company nor any Affiliate of the
Company may act as Paying Agent except as otherwise expressly provided in the
form of the Security.
To the extent the Company makes such payments directly to the Holders, the
Company shall simultaneously notify the Trustee thereof in writing.
SECTION 2.04. Paying Agent To Hold Assets in Trust.
The Company shall require each Paying Agent other than the Trustee to
agree in writing that each Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all assets held by the Paying Agent for the payment of
principal of, or interest on, the Securities, and shall notify the Trustee in
writing of any Default by the Company in making any such payment. The Company
at any time may require a Paying Agent to distribute all assets held by it to
the Trustee and account for any assets disbursed and the Trustee may at any
time, but shall be under no obligation to, during the continuance of any
payment Default, upon written request to a Paying Agent, require such Paying
Agent to distribute all assets held by it to the Trustee and to account for any
assets distributed. Upon distribution to the Trustee of all assets that shall
have been delivered by the Company to the Paying Agent, the Paying Agent shall
have no further liability for such assets.
SECTION 2.05. Securityholder 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
Holders. If the Trustee is not the Registrar, the Company shall furnish to the
Trustee before each Record Date and at such other times as the Trustee may
request in writing a list as of such date and in such form as the Trustee may
reasonably require of the names and addresses of Holders, which list may be
conclusively relied upon by the Trustee.
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SECTION 2.06. Transfer and Exchange.
Subject to the provisions of Sections 2.15 and 2.16, when Securities are
presented to the Registrar or a co-Registrar with a request to register the
transfer of such Securities or to exchange such Securities for an equal
principal amount of Securities of other authorized denominations of the same
series, the Registrar or co-Registrar shall register the transfer or make the
exchange as requested if its requirements for such transaction are met;
provided, however, that the Securities surrendered for transfer or exchange
shall be duly endorsed or accompanied by a written instrument of transfer in
form satisfactory to the Company and the Registrar or co-Registrar, duly
executed by the Holder thereof or his attorney duly authorized in writing. To
permit registrations of transfers and exchanges, the Company shall execute and
the Trustee shall authenticate Securities at the Registrar's or co-Registrar's
written request. No service charge shall be made 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 other governmental charge
payable upon exchanges or transfers pursuant to Section 2.02, 2.10, 3.06, 4.12,
4.24 or 9.05). The Registrar or co-Registrar shall not be required to register
the transfer of or exchange of any Security (i) during a period beginning at
the opening of business 15 days before the mailing of a notice of redemption of
Securities and ending at the close of business on the day of such mailing and
(ii) selected for redemption in whole or in part pursuant to Article Three,
except the unredeemed portion of any Security being redeemed in part.
Any Holder of a Global Security shall, by acceptance of such Global
Security, agree that transfers of beneficial interests in such Global Security
may be effected only through a book-entry system maintained by the Depository
(or its agent), and that ownership of a beneficial interest in a Global
Security shall be required to be reflected in a book entry system.
SECTION 2.07. Replacement Securities.
If a mutilated Security is surrendered to the Trustee or if the Holder of
a Security claims that the Security has been lost, destroyed or wrongfully
taken, the Company shall issue and the Trustee shall authenticate upon written
notice from the Company a replacement Security if the Trustee's requirements
are met. If required by the Trustee or the Company, such Holder must provide
an indemnity bond or other indemnity, sufficient in the judgment of both the
Company and the Trustee, to protect the Company, the Trustee and any Agent from
any loss which any of them may suffer if a Security is replaced. The Company
may charge such Holder for its reasonable, out-of-pocket expenses in replacing
a Security, including reasonable fees and expenses of counsel. Every
replacement Security is an additional obligation of the Company.
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SECTION 2.08. Outstanding Securities.
Securities outstanding at any time are all the Securities that have been
authenticated by the Trustee except those cancelled by it, those delivered to
it for cancellation and those described in this Section as not outstanding.
Subject to Section 2.09, a Security does not cease to be outstanding because
the Company or any of its Affiliates holds the Security.
If a Security is replaced pursuant to Section 2.07 (other than a mutilated
Security surrendered for replacement), it ceases to be outstanding unless the
Trustee receives proof satisfactory to it that the replaced Security is held by
a bona fide purchaser. A mutilated Security ceases to be outstanding upon
surrender of such Security and replacement thereof pursuant to Section 2.07.
If on a Redemption Date or the Final Maturity Date the Paying Agent holds
U.S. Legal Tender or U.S. Government Obligations sufficient to pay all of the
principal and interest due on the Securities payable on that date, then on and
after that date such Securities cease to be outstanding and interest on them
ceases to accrue.
SECTION 2.09. Treasury Securities.
In determining whether the Holders of the required principal amount of
Securities have concurred in any direction, waiver or consent, Securities owned
by the Company, the Guarantors, the Subsidiary Guarantors or any of their
respective Affiliates shall be disregarded, except that, for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Securities that a Responsible Officer of the
Trustee actually knows are so owned shall be disregarded.
The Trustee may require an Officers' Certificate listing Securities owned
by the Company, a Guarantor, a Subsidiary Guarantor or any of their respective
Affiliates.
SECTION 2.10. Temporary Securities.
Until definitive Securities are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Securities upon receipt of
a written order of the Company in the form of an Officers' Certificate. The
Officers' Certificate shall specify the amount of temporary Securities to be
authenticated and the date on which the temporary Securities are to be
authenticated. Temporary Securities shall be substantially in the form of
definitive Securities but may have variations that the Company considers
appropriate for temporary Securities. Without unreasonable
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delay, the Company shall prepare and the Trustee shall authenticate upon
receipt of a written order of the Company pursuant to Section 2.02 definitive
Securities in exchange for temporary Securities.
SECTION 2.11. Cancellation.
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Securities surrendered to them for transfer, exchange or payment. The
Trustee, or at the direction of the Trustee, the Registrar or the Paying Agent,
and no one else, shall cancel and, at the written direction of the Company,
shall dispose of all Securities surrendered for transfer, exchange, payment or
cancellation. Subject to Section 2.07, the Company may not issue new
Securities to replace Securities that it has paid or delivered to the Trustee
for cancellation. If the Company or any Guarantor or Subsidiary Guarantor
shall acquire any of the Securities, such acquisition shall or Subsidiary
Guarantor not operate as a redemption or satisfaction of the Indebtedness
represented by such Securities unless and until the same are surrendered to the
Trustee for cancellation pursuant to this Section 2.11.
SECTION 2.12. Defaulted Interest.
If the Company defaults in a payment of interest on the Securities, it
shall pay interest on overdue principal and on overdue installments of interest
(without grace periods) from time to time on demand at the rate of 2% per annum
in excess of the rate shown on the Security.
SECTION 2.13. CUSIP Number.
The Company in issuing the Securities will use a "CUSIP" number, and if
so, the Trustee shall use the CUSIP number in notices of redemption or
exchange as a convenience to Holders; provided that any such notice may state
that no representation is made as to the correctness or accuracy of the CUSIP
number printed in the notice or on the Securities, and that reliance may be
placed only on the other identification numbers printed on the Securities.
SECTION 2.14. Deposit of Moneys.
Prior to 11:00 a.m. New York City time on each Interest Payment Date and
the Final Maturity Date, the Company shall have either delivered by wire
transfer or check such interest or principal and interest, as the case may be
to Holders at such Holders registered address or deposited with the Paying
Agent in immediately available funds money sufficient to make cash payments, if
any, due on such Interest Payment Date or the Final Maturity Date, as the case
may be, in a timely manner which permits the Paying Agent to remit payment to
the Holders on such Interest Payment Date or the Final Maturity Date, as the
case may be.
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SECTION 2.15. Book-Entry Provisions for Global Securities.
(a) The Global Securities initially shall (i) be registered in the name of
the Depository or the nominee of such Depository, (ii) be delivered to the
Trustee as custodian for such Depository and (iii) bear legends as set forth in
Exhibit C.
Members of, or participants in, the Depository ("Participants") shall have
no rights under this Indenture with respect to any Global Security held on
their behalf by the Depository, or the Trustee as its custodian, or under the
Global Security, and the Depository may be treated by the Company, the Trustee
and any agent of the Company or the Trustee as the absolute owner of the Global
Security 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 Depository or impair, as between the Depository
and Participants, the operation of customary practices governing the exercise
of the rights of a Holder of any Security.
(b) Transfers of Global Securities shall be limited to transfers in whole,
but not in part, to the Depository, its successors or their respective
nominees. Interests of beneficial owners in the Global Securities may be
transferred or exchanged for Physical Securities in accordance with the rules
and procedures of the Depository and the provisions of Section 2.16. In
addition, Physical Securities shall be transferred to all beneficial owners in
exchange for their beneficial interests in Global Securities if (i) the
Depository notifies the Company that it is unwilling or unable to continue as
Depository for any Global Security and a successor depositary is not appointed
by the Company within 90 days of such notice or (ii) an Event of Default has
occurred and is continuing and the Registrar has received a request from the
Depository to issue Physical Securities.
(c) In connection with the transfer of Global Securities as an entirety to
beneficial owners pursuant to paragraph (b) of this Section 2.15, the Global
Securities shall be deemed to be surrendered to the Trustee for cancellation,
and the Company shall execute, and the Trustee shall upon written instructions
from the Company authenticate and deliver, to each beneficial owner identified
by the Depository in exchange for its beneficial interest in the Global
Securities, an equal aggregate principal amount of Physical Securities of
authorized denominations.
(d) Any Physical Security constituting a Restricted Security delivered in
exchange for an interest in a Global Security pursuant to paragraph (b) or (d)
of this Section 2.15 shall, except as otherwise provided by Section 2.16, bear
the Private Placement Legend.
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(e) The Holder of any Global Security may grant proxies and otherwise
authorize any Person, including Participants and Persons that may hold
interests through Participants, to take any action which a Holder is entitled
to take under this Indenture or the Securities.
SECTION 2.16. Registration of Transfers and Exchanges.
(a) Transfer and Exchange of Physical Securities. When Physical
Securities are presented to the Registrar with a request:
(i) to register the transfer of the Physical Securities;
or
(ii) to exchange such Physical Securities for an equal
number of Physical Securities of other authorized denominations,
the Registrar shall register the transfer or make the exchange as requested if
the requirements under this Indenture as set forth in this Section 2.16 for
such transactions are met; provided, however, that the Physical Securities
presented or surrendered for registration of transfer or exchange:
(I) shall be duly endorsed or accompanied by a written
instrument of transfer in form satisfactory to the Registrar or
co-Registrar, duly executed by the Holder thereof or his
attorney duly authorized in writing; and
(II) in the case of Physical Securities the offer and sale
of which have not been registered under the Securities Act, such
Physical Securities shall be accompanied, in the sole discretion
of the Company, by the following additional information and
documents, as applicable:
(A) if such Physical Security is being delivered to
the Registrar by a holder for registration in the name of such
holder, without transfer, a certification from such holder to
that effect (in substantially the form of Exhibit D hereto);
or
(B) if such Physical Security is being transferred to
a Qualified Institutional Buyer in accordance with Rule 144A
under the Securities Act, a certification to that effect (in
substantially the form of Exhibit D hereto); or
(C) if such Physical Security is being transferred to
an Institutional Accredited Investor, delivery of a
certification to that effect (in substantially the form of
Exhibit D hereto) and a Transferee Certificate for
Institutional Accredited Investors in substantially the form
of Exhibit E hereto; or
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(D) if such Physical Security is being transferred in
reliance on Regulation S, delivery of a certification to that
effect (in substantially the form of Exhibit D hereto) and a
Transferee Certificate for Regulation S Transfers in
substantially the form of Exhibit F hereto and an Opinion of
Counsel reasonably satisfactory to the Company to the effect
that such transfer is in compliance with the Securities Act;
or
(E) if such Physical Security is being transferred in
reliance on Rule 144 under the Securities Act, delivery of a
certification to that effect (in substantially the form of
Exhibit D hereto) and an Opinion of Counsel reasonably
satisfactory to the Company to the effect that such transfer
is in compliance with the Securities Act; or
(F) if such Physical Security is being transferred in
reliance on another exemption from the registration
requirements of the Securities Act, a certification to that
effect (in substantially the form of Exhibit D hereto) and an
Opinion of Counsel reasonably satisfactory to the Company to
the effect that such transfer is in compliance with the
Securities Act.
(b) Restrictions on Transfer of a Physical Security for a Beneficial
Interest in a Global Security. A Physical Security may not be exchanged for a
beneficial interest in a Global Security except upon satisfaction of the
requirements set forth below. Upon receipt by the Registrar of a Physical
Security, duly endorsed or accompanied by appropriate instruments of transfer,
in form satisfactory to the Registrar, together with:
(A) a certification, in substantially the form of
Exhibit D hereto, that such Physical Security is being
transferred to a Qualified Institutional Buyer; and
(B) written instructions directing the Registrar to
make, or to direct the Depository to make, an endorsement on
the Global Security to reflect an increase in the aggregate
amount of the Securities represented by the Global Security,
then the Registrar shall cancel such Physical Security and cause, or direct the
Depository to cause, in accordance with the standing instructions and
procedures existing between the Depository and the Registrar, the number of
Securities represented by the Global Security to be increased accordingly. If
no Global Security is then outstanding, the Company shall issue and the Trustee
shall upon written instructions from the Company authenticate a new Global
Security in the appropriate amount.
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(c) Transfer and Exchange of Global Securities. The transfer and
exchange of Global Securities or beneficial interests therein shall be
effected through the Depository, in accordance with this Indenture (including
the restrictions on transfer set forth herein) and the procedures of the
Depository therefor.
(d) Transfer of a Beneficial Interest in a Global Security for a
Physical Security.
(i) Any Person having a beneficial interest in a Global
Security may upon request exchange such beneficial interest for a
Physical Security. Upon receipt by the Registrar of written
instructions or such other form of instructions as is customary for
the Depository from the Depository or its nominee on behalf of any
Person having a beneficial interest in a Global Security and upon
receipt by the Trustee of a written order or such other form of
instructions as is customary for the Depository or the Person
designated by the Depository as having such a beneficial interest
containing registration instructions and, in the case of any such
transfer or exchange of a beneficial interest in Securities the
offer and sale of which have not been registered under the
Securities Act, the following additional information and documents:
(A) if such beneficial interest is being transferred
to the Person designated by the Depository as being the
beneficial owner, a certification from such Person to that
effect (in substantially the form of Exhibit D hereto); or
(B) if such beneficial interest is being transferred
to a Qualified Institutional Buyer in accordance with Rule
144A under the Securities Act, a certification to that effect
(in substantially the form of Exhibit D hereto); or
(C) if such beneficial interest is being transferred
to an Institutional Accredited Investor, delivery of a
certification to that effect (in substantially the form of
Exhibit D hereto) and a Certificate for Institutional
Accredited Investors in substantially the form of Exhibit E
hereto; or
(D) if such beneficial interest is being transferred
in reliance on Regulation S, delivery of a certification to
that effect (in substantially the form of Exhibit D hereto)
and a Transferee Certificate for Regulation S Transfers in
substantially the form of Exhibit F hereto and an Opinion of
Counsel reasonably satisfactory to the Company to the effect
that such transfer is in compliance with the Securities Act;
or
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(E) if such beneficial interest is being transferred
in reliance on Rule 144 under the Securities Act, delivery of
a certification to that effect (in substantially the form of
Exhibit D hereto) and an Opinion of Counsel reasonably
satisfactory to the Company to the effect that such transfer
is in compliance with the Securities Act; or
(F) if such beneficial interest is being transferred
in reliance on another exemption from the registration
requirements of the Securities Act, a certification to that
effect (in substantially the form of Exhibit D hereto) and an
Opinion of Counsel reasonably satisfactory to the Company to
the effect that such transfer is in compliance with the
Securities Act,
then the Registrar will cause, in accordance with the standing
instructions and procedures existing between the Depository and the
Registrar, the aggregate amount of the Global Security to be
reduced and, following such reduction, the Company will execute
and, upon receipt of an authentication order in the form of an
Officers' Certificate, the Trustee will authenticate and deliver to
the transferee a Physical Security.
(ii) Securities issued in exchange for a beneficial interest in
a Global Security pursuant to this Section 2.16(d) shall be
registered in such names and in such authorized denominations as
the Depository, pursuant to instructions from its direct or
indirect participants or otherwise, shall instruct the Registrar in
writing. The Registrar shall deliver such Physical Securities to
the Persons in whose names such Physical Securities are so
registered.
(e) Restrictions on Transfer and Exchange of Global Securities.
Notwithstanding any other provisions of this Indenture, a Global Security may
not be transferred as a whole except by the Depository to a nominee of the
Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository.
(f) Private Placement Legend. Upon the transfer, exchange or
replacement of Securities not bearing the Private Placement Legend, the
Registrar shall deliver Securities that do not bear the Private Placement
Legend. Upon the transfer, exchange or replacement of Securities bearing the
Private Placement Legend, the Registrar shall deliver only Securities that bear
the Private Placement Legend unless, and the Trustee is hereby authorized to
deliver Securities without the Private Placement Legend if, (i) there is
delivered to the Trustee an Opinion of Counsel reasonably satisfactory to the
Company and the Trustee to the effect that neither such legend nor the related
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restrictions on transfer are required in order to maintain compliance with the
provisions of the Securities Act or (ii) such Security has been sold pursuant
to an effective registration statement under the Securities Act.
(g) General. By its acceptance of any Security bearing the Private
Placement Legend, each Holder of such a Security acknowledges the restrictions
on transfer of such Security set forth in this Indenture and in the Private
Placement Legend and agrees that it will transfer such Security only as
provided in this Indenture.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.15 or this Section 2.16.
The Company shall have the right to inspect and make copies of all such
letters, notices or other written communications at any reasonable time upon
the giving of reasonable written notice to the Registrar.
SECTION 2.17. Designation.
The Indebtedness evidenced by the Securities is hereby irrevocably
designated as "senior indebtedness" or such other term denoting seniority for
the purposes of any future Indebtedness of the Company which the Company makes
subordinate to any senior indebtedness or such other term denoting seniority.
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee.
If the Company elects to redeem Securities pursuant to Paragraph 5 or
Paragraph 6 of the Securities, it shall notify the Trustee in writing of the
Redemption Date, the Redemption Price and the principal amount of Securities to
be redeemed. The Company shall give notice of redemption to Trustee at least
30 days but not more than 60 days before the Redemption Date (unless a shorter
notice shall be agreed to by the Trustee in writing), together with an
Officers' Certificate stating that such redemption will comply with the
conditions contained herein.
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SECTION 3.02. Selection of Securities To Be Redeemed.
If fewer than all of the Securities are to be redeemed, the Trustee shall
select the Securities to be redeemed in compliance with the requirements of the
principal national securities exchange, if any, on which the Securities are
listed or, if the Securities are not listed on a national securities exchange,
on a pro rata basis, by lot or by such method as the Trustee shall deem fair
and appropriate; provided, however, that if the Securities are redeemed
pursuant to Paragraph 6 of the Securities, the Securities shall be redeemed
solely on a pro rata basis or on as nearly a pro rata basis as is practicable
(subject to the procedures of the Depository) unless the securities exchange,
if any, on which the Securities are listed requires a different method. If the
Securities are listed on any national securities exchange, the Company shall
notify the Trustee in writing of the requirements of such exchange in respect
of any redemption. The Trustee shall make the selection from the Securities
outstanding and not previously called for redemption and shall promptly notify
the Company in writing of the Securities selected for redemption and, in the
case of any Security selected for partial redemption, the principal amount
thereof to be redeemed. Securities in denominations of less than $1,000 may be
redeemed only in whole. The Trustee may select for redemption portions (equal
to $1,000 or any integral multiple thereof) of the principal of Securities that
have denominations larger than $1,000. Provisions of this Indenture that apply
to Securities called for redemption also apply to portions of Securities called
for redemption.
SECTION 3.03. Notice of Redemption.
At least 30 days but not more than 60 days before a Redemption Date, the
Company shall mail or cause to be mailed a notice of redemption by first-class
mail, postage prepaid, to each Holder whose Securities are to be redeemed. At
the Company's written request, the Trustee shall give the notice of redemption
in the Company's name and at the Company's expense. Each notice for redemption
shall identify the Securities to be redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price and the amount of accrued interest, if any,
to be paid;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered to the
Paying Agent to collect the Redemption Price plus accrued interest, if
any;
(5) that, unless the Company defaults in making the redemption
payment, interest on Securities called for redemption ceases to accrue on
and after the Redemption Date, and
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the only remaining right of the Holders of such Securities is to receive
payment of the Redemption Price and accrued interest, if any, to the
Redemption Date upon surrender to the Paying Agent of the Securities
redeemed;
(6) if any Security is being redeemed in part, the portion of the
principal amount of such Security to be redeemed and that, after the
Redemption Date, and upon surrender of such Security, a new Security or
Securities in aggregate principal amount equal to the unredeemed portion
thereof will be issued;
(7) if fewer than all the Securities are to be redeemed, the
identification of the particular Securities (or portion thereof) to be
redeemed, as well as the aggregate principal amount of Securities to be
redeemed and the aggregate principal amount of Securities to be
outstanding after such partial redemption; and
(8) the Paragraph of the Securities pursuant to which the Securities
are to be redeemed.
SECTION 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.03,
Securities called for redemption become due and payable on the Redemption Date
and at the Redemption Price plus accrued interest, if any. Upon surrender to
the Paying Agent, such Securities called for redemption shall be paid at the
Redemption Price (which shall include accrued interest thereon to the
Redemption Date), but installments of interest, the maturity of which is on or
prior to the Redemption Date, shall be payable to Holders of record at the
close of business on the relevant Record Dates.
SECTION 3.05. Deposit of Redemption Price.
On or before the Redemption Date, the Company shall deposit with the
Paying Agent U.S. Legal Tender sufficient to pay the Redemption Price plus
accrued interest, if any, of all Securities to be redeemed on that date.
If the Company complies with the preceding paragraph, then, unless the
Company defaults in the payment of such Redemption Price plus accrued interest,
if any, interest on the Securities to be redeemed will cease to accrue on and
after the applicable Redemption Date, whether or not such Securities are
presented for payment.
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SECTION 3.06. Securities Redeemed in Part.
Upon surrender of a Security that is to be redeemed in part, the Trustee
shall upon written instruction from the Company authenticate for the Holder a
new Security or Securities equal in principal amount to the unredeemed portion
of the Security surrendered.
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Securities.
The Company shall pay the principal of and interest on the Securities in
the manner provided in the Securities. An installment of principal of or
interest on the Securities shall be considered paid on the date it is due if
the Trustee or Paying Agent holds on that date U.S. Legal Tender designated for
and sufficient to pay the installment.
The Company shall pay, to the extent such payments are lawful, interest on
overdue principal and it shall pay interest on overdue installments of interest
(without regard to any applicable grace periods) from time to time on demand at
the rate borne by the Securities plus 2% per annum. Interest will be computed
on the basis of a 360-day year comprised of twelve 30-day months.
SECTION 4.02. Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, The City of New
York, the office or agency required under Section 2.03. 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 address of the Trustee set forth in
Section 11.02. The Company hereby initially designates the Norwest Trust
Company of New York, 3 New York Plaza, 15th Floor, New York, New York 10004, as
its office or agency in the Borough of Manhattan, The City of New York.
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SECTION 4.03. Limitation on Incurrence of Additional
Indebtedness.
The Company will not, and will not permit any of the Restricted
Subsidiaries to, directly or indirectly, create, incur, assume, guarantee,
acquire, become liable with respect to, or otherwise become responsible for
payment of (collectively, "incur") any Indebtedness (other than Permitted
Indebtedness); provided, however, that if no Default or Event of Default shall
have occurred and be continuing at the time of or as a consequence of the
incurrence of any such Indebtedness, the Company or any Subsidiary Guarantor
may incur Indebtedness (including, without limitation, Acquired Indebtedness)
and any Restricted Subsidiary may incur Acquired Indebtedness, in each case, if
on the date of the incurrence of such Indebtedness, after giving effect to the
incurrence thereof, the Consolidated Fixed Charge Coverage Ratio of the Company
is greater than (a) 2.0 to 1.0, if the date of such incurrence is on or prior
to August 13, 1997 or (b) 2.25 to 1.0, if the date of such incurrence is after
August 13, 1997.
Indebtedness of a Person existing at the time such Person becomes a
Restricted Subsidiary or which is secured by a Lien on an asset acquired by the
Company or a Restricted Subsidiary (whether or not such Indebtedness is assumed
by the acquiring Person) shall be deemed incurred at the time the Person
becomes a Restricted Subsidiary or at the time of the asset acquisition, as the
case may be.
The Company will not, and will not permit any Subsidiary Guarantor to
incur any Indebtedness which by its terms (or by the terms of any agreement
governing such Indebtedness) is subordinated in right of payment to any other
Indebtedness of the Company or such Subsidiary Guarantor unless such
Indebtedness is also by its terms (or by the terms of any agreement governing
such Indebtedness) subordinated in right of payment to the Securities or the
Subsidiary Guarantee of such Subsidiary Guarantor, as the case may be, at least
to the same extent and in the same manner as such Indebtedness is subordinated
to any such other Indebtedness.
SECTION 4.04. Limitation on Restricted Payments.
The Company will not, and will not cause or permit any of the Restricted
Subsidiaries to, directly or indirectly, (a) declare or pay any dividend or
make any distribution (other than dividends or distributions payable in
Qualified Capital Stock of the Company) on or in respect of shares of the
Company's Capital Stock to holders of such Capital Stock, (b) purchase, redeem
or otherwise acquire or retire for value any Capital Stock of the Company or
either of the Guarantors or any warrants, rights or options to purchase or
acquire shares of any class of such Capital Stock, (c) make any principal
payment on, purchase, defease, redeem, prepay, decrease or otherwise acquire
or retire for value, prior to any scheduled final maturity, scheduled repayment
or scheduled
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sinking fund payment, any Indebtedness of the Company or a Subsidiary Guarantor
that is subordinate or junior in right of payment to the Securities or such
Subsidiary Guarantor's Subsidiary Guarantee, as the case may be, or (d) make
any Investment (other than a Permitted Investment) (each of the foregoing
actions set forth in clauses (a), (b) (c) and (d) being referred to as a
"Restricted Payment"), if at the time of such Restricted Payment or immediately
after giving effect thereto, (i) a Default or an Event of Default shall have
occurred and be continuing or (ii) the Company is not able to incur at least
$1.00 of additional Indebtedness (other than Permitted Indebtedness) in
compliance with Section 4.03 or (iii) the aggregate amount of Restricted
Payments (including such proposed Restricted Payment) made subsequent to the
Issue Date (the amount expended for such purposes, if other than in cash, being
the fair market value of such property as determined reasonably and in good
faith by the Board of Directors of the Company) shall exceed the sum of: (w)
50% of the cumulative Consolidated Net Income (or if cumulative Consolidated
Net Income shall be a loss, minus 100% of such loss) of the Company earned
subsequent to the Issue Date and on or prior to the date the Restricted Payment
occurs (the "Reference Date") (treating such period as a single accounting
period); plus (x) 100% of the aggregate net cash proceeds received by the
Company from any Person (other than a Subsidiary of the Company) from the
issuance and sale subsequent to the Issue Date and on or prior to the Reference
Date of Qualified Capital Stock of the Company; plus (y) without duplication of
any amounts included in clause (iii)(x) above, 100% of the aggregate net cash
proceeds of any equity contribution received by the Company from a holder of
the Company's Capital Stock (excluding, in the case of clauses (iii)(x) and (y)
above, any net cash proceeds from a Public Equity Offering to the extent used
to redeem the Securities pursuant to the redemption provisions thereof); plus
(z) an amount equal to the consolidated net Investments on the date of
Revocation made by the Company and/or any of the Restricted Subsidiaries in any
Subsidiary of the Company that has been designated an Unrestricted Subsidiary
after the Issue Date upon its redesignation as a Restricted Subsidiary in
accordance with Section 4.23.
Notwithstanding the foregoing, the provisions set forth in the immediately
preceding paragraph shall not prohibit: (1) (A) the payment of a dividend by
the Company on the Issue Date not to exceed $11,715,576 or (B) the payment of
any dividend or distribution within 60 days after the date of declaration of
such dividend or distribution if the dividend or distribution would have been
permitted on the date of declaration; (2) if no Default or Event of Default
shall have occurred and be continuing, the acquisition of any shares of Capital
Stock of the Company, either (A) solely in exchange for shares of Qualified
Capital Stock of the Company or (B) through the application of net proceeds of
a substantially concurrent sale for cash (other than to a Subsidiary of the
Company) of shares of Qualified Capital Stock of the Company; (3) if no Default
or Event of Default shall have occurred and be continuing, the acquisition of
any Indebtedness of the Company or a Subsidiary Guarantor that is subordinate
or junior in right of payment to the Securities or such Subsidiary Guarantor's
Subsidiary Guarantee, as the case may be, either (A) solely in exchange for
shares of Qualified Capital Stock of the Company, or (B) through the
application of net proceeds of a
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substantially concurrent sale for cash (other than to a Subsidiary of the
Company) of (I) shares of Qualified Capital Stock of the Company or (II)
Refinancing Indebtedness; (4) the making of payments by the Company to either
of the Guarantors in an amount not in excess of the Federal, state and local
income tax liability that the Company and its Subsidiaries would have been
liable for if the Company, together with its Subsidiaries, had filed its tax
return on a stand-alone basis; provided that such payments shall be made by the
Company no earlier than five days prior to the date on which such Guarantor is
required to make its payments to the Internal Revenue Service or state or local
taxing authorities, as the case may be; (5) if no Default or Event of Default
shall have occurred and be continuing, the making of payments by the Company to
either of the Guarantors to pay corporate overhead expenses (including, without
limitation, directors' fees and expenses), not to exceed $250,000 in any fiscal
year; (6) if no Default or Event of Default shall have occurred and be
continuing, the making of payments by the Company to either of the Guarantors
to repurchase Capital Stock of such Guarantor beneficially owned by directors,
officers and employees of the Company, any of its Subsidiaries or the
Guarantors pursuant to the terms of employment contracts or employee benefit
plans of the Company, any of its Subsidiaries or the Guarantors not to exceed
$500,000 in any fiscal year; (7) if no Default or Event of Default shall have
occurred and be continuing, the making of other Restricted Payments not to
exceed $2.0 million in the aggregate; and (8) the redemption, repurchase or
other acquisition of shares of Capital Stock of the Company in satisfaction of
indemnification or similar claims arising under any merger, asset purchase,
stock purchase or similar acquisition agreement pursuant to which such shares
of Capital Stock were issued. In determining the aggregate amount of
Restricted Payments made subsequent to the Issue Date in accordance with clause
(iii) of the immediately preceding paragraph, amounts expended pursuant to
clauses (1)(B), (2)(B), (3)(B)(I), (5), (6) and (7) shall be included in such
calculation.
SECTION 4.05. Corporate Existence.
Except as otherwise permitted by Article Five, the Company shall do or
cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence and the corporate, partnership or other
existence of each of the Restricted Subsidiaries in accordance with the
respective organizational documents of each Restricted Subsidiary and the
rights (charter and statutory) and material franchises of the Company and each
of its Restricted Subsidiaries; provided, however, that the Company shall not
be required to preserve any such right or franchise, or the corporate existence
of any Restricted Subsidiary, if the Board of Directors of the Company shall
determine that the preservation thereof is no longer desirable in the conduct
of the business of the Company and its Restricted Subsidiaries, taken as a
whole, and that the loss thereof is not, and will not be, adverse in any
material respect to the Holders.
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SECTION 4.06. Payment of Taxes and Other Claims.
The Company shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (i) all material taxes, assessments
and governmental charges levied or imposed upon it or any of the Restricted
Subsidiaries or upon the income, profits or property of it or any of the
Restricted Subsidiaries and (ii) all lawful claims for labor, materials and
supplies which, in each case, if unpaid, might by law become a material
liability or Lien upon the property of it or any of the Restricted
Subsidiaries; provided, however, that the Company shall not be required to pay
or discharge or cause to be paid or discharged any such tax, assessment, charge
or claim whose amount, applicability or validity is being contested in good
faith by appropriate proceedings and for which appropriate provision has been
made.
SECTION 4.07. Maintenance of Properties and Insurance.
(1) The Company shall cause all material properties owned by or leased by
it or any of the Restricted Subsidiaries used or useful to the conduct of its
business or the business of any of the Restricted Subsidiaries to be improved
or maintained and kept in normal condition, repair and working order and
supplied with all necessary equipment and shall cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof, all as
in its judgment may be necessary, so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; provided,
however, that nothing in this Section 4.07 shall prevent the Company or any of
the Restricted Subsidiaries from discontinuing the use, operation or
maintenance of any of such properties, or disposing of any of them, if such
discontinuance or disposal is, in the judgment of the Board of Directors of the
Company or of the Board of Directors of any Restricted Subsidiary, or of an
officer (or other agent employed by the Company or of any of the Restricted
Subsidiaries) of the Company or any of its Restricted Subsidiaries having
managerial responsibility for any such property, desirable in the conduct of
the business of the Company or any Restricted Subsidiary, and if such
discontinuance or disposal is not adverse in any material respect to the
Holders.
(2) The Company shall maintain, and shall cause the Restricted
Subsidiaries to maintain, insurance with responsible carriers against such
risks and in such amounts, and with such deductibles, retentions, self-insured
amounts and co-insurance provisions, as are customarily carried by similar
businesses of similar size, including property and casualty loss, workers'
compensation and interruption of business insurance.
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SECTION 4.08. Compliance Certificate; Notice of Default.
(1) The Company shall deliver to the Trustee, within 100 days after the
close of each fiscal year an Officers' Certificate stating that a review of the
activities of the Company has been made under the supervision of the signing
officers with a view to determining whether it 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 knowledge
the Company during such preceding fiscal year has kept, observed, performed and
fulfilled each and every such covenant and no Default or Event of Default
occurred during such year and at the date of such certificate no Default or
Event of Default has occurred and is continuing or, if such signers do know of
such Default or Event of Default, the certificate shall describe its status
with particularity. The Officers' Certificate shall also notify the Trustee
should the Company elect to change the manner in which it fixes its fiscal year
end.
(2) The annual financial statements delivered pursuant to Section 4.10
shall be accompanied by a written report of the Company's independent
accountants (who shall be a firm of established national reputation) that in
conducting their audit 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 Four, Five or Six of this Indenture insofar as they
relate to accounting matters 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.
(3) The Company shall deliver to the Trustee, within ten days of becoming
aware of any Default or Event of Default in the performance of any covenant,
agreement or condition contained in this Indenture, an Officers' Certificate
specifying the Default or Event of Default and describing its status with
particularity.
SECTION 4.09. Compliance with Laws.
The Company shall comply, and shall cause each of the Restricted
Subsidiaries to comply, with all applicable statutes, rules, regulations,
orders and restrictions of the United States of America, all states and
municipalities thereof, and of any governmental department, commission, board,
regulatory authority, bureau, agency and instrumentality of the foregoing, in
respect of the conduct of their respective businesses and the ownership of
their respective properties, except for such noncompliances as would not in the
aggregate have a material adverse effect on the financial condition or results
of operations of the Company and the Restricted Subsidiaries taken as a whole.
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SECTION 4.10. SEC Reports.
(1) The Company will file with the SEC all information documents and
reports to be filed with the SEC pursuant to Section 13 or 15(d) of the
Exchange Act, whether or not the Company is subject to such filing requirements
so long as the SEC will accept such filings. The Company (at its own expense)
will file with the Trustee within 15 days after it files them with the SEC,
copies of the annual reports and of the information, documents and other
reports (or copies of such portions of any of the foregoing as the SEC may by
rules and regulations prescribe) which the Company files with the SEC pursuant
to Section 13 or 15(d) of the Exchange Act. Upon qualification of this
Indenture under the TIA, the Company shall also comply with the provisions of
TIA Section 314(a).
(2) At the Company's expense, regardless of whether the Company is
required to furnish such reports to its stockholders pursuant to the Exchange
Act, the Company shall cause its consolidated financial statements, comparable
to that which would have been required to appear in annual or quarterly
reports, to be delivered to the Trustee and the Holders. The Company will also
make such reports available to prospective purchasers of the Securities,
securities analysts and broker-dealers upon their request.
(3) For so long as any of the Securities remain outstanding the Company
will make available to any prospective purchaser of the Securities or
beneficial owner of the Securities in connection with any sale thereof the
information required by Rule 144A(d)(4) under the Securities Act during any
period when the Company is not subject to Section 13 or 15(d) under the
Exchange Act.
SECTION 4.11. Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that it
shall not at any time insist upon, plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law or any usury law or
other law that would prohibit or forgive the Company from paying all or any
portion of the principal of and/or interest on the Securities as contemplated
herein, wherever enacted, now or at any time hereafter in force, or which may
affect the covenants or the performance of this Indenture, and (to the extent
that it may lawfully do so) the Company hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will
suffer and permit the execution of every such power as though no such law had
been enacted.
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SECTION 4.12. Limitation on Asset Sales.
The Company will not, and will not permit any of the Restricted
Subsidiaries to, consummate an Asset Sale unless (a) the Company or the
applicable Restricted Subsidiary, as the case may be, receives consideration at
the time of such Asset Sale at least equal to the fair market value of the
assets sold or otherwise disposed of (as determined in good faith by the
Company's Board of Directors), (b) at least 75% of the consideration received
by the Company or the Restricted Subsidiary, as the case may be, from such
Asset Sale shall be in the form of cash or Cash Equivalents and is received at
the time of such disposition; and (c) upon the consummation of an Asset Sale,
the Company shall commit in writing to apply, or cause such Restricted
Subsidiary to commit in writing to apply, the Net Cash Proceeds relating to
such Asset Sale within 180 days of receipt thereof, and shall apply, or cause
such Restricted Subsidiary to apply, such Net Cash Proceeds within 270 days of
receipt thereof, either (i) to the extent the properties or assets that were
the subject to such Asset Sale secure Indebtedness incurred in accordance with
this Indenture pursuant to a Lien permitted by this Indenture, to prepay any
such Indebtedness, (ii) to make an investment in properties or assets that
replace the properties or assets that were the subject of such Asset Sale or in
properties or assets that will be used in the business of the Company and the
Restricted Subsidiaries as existing on the Issue Date or in businesses
reasonably related thereto ("Replacement Assets"), or (iii) a combination of
prepayment and investment permitted by the foregoing clauses (c)(i) and
(c)(ii). On the 271st day after an Asset Sale or such earlier date, if any, as
the Board of Directors of the Company determines not to apply the Net Cash
Proceeds relating to such Asset Sale as set forth in clauses (c)(i), (c)(ii)
and (c)(iii) of the next preceding sentence (each, a "Net Proceeds Offer
Trigger Date"), such aggregate amount of Net Cash Proceeds which have not been
applied on or before such Net Proceeds Offer Trigger Date as permitted in
clauses (c)(i), (c)(ii) and (c)(iii) of the next preceding sentence (each a
"Net Proceeds Offer Amount") shall be applied by the Company or such Restricted
Subsidiary, as the case may be, to make an offer to purchase (a "Net Proceeds
Offer") on a date (the "Net Proceeds Offer Payment Date") not less than 30 nor
more than 45 days following the applicable Net Proceeds Offer Trigger Date,
from all Holders on a pro rata basis, that principal amount of Securities equal
to the Net Proceeds Offer Amount at a price equal to 100% of the principal
amount of the Securities to be purchased, plus accrued and unpaid interest, if
any, thereon to the date of purchase; provided, however, that if at any time
any non-cash consideration received by the Company or any Restricted
Subsidiary, as the case may be, in connection with any Asset Sale is converted
into or sold or otherwise disposed of for cash, then such conversion or
disposition shall be deemed to constitute an Asset Sale hereunder and the Net
Cash Proceeds thereof shall be applied in accordance with this covenant. The
Company may defer the Net Proceeds Offer until there is an aggregate unutilized
Net Proceeds Offer Amount equal to or in excess of $5.0 million resulting from
one or more Asset Sales (at which time, the entire unutilized Net Proceeds
Offer Amount, and not just the amount in excess of $5.0 million, shall be
applied as required pursuant to this paragraph).
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In the event of the transfer of substantially all (but not all) of the
property and assets of the Company and the Restricted Subsidiaries as an
entirety to a Person in a transaction permitted under Section 5.01, the
successor corporation shall be deemed to have sold the properties and assets of
the Company and the Restricted Subsidiaries not so transferred for purposes of
this covenant, and shall comply with the provisions of this covenant with
respect to such deemed sale as if it were an Asset Sale. In addition, the fair
market value of such properties and assets of the Company or the Restricted
Subsidiaries deemed to be sold shall be deemed to be Net Cash Proceeds for
purposes of this covenant.
Notwithstanding the two immediately preceding paragraphs, the Company and
the Restricted Subsidiaries will be permitted to consummate an Asset Sale
without complying with such paragraphs to the extent (a) at least 75% of the
consideration for such Asset Sale constitutes Replacement Assets and (b) such
Asset Sale is for fair market value; provided that any consideration not
constituting Replacement Assets received by the Company or any of the
Restricted Subsidiaries in connection with any Asset Sale permitted to be
consummated under this paragraph shall constitute Net Cash Proceeds subject to
the provisions of the two immediately preceding paragraphs.
Notice of each Net Proceeds Offer pursuant to this Section 4.12 will be
mailed or caused to be mailed, by first class mail, by the Company within 30
days following the Net Proceeds Offer Trigger Date to all Holders at their last
registered addresses, with a copy to the Trustee. The notice shall contain all
instructions and materials necessary to enable such Holders to tender
Securities pursuant to the Net Proceeds Offer and shall state the following
terms:
(1) that the Net Proceeds Offer is being made pursuant to Section
4.12 and that all Securities tendered in whole or in part in integral
multiples of $1,000 will be accepted for payment; provided, however, that
if the principal amount of Securities tendered in a Net Proceeds Offer
exceeds the aggregate amount of the Net Cash Proceeds, the Company shall
select the Securities to be purchased on a pro rata basis;
(2) the purchase price (including the amount of accrued interest, if
any) and the Net Proceeds Offer Payment Date (which shall be at least 20
Business Days from the date of mailing of notice of such Net Proceeds
Offer, or such longer period as required by law);
(3) that any Security not tendered will continue to accrue interest;
(4) that, unless the Company defaults in making payment therefor,
any Security accepted for payment pursuant to the Net Proceeds Offer
shall cease to accrue interest after the Net Proceeds Offer Payment Date;
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(5) that Holders electing to have a Security purchased pursuant to a
Net Proceeds Offer will be required to surrender the Security, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of the
Security completed, to the Paying Agent at the address specified in the
notice prior to the close of business on the Net Proceeds Offer Payment
Date;
(6) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the Business Day prior to the Net
Proceeds Offer Payment Date, a facsimile transmission or letter setting
forth the name of the Holder, the principal amount of the Security the
Holder delivered for purchase and a statement that such Holder is
withdrawing his election to have such Security purchased; and
(7) that Holders whose Securities are purchased only in part will be
issued new Securities in a principal amount equal to the unpurchased
portion of the Securities surrendered.
On or before the Net Proceeds Offer Payment Date, the Company shall (i)
accept for payment Securities or portions thereof tendered pursuant to the Net
Proceeds Offer which are to be purchased in accordance with item (1) above,
(ii) deposit with the Paying Agent in accordance with Section 2.14 U.S. Legal
Tender sufficient to pay the purchase price plus accrued interest, if any, of
all Securities to be purchased and (iii) deliver to the Trustee Securities so
accepted together with an Officers' Certificate stating the Securities or
portions thereof being purchased by the Company. The Paying Agent shall
promptly mail to the Holders of Securities so accepted payment in an amount
equal to the purchase price plus accrued interest, if any. For purposes of
this Section 4.12, the Trustee shall act as the Paying Agent.
The Company shall and shall cause its Subsidiaries to comply with all
tender offer rules under state and Federal securities laws, including, but not
limited to, Section 14(e) under the Exchange Act and Rule 14e-1 thereunder, to
the extent applicable to such offer. To the extent that the provisions of any
securities laws or regulations conflict with the foregoing provisions of this
Indenture, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under the
foregoing provisions of this Indenture by virtue thereof.
SECTION 4.13. Limitation on Dividend and Other Payment
Restrictions Affecting Restricted Subsidiaries.
The Company will not, and will not cause or permit any of the Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or permit to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (a) pay dividends or make
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any other distributions on or in respect of its Capital Stock; (b) make loans
or advances or to pay any Indebtedness or other obligation owed to the Company
or any other Restricted Subsidiary; or (c) transfer any of its property or
assets to the Company or any other Restricted Subsidiary, except for such
encumbrances or restrictions existing under or by reason of: (i) applicable
law; (ii) this Indenture; (iii) customary non-assignment provisions of any
contract licensing agreement or any lease governing a leasehold interest of any
Restricted Subsidiary; (iv) any instrument governing Acquired Indebtedness,
which encumbrance or restriction is not applicable to any Person, or the
properties or assets of any Person, other than the Person or the properties or
assets of the Person so acquired; (v) agreements existing on the Issue Date to
the extent and in the manner such agreements are in effect on the Issue Date;
(vi) agreements of a Restricted Subsidiary existing at the time such Person
became a Subsidiary of the Company and not entered into in connection with, or
in anticipation or contemplation of, such Person becoming a Subsidiary of the
Company; (vii) restrictions contained in security, pledge or similar agreements
granting a Lien permitted by Section 4.15 to the extent such agreements
restrict the transfer of the property subject to any such Lien; (viii)
contracts for the sale of assets in a transaction in compliance with Section
4.12, or (ix) an agreement governing Refinancing Indebtedness incurred to
Refinance the Indebtedness issued, assumed or incurred pursuant to an agreement
referred to in clause (ii), (iv), (v) or (vii) above; provided, however, that
the provisions relating to such encumbrance or restriction contained in any
such Refinancing Indebtedness are no less favorable to the Holders in any
material respect as determined by the Board of Directors of the Company in
their reasonable and good faith judgment than the provisions relating to such
encumbrance or restriction contained in the applicable agreement referred to in
such clause (ii), (iv), (v) or (vii).
SECTION 4.14. Limitation on Preferred Stock of Restricted Subsidiaries.
The Company will not permit any of the Restricted Subsidiaries to issue
any Preferred Stock (other than to the Company or to a Wholly Owned Restricted
Subsidiary) or permit any Person (other than the Company or a Wholly Owned
Restricted Subsidiary) to own any Preferred Stock of any Restricted Subsidiary.
SECTION 4.15. Limitation on Liens.
The Company will not, and will not cause or permit any of the Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or permit or
suffer to exist any Liens of any kind against or upon any property or assets of
the Company or any of the Restricted Subsidiaries, whether owned on the Issue
Date or acquired after the Issue Date, or any proceeds therefrom, or assign or
otherwise convey any right to receive income or profits therefrom unless (a) in
the case of Liens securing Indebtedness that is expressly subordinate or junior
in right of payment to the
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Securities or any Subsidiary Guarantee, the Securities or such Subsidiary
Guarantee, as the case may be, are secured by a Lien on such property, assets
or proceeds that is senior in priority to such Liens and (b) in all other
cases, the Securities and the Subsidiary Guarantees are equally and ratably
secured, except for (i) Liens existing as of the Issue Date; (ii) to the extent
not included in clause (i), Liens securing Indebtedness under the Revolving
Credit Facility that do not extend to or cover categories or types of property
or assets not covered by Liens securing the Revolving Credit Facility as of the
Issue Date; (iii) Liens securing the Securities and the Subsidiary Guarantees;
(iv) Liens of the Company or a Restricted Subsidiary on assets of any
Restricted Subsidiary; (v) Liens securing Refinancing Indebtedness which is
incurred to Refinance any Indebtedness which has been secured by a Lien
permitted under this Indenture and which has been incurred in accordance with
the provisions of this Indenture; provided, however, that such Liens do not
extend to or cover any property or assets of the Company or any of the
Restricted Subsidiaries not securing the Indebtedness so Refinanced; and (vi)
Permitted Liens.
SECTION 4.16. Limitation on Sale and Leaseback Transactions.
The Company will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, enter into any Sale and Leaseback Transaction unless
(a) immediately after giving pro forma effect to such Sale and Leaseback
Transaction (the Attributable Value of such Sale and Leaseback Transaction
being deemed to be Indebtedness of the Company), the Company could incur at
least $1.00 of additional Indebtedness (other than Permitted Indebtedness) in
compliance with Section 4.03 (assuming a market rate of interest with respect
to such additional Indebtedness) and (b) such Sale and Leaseback Transaction
complies with Section 4.12.
SECTION 4.17. Intentionally Omitted.
SECTION 4.18. Limitations on Transactions with Affiliates.
(1) The Company will not, and will not permit any of the Restricted
Subsidiaries to, directly or indirectly, enter into or permit to exist any
transaction or series of related transactions (including, without limitation,
the purchase, sale, lease or exchange of any property or the rendering of any
service) with, or for the benefit of, any of their respective Affiliates (each
an "Affiliate Transaction"), other than (i) Affiliate Transactions permitted
under paragraph (b) of this covenant and (ii) Affiliate Transactions on terms
that are no less favorable to the Company or the applicable Restricted
Subsidiary than those that might reasonably have been obtained in a comparable
transaction at such time on an arm's-length basis from a Person that is not an
Affiliate of the Company or such Restricted Subsidiary. All Affiliate
Transactions (and each series of related Affiliate Transactions which are
similar or part of a common plan) involving aggregate payments or other
property with a fair market value in excess of $500,000 shall be approved by
the Board of
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Directors of the Company, such approval to be evidenced by a Board Resolution
stating that such Board of Directors has determined that such transaction
complies with the foregoing provisions. If the Company or any Restricted
Subsidiary enters into an Affiliate Transaction (or a series of related
Affiliate Transactions related to a common plan) that involves an aggregate
fair market value of more than $5.0 million, the Company shall, prior to the
consummation thereof, obtain a favorable opinion as to the fairness of such
transaction or series of related transactions to the Company or the relevant
Restricted Subsidiary, as the case may be, from a financial point of view, from
an Independent Financial Advisor and file the same with the Trustee.
(2) The restrictions set forth in clause (a) shall not apply to (i)
reasonable fees and compensation paid to and indemnity provided on behalf of,
officers, directors, employees or consultants of the Company or any Restricted
Subsidiary as determined in good faith by the Company's Board of Directors;
(ii) transactions exclusively between or among the Company and any of the
Restricted Subsidiaries or exclusively between or among such Restricted
Subsidiaries, provided such transactions are not otherwise prohibited by this
Indenture; and (iii) Restricted Payments permitted by this Indenture.
SECTION 4.19. Additional Subsidiary Guarantees.
If the Company or any of the Restricted Subsidiaries transfers or causes
to be transferred, in one transaction or a series of related transactions, any
property to any Restricted Subsidiary that is not a Subsidiary Guarantor, or if
the Company or any of the Restricted Subsidiaries shall organize, acquire or
otherwise invest in or hold an Investment in another Restricted Subsidiary that
is not a Subsidiary Guarantor having total consolidated assets with a book
value in excess of $500,000, then such transferee or acquired or other
Restricted Subsidiary that is not a Subsidiary Guarantor shall (a) execute and
deliver to the Trustee a supplemental indenture in form reasonably satisfactory
to the Trustee pursuant to which such Restricted Subsidiary shall
unconditionally guarantee all of the Company's obligations under the Securities
and this Indenture on the terms set forth in Article Ten and (b) deliver to the
Trustee an Opinion of Counsel that such supplemental indenture has been duly
authorized, executed and delivered by such Restricted Subsidiary and
constitutes a legal, valid, binding and enforceable obligation of such
Restricted Subsidiary. Thereafter, such Restricted Subsidiary shall be a
Subsidiary Guarantor for all purposes of this Indenture.
SECTION 4.20. Intentionally Omitted.
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SECTION 4.21. Lines of Business.
The Company shall not, and shall not permit any of the Restricted
Subsidiaries to, enter into any business, either directly or through any
Restricted Subsidiary, except (i) for those businesses in which the Company and
the Restricted Subsidiaries were engaged on the Issue Date or businesses which,
in the reasonable good faith judgment of the Board of Directors of the Company,
are related to the automotive industry and (ii) Permitted Investments.
SECTION 4.22. Payments for Consent.
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any holder of any Securities for or as an
inducement to any consent, waiver or amendment of any of the terms or
provisions of this Indenture, the Securities, the Guarantees or any Subsidiary
Guarantee unless such consideration is offered to be paid or agreed to be paid
to all holders of the Securities who so consent, waive or agree to amend in the
time frame set forth in solicitation documents relating to such consent, waiver
or agreement.
SECTION 4.23. Limitation on Designations of Unrestricted Subsidiaries.
The Company may designate any Subsidiary of the Company (other than a
Subsidiary of the Company which owns Capital Stock of a Restricted Subsidiary)
as an "Unrestricted Subsidiary" under this Indenture (a "Designation") only if:
(1) no Default shall have occurred and be continuing at the time of
or after giving effect to such Designation; and
(2) the Company would be permitted under this Indenture to make an
Investment at the time of Designation (assuming the effectiveness of such
Designation) in an amount (the "Designation Amount") equal to the sum of
(i) fair market value of the Capital Stock of such Subsidiary owned by
the Company and the Restricted Subsidiaries on such date and (ii) the
aggregate amount of other Investments of the Company and the Restricted
Subsidiaries in such Subsidiary on such date; and
(3) the Company would be permitted to incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) pursuant to Section 4.03
at the time of Designation (assuming the effectiveness of such
Designation).
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In the event of any such Designation, the Company shall be deemed to have
made an Investment constituting a Restricted Payment in the Designation Amount
pursuant to Section 4.04 for all purposes of this Indenture. The Company shall
not, and shall not permit any Restricted Subsidiary to, at any time (x) provide
direct or indirect credit support for or a guarantee of any Indebtedness of any
Unrestricted Subsidiary (including of any undertaking, agreement or instrument
evidencing such Indebtedness), (y) be directly or indirectly liable for any
Indebtedness of any Unrestricted Subsidiary or (z) be directly or indirectly
liable for any Indebtedness which provides that the holder thereof may (upon
notice, lapse of time or both) declare a default thereon or cause the payment
thereof to be accelerated or payable prior to its final scheduled maturity upon
the occurrence of a default with respect to any Indebtedness of any
Unrestricted Subsidiary (including any right to take enforcement action against
such Unrestricted Subsidiary), except, in the case of clause (x) or (y), to
the extent permitted under Section 4.04.
The Company may revoke any Designation of a Subsidiary as an Unrestricted
Subsidiary (a "Revocation"), whereupon such Subsidiary shall then constitute a
Restricted Subsidiary, if:
(a) no Default shall have occurred and be continuing at the time of
and after giving effect to such Revocation; and
(b) all Liens and Indebtedness of such Unrestricted Subsidiary
outstanding immediately following such Revocation would, if incurred at
such time, have been permitted to be incurred for all purposes of this
Indenture.
All Designations and Revocations must be evidenced by Board Resolutions of
the Company delivered to the Trustee certifying compliance with the foregoing
provisions.
SECTION 4.24. Change of Control.
(a) Upon the occurrence of a Change of Control (unless, on or prior to the
date of such Change of Control, the Company shall have given a notice of
redemption with respect to all outstanding Securities), the Company shall be
obligated to make an offer to purchase (a "Change of Control Offer"), and shall
purchase, on a Business Day not more than 60 nor less than 30 days following
the occurrence of the Change of Control, other than as required by law (the
"Change of Control Payment Date"), all of the then outstanding Securities at a
purchase price equal to 101% of the principal amount thereof, plus accrued and
unpaid interest, if any, thereon to the Change of Control Payment Date. The
Change of Control Offer shall remain open for 20 Business Days (or such longer
period as may be required by law) and until the close of business on the Change
of Control Payment Date.
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(b) Within 30 days following the date upon which the Change of Control
occurred (the "Change of Control Date"), the Company shall mail, or cause to be
mailed, by first class mail, a notice to each Holder, with a copy to the
Trustee, which notice shall govern the terms of the Change of Control Offer.
The notice to the Holders shall contain all instructions and materials
necessary to enable such Holders to tender Securities pursuant to the Change
of Control Offer. Such notice shall state:
(1) that the Change of Control Offer is being made pursuant to this
Section 4.24 and that all Securities tendered and not withdrawn will be
accepted for payment;
(2) the purchase price (including the amount of accrued interest)
and the Change of Control Payment Date;
(3) that any Security not tendered will continue to accrue interest;
(4) that, unless the Company defaults in making payment therefor,
any Security 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 a Security purchased pursuant to a
Change of Control Offer will be required to surrender the Security, with
the form entitled "Option of Holder to Elect Purchase" on the reverse of
the Security completed, to the Paying Agent at the address specified in
the notice prior to the close of business on the Change of Control
Payment Date;
(6) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than the third Business Day prior to the
Change of Control Payment Date, a facsimile transmission or letter
setting forth the name of the Holder, the principal amount of the
Securities the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Securities purchased;
(7) that Holders whose Securities are purchased only in part will be
issued new Securities in a principal amount equal to the unpurchased
portion of the Securities surrendered; and
(8) the circumstances and relevant facts regarding such Change of
Control.
On or before the Change of Control Payment Date, the Company shall (i)
accept for payment Securities or portions thereof tendered pursuant to the
Change of Control Offer, (ii) deposit
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with the Paying Agent in accordance with Section 2.14 U.S. Legal Tender
sufficient to pay the purchase price plus accrued interest, if any, of all
Securities so tendered and (iii) deliver to the Trustee Securities so accepted
together with an Officers' Certificate stating the Securities or portions
thereof being purchased by the Company. Upon receipt by the Paying Agent of
the monies specified in clause (ii) above and a copy of the Officers'
Certificate specified in clause (iii) above, the Paying Agent shall promptly
mail to the Holders of Securities so accepted payment in an amount equal to the
purchase price plus accrued interest, if any, and the Trustee shall promptly
authenticate and mail to such Holders new Securities equal in principal amount
to any unpurchased portion of the Securities surrendered. Any Securities not
so accepted shall be promptly mailed by the Company to the Holder thereof. For
purposes of this Section 4.24, the Trustee shall act as the Paying Agent.
Any amounts remaining after the purchase of all validly tendered and not
validly withdrawn Securities pursuant to a Change of Control Offer shall be
returned by the Trustee to the Company.
The Company shall and shall cause its Subsidiaries to comply with all
tender offer rules under state and Federal securities laws, including, but not
limited to, Section 14(e) under the Exchange Act and Rule 14e-1 thereunder, to
the extent applicable to such offer. To the extent that the provisions of any
securities laws or regulations conflict with this Section 4.24, the Company
shall comply with the applicable securities laws and regulations and shall not
be deemed to have breached its obligations under this Section 4.24 by virtue
thereof.
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
applicable to a Change of Control Offer made by the Company and purchases all
Securities validly tendered and not withdrawn under such Change of Control
Offer.
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.01. Mergers, Consolidations and Sales of Assets.
(a) The Company will not, in a single transaction or series of related
transactions, consolidate or merge with or into any Person, or sell, assign,
transfer, lease, convey or otherwise
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dispose of (or cause or permit any Restricted Subsidiary to sell, assign,
transfer, lease, convey or otherwise dispose of) all or substantially all of
the Company's assets (determined on a consolidated basis for the Company and
the Company's Restricted Subsidiaries), whether as an entirety or substantially
as an entirety, to any Person unless: (i) either (1) the Company shall be the
surviving or continuing corporation or (2) the Person (if other than the
Company) formed by such consolidation or into which the Company is merged or
the Person which acquires by sale, assignment, transfer, lease, conveyance or
other disposition the properties and assets of the Company and of the
Restricted Subsidiaries substantially as an entirety (the "Surviving Entity")
(x) shall be a corporation organized and validly existing under the laws of the
United States or any state thereof or the District of Columbia and (y) shall
expressly assume, by supplemental indenture (in form and substance satisfactory
to the Trustee), executed and delivered to the Trustee, the due and punctual
payment of the principal of, and premium, if any, and interest on all of the
Securities and the performance of every covenant of the Securities, this
Indenture and the Registration Rights Agreement on the part of the Company to
be performed or observed; (ii) immediately after giving effect to such
transaction and the assumption contemplated by clause (i)(2)(y) above
(including giving effect to any Indebtedness incurred or anticipated to be
incurred in connection with or in respect of such transaction), the Company or
such Surviving Entity, as the case may be, (1) shall have a Consolidated Net
Worth equal to or greater than the Consolidated Net Worth of the Company
immediately prior to such transaction and (2) shall be able to incur at least
$1.00 of additional Indebtedness (other than Permitted Indebtedness) pursuant
to Section 4.03 hereof; provided that in determining the Consolidated Fixed
Charge Coverage Ratio of the Company or the Surviving Entity, as the case may
be, such ratio shall be calculated as if the transaction (including the
incurrence of any Indebtedness or Acquired Indebtedness) took place on the
first day of the Four Quarter Period; (iii) immediately before and immediately
after giving effect to such transaction and the assumption contemplated by
clause (i)(2)(y) above (including, without limitation, giving effect to any
Indebtedness and Acquired Indebtedness incurred or anticipated to be incurred
and any Lien granted in connection with or in respect of the transaction) no
Default or Event of Default shall have occurred or be continuing; and (iv) the
Company or the Surviving Entity, as the case may be, shall have delivered to
the Trustee an Officers' Certificate and an Opinion of Counsel, each stating
that such consolidation, merger, sale, assignment, transfer, lease, conveyance
or other disposition and, if a supplemental indenture is required in connection
with such transaction, such supplemental indenture comply with the applicable
provisions of this Indenture and that all conditions precedent in this
Indenture relating to such transaction have been satisfied. Notwithstanding
the foregoing provisions of this Section 5.01(a), nothing in this Indenture
shall prohibit the merger of Aetna Industries, Inc., a Michigan corporation,
with and into the Company on the Issue Date.
(b) For purposes of the foregoing, the transfer (by lease, assignment,
sale or otherwise, in a single transaction or series of transactions) of all or
substantially all of the properties or assets of one or more Restricted
Subsidiaries, the Capital Stock of which constitutes all or
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substantially all of the properties and assets of the Company, shall be deemed
to be the transfer of all or substantially all of the properties and assets of
the Company.
(c) Each of the Guarantors will not, in a single transaction or series of
related transactions, consolidate or merge with or into any Person, or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially
all of its assets, whether as an entirety or substantially as an entirety, to
any Person unless: (i) either (1) either of the Guarantors shall be the
surviving or continuing corporation or (2) the Person (if other than either of
the Guarantors) formed by such consolidation or into a Guarantor is merged or
the Person which acquires by sale, assignment, transfer, lease, conveyance or
other disposition the property and assets of a Guarantor substantially as an
entirety (x) shall be a corporation organized and validly existing under the
laws of the United States or any state thereof or the District of Columbia and
(y) shall expressly assume, by supplemental indenture (in form and substance
satisfactory to the Trustee), executed and delivered to the Trustee, all of the
obligations of such Guarantor under its Guarantee and the Registration Rights
Agreement on the part of such Guarantor to be performed or observed; and (ii)
such Guarantor or such other Person, as the case may be, shall have delivered
to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating
that such consolidation, merger, sale, assignment, transfer, lease, conveyance
or other disposition complies with, and, if a supplemental indenture is
required in connection with such transaction, such supplemental indenture
complies with, the applicable provisions of this Indenture, and that all
conditions precedent in this Indenture relating to such transactions have been
satisfied.
(d) Each Subsidiary Guarantor (other than any Subsidiary Guarantor whose
Subsidiary Guarantee is to be released in accordance with the terms of the
Subsidiary Guarantee and this Indenture in connection with any transaction
complying with the provisions of Section 4.12) will not, and the Company will
not cause or permit any Subsidiary Guarantor to, consolidate with or merge with
or into any Person other than the Company or another Subsidiary Guarantor
unless: (i) the entity formed by or surviving any such consolidation or merger
(if other than the Subsidiary Guarantor), or to which sale, lease, conveyance
or other disposition shall have been made, is a corporation organized and
existing under the laws of the United States or any state thereof or the
District of Columbia; (ii) such entity assumes by supplemental indenture all of
the obligations of the Subsidiary Guarantor under its Subsidiary Guarantee;
(iii) immediately after giving effect to such transaction, no Default or Event
of Default shall have occurred and be continuing; and (iv) immediately after
giving effect to such transaction and the use of any net proceeds therefrom on
a pro forma basis, the Company could satisfy the provisions of clause (a)(ii)
of this Section 5.01. Any merger or consolidation of a Subsidiary Guarantor
with and into the Company (with the Company being the surviving entity) or
another Subsidiary Guarantor need only comply with clause (a)(iv) of this
Section 5.01.
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SECTION 5.02. Successor Corporation Substituted.
In accordance with the foregoing, upon any such consolidation, merger,
conveyance, lease or transfer of all or substantially all of the assets of the
Company in which the Company is not the continuing corporation, the Surviving
Entity formed by such consolidation or into which the Company is merged or to
which such conveyance, lease or transfer is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company under
this Indenture and the Securities with the same effect as if such successor had
been named as the Company herein, and thereafter (except in the case of a sale,
assignment, transfer, lease, conveyance or other disposition) the predecessor
corporation will be relieved of all further obligations and covenants under
this Indenture, the Securities and the Registration Rights Agreement; provided
that solely for purposes of computing amounts described in subclause (iii) of
Section 4.04, any such Surviving Entity shall only be deemed to have succeeded
to and be substituted for the Company with respect to periods subsequent to the
effective time of such merger, consolidation or transfer of assets.
ARTICLE SIX
DEFAULT AND REMEDIES
SECTION 6.01. Events of Default.
An "Event of Default" occurs if:
(1) the Company fails to pay interest on any Security for a period
of 30 days after the same becomes due and payable; or
(2) the Company fails to pay the principal of or premium on any
Security, when such principal or premium becomes due and payable, whether
at maturity, upon redemption or otherwise (including the failure to make
a payment to purchase Securities tendered pursuant to a Change of Control
Offer or Net Proceeds Offer); or
(3) the Company, a Guarantor or any Subsidiary Guarantor defaults in
the observance or performance of any other covenant or agreement
contained in this Indenture, the Securities, any Guarantee or any
Subsidiary Guarantee, which default continues for a period of 30 days
after (x) the Company receives written notice specifying the default and
requiring the Company to remedy the same from the Trustee or (y) the
Company and the
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Trustee receive such a notice from Holders of at least 25% in principal
amount of outstanding Securities (except in the case of a default with
respect to Article Five, which will constitute an Event of Default with
such notice requirement but without such passage of time requirement); or
(4) the Company or a Restricted Subsidiary defaults under any
mortgage, indenture or instrument under which there may be issued or by
which there may be secured or evidenced any Indebtedness of the Company
or of any Restricted Subsidiary (or the payment of which is guaranteed by
the Company or any Restricted Subsidiary) which default (a) is caused by
a failure to pay principal of or premium, if any, on such Indebtedness
after any applicable grace period provided in such Indebtedness on the
date of such default (a "principal payment default"), or (b) results in
the acceleration of such Indebtedness prior to its express maturity and,
in each case, the principal amount of any such Indebtedness, together
with the principal amount of any other such Indebtedness under which
there has been a principal payment default or the maturity of which has
been so accelerated, aggregates at least $5,000,000; or
(5) the Company or any of its Significant Subsidiaries (A) admits in
writing its inability to pay its debts generally as they become due, (B)
commences a voluntary case or proceeding under any Bankruptcy Law with
respect to itself, (C) consents to the entry of a judgment, decree or
order for relief against it in an involuntary case or proceeding under
any Bankruptcy Law, (D) consents to the appointment of a Custodian of it
or for substantially all of its property, (E) consents to or acquiesces
in the institution of a bankruptcy or an insolvency proceeding against
it, (F) makes a general assignment for the benefit of its creditors, or
(G) takes any corporate action to authorize or effect any of the
foregoing; or
(6) a court of competent jurisdiction enters a judgment, decree or
order for relief in respect of the Company or any of its Significant
Subsidiaries in an involuntary case or proceeding under any Bankruptcy
Law, which shall (A) approve as properly filed a petition seeking
reorganization, arrangement, adjustment or composition in respect of the
Company or any of its Significant Subsidiaries, (B) appoint a Custodian
of the Company or any of its Significant Subsidiaries or for
substantially all of any of their property or (C) order the winding-up or
liquidation of its affairs; and such judgment, decree or order shall
remain unstayed and in effect for a period of 60 consecutive days; or
(7) one or more judgments, orders or decrees of any court or
regulatory or administrative agency of competent jurisdiction for the
payment of money in excess of $5,000,000, either individually or in the
aggregate, shall be entered against the Company or any Restricted
Subsidiary of the Company or any of their respective properties and shall
not
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be discharged or fully bonded and there shall have been a period of 60
days after the date on which any period for appeal has expired and during
which a stay of enforcement of such judgment, order or decree shall not
be in effect; or
(8) any of the Guarantees or the Subsidiary Guarantees ceases to be
in full force and effect, or any of the Guarantees or the Subsidiary
Guarantees is declared to be null and void and unenforceable or any of
the Guarantees or the Subsidiary Guarantees is found to be invalid or any
of the Guarantors or the Subsidiary Guarantors denies its liability under
its Guarantee or Subsidiary Guarantee, as the case may be (other than by
reason of release of a Subsidiary Guarantor in accordance with the terms
of this Indenture).
The Trustee shall, within 30 days after the occurrence of any Default
actually known to a Responsible Officer of the Trustee, give to the holders of
Securities notice of such Default; provided that, except in the case of a
Default in the payment of principal of or interest on any of the Securities,
the Trustee shall be protected in withholding such notice if and so long as a
Responsible Officer of the Trustee in good faith determines that the
withholding of such notice is in the interest of the Holders of Securities.
SECTION 6.02. Acceleration.
If an Event of Default (other than an Event of Default specified in clause
(5) or (6) above) occurs and is continuing, then the Trustee or the Holders of
not less than 25% in aggregate principal amount of the then outstanding
Securities may declare the unpaid principal of, premium, if any, and accrued
and unpaid interest on, all the Securities then outstanding to be immediately
due and payable, by a notice in writing to the Company (and to the Trustee, if
given by Holders) and upon such declaration such principal amount, premium, if
any, and accrued and unpaid interest will become immediately due and payable.
If an Event of Default specified in clause (5) or (6) above occurs, all unpaid
principal of, and premium, if any, and accrued and unpaid interest on, the
Securities then outstanding will ipso facto become and be immediately due and
payable without any declaration or other act on the part of the Trustee or any
Holder.
At any time after a declaration of acceleration with respect to the
Securities as described in the preceding paragraph, the Holders of a majority
in principal amount of the Securities then outstanding may rescind and cancel
such declaration and its consequences (a) if the rescission would not conflict
with any judgment or decree, (b) if all existing Events of Default have been
cured or waived except nonpayment of principal or interest that has become due
solely because of the acceleration, (c) to the extent the payment of such
interest is lawful, interest on overdue installments of interest and overdue
principal, which has become due otherwise than by such declaration of
acceleration, has been paid, (d) if the Company has paid the Trustee its
reasonable compensation and
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reimbursed the Trustee for its expenses, disbursements and advances and (e)
in the event of the cure or waiver of an Event of Default of the type described
in clauses (5) and (6) of the description of Events of Default above, the
Trustee shall have received an Officers' Certificate and an Opinion of Counsel
that such Event of Default has been cured or waived. No such rescission shall
affect any subsequent Default or impair any right consequent thereto.
SECTION 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy by proceeding at law or in equity to collect the payment
of principal of or interest on the Securities or to enforce the performance of
any provision of the Securities, this Indenture, the Guarantees or any
Subsidiary Guarantees.
The Trustee may maintain a proceeding even if it does not possess any of
the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder 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. No remedy is
exclusive of any other remedy. All available remedies are cumulative to the
extent permitted by law.
SECTION 6.04. Waiver of Past Defaults.
Subject to Sections 6.07 and 9.02, the Holders of not less than a majority
in principal amount of the outstanding Securities by written notice to the
Trustee may waive an existing Default or Event of Default and its consequences,
except a Default in the payment of principal of, premium or interest on any
Security as specified in clauses (1) and (2) of Section 6.01. The Company
shall deliver to the Trustee an Officers' Certificate stating that the
requisite percentage of Holders have consented to such waiver and attaching
copies of such consents upon which the Trustee may conclusively rely. When a
Default or Event of Default is waived, it is cured and ceases.
SECTION 6.05. Control by Majority.
The Holders of not less than a majority in principal amount of the
outstanding Securities may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on it. Subject to Section 7.01, however, the Trustee may
refuse to follow any direction that conflicts with any law or this Indenture,
that the Trustee determines may be unduly prejudicial to the rights of another
Securityholder, or that may involve the Trustee in personal liability; provided
that the Trustee may take any other action deemed proper by the Trustee which
is not inconsistent with such direction.
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In the event the Trustee takes any action or follows any direction
pursuant to this Indenture, the Trustee shall be entitled to indemnification
from the Company satisfactory to it in its sole discretion against any loss,
liability, cost or expense caused by taking such action or following such
direction.
SECTION 6.06. Limitation on Suits.
A Securityholder may not pursue any remedy with respect to this Indenture,
the Securities, any Guarantee or Subsidiary Guarantee unless:
(1) the Holder gives to the Trustee written notice of a continuing
Event of Default;
(2) the Holder or Holders of at least 25% in principal amount of the
outstanding Securities make a written request to the Trustee to pursue
the remedy;
(3) such Holder or Holders offer and, if requested, provide to the
Trustee indemnity satisfactory to the Trustee against any loss, liability
or expense;
(4) the Trustee does not comply with the request within 30 days
after receipt of the request and the offer and, if requested, the
provision of indemnity; and
(5) during such 30-day period the Holder or Holders of a majority in
principal amount of the outstanding Securities do not give the Trustee a
direction which, in the opinion of the Trustee, is inconsistent with the
request.
A Securityholder may not use this Indenture to prejudice the rights of
another Securityholder or to obtain a preference or priority over such other
Securityholder.
SECTION 6.07. Rights of Holders To Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any
Holder to receive payment of principal of, premium and interest on a Security,
on or after the respective due dates expressed in such Security, 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 the Holder.
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SECTION 6.08. Collection Suit by Trustee.
If an Event of Default in payment of principal, premium or interest
specified in clause (1) or (2) of Section 6.01 occurs and is continuing, the
Trustee may recover judgment in its own name and as trustee of an express trust
against the Company or any other obligor on the Securities for the whole amount
of principal and accrued interest remaining unpaid, together with interest on
overdue principal and, to the extent that payment of such interest is lawful,
interest on overdue installments of interest, in each case at the rate per
annum borne by the Securities 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 may 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, legal fees,
disbursements and advances of the Trustee, its agents, nominees, custodians and
counsel) and the Securityholders allowed in any judicial proceedings relating
to the Company, its creditors or its property and shall be entitled and
empowered to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same, and any Custodian in
any such judicial proceedings is hereby authorized by each Securityholder 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 Securityholders, to pay
to the Trustee any amount due to it for the reasonable compensation, expenses,
legal fees, disbursements and advances of the Trustee, its agents, nominees,
custodians and counsel, and any other amounts due the Trustee under Section
7.07. Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Securityholder any
plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof, or to authorize the Trustee to
vote in respect of the claim of any Securityholder in any such proceeding.
SECTION 6.10. Priorities.
If the Trustee collects any money or property pursuant to this Article
Six, it shall pay out the money or property in the following order:
First: to the Trustee for amounts due under Section 7.07;
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Second: if the Holders are forced to proceed against the Company, a
Guarantor, a Subsidiary Guarantor or any other obligor on the Securities
directly without the Trustee, to Holders for their collection costs;
Third: to Holders for amounts due and unpaid on the Securities for
principal, premium and interest, ratably, without preference or priority
of any kind, according to the amounts due and payable on the Securities
for principal, premium and interest, respectively; and
Fourth: to the Company, the Guarantors or any Subsidiary
Guarantors, as their respective interests may appear.
The Trustee, upon prior notice to the Company, may fix a record date and
payment date for any payment to Securityholders 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 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 and expenses, 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 6.11 does not apply to a suit by the Trustee, a
suit by a Holder pursuant to Section 6.07, or a suit by a Holder or Holders of
more than 10% in principal amount of the outstanding Securities.
ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee.
(a) If an Event of Default actually known to a Responsible Officer of the
Trustee 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 their exercise as a prudent person would exercise or use
under the circumstances in the conduct of his own affairs. Subject to such
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provisions, the Trustee shall be under no obligation to exercise any of its
rights or powers under this Indenture at the request of any of the holders of
Securities, unless they shall have offered to the Trustee security and
indemnity satisfactory to it.
(b) Except during the continuance of an Event of Default actually known to
a Responsible Officer of the Trustee:
(1) The Trustee need perform only those duties as are specifically
set forth herein and no others and no implied covenants or obligations
shall be read into this Indenture against the Trustee.
(2) 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 and such
other documents delivered to it pursuant to Section 11.04 hereof
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 liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(1) This paragraph does not limit the effect of paragraph (b) of
this Section 7.01.
(2) The Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer of the Trustee, unless it is
proved that the Trustee was negligent in ascertaining the pertinent
facts.
(3) 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.
(d) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or to take or omit to take any
action under this Indenture or take any action at the request or direction of
Holders if it shall have reasonable grounds for believing that repayment of
such funds is not assured to it or it does not receive an indemnity
satisfactory to it in its sole discretion against such risk, liability, loss,
fee or expense which might be incurred by it in compliance with such request or
direction.
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(e) Every provision of this Indenture that in any way relates to the
Trustee is subject to this Section 7.01.
(f) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
SECTION 7.02. Rights of Trustee.
Subject to Section 7.01:
(a) The Trustee may conclusively rely and shall be protected in
acting or refraining from acting on 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 and an Opinion of Counsel, which shall conform
to the provisions of Section 11.05. The Trustee shall not be liable for
any action it takes or omits to take in good faith in reliance on such
certificate or opinion.
(c) The Trustee may act through its attorneys, agents, custodians
and nominees and shall not be responsible for the misconduct or
negligence of any attorney, agent, custodian or nominee (other than such
a person who is an employee of the Trustee) appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it reasonably believes to be authorized or
within its rights or powers.
(e) The Trustee may consult with counsel and the advice or opinion
of such counsel as to matters of law shall be full and complete
authorization and protection from liability in respect of any action
taken, omitted or suffered by it hereunder in good faith and in
accordance with the advice or opinion of such counsel.
(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, order or
direction of any of the Holders pursuant to the provisions of this
Indenture, unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby.
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(g) The Trustee shall not be deemed to have notice or knowledge of
any matter unless a Responsible Officer assigned to and working in the
Trustee's Corporate Trust Office has actual knowledge thereof or unless
written notice thereof is received by the Trustee, attention: Corporate
Trust Services and such notice references the Securities generally, the
Company or this Indenture.
SECTION 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the owner
or pledgee of Securities and may otherwise deal with the Company, its
Subsidiaries, the Guarantors, any Subsidiary Guarantors and their respective
Affiliates with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights. However, the Trustee must comply with
Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation as to
the validity or adequacy of this Indenture or the Securities, it shall not be
accountable for the Company's use of the proceeds from the Securities, and it
shall not be responsible for any statement of the Company in this Indenture or
any document issued in connection with the sale of Securities or any statement
in the Securities other than the Trustee's certificate of authentication. The
Trustee makes no representations with respect to the effectiveness or adequacy
of this Indenture. The Trustee shall not be responsible for independently
ascertaining or maintaining such validity, if any, and shall be fully protected
in relying upon certificates and opinions delivered to it in accordance with
the terms of this Indenture.
SECTION 7.05. Notice of Default.
If a Default or an Event of Default occurs and is continuing and a
Responsible Officer of the Trustee receives actual notice of such event, the
Trustee shall mail to each Securityholder, as their names and addresses appear
on the Securityholder list described in Section 2.05, notice of the uncured
Default or Event of Default within 30 days after the Trustee receives such
notice. Except in the case of a Default or an Event of Default in payment of
principal of, premium or interest on, any Security, including the failure to
make payment on (i) the Change of Control Payment Date pursuant to a Change of
Control Offer or (ii) the Excess Proceeds Payment Date pursuant to an Asset
Sale Offer, or the Trustee may withhold the notice if and so long as the board
of directors, the executive committee, or a trust committee of directors, of
the Trustee in good faith determines that withholding the notice is in the
interest of the Securityholders.
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SECTION 7.06. Reports by Trustee to Holders.
This Section 7.06 shall not be operative as a part of this Indenture until
this Indenture is qualified under the TIA, and, until such qualification, this
Indenture shall be construed as if this Section 7.06 were not contained herein.
Within 60 days after each May 15 of each year beginning with 1996, the
Trustee shall, to the extent that any of the events described in TIA Section
313(a) occurred within the previous twelve months, but not otherwise, mail to
each Securityholder a brief report dated as of such date that complies with TIA
Section 313(a). The Trustee also shall comply with TIA Section Section
313(b), 313(c) and 313(d).
A copy of each report at the time of its mailing to Securityholders shall
be mailed to the Company and filed with the SEC and each securities exchange,
if any, on which the Securities are listed.
The Company shall notify a Responsible Officer of the Trustee if the
Securities become listed on any securities exchange or of any delisting
thereof.
SECTION 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time reasonable
compensation for its services hereunder. The Trustee's compensation shall not
be limited by any law on compensation of a trustee of an express trust. The
Company shall reimburse the Trustee upon request for all reasonable
disbursements, expenses and advances (including reasonable fees and expenses of
counsel) incurred or made by it in addition to the compensation for its
services, except any such disbursements, expenses and advances as may be
attributable to the Trustee's negligence or bad faith. Such expenses shall
include the reasonable compensation, legal fees, disbursements and expenses of
the Trustee's agents, accountants, experts, nominees, custodians and counsel
and any taxes or other expenses incurred by a trust created pursuant to Section
8.01 hereof.
The Company shall indemnify the Trustee, its directors, officers and
employees and each predecessor trustee for, and hold it harmless against, any
loss, liability or expense incurred by the Trustee without negligence or bad
faith on its part arising out of or in connection with the administration of
this trust and its duties under this Indenture, including the reasonable
expenses and attorneys' fees of defending itself against any claim of liability
arising hereunder. The Trustee shall notify the Company promptly of any claim
asserted against the Trustee for which it may seek indemnity. However, the
failure by the Trustee to so notify the Company shall not relieve the Company
of its obligations hereunder. The Company shall defend the claim and the
Trustee shall
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cooperate in the defense (and may employ its own counsel) at the Company's
expense. The Company need not pay for any settlement made without its written
consent, which consent shall not be unreasonably withheld or delayed. The
Company need not reimburse any expense or indemnify against any loss or
liability incurred by the Trustee as a result of the violation of this
Indenture by the Trustee if such violation arose from the Trustee's negligence
or bad faith.
To secure the Company's payment obligations in this Section 7.07, the
Trustee shall have a senior claim prior to the Securities against all money or
property held or collected by the Trustee, in its capacity as Trustee.
When the Trustee incurs expenses or renders services after an Event of
Default specified in clause (5) or (6) of Section 6.01 occurs, the expenses
(including the reasonable fees and expenses of its agents and counsel) and the
compensation for the services shall be preferred over the status of the Holders
in a proceeding under any Bankruptcy Law and are intended to constitute
expenses of administration under any Bankruptcy Law. The Company's obligations
under this Section 7.07 and any claim arising hereunder shall survive the
resignation or removal of any Trustee, the discharge of the Company's
obligations pursuant to Article Eight and any rejection or termination under
any Bankruptcy Law.
SECTION 7.08. Replacement of Trustee.
The Trustee may resign at any time by so notifying the Company in writing.
The Holders of a majority in principal amount of the outstanding Securities
may remove the Trustee by so notifying the Company and the Trustee in writing
and may appoint a successor trustee with the Company's consent. The Company
may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a receiver or other public officer takes charge of the Trustee
or its property; or
(4) the Trustee becomes legally incapable of acting with respect to
its duties hereunder.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall notify each Holder of such event
and shall promptly appoint a successor Trustee. Within one year after the
successor Trustee takes office, the Holders of a majority
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in principal amount of the Securities may appoint a successor Trustee to
replace the successor Trustee appointed by the Company.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Immediately after that, the
retiring Trustee shall transfer, after payment of all sums then owing to the
Trustee pursuant to Section 7.07, all property held by it as Trustee to the
successor Trustee, subject to the lien provided in Section 7.07, 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; provided, however, that no Trustee under this Indenture
shall be liable for any act or omission of any successor Trustee. A successor
Trustee shall mail notice of its succession to each Securityholder.
If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or
the Holders of at least 10% in principal amount of the outstanding Securities
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section 7.08,
the Company's obligations under Section 7.07 shall continue for the benefit of
the retiring Trustee and the Company shall pay to any such replaced or removed
Trustee all amounts owed under Section 7.07 upon such replacement or removal.
SECTION 7.09. Successor Trustee by Merger, Etc.
If the Trustee consolidates with, merges or converts into, or transfers
all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee. In case any Securities
shall have been authenticated, but not delivered, by the Trustee then in
office, any successor by merger, conversion or consolidation to such
authenticating Trustee may adopt such authentication and deliver the Securities
so authenticated with the same effect as if such successor Trustee had itself
authenticated such Securities.
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SECTION 7.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the requirement
of TIA Section Section 310(a)(1) and 310(a)(5). The Trustee shall have a
combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with TIA
Section 310(b); provided, however, that there shall be excluded from the
operation of TIA Section 310(b)(1) any indenture or indentures under which
other securities, or certificates of interest or participation in other
securities, of the Company are outstanding, if the requirements for such
exclusion set forth in TIA Section 310(b)(1) are met.
SECTION 7.11. Preferential Collection of Claims Against Company.
The Trustee, in its capacity as Trustee hereunder shall comply with 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.
ARTICLE EIGHT
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 8.01. Legal Defeasance and Covenant Defeasance.
(a) The Company may, at its option by Board Resolution, at any time, with
respect to the Securities, elect to have either paragraph (b) or paragraph (c)
below be applied to the outstanding Securities upon compliance with the
conditions set forth in paragraph (d).
(b) Upon the Company's exercise under paragraph (a) of the option
applicable to this paragraph (b), the Company shall be deemed to have been
released and discharged from its obligations with respect to the outstanding
Securities on the date the conditions set forth below are satisfied
(hereinafter, "Legal Defeasance"). For this purpose, such Legal Defeasance
means that the Company shall be deemed to have paid and discharged the entire
indebtedness represented by the outstanding Securities, which shall thereafter
be deemed to be "outstanding" only for the purposes of the Sections and matters
under this Indenture referred to in (i) and (ii) below, and to have satisfied
all its other obligations under such Securities and this Indenture insofar as
such Securities are
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concerned, except for the following, which shall survive until otherwise
terminated or discharged hereunder: (i) the rights of the Holders of
outstanding Securities to receive payment in respect of the principal of,
premium, if any, and interest on such Securities when such payments are due,
(ii) the Company's obligations to issue temporary Securities, register the
transfer or exchange of any Securities, replace mutilated, destroyed, lost or
stolen Securities and maintain an office or agency for payments in respect of
the Securities, (iii) the rights, powers, trusts, duties and immunities of the
Trustee, and (iv) the defeasance provisions of this Indenture. The Company
may exercise its option under this paragraph (b) notwithstanding the prior
exercise of its option under paragraph (c) below with respect to the
Securities.
(c) Upon the Company's exercise under paragraph (a) of the option
applicable to this paragraph (c), the Company shall be released and discharged
from its obligations under any covenant contained in Article Five and in
Sections 4.03 through 4.24 with respect to the outstanding Securities on and
after the date the conditions set forth below are satisfied (hereinafter,
"Covenant Defeasance"), and the Securities shall thereafter be deemed to be not
"outstanding" for the purpose 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. For this purpose, such Covenant Defeasance means that, with respect
to the outstanding Securities, the Company and any Guarantor or Subsidiary
Guarantor 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(3), nor shall
any event referred to in Section 6.01(4) or (7) thereafter constitute a Default
or an Event of Default thereunder but, except as specified above, the remainder
of this Indenture and such Securities shall be unaffected thereby.
(d) The following shall be the conditions to application of either
paragraph (b) or paragraph (c) above to the outstanding Securities:
(1) The Company shall have irrevocably deposited in trust with the
Trustee, pursuant to an irrevocable trust and security agreement in form
and substance satisfactory to the Trustee, U.S. Legal Tender or direct
non-callable obligations of, or non-callable obligations guaranteed by,
the United States of America for the payment of which obligation or
guarantee the full faith and credit of the United States of America is
pledged ("U.S. Government Obligations") maturing as to principal and
interest in such amounts and at such times as are sufficient, without
consideration of the reinvestment of such interest and after payment of
all Federal, state and local taxes or other charges or assessments in
respect thereof payable by the Trustee, in the opinion of a nationally
recognized firm of Independent
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public accountants expressed in a written certification thereof (in form
and substance reasonably satisfactory to the Trustee) delivered to the
Trustee, to pay the principal of, premium, if any, and interest on all
the outstanding Securities on the dates on which any such payments are
due and payable in accordance with the terms of this Indenture and of the
Securities;
(2) Such deposits shall not cause the Trustee to have a conflicting
interest as defined in and for purposes of the TIA;
(3) The Trustee shall have received Officers' Certificates stating
that No Default of Event of Default or event which with notice or lapse
of time or both would become a Default or an Event of Default with
respect to the Securities shall have occurred and be continuing on the
date of such deposit or, insofar as Section 6.01(5) or (6) is concerned,
at any time during the period ending on the 91st day after the date of
such deposit (it being understood that this condition shall not be deemed
satisfied until the expiration of such period);
(4) The Trustee shall have received Officers' Certificates stating
that such deposit will not result in a Default under this Indenture or a
breach or violation of, or constitute a default under, any other material
instrument or agreement to which the Company or any of its Subsidiaries
is a party or by which it or its property is bound;
(5) (i) In the event the Company elects paragraph (b) hereof, the
Company shall deliver to the Trustee an Opinion of Counsel, in form and
substance reasonably satisfactory to the Trustee to the effect that (A)
the Company has received from, or there has been published by, the
Internal Revenue Service a ruling or (B) since the Issue Date, there has
been a change in the applicable federal income tax law, in either case to
the effect that, and based thereon such Opinion of Counsel shall state
that Holders of the Securities will not recognize income gain or loss for
Federal income tax purposes as a result of such deposit and the
defeasance contemplated hereby and will be subject to Federal income
taxes in the same manner and at the same times as would have been the
case of such deposit and defeasance had not occurred, or (ii) in the
event the Company elects paragraph (c) hereof, the Company shall deliver
to the Trustee an Opinion of Counsel, in form and substance reasonably
satisfactory to the Trustee, to the effect that, Holders of the
Securities will not recognize income, gain or loss for Federal income tax
purposes as a result of such deposit and the defeasance contemplated
hereby and will be subject to Federal income tax in the same amounts and
in the same manner and at the same times as would have been the case if
such deposit and defeasance had not occurred;
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(6) The deposit shall not result in the Company, the Trustee or the
trust becoming or being deemed to be an "investment company" under the
Investment Company Act of 1940, as amended;
(7) The Company shall have delivered to the Trustee an Officers'
Certificate, in form and substance reasonably satisfactory to the
Trustee, stating that the deposit under clause (1) was not made by the
Company, a Guarantor, any Subsidiary Guarantor or any Subsidiary of the
Company with the intent of defeating, hindering, delaying or defrauding
any other creditors of the Company, a Guarantor, any Subsidiary Guarantor
or any Subsidiary of the Company or others;
(8) The Company shall have delivered to the Trustee an Opinion of
Counsel, in form and substance reasonably satisfactory to the Trustee, to
the effect that, (A) the trust funds will not be subject to the rights of
holders of Indebtedness of the Company or any Guarantor or Subsidiary
Guarantor other than the Securities and (B) assuming no intervening
bankruptcy of the Company between the date of deposit and the 91st day
following the deposit and that no Holder of Securities is an insider of
the Company, after the passage of 90 days following the deposit, the
trust funds will not be subject to any applicable bankruptcy, insolvency,
reorganization or similar law affecting creditors' rights generally; and
(9) The Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent specified herein relating to the defeasance contemplated by
this Section 8.01 have been complied with; provided, however, that no
deposit under clause (1) above shall be effective to terminate the
obligations of the Company under the Securities or this Indenture prior
to 90 days following any such deposit.
In the event all or any portion of the Securities are to be redeemed
through such irrevocable trust, the Company must make arrangements satisfactory
to the Trustee, at the time of such deposit, for the giving of the notice of
such redemption or redemptions by the Trustee in the name and at the expense of
the Company.
SECTION 8.02. Satisfaction and Discharge.
In addition to the Company's rights under Section 8.01, the Company
may terminate all of its obligations under this Indenture (subject to
Section 8.03) when:
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(1) all Securities theretofore authenticated and delivered (other
than Securities which have been destroyed, lost or stolen and which have
been replaced or paid as provided in Section 2.07) have been delivered to
the Trustee for cancellation; or
(2) all Securities not theretofore delivered to the Trustee for
cancellation (except lost, stolen or destroyed Securities which have been
replaced or paid) have been called for redemption pursuant to the terms
of the Securities or have otherwise become due and payable and the
Company has irrevocably deposited or caused to be deposited with the
Trustee funds in an amount sufficient to pay and discharge the entire
Indebtedness on the Securities not theretofore delivered to the Trustee
for cancellation, for principal of, premium, if any, and interest on the
Securities to the date of deposit together with irrevocable instructions
from the Company directing the Trustee to apply such funds to the payment
thereof at maturity or redemption, as the case may be; and
(3) the Company has paid or caused to be paid all other sums payable
hereunder and under the Securities by the Company; and
(4) there exists no Default or Event of Default under this
Indenture; and
(5) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent specified herein relating to the satisfaction and discharge of
this Indenture have been complied with.
SECTION 8.03. Survival of Certain Obligations.
Notwithstanding the satisfaction and discharge of this Indenture
and of the Securities referred to in Section 8.01 or 8.02, the
respective obligations of the Company and the Trustee under Sections 2.02,
2.03, 2.04, 2.05, 2.06, 2.07, 2.10, 2.12, 2.13, 4.01, 4.02 and 6.07, Article
Seven and Sections 8.05, 8.06 and 8.07 shall survive until the Securities are
no longer outstanding, and thereafter the obligations of the Company and the
Trustee under Sections 7.07, 8.05, 8.06 and 8.07 shall survive. Nothing
contained in this Article Eight shall abrogate any of the rights, obligations
or duties of the Trustee under this Indenture.
SECTION 8.04. Acknowledgment of Discharge by Trustee.
Subject to Section 8.07, after (i) the conditions of Section 8.01
or 8.02 have been satisfied, (ii) the Company has paid or caused to be
paid all other sums payable hereunder by the Company and (iii) the Company has
delivered to the Trustee an Officers' Certificate and an Opinion of Counsel,
each stating that all conditions precedent referred to in clause (i) above
relating to the
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satisfaction and discharge of this Indenture have been complied with, the
Trustee upon written request shall acknowledge in writing the discharge of the
Company's obligations under this Indenture except for those surviving
obligations specified in Section 8.03.
SECTION 8.05. Application of Trust Assets.
The Trustee shall hold any U.S. Legal Tender or U.S. Government
Obligations deposited with it in the irrevocable trust established pursuant to
Section 8.01. The Trustee shall apply the deposited U.S. Legal Tender or the
U.S. Government Obligations, together with earnings thereon, through the Paying
Agent, in accordance with this Indenture and the terms of the irrevocable trust
agreement established pursuant to Section 8.01, to the payment of principal of
and interest on the Securities. The U.S. Legal Tender or U.S. Government
Obligations so held in trust and deposited with the Trustee in compliance with
Section 8.01 shall not be part of the trust estate under this Indenture, but
shall constitute a separate trust fund for the benefit of all Holders entitled
thereto.
SECTION 8.06. Repayment to the Company, Guarantors or Subsidiary Guarantors;
Unclaimed Money.
Subject to Sections 7.07 and 8.01, the Trustee shall promptly pay to the
Company, or if deposited with the Trustee by any Guarantor or Subsidiary
Guarantor, to such Guarantor or Subsidiary Guarantor, as the case may be, upon
receipt by the Trustee of an Officers' Certificate, any excess money,
determined in accordance with Section 8.01, held by it at any time. The
Trustee and the Paying Agent shall pay to the Company or any Guarantor or
Subsidiary Guarantor, as the case may be, upon receipt by the Trustee or the
Paying Agent, as the case may be, of an Officers' Certificate, any money held
by it for the payment of principal, premium, if any, or interest that remains
unclaimed for two years after payment to the Holders is required; provided,
however, that the Trustee and the Paying Agent before being required to make
any payment may, but need not, at the expense of the Company cause to be
published once in a newspaper of general circulation in the City of New York or
mail to each Holder entitled to such money notice that such money remains
unclaimed and that after a date specified therein, which shall be at least 2
years from the date of such publication or mailing, any unclaimed balance of
such money then remaining will be repaid to the Company. After payment to the
Company or any Guarantor or Subsidiary Guarantor, as the case may be, Security
holders entitled to money must look solely to the Company for payment as
general creditors unless an applicable abandoned property law designates
another Person, and all liability of the Trustee or Paying Agent with respect
to such money shall thereupon cease.
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SECTION 8.07. Reinstatement.
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with this Indenture by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application,
then and only then the Company's and each Guarantor's and Subsidiary
Guarantor's, if any, obligations under this Indenture and the Securities shall
be revived and reinstated as though no deposit had been made pursuant to this
Indenture until such time as the Trustee is permitted to apply all such money
or U.S. Government Obligations in accordance with this Indenture; provided,
however, that if the Company or the Guarantors or Subsidiary Guarantors, as the
case may be, have made any payment of principal of, premium, if any, or
interest on any Securities because of the reinstatement of their obligations,
the Company or the Guarantors or Subsidiary Guarantors, as the case may be,
shall be, subrogated to the rights of the holders of such Securities to receive
such payment from the money or U.S. Government Obligations held by the Trustee
or Paying Agent.
ARTICLE NINE
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Without Consent of Holders.
The Company, the Guarantors and the Subsidiary Guarantors (when
authorized by Board Resolutions), and the Trustee, together, may amend
or supplement this Indenture or the Securities without notice to or consent of
any Securityholder:
(1) to cure any ambiguity, defect or inconsistency;
(2) to evidence the succession in accordance with Article Five
hereof of another Person to the Company or a Guarantor or Subsidiary
Guarantor and the assumption by any such successor of the covenants of
the Company or a Guarantor or Subsidiary Guarantor herein and in the
Securities or a Guarantee or a Subsidiary Guarantee, as the case may be;
(3) to provide for uncertificated Securities in addition to or in
place of certificated Securities;
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(4) to make any other change that does not materially adversely
affect the rights of any Securityholders hereunder; or
(5) to comply with any requirements of the SEC in connection with
the qualification of this Indenture under the TIA; or
(6) to add or release any Subsidiary Guarantor pursuant to the terms
of this Indenture;
provided that each of the Company, the Guarantors and the Subsidiary Guarantors
has delivered to the Trustee an Opinion of Counsel and an Officers'
Certificate, each stating that such amendment or supplement complies with the
provisions of this Section 9.01.
SECTION 9.02. With Consent of Holders.
Subject to Section 6.07, the Company, the Guarantors and the
Subsidiary Guarantors (when authorized by Board Resolutions) and the Trustee,
together, with the written consent of the Holder or Holders of at least a
majority in aggregate principal amount of the outstanding Securities, may amend
or supplement this Indenture, the Securities, the Guarantees and any Subsidiary
Guarantees without notice to any other Securityholders. Subject to Section
6.07, the Holder or Holders of a majority in aggregate principal amount of the
outstanding Securities may waive compliance by the Company with any provision of
this Indenture or the Securities without notice to any other Securityholder.
Without the consent of each Securityholder affected, however, no amendment,
supplement or waiver, including a waiver pursuant to Section 6.04, may:
(1) reduce the principal amount of Securities whose Holders must
consent to an amendment, supplement or waiver of any provision of this
Indenture, the Securities, the Guarantees or the Subsidiary Guarantees;
(2) reduce the rate or change or have the effect of changing the
time for payment of interest, including default interest, on any
Security;
(3) reduce the principal amount of any Security;
(4) change or have the effect of changing the Final Maturity Date of
any Security, or alter the redemption or repurchase provisions contained
in this Indenture or the Securities in a manner adverse to any Holder;
<PAGE> 86
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(5) make any change in provisions of this Indenture protecting the
right of each Holder to receive payment of principal of and interest on
such Security on or after the due date thereof or to bring suit to
enforce such payment, or permitting Holders of a majority in principal
amount of the Securities to waive Defaults or Events of Default;
(6) make any changes in Section 6.04, 6.07 or this Section 9.02;
(7) make the principal of, premium or the interest on any Security
payable in money other than as provided for in this Indenture, the
Securities, the Guarantees and the Subsidiary Guarantees as in effect on
the date hereof;
(8) affect the ranking of the Securities, the Guarantees or the
Subsidiary Guarantees, in each case in a manner adverse to the Holders;
(9) amend, modify or change the obligation of the Company to make or
consummate a Change of Control Offer, a Net Proceeds Offer or waive any
default in the performance thereof or modify any of the provisions or
definitions with respect to any such offers; or
(10) release any Guarantor or Subsidiary Guarantor from any of its
obligations under its Guarantee or Subsidiary Guarantee, as the case may
be, or this Indenture otherwise than in accordance with the terms of this
Indenture.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section 9.02 becomes
effective, the Company shall mail to the Holders 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 supplemental indenture.
SECTION 9.03. Compliance with TIA.
From the date on which this Indenture is qualified under the TIA, every
amendment, waiver or supplement of this Indenture or the Securities shall
comply with the TIA as then in effect.
<PAGE> 87
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SECTION 9.04. Revocation and Effect of Consents.
Until an amendment, waiver or supplement becomes effective, a consent to
it by a Holder is a continuing consent by the Holder and every subsequent
Holder of a Security or portion of a Security that evidences the same debt as
the consenting Holder's Security, even if notation of the consent is not made
on any Security. However, any such Holder or subsequent Holder may revoke the
consent as to his Security or portion of his Security by notice to the Trustee
or the Company received before the date on which the Trustee receives an
Officers' Certificate certifying that the Holders of the requisite principal
amount of Securities have consented (and not theretofore revoked such consent)
to the amendment, supplement or waiver.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver. If a record date is fixed, then notwithstanding the last
sentence of the immediately preceding paragraph, those Persons who were Holders
at such record date (or their duly designated proxies), and only those Persons,
shall be entitled to revoke any consent previously given, whether or not such
Persons continue to be Holders after such record date. No such consent shall
be valid or effective for more than 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it shall bind
every Securityholder, unless it makes a change described in any of clauses (1)
through (10) of Section 9.02, in which case, the amendment, supplement or
waiver shall bind only each Holder of a Security who has consented to it and
every subsequent Holder of a Security or portion of a Security that evidences
the same debt as the consenting Holder's Security; provided that any such
waiver shall not impair or affect the right of any Holder to receive payment of
principal of and interest on a Security, on or after the respective due dates
expressed in such Security, or to bring suit for the enforcement of any such
payment on or after such respective dates without the consent of such Holder.
SECTION 9.05. Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the terms of a Security, the
Trustee may require the Holder of the Security to deliver it to the Trustee.
The Trustee may place an appropriate notation on the Security about the changed
terms and return it to the Holder. Alternatively, if the Company or the
Trustee so determines, the Company in exchange for the Security shall issue and
the Trustee shall authenticate a new Security that reflects the changed terms.
<PAGE> 88
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SECTION 9.06. Trustee To Sign Amendments, Etc.
The Trustee shall execute any amendment, supplement or waiver authorized
pursuant to this Article Nine; provided that the Trustee may, but shall not be
obligated to, execute any such amendment, supplement or waiver which affects
the Trustee's own rights, duties or immunities under this Indenture. The
Trustee shall be entitled to receive, and shall be fully protected in relying
upon, an Opinion of Counsel and an Officers' Certificate each stating that the
execution of any amendment, supplement or waiver authorized pursuant to this
Article Nine is authorized or permitted by this Indenture and constituted the
legal, valid and binding obligations of the Company enforceable in accordance
with its terms. Such Opinion of Counsel shall be at the expense of the
Company, and the Trustee shall have a lien under Section 7.07 for any such
expense.
ARTICLE TEN
GUARANTEE
SECTION 10.01. Unconditional Guarantee.
Each Guarantor and Subsidiary Guarantor hereby unconditionally, jointly
and severally, guarantees to each Holder of a Security authenticated and
delivered by the Trustee, and to the Trustee and its successors and assigns,
that: (i) the principal of, premium and interest on the Securities will be
promptly paid in full when due, subject to any applicable grace period, whether
at maturity, by acceleration or otherwise and interest on the overdue
principal, if any, and interest on any interest, to the extent lawful, of the
Securities and all other Obligations of the Company to the Holders or the
Trustee hereunder or thereunder will be promptly paid in full or performed, all
in accordance with the terms hereof and thereof; and (ii) in case of any
extension of time of payment or renewal of any Securities or of any such other
Obligations, the same will be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, subject to any
applicable grace period, whether at stated maturity, by acceleration or
otherwise, subject, however, in the case of clauses (i) and (ii) above, to the
limitations set forth in Section 10.03. Each Guarantor and
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Subsidiary Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of
the Securities or this Indenture, the absence of any action to enforce the
same, any waiver or consent by any Holder of the Securities 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 or
Subsidiary Guarantor. Each Guarantor and Subsidiary 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 its Guarantee or Subsidiary Guarantee, as the
case may be, will not be discharged except by complete performance of the
obligations contained in the Securities, this Indenture, the Guarantees and
each Subsidiary Guarantee. If any Securityholder or the Trustee is required by
any court or otherwise to return to the Company, any Guarantor, any Subsidiary
Guarantor or any custodian, trustee, liquidator or other similar official
acting in relation to the Company or any Guarantor or Subsidiary Guarantor, any
amount paid by the Company or any Guarantor or Subsidiary Guarantor to the
Trustee or such Securityholder, each Guarantee and Subsidiary Guarantee to the
extent theretofore discharged, shall be reinstated in full force and effect.
Each Guarantor and Subsidiary Guarantor further agrees that, as between each
Guarantor or Subsidiary Guarantor, 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 Six for the purposes of each
Guarantee and Subsidiary 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 acceleration of such obligations
as provided in Article Six, such obligations (whether or not due and payable)
shall forthwith become due and payable by each Guarantor and Subsidiary
Guarantor for the purpose of its Guarantee or Subsidiary Guarantee, as the case
may be.
SECTION 10.02. Severability
In case any provision of a Guarantee or Subsidiary Guarantee 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 10.03. Release of a Subsidiary Guarantor.
If all of the assets of any Subsidiary Guarantor or all of the Capital
Stock of any Subsidiary Guarantor is sold (including by issuance or otherwise)
by the Company or any of its Subsidiaries in a transaction constituting an
Asset Sale, and if the Net Cash Proceeds from such Asset Sale are used in
accordance with Section 4.12, then such Subsidiary Guarantor (in the event of a
sale or other disposition of all of the Capital Stock of such Subsidiary
Guarantor) or the corporation or other entity acquiring such assets (in the
event of a sale or other disposition of all or substantially all of the assets
of such Subsidiary Guarantor) shall be released and discharged of its
Obligations under its Subsidiary Guarantee.
The Trustee shall deliver an appropriate instrument evidencing such
release upon receipt of a request by the Company accompanied by an Officers'
Certificate and Opinion of Counsel
<PAGE> 90
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certifying as to the compliance with this Section 10.03. Any Subsidiary
Guarantor not so released remains liable for the full amount of principal of an
interest on the Securities as provided in this Article Ten.
SECTION 10.04. Limitation of a Guarantor's or Subsidiary Guarantor's Liability.
Each Guarantor and Subsidiary Guarantor and, by its acceptance hereof,
each Holder hereby confirms that it is the intention of all such parties that
the guarantee by such Guarantor or Subsidiary Guarantor, as the case may be,
pursuant to its Guarantee or Subsidiary Guarantee not constitute a fraudulent
transfer or conveyance for purposes of any Bankruptcy Law, the Uniform
Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar
Federal or state law. To effectuate the foregoing intention, the Holders and
each Guarantor and Subsidiary Guarantor hereby irrevocably agree that the
obligations of each Guarantor and Subsidiary Guarantor under its Guarantee or
Subsidiary Guarantee, as the case may be, shall be limited to the maximum
amount as will, after giving effect to all other contingent and fixed
liabilities of such Guarantor or Subsidiary Guarantor, as the case may be, and
after giving effect to any collections from or payments made by or on behalf of
any other Guarantor or Subsidiary Guarantor, as the case may be, in respect of
the obligations of such other Guarantor or Subsidiary Guarantor, as the case
may be, under its Guarantee or Subsidiary Guarantee, as the case may be, or
pursuant to Section 10.05, result in the obligations of such Guarantor or
Subsidiary Guarantor under its Guarantee or Subsidiary Guarantee, as the case
may be, not constituting such fraudulent transfer or conveyance.
SECTION 10.05. Contribution.
In order to provide for just and equitable contribution among the
Guarantors and Subsidiary Guarantors, the Guarantors and Subsidiary Guarantors
agree, inter se, that in the event any payment or distribution is made by any
Guarantor or Subsidiary Guarantor (a "Funding Guarantor") under its Guarantee
or Subsidiary Guarantee, as the case may be, such Funding Guarantor shall be
entitled to a contribution from all other Guarantors and Subsidiary Guarantors
in a pro rata amount based on the Adjusted Net Assets of each Guarantor and
Subsidiary Guarantor (including the Funding Guarantor) for all payments,
damages and expenses incurred by that Funding Guarantor in discharging the
Company's obligations with respect to its Securities or any other Guarantor's
or Subsidiary Guarantor's obligations with respect to its Guarantee or
Subsidiary Guarantee, as the case may be. "Adjusted Net Assets" of a Guarantor
or Subsidiary Guarantor at any date shall mean the lesser of the amount by
which (x) the fair value of the property of such Guarantor or Subsidiary
Guarantor exceeds the total amount of liabilities, including, without
limitation, contingent liabilities (after giving effect to all other fixed and
contingent liabilities incurred or assumed on such date), but excluding
liabilities under the Guarantee or Subsidiary Guarantee, as the
<PAGE> 91
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case may be, of such Guarantor or Subsidiary Guarantor at such date and (y) the
present fair salable value of the assets of such Guarantor or Subsidiary
Guarantor at such date exceeds the amount that will be required to pay the
probable liability of such Guarantor or Subsidiary Guarantor on its debts
(after giving effect to all other fixed and contingent liabilities incurred or
assumed on such date), excluding debt in respect of the Guarantee or Subsidiary
Guarantee of such Guarantor or Subsidiary Guarantor, as the case may be, as
they become absolute and matured.
SECTION 10.06. Waiver of Subrogation.
Until all Guarantee or Subsidiary Guarantee Obligations are paid in full,
each Guarantor and Subsidiary Guarantor hereby irrevocably waives any claims or
other rights which it may now or hereafter acquire against the Company that
arise from the existence, payment, performance or enforcement of such
Guarantor's or Subsidiary Guarantor's obligations under its Guarantee or
Subsidiary Guarantee and this Indenture, including, without limitation, any
right of subrogation, reimbursement, exoneration, indemnification, and any
right to participate in any claim or remedy of any Holder of Securities against
the Company, whether or not such claim, remedy or right arises in equity, or
under contract, statute or common law, including, without limitation, the right
to take or receive from the Company, directly or indirectly, in cash or other
property or by set-off or in any other manner, payment or security on account
of such claim or other rights. If any amount shall be paid to any Guarantor or
Subsidiary Guarantor in violation of the preceding sentence and the Securities
shall not have been paid in full, such amount shall have been deemed to have
been paid to such Guarantor or Subsidiary Guarantor for the benefit of, and
held in trust for the benefit of, the Holders of the Securities, and shall
forthwith be paid to the Trustee for the benefit of such Holders to be credited
and applied upon the Securities, in accordance with the terms of this
Indenture. Each Guarantor and Subsidiary Guarantor acknowledges that it will
receive direct and indirect benefits from the financing arrangements
contemplated by this Indenture and that the waiver set forth in this Section
10.06 is knowingly made in contemplation of such benefits.
SECTION 10.07. Execution of Guarantees and Subsidiary Guarantees.
To evidence their guarantee to the Securityholders set forth in this
Article Ten, the Guarantors and Subsidiary Guarantors hereby agree to execute a
Guarantee or Subsidiary Guarantee, as the case may be, in substantially the
form included in the Securities, which shall be endorsed on each Security
ordered to be authenticated and delivered by the Trustee. Each Guarantor and
Subsidiary Guarantor hereby agrees that its Guarantee and Subsidiary Guarantee
set forth in this Article Ten shall remain in full force and effect
notwithstanding any failure to endorse on each Security a notation of such
Guarantee or Subsidiary Guarantee, as the case may be. Each such Guarantee or
Subsidiary Guarantee shall be signed on behalf of each Guarantor or Subsidiary
<PAGE> 92
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Guarantor, as the case may be, by two Officers, or an Officer and an Assistant
Secretary or one Officer shall sign and one Officer or an Assistant Secretary
(each of whom shall, in each case, have been duly authorized by all requisite
corporate actions) shall attest to such Guarantee or Subsidiary Guarantee prior
to the authentication of the Security on which it is endorsed, and the delivery
of such Security by the Trustee, after the authentication thereof hereunder,
shall constitute due delivery of such Guarantee or Subsidiary Guarantee, as the
case may be, on behalf of such Guarantor or Subsidiary Guarantor. Such
signatures upon the Guarantee or Subsidiary Guarantee may be by manual or
facsimile signature of such officers and may be imprinted or otherwise
reproduced on the Guarantee or Subsidiary Guarantee, and in case any such
officer who shall have signed the Guarantee or Subsidiary Guarantee shall cease
to be such officer before the Security on which such Guarantee or Subsidiary
Guarantee is endorsed shall have been authenticated and delivered by the
Trustee or disposed of by the Company, such Security nevertheless may be
authenticated and delivered or disposed of as though the person who signed the
Guarantee or Subsidiary Guarantee had not ceased to be such officer of the
Guarantor or Subsidiary Guarantor, as the case may be.
SECTION 10.08. Waiver of Stay, Extension or Usury Laws.
Each Guarantor and Subsidiary Guarantor convenants (to the extent that it
may lawfully do so) that it will not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury law or other law that would prohibit or forgive each
such Guarantor or Subsidiary Guarantor from performing its Guarantee or
Subsidiary Guarantee, as the case may be, as contemplated herein, wherever
enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Indenture; and (to the extent that it may
lawfully do so) each such Guarantor and Subsidiary Guarantor hereby expressly
waives all benefit or advantage of any such law, and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.
ARTICLE ELEVEN
MISCELLANEOUS
SECTION 11.01. TIA Controls.
If any provision of this Indenture limits, qualifies, or conflicts with
the duties imposed by operation of Section 318(c) of the TIA, the imposed
duties shall control.
<PAGE> 93
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SECTION 11.02. Notices.
Any notices or other communications required or permitted hereunder shall
be in writing, and shall be sufficiently given if made by hand delivery, by
telex, by telecopier or registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:
if to the Company, a Guarantor or a Subsidiary Guarantor:
Aetna Industries, Inc.
24331 Sherwood Avenue
P.O. Box 3067
Centerline, Michigan 48015-0067
Attention: Chief Executive Officer
Facsimile: (810) 759-0508
Telephone: (810) 759-2200
if to the Trustee:
Norwest Bank Minnesota National Association
6th and Marquette
Minneapolis, Minnesota 55479-0069
Attention: Corporate Trust Services
Facsimile: (612) 667-9825
Telephone: (612) 667-8058
Each of the Company and the Trustee by written notice to each other such
person may designate additional or different addresses for notices to such
person. Any notice or communication to the Company, a Guarantor or a
Subsidiary Guarantor or the Trustee, shall be deemed to have been given or made
as of the date so delivered if personally delivered; when answered back, if
telexed; when receipt is acknowledged, if telecopied; and five (5) calendar
days after mailing if sent by registered or certified mail, postage prepaid
(except that a notice of change of address shall not be deemed to have been
given until actually received by the addressee).
<PAGE> 94
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Any notice or communication mailed to a Securityholder shall be mailed to
him by first class mail or other equivalent means at his address as it appears
on the registration books of the Registrar and shall be sufficiently given to
him if so mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 11.03. Communications by Holders with Other Holders.
Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture, the
Securities, the Guarantees or the Subsidiary Guarantees. The Company, the
Trustee, the Registrar and any other Person shall have the protection of TIA
Section 312(c).
SECTION 11.04. Certificate and Opinion
as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take any
action under this Indenture, the Company shall furnish to the Trustee at the
request of the Trustee:
(1) an Officers' Certificate, in form and substance satisfactory to
the Trustee, stating that, in the opinion of the signers, all conditions
precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with; and
(2) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 11.05. 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 the Officers' Certificate
required by Section 4.08, shall include:
(1) a statement that the person making such certificate or opinion
has read such covenant or condition;
<PAGE> 95
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(2) 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;
(3) a statement that, in the opinion of such person, he 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 complied with; and
(4) a statement as to whether or not, in the opinion of each such
person, such condition or covenant has been complied with; provided,
however, that with respect to matters of fact an Opinion of Counsel may
rely on an Officers' Certificate or certificates of public officials.
SECTION 11.06. Rules by Trustee, Paying Agent, Registrar.
The Trustee, Paying Agent or Registrar may make reasonable rules for its
functions.
SECTION 11.07. Legal Holidays.
If a payment date is not a Business Day, payment may be made on the next
succeeding day that is a Business Day with the same force and effect as if made
on such payment date.
SECTION 11.08. Governing Law.
THIS INDENTURE, THE SECURITIES, THE GUARANTEES AND THE SUBSIDIARY
GUARANTEES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE
STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. Each of
the parties hereto agrees to submit to the jurisdiction of the courts of the
State of New York in any action or proceeding arising out of or relating to
this Indenture.
SECTION 11.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or
debt agreement of any of the Company or any of its Subsidiaries, any Guarantor
or any Subsidiary Guarantor. Any such indenture, loan or debt agreement may
not be used to interpret this Indenture.
<PAGE> 96
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SECTION 11.10. No Recourse Against Others.
A director, officer, employee, stockholder or incorporator, as such, of
the Company or any of its Subsidiaries, any of the Guarantors or any of the
Subsidiary Guarantors shall not have any liability for any obligations of the
Company, the Guarantors or the Subsidiary Guarantors under the Securities, this
Indenture, the Guarantees or the Subsidiary Guarantees or for any claim based
on, in respect of or by reason of such obligations or their creations. Each
Securityholder by accepting a Security waives and releases all such liability.
Such waiver and release are part of the consideration for the issuance of the
Securities.
SECTION 11.11. Successors.
All agreements of the Company, the Guarantors and the Subsidiary
Guarantors in this Indenture, the Securities, the Guarantees and the Subsidiary
Guarantees shall bind their respective successors. All agreements of the
Trustee in this Indenture shall bind its successor.
SECTION 11.12. Duplicate Originals.
All parties may sign any number of copies of this Indenture. Each signed
copy or counterpart shall be an original, but all of them together shall
represent the same agreement.
SECTION 11.13. Severability.
In case any one or more of the provisions in this Indenture, in the
Securities, in the Guarantees or in the Subsidiary Guarantees shall be held
invalid, illegal or unenforceable, in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions shall not in any way be affected or impaired thereby,
it being intended that all of the provisions hereof shall be enforceable to the
full extent permitted by law.
<PAGE> 97
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SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the date first written above.
AETNA INDUSTRIES, INC.
By: /s/ Ueli Spring
-------------------------
Name: Ueli Spring
Title: President and Chief
Executive Officer
NORWEST BANK MINNESOTA
NATIONAL ASSOCIATION
as Trustee
By: /s/ Curtis D. Schwegman
-------------------------
Name: Curtis D. Schwegman
Title: Assistant Vice President
THE GUARANTORS:
MS ACQUISITION CORP.
By: /s/ Ueli Spring
-------------------------
Name: Ueli Spring
Title: President and Chief
Executive Officer
AETNA HOLDINGS, INC.
By: /s/ Ueli Spring
-------------------------
<PAGE> 98
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Name: Ueli Spring
------------------------------
Title: President and Chief
Executive Officer
THE SUBSIDIARY GUARANTOR:
AETNA EXPORT SALES CORP.
By: /s/ Ueli Spring
---------------------------------
Name: Ueli Spring
Title: President and Chief
Executive Officer
<PAGE> 99
EXHIBIT A
[FORM OF SERIES A SECURITY]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES
ACT) (AN "ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING
THIS SECURITY IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT WITHIN
THREE YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE
TRANSFER THIS SECURITY EXCEPT (A) TO THE ISSUER OR ANY SUBSIDIARY THEREOF, (B)
INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH
RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN
ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS (THE FORM OF
WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), (D) OUTSIDE THE UNITED STATES
TO PERSONS OTHER THAN U.S. PERSONS IN OFFSHORE TRANSACTIONS MEETING THE
REQUIREMENTS OF RULE 904 UNDER REGULATION S UNDER THE SECURITIES ACT, (E)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE), OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH
PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION,"
"UNITED STATES" AND "U.S. PERSON" HAVE THE RESPECTIVE MEANINGS GIVEN TO THEM BY
REGULATION S UNDER THE SECURITIES ACT.
<PAGE> 100
AETNA INDUSTRIES, INC.
11 7/8% Senior Notes
due October 1, 2006, Series A
CUSIP No.:
No. [ ] $[ ]
AETNA INDUSTRIES, INC., a Delaware corporation (the "Company", which term
includes any successor corporation), for value received promises to pay to [ ]
or registered assigns, the principal sum of $[ ] Dollars, on
October 1, 2006.
Interest Payment Dates: April 1 and October 1 commencing April 1, 1997
Record Dates: March 15 and September 15
Reference is made to the further provisions of this Security contained
herein, which will for all purposes have the same effect as if set forth at
this place.
IN WITNESS WHEREOF, the Company has caused this Security to be signed
manually or by facsimile by its duly authorized officers.
Dated:
AETNA INDUSTRIES, INC.
By:
--------------------------
Name:
Title:
By:
--------------------------
Name:
Title:
-2-
<PAGE> 101
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the 11 7/8% Senior Notes due 2006, Series A, described in
the within-mentioned Indenture.
Dated: NORWEST BANK MINNESOTA
NATIONAL ASSOCIATION,
as Trustee
By
---------------------------------
Authorized Signatory
-3-
<PAGE> 102
(REVERSE OF SECURITY)
AETNA INDUSTRIES, INC.
11 7/8% Senior Notes
due October 1, 2006, Series A
1. Interest.
AETNA INDUSTRIES, INC., a Delaware corporation (the "Company"), promises
to pay interest on the principal amount of this Security at the rate per annum
shown above. The Company will pay interest semi-annually on April 1 and
October 1 of each year (an "Interest Payment Date"), commencing April 1, 1997.
Interest on the Securities will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from August 13, 1996.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
The Company shall pay interest on overdue principal from time to time on
demand at the rate borne by the Securities plus 2% and on overdue installments
of interest (without regard to any applicable grace periods) to the extent
lawful.
2. Method of Payment.
The Company shall pay interest on the Securities (except defaulted
interest) to the persons who are the registered Holders at the close of
business on the Record Date immediately preceding the Interest Payment Date
even if the Securities are cancelled on registration of transfer or
registration of exchange after such Record Date. Holders must surrender
Securities to a Paying Agent to collect principal payments. The Company shall
pay principal and interest in money of the United States that at the time of
payment is legal tender for payment of public and private debts ("U.S. Legal
Tender"). However, the Company may pay principal and interest by wire transfer
of Federal funds, or interest by check payable in such U.S. Legal Tender. The
Company may deliver any such interest payment to the Paying Agent or to a
Holder at the Holder's registered address.
3. Paying Agent and Registrar.
Initially, Norwest Bank Minnesota National Association (the "Trustee")
will act as Paying Agent and Registrar. The Company may change any Paying
Agent, Registrar or co-Registrar without notice to the Holders.
4. Indenture, Guarantees and Subsidiary Guarantees.
The Company issued the Securities under an Indenture, dated as of August
1, 1996 (the "Indenture"), among the Company, the Guarantors, the Subsidiary
Guarantor and the Trustee.
-4-
<PAGE> 103
Capitalized terms herein are used as defined in the Indenture unless otherwise
defined herein. The terms of the Securities include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S.C. Section Section 77aaa-77bbbb) (the "TIA"), as
in effect on the date of the Indenture until such time as the Indenture is
qualified under the TIA, and thereafter as in effect on the date on which the
Indenture is qualified under the TIA. Notwithstanding anything to the contrary
herein, the Securities are subject to all such terms, and Holders of Securities
are referred to the Indenture and the TIA for a statement of them. The
Securities are general unsecured obligations of the Company limited in
aggregate principal amount to $85,000,000. Payment on each Security is
guaranteed on a senior basis, jointly and severally, by the Guarantors and
Subsidiary Guarantors pursuant to Article Ten of the Indenture.
5. Optional Redemption.
The Securities will be redeemable, at the Company's option, in whole at
any time or in part from time to time, on and after October 1, 2001 at the
following redemption prices (expressed as percentages of the principal amount)
if redeemed during the twelve-month period commencing on October 1 of the years
set forth below, plus, in each case, accrued interest thereon to the date of
redemption:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2001 ........................................ 105.938%
2002 ........................................ 103.958%
2003 ........................................ 101.979%
2004 and thereafter ......................... 100.000%
</TABLE>
6. Optional Redemption upon Public Equity Offering.
At any time, or from time to time, on or prior to October 1, 1999, the
Company may, at its option, use the net cash proceeds of one or more Public
Equity Offerings (as defined) to redeem up to $25,000,000 aggregate principal
amount at a redemption price equal to 110.875% of the principal amount thereof
plus accrued and unpaid interest, if any, to the date of redemption; provided
that at least $60,000,000 aggregate principal amount of Securities remains
outstanding immediately after giving effect to any such redemption. In order
to effect the foregoing redemption with the net cash proceeds of a Public
Equity Offering, the Company shall send the redemption notice not later than 90
days after the consummation of such Public Equity Offering.
As used in the preceding paragraph, "Public Equity Offering" means an
underwritten public offering of Qualified Capital Stock of the Company or
either of the Guarantors pursuant to a registration statement filed with and
declared effective by the SEC in accordance with the Securities Act; provided
that, in the event of a Public Equity Offering by either of the Guarantors, it
contributes to the capital of the Company the portion of the net cash proceeds
of such Public
-5-
<PAGE> 104
Equity Offering necessary to pay the aggregate redemption price, plus accrued
and unpaid interest, if any, to the redemption date of the Securities to be
redeemed pursuant to the preceding paragraph.
7. Notice of Redemption.
Notice of redemption will be mailed at least 30 days but not more than 60
days before the Redemption Date to each Holder of Securities to be redeemed at
such Holder's registered address. Securities in denominations of $1,000 may be
redeemed only in whole. The Trustee may select for redemption portions (equal
to $1,000 or any integral multiple thereof) of the principal of Securities that
have denominations larger than $1,000.
If any Security is to be redeemed in part only, the notice of redemption
that relates to such Security shall state the portion of the principal amount
thereof to be redeemed. A new Security in a principal amount equal to the
unredeemed portion thereof will be issued in the name of the Holder thereof
upon cancellation of the original Security. On and after the Redemption Date,
interest will cease to accrue on Securities or portions thereof called for
redemption.
8. Change of Control Offer.
Upon the occurrence of a Change of Control, the Company will be required
to offer to purchase all of the outstanding Securities at a purchase price
equal to 101% of the principal amount thereof plus accrued and unpaid interest,
if any, to the date of repurchase.
9. Limitation on Disposition of Assets.
The Company is subject to certain conditions, obligated to make an offer
to purchase Securities at 100% of their principal amount plus accrued and
unpaid interest to the date of repurchase with certain net cash proceeds of
certain sales or other dispositions of assets in accordance with the Indenture.
10. Denominations; Transfer; Exchange.
The Securities are in registered form, without coupons, in denominations
of $1,000 and integral multiples of $1,000. A Holder shall register the
transfer of or exchange Securities in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay certain transfer taxes or
similar governmental charges payable in connection therewith as permitted by
the Indenture. The Registrar need not register the transfer of or exchange any
Securities or portions thereof selected for redemption, except the unredeemed
portion of any security being redeemed in part.
-6-
<PAGE> 105
11. Persons Deemed Owners.
The registered Holder of a Security shall be treated as the owner of it
for all purposes.
12. Unclaimed Funds.
If funds for the payment of principal or interest remain unclaimed for two
years, the Trustee and the Paying Agent will repay the funds to the Company at
its request. After that, all liability of the Trustee and such Paying Agent
with respect to such funds shall cease.
13. Legal Defeasance and Covenant Defeasance.
The Company may be discharged from its obligations under the Indenture and
the Securities except for certain provisions thereof, and may be discharged
from its obligations to comply with certain covenants contained in the
Indenture and the Securities, in each case upon satisfaction of certain
conditions specified in the Indenture.
14. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Securities may be
amended or supplemented with the written consent of the Holders of at least a
majority in aggregate principal amount of the Securities then outstanding, and
any existing Default or Event of Default or compliance with any provision may
be waived with the consent of the Holders of a majority in aggregate principal
amount of the Securities then outstanding. Without notice to or consent of
any Holder, the parties thereto may amend or supplement the Indenture or the
Securities to, among other things, cure any ambiguity, defect or inconsistency,
provide for uncertificated Securities in addition to or in place of
certificated Securities or comply with any requirements of the SEC in
connection with the qualification of the Indenture under the TIA, or make any
other change that does not materially adversely affect the rights of any Holder
of a Security.
15. Restrictive Covenants.
The Indenture contains certain covenants that, among other things, limit
the ability of the Company and certain of its subsidiaries to make restricted
payments, to incur indebtedness, to create liens, to issue preferred or other
capital stock of subsidiaries, to sell assets, to permit restrictions on
dividends and other payments by subsidiaries to the Company, to consolidate,
merge or sell all or substantially all of its assets, to engage in transactions
with affiliates or to engage in certain businesses. The limitations are
subject to a number of important qualifications and exceptions.
-7-
<PAGE> 106
16. Defaults and Remedies.
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of Securities then
outstanding may declare all the Securities to be due and payable immediately in
the manner and with the effect provided in the Indenture. Holders of
Securities may not enforce the Indenture or the Securities except as provided
in the Indenture. The Trustee is not obligated to enforce the Indenture or the
Securities unless it has received indemnity satisfactory to it. The Indenture
permits, subject to certain limitations therein provided, Holders of a majority
in aggregate principal amount of the Securities then outstanding to direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of Securities notice of any continuing Default or Event of Default
(except a Default in payment of principal, premium or interest, including an
accelerated payment) if it determines that withholding notice is in their
interest.
17. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other capacity,
may become the owner or pledgee of Securities and may otherwise deal with the
Company, its Subsidiaries, the Guarantors, any Subsidiary Guarantors and their
respective Affiliates as if it were not the Trustee.
18. No Recourse Against Others.
No stockholder, director, officer, employee or incorporator, as such, of
the Company shall have any liability for any obligation of the Company under
the Securities or the Indenture or for any claim based on, in respect of or by
reason of, such obligations or their creation. Each Holder of a Security by
accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Securities.
19. Authentication.
This Security shall not be valid until the Trustee or authenticating agent
signs the certificate of authentication on this Security.
20. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of a Security
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> 107
21. 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 Securities as a convenience to the Holders of the Securities.
No representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
22. Registration Rights.
Pursuant to the Registration Rights Agreement, the Company will be
obligated upon the occurrence of certain events to consummate an exchange offer
pursuant to which the Holder of this Security shall have the right to exchange
this Series A Security for the Company's 11 7/8% Senior Notes due 2006, Series
B (the "Series B Securities"), which have been registered under the Securities
Act, in like principal amount and having terms identical in all material
respects as the Series A Securities. The Holders shall be entitled to receive
certain additional interest payments in the event such exchange offer is not
consummated and upon certain other conditions, all pursuant to and in
accordance with the terms of the Registration Rights Agreement.
The Company will furnish to any Holder of a Security upon written request
and without charge a copy of the Indenture. Requests may be made to: Aetna
Industries, Inc., 24331 Sherwood Avenue, P.O. Box 3067, Centerline, Michigan
48015-0067, Attn: Chief Executive Officer.
-9-
<PAGE> 108
GUARANTEES AND SUBSIDIARY GUARANTEE
The Guarantors and the Subsidiary Guarantor (as defined in the Indenture
referred to in the Security upon which this notation is endorsed and each
hereinafter referred to as a "Guarantor" or "Subsidiary Guarantor", as the case
may be, which terms respectively include any successor person under the
Indenture) have unconditionally guaranteed on a senior basis (such guarantees
by each Guarantor and Subsidiary Guarantor being referred to herein as a
"Guarantee" and "Subsidiary Guarantee", respectively) (i) the due and punctual
payment of the principal of and interest on the Securities, whether at
maturity, by acceleration or otherwise, the due and punctual payment of
interest on the overdue principal and interest, if any, on the Securities, to
the extent lawful, and the due and punctual performance of all other
obligations of the Company to the Holders or the Trustee all in accordance with
the terms set forth in Article Ten of the Indenture and (ii) in case of any
extension of time of payment or renewal of any Securities or any of such other
obligations, that the same will be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise.
No stockholder, officer, director or incorporator, as such, past, present
or future, of any Guarantor or Subsidiary Guarantor shall have any liability
under a Guarantee or Subsidiary Guarantee, as the case may be, by reason of his
or its status as such stockholder, officer, director or incorporator.
The Guarantees and Subsidiary Guarantee shall not be valid or obligatory
for any purpose until the certificate of authentication on the Securities upon
which the Guarantees and Subsidiary Guarantee are noted shall have been
executed by the Trustee under the Indenture by the manual signature of one of
its authorized officers.
GUARANTORS:
MS ACQUISITION CORP.
By:
-----------------------------
Name:
Title:
By:
-----------------------------
Name:
Title:
AETNA HOLDINGS INC.
<PAGE> 109
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
SUBSIDIARY GUARANTOR:
AETNA EXPORT SALES CORP.
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
-2-
<PAGE> 110
ASSIGNMENT FORM
I or we assign and transfer this Security to
________________________________________________________________________________
________________________________________________________________________________
(Print or type name, address and zip code of assignee or transferee)
________________________________________________________________________________
(Insert Social Security or other identifying number of assignee or transferee)
and irrevocably appoint ________________________________________________________
agent to transfer this Security on the books of the Company.
The agent may substitute another to act for him.
Dated: ____________________ Signed:_______________________________
(Sign exactly as
name appears on the
other side of this
Security)
Signature Guarantee: ___________________________________________________________
Participant in a recognized Signature
Guarantee Medallion Program (or other
signature guarantor program reasonably
acceptable to the Trustee)
<PAGE> 111
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.12 or Section 4.24 of the Indenture, check the
appropriate box:
Section 4.12 [ ] Section 4.24 [ ]
If you want to elect to have only part of this Security purchased by the
Company pursuant to Section 4.12 or Section 4.24 of the Indenture, state the
amount: $_____________
Date:_________________ Your Signature: ______________________________________
(Sign exactly as
your name appears
on the other side
of this Security)
Signature Guarantee:_______________________________________
<PAGE> 112
EXHIBIT B
[FORM OF SERIES B SECURITY]
AETNA INDUSTRIES INC.
11 7/8% Senior Notes
due October 1, 2006, Series B
CUSIP No.: [ ]
No. [ ] $[ ]
AETNA INDUSTRIES INC., a Delaware corporation (the "Company", which term
includes any successor corporation), for value received promises to pay to
[ ] or registered assigns, the principal sum of $[ ] Dollars, on
October 1, 2006.
Interest Payment Dates: April 1 and October 1 commencing April 1, 1997
Record Dates: March 15 and September 15
Reference is made to the further provisions of this Security contained
herein, which will for all purposes have the same effect as if set forth at
this place.
IN WITNESS WHEREOF, the Company has caused this Security to be signed
manually or by facsimile by its duly authorized officers.
Dated:
AETNA INDUSTRIES, INC.
By:
--------------------------------
Name:
Title:
By:
--------------------------------
Name:
Title:
<PAGE> 113
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the 11 7/8% Senior Notes due 2006, Series B, described in
the within-mentioned Indenture.
Dated: NORWEST BANK MINNESOTA
NATIONAL ASSOCIATION,
as Trustee
By
-----------------------------
Authorized Signatory
-2-
<PAGE> 114
(REVERSE OF SECURITY)
AETNA INDUSTRIES, INC.
11 7/8% Senior Notes
due October 1, 2006, Series B
1. Interest.
AETNA INDUSTRIES, INC., a Delaware corporation (the "Company"), promises
to pay interest on the principal amount of this Security at the rate per annum
shown above. The Company will pay interest semi-annually on April 1 and
October 1 of each year (an "Interest Payment Date"), commencing April 1, 1997.
Interest on the Securities will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from August 13, 1996.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
The Company shall pay interest on overdue principal from time to time on
demand at the rate borne by the Securities plus 2% and on overdue installments
of interest (without regard to any applicable grace periods) to the extent
lawful.
2. Method of Payment.
The Company shall pay interest on the Securities (except defaulted
interest) to the persons who are the registered Holders at the close of
business on the Record Date immediately preceding the Interest Payment Date
even if the Securities are cancelled on registration of transfer or
registration of exchange after such Record Date. Holders must surrender
Securities to a Paying Agent to collect principal payments. The Company shall
pay principal and interest in money of the United States that at the time of
payment is legal tender for payment of public and private debts ("U.S. Legal
Tender"). However, the Company may pay principal and interest by wire transfer
of Federal funds, or interest by check payable in such U.S. Legal Tender. The
Company may deliver any such interest payment to the Paying Agent or to a
Holder at the Holder's registered address.
3. Paying Agent and Registrar.
Initially, Norwest Bank Minnesota National Association (the "Trustee")
will act as Paying Agent and Registrar. The Company may change any Paying
Agent, Registrar or co-Registrar without notice to the Holders.
4. Indenture, Guarantees and Subsidiary Guarantees.
The Company issued the Securities under an Indenture, dated as of August
1, 1996 (the "Indenture"), among the Company, the Guarantors, the Subsidiary
Guarantor and the Trustee.
-3-
<PAGE> 115
Capitalized terms herein are used as defined in the Indenture unless otherwise
defined herein. The terms of the Securities include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S.C. Section Section 77aaa-77bbbb) (the "TIA"), as
in effect on the date of the Indenture until such time as the Indenture is
qualified under the TIA, and thereafter as in effect on the date on which the
Indenture is qualified under the TIA. Notwithstanding anything to the contrary
herein, the Securities are subject to all such terms, and Holders of Securities
are referred to the Indenture and the TIA for a statement of them. The
Securities are general unsecured obligations of the Company limited in
aggregate principal amount to $85,000,000. Payment on each Security is
guaranteed on a senior basis, jointly and severally, by the Guarantors and
Subsidiary Guarantors pursuant to Article Ten of the Indenture.
5. Optional Redemption.
The Securities will be redeemable, at the Company's option, in whole at
any time or in part from time to time, on and after October 1, 2001 at the
following redemption prices (expressed as percentages of the principal amount)
if redeemed during the twelve-month period commencing on October 1 of the years
set forth below, plus, in each case, accrued interest thereon to the date of
redemption:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2001 ........................................... 105.938%
2002 ........................................... 103.958%
2003 ........................................... 101.979%
2004 and thereafter ............................ 100.000%
</TABLE>
6. Optional Redemption upon Public Equity Offering.
At any time, or from time to time, on or prior to October 1, 1999, the
Company may, at its option, use the net cash proceeds of one or more Public
Equity Offerings (as defined) to redeem up to $25,000,000 aggregate principal
amount, at a redemption price equal to 110.875% of the principal amount thereof
plus accrued and unpaid interest, if any, to the date of redemption; provided
that at least $60,000,000 aggregate principal amount of Securities remains
outstanding immediately after giving effect to any such redemption. In order
to effect the foregoing redemption with the net cash proceeds of a Public
Equity Offering, the Company shall send the redemption notice not later than 90
days after the consummation of such Public Equity Offering.
As used in the preceding paragraph, "Public Equity Offering" means an
underwritten public offering of Qualified Capital Stock of the Company or
either of the Guarantors pursuant to a registration statement filed with and
declared effective by the SEC in accordance with the Securities Act; provided
that, in the event of a Public Equity Offering by either of the Guarantors, it
contributes to the capital of the Company the portion of the net cash proceeds
of such Public
-4-
<PAGE> 116
Equity Offering necessary to pay the aggregate redemption price, plus accrued
and unpaid interest, if any, to the redemption date of the Securities to be
redeemed pursuant to the preceding paragraph.
7. Notice of Redemption.
Notice of redemption will be mailed at least 30 days but not more than 60
days before the Redemption Date to each Holder of Securities to be redeemed at
such Holder's registered address. Securities in denominations of $1,000 may be
redeemed only in whole. The Trustee may select for redemption portions (equal
to $1,000 or any integral multiple thereof) of the principal of Securities that
have denominations larger than $1,000.
If any Security is to be redeemed in part only, the notice of redemption
that relates to such Security shall state the portion of the principal amount
thereof to be redeemed. A new Security in a principal amount equal to the
unredeemed portion thereof will be issued in the name of the Holder thereof
upon cancellation of the original Security. On and after the Redemption Date,
interest will cease to accrue on Securities or portions thereof called for
redemption.
8. Change of Control Offer.
Upon the occurrence of a Change of Control, the Company will be required
to offer to purchase all of the outstanding Securities at a purchase price
equal to 101% of the principal amount thereof plus accrued and unpaid interest,
if any, to the date of repurchase.
9. Limitation on Disposition of Assets.
The Company is subject to certain conditions, obligated to make an offer
to purchase Securities at 100% of their principal amount plus accrued and
unpaid interest to the date of repurchase with certain net cash proceeds of
certain sales or other dispositions of assets in accordance with the Indenture.
10. Denominations; Transfer; Exchange.
The Securities are in registered form, without coupons, in denominations
of $1,000 and integral multiples of $1,000. A Holder shall register the
transfer of or exchange Securities in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay certain transfer taxes or
similar governmental charges payable in connection therewith as permitted by
the Indenture. The Registrar need not register the transfer of or exchange any
Securities or portions thereof selected for redemption, except the unredeemed
portion of any security being redeemed in part.
-5-
<PAGE> 117
11. Persons Deemed Owners.
The registered Holder of a Security shall be treated as the owner of it
for all purposes.
12. Unclaimed Funds.
If funds for the payment of principal or interest remain unclaimed for two
years, the Trustee and the Paying Agent will repay the funds to the Company at
its request. After that, all liability of the Trustee and such Paying Agent
with respect to such funds shall cease.
13. Legal Defeasance and Covenant Defeasance.
The Company may be discharged from its obligations under the Indenture and
the Securities except for certain provisions thereof, and may be discharged
from its obligations to comply with certain covenants contained in the
Indenture and the Securities, in each case upon satisfaction of certain
conditions specified in the Indenture.
14. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Securities may be
amended or supplemented with the written consent of the Holders of at least a
majority in aggregate principal amount of the Securities then outstanding, and
any existing Default or Event of Default or compliance with any provision may
be waived with the consent of the Holders of a majority in aggregate principal
amount of the Securities then outstanding. Without notice to or consent of
any Holder, the parties thereto may amend or supplement the Indenture or the
Securities to, among other things, cure any ambiguity, defect or inconsistency,
provide for uncertificated Securities in addition to or in place of
certificated Securities or comply with any requirements of the SEC in
connection with the qualification of the Indenture under the TIA, or make any
other change that does not materially adversely affect the rights of any Holder
of a Security.
15. Restrictive Covenants.
The Indenture contains certain covenants that, among other things, limit
the ability of the Company and certain of its subsidiaries to make restricted
payments, to incur indebtedness, to create liens, to issue preferred or other
capital stock of subsidiaries, to sell assets, to permit restrictions on
dividends and other payments by subsidiaries to the Company, to consolidate,
merge or sell all or substantially all of its assets, to engage in transactions
with affiliates or to engage in certain businesses. The limitations are
subject to a number of important qualifications and exceptions.
-6-
<PAGE> 118
16. Defaults and Remedies.
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of Securities then
outstanding may declare all the Securities to be due and payable immediately in
the manner and with the effect provided in the Indenture. Holders of
Securities may not enforce the Indenture or the Securities except as provided
in the Indenture. The Trustee is not obligated to enforce the Indenture or the
Securities unless it has received indemnity satisfactory to it. The Indenture
permits, subject to certain limitations therein provided, Holders of a majority
in aggregate principal amount of the Securities then outstanding to direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of Securities notice of any continuing Default or Event of Default
(except a Default in payment of principal, premium or interest, including an
accelerated payment) if it determines that withholding notice is in their
interest.
17. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other capacity,
may become the owner or pledgee of Securities and may otherwise deal with the
Company, its Subsidiaries, the Guarantors, any Subsidiary Guarantors and their
respective Affiliates as if it were not the Trustee.
18. No Recourse Against Others.
No stockholder, director, officer, employee or incorporator, as such, of
the Company shall have any liability for any obligation of the Company under
the Securities or the Indenture or for any claim based on, in respect of or by
reason of, such obligations or their creation. Each Holder of a Security by
accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Securities.
19. Authentication.
This Security shall not be valid until the Trustee or authenticating agent
signs the certificate of authentication on this Security.
20. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of a Security
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).
-7-
<PAGE> 119
21. 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 Securities as a convenience to the Holders of the Securities.
No representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
The Company will furnish to any Holder of a Security upon written request
and without charge a copy of the Indenture. Requests may be made to: Aetna
Industries, Inc., 24331 Sherwood Avenue, P.O. Box 3067, Centerline, Michigan
48015-0067, Attn: Chief Executive Officer.
-8-
<PAGE> 120
GUARANTEES AND SUBSIDIARY GUARANTEE
The Guarantors and Subsidiary Guarantor (as defined in the Indenture
referred to in the Security upon which this notation is endorsed and each
hereinafter referred to as a "Guarantor" or "Subsidiary Guarantor", as the case
may be, which terms respectively include any successor person under the
Indenture) have unconditionally guaranteed on a senior basis (such guarantees
by each Guarantor and Subsidiary Guarantor being referred to herein as a
"Guarantee" and "Subsidiary Guarantee", respectively) (i) the due and punctual
payment of the principal of and interest on the Securities, whether at
maturity, by acceleration or otherwise, the due and punctual payment of
interest on the overdue principal and interest, if any, on the Securities, to
the extent lawful, and the due and punctual performance of all other
obligations of the Company to the Holders or the Trustee all in accordance with
the terms set forth in Article Ten of the Indenture and (ii) in case of any
extension of time of payment or renewal of any Securities or any of such other
obligations, that the same will be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise.
No stockholder, officer, director or incorporator, as such, past, present
or future, of any Guarantor or Subsidiary Guarantor shall have any liability
under a Guarantee or Subsidiary Guarantee, as the case may be, by reason of his
or its status as such stockholder, officer, director or incorporator.
The Guarantees and Subsidiary Guarantee shall not be valid or obligatory
for any purpose until the certificate of authentication on the Securities upon
which the Guarantees and Subsidiary Guarantee are noted shall have been
executed by the Trustee under the Indenture by the manual signature of one of
its authorized officers.
GUARANTORS:
MS ACQUISITION CORP.
By:
------------------------------
Name:
Title:
By:
------------------------------
Name:
Title:
<PAGE> 121
AETNA HOLDINGS, INC.
By:
-------------------------------------
Name:
Title:
By:
-------------------------------------
Name:
Title:
SUBSIDIARY GUARANTOR:
AETNA EXPORT SALES CORP.
By:
-------------------------------------
Name:
Title:
By:
-------------------------------------
Name:
Title:
-2-
<PAGE> 122
ASSIGNMENT FORM
I or we assign and transfer this Security to
________________________________________________________________________________
________________________________________________________________________________
(Print or type name, address and zip code of assignee or transferee)
________________________________________________________________________________
(Insert Social Security or other identifying number of assignee or transferee)
and irrevocably appoint ________________________________________________________
agent to transfer this Security on the books of the Company.
The agent may substitute another to act for him.
Dated: ____________________ Signed:______________________________
(Sign exactly as
name appears on the
other side of this
Security)
Signature Guarantee: ___________________________________________________________
Participant in a recognized Signature
Guarantee Medallion Program (or other
signature guarantor program reasonably
acceptable to the Trustee)
<PAGE> 123
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.12 or Section 4.24 of the Indenture, check the
appropriate box:
Section 4.12 [ ] Section 4.24 [ ]
If you want to elect to have only part of this Security purchased by the
Company pursuant to Section 4.12 or Section 4.24 of the Indenture, state the
amount: $___________
Date:__________________ Your Signature: _____________________________________
(Sign exactly as
your name appears
on the other side
of this Security)
Signature Guarantee:____________________________________________________________
-2-
<PAGE> 124
EXHIBIT C
FORM OF LEGEND FOR GLOBAL SECURITIES
Any Global Security authenticated and delivered hereunder shall bear a
legend (which would be in addition to any other legends required in the case of
a Restricted Security) in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF
A DEPOSITORY OR A NOMINEE OF A DEPOSITORY OR A SUCCESSOR
DEPOSITORY. THIS SECURITY IS NOT EXCHANGEABLE FOR SECURITIES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR
ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER
OF THIS SECURITY AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE
DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR
ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("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 IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS 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.
<PAGE> 125
EXHIBIT D
CERTIFICATE TO BE DELIVERED UPON EXCHANGE
OR REGISTRATION OF TRANSFER OF SECURITIES
Re: 11 7/8% Senior Notes due 2006, Series A,
and 11 7/8% Senior Notes due 2006, Series B
(the "Securities"), of Aetna Industries, Inc.
This Certificate relates to $_______ principal amount of Securities held
in the form of* ___ a beneficial interest in a Global Security or* _______
Physical Securities by ______ (the "Transferor").
The Transferor:*
/ / has requested by written order that the Registrar deliver in exchange
for its beneficial interest in the Global Security held by the Depositary a
Physical Security or Physical Securities in definitive, registered form of
authorized denominations and an aggregate number equal to its beneficial
interest in such Global Security (or the portion thereof indicated above); or
/ / has requested that the Registrar by written order to exchange or
register the transfer of a Physical Security or Physical Securities.
In connection with such request and in respect of each such Security,
the Transferor does hereby certify that the Transferor is familiar with the
Indenture relating to the above captioned Securities and the restrictions on
transfers thereof as provided in Section 2.16 of such Indenture, and that the
transfer of this Securities does not require registration under the Securities
Act of 1933, as amended (the "Act") because*:
/ / Such Security is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 2.16(a)(II)(A) or Section
2.16(d)(i)(A) of the Indenture).
/ / Such Security is being transferred to a "qualified institutional
buyer" (as defined in Rule 144A under the Act), in reliance on Rule 144A.
/ / Such Security is being transferred to an institutional "accredited
investor" (within the meaning of subparagraphs (a)(1), (2), (3) or (7) of Rule
501 under the Act.
/ / Such Security is being transferred in reliance on Regulation S under
the Act
<PAGE> 126
/ / Such Security is being transferred in reliance on Rule 144 under
the Act.
/ / Such Security is being transferred in reliance on and in
compliance with an exemption from the registration requirements of the Act
other than Rule 144A or Rule 144 or Regulation S under the Act to a person
other than an institutional "accredited investor."
-----------------------------------
[INSERT NAME OF TRANSFEROR]
By:
------------------------------
[Authorized Signatory]
Date:
-------------------
*Check applicable box.
<PAGE> 127
EXHIBIT E
Form of Certificate To Be
Delivered in Connection with
Transfers to Institutional Accredited Investors
_______________, ____
Norwest Bank Minnesota National Association
6th and Marquette
Minneapolis, Minnesota 55479-0069
Attention: Corporate Trust Services
Re: Aetna Industries, Inc. (the "Company")
Indenture (the "Indenture") relating to
11 7/8% Senior Notes due 2006, Series A,
or 11 7/8% Senior Notes due 2006, Series B
Ladies and Gentlemen:
In connection with our proposed purchase of 11 7/8% Senior Notes
due 2006, Series A, or 11 7/8% Series Notes due 2006, Series B (the
"Securities"), of Aetna Industries, Inc. (the "Company"), we confirm that:
1. We have received such information as we deem necessary in order
to make our investment decision.
2. We understand that any subsequent transfer of the Securities is
subject to certain restrictions and conditions set forth in the Indenture and
the undersigned agrees to be bound by, and not to resell, pledge or otherwise
transfer the Securities except in compliance with, such restrictions and
conditions and the Securities Act of 1933, as amended (the "Securities Act").
3. We understand that the offer and sale of the Securities have
not been registered under the Securities Act, and that the Securities may not
be offered or sold within the United States or to, or for the account or
benefit of, U.S. persons except as permitted in the following sentence. We
agree, on our own behalf and on behalf of any accounts for which we are acting
as hereinafter stated, that if we should sell any Securities, we will do so
only (A) to the Company or any subsidiary thereof, (B) inside the United States
in accordance with Rule 144A under the Securities Act to a "qualified
institutional buyer" (as defined therein), (C) inside the United States to an
institutional "accredited investor" (as defined below) that, prior to such
transfer, furnishes (or
<PAGE> 128
has furnished on its behalf by a U.S. broker-dealer) to the Trustee a signed
letter substantially in the form hereof, (D) outside the United States in
accordance with Regulations S under the Securities Act, (E) pursuant to the
exemption from registration provided by Rule 144 under the Securities Act (if
available), or (F) pursuant to an effective registration statement under the
Securities Act, and we further agree to provide to any person purchasing
Securities from us a notice advising such purchaser that resales of the
Securities are restricted as stated herein.
4. We understand that, on any proposed resale of Securities, we
will be required to furnish to the Trustee and the Company, such certification,
legal opinions and other information as the Trustee and the Company may
reasonably require to confirm that the proposed sale complies with the foregoing
restrictions. We further understand that the Securities purchased by us will
bear a legend to the foregoing effect.
5. We are an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of our investment in the Securities,
and we and any accounts for which we are acting are each able to bear the
economic risk of our or their investment, as the case may be.
6. We are acquiring the Securities purchased by us for our account
or for one or more accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment discretion.
-2-
<PAGE> 129
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceeding or official inquiry
with respect to the matters covered hereby.
Very truly yours,
[Name of Transferor]
By:
----------------------------
[Authorized Signatory]
-3-
<PAGE> 130
EXHIBIT F
Form of Certificate To Be
Delivered in Connection
with Regulation S Transfers
_______________, ____
Norwest Bank Minnesota National Association
6th and Marquette
Minneapolis, Minnesota 55479-0069
Attention: Corporate Trust Services
Re: Aetna Industries, Inc. (the "Company") 11 7/8%
Senior Notes due 2006, Series A, and 11 7/8%
Senior Notes due 2006, Series B (the "Securities")
Dear Sirs:
In connection with our proposed sale of $____________ aggregate principal
amount of the Securities, we confirm that such sale has been effected pursuant
to and in accordance with Regulation S under the Securities Act of 1933, as
amended (the "Securities Act"), and, accordingly, we represent that:
(1) the offer of the Securities was not made to a person in the United States;
(2) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on
our behalf reasonably believed that the transferee was outside the United
States, or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction has been
pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United States
in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
<PAGE> 131
(5) we have advised the transferee of the transfer restrictions
applicable to the Securities.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby. Defined terms used herein without
definition have the respective meanings provided in Regulation S.
Very truly yours,
[Name of Transferor]
By:
-----------------------------
[Authorized Signature]
-2-
<PAGE> 1
EXHIBIT 10.3
AETNA INDUSTRIES, INC.
------------------
CREDIT AGREEMENT
DATED AS OF MAY 2, 1996
------------------
THE BANKS PARTY HERETO
AND
NBD BANK, AS AGENT
<PAGE> 2
TABLE OF CONTENTS
Article Page
- ------- ----
I. DEFINITIONS 1
1.1 Certain Definitions 1
1.2 Other Definitions; Rules of
Construction 12
II. THE COMMITMENTS AND THE ADVANCES 12
2.1 Commitment of the Banks 12
2.2 Termination and Reduction of
Commitments 13
2.3 Fees 13
2.4 Disbursement of Advances 14
2.5 Conditions for Disbursement 15
2.6 Further Conditions for Disbursement 16
2.7 Subsequent Elections as to
Loans; Etc. 17
2.8 Limitation of Requests and Elections 17
2.9 Minimum Amounts; Limitation on
Number of Loans 17
2.10 Borrowing Base Adjustments 18
2.11 Security and Collateral 18
III. PAYMENTS AND PREPAYMENTS OF ADVANCES 18
3.1 Principal Payments and Prepayments 18
3.2 Interest Payments 19
3.3 Letter of Credit Reimbursement
Payments 19
3.4 Payment Method 21
3.5 No Setoff or Deduction 21
3.6 Payment on Non-Business Day;
Payment Computations 21
3.7 Additional Costs 22
3.8 Illegality and Impossibility 23
3.9 Indemnification 23
<PAGE> 3
IV. REPRESENTATIONS AND WARRANTIES 24
4.1 Corporate Existence and Power 24
4.2 Corporate Authority 24
4.3 Binding Effect 24
4.4 Subsidiaries 24
4.5 Litigation 24
4.6 Financial Condition 25
4.7 Use of Advances 25
4.8 Consents, Etc. 25
4.9 Taxes 25
4.10 Title to Properties 26
4.11 Borrowing Base 26
4.12 ERISA 26
4.13 Disclosure 26
4.14 Environmental Matters 26
4.15 No Default 27
4.16 No Burdensome Restrictions 27
4.17 Subordinated Debt 27
V. COVENANTS 27
5.1 Affirmative Covenants 27
(a) Preservation of Corporate
Existence, Etc. 28
(b) Compliance with Laws, Etc. 28
(c) Maintenance of Properties;
Insurance 28
(d) Reporting Requirements 28
(e) Accounting; Access to
Records, Books, Etc. 30
(f) Additional Security and
Collateral 30
(g) Further Assurances 31
5.2 Negative Covenants 31
(a) Funded Debt Ratio 31
(b) Interest Coverage Ratio 31
(c) Indebtedness 31
(d) Liens 32
(e) Merger; Acquisitions; Etc. 33
(f) Disposition of Assets, Etc. 33
<PAGE> 4
(g) Nature of Business 33
(h) Dividends and Other Restricted
Payments 33
(i) Investment Loans and Advances 34
(j) Transactions with Affiliates 34
(k) Modifications of Subordinated Debt 34
(l) Negative Pledge Limitation 34
(m) Inconsistent Agreements 34
(n) Accounting Changes 34
(o) Additional Covenants 34
VI. DEFAULT 35
6.1 Events of Default 35
6.2 Remedies 37
VII. THE AGENT AND THE BANKS 38
7.1 Appointment and Authorization 38
7.2 Agent and Affiliates 38
7.3 Scope of Agent's Duties 38
7.4 Reliance by Agent 38
7.5 Default 39
7.6 Liability of Agent 39
7.7 Nonreliance on Agent and
Other Banks 39
7.8 Indemnification 39
7.9 Successor Agent 40
7.10 Sharing of Payments 40
7.11 Withholding Tax Exemption 41
VIII. GUARANTY 42
8.1 Guarantee of Obligations 42
8.2 Nature of Guaranty 42
8.3 Waivers and Other Agreements 42
8.4 Obligations Absolute 43
8.5 No Investigation by Banks or Agent 43
8.6 Indemnity 43
8.7 Subordination, Subrogation, Etc. 44
8.8 Waiver 44
<PAGE> 5
IX. MISCELLANEOUS 44
9.1 Amendments, Etc. 44
9.2 Notices 45
9.3 No Waiver By conduct; Remedies
Cumulative 45
9.4 Reliance on and Survival of
Various Provisions 45
9.5 Expenses; Indemnification 46
9.6 Successors and Assigns 47
9.7 Counterparts 50
9.8 Governing Law 50
9.9 Table of Contents and Headings 50
9.10 Construction of Certain Provisions 50
9.11 Integration and Severability 50
9.12 Independence of Covenants 51
9.13 Interest Rate Limitation 51
9.14 Waiver of Jury Trial 51
EXHIBITS
- --------
Exhibit A Borrowing Base Certificate
Exhibit B Note
Exhibit C Security Agreement
Exhibit D Request for Advance
Exhibit E Request for Continuation or Conversion
Exhibit F Assignment and Acceptance
Exhibit G Assumption Agreement
SCHEDULES
- ---------
Schedule 1.1 Subordinated Debt Documents
Schedule 4.4 Subsidiaries
Schedule 4.5 Litigation
Schedule 4.12 ERISA
Schedule 4.14 Environmental Matters
Schedule 5.2(c) Indebtedness
Schedule 5.2(d) Liens
Schedule 5.2(i) Investments, Loans and Advances
<PAGE> 6
THIS CREDIT AGREEMENT, dated as of May 2, 1996 (this "Agreement"), is by
and among AETNA INDUSTRIES, INC. a Michigan corporation (the "Company"), the
Guarantor(s) party hereto from time to time, the lender(s) party hereto from
time to time (collectively, the "Banks" and individually, a "Bank") and NBD
BANK, a Michigan banking corporation, as agent for the Banks (in such capacity,
the "Agent").
INTRODUCTION
The Company desires to obtain a revolving credit facility, including
letters of credit, in the aggregate principal amount of $35,000,000, in order
to provide funds and other financial accommodations for working capital and its
other general corporate purposes, and the Banks are willing to establish such a
credit facility in favor of the Company on the terms and conditions herein set
forth.
In consideration of the premises and of the mutual agreements herein
contained, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
1.1 Certain Definitions. As used herein the following terms shall have
the following respective meanings:
"Advance" shall mean any Loan and any Letter of Credit Advance.
"Affiliate", when used with respect to any person shall mean any other
person which, directly or indirectly, controls or is controlled by or is under
common control with such person. For purposes of this definition "control"
(including the correlative meanings of the terms "controlled by" and "under
common control with"), with respect to any person, shall mean possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such person, whether through the ownership of voting
securities or by contract or otherwise.
"Applicable Eurodollar Rate Margin" shall mean the margin, if any, agreed
to by the Banks in their sole discretion.
"Applicable Lending Office" shall mean, with respect to any Advance made
by any Bank or with respect to such Bank's Commitment, the office of such Bank
or of any Affiliate of such Bank located at the address specified as the
applicable lending office for such Bank set forth next to the name of such
Bank in the signature pages hereof or any other office or Affiliate of such
Bank or of any Affiliate of such Bank hereafter selected and notified to the
Company and the Agent by such Bank.
"Borrowing" shall mean the aggregation of Advances, including each Letter
of Credit issuance, of the Banks to be made to the Company, or continuations
and conversions of any Loans, made pursuant to Article II on a single date and,
in the case of any Loans, for a single Eurodollar Interest
<PAGE> 7
Period, which Borrowings may be classified for purposes of this Agreement by
reference to the type of Loans or the type of Advance comprising the related
Borrowing, e.g., a "Eurodollar Rate Borrowing" is a Borrowing comprised of
Eurodollar Rate Loans and a "Letter of Credit Borrowing" is an Advance
comprised of a single Letter of Credit.
"Borrowing Base" shall mean, as of any date, the sum, without duplication,
of (a) an amount equal to 85% of the value of Eligible Accounts Receivable plus
(b) an amount equal to 60% of the value of Eligible Inventory, plus (c) an
amount equal to 75% of Eligible Fixed Assets owned as of the Effective Date not
to exceed $15,000,000, (d) an amount equal to 50% Eligible Fixed Assets
acquired by the Company after the Effective Date and for the purposes of
expanding capacity of the Company not to exceed $5,000,000, plus (e) an amount
equal to 50% of Eligible Tooling Inventory not to exceed $5,000,000.
Notwithstanding the foregoing, the Company agrees that if at any time the
Funded Debt Ratio is greater than 4.0 to 1.0 or the Interest Coverage Ratio is
less than 2.0 to 1.0, the Required Banks may request (in their sole discretion)
that the Company do one of the following, as determined by the Required Banks:
(i) provide a first lien and security interest on additional collateral, in
both amount and type, acceptable to the Required Banks, or (ii) eliminate
clause (e) from the foregoing sentence, provided that the Agent shall give the
Company 30 days prior written notice before eliminating clause (e) from the
foregoing sentence.
"Borrowing Base Certificate" for any date shall mean an appropriately
completed report as of such date in substantially the form of Exhibit A hereto,
certified as true and correct as of such date by a duly authorized officer of
the Company.
"Business Day" shall mean a day other than a Saturday, Sunday or other day
on which the Agent is not open to the public for carrying on substantially all
of its banking functions in Detroit, Michigan.
"Capital Lease" of any person shall mean any lease which, in accordance
with generally accepted accounting principles, is or should be capitalized on
the books of such person.
"Change in Control" means the acquisition by any Person, or two or more
Persons acting in concert, other than Citibank Venture Capital Ltd. or its
Affiliates or such other Person acceptable to the Required Banks, of beneficial
ownership (within the meaning of Rule 13d-3 of the Securities and Exchange
Commission under the Securities Exchange Act of 1934) of 20% or more of the
outstanding shares of voting stock of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time, and the regulations thereunder.
"Commitment" shall mean, with respect to each Bank, the commitment of each
such Bank to make Loans and to participate in Letter of Credit Advances made
through the Agent pursuant to Section 2.1, in amounts not exceeding in
aggregate principal amount outstanding at any time the respective commitment
amounts for each such Bank set forth next to the name of each such Bank in the
signature pages hereof, as such amounts may be reduced from time to time
pursuant to Section 2.2.
-2-
<PAGE> 8
"Consolidated" or "consolidated" shall mean, when used with reference to
any financial term in this Agreement, the aggregate for two or more persons of
the amounts signified by such term for all such persons determined on a
consolidated basis in accordance with generally accepted accounting principles.
"Contingent Liabilities" of any person shall mean, as of any date, all
obligations of such person or of others for which such person is contingently
liable, as obligor, guarantor, surety, accommodation party, partner or in any
other capacity, or in respect of which obligations such person assures a
creditor against loss or agrees to take any action to prevent any such loss
(other than endorsements of negotiable instruments for collection in the
ordinary course of business), including without limitation all reimbursement
obligations of such person in respect of any letters of credit, surety bonds or
similar obligations (including, without limitation, bankers acceptances) and
all obligations of such person to advance funds to, or to purchase assets,
property or services from, any other person in order to maintain the financial
condition of such other person.
"Contractual Obligation" shall mean as to any person, any provision of any
security issued by such person or of any agreement, instrument or other
undertaking to which such person is a party or by which it or any of its
property is bound.
"Default" shall mean any event or condition which might become an Event of
Default with notice or lapse of time or both.
"Dollars" and "$" shall mean the lawful money of the United States of
America.
"EBITDA" means, for any period, Net Income for such period plus all
amounts deducted in determining such Net Income on account of (a) Interest
Expense (without giving effect to the proviso at the end of such definition)
and (b) income taxes and the State of Michigan single business tax, and (c)
depreciation and amortization expense, all as determined for the Company and
its Subsidiaries on a consolidated basis in accordance with Generally Accepted
Accounting Principles.
"Effective Date" shall mean the effective date specified in the final
paragraph of this Agreement.
"Eligible Accounts Receivable" shall mean, as of any date, those trade
accounts receivable owned by the Company which are payable in Dollars and in
which the Company has granted to the Agent for the benefit of the Banks and the
Agent a first-priority perfected security interest pursuant to the Security
Agreement, valued at the face amount thereof less sales, excise or similar
taxes and less returns, discounts, claims, credits and allowances of any nature
at any time issued, owing, granted, outstanding, available or claimed, but
shall not include any such account receivable (a) that is not a bona fide
existing obligation created by the sale and actual delivery of inventory, goods
or other property or the furnishing of services or other good and sufficient
consideration to customers of the Company in the ordinary course of business,
(b) that is more than 90 days past due or that remains outstanding more than 90
days after the earlier of the date of the invoice or the shipment of the
related inventory, goods or other property or the furnishing of the related
services or other consideration, (c) that is subject to any dispute,
contra-account, defense, offset or counterclaim or any Lien (except those in
favor of the Agent for the
-3-
<PAGE> 9
benefit of itself and the Banks under the Security Documents and other
Permitted Liens which are junior in priority to those in favor of the Agent),
except as being contested by the Company in good faith, or the inventory,
goods, property, services or other consideration of which such account
receivable constitutes proceeds is subject to any such Lien, provided that any
account receivable shall be classified as ineligible only to the extent of any
such dispute, contra-account, offset or counterclaim or any Lien, (d) in
respect of which the inventory, goods, property, services or other
consideration have been rejected or the amount is in dispute, except as being
contested by the Company in good faith, (e) that is due from any Affiliate or
Subsidiary of the Company, (f) that has been classified by the Company as
doubtful or has otherwise failed to meet established or customary credit
standards of the Company, (g) that is payable by any person located outside the
United States (which shall not be deemed to include any territories of the
United States) or Canada and are not supported by letters of credit issued to
the Agent by commercial banks, and in form and substance, acceptable to the
Agent, (h) that is payable by the United States or any of its departments,
agencies or instrumentalities or by any state or other governmental entity, (i)
that is payable by any person as to which 50% or more of the aggregate amount
of such accounts receivable payable by such person to the Company do not
otherwise constitute Eligible Accounts Receivable, other than due to an offset
which General Motors or Chrysler has due to steel purchases by the Company from
General Motors or Chrysler, (j) that is payable by any person that is the
subject of any proceeding seeking to adjudicate it a bankrupt or insolvent or
seeking liquidation, winding up or reorganization, arrangement, adjustment,
protection, relief or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief or protection of debtors or
seeking the appointment of a receiver, trustee, custodian or other similar
official for it or for any substantial part of its property, or has admitted
in writing its inability to pay its debts generally or has made a general
assignment for the benefit of creditors, (k) that is evidenced by a promissory
note or other negotiable instrument, (l) that is subordinate or junior in right
or priority of payment to any other obligation or claim, or (m) that for any
other reason is at any time reasonably deemed by the Agent to be ineligible.
"Eligible Fixed Assets" shall mean, as of any date, the equipment owned by
the Company in which the Company has granted to the Agent for the benefit of
the Banks a first-priority security interest pursuant to the Security
Agreement, valued, in the case of any equipment owned as of the Effective Date,
at the lesser of net book value and the amount of net proceeds estimated by the
Agent in its sole discretion to be realizable from a public auction sale
thereof held on such date under forced sale conditions and under then existing
economic conditions, and, in the case of any equipment acquired after the
Effective Date, at the hard cost thereof, but not including any such fixed
asset (a) that is not useable in the business of the Company, (b) that is
located outside the United States (which shall not be deemed to include any
territories of the United States) or Canada, (c) that is subject to, or any
accounts or other proceeds resulting from the sale or other disposition thereof
could be subject to, any Lien (except those in favor of the Agent for the
benefit of itself and the Banks under the Security Documents and other
Permitted Liens which are junior in priority to those in favor of the Agent),
(d) that is not in the possession of the Company (provided that such assets
shall be deemed in possession of the Company if they are located on premises
owned or leased by the Company), (e) that is held for sale or lease or is
subject of any lease, (f) that is subject to any trademark, trade name or
licensing arrangement, or any law, rule or regulation, that would limit or
impair the ability of the Banks and the Agent to promptly exercise all rights
of the Banks and the Agent under the Security Documents, (g) if such fixed
asset is located on premises not owned by the Company and, on or before sixty
(60) days after the Effective Date, the landlord or other owner of such
premises shall not have waived its distraint, lien and similar rights with
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respect to such fixed asset, and shall not have agreed to permit the Banks and
the Agent to enter such premises after the occurrence of an Event of Default
pursuant to a waiver and agreement of such person in favor of and in form and
substance acceptable to the Agent (h) with respect to which any insurance
proceeds are not payable to the Banks and the Agent as a lender loss payee or
are payable to any loss payee other than the Banks and the Agent or the Company
or (i) that for any other reason is at any time reasonably deemed by the Agent
to be ineligible.
"Eligible Inventory" shall mean, as of any date, that inventory owned by
the Company that constitutes raw materials, work in process or finished goods
in which the Company has granted to the Agent for the benefit of the Banks a
first-priority perfected security interest pursuant to the Security Agreement,
valued at the lower of cost or market in accordance with generally accepted
accounting principles, but shall not include any such inventory (a) that does
not constitute raw materials or finished goods readily salable or usable in the
business of the Company (b) that is located outside the United States (which
shall not be deemed to include any territories of the United States) or Canada,
(c) that is subject to, or any accounts or other proceeds resulting from the
sale or other disposition thereof could be subject to, any Lien (except those
in favor of the Agent for the benefit of itself and the Banks under the
Security Documents and other Permitted Liens which are junior in priority to
those in favor of the Agent), including any sale on approval or sale or return
transaction or any consignment, (d) that is not in the possession of the
Company (provided that such assets shall be deemed in possession of the Company
if they are located on premises owned or leased by the Company), (e) that is
held for lease or is the subject of any lease, (f) that is subject to any
trademark, trade name or licensing arrangement, or any law, rule or regulation,
that could materially limit or impair the ability of the Banks and the Agent to
promptly exercise all rights of the Banks and the Agent under the Security
Documents, (g) if such inventory is located on premises not owned by the
Company and, on or before sixty (60) days after the Effective Date, the
landlord or other owner of such premises shall not have waived its distraint,
lien and similar rights with respect to such inventory and shall not have
agreed to permit the Banks and the Agent to enter such premises pursuant to a
waiver and agreement of such person in favor of and in form and substance
acceptable to the Banks and the Agent, (h) with respect to which any insurance
proceeds are not payable to the Banks and the Agent as a lender loss payee or
are payable to any loss payee other than the Banks and the Agent or the
Company, or (i) that for any other reason is at any time reasonably deemed by
the Agent to be ineligible.
"Eligible Tooling Inventory" shall mean such portion of long term assets
of the Company which consists of dies, molds, tooling and similar items
(collectively, "Tooling") provided that each of the following conditions are
satisfied: (a) the sale of such Tooling is covered under specific written
purchase orders or agreements between the Company and the purchaser of such
Tooling, and the terms and provisions of all such purchase orders and
agreements and the purchaser thereof must be satisfactory to the Agent, (b) the
Agent has a first priority, enforceable security interest in such long terms
assets, and (c) the unpaid balance of such Tooling as represented by the
Company is not subject to any defense, counterclaim, setoff, contra-account,
credit, allowance or adjustment.
"Environmental Laws" at any date shall mean all provisions of law,
statute, ordinances, rules, regulations, judgments, writs, injunctions,
decrees, orders, awards and standards promulgated by the government of the
United States of America or any foreign government or by any state, province,
municipality or other political subdivision thereof or therein, or by any
court, agency, instrumentality,
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<PAGE> 11
regulatory authority or commission of any of the foregoing concerning the
protection of, or regulating the discharge of substances into, the environment.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations thereunder.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) which, together with the Company or any Guarantor, would be
treated as a single employer under Section 414 of the Code and the regulations
promulgated thereunder.
"Eurodollar Business Day" shall mean, with respect to any Eurodollar Rate
Loan, a day which is both a Business Day and a day on which dealings in Dollar
deposits are carried out in the London interbank market.
"Eurodollar Interest Period" shall mean, with respect to any Eurodollar
Rate Loan, the period commencing on the day such Eurodollar Rate Loan is made
or converted to a Eurodollar Rate Loan and ending on the day which is one, two,
three or six months thereafter, as the Company may elect under Section 2.4 or
2.7, and each subsequent period commencing on the last day of the immediately
preceding Eurodollar Interest Period and ending on the day which is one, two,
three or six months thereafter, as the Company may elect under Section 2.4 or
2.7, provided, however, that (a) any Eurodollar Interest Period which commences
on the last Eurodollar Business Day of a calendar month (or on any day for
which there is no numerically corresponding day in the appropriate subsequent
calendar month) shall end on the last Eurodollar Business Day of the
appropriate subsequent calendar month, (b) each Eurodollar Interest Period
which would otherwise end on a day which is not a Eurodollar Business Day shall
end on the next succeeding Eurodollar Business Day or, if such next succeeding
Eurodollar Business Day falls in the next succeeding calendar month, on the
next preceding Eurodollar Business Day, and (c) no Eurodollar Interest Period
which would end after the Termination Date shall be permitted.
"Eurodollar Rate" shall mean, with respect to any Eurodollar Rate Loan and
the related Eurodollar Interest Period, the per annum rate that is equal to the
sum of:
(a) the Applicable Eurodollar Rate Margin, plus
(b) the rate per annum obtained by dividing (i) the per annum rate of
interest at which deposits in Dollars for such Eurodollar Interest
Period and in an aggregate amount comparable to the amount of such Eurodollar
Rate Loan to be made by the Agent in its capacity as a Bank hereunder are
offered to the Agent by other prime banks in the London interbank market at
approximately 11:00 a.m. London time on the second Eurodollar Business Day
prior to the first day of such Eurodollar Interest Period by (ii) an amount
equal to one minus the stated maximum rate (expressed as a decimal) of all
reserve requirements (including, without limitation, any marginal, emergency,
supplemental, special or other reserves) that are specified on the first day of
such Eurodollar Interest Period by the Board of Governors of the Federal
Reserve System (or any successor agency thereto) for determining the maximum
reserve requirement with respect to eurocurrency funding (currently referred to
as "Eurocurrency liabilities" in Regulation D of such Board) maintained by a
member bank of such System;
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<PAGE> 12
all as conclusively determined by the Agent, such sum to be rounded up, if
necessary, to the nearest whole multiple of one one-hundredth of one percent
(1/100 of 1%).
"Eurodollar Rate Loan" shall mean any Loan which bears interest at the
Eurodollar Rate.
"Event of Default" shall mean any of the events or conditions described in
Section 6.1.
"Export" shall mean Aetna Export Sales Corp., a corporation organized
under the laws of the United States Virgin Islands.
"Federal Funds Rate" shall mean the per annum rate that is equal to the
average of the rates on overnight federal funds transactions with members of
the Federal Reserve System arranged by federal funds brokers, as published by
the Federal Reserve Bank of New York for such day, or, if such rate is not so
published for any day, the average of the quotations for such rates received by
the Agent from three federal funds brokers of recognized standing selected by
the Agent in its discretion;
all as conclusively determined by the Agent, such sum to be rounded up, if
necessary, to the nearest whole multiple of one one-hundredth of one percent
(1/100 of 1%), which Federal Funds Rate shall change simultaneously with any
change in such published or quoted rates.
"Floating Rate" shall mean the per annum rate equal to the greater of (a)
the Prime Rate in effect from time to time , and (b) the sum of one percent
(1%) per annum plus the Federal Funds Rate in effect from time to time; which
Floating Rate shall change simultaneously with any change in such Prime Rate or
Federal Funds Rate, as the case may be.
"Floating Rate Loan" shall mean any Loan which bears interest at the
Floating Rate.
"Funded Debt" of any person, as of any date, shall mean: (a) all debt for
borrowed money and similar monetary obligations evidenced by bonds, notes,
debentures, Capital Lease obligations or otherwise, including without
limitation obligations in respect of the deferred purchase price of properties
or assets, in each case whether direct or indirect; (b) all liabilities secured
by any Lien existing on property owned or acquired subject thereto, whether or
not the liability secured thereby shall have been assumed; (c) all
reimbursements obligations under outstanding letters of credit in respect of
drafts which (i) may be presented or (ii) have been presented and have not yet
been paid, and (d) all Contingent Liabilities relating to any of the
obligations of others similar in character to those described in the foregoing
clauses (a) through (c).
"Funded Debt Ratio" shall mean, as of any date, the ratio of (a) Funded
Debt as of such date to (b) EBITDA, as calculated for the four consecutive
fiscal quarters of the Company most recently ended, provided that the amount
determined pursuant to this clause (b) at any time (i) from the Effective Date
hereof to and including June 29, 1996, shall be an amount equal to four times
the EBITDA for the fiscal quarter ending March 31, 1996, (ii) during the period
from June 30, 1996 through September 29, 1996, shall be an amount equal to two
times the EBITDA for the two consecutive fiscal quarters of the Company ending
June 30, 1996 and (iii) from September 30, 1996 through December 29, 1996,
shall be
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<PAGE> 13
an amount equal to four-thirds times the EBITDA for the three consecutive
fiscal quarters of the Company ending September 30, 1996.
"Generally Accepted Accounting Principles" or "Generally Accepted
Accounting Principles" shall mean generally accepted accounting principles
applied on a basis consistent with that reflected in the financial statements
referred to in Section 4.6.
"Guaranties" shall mean the guaranties entered into by each of the
Guarantors for the benefit of the Agent and the Banks pursuant to Article VIII
of this Agreement, as amended or modified from time to time.
"Guarantor" shall mean Export, MS and each Subsidiary of the Company and
each person otherwise becoming a Subsidiary of the Company, or otherwise
entering into a Guaranty, from time to time.
"Hazardous Materials" includes, without limitation, any flammable
explosives, radioactive materials, hazardous materials, hazardous wastes,
hazardous or toxic substances or related materials defined in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended (42
U.S.C. Sections 9601, et seq.), the Hazardous Materials Transportation Act, as
amended (49 U.S.C. Sections 1801, et seq.), the Resource Conservation and
Recovery Act, as amended (42 U.S.C. Sections 6901, et seq.) and in the
regulations adopted and publications promulgated pursuant thereto, or any other
federal, state or local government law, ordinance, rule or regulation.
"Hedging Contract" shall mean, with respect to any person, all liabilities
of such person under interest rate swap, cap or collar agreements, currency
exchange agreements and all similar agreements designed to protect such person
against fluctuations in interest rates or currency exchange rates.
"Indebtedness" of any person shall mean, as of any date, (a) all
obligations of such person for borrowed money, (b) all obligations of such
person as lessee under any Capital Lease, (c) all obligations which are secured
by any Lien existing on any asset or property of such person whether or not the
obligation secured thereby shall have been assumed by such person (to the
extent of such Lien if such obligation is not assumed), (d) all obligations of
such person for the unpaid purchase price for goods, property or services
acquired by such person, except for trade accounts payable arising in the
ordinary course of business that are not materially past due, (e) all
obligations of such person to purchase goods, property or services where
payment therefor is required regardless of whether delivery of such goods or
property or the performance of such services is ever made or tendered
(generally referred to as "take or pay contracts"), (f) all liabilities of such
person in respect of Unfunded Benefit Liabilities under any Plan of such person
or of any ERISA Affiliate, (g) all obligations of such person in respect of any
Hedging Contract (valued in an amount equal to the highest termination payment,
if any, that would be payable by such person upon termination for any reason on
the date of determination), and (h) all Contingent Liabilities of such person.
"Interest Coverage Ratio" shall mean, as of any date, the ratio of
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(a) EBITDA, as calculated for the four consecutive fiscal quarters of the
Company most recently ended, provided that the amount determined pursuant to
this clause (a) at any time (i) from the Effective Date hereof to and including
June 29, 1996, shall be an amount equal to four times the EBITDA for the fiscal
quarter ending March 31, 1996, (ii) during the period from June 30, 1996
through September 29, 1996, shall be an amount equal to two times the EBITDA
for the two consecutive fiscal quarters of the Company ending June 30, 1996 and
(iii) from September 30, 1996 through December 29, 1996, shall be an amount
equal to four-thirds times the EBITDA for the three consecutive fiscal quarters
of the Company ending September 30, 1996 to
(b) Interest Expense as calculated for the four consecutive fiscal quarter
period most recently ended, provided that the amount determined pursuant to
this clause (b) at any time (i) from the Effective Date hereof to and including
June 29, 1996, shall be an amount equal to four times the Interest Expense for
the fiscal quarter ending March 31, 1996, (ii) during the period from June 30,
1996 through September 29, 1996, shall be an amount equal to two times the
Interest Expense for the two consecutive fiscal quarters of the Company ending
June 30, 1996 and (iii) from September 30, 1996 through December 29, 1996,
shall be an amount equal to four-thirds times the Interest Expense for the
three consecutive fiscal quarters of the Company ending September 30, 1996.
"Interest Expense" means, for any period, total interest and related
expense (including, without limitation, that portion of any Capitalized Lease
obligation attributable to interest expense in conformity with Generally
Accepted Accounting Principles, amortization of debt discount, all capitalized
interest, the interest portion of any deferred payment obligations, all
commissions, discounts and other fees and charges owed with respect to letter
of credit and bankers acceptance financing, the net costs and net payments
under any interest rate hedging, cap or similar agreement or arrangement,
prepayment charges, agency fees, administrative fees, commitment fees and
capitalized transaction costs allocated to interest expense) paid, payable or
accrued during such period, without duplication for any period, with respect to
all outstanding Indebtedness of the Company and its Subsidiaries, all as
determined for the Company and its Subsidiaries on a consolidated basis for
such period in accordance with Generally Accepted Accounting Principles;
provided, however, that interest on Subordinated Debt which is not paid in cash
or cash equivalents but is paid by the issuance by the Company of a promissory
note shall be excluded from the calculation of "Interest Expense" hereunder.
"Interest Payment Date" shall mean (a) with respect to any Eurodollar Rate
Loan, the last day of each Eurodollar Interest Period with respect to such
Eurodollar Rate Loan and, in the case of any Eurodollar Interest Period
exceeding three months, those days that occur during such Eurodollar Interest
Period at intervals of three months after the first day of such Eurodollar
Interest Period, and (b) in all other cases, the last Business Day of each
month occurring after the date hereof, commencing with the first such Business
Day occurring after the date of this Agreement.
"Letter of Credit" shall mean a standby letter of credit having a stated
expiry date or a date upon which the draft must be reimbursed not later than
twelve months after the date of issuance and not later than the fifth Business
Day before the Termination Date issued by the Agent on behalf of the Banks for
the account of the Company under an application and related documentation
acceptable to the Agent requiring, among other things, immediate reimbursement
by the Company to the Agent in respect of all
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<PAGE> 15
drafts or other demand for payment honored thereunder and all expenses paid or
incurred by the Agent relative thereto.
"Letter of Credit Advance" shall mean any issuance of a Letter of Credit
under Section 2.4 made pursuant to Section 2.1 in which each Bank acquires a
pro rata risk participation pursuant to Section 2.4(d).
"Letter of Credit Documents" shall have the meaning ascribed thereto in
Section 3.3(b).
"Lien" shall mean any pledge, assignment, hypothecation, mortgage,
security interest, deposit arrangement, option, conditional sale or title
retaining contract, sale and leaseback transaction, financing statement filing,
lessor's or lessee's interest under any lease, subordination of any claim or
right, or any other type of lien, charge, encumbrance, preferential arrangement
or other claim or right.
"Loan" shall mean any borrowing under Section 2.4 evidenced by the Notes
and made pursuant to Section 2.1. Any such Loan or portion thereof may also be
denominated as a Floating Rate Loan or a Eurodollar Rate Loan and such Loans
are referred to herein as "types" of Loans.
"Loan Documents" shall mean, collectively, this Agreement, the Notes, the
Security Documents and all other agreements, instruments and documents executed
pursuant thereto at any time.
"Material Adverse Effect" shall mean a material adverse effect on (a) the
business, assets, operations or condition (financial or otherwise) of the
Company and its Subsidiaries on a consolidated basis, (b) the ability of the
Company or any Guarantor to perform its obligations under any Loan Document, or
(c) the validity of enforceability of any Loan Document or the rights or
remedies of the Agent or the Banks under any Loan Document.
"MS" shall mean MS Acquisition Corp., a Delaware corporation.
"Multiemployer Plan" shall mean any "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA or Section 414(f) of the Code.
"Net Income" means, for any period, the net income (or loss) of the
Company and its Subsidiaries on a consolidated basis for such period taken as a
single accounting period, determined in accordance with Generally Accepted
Accounting Principles; provided that in determining Consolidated Net Income
there shall be excluded, without duplication: (a) the income of any Person
(other than a Subsidiary of the Company) in which any Person other than the
Company or any of its Subsidiaries has a joint interest or partnership
interest, except to the extent of the amount of dividends or other
distributions actually paid to the Company or any of its Subsidiaries by such
Person during such period, (b) the income of any Person accrued prior to the
date it becomes a Subsidiary of the Company or is merged into or consolidated
with the Company or any of its Subsidiaries or that Person's assets are
acquired by the Company or any of its Subsidiaries, (c) the proceeds of any
insurance policy, (d) gains from the sale, exchange, transfer or other
disposition of property or assets not in the ordinary course of business of the
Company and its Subsidiaries, and related tax effects in accordance with
Generally Accepted Accounting Principles, (e) any other extraordinary or
non-recurring gains of the Company or
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<PAGE> 16
its Subsidiaries, and related tax effects in accordance with Generally Accepted
Accounting Principles, and (f) the income of any Subsidiary of the Company to
the extent that the declaration or payment of dividends or similar
distributions by that Subsidiary of that income is not at the time permitted by
operation of the terms of its charter or of any agreement, instrument,
judgment, decree, order, statute, rule or governmental regulation applicable to
that Subsidiary.
"Note" shall mean any promissory note of the Company evidencing the Loans,
in substantially the form annexed hereto as Exhibit B, as amended or modified
from time to time and together with any promissory note or notes issued in
exchange or replacement therefor.
"Overdue Rate" shall mean (a) in respect of principal of Floating Rate
Loans, a rate per annum that is equal to the sum of three percent (3%) per
annum plus the Floating Rate, (b) in respect of principal of Eurodollar Rate
Loans, a rate per annum that is equal to the sum of three percent (3%) per
annum plus the per annum rate in effect thereon until the end of the then
current Eurodollar Interest Period for such Loan and, thereafter, a rate per
annum that is equal to the sum of three percent (3%) per annum plus the
Floating Rate, and (c) in respect of other amounts payable by the Company
hereunder (other than interest), a per annum rate that is equal to the sum of
three percent (3%) per annum plus the Floating Rate.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Permitted Liens" shall mean Liens permitted by Section 5.2(d) hereof.
"Person" or "person" shall include an individual, a corporation, an
association, a partnership, a trust or estate, a joint stock company, an
unincorporated organization, a joint venture, a trade or business (whether or
not incorporated), a government (foreign or domestic) and any agency or
political subdivision thereof, or any other entity.
"Plan" shall mean any pension plan (including a Multiemployer Plan)
subject to Title IV of ERISA or to the minimum funding standards of Section 412
of the Code which has been established or maintained by the Company, any
Guarantor or any ERISA Affiliate.
"Prime Rate" shall mean the per annum rate announced by the Agent from
time to time as its "prime rate" (it being acknowledged that such announced
rate may not necessarily be the lowest rate charged by the Agent to any of its
customers); which Prime Rate shall change simultaneously with any change in
such announced rate.
"Prohibited Transaction" shall mean any transaction involving any Plan
which is proscribed by Section 406 of ERISA or Section 4975 of the Code and to
which no statutory or administrative exemption applies.
"Reportable Event" shall mean a reportable event with respect to any Plan
as described in Section 4043(c) of ERISA, excluding those events as to which
the thirty (30) day notice period is waived under Part 2615 of the regulations
promulgated by the PBGC under ERISA.
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<PAGE> 17
"Required Banks" shall mean Banks holding not less than (i) 66% of the
aggregate principal amount of the Advances then outstanding or (ii) 66% of the
Commitments if no Advances are then outstanding.
"Requirement of Law" shall mean as to any person, the certificate of
incorporation and by-laws or other organizational or governing documents of
such person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other governmental authority, in each case applicable
to or binding upon such person or any of its property to which such person or
any of its property is subject.
"Security Agreement" shall mean each security agreement entered into by
the Company or any Guarantor for the benefit of the Agent and the Banks
pursuant to this Agreement in substantially the form of Exhibit C hereto, as
amended or modified from time to time.
"Security Documents" shall mean, collectively, the Security Agreements,
the Guaranties, the Letter of Credit Documents, any pledge agreement, any note
assignment agreement and all other related agreements and documents, including
financing statements and similar documents, delivered pursuant to this
Agreement or otherwise entered into by any person to secure the Advances.
"Subordinated Debt" of any person shall mean, as of any date, that
Indebtedness of such person for borrowed money which is expressly subordinate
and junior in right and priority of payment to the Advances and other
Indebtedness of such person to the Banks in manner and by written agreement
satisfactory in form and substance to the Required Banks.
"Subordinated Debt Documents" shall mean each of the agreements,
instruments and documents described on Schedule 1.1.
"Subsidiary" of any person shall mean any other person (whether now
existing or hereafter organized or acquired) in which (other than directors
qualifying shares required by law) at least a majority of the securities or
other ownership interests of each class having ordinary voting power or
analogous right (other than securities or other ownership interests which have
such power or right only by reason of the happening of a contingency), at the
time as of which any determination is being made, are owned, beneficially and
of record, by such person or by one or more of the other Subsidiaries of such
person or by any combination thereof. Unless otherwise specified, reference to
"Subsidiary" shall mean a Subsidiary of the Company.
"Termination Date" shall mean the earlier to occur of (a) May __, 1997 and
(b) the date on which the Commitment shall be terminated pursuant to Section
2.2 or 6.2.
"Unfunded Benefit Liabilities" shall mean, with respect to any Plan as of
any date, the amount of the unfunded benefit liabilities determined in
accordance with Section 4001(a)(18) of ERISA.
1.2 Other Definitions; Rules of Construction. As used herein, the terms
"Agent", "Banks", "Company" and "this Agreement" shall have the respective
meanings ascribed thereto in the introductory paragraph of this Agreement, and
the term "Guaranteed Obligations" shall have the meaning
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<PAGE> 18
ascribed thereto in Section 8.1 of this Agreement. Such terms, together with
the other terms defined in Section 1.1, shall include both the singular and the
plural forms thereof and shall be construed accordingly. All computations
required hereunder and all financial terms used herein shall be made or
construed in accordance with Generally Accepted Accounting Principles unless
such principles are inconsistent with the express requirements of this
Agreement; provided that, if the Company notifies the Agent that the Company
wishes to amend any covenant in Article V to eliminate the effect of any change
in Generally Accepted Accounting Principles in the operation of such covenant
(or if the Agent notifies the Company that the Required Banks wish to amend
Article V for such purpose), then the Company's compliance with such covenant
shall be determined on the basis of Generally Accepted Accounting Principles in
effect immediately before the relevant change in Generally Accepted Accounting
Principles became effective, until either such notice is withdrawn or such
covenant is amended in a manner satisfactory to the Company and the Required
Banks. Use of the terms "herein", "hereof", and "hereunder" shall be deemed
references to this Agreement in its entirety and not to the Section or clause
in which such term appears. References to "Sections" and "subsections" shall
be to Sections and subsections, respectively, of this Agreement unless
otherwise specifically provided.
ARTICLE II.
THE COMMITMENTS AND THE ADVANCES
2.1 Commitment of the Banks.
a. Advances. Each Bank agrees, for itself only, subject to the
terms and conditions of this Agreement, to make Loans to the Company
pursuant to Section 2.4 and Section 3.3 and to participate in Letter of Credit
Advances to the Company pursuant to Section 2.4, from time to time from and
including the Effective Date to but excluding the Termination Date, not to
exceed in aggregate principal amount at any time outstanding the amount
determined pursuant to Section 2.1(b).
b. Limitation on Amount of Advances. Notwithstanding anything in
this Agreement to the contrary, (i) the aggregate principal amount of the
Advances made by any Bank at any time outstanding shall not exceed the amount
of its respective Commitment as of the date any such Advance is made, provided,
however, that the aggregate principal amount of Letter of Credit Advances
outstanding at any time shall not exceed $3,000,000, and (ii) the aggregate
principal amount of all Advances at any time outstanding shall not exceed the
amount of the Borrowing Base as of the close of business on the last date of
the month next preceding the date any such Advance is made.
2.2 Termination and Reduction of Commitments. (a) The Company shall have
the right to terminate or reduce the Commitments at any time and from time to
time at its option, provided that (i) the Company shall give notice of such
termination or reduction to the Agent (with sufficient executed copies for each
Bank) specifying the amount and effective date thereof, (ii) each partial
reduction of the Commitments shall be in a minimum amount of $1,000,000 and in
an integral multiple of $1,000,000 and shall reduce the Commitments of all of
the Banks proportionately in accordance with the respective commitment amounts
for each such Bank set forth in the signature pages hereof next to name of each
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<PAGE> 19
such Bank, (iii) no such termination or reduction shall be permitted with
respect to any portion of the Commitments as to which a request for a Advance
pursuant to Section 2.4 is then pending and (iv) the Commitments may not be
terminated if any Advances are then outstanding and may not be reduced below
the principal amount of Advances then outstanding. The Commitments or any
portion thereof terminated or reduced pursuant to this Section 2.2, whether
optional or mandatory, may not be reinstated.
(b) For purposes of this Agreement, a Letter of Credit Advance (i) shall
be deemed outstanding in an amount equal to the sum of the maximum amount
available to be drawn under the related Letter of Credit on or after the date
of determination and on or before the stated expiry date thereof plus the
amount of any draws under such Letter of Credit that have not been reimbursed
as provided in Section 3.3 and (ii) shall be deemed outstanding at all times
on and before such stated expiry date or such earlier date on which all amounts
available to be drawn under such Letter of Credit have been fully drawn, and
thereafter until all related reimbursement obligations have been paid pursuant
to Section 3.3. As provided in Section 3.3, upon each payment made by the
Agent in respect of any draft or other demand for payment under any Letter of
Credit, the amount of any Letter of Credit Advance outstanding immediately
prior to such payment shall be automatically reduced by the amount of each Loan
deemed advanced in respect of the related reimbursement obligation of the
Company.
2.3 Fees. (a) The Company agrees to pay to each Bank a commitment fee
on the daily average unused amount of its respective Commitment, for
the period from the Effective Date to but excluding the Termination Date, at a
rate equal to one-half of one percent (1/2 of 1%) per annum. Accrued
commitment fees shall be payable quarterly in arrears on the last Business Day
of each March, June, September and December, commencing on the first such
Business Day occurring after the Effective Date, and on the Termination Date.
(b) On or before the date of issuance of any Letter of Credit, the
Company agrees (i) to pay to the Banks a fee computed at the rate of
one and three quarters percent (1 3/4%) per annum of the maximum amount
available to be drawn from time to time under such Letter of Credit for the
period from and including the date of issuance of such Letter of Credit to and
including the stated expiry date of such Letter of Credit, and (ii) if there is
more than one Bank party hereto, to pay an additional fee to the Agent for its
own account computed at the rate of one-quarter of one percent (1/4 of 1%) per
annum of such maximum amount for such period. Such fees are nonrefundable and
the Company shall not be entitled to any rebate of any portion thereof if such
Letter of Credit does not remain outstanding through its stated expiry date or
for any other reason. The Company further agrees to pay to the Agent, on
demand, such other reasonable and customary administrative fees, charges and
expenses of the Agent in respect of the issuance, negotiation, acceptance,
amendment, transfer and payment of such Letter of Credit or otherwise payable
pursuant to the application and related documentation under which such Letter
of Credit is issued.
(c) The Company agrees to pay to the Agent such reasonable fees in
such amounts as may from time to time be agreed upon by the Company and the
Agent.
2.4 Disbursement of Advances. The Company shall give the Agent notice
of its request for each Advance in substantially the form of Exhibit D
hereto not later than 10:00 a.m. Detroit time (i) four Eurodollar Business Days
prior to the date such Advance is requested to be made if such
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Advance is to be made as a Eurodollar Rate Loan, (ii) five Business Days prior
to the date any Letter of Credit Advance is requested to be made, and (iii) one
Business Day prior to the date such Advance is requested to be made in all
other cases, which notice shall specify whether a Eurodollar Rate Loan or
Floating Rate Loan or a Letter of Credit Advance is requested and, in the case
of each requested Eurodollar Rate Loan, the Eurodollar Interest Period to be
initially applicable to such Loan and, in the case of each Letter of Credit
Advance, such information as may be necessary for the issuance thereof by the
Agent. The Agent, not later than the Business Day next succeeding the day such
notice is given, shall provide notice of such requested Advance to each Bank.
Subject to the terms and conditions of this Agreement, the proceeds of each
such requested Loan shall be made available to the Company by depositing the
proceeds thereof in immediately available funds, in an account maintained and
designated by the Company at the principal office of the Agent. Subject to the
terms and conditions of this Agreement, the Agent shall, on the date any Letter
of Credit Advance is requested to be made, issue the related Letter of Credit
on behalf of the Banks for the account of the Company. Notwithstanding
anything herein to the contrary, the Agent may decline to issue any requested
Letter of Credit on the basis that the beneficiary, the purpose of issuance or
the terms or the conditions of drawing are unacceptable to it in its reasonable
discretion.
(b) Each Bank, on the date any Borrowing in the form of a Loan is
requested to be made, shall make its pro rata share of such Borrowing
available in immediately available, freely transferable, cleared funds for
disbursement to the Company pursuant to the terms and conditions of this
Agreement at the principal office of the Agent. Unless the Agent shall have
received notice from any Bank prior to the date such Borrowing is requested to
be made under this Section 2.4 that such Bank will not make available to the
Agent such Bank's pro rata portion of such Borrowing, the Agent may assume that
such Bank has made such portion available to the Agent on the date such
Borrowing is requested to be made in accordance with this Section 2.4. If and
to the extent such Bank shall not have so made such pro rata portion available
to the Agent, the Agent may (but shall not be obligated to) make such amount
available to the Company, and such Bank and the Company severally agree to pay
to the Agent forthwith on demand such amount together with interest thereon,
for each day from the date such amount is made available to the Company by the
Agent until the date such amount is repaid to the Agent, at the Federal Funds
Rate. If such Bank shall pay such amount to the Agent together with interest,
such amount so paid shall constitute a Loan by such Bank as a part of such the
related Borrowing for purposes of this Agreement. The failure of any Bank to
make its pro rata portion of any such Borrowing available to the Agent shall
not relieve any other Bank of its obligations to make available its pro rata
portion of such Borrowing on the date such Borrowing is requested to be made,
but no Bank shall be responsible for failure of any other Bank to make such pro
rata portion available to the Agent on the date of any such Borrowing.
(c) All Loans made under this Section 2.4 shall be evidenced by the
Notes, and all such Loans shall be due and payable and bear interest as
provided in Article III. Each Bank is hereby authorized by the Company to
record on the schedule attached to the Notes, or in its books and records, the
date, amount and type of each Loan and the duration of the related Eurodollar
Interest Period (if applicable), the amount of each payment or prepayment of
principal thereon, and the other information provided for on such schedule,
which schedule or books and records, as the case may be, shall constitute prima
facie evidence of the information so recorded, provided, however, that failure
of any Bank to record, or any error in recording, any such information shall
not relieve the Company of its obligation to
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<PAGE> 21
repay the outstanding principal amount of the Loans, all accrued interest
thereon and other amounts payable with respect thereto in accordance with the
terms of the Notes and this Agreement. Subject to the terms and conditions of
this Agreement, the Company may borrow Loans under this Section 2.4 and under
Section 3.3, prepay Loans pursuant to Section 3.1 and reborrow Loans under this
Section 2.4 and under Section 3.3.
(d) Nothing in this Agreement shall be construed to require or
authorize any Bank to issue any Letter of Credit, it being recognized
that the Agent has the sole obligation under this Agreement to issue Letters of
Credit on behalf of the Banks, and the Commitment of each Bank with respect to
Letter of Credit Advances is expressly conditioned upon the Agent's performance
of such obligations. Upon such issuance by the Agent, each Bank shall
automatically acquire a pro rata risk participation interest in such Letter of
Credit Advance based on the amount of its respective Commitment. If the Agent
shall honor a draft or other demand for payment presented or made under any
Letter of Credit, the Agent shall provide notice thereof to each Bank on the
date such draft or demand is honored unless the Company shall have satisfied
its reimbursement obligation under Section 3.3 by payment to the Agent on such
date. Each Bank, on such date, shall make its pro rata share of the amount
paid by the Agent available in immediately available funds at the principal
office of the Agent for the account of the Agent. If and to the extent such
Bank shall not have made such pro rata portion available to the Agent, such
Bank and the Company severally agree to pay to the Agent forthwith on demand
such amount together with interest thereon, for each day from the date such
amount was paid by the Agent until such amount is so made available to the
Agent at a per annum rate equal to the Federal Funds Rate. If such Bank shall
pay such amount to the Agent together with such interest, such amount so paid
shall constitute a Loan by such Bank as part of the Borrowing disbursed in
respect of the reimbursement obligation of the Company under Section 3.3 for
purposes of this Agreement. The failure of any Bank to make its pro rata
portion of any such amount paid by the Agent available to the Agent shall not
relieve any other Bank of its obligation to make available its pro rata portion
of such amount, but no Bank shall be responsible for failure of any other Bank
to make such pro rata portion available to the Agent.
2.5 Conditions for First Disbursement. The obligation of the Banks to
make the first Advance hereunder is subject to receipt by each Bank and the
Agent of the following documents and completion of the following matters, in
form and substance satisfactory to each Bank and the Agent:
(a) Corporate Documents. Certified copies of such corporate
documents, resolutions and incumbency certificates as requested by the Agent;
(b) Notes. The Notes duly executed on behalf of the Company for each
Bank;
(c) Security Documents. The Security Documents duly executed on
behalf of the Company and each Guarantor, as the case may be, granting
to the Banks and the Agent the collateral and security intended to be provided
pursuant to Section 2.11, together with such financing statements, UCC
searches, pledge agreement, instruments, stock certificates and other documents
in connection therewith requested by the Agent;
(d) Casualty and Other Insurance. Evidence that the casualty and
other insurance required pursuant to Section 5.1(c) and each Security
Agreement is in full force and effect;
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<PAGE> 22
(e) Legal Opinions. The favorable written opinion of counsel for the
Company and each Guarantor in form and substance satisfactory to the Agent;
(f) Fees. Payment of any fees due as of the Effective Date;
(g) Payoff Letters, Etc. Payoff letters, lien releases (provided
that the delivery of such lien releases may contingent upon payment of
the amount required under the related payoff letter) and other documents from
any creditor of the Company or any Guarantor whose debt liens are not permitted
hereunder, including without limitation a payoff letter and release of all
liens and security interests currently held by NatWest Bank, N.A., and
notwithstanding anything herein to the contrary, the first Advance hereunder
shall be used to pay in full any of the foregoing creditors;
(h) Subordinated Debt Documents. Copies of all agreements and
documents relating to any Subordinated Debt, all of which are described
on Schedule 1.1 hereto, and amendments to all such Subordinated Debt Documents
in form or substance satisfactory to the Agent; and
(i) Miscellaneous. Such other documents, and completion of such other
matters, as the Agent may reasonably request.
2.6 Further Conditions for Disbursement. The obligation of the Banks to
make any Advance (including the first Advance), or any continuation or
conversion under Section 2.7 is further subject to the satisfaction of the
following conditions precedent:
(a) The representations and warranties contained in Article IV
hereof and in the Security Documents shall be true and correct on and
as of the date such Advance is made (both before and after such Advance is
made) as if such representations and warranties were made on and as of such
date;
(b) No Default or Event of Default shall exist or shall have occurred
and be continuing on the date such Advance is made (whether before or
after such Advance is made);
(c) The Agent shall have received the Borrowing Base Certificate
required pursuant to Section 5.1(d)(v) as of the close of business on
the last day of the month next preceding the date such Advance is made; and
(d) In the case of any Letter of Credit Advance, the Company shall
have delivered to the Agent an application for the related Letter of
Credit and other related documentation requested by and acceptable to the Agent
appropriately completed and duly executed on behalf of the Company.
The Company shall be deemed to have made a representation and warranty to the
Banks at the time of the making of, and the continuation or conversion of, each
Advance to the effects set forth in clauses (a) and (b) of this Section 2.6.
For purposes of this Section 2.6 the representations and warranties contained
in Section 4.6 hereof shall be deemed made with respect to both the financial
statements referred to therein and the most recent financial statements
delivered pursuant to Section 5.1(d)(ii) and (iii). The schedules referenced
in the representations and warranties in this Agreement may be amended from
time
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to time by the Company provided that such amendments reflect transactions
permitted by the Agreement or are immaterial, and shall be effective when
consented to by the Agent.
2.7 Subsequent Elections as to Loans. The Company may elect (a) to
continue a Eurodollar Rate Loan, or a portion thereof, as a Eurodollar
Rate Loan or (b) may elect to convert a Eurodollar Rate Loan, or a portion
thereof, to a Loan of another type or (c) elect to convert a Floating Rate
Loan, or a portion thereof, to a Eurodollar Rate Loan in each case by giving
notice thereof to the Agent in substantially the form of Exhibit E hereto not
later than 10:00 a.m. Detroit time four Eurodollar Business Days prior to the
date any such continuation of or conversion to a Eurodollar Rate Loan is to be
effective and not later than 10:00 a.m. Detroit time one Business Day prior to
the date such continuation or conversion is to be effective in all other cases,
provided that an outstanding Eurodollar Rate Loan may only be converted on the
last day of the then current Eurodollar Interest Period with respect to such
Loan, and provided, further, if a continuation of a Loan as, or a conversion of
a Loan to, a Eurodollar Rate Loan is requested, such notice shall also specify
the Eurodollar Interest Period to be applicable thereto upon such continuation
or conversion. The Agent, not later than the Business Day next succeeding the
day such notice is given, shall provide notice of such election to the Banks.
If the Company shall not timely deliver such a notice with respect to any
outstanding Eurodollar Rate Loan, the Company shall be deemed to have elected
to convert such Eurodollar Rate Loan to a Floating Rate Loan on the last day of
the then current Eurodollar Interest Period with respect to such Loan.
2.8 Limitation of Requests and Elections. Notwithstanding any other
provision of this Agreement to the contrary, (a) the Company may not
elect any Eurodollar Rate Loan, including any conversion to a Eurodollar Rate
Loan, and shall not be entitled to request any Eurodollar Rate Loan or any
conversion to a Eurodollar Rate Loan until such time as agreed to by the Agent
in his sole discretion, and (b) at any time after the Company may obtain a
Eurodollar Rate Loan or a conversion thereto, if, upon receiving a request for
a Eurodollar Rate Loan pursuant to Section 2.4, or a request for a continuation
of a Eurodollar Rate Loan as a Eurodollar Rate Loan of the then existing type,
or a request for a conversion of a Floating Rate Loan to a Eurodollar Rate Loan
pursuant to Section 2.7, (i) in the case of any Eurodollar Rate Loan, deposits
in Dollars for periods comparable to the Eurodollar Interest Period elected by
the Company are not available to any Bank in the London interbank market, (ii)
the Eurodollar Rate will not adequately and fairly reflect the cost to any Bank
of making, funding or maintaining the related Eurodollar Rate Loan, or (iii) by
reason of national or international financial, political or economic conditions
or by reason of any applicable law, treaty or other international agreement,
rule or regulation (whether domestic or foreign) now or hereafter in effect, or
the interpretation or administration thereof by any governmental authority
charged with the interpretation or administration thereof, or compliance by any
Bank with any guideline, request or directive of such authority (whether or not
having the force of law), including without limitation exchange controls, it is
impracticable, unlawful or impossible for, or shall limit or impair the ability
of, (i) any Bank to make or fund the relevant Loan or to continue such Loan as
a Loan of the then existing type or to convert a Loan to such a Loan or (ii)
the Company to make or any Bank to receive any payment under this Agreement at
the place specified for payment hereunder or to freely convert any amount paid
into Dollars at market rates of exchange or to transfer any amount paid or so
converted to the address of its principal office specified in Section 9.2, then
the Company shall not be entitled, so long as such circumstances continue, to
request a Loan of the affected type pursuant to Section 2.4 or a continuation
of or conversion to a Loan of the affected type pursuant to Section 2.7. In
the event that such circumstances no longer exist, the
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<PAGE> 24
Banks shall again consider requests for Loans of the affected type pursuant to
Section 2.4, and requests for continuations of and conversions to Loans of the
affected type pursuant to Section 2.7.
2.9 Minimum Amounts; Limitation on Number of Loans; Etc. Except for (a)
Advances which exhaust the entire remaining amount of the Commitments, and (b)
payments required pursuant to Section 3.1(c) or Section 3.8, each Floating Rate
Loan and each continuation or conversion thereof and each prepayment thereof
shall be in a minimum amount of $100,000 and in an integral multiple of
$10,000, each Letter of Credit Advance shall be in a minimum amount of
$100,000, and (c) each Eurodollar Rate Loan and each continuation or conversion
thereof and each prepayment thereof shall be in a minimum amount of $2,000,000
and in an integral multiple of $500,000.
2.40 Borrowing Base Adjustments. The Company agrees that if at any time
any trade account receivable, any inventory, any fixed asset or any other
asset of the Company fails to constitute Eligible Account Receivable, Eligible
Inventory, Eligible Tooling Inventory or Eligible Fixed Assets, as the case may
be, for any reasonable reason, the Agent may, at any time and notwithstanding
any prior classification of eligibility, classify such asset or property as
ineligible and exclude the same from the computation of the Borrowing Base
without in any way impairing the rights of the Banks and the Agent in and to
the same under the Security Agreements.
2.11 Security and Collateral. To secure the payment when due of the Notes
and all other obligations of the Company under the Loan Documents and under any
Hedging Contract to the Banks and the Agent, the Company shall execute and
deliver, or cause to be executed and delivered, to the Banks and the Agent
Security Documents granting the following:
(a) Security interests in all present and future accounts,
inventory, general intangibles, chattel paper, instruments, equipment,
fixtures, and all other personal property of the Company.
(b) Security interests in all present and future accounts,
inventory, general tangibles, chattel paper, instruments, equipment,
fixtures and all other personal property of the Guarantors other than MS.
(c) Guarantees of each Guarantor.
(d) All other security and collateral described in the Security
Documents.
ARTICLE III.
PAYMENTS AND PREPAYMENTS OF ADVANCES
3.1 Principal Payments and Prepayments.
(a) Unless earlier payment is required under this Agreement, the
Company shall pay to the Banks on the Termination Date the entire
outstanding principal amount of the Advances.
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(b) The Company may at any time and from time to time prepay all or
a portion of the Loans, without premium or penalty, provided that (i)
the Company may not prepay any portion of any Loan as to which an election for
a continuation of or a conversion to a Eurodollar Rate Loan is pending pursuant
to Section 2.4, and (ii) unless earlier payment is required under this
Agreement, any Eurodollar Rate Loan may only be prepaid on the last day of the
then current Eurodollar Interest Period with respect to such Loan. Upon the
giving of such notice, the aggregate principal amount of such Loan or portion
thereof so specified in such notice, together with such accrued interest and
other amounts, shall become due and payable on the specified prepayment date.
(c) If at any time the aggregate outstanding principal amount of
the Advances shall exceed the lesser of Borrowing Base or the aggregate
Commitments, the Company shall forthwith pay to the Banks, without demand, an
amount not less than the amount of such excess for application to the
outstanding principal amount of the Loans, provided that if any such prepayment
would be in excess of the outstanding amount of the Loans, the Company shall
deliver cash collateral to the Agent to secure the outstanding Letters of
Credit in the amount of such excess which is greater than the outstanding Loans
and the Company hereby grants to the Agent, for the benefit of the Banks, a
first priority lien and security interest in such collateral, and all such cash
collateral shall be under the sole and exclusive control of the Agent.
3.2 Interest Payments. The Company shall pay interest to the Banks
on the unpaid principal amount of each Loan, for the period commencing
on the date such Loan is made until such Loan is paid in full, on each Interest
Payment Date and at maturity (whether at stated maturity, by acceleration or
otherwise), and thereafter on demand, at the following rates per annum:
(a) During such periods that such Loan is a Floating Rate Loan, the
Floating Rate.
(b) During such periods that such Loan is a Eurodollar Rate Loan, the
Eurodollar Rate applicable to such Loan for each related Eurodollar Interest
Period.
Notwithstanding the foregoing paragraphs (a) and (b), the Company shall pay
interest on demand by the Agent at the Overdue Rate on the outstanding
principal amount of any Loan and any other amount payable by the Company
hereunder (other than interest) at any time on or after an Event of Default if
required in writing by the Required Banks.
3.3 Letter of Credit Reimbursement Payments. (a) The Company agrees to
pay to the Banks, on the day on which the Agent shall honor a draft or
other demand for payment presented or made under any Letter of Credit, an
amount equal to the amount paid by the Agent in respect of such draft or other
demand under such Letter of Credit and all expenses paid or incurred by the
Agent relative thereto. Unless the Company shall have made such payment to the
Banks on such day, upon each such payment by the Agent, the Agent shall be
deemed to have disbursed to the Company, and the Company shall be deemed to
have elected to satisfy its reimbursement obligation by, a Loan bearing
interest at the Floating Rate for the account of the Banks in an amount equal
to the amount so paid by the Agent in respect of such draft or other demand
under such Letter of Credit. Such Loan shall be disbursed notwithstanding any
failure to satisfy any conditions for disbursement of any Loan set forth in
Article II hereof and, to the extent of the Loan so disbursed, the
reimbursement obligation of the Company under
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this Section 3.3 shall be deemed satisfied; provided, however, that nothing in
this Section 3.3 shall be deemed to constitute a waiver of any Default or Event
of Default caused by the failure to the conditions for disbursement or
otherwise.
(ii) If, for any reason (including without limitation as a result of
the occurrence of an Event of Default with respect to the Company
pursuant to Section 6.1(h)), Floating Rate Loans may not be made by the Banks
as described in Section 3.3(a)(i), then (A) the Company agrees that each
reimbursement amount not paid pursuant to the first sentence of Section
3.3(a)(i) shall bear interest, payable on demand by the Agent, at the interest
rate then applicable to Floating Rate Loans, and (B) effective on the date each
such Floating Rate Loan would otherwise have been made, each Bank severally
agrees that it shall unconditionally and irrevocably, without regard to the
occurrence of any Default or Event of Default, in lieu of deemed disbursement
of loans, to the extent of such Bank's Commitment, purchase a participating
interest in each reimbursement amount. Each Bank will immediately transfer to
the Agent, in same day funds, the amount of its participation. Each Bank shall
share on a pro rata basis (calculated by reference to its Commitment) in any
interest which accrues thereon and in all repayments thereof. If and to the
extent that any Bank shall not have so made the amount of such participating
interest available to the Agent, such Bank and the Company severally agree to
pay to the Agent forthwith on demand such amount together with interest
thereon, for each day from the date of demand by the Agent until the date such
amount is paid to the Agent, at (x) in the case of the Company, the interest
rate then applicable to Floating Rate Loans and (y) in the case of such Bank,
the Federal Funds Rate.
(b) The reimbursement obligation of the Company under this Section 3.3
shall be absolute, unconditional and irrevocable and shall remain in full force
and effect until all obligations of the Company to the Banks hereunder shall
have been satisfied, and such obligations of the Company shall not be affected,
modified or impaired upon the happening of any event, including without
limitation, any of the following, whether or not with notice to, or the consent
of, the Company:
(iii) Any lack of validity or enforceability of any Letter of Credit
or any documentation relating to any Letter of Credit or to any
transaction related in any way to such Letter of Credit (the "Letter of Credit
Documents");
(iv) Any amendment, modification, waiver, consent, or any
substitution, exchange or release of or failure to perfect any interest
in collateral or security, with respect to any of the Letter of Credit
Documents;
(v) The existence of any claim, setoff, defense or other right
which the Company may have at any time against any beneficiary or any
transferee of any Letter of Credit (or any persons or entities for whom any
such beneficiary or any such transferee may be acting), the Agent or any Bank
or any other person or entity, whether in connection with any of the Letter of
Credit Documents, the transactions contemplated herein or therein or any
unrelated transactions;
(vi) Any draft or other statement or document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or inaccurate
in any respect;
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<PAGE> 27
(vii) Payment by the Agent to the beneficiary under any Letter of
Credit against presentation of a documents which do not comply with the
terms of the Letter of Credit, including failure of any documents to bear any
reference or adequate reference to such Letter of Credit;
(viii) Any failure, omission, delay or lack on the part of the Agent
or any Bank or any party to any of the Letter of Credit Documents to
enforce, assert or exercise any right, power or remedy conferred upon the
Agent, any Bank or any such party under this Agreement or any of the Letter of
Credit Documents, or any other acts or omissions on the part of the Agent, any
Bank or any such party;
(ix) Any other event or circumstance that would, in the absence of
this clause, result in the release or discharge by operation of law or
otherwise of the Company from the performance or observance of any obligation,
covenant or agreement contained in this Section 3.3.
No setoff, counterclaim, reduction or diminution of any obligation or any
defense of any kind or nature which the Company has or may have against the
beneficiary of any Letter of Credit shall be available hereunder to the Company
against the Agent or any Bank. Nothing in this Section 3.3 shall limit the
liability, if any, of the Banks to the Company pursuant to Section 9.5.
3.4 Payment Method. (a) All payments to be made by the Company hereunder
will be made to the Agent for the account of the Banks in Dollars and in
immediately available, freely transferable, cleared funds not later than 1:00
p.m. at the principal office of the Agent specified in Section 9.2. Payments
received after 1:00 p.m. at the place for payment shall be deemed to be
payments made prior to 1:00 p.m. at the place for payment on the next
succeeding Business Day. The Company hereby authorizes the Agent to charge its
account with the Agent in order to cause timely payment of amounts due
hereunder to be made (subject to sufficient funds being available in such
account for that purpose).
(b) At the time of making each such payment, the Company shall,
subject to the other terms and conditions of this Agreement, specify to
the Agent that Loan or other obligation of the Company hereunder to which such
payment is to be applied. In the event that the Company fails to so specify
the relevant obligation or if an Event of Default shall have occurred and be
continuing, the Agent may apply such payments as it may determine in its sole
discretion.
(c) On the day such payments are deemed received, the Agent shall
remit to the Banks their pro rata shares of such payments in
immediately available funds to the Banks at their respective address in the
United States specified for notices pursuant to Section 9.2. In the case of
payments of principal and interest on any Borrowing, such pro rata shares shall
be determined with respect to each such Bank by the ratio which the outstanding
principal balance of its Loan included in such Borrowing bears to the
outstanding principal balance of the Loans of all of the Banks included in such
Borrowing, and in the case of fees paid pursuant to Section 2.3 and other
amounts payable hereunder (other than the Agent's fees payable pursuant to
Section 2.3(d) and amounts payable to any Bank under Section 3.7), such pro
rata shares shall be determined with respect to each such Bank by the ratio
which the Commitment of such Bank bears to the Commitments of all the Banks.
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3.5 No Setoff or Deduction. All payments of principal of and interest
on the Loans and other amounts payable by the Company hereunder shall
be made by the Company without setoff or counterclaim, and, subject to the next
succeeding sentence, free and clear of, and without deduction or withholding
for, or on account of, any present or future taxes, levies, imposts, duties,
fees, assessments, or other charges of whatever nature, imposed by any
governmental authority, or by any department, agency or other political
subdivision or taxing authority. If any such taxes, levies, imposts, duties,
fees, assessments or other charges are imposed, the Company will pay such
additional amounts as may be necessary so that payment of principal of and
interest on the Loans and other amounts payable hereunder, after withholding or
deduction for or on account thereof, will not be less than any amount provided
to be paid hereunder and, in any such case, the Company will furnish to the
Banks certified copies of all tax receipts evidencing the payment of such
amounts within 45 days after the date any such payment is due pursuant to
applicable law.
3.6 Payment on Non-Business Day; Payment Computations. Except as
otherwise provided in this Agreement to the contrary, whenever any
installment of principal of, or interest on, any Loan or any other amount due
hereunder becomes due and payable on a day which is not a Business Day, the
maturity thereof shall be extended to the next succeeding Business Day and, in
the case of any installment of principal, interest shall be payable thereon at
the rate per annum determined in accordance with this Agreement during such
extension. Computations of interest and other amounts due under this Agreement
shall be made on the basis of a year of 360 days for the actual number of days
elapsed, including the first day but excluding the last day of the relevant
period.
3.7 Additional Costs. In the event that any applicable law, treaty or
other international agreement, rule or regulation (whether domestic or
foreign) now or hereafter in effect and whether or not presently applicable to
any Bank or the Agent, or any interpretation or administration thereof by any
governmental authority charged with the interpretation or administration
thereof, or compliance by any Bank or the Agent with any guideline, request or
directive of any such authority (whether or not having the force of law), shall
(a) affect the basis of taxation of payments to any Bank or the Agent of any
amounts payable by the Company under this Agreement (other than taxes imposed
on the overall net income of any Bank or the Agent, by the jurisdiction, or by
any political subdivision or taxing authority of any such jurisdiction, in
which any Bank or the Agent, as the case may be, has its principal office), or
(b) shall impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account of, or
credit extended by any Bank or the Agent, or (c) shall impose any other
condition with respect to this Agreement, or any of the Commitments, the Notes
or the Loans or any Letter of Credit, and the result of any of the foregoing is
to increase the cost to any Bank or the Agent, as the case may be, of making,
funding or maintaining any Eurodollar Rate Loan or any Letter of Credit or to
reduce the amount of any sum receivable by any Bank or the Agent, as the case
may be, thereon, then the Company shall pay to such Bank or the Agent, as the
case may be, from time to time, upon request by such Bank (with a copy of such
request to be provided to the Agent) or the Agent, additional amounts
sufficient to compensate such Bank or the Agent, as the case may be, for such
increased cost or reduced sum receivable to the extent, in the case of any
Eurodollar Rate Loan, such Bank or the Agent is not compensated therefor in the
computation of the interest rate applicable to such Eurodollar Rate Loan. A
statement as to the amount of such increased cost or reduced sum receivable,
prepared in good faith and in reasonable detail by such Bank or the Agent, as
the case may be, and submitted by such Bank or the Agent, as the case may be,
to the
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Company, shall be conclusive and binding for all purposes absent manifest error
in computation. No Bank shall charge any amount under this Section 3.7(a)
unless it is charging other borrowers similar to the Company, as reasonably
determined by such Bank, such similar amounts if allowed.
(b) In the event that any applicable law, treaty or other international
agreement, rule or regulation (whether domestic or foreign) now or hereafter in
effect and whether or not presently applicable to any Bank or the Agent, or any
interpretation or administration thereof by any governmental authority charged
with the interpretation or administration thereof, or compliance by any Bank or
the Agent with any guideline, request or directive of any such authority
(whether or not having the force of law), including any risk-based capital
guidelines, affects or would affect the amount of capital required or expected
to be maintained by such Bank or the Agent (or any corporation controlling
such Bank or the Agent) and such Bank or the Agent, as the case may be,
determines that the amount of such capital is increased by or based upon the
existence of such Bank's or the Agent's obligations hereunder and such increase
has the effect of reducing the rate of return on such Bank's or the Agent's (or
such controlling corporation's) capital as a consequence of such obligations
hereunder to a level below that which such Bank or the Agent (or such
controlling corporation) could have achieved but for such circumstances (taking
into consideration its policies with respect to capital adequacy), then the
Company shall pay to such Bank or the Agent, as the case may be, from time to
time, upon request by such Bank (with a copy of such request to be provided to
the Agent) or the Agent, additional amounts sufficient to compensate such Bank
or the Agent (or such controlling corporation) for any increase in the amount
of capital and reduced rate of return which such Bank or the Agent reasonably
determines to be allocable to the existence of such Bank's or the Agent's
obligations hereunder. A statement as to the amount of such compensation,
prepared in good faith and in reasonable detail by such Bank or the Agent, as
the case may be, and submitted by such Bank or the Agent to the Company, shall
be conclusive and binding for all purposes absent manifest error in
computation. Such Bank or the Agent may, at its option, specify that such
amounts be paid by way of an increase in the commitment fees payable by the
Company pursuant to Section 2.3(a). No Bank shall charge any amount under this
Section 3.7(b) unless it is charging other borrowers similar to the Company, as
reasonably determined by such Bank, such similar amounts if allowed.
3.8 Illegality and Impossibility. In the event that any applicable law,
treaty or other international agreement, rule or regulation (whether domestic
or foreign) now or hereafter in effect and whether or not presently applicable
to any Bank, or any interpretation or administration thereof by any
governmental authority charged with the interpretation or administration
thereof, or compliance by any Bank with any guideline, request or directive of
such authority (whether or not having the force of law), including without
limitation exchange controls, shall make it unlawful or impossible for any Bank
to maintain any Loan under this Agreement, shall make it impracticable,
unlawful or impossible for, or shall in any way limit or impair ability of, the
Company to make or any Bank to receive any payment under this Agreement at the
place specified for payment hereunder, the Company shall upon receipt of notice
thereof from such Bank, repay in full the then outstanding principal amount of
each Loan so affected, together with all accrued interest thereon to the date
of payment and all amounts owing to such Bank under Section 3.8, (a) on the
last day of the then current Eurodollar Interest Period applicable to such Loan
if such Bank may lawfully continue to maintain such Loan to such day, or (b)
immediately if such Bank may not continue to maintain such Loan to such day.
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3.9 Indemnification. If the Company makes any payment of principal with
respect to any Eurodollar Rate Loan on any other date than the last day of an
Eurodollar Interest Period applicable thereto (whether pursuant to Section
3.1(c), Section 3.7, Section 6.2 or otherwise), or if the Company fails to
borrow any Eurodollar Rate Loan after notice has been given to the Banks in
accordance with Section 2.4, or if the Company fails to make any payment of
principal or interest in respect of a Eurodollar Rate Loan when due, the
Company shall reimburse each Bank on demand for any resulting loss or expense
incurred by each such Bank, including without limitation any loss incurred in
obtaining, liquidating or employing deposits from third parties, whether or not
such Bank shall have funded or committed to fund such Loan. A statement as to
the amount of such loss or expense, prepared in good faith and in reasonable
detail by such Bank and submitted by such Bank to the Company, shall be
conclusive and binding for all purposes absent manifest error in computation.
Calculation of all amounts payable to such Bank under this Section 3.9 shall be
made as though such Bank shall have actually funded or committed to fund the
relevant Eurodollar Rate Loan through the purchase of an underlying deposit in
an amount equal to the amount of such Loan in the relevant market and having a
maturity comparable to the related Eurodollar Interest Period and, through the
transfer of such deposit to a domestic office of such Bank in the United
States; provided, however, that such Bank may fund any Eurodollar Rate Loan in
any manner it sees fit and the foregoing assumption shall be utilized only for
the purpose of calculation of amounts payable under this Section 3.9.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Banks and the Agent that:
4.1 Corporate Existence and Power. Each of the Company and each
Guarantor is a corporation duly organized, validly existing and in good
standing under the laws of the state or territory of its jurisdiction of
incorporation or organization, as the case may be, and is duly qualified to do
business, and is in good standing, in all additional jurisdictions where such
qualification is necessary under applicable law, except where failure to so
qualify would not have a Material Adverse Effect. Each of the Company and each
Guarantor has all requisite corporate power to own or lease the properties used
in its business and to carry on its business as now being conducted and as
proposed to be conducted, and to execute and deliver the Loan Documents to
which it is a party and to engage in the transactions contemplated by the Loan
Documents.
4.2 Corporate Authority. The execution, delivery and performance by the
Company and each Guarantor of the Loan Documents to which it is a party have
been duly authorized by all necessary corporate action and are not in
contravention of any law, rule or regulation, or any judgment, decree, writ,
injunction, order or award of any arbitrator, court or governmental authority,
or of the terms of the Company's or the Guarantor's charter or by-laws, or of
any contract or undertaking to which the Company or any Guarantor is a party or
by which the Company or any Guarantor or any of their respective property may
be bound or affected and will not result in the imposition of any Lien on any
of their property or of any of their Subsidiaries except for Permitted Liens.
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4.3 Binding Effect. The Loan Documents to which the Company or any
Guarantor is a party are the legal, valid and binding obligations of
the Company and each Guarantor, respectively, enforceable against the Company
and each Guarantor in accordance with their respective terms.
4.4 Subsidiaries. Schedule 4.4 hereto correctly sets forth the corporate
name, jurisdiction of incorporation and ownership of each Subsidiary of the
Company and each Guarantor. Each such Subsidiary and each corporation becoming
a Subsidiary of the Company or any Guarantor after the date hereof is and will
be a corporation duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation and is and will be duly qualified
to do business in each additional jurisdiction where such qualification is or
may be necessary under applicable law, except where the failure to so qualify
would not have a Material Adverse Effect. Each Subsidiary of the Company and
each Guarantor has and will have all requisite corporate power to own or lease
the properties used in its business and to carry on its business as now being
conducted and as proposed to be conducted. All outstanding shares of capital
stock of each class of each Subsidiary of the Company and each Guarantor have
been and will be validly issued and are and will be fully paid and
nonassessable and, except as otherwise indicated in Schedule 4.4 hereto or
disclosed in writing to the Agent and the Banks from time to time, are and will
be owned, beneficially and of record, by the Company or another Subsidiary of
the Company free and clear of any Liens.
4.5 Litigation. Except as set forth in Schedule 4.5 hereto, there is no
action, suit or proceeding pending or, to the best of the Company's and the
Guarantors' knowledge, threatened against or affecting the Company, any
Guarantor or any of their respective Subsidiaries before or by any court,
governmental authority or arbitrator, which if adversely decided might have a
Material Adverse Effect and, to the best of the Company's and the Guarantor's
knowledge, there is no basis for any such action, suit or proceeding.
4.6 Financial Condition. The consolidated and consolidating balance
sheet of the Company and its Subsidiaries and the consolidated and
consolidating statements of income, retained earnings and cash flows of the
Company and its Subsidiaries for the fiscal year ended December 31, 1995 and
reviewed by Price Waterhouse, independent certified public accountants, and the
interim consolidated balance sheet and interim consolidated statements of
income, retained earnings and cash flows of the Company and its Subsidiaries,
as of or for the three-month period ended on March 31, 1996, copies of which
have been furnished to the Banks, fairly present, and the financial statements
of the Company and its Subsidiaries delivered pursuant to Section 5.1(d) will
fairly present, the consolidated financial position of the Company and its
Subsidiaries as at the respective dates thereof, and the consolidated results
of operations of the Company and its Subsidiaries for the respective periods
indicated, all in accordance with Generally Accepted Accounting Principles
consistently applied (subject, in the case of said interim statements, to
year-end audit adjustments). There has been no event or development which has
had or could reasonably be expected to have a Material Adverse Effect since
December 31, 1995. There is no material Contingent Liability of the Company or
any of its Subsidiaries that is not reflected in such financial statements or
in the notes thereto.
4.7 Use of Advances. The Company will use the proceeds of the Advances
for its general corporate purposes, and shall use the first Advances
hereunder for refinancing in full the existing facility with NatWest USA Credit
Corp., as Agent, and accrued interest in the amount of $2,173,125 on
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Subordinated Debt. Neither the Company nor any Guarantor nor any of their
respective Subsidiaries extends or maintains, in the ordinary course of
business, credit for the purpose, whether immediate, incidental, or ultimate,
of buying or carrying margin stock (within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System), and no part of the proceeds
of any Advance will be used for the purpose, whether immediate, incidental, or
ultimate, of buying or carrying any such margin stock or maintaining or
extending credit to others for such purpose. After applying the proceeds of
each Advance, such margin stock will not constitute more than 25% of the value
of the assets (either of the Company or any Guarantor alone or of the Company
and the Guarantors and their respective Subsidiaries on a consolidated basis)
that are subject to any provisions of this Agreement or any Security Document
that may cause the Advances to be deemed secured, directly or indirectly, by
margin stock.
4.8 Consents, Etc. No consent, approval or authorization of or
declaration, registration or filing (other than financing statements
which have been executed) with any governmental authority or any
nongovernmental person or entity, including without limitation any creditor,
lessor or stockholder of the Company or any Guarantor or any of their
respective Subsidiaries, is required on the part of the Company or any
Guarantor in connection with the execution, delivery and performance of the
Loan Documents or the transactions contemplated hereby or as a condition to the
legality, validity or enforceability of any of the Loan Documents.
4.9 Taxes. The Company and the Guarantors and their respective
Subsidiaries have filed all tax returns (federal, state and local)
required to be filed and have paid all taxes shown thereon to be due, including
interest and penalties, or have established adequate financial reserves on
their respective books and records for payment thereof in accordance with
Generally Accepted Accounting Principles. Neither the Company nor any
Guarantor nor any of their respective Subsidiaries knows of any actual or
proposed tax assessment or any basis therefor, and no extension of time for the
assessment of deficiencies in any federal or state tax has been granted by the
Company, any Guarantor or any such Subsidiary.
4.10 Title to Properties. Except as otherwise disclosed in the latest
balance sheet delivered pursuant to Section 4.6 or 5.1(d) of this
Agreement, the Company, the Guarantors or one or more of their respective
Subsidiaries have good and marketable fee simple title to all of the real
property, and a valid and indefeasible ownership interest in all of the other
properties and assets (including, without limitation, the collateral subject to
the Security Documents to which any of them is a party) reflected in said
balance sheet or subsequently acquired by the Company, any Guarantor or any
such Subsidiary. All of such properties and assets are free and clear of any
Lien, except for Permitted Liens. Subject to the Permitted Liens, the Security
Documents grant a first priority, perfected and enforceable lien and security
interest which is not void or voidable in all collateral described therein,
securing all Indebtedness described therein.
4.11 Borrowing Base. All trade accounts receivable and inventory and
fixed assets of the Company represented or reported by the Company to
be, or are otherwise included in, Eligible Accounts Receivable, Eligible
Inventory, Eligible Tooling Inventory and Eligible Fixed Assets comply in all
respects with the requirements therefor set forth in the definition thereof,
and the computations of the Borrowing Base set forth in each Borrowing Base
Certificate is true and correct.
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4.12 ERISA. The Company, the Guarantors, the ERISA Affiliates and the
Plans are in compliance in all material respects with those provisions
of ERISA and of the Code which are applicable with respect to any Plan. No
Prohibited Transaction and no Reportable Event has occurred that could result
in material liability to the Company or any Guarantor or any Material Adverse
Effect. Neither the Company, any Guarantor nor any ERISA Affiliate is an
employer with respect to any Multiemployer Plan. The Company, the Guarantors,
and the ERISA Affiliates have met the minimum funding requirements under ERISA
and the Code with respect to each Plan and have not incurred any material
liability to the PBGC or any Plan other than liability for PBGC premiums and
Plan contributions, none of which is overdue. The execution, delivery and
performance of this Agreement, the Notes and the Security Documents does not
constitute a Prohibited Transaction. Except with respect to any Plan
identified on Schedule 4.12 (the funding status of which is addressed therein),
there is no material Unfunded Benefit Liability.
4.13 Disclosure. No report or other information furnished in writing or on
behalf of the Company or any Guarantor to any Bank or the Agent in connection
with the negotiation or administration of this Agreement contains any material
misstatement of fact or omits to state any material fact or any fact necessary
to make the statements contained therein not misleading in light of the
circumstances in which they were made. Neither this Agreement, the Notes, the
Security Documents nor any other document, certificate, or report or statement
or other information furnished to any Bank or the Agent by or on behalf of the
Company or any Guarantor in connection with the transactions contemplated
hereby contains any untrue statement of a material fact or omits to state a
material fact in order to make the statements contained herein and therein not
misleading in light of the circumstances in which they were made. There is no
fact known to the Company or any Guarantor which has or which in the future may
have (so far as the Company or any Guarantor can now foresee) a Material
Adverse Effect, which has not been set forth in this Agreement or in the other
documents, certificates, statements, reports and other information furnished in
writing to the Banks by or on behalf of the Company or any Guarantor in
connection with the transactions contemplated hereby.
4.14 Environmental Matters. Except as disclosed on Schedule 4.14, the
Company, the Guarantor and each of their respective Subsidiaries are in
substantial compliance with all Environmental Laws in jurisdictions in which
the Company, the Guarantor or any such Subsidiary owns or operates, or has
owned or operated, a facility or site, or arranges or has arranged for disposal
or treatment of hazardous substances, solid waste, or other wastes, accepts or
has accepted for transport any hazardous substances, solid wastes or other
wastes or holds or has held any interest in real property or otherwise. No
demand, claim, notice, action, administrative proceeding, investigation or
inquiry whether brought by any governmental authority, private person or entity
or otherwise, arising under, relating to or in connection with any
Environmental Laws is pending or threatened against the Company, the Guarantor
or any of their respective Subsidiaries, any real property in which the
Company, the Guarantor or any such Subsidiary holds or has held an interest or
any past or present operation of the Company, the Guarantor or any such
Subsidiary which could result in a Material Adverse Effect. Neither the
Company, the Guarantor nor any of their respective Subsidiaries (a) is the
subject of any federal or state investigation evaluating whether any remedial
action is needed to respond to a release of any toxic substances, radioactive
materials, hazardous wastes or related materials into the environment which
could result in a Material Adverse Effect, (b) has received any notice of any
toxic substances, radioactive materials, hazardous waste or related materials
in, or upon any of its properties in violation of any
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<PAGE> 34
Environmental Laws which could result in a Material Adverse Effect, (c) knows
of any basis for any such investigation, notice or violation, or (d) owns or
operates, or has owned or operated, property which appears on the United States
National Priority List or any other governmental listing which identifies sites
for remedial clean-up or investigatory actions, except as disclosed on Schedule
4.14 hereto, and as to such matters disclosed on such Schedule, none will have
a Material Adverse Effect. No release, threatened release or disposal of
hazardous waste, solid waste or other wastes is occurring or has occurred on,
under or to any real property in which the Company, the Guarantor or any of
their respective Subsidiaries holds any interest or performs any of its
operations, in violation of any Environmental Law which could result in a
Material Adverse Effect.
4.15 No Default. Neither the Company nor any Subsidiary is in default or
has received any written notice of default under or with respect to any
of its Contractual Obligations in any respect which could have a Material
Adverse Effect. No Default or Event of Default has occurred and is continuing.
4.16 No Burdensome Restrictions. No Requirement of Law or Contractual
Obligation applicable to the Company or any Subsidiary could have a Material
Adverse Effect on the financial condition or business of the Company and its
Subsidiaries.
4.17 Subordinated Debt. All agreements, instruments and documents
relating in any way to the Subordinated Debt are described on Schedule 1.1
hereto, and accurate and complete copies thereof have been delivered to the
Agent. All Advances, all liabilities pursuant to any Hedging Contracts and all
other present and future indebtedness, obligations and liabilities owing by the
Company to the Agent or any of the Banks under the Loan Documents constitute
Senior Debt as defined in the Subordinated Debt Documents. The only payments
(whether of principal, interest or otherwise) due on the Subordinated Debt on
or prior to the Termination are interest payments due on September 1, 1996 and
March 1, 1997 and a principal payment of $6,100,000 due on March 1, 1997.
ARTICLE V.
COVENANTS
5.1 Affirmative Covenants. Each of the Company and the Guarantors
covenants and agrees that, until the Termination Date and thereafter
until payment in full of the principal of and accrued interest on the Notes and
the performance of all other obligations of the Company and the Guarantors
under the Loan Documents, unless the Required Banks shall otherwise consent in
writing, it shall, and shall cause each of their respective Subsidiaries to:
(a) Preservation of Corporate Existence, Etc. Do or cause to be
done all things necessary to preserve, renew and keep in full force and
effect its legal existence, and its qualification as a foreign corporation in
good standing in each jurisdiction except where it would not have a Material
Adverse Effect, and the rights, licenses, permits (including those required
under Environmental Laws), franchises, patents, copyrights, trademarks and
trade names material to the conduct of its businesses; and defend all of the
foregoing against all claims, actions, demands, suits or proceedings at law or
in equity or by or before any governmental instrumentality or other agency or
regulatory authority, except where it would not have a Material Adverse Effect.
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(b) Compliance with Laws, Etc. Comply in all material respects with all
applicable laws, rules, regulations and orders of any governmental authority,
whether federal, state, local or foreign (including without limitation ERISA,
the Code and Environmental Laws), in effect from time to time; and pay and
discharge promptly when due all taxes, assessments and governmental charges or
levies imposed upon it or upon its income, revenues or property, before the
same shall become delinquent or in default, as well as all lawful claims for
labor, materials and supplies or otherwise, which, if unpaid, might give rise
to Liens upon such properties or any portion thereof, except where it would not
have a Material Adverse Effect, and except to the extent that payment of any of
the foregoing is then being contested in good faith by appropriate legal
proceedings and with respect to which adequate financial reserves have been
established on the books and records of the Company, any Guarantor or any of
their respective Subsidiaries in accordance with Generally Accepted Accounting
Principles.
(c) Maintenance of Properties; Insurance. Maintain, preserve and protect
all property that is material to the conduct of the business of the
Company, any Guarantor or any of their respective Subsidiaries and keep such
property in good repair, working order and condition and from time to time
make, or cause to be made all needful and proper repairs, renewals, additions,
improvements and replacements thereto necessary in order that the business
carried on in connection therewith may be properly conducted at all times in
accordance with customary and prudent business practices for similar
businesses, except if in the Company's reasonable business judgment it is in
its best interest not to do the foregoing; and, in addition to that insurance
required under the Security Documents, maintain in full force and effect
insurance with responsible and reputable insurance companies or associations in
such amounts, on such terms and covering such risks, including fire and other
risks insured against by extended coverage, as is usually carried by companies
engaged in similar businesses and owning similar properties similarly situated
and maintain in full force and effect public liability insurance, insurance
against claims for personal injury or death or property damage occurring in
connection with any of its activities or any properties owned, occupied or
controlled by it, in such amount as it shall reasonably deem necessary, and
maintain such other insurance as may be required by law or as may be reasonably
requested by the Required Banks for purposes of assuring compliance with this
Section 5.1(c).
(d) Reporting Requirements. Furnish to the Banks and the Agent the
following:
(i) Promptly and in any event within three calendar days after
becoming aware of the occurrence of (A) any Default or Event of Default,
(B) the commencement of any material litigation against, by or affecting
the Company, any Guarantor or any of their respective Subsidiaries, and any
material developments therein, or (C) entering into any material contract
or undertaking that is not entered into in the ordinary course of business
or (D) any development in the business or affairs of the Company, any
Guarantor or any of their respective Subsidiaries which has resulted in or
which is likely in the reasonable judgment of the Company or any Guarantor,
to result in a Material Adverse Effect, a statement of the chief financial
officer of the Company or the Guarantor, as the case may be setting forth
details of each such Default or Event of Default or such litigation,
material contract or undertaking or development and the action which the
Company, such Guarantor or such Subsidiary, as the case may be, has taken
and proposes to take with respect thereto;
(ii) As soon as available and in any event within 30 days after the
end of each month, the consolidated and consolidating balance sheet of the
Company and its Subsidiaries as of
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the end of such month, and the related consolidated and consolidating
statements of income, retained earnings and cash flows for the period
commencing at the end of the previous fiscal year and ending with the end of
such month, 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 year-end audit adjustments)
by the chief financial officer of the Company as having been prepared in
accordance with Generally Accepted Accounting Principles, together with a
certificate of the chief financial officer of the Company stating (A) that no
Default or Event of Default has occurred and is continuing or, if a Default or
Event of Default has occurred and is continuing, a statement setting forth the
details thereof and the action which the Company has taken and proposes to take
with respect thereto, and (B) that a computation (which computation shall
accompany such certificate and shall be in reasonable detail) showing
compliance with Section 5.2(a) and (b) hereof is in conformity with the terms
of this Agreement;
(iii) As soon as available and in any event within 90 days after
the end of each fiscal year of the Company, a copy of the consolidated
balance sheet of the Company and its Subsidiaries as of the end of such fiscal
year and the related consolidated statements of income, retained earnings and
changes in financial position of the Company and its Subsidiaries for such
fiscal year, with a customary audit report of Price Waterhouse, or other
independent certified public accountants selected by the Company and acceptable
to the Required Banks, without qualifications unacceptable to the Required
Banks, together with a certificate of such accountants stating (A) that they
have reviewed this Agreement and stating further whether, in the course of
their review of such financial statements, they have become aware of any
Default or Event of Default and, if such a Default or Event of Default exists
and is continuing, a statement setting forth the nature and status thereof, and
(B) that a computation by the Company (which computation shall accompany such
certificate and shall be in reasonable detail) showing compliance with Section
5.2(a) and (b) hereof is in conformity with the terms of this Agreement;
(iv) Promptly after the sending or filing thereof, copies of all
reports, proxy statements and financial statements which the Company or
any Guarantor or any of their respective Subsidiaries sends to or files with
any of their respective security holders or any securities exchange or the
Securities and Exchange Commission or any successor agency thereof; and
(v) No later than the following tenth Business Day, a Borrowing Base
Certificate prepared as of the close of business on the last day of each month,
together with supporting schedules, in form and detail satisfactory to the
Agent, setting forth such information as the Agent may request with respect to
the aging, value, location and other information relating to the computation of
the Borrowing Base and the eligibility of any property or assets included in
such computation, certified as true and correct by the chief financial officer
of the Company;
(vi) Promptly and in any event within 10 calendar days after
receiving or becoming aware thereof (A) a copy of any notice of intent
to terminate any Plan filed with the PBGC, (B) a statement of the chief
financial officer of the Company or any Guarantor, as the case may be, setting
forth the details of the occurrence of any Reportable Event, (C) a copy of any
notice that the Company, any Guarantor, or any ERISA Affiliate may receive from
the PBGC relating to the intention of the PBGC to terminate any Plan or to
appoint a trustee to administer any such Plan, or (D) a copy of any
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<PAGE> 37
notice of failure to make a required installment or other payment within the
meaning of Section 412(n) of the Code or Section 302(f) of ERISA with respect
to any Plan; and
(vii) As soon as available and in any event within 30 days after
the end of each month, a report with respect to the Company setting
forth a summary and aging of accounts payable of the Company, a listing of any
checks held after the due date of the related vendor invoice and setting forth
the corresponding due dates of such invoices, in form and detail satisfactory
to the Agent, certified as true and correct by the chief financial officer of
the Company;
(viii) Promptly, such other information respecting the business,
properties, operations or condition, financial or otherwise, of the
Company, any Guarantor or any of their respective Subsidiaries as any Bank or
the Agent may from time to time reasonably request.
(e) Accounting; Access to Records, Books, Etc. Maintain a system of
accounting established and administered in accordance with sound business
practices to permit preparation of financial statements in accordance with
Generally Accepted Accounting Principles and to comply with the requirements of
this Agreement and, at any reasonable time and from time to time, (i) permit
any Bank or the Agent 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 Company, the Guarantors and their respective
Subsidiaries, and to discuss the affairs, finances and accounts of the Company,
the Guarantors and their respective Subsidiaries with their respective
directors, officers, employees and independent auditors, and by this provision
each of the Company and the Guarantors hereby authorizes such persons to
discuss such affairs, finances and accounts with any Bank or the Agent,
provided that such Bank or the Agent, as the case may be, shall provide prior
notice of any of the actions described in this clause (i) if no Event of
Default exists, and (ii) permit the Agent or any of its agents or
representatives to conduct a comprehensive field audit of its books, records,
properties and assets, including without limitation all collateral subject to
the Security Documents, at the expense of the Company, provided that prior to
occurrence of an Event of Default no more than two such field audits shall be
performed in any twelve month period; and
(f) Additional Security and Collateral. Promptly (i) execute and deliver
and cause each Subsidiary of the Company and the Guarantors to execute
and deliver, additional Security Documents, within 30 days after request
therefor by the Banks and the Agent, sufficient to grant to the Agent for the
benefit of the Banks liens and security interests in any after acquired
property of the type described in Section 2.11, and (ii) cause each person
becoming a Subsidiary of the Company or any Guarantor from time to time to
execute and deliver to the Banks and the Agent, within 30 days after such
person becomes a Subsidiary, a Guaranty (or become a party hereto as a
Guarantor as required by the Agent) and Security Documents, together with other
related documents described in Section 2.5, sufficient to grant to the Agent
for the benefit of the Banks liens and security interests in all collateral of
the type described in Section 2.11. The Company shall notify the Banks and the
Agent, within 10 days after the occurrence thereof, of the acquisition of any
property that is covered by Section 2.11 by the Company or any Guarantor that
is not subject to the existing Security Documents, any person's becoming a
Subsidiary and any other event or condition that may require additional action
of any nature in order to preserve the effectiveness and perfected status of
the liens and security interests of the Banks and the Agent with respect to
such property pursuant to the Security Documents.
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(g) Further Assurances. Will, and will cause each Guarantor to,
execute and deliver within 30 days after request therefor by the Banks
and the Agent, all further instruments and documents and take all further
action that may be reasonably necessary or desirable, or that the Agent may
request, in order to give effect to, and to aid in the exercise and enforcement
of the rights and remedies of the Banks under, this Agreement, the Notes and
the Security Documents, including without limitation using reasonable efforts
to cause, on or before sixty (60) days after the Effective Date, each lessor of
real property to the Company, any Guarantor or any of their respective
Subsidiaries to execute and deliver to the Agent, prior to or upon the
commencement of any tenancy, an agreement in form and substance acceptable to
the Banks and the Agent duly executed on behalf of such lessor waiving any
distraint, lien and similar rights with respect to any property subject to the
Security Documents and agreeing to permit the Banks and the Agent to enter such
premises in connection therewith. At all times on and after the date requested
by the Agent in its discretion, the Company and the Guarantors shall direct all
customers and other account debtors to make all payments in connection with any
obligations to the Company or any Guarantor directly to a lock-box account,
which account shall be a non-interest bearing account over which the Agent
shall have the power of application and withdrawal, and all amounts received in
such lock-box account shall be applied to the Advances on such terms reasonably
required by the Agent, and the Company and the Guarantors shall promptly
execute such lock-box agreements, dominion of funds agreements and related
agreements in connection therewith, each in form and substance satisfactory to
the Agent.
5.2 Negative Covenants. Until the Termination Date and thereafter until
payment in full of the principal of and accrued interest on the Notes and the
performance of all other obligations of the Company and the Guarantors under
the Loan Documents, the Company agrees that, unless the Required Banks shall
otherwise consent in writing it shall not, and shall not permit any of its
Subsidiaries to:
(a) Funded Debt Ratio. Permit or suffer the Funded Debt Ratio to be
greater than 5.0 to 1.0 at any time.
(b) Interest Coverage Ratio. Permit or suffer the Interest Coverage
Ratio to be less than 1.5 to 1.0 at any time.
(c) Indebtedness. Create, incur, assume or in any manner become liable in
respect of, or suffer to exist, any Indebtedness other than:
(i) The Advances;
(ii) The Indebtedness described in Schedule 5.2(c) hereto, but no
increase in the amount thereof shall be permitted;
(iii) Indebtedness in aggregate outstanding principal amount not
exceeding $1,000,000 which is secured by one or more Liens permitted by
Section 5.2(d)(vi) hereof;
(iv) Subordinated Debt of the Company or any of its Subsidiaries in
an aggregate principal amount not to exceed $30,500,000;
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(v) Indebtedness pursuant to any Hedging Contracts with any Bank,
provided that the Company and the Guarantors shall not enter into any
Hedging Contracts for the purposes of financial speculation; and
(vi) Other Indebtedness with the prior written permission of the
Required Banks.
(d) Liens. Create, incur or suffer to exist any Lien on any of the
assets, rights, revenues or property, real, personal or mixed,
tangible or intangible, whether now owned or hereafter acquired, of the Company
or any of its Subsidiaries, other than:
(i) Liens for taxes not delinquent or for taxes being contested in
good faith by appropriate proceedings and as to which adequate
financial reserves have been established on its books and records in accordance
with Generally Accepted Accounting Principles;
(ii) Liens (other than any Lien imposed by ERISA or any
Environmental Law) created and maintained in the ordinary course of
business which are not material in the aggregate, and which would not have a
Material Adverse Effect and which constitute (A) pledges or deposits under
worker's compensation laws, unemployment insurance laws or similar legislation,
(B) good faith deposits in connection with bids, tenders, contracts or leases
to which the Company or any of its Subsidiaries is a party for a purpose other
than borrowing money or obtaining credit, including rent security deposits, (C)
liens imposed by law, such as those of carriers, warehousemen and mechanics, if
payment of the obligation secured thereby is not yet due, (D) Liens securing
taxes, assessments or other governmental charges or levies not yet subject to
penalties for nonpayment, and (E) pledges or deposits to secure public or
statutory obligations of the Company or any of its Subsidiaries, or surety,
customs or appeal bonds to which the Company or any of its Subsidiaries is a
party;
(iii) Liens affecting real property which constitute minor survey
exceptions or defects or irregularities in title, minor encumbrances,
easements or reservations of, or rights of others for, rights of way, sewers,
electric lines, telegraph and telephone lines and other similar purposes, or
zoning or other restrictions as to the use of such real property, provided that
all of the foregoing, in the aggregate, do not at any time materially detract
from the value of said properties or materially impair their use in the
operation of the businesses of the Company or any of its Subsidiaries;
(iv) Liens created pursuant to the Security Documents and Liens
expressly permitted by the Security Documents;
(v) Each Lien described in Schedule 5.2(d) hereto may be suffered
to exist, but no increase in the amount secured thereby shall be permitted; and
(vi) Any Lien created to secure payment of a portion of the
purchase price of, or existing at the time of acquisition of, any
tangible fixed asset acquired by the Company or any of its Subsidiaries may be
created or suffered to exist upon such fixed asset if the outstanding principal
amount of the Indebtedness secured by such Lien does not at any time exceed the
purchase price paid by the Company or such Subsidiary for such fixed asset and
the aggregate principal amount of all
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Indebtedness secured by such Liens does not exceed $1,000,000, provided that
such Lien does not encumber any other asset at any time owned by the Company or
such Subsidiary, and provided, further, that not more than one such Lien shall
encumber such fixed asset at any one time.
(e) Merger; Acquisitions; Etc. Subject to Section 5.2(i), purchase or
otherwise acquire, whether in one or a series of transactions, all or a
substantial portion of the business assets, rights, revenues or property, real,
personal or mixed, tangible or intangible, of any person, or all or a
substantial portion of the capital stock of or other ownership interest in any
other person; nor merge or consolidate or amalgamate with any other person or
take any other action having a similar effect, nor enter into any joint venture
or similar arrangement with any other person, provided, however, that this
Section 5.2(e) shall not prohibit any merger of any Subsidiary into another
Subsidiary or of any Subsidiary into the Company, provided that the Company
shall be the surviving corporation.
(f) Disposition of Assets; Etc. Sell, lease, license, transfer, assign or
otherwise dispose of all or a substantial portion of its business, assets,
rights, revenues or property, real, personal or mixed, tangible or intangible,
whether in one or a series of transactions, other than inventory sold in the
ordinary course of business upon customary credit terms and sales of scrap or
obsolete material or equipment, provided, however, that this Section 5.2(f)
shall not prohibit any such sale, lease, license, transfer, assignment or other
disposition if the aggregate book value (disregarding any write-downs of such
book value other than ordinary depreciation and amortization) of all of the
business, assets, rights, revenues and property disposed of after the date of
this Agreement shall be less than $1,000,000 in the aggregate and if,
immediately before and after such transaction, no Default or Event of Default
shall exist or shall have occurred and be continuing.
(g) Nature of Business. Make any substantial change in the nature of its
business from that engaged in on the date of this Agreement or engage in any
other businesses other than those in which it is engaged on the date of this
Agreement.
(h) Dividends and Other Restricted Payments. Make, pay, declare,
authorize or distribute directly or indirectly any of the following:
(i) any dividend, payment or other distribution in respect of any class of its
capital stock, (ii) any dividend, payment or distribution in connection with
the redemption, purchase, retirement or other acquisition, directly or
indirectly, of any shares of its capital stock, and (iii) any payment,
prepayment or redemption of any Subordinated Debt, whether of principal,
interest or otherwise, or any other payment or arrangement or agreement
providing for the defeasance of any Subordinated Debt (all of the foregoing
described in the above clauses (i), (ii) and (iii) collectively referred to as
"Restricted Payments") other than (A) such dividends, payments or other
distributions to the extent payable solely in shares of the capital stock of
the Company or to the extent payable solely to the Company by a wholly-owned
Subsidiary of the Company, (B) payments on Subordinated Debt solely with
promissory notes, and not with cash or cash equivalents, and (C) other
Restricted Payments if both of the following conditions are satisfied, both
before any such Restricted Payment is made and on a pro forma basis
satisfactory to the Agent after giving effect to any such Restricted
Payment:(x) no Default or Event of Default shall exist or shall have occurred
and be continuing and (y) the Company shall have the ability to borrow at least
$2,000,000 in Loans under this Agreement. If the Company is prohibited from
making the payment under the Subordinated Debt Documents due March 1, 1997 due
to this Section 5.2(h), the Company agrees to deliver (and hereby authorizes
the Agent to do so on its behalf if it fails to
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do so) the written notice and other documents required under the Subordinated
Debt Documents on or within 3 days prior to March 1, 1997 as may be required
under Section 2 of the Fifth Amendment, Limited Waiver and Consent to
Securities Purchase Agreement dated on or about the date hereof in order to
prevent such payment from being made or accepted. The Company acknowledges and
agrees that this Section 5.2(h) shall be deemed breached an Event of Default
shall be deemed to have occurred 2 Business Days prior to the date any payment
of principal, interest or other payment is due on the Subordinated Debt if the
Company is unable to comply with this Section 5.2(h) on a proforma basis as of
the date such payment is to be made. For purposes of this Agreement, "capital
stock" shall include capital stock and any securities exchangeable for or
convertible into capital stock and any warrants, rights or other options to
purchase or otherwise acquire capital stock or such securities.
(i) Investments, Loans and Advances. Purchase or otherwise acquire
any capital stock of or other ownership interest in, or debt securities
of or other evidences of Indebtedness of, any other person; nor make any loan
or advance of any of its funds or property or make any other extension of
credit to, or make any investment or acquire any interest whatsoever in, any
other person; nor incur any Contingent Liability; other than (i) extensions of
trade credit made in the ordinary course of business on customary credit terms
and commission, travel and similar advances made to officers and employees in
the ordinary course of business, including for personal computers, (ii)
commercial paper of any United States issuer having the highest rating then
given by Moody's Investors Service, Inc., or Standard & Poor's Rating Group,
direct obligations of and obligations fully guaranteed by the United States of
America or any agency or instrumentality thereof, or certificates of deposit of
any commercial bank which is a member of the Federal Reserve System and which
has capital, surplus and undivided profit (as shown on its most recently
published statement of condition) aggregating not less than $100,000,000, and
(iii) those investments, loans, advances and other transactions described in
Schedule 5.2.(i) hereto, having the same terms as existing on the date of this
Agreement, but no extension or renewal thereof shall be permitted.
(j) Transactions with Affiliates. Enter into, become a party to,
or become liable in respect of, any contract or undertaking with any
Affiliate except in the ordinary course of business and on terms not less
favorable to the Company or such Subsidiary than those which could be obtained
if such contract or undertaking were an arms length transaction with a person
other than an Affiliate.
(k) Modification of Subordinated Debt. Amend or modify, or consent
or agree to any amendment or modification, any agreement under which
any Subordinated Debt is issued or created or otherwise related thereto.
(l) Negative Pledge Limitation. Enter into any agreement with any
person other than the Banks pursuant hereto which prohibits or limits
the ability of the Company or any Subsidiary to create, incur, assume or suffer
to exist any Lien upon any of its assets, rights, revenues or property, real,
personal or mixed, tangible or intangible, whether now owned or hereafter
acquired.
(m) Inconsistent Agreements. Enter into any agreement containing any
provision which would be violated or breached by any Loan Document or any of
the transactions contemplated thereby or by performance by the Company or any
of its Subsidiaries or any Guarantor of its obligations in connection
therewith.
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(n) Accounting Changes. The Company shall not change its fiscal
year or make any significant changes (i) in accounting treatment and
reporting practices except as permitted by generally accepted accounting
principles and disclosed to the Banks, or (ii) in tax reporting treatment
except as permitted by law and disclosed to the Banks.
(o) If at any time the Company or any Guarantor shall enter into or
be a party to any instrument or agreement, including all such
instruments or agreements in existence as of the date hereof and all such
instruments or agreements entered into after the date hereof, relating to or
amending any terms or conditions applicable to any of its Indebtedness which
includes covenants, terms, conditions or defaults not substantially provided
for in this Agreement or more favorable to the lender or lenders thereunder
than those provided for in this Agreement, then the Company shall promptly so
advise the Agent and the Banks. Thereupon, if the Agent shall request, upon
notice to the Company, the Agent and the Banks shall enter into an amendment to
this Agreement or an additional agreement (as the Agent may request), providing
for substantially the same covenants, terms, conditions and defaults as those
provided for in such instrument or agreement to the extent required and as may
be selected by the Agent.
ARTICLE VI.
DEFAULT
6.1 Events of Default. The occurrence of any one of the following events
or conditions shall be deemed an "Event of Default" hereunder unless
waived pursuant to Section 9.1:
(a) Nonpayment. The Company shall fail to pay when due or within
five days of when due any principal of the Notes, or any reimbursement
obligation under Section 3.3 (whether by deemed disbursement of a Loan or
otherwise), or any interest on the Notes or any fees or any other amount
payable hereunder; or
(b) Misrepresentation. Any representation or warranty made by the
Company or any Guarantor in any Loan Document or any other certificate,
report, financial statement or other document furnished by or on behalf of the
Company or any Guarantor in connection with this Agreement, shall prove to have
been incorrect in any material respect when made or deemed made; or
(c) Certain Covenants. The Company or any Guarantor shall fail to
perform or observe any term, covenant or agreement contained in Article
V (other than Section 5.1(a)) hereof; or
(d) Other Defaults. The Company or any Guarantor shall fail to
perform or observe any other term, covenant or agreement contained in
this Agreement or in any Security Document, and any such failure shall remain
unremedied for 30 calendar days after notice thereof shall have been given to
the Company or such Guarantor, as the case may be, by the Agent (or such longer
or shorter period of time as may be specified in such Security Document); or
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(e) Cross Default. The Company or any Guarantor or any of their
respective Subsidiaries shall fail to pay any part of the principal of,
the premium, if any, or the interest on, or any other payment of money due
under any of its Indebtedness (other than Indebtedness hereunder), beyond any
period of grace provided with respect thereto, which individually or together
with other such Indebtedness as to which any such failure exists has an
aggregate outstanding principal amount in excess of $1,000,000; or if the
Company or any Guarantor or any of their respective Subsidiaries fails to
perform or observe any other term, covenant or agreement contained in, or if
any other event or condition occurs or exists under, any agreement, document or
instrument evidencing or securing any such Indebtedness having such aggregate
outstanding principal amount, or under which any such Indebtedness was
incurred, issued or created, beyond any period of grace, if any, provided with
respect thereto if the effect of such failure is either (i) to cause, or permit
the holders of such Indebtedness (or a trustee on behalf of such holders) to
cause, any payment in respect of such Indebtedness to become due prior to its
due date or (ii) to permit the holders of such Indebtedness (or a trustee on
behalf of such holders) to elect a majority of the board of directors of the
Company; or
(f) Judgments. One or more judgments or orders for the payment of money
in an aggregate amount of $1,000,000, other than those covered by
insurance (provided that only such a judgments for which the relevant insurance
company has accepted coverage thereof shall be considered covered by insurance)
shall be rendered against the Company or any Guarantor or any of their
respective Subsidiaries, or any other judgment or order (whether or not for the
payment of money) shall be rendered against or shall affect the Company or any
Guarantor or any of their respective Subsidiaries which causes or could cause a
Material Adverse Effect, and either (i) such judgment or order shall have
remained unsatisfied and the Company or such Guarantor or such Subsidiary shall
not have taken action necessary to stay enforcement thereof by reason of
pending appeal or otherwise, prior to the expiration of the applicable period
of limitations for taking such action or, if such action shall have been taken,
a final order denying such stay shall have been rendered, or (ii) enforcement
proceedings shall have been commenced by any creditor upon any such judgment or
order; or
(g) ERISA. The occurrence of any of the following events, if such event
could alone or in combination with any other such event or events have
a Material Adverse Effect: a Reportable Event that results in or could result
in material liability of the Company, or any Guarantor to the PBGC or to any
Plan which could constitute grounds for termination of any Plan by the PBGC or
for the appointment by the appropriate United States District Court of a
trustee to administer any Plan or the filing by the Company, any Guarantor, or
any ERISA Affiliate of a notice of intent to terminate a Plan or the
institution of other proceedings to terminate a Plan; or the Company, any
Guarantor, or any ERISA Affiliate shall fail to pay when due any material
liability to the PBGC or to a Plan; or the PBGC shall have instituted
proceedings to terminate, or to cause a trustee to be appointed to administer,
any Plan; or any person engages in a Prohibited Transaction with respect to any
Plan which results in or could result in material liability of the Company, or
any Guarantor; or failure by the Company, any Guarantor, or any ERISA Affiliate
to make a required installment or other payment to any Plan within the meaning
of Section 302(f) of ERISA or Section 412(n) of the Code that results in or
could result in material liability of the Company, or any Guarantor to the PBGC
or any Plan; or the withdrawal of the Company, any Guarantor, or any ERISA
Affiliate from a Plan during a plan year in which it was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA; or the Company, any
Guarantor or any ERISA
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Affiliate becomes an employer with respect to any Multiemployer Plan without
the prior written consent of the Required Banks; or
(h) Insolvency, Etc. The Company, any Guarantor or any of their
respective Subsidiaries shall be dissolved or liquidated (or any
judgment, order or decree therefor shall be entered), or shall generally not
pay its debts as they 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 shall institute, or there shall be instituted against the
Company, any Guarantor or any of their respective Subsidiaries, any proceeding
or case 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 or protection of debtors or seeking the
entry of an order for relief, or the appointment of a receiver, trustee,
custodian or other similar official for it or for any substantial part of its
assets, rights, revenues or property, and, if such proceeding is instituted
against the Company, such Guarantor or such Subsidiary and is being contested
by the Company, such Guarantor or such Subsidiary, as the case may be, in good
faith by appropriate proceedings, such proceeding shall remain undismissed or
unstayed for a period of 60 days; or the Company, such Guarantor or such
Subsidiary shall take any action (corporate or other) to authorize any of the
actions described above in this subsection; or
(i) Loan Documents. Any event of default described in any Loan
Document shall have occurred and be continuing, or any material
provision of Article VIII hereof or of any Loan Document shall at any time for
any reason cease to be valid and binding and enforceable against any obligor
thereunder, or the validity, binding effect or enforceability thereof shall be
contested by any person, or any obligor, shall deny that it has any or further
liability or obligation thereunder, or any Loan Document shall be terminated,
invalidated or set aside, or be declared ineffective or inoperative or in any
way cease to give or provide to the Banks and the Agent the benefits purported
to be created thereby.
(j) Change in Control. Any Change in Control shall occur.
6.2 Remedies.
(a) Upon the occurrence and during the continuance of any Event of
Default, the Agent may and, upon being directed to do so by the
Required Banks, shall by notice to the Company (i) terminate the Commitments or
(ii) declare the outstanding principal of, and accrued interest on, the Notes,
all unpaid reimbursement obligations in respect of drawings under Letters of
Credit and all other amounts owing under this Agreement to be immediately due
and payable, or (iii) demand immediate delivery of cash collateral, and the
Company agrees to deliver such cash collateral upon demand, in an amount equal
to the maximum amount that may be available to be drawn at any time prior to
the stated expiry of all outstanding Letters of Credit, or any one or more of
the foregoing, whereupon the Commitments shall terminate forthwith and all such
amounts, including such cash collateral, shall become immediately due and
payable, provided that in the case of any event or condition described in
Section 6.1(h) with respect to the Company or any Guarantor, the Commitments
shall automatically terminate forthwith and all such amounts, including such
cash collateral, shall automatically become immediately due and payable without
notice; in all cases without demand, presentment, protest, diligence, notice of
dishonor or other formality, all of which are hereby expressly waived. Such
cash
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collateral delivered in respect of outstanding Letters of Credit shall be
deposited in a special cash collateral account to be held by the Agent as
collateral security for the payment and performance of the Company's
obligations under this Agreement to the Banks and the Agent.
(b) The Agent may and, upon being directed to do so by the Required
Banks, shall, in addition to the remedies provided in Section 6.2(a),
exercise and enforce any and all other rights and remedies available to it,
whether arising under any Loan Document or under applicable law, in any manner
deemed appropriate by the Agent, including suit in equity, action at law, or
other appropriate proceedings, whether for the specific performance (to the
extent permitted by law) of any covenant or agreement contained in any Loan
Document or in aid of the exercise of any power granted in any Loan Document.
(c) Upon the occurrence and during the continuance of any Event of
Default, each Bank may at any time and from time to time, without
notice to the Company or any Guarantor (any requirement for such notice being
expressly waived by the Company and each Guarantor) set off and apply against
any and all of the obligations of the Company and each Guarantor now or
hereafter existing under this Agreement, whether owing to such Bank or any
other Bank or the Agent, 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 Bank to or for the credit or the account of the Company or
any Guarantor and any property of the Company or any Guarantor from time to
time in possession of such Bank, irrespective of whether or not such Bank shall
have made any demand hereunder and although such obligations may be contingent
and unmatured. Each of the Company and the Guarantors hereby grants to the
Banks and the Agent a lien on and security interest in all such deposits,
indebtedness and property as collateral security for the payment and
performance of the obligations of the Company and each Guarantor under this
Agreement. The rights of such Bank under this Section 6.2(c) are in addition
to other rights and remedies (including, without limitation, other rights of
setoff) which such Bank may have.
ARTICLE VII.
THE AGENT AND THE BANKS
7.1 Appointment and Authorization. Each Bank hereby irrevocably appoints
and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers under the Loan Documents as are delegated to the Agent
by the terms hereof or thereof, together with all such powers as are reasonably
incidental thereto. The provisions of this Article VII are solely for the
benefit of the Agent and the Banks, and neither the Company nor any Guarantor
shall have any rights as a third party beneficiary of any of the provisions
hereof. In performing its functions and duties under this Agreement, the Agent
shall act solely as agent of the Banks and does not assume and shall not be
deemed to have assumed any obligation towards or relationship of agency or
trust with or for the Company.
7.2 Agent and Affiliates. NBD Bank in its capacity as a Bank hereunder
shall have the same rights and powers hereunder as any other Bank and
may exercise or refrain from exercising the same as though it were not the
Agent. NBD Bank and its affiliates may (without having to account therefor to
any Bank) accept deposits from, lend money to, and generally engage in any kind
of banking,
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trust, financial advisory or other business with the Company, any Guarantor or
any of their respective Subsidiaries as if it were not acting as Agent
hereunder, and may accept fees and other consideration therefor without having
to account for the same to the Banks.
7.3 Scope of Agent's Duties. The Agent shall have no duties or
responsibilities except those expressly set forth herein, and shall not, by
reason of any Loan Document, have a fiduciary relationship with any Bank, and
no implied covenants, responsibilities, duties, obligations or liabilities
shall be read into any Loan Document or shall otherwise exist against the
Agent. As to any matters not expressly provided for by any Loan Document the
Agent shall not be required to exercise any discretion or take any action, but
the Agent shall take such action or omit to take any action pursuant to the
reasonable written instructions of the Required Banks and may request
instructions from the Required Banks. The Agent shall in all cases be fully
protected in acting, or in refraining from acting, pursuant to the written
instructions of the Required Banks (or all of the Banks, as the case may be, in
accordance with the requirements of this Agreement), which instructions and any
action or omission pursuant thereto shall be binding upon all of the Banks;
provided, however, that the Agent shall not be required to act or omit to act
if, in the judgment of the Agent, such action or omission may expose the Agent
to personal liability or is contrary to the Loan Documents or applicable law.
7.4 Reliance by Agent. The Agent shall be entitled to rely upon any
certificate, notice, document or other communication (including any cable,
telegram, telex, facsimile transmission or oral communication) believed by it
to be genuine and correct and to have been sent or given by or on behalf of a
proper person. The Agent may treat the payee of any Note as the holder thereof
unless and until the Agent receives written notice of the assignment thereof
pursuant to the terms of this Agreement signed by such payee and the Agent
receives the written agreement of the assignee that such assignee is bound
hereby to the same extent as if it had been an original party hereto. The
Agent may employ agents (including without limitation collateral agents) and
may consult with legal counsel (who may be counsel for the Company),
independent public accountants and other experts selected by it and shall not
be liable to the Banks, except as to money or property received by it or its
authorized agents, for the negligence or misconduct of any such agent selected
by it with reasonable care or for any action taken or omitted to be taken by it
in good faith in accordance with the advice of such counsel, accountants or
experts.
7.5 Default. The Agent shall not be deemed to have knowledge of the
occurrence of any Default or Event of Default, unless the Agent has received
written notice from a Bank or the Company or any Guarantor specifying such
Default or Event of Default and stating that such notice is a "Notice of
Default". In the event that the Agent receives such a notice, the Agent shall
give written notice thereto to the Banks.
7.6 Liability of Agent. Neither the Agent nor any of its directors,
officers, agents, or employees shall be liable to the Banks for any
action taken or not taken by it or them in connection herewith with the consent
or at the request of the Required Banks or in the absence of its or their own
gross negligence or willful misconduct. Neither the Agent nor any of its
directors, officers, agents or employees shall be responsible for or have any
duty to ascertain, inquire into or verify (i) any recital, statement, warranty
or representation contained in this Agreement, any Note or any Security
Document, or in any certificate, report, financial statement or other document
furnished in connection with this Agreement, (ii) the performance or observance
of any of the covenants or agreements of the Company or
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any Guarantor, (iii) the satisfaction of any condition specified in Article II
hereof, or (iv) the validity, effectiveness, legal enforceability, value or
genuineness of the Loan Documents or any collateral subject thereto or any
other instrument or document furnished in connection herewith.
7.7 Nonreliance on Agent and Other Banks. Each Bank acknowledges and
agrees that it has, independently and without reliance on the Agent or
any other Bank, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Company and the Guarantors and
decision to enter into this Agreement and that it will, independently and
without reliance upon the Agent or any other Bank, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own analysis and decision in taking or not taking action under this Agreement.
The Agent shall not be required to keep itself informed as to the performance
or observance by the Company or any Guarantor of the Loan Documents or any
other documents referred to or provided for herein or to inspect the properties
or books of the Company or any Guarantor and, except for notices, reports and
other documents and information expressly required to be furnished to the Banks
by the Agent hereunder, the Agent shall not have any duty or responsibility to
provide any Bank with any information concerning the affairs, financial
condition or business of the Company, any Guarantor or any of their respective
Subsidiaries which may come into the possession of the Agent or any of its
affiliates.
7.8 Indemnification. The Banks agree to indemnify the Agent (to the
extent not reimbursed by the Company or any Guarantor, but without
limiting any obligation of the Company or any Guarantor to make such
reimbursement), ratably according to the respective principal amounts of the
Advances then outstanding made by each of them (or if no Advances are at the
time outstanding, ratably according to the respective amounts of their
Commitments), from and against any and all claims, damages, losses,
liabilities, costs or expenses of any kind or nature whatsoever (including,
without limitation, fees and disbursements of counsel) which may be imposed on,
incurred by, or asserted against the Agent in any way relating to or arising
out of any Loan Document or the transactions contemplated hereby or any action
taken or omitted by the Agent under any Loan Document, provided, however, that
no Bank shall be liable for any portion of such claims, damages, losses,
liabilities, costs or expenses resulting from the Agent's gross negligence or
willful misconduct. Without limitation of the foregoing, each Bank agrees to
reimburse the Agent promptly upon demand for its ratable share of any
out-of-pocket expenses (including without limitation fees and expenses of
counsel) incurred by the Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement, to the extent that
the Agent is not reimbursed for such expenses by the Company or any Guarantor,
but without limiting the obligation of the Company or any Guarantor to make
such reimbursement. Each Bank agrees to reimburse the Agent promptly upon
demand for its ratable share of any amounts owing to the Agent by the Banks
pursuant to this Section. If the indemnity furnished to the Agent under this
Section shall, in the judgment of the Agent, be insufficient or become
impaired, the Agent may call for additional indemnity from the Banks and cease,
or not commence, to take any action until such additional indemnity is
furnished.
7.9 Successor Agent. The Agent may resign as such at any time upon ten
days' prior written notice to the Company and the Banks. In the event
of any such resignation, the Required Banks shall, by an instrument in writing
delivered to the Company and the Agent, appoint a successor, which shall be a
commercial bank organized under the laws of the United States or any State
thereof and having
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a combined capital and surplus of at least $500,000,000. If a successor is not
so appointed or does not accept such appointment before the Agent's resignation
becomes effective, the retiring Agent may appoint a temporary successor to act
until such appointment by the Required Banks is made and accepted or if no such
temporary successor is appointed as provided above by the retiring Agent, the
Required Banks shall thereafter perform all the duties of the Agent hereunder
until such appointment by the Required Banks is made and accepted. Any
successor to the Agent shall execute and deliver to the Company and the Banks
an instrument accepting such appointment and thereupon such successor Agent,
without further act, deed, conveyance or transfer shall become vested with all
of the properties, rights, interests, powers, authorities and obligations of
its predecessor hereunder with like effect as if originally named as Agent
hereunder. Upon request of such successor Agent, the Company and the retiring
Agent shall execute and deliver such instruments of conveyance, assignment and
further assurance and do such other things as may reasonably be required for
more fully and certainly vesting and confirming in such successor Agent all
such properties, rights, interests, powers, authorities and obligations. The
provisions of this Article VII shall thereafter remain effective for such
retiring Agent with respect to any actions taken or omitted to be taken by such
Agent while acting as the Agent hereunder.
7.10 Sharing of Payments. The Banks agree among themselves that, in the
event that any Bank shall obtain payment in respect of any Advance or
any other obligation owing to the Banks under this Agreement through the
exercise of a right of set-off, banker's lien, counterclaim or otherwise in
excess of its ratable share of payments received by all of the Banks on account
of the Advances and other obligations (or if no Advances are outstanding,
ratably according to the respective amounts of the Commitments), such Bank
shall promptly purchase from the other Banks participations in such Advances
and other obligations in such amounts, and make such other adjustments from
time to time, as shall be equitable to the end that all of the Banks share such
payment in accordance with such ratable shares. The Banks further agree among
themselves that if payment to a Bank obtained by such Bank through the exercise
of a right of set-off, banker's lien, counterclaim or otherwise as aforesaid
shall be rescinded or must otherwise be restored, each Bank which shall have
shared the benefit of such payment shall, by repurchase of participations
theretofore sold, return its share of that benefit to each Bank whose payment
shall have been rescinded or otherwise restored. The Company and the
Guarantors each agrees that any Bank so purchasing such a participation may, to
the fullest extent permitted by law, exercise all rights of payment, including
set-off, banker's lien or counterclaim, with respect to such participation as
fully as if such Bank were a holder of such Advance or other obligation in the
amount of such participation. The Banks further agree among themselves that,
in the event that amounts received by the Banks and the Agent hereunder are
insufficient to pay all such obligations or insufficient to pay all such
obligations when due, the fees and other amounts owing to the Agent in such
capacity shall be paid therefrom before payment of obligations owing to the
Banks under this Agreement. Except as otherwise expressly provided in this
Agreement, if any Bank or the Agent shall fail to remit to the Agent or any
other Bank an amount payable by such Bank or the Agent to the Agent or such
other Bank pursuant to this Agreement on the date when such amount is due, such
payments shall be made together with interest thereon for each date from the
date such amount is due until the date such amount is paid to the Agent or such
other Bank at a rate per annum equal to the rate at which borrowings are
available to the payee in its overnight federal funds market. It is further
understood and agreed among the Banks and the Agent that if the Agent shall
engage in any other transactions with the Company and shall have the benefit of
any collateral or security therefor which does not expressly secure the
obligations arising under this Agreement except by virtue of a so-called
dragnet clause or comparable provision, the Agent shall be
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entitled to apply any proceeds of such collateral or security first in respect
of the obligations arising in connection with such other transaction before
application to the obligations arising under this Agreement.
7.11 Withholding Tax Exemption. At least five Business Days prior to the
first date on which interest or fees are payable hereunder for the
account of any Bank, each Bank that is not incorporated under the laws of the
United States of America, or a state thereof, agrees that it will deliver to
each of the Company and the Agent two duly completed copies of United States
Internal Revenue Service Form 1001 or 4224, certifying in either case that such
Bank is entitled to receive payments under this Agreement and the Notes without
deduction or withholding of any United States federal income taxes. Each Bank
which so delivers a Form 1001 or 4224 further undertakes to deliver to each of
the Company and the Agent two additional copies of such form (or a successor
form) on or before the date that such form expires (currently, three successive
calendar years for Form 1001 and one calendar year for Form 4224) or becomes
obsolete or after the occurrence of any event requiring a change in the most
recent forms so delivered by it, and such amendments thereto or extensions or
renewals thereof as may be reasonably requested by the Company or the Agent, in
each case certifying that such Bank is entitled to receive payments under this
Agreement and the Notes without deduction or withholding of any United States
federal income taxes, unless an event (including without limitation any change
in treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Bank from duly completing and delivering any such
form with respect to it and such Bank advises the Company and the Agent that it
is not capable of receiving payments without any deduction or withholding of
United States federal income tax. Each such Bank delivering such forms shall
indemnify the Company and the Agent, and hold harmless the Company and the
Agent from, all losses and damages suffered by the Company or the Agent for any
inaccuracies in any such forms.
ARTICLE VIII.
GUARANTY
As an inducement to the Banks and the Agent to enter into the transactions
contemplated by this Agreement, each Guarantor agrees with the Banks and the
Agent as follows:
8.1 Guarantee of Obligations. (a) Each Guarantor hereby (i) guarantees, as
principal obligor and not as surety only, to the Banks the prompt payment of
the principal of and any and all accrued and unpaid interest (including
interest which otherwise may cease to accrue by operation of any insolvency
law, rule, regulation or interpretation thereof) on the Advances and all other
obligations of the Company to the Banks and the Agent under the Loan Documents
when due, whether by scheduled maturity, acceleration or otherwise, all in
accordance with the terms of the Loan Documents, including, without limitation,
default interest, indemnification payments and all reasonable costs and
expenses incurred by the Banks and the Agent in connection with enforcing any
obligations of the Company hereunder, including without limitation the
reasonable fees and disbursements of counsel, (ii) guarantees the prompt and
punctual performance and observance of each and every term, covenant or
agreement contained in this Agreement and the Notes to be performed or observed
on the part of the Company, (iii) guarantees, as principal obligor not as
surety only, to the Banks the prompt payment of any obligation or
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other liability pursuant to any Hedging Contract among the Company or any
Guarantor with any Bank, and (iv) agrees to make prompt payment, on demand, of
any and all reasonable costs and expenses incurred by the Banks or the Agent in
connection with enforcing the obligations of the Guarantors hereunder,
including, without limitation, the reasonable fees and disbursements of
counsel, in all cases described in this clause (a) whether now owing or
outstanding or at any time hereafter owing or outstanding (all of the foregoing
being collectively referred to as the "Guaranteed Obligations").
(b) If for any reason any duty, agreement or obligation of the
Company contained in this Agreement shall not be performed or observed
by the Company as provided therein, or if any amount payable under or in
connection with this Agreement shall not be paid in full when the same becomes
due and payable, each Guarantor undertakes to perform or cause to be performed
promptly each of such duties, agreements and obligations and to pay forthwith
each such amount to the Agent for the account of the Banks regardless of any
defense or setoff or counterclaim which the Company may have or assert, and
regardless of any other condition or contingency.
8.2 Nature of Guaranty. The obligations of the Guarantors hereunder
constitute an absolute and unconditional and irrevocable guaranty of payment
and not a guaranty of collection and are wholly independent of and in addition
to other rights and remedies of the Banks and the Agent and are not contingent
upon the pursuit by the Banks and the Agent of any such rights and remedies,
such pursuit being hereby waived by the Guarantors.
8.3 Waivers and Other Agreements. Each Guarantor hereby unconditionally
(a) waives any requirement that the Banks or the Agent, upon the
occurrence of an Event of Default first make demand upon, or seek to enforce
remedies against the Company before demanding payment under or seeking to
enforce the obligations of the Guarantors hereunder, (b) covenants that the
obligations of the Guarantors hereunder will not be discharged except by
complete performance of all obligations of the Company contained in the Loan
Documents, (c) agrees that the obligations of the Guarantors hereunder shall
remain in full force and effect without regard to, and shall not be affected or
impaired, without limitation, by any invalidity, irregularity or
unenforceability in whole or in part of this Agreement or the Notes, or any
limitation on the liability of the Company thereunder, or any limitation on the
method or terms of payment thereunder which may or hereafter be caused or
imposed in any manner whatsoever (including, without limitation, usury laws),
(d) waives diligence, presentment and protest with respect to, and any notice
of default or dishonor in the payment of any amount at any time payable by the
Company under or in connection with the Loan Documents, and further waives any
requirement of notice of acceptance of, or other formality relating to, the
obligations of the Guarantors hereunder and (e) agrees that the Guaranteed
Obligations shall include any amounts paid by the Company to the Banks or the
Agent which may be required to be returned to the Company or to its
representative or to a trustee, custodian or receiver for the Company, and this
Guaranty shall continue to be effective, or be reinstated, as the case may be,
with respect to any amounts which may be required to be so returned.
8.4 Obligations Absolute. The obligations, covenants, agreements and
duties of the Guarantors under this Agreement shall not be released,
affected or impaired by any of the following whether or not undertaken with
notice to or consent of the Guarantors: (a) an assignment or transfer, in
whole or in part, of the Advances made to the Company or of this Agreement or
any Note although made without notice to or consent of the Guarantors, or (b)
any waiver by any Bank or the Agent or by any
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other person, of the performance or observance by the Company of any of the
agreements, covenants, terms or conditions contained in this Agreement or in
the other Loan Documents, or (c) any indulgence in or the extension of the
time for payment by the Company of any amounts payable under or in connection
with this Agreement or any other Loan Document, or of the time for performance
by the Company of any other obligations under or arising out of this Agreement
or any other Loan Document, or the extension or renewal thereof, or (d) the
modification, amendment or waiver (whether material or otherwise) of any duty,
agreement or obligation of the Company set forth in this Agreement or any other
Loan Document (the modification, amendment or waiver from time to time of this
Agreement and the other Loan Documents being expressly authorized without
further notice to or consent of the Guarantors), or (e) the voluntary or
involuntary liquidation, sale or other disposition of all or substantially all
of the assets of the Company or any receivership, insolvency, bankruptcy,
reorganization, or other similar proceedings, affecting the Company or any of
its assets, or (f) the merger or consolidation of the Company or the Guarantors
with any other person, or (g) the release of discharge of the Company or the
Guarantors from the performance or observance of any agreement, covenant, term
or condition contained in this Agreement or any other Loan Document, by
operation of law, or (h) any other cause whether similar or dissimilar to the
foregoing which would release, affect or impair the obligations, covenants,
agreements or duties of the Guarantors hereunder. The Guaranty pursuant to
this Article VIII shall be released, subject to reinstatement under Section
8.3(e), when all Guaranteed Obligations have been irrevocably paid in
immediately available funds and all Commitments, Letters of Credit and Hedging
Contracts have expired or been terminated.
8.5 No Investigation by Banks or Agent. Each Guarantor hereby waives
unconditionally any obligation which, in the absence of such provision, the
Banks or the Agent might otherwise have to investigate or to assure that there
has been compliance with the law of any jurisdiction with respect to the
Guaranteed Obligations recognizing that, to save both time and expense, each
Guarantor has requested that the Banks and the Agent not undertake such
investigation. Each Guarantor hereby expressly confirms that the obligations
of such Guarantor hereunder shall remain in full force and effect without
regard to compliance or noncompliance with any such law and irrespective of any
investigation or knowledge of any Bank or the Agent of any such law.
8.6 Indemnity. As a separate, additional and continuing obligation, each
Guarantor unconditionally and irrevocably undertakes and agrees with the Banks
and the Agent that, should the Guaranteed Obligations not be recoverable from
the Guarantors under Section 8.1 for any reason whatsoever (including, without
limitation, by reason of any provision of any Loan Document being or becoming
void, unenforceable, or otherwise invalid under any applicable law) then,
notwithstanding any knowledge thereof by any Bank or the Agent at any time,
each Guarantor as sole, original and independent obligor, upon demand by the
Agent, will make payment to the Agent for the account of the Banks and the
Agent of the Guaranteed Obligations by way of a full indemnity in such currency
and otherwise in such manner as is provided in this Agreement and the Notes.
8.7 Subordination, Subrogation, Etc. Each Guarantor agrees that any
present or future indebtedness, obligations or liabilities of the
Company to any Guarantor shall be fully subordinate and junior in right and
priority of payment to any present or future indebtedness, obligations or
liabilities of the Company to the Banks and the Agent. Each Guarantor waives
any right of subrogation to the rights of any Bank or the Agent against the
Company or any other person obligated for payment of the
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Guaranteed Obligations and any right of reimbursement or indemnity whatsoever
arising or accruing out of any payment which any Guarantor may make pursuant to
this Agreement and the Notes, and any right of recourse to security for the
debts and obligations of the Company, unless and until all Guaranteed
Obligations shall have been paid in full.
8.8 Waiver. To the extent that it lawfully may, each Guarantor agrees
that it will not at any time insist upon or plead, or in any manner
whatsoever claim or take any benefit or advantage of any applicable present or
future stay, extension or moratorium law, which may affect observance or
performance of the provisions of the Loan Documents; nor will it claim, take or
insist upon any benefit or advantage of any present or future law providing for
the evaluation or appraisal of any security for its obligations hereunder or
the Company under the Loan Documents prior to any sale or sales thereof which
may be made under or by virtue of any instrument governing the same; nor will
it, after any such sale or sales claim or exercise any right, under any
applicable law, to redeem any portion of such security so sold.
ARTICLE IX.
MISCELLANEOUS
9.1 Amendments, Etc. No amendment, modification, termination or waiver
of any provision of any Loan Document nor any consent to any departure
therefrom shall be effective unless the same shall be in writing and signed by
the Company and Required Banks and, to the extent any rights or duties of the
Agent may be affected thereby, the Agent, provided, however, that no such
amendment, modification, termination, waiver or consent shall, without the
consent of the Agent and all of the Banks, (i) authorize or permit the
extension of time for, or any reduction of the amount of, any payment of the
principal of, or interest on, the Notes or any Letter of Credit reimbursement
obligation, or any fees or other amount payable hereunder, (ii) amend, extend
or terminate the respective Commitments of any Bank set forth on the signature
pages hereof or the definition of Required Banks, or (iii) provide for the
discharge of any material Guarantor or release all or substantially all of the
collateral subject to the Security Documents.
(b) Any such amendment, waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.
(c) Notwithstanding anything herein to the contrary, no Bank that
is in default of any of its obligations to fund any amount due under
this Agreement shall be entitled to vote (whether to consent or to withhold its
consent) with respect to any amendment, modification, termination or waiver of
any provision of this Agreement or any departure therefrom or any direction
from the Banks to the Agent, and, for purposes of determining the Required
Banks at any time when any Bank is in default under this Agreement, the
Commitments and Advances of such defaulting Banks shall be disregarded.
9.2 Notices. (a) Except as otherwise provided in Section 9.2(c) hereof,
all notices and other communications hereunder shall be in writing and
shall be delivered or sent to the Company, Guarantors, the Agent and the Banks
at the respective addresses for notices set forth on the signatures pages
hereof, or to such other address as may be designated by the Company, any
Guarantor, the Agent
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or any Bank by notice to the other parties hereto. All notices and other
communications shall be deemed to have been given at the time of actual
delivery thereof to such address, or, unless sooner delivered, (i) if sent by
certified or registered mail, postage prepaid, to such address, on the third
day after the date of mailing, (ii) if sent by telex, upon receipt of the
appropriate answerback, or (iii) if sent by facsimile transmission, upon
confirmation of receipt by telephone at the number specified for confirmation,
provided, however, that notices to the Agent shall not be effective until
received.
(b) Notices by the Company to the Agent with respect to terminations
or reductions of the Commitments pursuant to Section 2.2, requests for
Advances pursuant to Section 2.4, requests for continuations or conversions of
Loans pursuant to Section 2.7 and notices of prepayment pursuant to Section 3.1
shall be irrevocable and binding on the Company.
(c) Any notice to be given by the Company to the Agent pursuant to
Sections 2.4, 2.7 or 3.1 and any notice to be given by the Agent or any
Bank hereunder, may be given by telephone, and all such notices given by the
Company must be immediately confirmed in writing in the manner provided in
Section 9.2(a). Any such notice given by telephone shall be deemed effective
upon receipt thereof by the party to whom such notice is to be given. The
Company and the Guarantors shall indemnify and hold harmless the Banks and the
Agent from any and all losses, damages, liabilities and claims arising from
their good faith reliance on any such telephone notice.
9.3 No Waiver By Conduct; Remedies Cumulative. No course of dealing on
the part of the Agent or any Bank, nor any delay or failure on the part
of the Agent or any Bank in exercising any right, power or privilege hereunder
shall operate as a waiver of such right, power or privilege or otherwise
prejudice the Agent's or such Bank's rights and remedies hereunder; nor shall
any single or partial exercise thereof preclude any further exercise thereof or
the exercise of any other right, power or privilege. No right or remedy
conferred upon or reserved to the Agent or any Bank under this Agreement, the
Notes or any Security Document is intended to be exclusive of any other right
or remedy, and every right and remedy shall be cumulative and in addition to
every other right or remedy granted thereunder or now or hereafter existing
under any applicable law. Every right and remedy granted by this Agreement,
the Notes or any Security Document or by applicable law to the Agent or any
Bank may be exercised from time to time and as often as may be deemed expedient
by the Agent or any Bank and, unless contrary to the express provisions of this
Agreement, the Notes or any Security Document, irrespective of the occurrence
or continuance of any Default or Event of Default.
9.4 Reliance on and Survival of Various Provisions. All terms, covenants,
agreements, representations and warranties of the Company or any Guarantor made
herein or in any Security Document or in any certificate, report, financial
statement or other document furnished by or on behalf of the Company or any
Guarantor in connection with this Agreement shall be deemed to be material and
to have been relied upon by the Banks, notwithstanding any investigation
heretofore or hereafter made by any Bank or on such Bank's behalf, and those
covenants and agreements of the Company set forth in Section 3.7, 3.9 and 9.5
hereof shall survive the repayment in full of the Advances and the termination
of the Commitments.
9.5 Expenses; Indemnification. The Company agrees to pay, or reimburse
the Agent for the payment of, on demand, (i) the reasonable fees and
expenses of counsel to the Agent, including
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without limitation the fees and expenses of Dickinson, Wright, Moon, Van Dusen
& Freeman, in connection with the preparation, execution, delivery and
administration of this Agreement, the Notes, the Security Documents and in
connection with advising the Agent as to its rights and responsibilities with
respect thereto, and in connection with any amendments, waivers or consents in
connection therewith, and (ii) all stamp and other taxes and fees payable or
determined to be payable in connection with the execution, delivery, filing or
recording of this Agreement, Notes, the Security Documents (or the verification
of filing, recording, perfection or priority thereof) or the consummation of
the transactions contemplated hereby, and any and all liabilities with respect
to or resulting from any delay in paying or omitting to pay such taxes or fees,
and (iii) all reasonable costs and expenses of the Agent and the Banks
(including reasonable fees and expenses of counsel and whether incurred through
negotiations, legal proceedings or otherwise)) in connection with any Default
or Event of Default or the enforcement of, or the exercise or preservation of
any rights under, any Loan Document or in connection with any refinancing or
restructuring of the credit arrangements provided under this Agreement and (iv)
all reasonable costs and expenses of the Agent and the Banks (including
reasonable fees and expenses of counsel) in connection with any action or
proceeding relating to a court order, injunction or other process or decree
restraining or seeking to restrain the Agent from paying any amount under, or
otherwise relating in any way to, any Letter of Credit and any and all costs
and expenses which any of them may incur relative to any payment under any
Letter of Credit.
(b) The Company hereby indemnifies and agrees to hold harmless the Banks
and the Agent, and their respective officers, directors, employees and
agents, harmless from and against any and all claims, damages, losses,
liabilities, costs or expenses of any kind or nature whatsoever which the Banks
or the Agent or any such person may incur or which may be claimed against any
of them by reason of or in connection with any Letter of Credit, and neither
any Bank nor the Agent or any of their respective officers, directors,
employees or agents shall be liable or responsible for: (i) the use which may
be made of any Letter of Credit or for any acts or omissions of any beneficiary
in connection therewith; (ii) the validity, sufficiency or genuineness of
documents or of any endorsement thereon, even if such documents should in fact
prove to be in any or all respects invalid, insufficient, fraudulent or forged;
(iii) payment by the Agent to the beneficiary under any Letter of Credit
against presentation of documents which do not comply with the terms of any
Letter of Credit, including failure of any documents to bear any reference or
adequate reference to such Letter of Credit; (iv) any error, omission,
interruption or delay in transmission, dispatch or delivery of any message or
advice, however transmitted, in connection with any Letter of Credit; or (v)
any other event or circumstance whatsoever arising in connection with any
Letter of Credit; provided, however, that the Company shall not be required to
indemnify the Banks and the Agent and such other persons, and the Banks shall
be liable to the Company to the extent, but only to the extent, of any direct,
as opposed to consequential or incidental, damages suffered by the Company
which were caused by (A) the Agent's wrongful dishonor of any Letter of Credit
after the presentation to it by the beneficiary thereunder of a draft or other
demand for payment and other documentation strictly complying with the terms
and conditions of such Letter of Credit, or (B) the Agent's payment by the
Agent to the beneficiary under any Letter of Credit against presentation of
documents which do not comply with the terms of the Letter of Credit to the
extent, but only to the extent, that such payment constitutes gross negligence
of wilful misconduct of the Agent. It is understood that in making any payment
under a Letter of Credit the Agent will rely on documents presented to it under
such Letter of Credit as to any and all matters set forth therein without
further investigation and regardless of any notice or information to the
contrary, and such reliance and
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payment against documents presented under a Letter of Credit substantially
complying with the terms thereof shall not be deemed gross negligence or wilful
misconduct of the Agent in connection with such payment. It is further
acknowledged and agreed that the Company may have rights against the
beneficiary or others in connection with any Letter of Credit with respect to
which the Banks are alleged to be liable and it shall be a precondition of the
assertion of any liability of the Banks under this Section that the Company
shall first have materially exhausted all remedies in respect of the alleged
loss against such beneficiary and any other parties obligated or liable in
connection with such Letter of Credit and any related transactions.
(c) The Company hereby indemnifies and agrees to hold harmless the
Banks and the Agent, and their respective officers, directors,
employees and agents, from and against any and all claims, damages, losses,
liabilities, costs or expenses of any kind or nature whatsoever (including
reasonable attorneys fees and disbursements incurred in connection with any
investigative, administrative or judicial proceeding whether or not such person
shall be designated as a party thereto) which the Banks or the Agent or any
such person may incur at any time or which may be claimed against any of them
at any time by reason of or in connection with entering into the Loan Documents
or the transactions contemplated thereby, including without limitation those
arising under Environmental Laws, any transaction financed or to be financed in
whole or in part, directly or indirectly, with any proceeds of any Advance or
any other actions of the Company or any Guarantor; provided, however, that the
Company shall not be required to indemnify any such Bank and the Agent or such
other person, to the extent, but only to the extent, that such claim, damage,
loss, liability, cost or expense is attributable to the gross negligence or
willful misconduct of such Bank or the Agent, as the case may be.
9.6 Successors and Assigns. (a) This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective
successors and assigns, provided that the Company may not, without the prior
consent of the Banks, assign its rights or obligations hereunder or under the
Notes or any Security Document and the Banks shall not be obligated to make any
Advance hereunder to any entity other than the Company.
(b) Any Bank may sell to any financial institution or institutions,
and such financial institution or institutions may further sell, a
participation interest (undivided or divided) in, the Advances and such Bank's
rights and benefits under this Agreement, the Notes and the Security Documents,
and to the extent of that participation interest such participant or
participants shall have the same rights and benefits against the Company under
Section 3.7, 3.9 and 6.2(c) as it or they would have had if such participant or
participants were the Bank making the Advances to the Company hereunder,
provided, however, that (i) such Bank's obligations under this Agreement shall
remain unmodified and fully effective and enforceable against such Bank, (ii)
such Bank shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) such Bank shall remain the holder of its
Notes for all purposes of this Agreement, (iv) the Company, the Agent and the
other Banks shall continue to deal solely and directly with such Bank in
connection with such Bank's rights and obligations under this Agreement, and
(v) such Bank shall not grant to its participant any rights to consent or
withhold consent to any action taken by such Bank or the Agent under this
Agreement other than action requiring the consent of all of the Banks
hereunder.
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<PAGE> 56
(c) The Agent from time to time in its sole discretion may appoint
agents for the purpose of servicing and administering this Agreement
and the transactions contemplated hereby and enforcing or exercising any rights
or remedies of the Agent provided under this Agreement, the Notes, any Security
Documents or otherwise. In furtherance of such agency, the Agent may from time
to time direct that the Company and the Guarantors provide notices, reports and
other documents contemplated by this Agreement (or duplicates thereof) to such
agent. The Company and each Guarantor hereby consents to the appointment of
such agent and agrees to provide all such notices, reports and other documents
and to otherwise deal with such agent acting on behalf of the Agent in the same
manner as would be required if dealing with the Agent itself.
(d) Each Bank may, with the prior consent of the Company (which
shall not be unreasonably withheld and may not be withheld if an Event
of Default has occurred and is continuing) and the Agent, assign to one or more
banks or other entities all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its
Commitment, 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, (ii) except in the case of
an assignment of all of a Bank's rights and obligations under this Agreement,
(A) the amount of the Commitment of the assigning 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 in integral multiples of $1,000,000 thereafter, or such lesser
amount as the Company and the Agent may consent to and (B) after giving effect
to each such assignment, the amount of the Commitment of the assigning Bank
shall in no event be less than $5,000,000, (iii) the parties to each such
assignment shall execute and deliver to the Agent, for its acceptance and
recording in the Register, an Assignment and Acceptance in the form of Exhibit
F hereto (an "Assignment and Acceptance"), together with any Note or Notes
subject to such assignment and a processing and recordation fee of $3,000, and
(iv) any Bank may without the consent of the Company or the Agent, and without
paying any fee, assign to any Affiliate of such Bank that is a bank or
financial institution all of its rights and obligations under this Agreement.
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 Bank hereunder and (y) the
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 and be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all of the remaining
portion of an assigning Bank's rights and obligations under this Agreement,
such Bank shall cease to be a party hereto).
(e) By executing and delivering an Assignment and Acceptance, the
Bank 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 Bank 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 the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other instrument or document
furnished pursuant hereto; (ii) such assigning Bank makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Company or the performance or
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<PAGE> 57
observance by the Company of any of its obligations under this Agreement or any
other instrument or document furnished pursuant hereto; (iii) such assignee
confirms that it has received a copy of this Agreement, together with copies of
the financial statements referred to in Section 4.6 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 the Agent, such assigning Bank or
any other Bank 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 appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers and discretion under this Agreement as are delegated to the Agent
by the terms hereof, together with such powers and discretion as are reasonably
incidental thereto; and (vi) such assignee agrees that it will 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 a Bank.
(f) The Agent shall maintain at its address designated on the
signature pages hereof 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 Banks and the Commitment of, and principal amount of the
Advances owing to, each Bank from time to time (the "Register"). The entries
in the Register shall be conclusive and binding for all purposes, absent
manifest error, and the Company, the Agent and the Banks may treat each person
whose name is recorded in the Register as a Bank hereunder for all purposes of
this Agreement. The Register shall be available for inspection by the Company
or any Bank at any reasonable time and from time to time upon reasonable prior
notice.
(g) Upon its receipt of an Assignment and Acceptance executed by an
assigning Bank and an assignee, together with any Note or Notes subject
to such assignment, the Agent shall, if such Assignment and Acceptance has been
completed, (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register and (iii) give prompt notice
thereof to the Company. Within five Business Days after its receipt of such
notice, the Company, at its own expense, shall execute and deliver to the Agent
in exchange for the surrendered Note or Notes a new Note to the order of such
assignee in an amount equal to the Commitment assumed by it pursuant to such
Assignment and Acceptance and, if the assigning Bank has retained a Commitment
hereunder, a new Note to the order of the assigning Bank 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 F
hereto.
(h) Additional lenders may also become Banks hereunder, with the
prior written consent of the Company and the Agent, by executing an
Assumption Agreement substantially in the form of Exhibit G. Any Bank, subject
to the prior written approval of the Agent and the Company and subject to being
paid in full or all outstanding liabilities owing to such Bank, may be
terminated as a Bank hereunder and upon such termination the Company shall have
the option to select a bank to replace such terminating bank and to assume the
rights and obligations of such terminated Bank hereunder, provided that such
replacement bank is acceptable to the Agent and executes an Assumption
Agreement substantially in the form of Exhibit G hereto. Upon any Bank being
added hereto or terminated, a new schedule will be distributed by the Agent to
all Banks and the Company showing the Commitment amount and the percentage of
total commitments of each Bank.
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<PAGE> 58
(i) The Banks may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this
Section 9.6, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Company.
(j) Notwithstanding any other provision set forth in this Agreement,
any Bank may at any time create a security interest in, or assign, all
or any portion of its rights under this Agreement (including, without
limitation, the Loans 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; provided that such creation of a
security interest or assignment shall not release such Bank from its
obligations under this Agreement.
9.7 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
9.8 Governing Law. This Agreement is a contract made under, and shall be
governed by and construed in accordance with, the law of the State of Michigan
applicable to contracts made and to be performed entirely within such State and
without giving effect to choice of law principles of such State. Each of the
Company and the Guarantors and the Banks further agrees that any legal or
equitable action or proceeding with respect to any Loan Document or the
transactions contemplated hereby shall be brought in any court of the State of
Michigan, or in any court of the United States of America sitting in Michigan,
and the Company and each Guarantor and the Banks hereby submits to and accepts
generally and unconditionally the jurisdiction of those courts with respect to
its person and property, and, in the case of the Company and each Guarantor
irrevocably appoints Harold Brown, V.P. Finance, whose address in Michigan is
24331 Sherwood, Centerline, Michigan 48015, as its agent for service of process
and irrevocably consents to the service of process in connection with any such
action or proceeding by personal delivery to such agent or to the Company or
such Guarantor, as the case may be, or by the mailing thereof by registered or
certified mail, postage prepaid to the Company or such Guarantor at its address
for notices pursuant to Section 9.2. The Company shall at all times maintain
such an agent in Michigan for such purpose and shall notify the Banks and the
Agent of such agent's address in Michigan within ten days of any change of
address. Nothing in this paragraph shall affect the right of the Banks and the
Agent to serve process in any other manner permitted by law or limit the right
of the Banks or the Agent to bring any such action or proceeding against the
Company or any Guarantor or property in the courts of any other jurisdiction.
The Company and each Guarantor and the Banks hereby irrevocably waives any
objection to the laying of venue of any such action or proceeding in the above
described courts.
9.9 Table of Contents and Headings. The table of contents and the
headings of the various subdivisions hereof are for the convenience of
reference only and shall in no way modify any of the terms or provisions
hereof.
9.10 Construction of Certain Provisions. If any provision of this
Agreement refers to any action to be taken by any person, or which such
person is prohibited from taking, such provision shall be applicable whether
such action is taken directly or indirectly by such person, whether or not
expressly specified in such provision.
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<PAGE> 59
9.11 Integration and Severability. The Loan Documents embody the entire
agreement and understanding between the Company, the Guarantors and the Agent
and the Banks, and supersede all prior agreements and understandings, relating
to the subject matter hereof. In case any one or more of the obligations of
the Company or any Guarantor under any Loan Document shall be invalid, illegal
or unenforceable in any jurisdiction, the validity, legality and enforceability
of the remaining obligations of the Company and the Guarantors shall not in any
way be affected or impaired thereby, and such invalidity, illegality or
unenforceability in one jurisdiction shall not affect the validity, legality or
enforceability of the obligations of the Company or any Guarantor under any
Loan Document in any other jurisdiction.
9.12 Independence of Covenants. All covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted
by any such covenant, the fact that it would be permitted by an exception to,
or would be otherwise within the limitations of, another covenant shall not
avoid the occurrence of a Default or an Event of Default if such action is
taken or such condition exists.
9.13 Interest Rate Limitation. Notwithstanding any provisions of any Loan
Document, in no event shall the amount of interest paid or agreed to be paid by
the Company exceed an amount computed at the highest rate of interest
permissible under applicable law. If, from any circumstances whatsoever,
fulfillment of any provision of any Loan Document at the time performance of
such provision shall be due, shall involve exceeding the interest rate
limitation validly prescribed by law which a court of competent jurisdiction
may deem applicable hereto, then, ipso facto, the obligations to be fulfilled
shall be reduced to an amount computed at the highest rate of interest
permissible under applicable law, and if for any reason whatsoever any Bank
shall ever receive as interest an amount which would be deemed unlawful under
such applicable law such interest shall be automatically applied to the payment
of principal of the Advances outstanding hereunder (whether or not then due and
payable) and not to the payment of interest, or shall be refunded to the
Company if such principal and all other obligations of the Company to the Banks
have been paid in full.
9.14 Waiver of Jury Trial. The Banks and the Agent and the Company and the
Guarantors, after consulting or having had the opportunity to consult with
counsel, knowingly, voluntarily and intentionally waive any right any of them
may have to a trial by jury in any litigation based upon or arising out of any
Loan Document or any of the transactions contemplated by any Loan Document or
any course of conduct, dealing, statements (whether oral or written) or actions
of any of them. Neither any Bank, the Agent, any Guarantor nor the Company
shall seek to consolidate, by counterclaim or otherwise, any such action in
which a jury trial has been waived with any other action in which a jury trial
cannot be or has not been waived. These provisions shall not be deemed to have
been modified in any respect or relinquished by any party hereto except by a
written instrument executed by such party.
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<PAGE> 60
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered on the 2nd day of May, 1996, which shall be the
Effective Date of this Agreement, notwithstanding the day and year first above
written.
Address for Notices: AETNA INDUSTRIES, INC.
24331 Sherwood By: /s/ Harold Brown
P.O. Box 3067 ------------------------------
Center Line, Michigan 48015 Its: Vice President Finance and
Chief Financial Officer
-----------------------------
Attention: Vice President and Treasurer
Facsimile No.: (810) 759-0508
Facsimile
Confirmation No.: (810) 759-1688
Address for Notices: AETNA EXPORT SALES CORP.
24331 Sherwood By: /s/ Harold Brown
P.O. Box 3067 ------------------------------
Center Line, Michigan 48015 Its: Secretary
-----------------------------
Attention: Vice President and Treasurer
Facsimile No.: (810) 759-0508
Facsimile
Confirmation No.: (810) 759-1688
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<PAGE> 61
Address for Notices: MS ACQUISITION CORP.
24331 Sherwood By: /s/ Harold Brown
P.O. Box 3067 -------------------------------
Center Line, Michigan 48015 Its: Vice President Finance and
Chief Financial Officer
------------------------------
Attention: Vice President and Treasurer
Facsimile No.: (810) 759-0508
Facsimile
Confirmation No.: (810) 759-1688
Address for Notices: NBD BANK, as a Bank and as Agent
611 Woodward Avenue By: /s/ Randy Balluff
Detroit, Michigan 48226 ----------------------------
Its: Senior Vice President
---------------------------
Attention: Michigan Banking Division
Facsimile No.: (313) 225-1390
Facsimile
Confirmation No.: (313) 225-2992
Commitment Amount: $35,000,000
Percentage of
Total Commitments: 100%
Total Commitment Amount of
all Banks: $35,000,000
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<PAGE> 1
EXHIBIT 10.4
FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT, dated as of August 13, 1996
(this "Amendment"), is among AETNA INDUSTRIES, INC., a Delaware corporation,
and successor by merger to Aetna Industries, Inc., a Michigan corporation (the
"Company"), the guarantors set forth on the signature pages hereof
(collectively, the "Guarantors"), the banks set forth on the signature pages
hereof (collectively, the "Banks") and NBD BANK, a Michigan banking
corporation, as agent for the Banks (in such capacity, the "Agent").
RECITALS
A. The Company, the Guarantors, the Agent and the Banks are parties to a
Credit Agreement dated as of May 2, 1996 (as now and hereafter amended, the
"Credit Agreement").
B. As of the date hereof, MS Acquisition Corp., a Delaware Corporation and
the parent of the Company ("MS"), has effected a number of transactions
resulting in a recapitalization of MS (such transactions collectively, the
"Recapitalization").
C. In connection with the Recapitalization, the Company and the Guarantors
desire to amend the Credit Agreement, and the Agent and the Banks are willing
to do so in accordance with the terms hereof.
TERMS
In consideration of the premises and of the mutual agreements herein
contained, the parties agree as follows:
ARTICLE I. AMENDMENTS. Upon fulfillment of the conditions set forth in
Article III hereof, the Credit Agreement shall be amended as follows:
1.1 The following new definitions are hereby added to Section 1.1 in
appropriate alphabetical order:
"Applicable Margin" shall mean, with the respect to any Eurodollar Rate
Loan, Floating Rate Loan, commitment fees payable under Section 2.3(a) or
letter of credit fees payable pursuant to Section 2.3(b)(i), as the case may
be, the applicable margin set forth in the table below based on the Funded Debt
Ratio, as adjusted on the first day of each fiscal quarter based on the Funded
Debt Ratio as of the last day of the fiscal quarter immediately preceding the
fiscal quarter most recently ended, provided that the Applicable Margin in
effect on the first day of any Eurodollar Interest Period for any Eurodollar
Rate Loan shall remain in effect for the entire Eurodollar Interest Period and,
notwithstanding anything herein to the contrary, upon or during the continuance
of any
<PAGE> 2
Event of Default the Applicable Margin shall be based on the highest possible
Applicable Margin described in the table below, regardless of the Funded Debt
Ratio:
<TABLE>
<CAPTION>
Applicable Margin (expressed in basis points)
- ---------------------------------------------------------------------------
Letter of
Funded Debt Eurodollar Floating Commitment Credit
Ratio Rate Loan Rate Loan Fee Commission
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
>4.5:1.0 < = 5.0:1.0 275.00 125.00 50.00 275.00
>4.0:1.0 < = 4.5:1.0 225.00 75.00 50.00 225.00
>3.5:1.0 < = 4.0:1.0 200.00 50.00 50.00 200.00
>3.0:1.0 < = 3.5:1.0 175.00 25.00 37.50 175.00
>2.5:1.0 < = 3.0:1.0 150.00 0.00 25.00 150.00
>2.0:1.0 < = 2.5:1.0 125.00 0.00 25.00 125.00
< = 2.0:1.0 100.00 0.00 25.00 100.00
</TABLE>
"Change of Control" means the occurrence of any event or transaction or
series of related transactions in connection with or as a consequence of which
(i) prior to a registered initial public offering of the Common Stock of the
Company, MS (directly or indirectly) or Holdings shall cease to own 100% of the
Company's outstanding Capital Stock, clear of any Liens; (ii)(A) prior to a
registered initial public offering of the Common Stock of MS or Holdings, the
CVC Investor Group shall cease to own Common Stock of, as the case may be, MS
or Holdings, representing not less than 50% of the common equity interest in,
as the case may be, MS's or Holding's, Capital Stock (whether voting or
non-voting) on a fully-diluted basis assuming the exercise of all securities
exercisable, convertible or exchangeable for or into common equity interests or
(B) after a registered initial public offering of the Common Stock of MS,
Holdings or the Company, the CVC Investor Group shall cease to own Common Stock
of, MS, Holdings or the Company, as the case may be, representing not less than
20% of the common equity interest in MS's, Holding's or, as the case may be,
the Company's Capital Stock (whether voting or non-voting) on a fully-diluted
basis assuming the exercise of all securities exercisable, convertible or
exchangeable for or into common equity interest; or (iii) after a registered
initial public offering of the Common Stock of MS, Holdings or the Company, any
Person (or group of Persons (as such term is used under the Exchange Act) shall
own, beneficially or of record, a greater percentage of the common equity
interests or total combined voting power of all classes or Capital Stock of MS,
Holdings or the Company, as the case may be, than is so owned by the CVC
Investor Group. For purposes of this definition, the term "CAPITAL STOCK" of
any Person means any and all shares, interests, participations, or other
equivalents, (however designated) of its capital stock and any rights (other
than debt securities convertible into
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<PAGE> 3
capital stock), warrants or options to acquire such capital stock and the term
"COMMON STOCK" means, as applicable, the Common Stock, par value $.01, of
Holdings and the Common Stock, par value $.01 of the Company and, collectively,
the Class A Common Stock, par value $.01 per share, and Class B Common Stock,
par value $0.01 per share, of MS, and, in each case, any Capital Stock issued
with respect thereto in a stock consolidation, reclassification or
recapitalization.
"CVC" shall mean Citicorp Venture Capital, Ltd.
"CVC Investor Group" means (i) CVC, (ii) Citicorp and any direct or
indirect wholly owned subsidiary of Citicorp; (iii) any officer, director or
employee of CVC, Citicorp or any wholly owned subsidiary of Citicorp, and any
spouse or lineal descendant (including by adoption and stepchildren) of any
officer, director or employee of CVC, Citicorp or any wholly owned subsidiary
of Citicorp and any trust, corporation or partnership the majority in interest
of the beneficiaries, stockholders or partners of which consists of employees,
officers or directors of CVC, Citicorp or any wholly owned subsidiary of
Citicorp provided that none of the Persons listed in the preceding provisions
of this subclause (iii) shall be included as members of the CVC Investor Group
unless CVC owns at least a majority of the Common Stock of MS or, if
applicable, Holdings, owned by CVC and all of such Persons, taken together.
"First Amendment" shall mean the First Amendment to Credit Agreement dated
as of August 13, 1996 among the Company, the Guarantors, the Banks and the
Agent.
"First Amendment Effective Date" shall mean the effective date of the
First Amendment.
"Fixed Rate Loan" shall mean any Eurodollar Rate Loan or any Negotiated
Rate Loan.
"Floating Rate" shall mean the per annum rate equal to the sum of (a) the
Applicable Margin plus (b) the greater of (i) the Prime Rate in effect from
time to time, and (ii) the sum of one percent (1%) per annum plus the Federal
Funds Rate in effect from time to time; which Floating Rate shall change
simultaneously with any change in such Prime Rate or Federal Funds Rate, as the
case may be.
"Holdings" shall mean Aetna Holdings, Inc., a Delaware corporation.
"Interest Period" shall mean any Eurodollar Interest Period or any
Negotiated Interest Period.
"Negotiated Rate" shall mean, with respect to any Negotiated Rate Loan,
the rate per annum agreed upon between the Company and the Banks at the time
such Negotiated Rate Loan is made.
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<PAGE> 4
"Negotiated Interest Period" shall mean, with respect to any Negotiated
Rate Loan, the period commencing on the day such Negotiated Rate Loan is made
or converted to a Negotiated Rate Loan and ending on the date agreed upon
between the Company and the Banks at the time such Negotiated Rate Loan is
made, and each subsequent period commencing on the last day of the immediately
preceding Negotiated Interest Period and ending on the date agreed upon between
the Company and the Banks at the time such Negotiated Rate Loan is elected to
be continued as a Negotiated Rate Loan by the Company under Section 2.4 or 2.7,
provided, however, that no Negotiated Rate Interest Period which would end
after the Termination Date shall be permitted.
"Negotiated Rate Loan" shall mean any Loan which bears interest at the
Negotiated Rate.
"Recapitalization Agreements" shall mean: (i) the Recapitalization and
Stock Purchase Agreement by and among MS, the Stockholders of MS and CVC Dated
as of the date hereof; (ii) the Stock Purchase Agreement, by and among MS, the
Stockholders of MS, the Management Holders of MS and Holdings, Dated as of the
date hereof; and (iii) the Stockholders Agreement among MS and its Stockholders
Dated as of the date hereof.
"Senior Notes" shall mean the 11 7/8% Senior Notes due 2006 issued by the
Company in the original aggregate principal amount of $85,000,000 and issued
pursuant to the Senior Note Indenture.
"Senior Note Documents" shall mean the Senior Note Indenture, the Senior
Notes and all instruments, agreements and documents executed in connection
therewith at any time.
"Senior Note Debt" shall mean all present and future indebtedness,
obligations and liabilities outstanding pursuant to the Senior Note Documents
including, without limitation, any senior notes due 2006 issued by the Company
in an original principal amount of $85,000,000 for which the Senior Notes are
exchangeable pursuant to a registered exchange offer effectuated by the Company
pursuant to the Registration Rights Agreement (as defined in the Senior Note
Indenture) and the guaranties of the Senior Notes by each of MS, Holdings and
Export.
"Senior Note Indenture" shall mean the indenture dated as of August 1,
1996 by and among the Company, MS, Holdings, Export and Norwest Bank Minnesota,
N.A., as trustee, as the same may be amended from time.
"Solvent" when used with respect to any person, means that, as of any date
of determination, (a) the amount of the "present fair saleable value" of the
assets of such person will, as of such date, exceed the amount of all
"liabilities of such person, contingent or otherwise", as of such date, as such
quoted terms are determined in accordance with applicable federal and state
laws governing determinations of the insolvency of debtors, (b) the present
fair saleable value of the assets of such person will, as of such date, be
greater than the amount that will be required to pay the liability of such
person on its debts as such debts become absolute and matured, (c) such person
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<PAGE> 5
will not have, as of such date, an unreasonably small amount of capital with
which to conduct its business, and (d) such person will be able to pay its
debts as they mature. For purposes of this definition, (i) "debt" means
liability on a "claim", and (ii) "claim" means any (x) right to payment,
whether or not such a right is reduced to judgment, liquidated, unliquidated,
fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured or (y) right to an equitable remedy for breach of
performance if such breach gives rise to a right to payment, whether or not
such right to an equitable remedy is reduced to judgment, fixed, contingent,
matured or unmatured, disputed, undisputed, secured or unsecured.
1.2 The definition of "Applicable Eurodollar Rate Margin" contained in
Section 1.1 is hereby deleted, and any reference in the Credit Agreement to
"Applicable Eurodollar Rate Margin" shall be deleted and "Applicable Margin"
shall be substituted in each place thereof.
1.3 The definitions of Borrowing Base, Guarantor, Interest Payment Date,
Overdue Rate and Termination Date contained in Section 1.1 are each hereby
restated, respectively, as follows:
"Borrowing Base" shall mean, as of any date, the sum, without duplication,
of (a) an amount equal to 85% of the value of Eligible Accounts Receivable plus
(b) an amount equal to 60% of the value of Eligible Inventory, plus (c) an
amount equal to 50% of Eligible Fixed Assets plus (d) an amount equal to 50% of
Eligible Tooling Inventory not to exceed $5,000,000.
"Guarantor" shall mean Export, Holdings, MS and each Subsidiary of the
Company and each person otherwise becoming a Subsidiary of the Company, or
otherwise entering into a Guaranty from time to time.
"Interest Payment Date" shall mean (a) with respect to any Fixed Rate
Loan, the last day of each Interest Period with respect to such Fixed Rate Loan
and, in the case of any Interest Period exceeding three months, those days that
occur during such Interest Period at intervals of three months after the first
day of such Interest Period, and (b) in all other cases, the last Business Day
of each month occurring after the date hereof, commencing with the first such
Business Day occurring after the date of this Agreement.
"Overdue Rate" shall mean (a) in respect of principal of Floating Rate
Loans, a rate per annum that is equal to the sum of three percent (3%) per
annum plus the Floating Rate, (b) in respect of principal of Fixed Rate Loans,
a rate per annum that is equal to the sum of three percent (3%) per annum plus
the per annum rate in effect thereon until the end of the then current Interest
Period for such Loan and, thereafter, a rate per annum that is equal to the sum
of three percent (3%) per annum plus the Floating Rate, and (c) in respect of
other amounts payable by the Company hereunder (other than interest), a per
annum rate that is equal to the sum of three percent (3%) per annum plus the
Floating Rate.
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<PAGE> 6
"Termination Date" shall mean the earlier to occur of (a) August 13, 2001
and (b) the date on which the Commitment shall be terminated pursuant to
Section 2.2 or 6.2.
1.4 The definition of "Interest Expense" contained in Section 1.1 is
amended by adding the following after the end of the parenthetical on line 3 of
page 9 of the Credit Agreement: "and all dividends and other distributions on
any preferred capital stock of the Company" and by adding the following after
the words "promissory notes" appearing in the penultimate line of such
definition and dividends and other distributions on any preferred capital stock
of the Company which is not paid in cash or cash equivalents.
1.5 Clause (b) of the definition of "Interest Coverage Ratio" in Section
1.1 is restated as follows:
(b) Interest Expense as calculated for the four consecutive fiscal
quarter period most recently ended, provided that (i) the Interest
Expense calculated for the fiscal quarter ending September 30, 1996 shall
be calculated on a pro forma basis acceptable to the Agent as if the
Senior Notes and all transactions contemplated pursuant thereto, including
without limitation the issuance of any Subordinated Debt and preferred
stock of the Company, was incurred at the beginning of such fiscal quarter
and (ii) the amount determined pursuant to this clause (b) for the four
consecutive fiscal quarter period ending (A) September 30, 1996 shall be
deemed to be an amount equal to four times the Interest Expense for the
fiscal quarter ending September 30, 1996, (B) December 31, 1996 shall be
deemed to be an amount equal to two times the Interest Expense for the two
consecutive fiscal quarters of the Company ending December 31, 1996, and
(C) March 31, 1997 shall be deemed to be an amount equal to four-thirds
times the Interest Expense for the three consecutive fiscal quarters of
the Company ending March 31, 1997.
1.6 Reference in Section 2.3 (a) to "one-half of one percent (1/2%) per
annum" shall be deleted and "Applicable Margin" shall be substituted in place
thereof.
1.7 Reference in Section 2.3(b)(i) to "one and three quarters percent (1
3/4%) per annum" shall be deleted and "Applicable Margin" shall be substituted
in place thereof.
1.8 The first sentence of Section 2.4(a) is restated as follows: "The
Company shall give the Agent notice of its request for each Advance in
substantially the form of Exhibit D hereto not later than 10:00 a.m. Detroit
time (i) four Eurodollar Business Days prior to such Advance is requested to be
made if such Advance is to be made as a Eurodollar Rate Loan, (ii) five
Business Days prior to the date any Letter of Credit Advance is requested to be
made, and (iii) one Business Day prior to the date such Advance is requested to
be made in all other cases, which notice shall specify whether a Eurodollar
Rate Loan, Negotiated Rate Loan, Floating Rate Loan or Letter of Credit Advance
is requested and, in the case of each requested Fixed Rate Loan, the Interest
Period
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<PAGE> 7
to be initially applicable to such Loan and, in the case of each Letter
of Credit Advance, such information as may be necessary for the issuance
thereof by the Agent."
1.9 Section 2.7 is restated as follows:
2.7 Subsequent Elections as to Loans. The Company may elect
(a) to continue a Fixed Rate Loan of one type, or a portion thereof, as a
Fixed Rate Loan of the then existing type or (b) may elect to convert a
Fixed Rate Loan of one type, or a portion thereof, to a Loan of another
type or (c) elect to convert a
Floating Rate Loan, or a portion thereof, to a Fixed Rate Loan, in
each case by giving notice thereof to the Agent (with sufficient
executed copies for each Bank) in substantially the form of Exhibit
E hereto not later than 10:00 a.m. Detroit time four Eurodollar
Business Days prior to the date any such continuation of or
conversion to a Eurodollar Rate Loan is to be effective and not
later than 10:00 a.m. Detroit time one Business Day prior to the
Date such continuation or conversion is to be effective in all
other cases, provided that an outstanding Fixed Rate Loan may only
be converted on the last day of the then current Interest Period
with respect to such Loan as, or a conversion of a Loan to, a
Eurodollar Rate Loan or a Negotiated Rate Loan is requested, such
notice shall also specify the Interest Period to be applicable
thereto upon such continuation or conversion. The Agent, not later
than the Business Day next succeeding the day such notice is given,
shall provide notice of such election to the Banks. If the Company
shall not timely deliver such a notice with respect to any
outstanding Fixed Rate Loan, the Company shall be deemed to have
elected to convert such Fixed Rate Loan to a Floating Rate Loan on
the last day of the then current Interest Period with respect to
such Loan.
1.10 Section 2.9 is restated as follows:
2.9 Minimum Amount; Limitation on Number of Loans; Etc.
Except for (a) Advances which exhaust the entire remaining amount
of the Commitments and (b) payments required pursuant to Section
3.1(c) or Section 3.8, each Floating Rate Loan and each prepayment
thereof shall be in a minimum amount of $100,000 and in integral
multiples of $10,000, each Letter of Credit Advance shall be in a
minimum amount of $100,000, and each Fixed Rate Loan and each
continuation or conversion thereof and each prepayment thereof
shall be in a minimum amount of $1,000,000 and in an integral
multiple of $250,000.
1.11 Section 2.11 is hereby amended by: (i) adding the words "and
Holdings" before the period at the end of Section 2.11(b); (ii) adding the
parenthetical phrase "(other than real property)" before the period at the end
of Section 2.11(d); and (iii) adding the following as a new paragraph at the
end of Section 2.11: "The Agent, on behalf of itself and the Banks,
acknowledges and agrees that, notwithstanding any provision to the contrary in
this Credit Agreement or any Loan
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<PAGE> 8
Document, it does not currently hold a perfected security interest in the
capital stock of the Company. MS and Holdings each represent and warrant that,
other than the existing pledge agreement dated March 3, 1989 under which MS
pledged the stock of the Company (as then incorporated in Michigan) to the
Company (which pledge agreement will not be modified) and the related Note
Assignment Agreement dated May 2, 1992 between the Company and the Agent, to
which the Agent's acknowledgment and agreement in the preceding sentence in
part refers, they have not granted any Lien on any of their assets (whether
real, personal or otherwise, and including without limitation any capital stock
owned by either of them), and agree that they will not at any time grant any
Liens on any of their assets, whether now or hereafter acquired. MS and
Holdings each further represent and warrant that no agreement or document
prohibits or would be defaulted by the granting of any Liens by MS or Holdings
in favor of the Agent hereunder and agree that they will not enter into any
agreement which would prohibit or be defaulted by the granting of such Liens."
1.12 Each reference in Section 3.1(b), 3.7(a) and 3.9 to
"Eurodollar Rate Loan" and "Eurodollar Interest Period" shall be deleted and
"Fixed Rate Loan" and "Interest Period" respectively, shall be substituted in
each place thereof.
1.13 Section 3.2 is amended by adding the following new clause
(c) after clause (b) contained in Section 3.2: "(c) during such periods as
such Loan is a Negotiated Rate Loan, the Negotiated Rate applicable to such
Loan for each related Negotiated Interest Period." Additionally, reference in
Section 3.2 to "paragraphs (a) and (b)" shall be deleted and "paragraphs (a),
(b) and (c)" shall be substituted in place thereof.
1.14 Section 4.10 is amended by adding the words "owned by them"
after the words "real property" in the third line of Section 4.10.
1.15 Section 4.12 is amended by adding the words "Except as
disclosed on Schedule 4.12," to the beginning of the text of Section 4.12.
1.16 Section 4.17 is restated as follows:
4.17 Other Debt. All agreements, instruments and documents
relating in any way to any Subordinated Debt, the Senior Note Debt
or any preferred stock of the Company, and all scheduled payments
thereon, are described on Schedule 1.1 hereto, and accurate and
complete copies thereof have been delivered to the Agent. All
Advances, all liabilities pursuant to any Hedging Contracts and all
other present and future indebtedness, obligations and liabilities
owing by the Company to the Agent or any of the Banks under the
Loan Documents constitute Senior Debt as defined in the
Subordinated Debt Documents. All representations and warranties
contained in the Subordinated Debt Documents and the Senior Note
Indenture are true and correct and there is no default or event or
condition which with notice or
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<PAGE> 9
with lapse of time could become a default under the Subordinated
Debt Documents or the Senior Note Documents. After giving effect to
all transactions contemplated by the Subordinated Debt Documents and
the Senior Note Documents, including without limitation the
incurrence of Senior Note Debt, the Company is, and will at all
times thereafter be, Solvent.
1.17 Section 5.1(a) is amended by adding the following parenthetical
phrase after the word "existence" and before the comma in the second line
thereof: "(provided that the Company may nonetheless reincorporate as a
Delaware corporation and may take whatever actions are necessary to do so)".
1.18 Section 5.2(c)(iv) is restated to read as follows: "(iv)
Subordinated Debt of the Company or any of its Subsidiaries in aggregate
principal amount not to exceed $7,000,000 and Senior Note Debt in aggregate
principal amount not to exceed $85,000,000, in each case as reduced from time
to time by any payments thereon".
1.19 Section 5.2(e) is amended by adding the following to the end
thereof: "and any merger required to reincorporate the Company as a Delaware
corporation".
1.20 Sections 5.2(h), (j), (k) and (l) are restated, respectively,
as follows:
(h) Dividends and Other Restricted Payments. Make, pay,
declare, authorize or distribute directly or indirectly any of the
following: (i) any dividend, payment or other distribution in
respect of any class of its capital stock, (ii) any dividend,
payment or distribution in connection with the redemption,
purchase, retirement or other acquisition, directly or indirectly,
of any shares of its capital stock, (iii) any payment, prepayment
or redemption of any Subordinated Debt, whether of principal,
interest or otherwise, or any other payment or arrangement or
agreement providing for the defeasance of any Subordinated Debt,
and (iv) any prepayment or redemption of any Senior Note Debt,
whether of principal, interest or otherwise, or any other payment
or arrangement or agreement providing for the defeasance of any
Senior Note Debt other than required prepayment or redemption
payments on the Senior Note Debt as described in the Senior Note
Indenture (all of the foregoing described in the above clauses (i),
(ii) (iii) and (iv) collectively referred to as "Restricted
Payments") other than (A) such dividends, payments or other
distributions to the extent payable solely in shares of the capital
stock of the Company or to the extent payable solely to the Company
by a wholly-owned Subsidiary of the Company, (B) payments on
Subordinated Debt solely with promissory notes, and not with cash
or cash equivalents, (C) the dividend to Holdings on August 13,
1996 in an aggregate amount not to exceed $12,000,000 made in
connection with the Recapitalization, and (D) other Restricted
Payments if both of the following conditions are satisfied, both
before any such Restricted Payment is
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<PAGE> 10
made and on a pro forma basis satisfactory to the Agent after
giving effect to any such Restricted Payment:(x) no Default or
Event of Default shall exist or shall have occurred and be
continuing and (y) the Company shall have the ability to borrow at
least $2,000,000 in Loans under this Agreement. The Company
acknowledges and agrees that this Section 5.2(h) shall be deemed
breached and an Event of Default shall be deemed to have occurred 2
Business Days prior to the date any payment of principal, interest
or other payment is due on the Subordinated Debt if the Company is
unable to comply with this Section 5.2(h) on a proforma basis as of
the date such payment is to be made. For purposes of this
Agreement, "capital stock" shall include capital stock, whether
common, preferred or otherwise, and any securities exchangeable for
or convertible into capital stock and any warrants, rights or other
options to purchase or otherwise acquire capital stock or such
securities.
(j) Transactions with Affiliates. Enter into, become a party
to, or become liable in respect of, any contract or undertaking
with any Affiliate, other than those shown on Schedule 5.2(j)
hereto, except in the ordinary course of business and on terms not
less favorable to the Company or such Subsidiary than those which
could be obtained if such contract or undertaking were an arms
length transaction with a person other than an Affiliate. The
Company agrees that it will not pay, or allow any Subsidiaries to
pay, whether directly or indirectly, any amounts to MS or Holdings
pursuant to the management agreement referenced on Schedule 5.2(j)
or under any similar agreement or arrangement if any Event of
Default exists hereunder or would be caused by any such payment,
and MS and Holdings agree not to receive any such payment.
(k) Modification of Subordinated Debt and Senior Note Debt.
Amend or modify, or consent or agree to any amendment or
modification of, (i) any Senior Note Document that increases the
interest rate, makes the covenants or defaults thereunder more
burdensome or shortens any maturity thereunder or (ii) any
Subordinated Debt Document, in each case without the prior written
consent of the Required Banks.
(l) Negative Pledge Limitation. Enter into any agreement,
other than the Senior Notes Indenture as in effect on the First
Amendment Effective Date and without giving effect to any
subsequent amendment or modification thereof, with any person other
than the Banks, which prohibits or limits the ability of the
Company or any Guarantor to create, incur, assume or suffer to
exist any lien upon any of its assets, rights, revenues or
property, real, personal or mixed, tangible or intangible, whether
now owned or hereafter acquired.
1.21 The following is hereby added to end of Section 5.2(o): "In
addition to the foregoing, any covenants, terms, conditions or defaults in the
Subordinated Debt Documents or in
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<PAGE> 11
the Senior Note Documents not substantially provided for in this Agreement or
more favorable to the holders of the Subordinated Debt or the Senior Note Debt,
as the case may be, are hereby incorporated by reference into this Agreement to
the same extent as if set forth fully herein, and no subsequent amendment,
waiver or modification thereof shall affect any such covenants, terms,
conditions or defaults as incorporated herein. Without limiting the foregoing,
each of MS and Holdings agree that they will not amend or modify the terms of
any subordinated debt issued by them, including without limitation the junior
subordinated promissory note due 2007 issued by Holdings, if such amendment or
modification would shorten the due date of any payment due thereunder or
increase the amount of any payment due thereunder."
1.22 The following Schedules attached hereto are substituted for the
corresponding Schedules to the Credit Agreement, and all references to such
Schedules shall be deemed, until further amendment or substitution, to refer to
the versions attached hereto: Schedules 1.1, 4.4, 4.5, 4.12, 5.2(d) and
5.2(i).
1.23 Schedule 5.2(j) attached hereto is hereby added as Schedule 5.2(j)
to the Credit Agreement.
ARTICLE II. REPRESENTATIONS. The Company and each Guarantor represent and
warrant to the Agent and the Banks that:
2.1 The execution, delivery and performance of this Amendment is within
its powers, has been duly authorized and is not in contravention of any
statute, law or regulation known to it or of any terms of its Articles of
Incorporation or By-laws, or of any material agreement or undertaking to which
it is a party or by which it is bound.
2.2 This Amendment is the legal, valid and binding obligation of the
Company and each Guarantor enforceable against each in accordance with the
terms hereof.
2.3 After giving effect to the amendments herein contained and all
transactions contemplated by the Senior Note Documents, the representations and
warranties contained in Article IV of the Credit Agreement are true on and as
of the date hereof with the same force and effect as if made on and as of the
date hereof.
2.4 No Event of Default or any event or condition which might become an
Event of Default with notice or lapse of time, or both, exists or has occurred
and is continuing on the date hereof.
2.5 The Company has issued the Senior Notes and received the proceeds
therefrom, all in conformity with the terms of the Senior Note Indenture and
other Senior Note Documents delivered to the Agent.
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<PAGE> 12
ARTICLE III. CONDITIONS OF EFFECTIVENESS. This Amendment shall not become
effective until each of the following conditions has been satisfied:
3.1 This Amendment shall be signed by the Company, the Guarantors, the
Banks and the Agent.
3.2 The Company and each of the Guarantors shall deliver such certified
resolutions and opinions of counsel, in form and substance satisfactory to the
Agent, as may be requested by the Agent.
3.3 The Company shall deliver to the Agent the Senior Note Documents,
the Subordinated Debt Documents, all agreements relating to any preferred
stock of the Company and all other agreements and documents executed in
connection therewith, all of which must be in form and substance satisfactory
to the Agent.
3.4 The Company shall have executed and delivered to the Agent a fee
letter mutually acceptable to the Company and the Agent.
3.5 The Company shall provide evidence satisfactory to the Agent that
all transactions contemplated pursuant to the Senior Note Documents have been c
ompleted and shall have satisfied such other conditions in connection therewith
and otherwise required by the Agent.
ARTICLE IV. MISCELLANEOUS.
4.1 References in the Credit Agreement or in any note, certificate,
instrument or other document to the Credit Agreement shall be deemed to be
references to the Credit Agreement as amended hereby and as further amended
from time to time.
4.2 The Company agrees to pay and to save the Agent harmless for the
payment of all reasonable costs and expenses arising in connection with this
Amendment, including the reasonable fees of counsel to the Agent in connection
with preparing this Amendment and the related documents.
4.3 The Company and each Guarantor acknowledge and agree that, to the
best of their knowledge, the Agent and the Banks have fully performed all of
their obligations under all documents executed in connection with the Credit
Agreement. The Company and each Guarantor represent and warrant that they are
not aware of any claims or causes of action against the Agent or any Bank.
4.4 Except as expressly amended hereby, the Company and each Guarantor
agree that the Credit Agreement, the Notes, the Security Documents and all
other documents and
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<PAGE> 13
agreements executed by the Company in connection with the Credit Agreement in
favor of the Agent or any Bank are ratified and confirmed, as amended hereby,
and shall remain in full force and effect in accordance with their terms and
that they are not aware of any set off, counterclaim or defense with respect to
any of the foregoing. Terms used but not defined herein shall have the
respective meanings ascribed thereto in the Credit Agreement.
4.5 The Company represents that it is the successor by merger to Aetna
Industries, Inc., a Michigan corporation ("Old Aetna"), and the Company by
operation of law and also expressly by this Amendment assumes and shall be
liable for all indebtedness, obligations and liabilities of Old Aetna (in each
case, as amended hereby) under the Credit Agreement, the Notes, the Security
Documents and all other agreements and documents executed in connection
therewith as if it had originally been a party thereto, including without
limitation the obligation to pay all indebtedness and the granting of all liens
and security interests. Holdings acknowledges and agrees that it is becoming a
Guarantor under the Credit Agreement pursuant to this Amendment and has all
obligations and liabilities as a Guarantor under the Credit Agreement as
amended hereby.
4.6 The Agent acknowledges that the Company has satisfied the
requirements of Section 5.1(d)(i)(C) and (D) in connection with the
Recapitalization.
4.7 This Amendment may be signed upon any number of counterparts with
the same effect as if the signatures thereto and hereto were upon the same
instrument.
IN WITNESS WHEREOF, the parties signing this Amendment have caused this
Amendment to be executed and delivered as of August 13, 1996.
AETNA INDUSTRIES, INC.
By: /s/ Harold Brown
---------------------------
Its: Secretary and Treasurer
---------------------------
AETNA HOLDINGS, INC.
By: /s/ Ueli Spring
---------------------------
Its: President
---------------------------
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<PAGE> 14
AETNA EXPORT SALES CORP.
By: /s/ Harold Brown
---------------------------
Its: Secretary and Treasurer
---------------------------
MS ACQUISITION CORP.
By: /s/ Ueli Spring
---------------------------
Its: /s/ President
---------------------------
NBD BANK, as a Bank and as Agent
By: /s/ Randy Balluff
---------------------------
Its: Senior Vice President
---------------------------
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<PAGE> 1
EXHIBIT 10.5
SECURITY AGREEMENT
THIS SECURITY AGREEMENT, dated as of May 2, 1996 (this "Security
Agreement"), is made by Aetna Industries, Inc. (the "Company"), in favor of NBD
Bank, a Michigan banking corporation, as agent (in such capacity, the "Agent")
for the benefit of itself and the banks (the "Banks") now or hereafter parties
to the Credit Agreement described below.
RECITALS
A. The Company has entered into a Credit Agreement of even date herewith
(as amended or modified from time to time, including any agreement entered
into in substitution therefor, the "Credit Agreement"), with the guarantors
party thereto, the Banks and the Agent pursuant to which the Banks may make
Advances (as therein defined) to the Company.
B. Under the terms of the Credit Agreement, the Company has agreed to grant
to the Agent, for the benefit of itself and the Banks, a first-priority
security interest, subject only to security interests expressly permitted by
the Credit Agreement, in and to the Collateral hereinafter described.
AGREEMENT
To secure (a) the prompt and complete payment of all indebtedness and
other obligations of the Company or any Subsidiary now or hereafter owing to
the Banks or the Agent under or on account of the Credit Agreement, any
Security Document, any letters of credit, notes or other instruments issued to
the Agent or Banks pursuant thereto, or any other Loan Document, (b) the
performance of the covenants under the Credit Agreement and the Security
Documents and any monies expended by the Agent in connection therewith, (c) the
prompt and complete payment of all obligations and performance of all covenants
of the Company under any Hedging Contract with any Bank and (d) the prompt and
complete payment of any and all other indebtedness, obligations and liabilities
of any kind of the Company or any Subsidiary to the Agent and the Banks, or any
of them, in all cases, of any kind or nature, howsoever created or evidenced
and whether now or hereafter existing, direct or indirect (including without
limitation any participation interest acquired by any Bank in any such
indebtedness, obligations or liabilities of the Company or any Subsidiary to
any other person), absolute or contingent, joint and/or several, secured or
unsecured, arising by operation of law or otherwise, and whether incurred by
the Company or any Subsidiary as principal, surety, endorser, guarantor,
accommodation party or otherwise, including without limitation all principal
and all interest (including any interest accruing subsequent to any petition
filed by or against the Company or any Subsidiary under the U.S. Bankruptcy
Code), indemnity and reimbursement obligations, charges, expenses, fees,
attorneys' fees and disbursements and any other amounts owing thereunder (all
of the aforesaid indebtedness, obligations and liabilities of the Company and
its Subsidiaries being herein called the "Secured Obligations", and all of the
documents, agreements and instruments among the Company, the Subsidiaries, the
Agent, the Banks, or any of them evidencing or securing the
repayment of, or otherwise pertaining to, the Secured Obligations including
without limitation the Credit
<PAGE> 2
Agreement, the Notes and the Security Documents, being herein collectively
called the "Operative Documents"), for value received and pursuant to the
Credit Agreement, the Company hereby grants, assigns and transfers to the Agent
for the benefit of the Banks a first-priority security interest, subject only
to Permitted Liens, in and to the following described property whether now
owned or existing or hereafter acquired or arising and wherever located (all of
which is herein collectively called the "Collateral"):
(a) All of the Company's present and future accounts, documents,
instruments, general intangibles and chattel paper, including, but without
limitation, all accounts receivable, contract rights, all deposit accounts and
all monies and claims for money due or to become due to the Company, security
held or granted to the Company, and all assets described in clause (d) below;
(b) All of the Company's furniture, fixtures, machinery and
equipment, whether now owned or hereafter acquired, and wherever located,
and whether used by the Company or any other person, or leased by the Company
to any person and whether the interest of Company is as owner, lessee or
otherwise;
(c) All of the Company's present and future inventory of every type,
wherever located, including but not limited to raw materials, work in
process, finished goods and all inventory that is available for leasing or
leased to others by the Company;
(d) All other present and future assets of the Company (whether
tangible or intangible), including but not limited to all trademarks, trade
names, service marks, patents, industrial designs, masks, trade names, trade
secrets, copyrights, franchises, customer lists, service marks, computer
programs, software, tax refund claims, licenses and permits, and the good will
associated therewith and all federal, state, foreign and other applications and
registrations therefor, all reissues, divisions, continuations, renewals,
extensions and continuations-in-part thereof now or hereafter in effect, all
income, license royalties, damages and payments now and hereafter due or
payable under and with respect thereto, including, without limitation, any
damages, proceeds or payments for part or future infringements thereof and all
income, royalties, damages and payments under all licenses thereof, the right
to sue for past, present and future infringements thereof, all right, title and
interest of the Company as licensor under any of the foregoing whether now
owned and existing or hereafter arising, and all other rights and other
interests corresponding thereto throughout the world (all of the assets
described in this clause (d) collectively referred to as the "Intellectual
Property");
(e) All books, records, files, correspondence, computer programs,
tapes, disks, cards, accounting information and other data of the Company
related in any way to the Collateral described in clauses (a), (b), (c) and (d)
above, including but not limited to any of the foregoing necessary to
administer, sell or dispose of any of the Collateral;
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<PAGE> 3
(f) All substitutions and replacements for, and all additions and
accessions to, any and all of the foregoing; and
(g) All products and all proceeds of any and all of the foregoing,
and, to the extent not otherwise included, all payments under insurance
(whether or not the Agent is the loss payee thereof), and any indemnity,
warranty or guaranty, payable by reason of loss or damage to or otherwise with
respect to any of the foregoing.
1. Representations, Warranties, Covenants and Agreements. The Company
further represents, warrants, covenants, and agrees with the Agent for the
benefit of the Banks as follows:
(a) Ownership of Collateral; Security Interest Priority. At
the time any Collateral becomes subject to a security interest of the Agent
hereunder, unless the Agent shall otherwise consent, the Company shall be
deemed to have represented and warranted that (i) the Company is the lawful
owner of such Collateral and has the right and authority to subject the same to
the security interest of the Agent; (ii) other than Permitted Liens and
lessors' interest with respect to any security interest in any property leased
by the Company as lessee, none of the Collateral is subject to any Lien other
than that in favor of the Agent and other Permitted Liens and, to the best of
its knowledge, there is no effective financing statement or other filing
covering any of the Collateral on file in any public office, other than in
favor of the Agent. This Security Agreement creates in favor of the Agent a
valid first-priority security interest, subject only to Permitted Liens, in the
Collateral enforceable against the Company and all third parties and securing
the payment of the Secured Obligations. All financing statements necessary to
perfect such security interest in the Collateral have been delivered by the
Company to the Agent for filing.
(b) Location of Offices, Records and Facilities. The
Company's chief executive office and chief place of business and the office
where the Company keeps its records concerning its accounts, contract rights,
chattel papers, instruments, general intangibles and other obligations arising
out of or in connection with the sale or lease of goods or the rendering of
services or otherwise ("Receivables"), and all originals of all leases and
other chattel paper which evidence Receivables, are located in the State of
Michigan, County of Macomb at 24331 Sherwood, P.O. Box 3067, Center Line. The
Company will provide the Agent with prior written notice of any proposed change
in the location of its chief executive office. The Company's only other
offices and facilities are at the locations set forth in Schedule 1(b) hereto.
The Company will provide the Agent with prior written notice of any change in
the locations of its other offices and the facilities at which any assets of
the Company are located. The tax identification number of the Company is
38-2007550. The name of the Company is Aetna Industries, Inc., and the Company
operates under no other names. The Company shall not change its name without
the prior written consent of the Agent.
(c) Location of Inventory, Fixtures, Machinery and Equipment.
(i) All Collateral consisting of inventory is, and will be, located at
the locations listed on Schedule 1(c)(i)
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<PAGE> 4
hereto, and at no other locations without the prior written consent of
the Agent. (ii) All Collateral consisting of fixtures, machinery or
equipment, is, and will be, located at the locations listed on Schedule
1(c)(ii) hereto, and at no other locations without the prior written consent of
the Agent.
(d) Liens, Etc. The Company will keep the Collateral free at
all times from any and all liens, security interests or encumbrances other
than Permitted Liens and those consented to in writing by the Required Banks.
The Company will not, without the prior written consent of the Agent, sell,
lease, license, transfer, assign or otherwise dispose, or permit or suffer to
be sold, leased, licensed, transferred, assigned or otherwise disposed, any of
the Collateral, except for, prior to an event of default only (notwithstanding
any other agreement), the following: inventory sold in the ordinary course of
business and other assets permitted to be sold, leased, licensed, transferred,
assigned or otherwise disposed under Section 5.2(f) of the Credit Agreement.
The Agent or its attorneys may at any and all reasonable times, and absent an
event of default with reasonable prior notice to the Company, inspect the
Collateral and for such purpose may enter upon any and all premises where the
Collateral is or might be kept or located.
(e) Insurance. The Company shall keep the tangible Collateral
insured at all times against loss by theft, fire and other casualties. Said
insurance shall be issued by a company rated A or better by Best and shall be
in amounts sufficient to protect the Agent against any and all loss or damage
to the Collateral. The policy or policies which evidence said insurance shall
be delivered to the Agent upon request, shall contain a lender loss payable
clause in favor of the Agent, shall name the Agent for the benefit of the Banks
as an additional insured, as its interest may appear, shall not permit
amendment, cancellation or termination without giving the Agent at least 30
days prior written notice thereof, and shall otherwise be in form and substance
satisfactory to the Agent. Reimbursement under any liability insurance
maintained by the Company pursuant to this paragraph 1(e) may be paid directly
to the person who shall have incurred liability covered by such insurance,
provided that if there is no Default or Event of Default (whether before or
after any event which caused any reimbursement under any liability insurance)
the Company may use the proceeds of such insurance solely to repair or replace
the property damaged if the insurance proceeds are less than $250,000 and if
there is any Event of Default or Default, and if such reimbursement is greater
than $250,000 or there is any Default or Event of Default such amounts shall be
paid to the Agent for application to the Secured Obligations.
(f) Taxes, Etc. The Company will pay promptly, and within the
time that they can be paid without interest or penalty, any taxes, assessments
and similar imposts and charges, not being contested in good faith, which are
now or hereafter may become a Lien upon any of the Collateral. If the Company
fails to pay any such taxes, assessments or other imposts or charges in
accordance with this Section, the Agent shall have the option to do so and the
Company agrees to repay forthwith all amounts so expended by the Agent with
interest at the Overdue Rate.
-4-
<PAGE> 5
(g) Further Assurances. The Company will do all acts and things and
will execute all financing statements and writings reasonably requested by
the Agent to establish, maintain and continue a perfected and valid security
interest of the Agent in the Collateral, and will promptly on demand pay all
reasonable costs and expenses of filing and recording all instruments,
including the costs of any reasonable searches requested by the Agent, to
establish and determine the validity and the priority of the Agent's security
interests. A carbon, photographic or other reproduction of this Security
Agreement or any financing statement covering the Collateral shall be
sufficient as a financing statement.
(h) List of Patents, Copyrights, Mask Works and Trademarks. Attached
hereto as Schedule 1(h)(i) is a list of all registered patents and patent
applications owned by the Company. Attached hereto as Schedule 1(h)(ii) is a
list of all registered copyrights and all registered mask works and
applications therefor owned by the Company. Attached hereto as Schedule
1(h)(iii) is a list of all registered trademarks and service marks owned by the
Company. If the Company at any time owns any additional registered patents,
copyrights, mask works, trademarks or any applications therefor not listed on
such schedules, the Company shall give the Agent prompt written notice thereof
and hereby authorizes the Agent to modify this Agreement by amending Schedules
1(h)(i), 1(h)(ii) and 1(h)(iii) to include all future registered patents,
copyrights, mask works, trademarks and applications therefor and agrees to
execute all further instruments and agreements, if any, if requested by the
Agent to evidence the Agent's interest therein.
(i) Maintenance of Tangible Collateral. The Company will
cause the tangible Collateral material to the conduct of its business to
be maintained and preserved in the same condition, repair and working order as
when new, ordinary wear and tear excepted, and in accordance with any
manufacturer's manual, and shall forthwith, or, in the case of any loss or
damage to any of the tangible Collateral as quickly as practicable after the
occurrence thereof, make or cause to be made all repairs, replacements, and
other improvements which in its judgment is in the best interest of the
Company. The Company shall promptly furnish to the Agent a statement
respecting any material loss or damage to any of the tangible Collateral.
(j) Special Rights Regarding Receivables. The Agent or any of
its agents may, at any time and from time to time in its sole discretion and
irrespective of the existence of any event of default under this Security
Agreement, verify, directly with each person (collectively, the "Obligors")
which owes any Receivables to the Company, the Receivables in any manner,
provided that the Agent will not contact Chrysler or General Motors for such
purpose more than twice a year for each of them if no event of default exists.
The Agent or any of its agents may, at any time from time to time after and
during the continuance of an event of default under this Security Agreement,
notify the Obligors of the security interest of the Agent in the Collateral
and/or direct such account debtors that all payments in connection with such
obligations and the Collateral be made directly to the Agent in the Agent's
name. If the Agent or any of its agents shall collect such obligations
directly from the Obligors after any event of default, the Agent or any of its
agents shall have the right to resolve any disputes relating to returned goods
directly
-5-
<PAGE> 6
with the Obligors in such manner and on such terms as the Agent or any
of its agents shall deem appropriate. After any event of default, the Company
directs and authorizes any and all of its present and future account debtors to
comply with requests for information from the Agent, the Agent's designees and
agents and/or auditors, relating to any and all business transactions between
the Company and the Obligors. After any event of default, the Company further
directs and authorizes all of its Obligors upon receiving a notice or request
sent by the Agent or the Agent's agents or designees to pay directly to the
Agent any and all sums of money or proceeds now or hereafter owing by the
Obligors to the Company, and any such payment shall act as a discharge of any
debt of such Obligor to the Company in the same manner as if such payment had
been made directly to the Company. The Company agrees to take any and all
action as the Agent may reasonably request to assist the Agent in exercising
the rights described in this Section.
(k) Maintenance of Intellectual Property and Other Intangible
Collateral. The Company shall preserve and maintain all rights of the
Company and the Agent in all material Intellectual Property and all other
material intangible Collateral, including without limitation the payment of all
maintenance fees, filing fees and the taking of all appropriate action at the
Company's expense to halt the infringement of any of the Intellectual Property
or other Collateral, provided that, with respect to halting the infringement of
any Intellectual Property or other Collateral, the Company does not need to
take all such appropriate action if the Company has, or after event of default
the Required Banks have, reasonably determined that it is not in its best
interest to demand or enforce cessation of such infringement or other conduct
because it is either not material or because the adverse consequences to the
Company would outweigh the benefits gained by such demand or enforcement.
2. Events of Default. The occurrence of any Event of Default under the
Credit Agreement shall be deemed an event of default under this Security
Agreement.
3. Remedies. Upon the occurrence of any event of default specified in
Paragraph 2 hereof, the Agent shall have and may exercise any one or more of
the rights and remedies provided to it under this Security Agreement or any of
the other Operative Documents or provided by law, including but not limited to
all of the rights and remedies of a secured party under the Uniform Commercial
Code, and the Company hereby agrees to assemble the Collateral and make it
available to the Agent at a place to be designated by the Agent which is
reasonably convenient to both parties, authorizes the Agent to take possession
of the Collateral with or without demand and with or without process of law and
to sell and dispose of the same at public or private sale and to apply the
proceeds of such sale to the costs and expenses thereof (including reasonable
attorneys' fees and disbursements, incurred by the Agent) and then to the
payment and satisfaction of the Secured Obligations. Any requirement of
reasonable notice shall be met if the Agent sends such notice to the Company,
by registered or certified mail, at least 10 days prior to
the date of sale, disposition or other event giving rise to a required notice.
The Agent or any Bank may be the purchaser at any such sale. The Company
expressly authorizes such sale or sales of the Collateral in advance of and to
the exclusion of any sale or sales of or other realization upon any other
collateral securing the Secured Obligations. The Agent shall have no
obligation to
-6-
<PAGE> 7
preserve rights against prior parties. The Company hereby waives as to the
Agent and each Bank any right of subrogation or marshalling of such
Collateral and any other collateral for the Secured Obligations. To this end,
the Company hereby expressly agrees that any such collateral or other security
of the Company or any other party which the Agent may hold, or which may come
to any of the Banks or any of their possession, may be dealt with in all
respects and particulars as though this Security Agreement were not in
existence. The parties hereto further agree that public sale of the Collateral
by auction conducted in any county in which any Collateral is located or in
which the Agent or the Company does business after advertisement of the time
and place thereof shall, among other manners of public and private sale, be
deemed to be a commercially reasonable disposition of the Collateral. The
Company shall be liable for any deficiency remaining after disposition of the
Collateral.
4. Special Remedies Concerning Certain Collateral.
(a) Upon the occurrence of any event of default, the Company
shall, if requested to do so in writing, and to the extent so requested
(i) promptly collect and enforce payment of all amounts due the Company on
account of, in payment of, or in connection with, any of the Collateral, (ii)
hold all payments in the form received by the Company as trustee for the Agent,
without commingling with any funds belonging to the Company, and (iii)
forthwith deliver all such payments to the Agent with endorsement to the
Agent's order of any checks or similar instruments.
(b) Upon the occurrence of any event of default, the Company
shall, if requested to do so, and to the extent so requested, notify all
Obligors and other persons with obligations to the Company on account of or in
connection with any of the Collateral of the security interest of the Agent in
the Collateral and direct such account debtors and other persons that all
payments in connection with such obligations and the Collateral be made
directly to the Agent. The Agent itself may, upon the occurrence of an event
of default, so notify and direct any such account debtor or other person that
such payments are to be made directly to the Agent.
(c) Upon the occurrence of any event of default, for purposes
of assisting the Agent in exercising its rights and remedies provided to
it under this Security Agreement, the Company (i) hereby irrevocably
constitutes and appoints the Agent its true and lawful attorney, for and in the
Company's name, place and stead, to collect, demand, receive, sue for,
compromise, and give good and sufficient releases for, any monies due or to
become due on account of, in payment of, or in connection with the Collateral,
(ii) hereby irrevocably authorizes the Agent to endorse the name of the
Company, upon any checks, drafts, or similar items which are received in
payment of, or in connection with, any of the Collateral, and to do all things
necessary in order to reduce the same to money, (iii) with respect to any
Collateral, hereby irrevocably assents to all extensions or postponements of
the time of payment thereof or any other indulgence in connection
therewith, to each substitution, exchange or release of collateral, to the
addition or release of any party primarily or secondarily liable, to the
acceptance of partial payments thereon and the settlement, compromise or
adjustment (including adjustment of insurance payments)
-7-
<PAGE> 8
thereof, all in such manner and at such time or times as the Agent shall deem
advisable and (iv) hereby irrevocably authorizes the Agent to notify the
post office authorities to change the address for delivery of the Company's
mail to an address designated by the Agent, and the Agent may receive, open and
dispose of all mail addressed to the Company. Notwithstanding any other
provisions of this Security Agreement, it is expressly understood and agreed
that the Agent shall have no duty, and shall not be obligated in any manner, to
make any demand or to make any inquiry as to the nature or sufficiency of any
payments received by it or to present or file any claim or take any other
action to collect or enforce the payment of any amounts due or to become due on
account of or in connection with any of the Collateral.
5. Remedies Cumulative. No right or remedy conferred upon or
reserved to the Agent under any Operative Document is intended to be exclusive
of any other right or remedy, and every right and remedy shall be cumulative in
addition to every other right or remedy given hereunder or now or hereafter
existing under any applicable law. Every right and remedy of the Agent under
any Operative Document or under applicable law may be exercised from time to
time and as often as may be deemed expedient by the Agent. To the extent that
it lawfully may, the Company agrees that it will not at any time insist upon,
plead, or in any manner whatever claim or take any benefit or advantage of any
applicable present or future stay, extension or moratorium law, which may
affect observance or performance of any provisions of any Operative Document
except as provided under the Bankruptcy Code; nor will it claim, take or insist
upon any benefit or advantage of any present or future law providing for the
valuation or appraisal of any security for its obligations under any Operative
Document prior to any sale or sales thereof which may be made under or by
virtue of any instrument governing the same; nor will the Company, after any
such sale or sales, claim or exercise any right, under any applicable law to
redeem any portion of such security so sold.
6. Conduct No Waiver. No waiver of default shall be effective
unless in writing executed by the Agent and waiver of any default or
forbearance on the part of the Agent in enforcing any of its rights under
this Security Agreement shall not operate as a waiver of any other default or
of the same default on a future occasion or of such right.
7. Governing Law; Consent to Jurisdiction; Definitions. This
Security Agreement is a contract made under, and shall be governed by
and construed in accordance with, the law of the State of Michigan applicable
to contracts made and to be performed entirely within such State and without
giving effect to choice of law principles of such State. The Company agrees
that any legal action or proceeding with respect to this Security Agreement or
the transactions contemplated hereby may be brought in any court of the State
of Michigan, or in any court of the United States of America sitting in
Michigan, and the Company hereby submits to and accepts generally and
unconditionally the jurisdiction of those courts with respect to its person and
property, and irrevocably appoints the Vice President and Treasurer of the
Company, at the Company's address set forth in the Credit Agreement, as its
agent for service of process and irrevocably consents to the service of process
in connection with any such action or proceeding by personal delivery to such
agent or to the Company or by the mailing thereof by registered or
-8-
<PAGE> 9
certified mail, postage prepaid to the Company at its address set forth in the
Credit Agreement. Nothing in this paragraph shall affect the right of the
Agent to serve process in any other manner permitted by law or limit the
right of the Agent to bring any such action or proceeding against the Company
or its property in the courts of any other jurisdiction. The Company hereby
irrevocably waives any objection to the laying of venue of any such suit or
proceeding in the above described courts. Terms used but not defined herein
shall have the respective meanings ascribed thereto in the Credit Agreement.
Unless otherwise defined herein or in the Credit Agreement, terms used in
Article 9 of the Uniform Commercial Code in the State of Michigan are used
herein as therein defined on the date hereof. The headings of the various
subdivisions hereof are for convenience of reference only and shall in no way
modify any of the terms or provisions hereof.
8. Notices. All notices, demands, requests, consents and other
communications hereunder shall be delivered in the manner described in the
Credit Agreement.
9. Rights Not Construed as Duties. The Agent neither assumes
nor shall it have any duty of performance or other responsibility under any
contracts in which the Agent has or obtains a security interest hereunder. If
the Company fails to perform any agreement contained herein, the Agent may but
is in no way obligated to itself perform, or cause performance of, such
agreement, and the reasonable expenses of the Agent incurred in connection
therewith shall be payable by the Company under paragraph 12. The powers
conferred on the Agent hereunder are solely to protect its interests in the
Collateral and shall not impose any duty upon it to exercise any such powers.
Except for the safe custody of any Collateral in its possession and accounting
for monies actually received by it hereunder, the Agent shall have no duty as
to any Collateral or as to the taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Collateral.
10. Amendments. None of the terms and provisions of this
Security Agreement may be modified or amended in any way except by an
instrument in writing executed by each of the parties hereto.
11. Severability. If any one or more provisions of this
Security Agreement should be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected, impaired or prejudiced
thereby.
12. Expenses. The Company agrees to indemnify the Agent from
and against any and all claims, losses and liabilities growing out of or
resulting from this Security Agreement (including, without limitation,
enforcement of this Security Agreement), except claims, losses or liabilities
resulting from the Agent's gross negligence or willful misconduct.
(b) The Company will, upon demand, pay to the Agent an
amount of any and all reasonable expenses, including the reasonable fees and
disbursements of its counsel and of any experts and agents, which the Agent may
incur in connection with (i) the administration of this
-9-
<PAGE> 10
Security Agreement, (ii) the custody, preservation, use or operation of, or
the sale of, collection from or other realization upon, any of the Collateral,
(iii) the exercise or enforcement of any of the rights of the Agent hereunder
or under the Operative Documents, or (iv) the failure of the Company to perform
or observe any of the provisions hereof.
13. Successors and Assigns; Termination. This Security
Agreement shall create a continuing security interest in the Collateral and
shall be binding upon the Company, its successors and assigns, and inure,
together with the rights and remedies of the Agent hereunder, to the benefit of
the Agent and its successors, transferees and assigns. Upon the payment in
full in immediately available funds of all of the Secured Obligations and the
termination of all commitments to lend under the Operative Documents, the
security interest granted hereunder shall terminate and all rights to the
Collateral shall revert to the Company.
14. Waiver of Jury Trial. The Agent and the Banks, in
accepting this Security Agreement and the Company, after consulting or having
had the opportunity to consult with counsel, knowingly, voluntarily and
intentionally waive any right any of them may have to a trial by jury in any
litigation based upon or arising out of this Security Agreement or any related
instrument or agreement or any of the transactions contemplated by this
Security Agreement or any course of conduct, dealing, statements (whether oral
or written) or actions of any of them. Neither the Agent, the Banks nor the
Company shall seek to consolidate, by counterclaim or otherwise, any such
action in which a jury trial has been waived with any other action in which a
jury trial cannot be or has not been waived. These provisions shall not be
deemed to have been modified in any respect or relinquished by either the
Agent, the Banks or the Company except by a written instrument executed by all
of them.
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<PAGE> 11
IN WITNESS WHEREOF, the Company has caused this Security Agreement to be
duly executed as of the day and year first set forth above.
AETNA INDUSTRIES, INC.
By: /s/ Harold Brown
-------------------------------------
Its: Vice President Finance and Chief
Financial Officer
Accepted and Agreed:
NBD BANK, as Agent and
on behalf of the Banks
By: /s/ Randy Balluff
----------------------------------
Its: Senior Vice President
----------------------
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<PAGE> 12
SCHEDULES 1(B), 1(C)(i) & 1(C)(ii)
FACILITIES
<TABLE>
<CAPTION>
LOCATION BUILDING FUNCTION* OWNED/LEASED
- --------------- ------------- --------- ------------
<S> <C> <C> <C>
Sherwood Avenue
850 M&E, I Owned
Plant 1
Plant 2 870 M&E, I Owned
Plant 3 200 M&E Leased
Plant 4 100, 440, 411 M&E Leased
Plant 5 301, 421 M&E Leased
QA Office 600 O Leased
North Sherwood
431 M&E, I, O Leased
Plant 6
Plant 9 501 M&E Leased
Mound Road
700 M&E, I, O Owned
Plant 7
Merrill Street
250 M&E, I, O Leased
Plant 8
15 Mile Road 215 O Leased
Mt. Elliott 800 I Owned
</TABLE>
*M&E - Machinery & Equipment
I - Inventory
O - Office
-12-
<PAGE> 13
SCHEDULE 1(h)(i) TO SECURITY AGREEMENT
Patents and Applications
NONE
-13-
<PAGE> 14
SECURITY 1(h)(ii) TO SECURITY AGREEMENT
Copyrights, Maskworks and Applications
NONE
-14-
<PAGE> 15
SCHEDULE 1(h)(iii) TO SECURITY AGREEMENT
Trademarks, Service Marks and Applications
NONE
-15-
<PAGE> 1
EXHIBIT 10.6
SECURITY AGREEMENT
(AETNA EXPORT SALES CORP.)
THIS SECURITY AGREEMENT, dated as of May 2, 1996 (this "Security
Agreement"), is made by Aetna Export Sales Corp. (the "Company"), in favor of
NBD Bank, a Michigan banking corporation, as agent (in such capacity, the
"Agent") for the benefit of itself and the banks (the "Banks") now or hereafter
parties to the Credit Agreement described below.
RECITALS
A. Aetna Industries, Inc. (the "Borrower") has entered into a Credit
Agreement of even date herewith (as amended or modified from time to time,
including any agreement entered into in substitution therefor, the "Credit
Agreement"), with the guarantors (including the Company) party thereto, the
Banks and the Agent pursuant to which the Banks may make Advances (as therein
defined) to the Company.
B. Under the terms of the Credit Agreement, the Company has agreed to
grant to the Agent, for the benefit of itself and the Banks, a first-priority
security interest, subject only to security interests expressly permitted by the
Credit Agreement, in and to the Collateral hereinafter described.
AGREEMENT
To secure (a) the prompt and complete payment of all indebtedness and
other obligations of the Borrower or the Company now or hereafter owing to the
Banks or the Agent under or on account of the Credit Agreement, any Security
Document, any letters of credit, notes or other instruments issued to the Agent
or Banks pursuant thereto, or any other Loan Document, (b) the performance of
the covenants under the Credit Agreement and the Security Documents and any
monies expended by the Agent in connection therewith, (c) the prompt and
complete payment of all obligations and performance of all covenants of the
Borrower or the Company under any Hedging Contract with any Bank and (d) the
prompt and complete payment of any and all other indebtedness, obligations and
liabilities of any kind of the Borrower or the Company or any Subsidiary to the
Agent and the Banks, or any of them, in all cases, of any kind or nature,
howsoever created or evidenced and whether now or hereafter existing, direct or
indirect (including without limitation any participation interest acquired by
any Bank in any such indebtedness, obligations or liabilities of the Borrower or
the Company or any Subsidiary to any other person), absolute or contingent,
joint and/or several, secured or unsecured, arising by operation of law or
otherwise, and whether incurred by the Borrower or the Company or any Subsidiary
as principal, surety, endorser, guarantor, accommodation party or otherwise,
including without limitation all principal and all interest (including any
interest accruing subsequent to any petition filed by or against the Borrower or
the Company or any Subsidiary under the U.S. Bankruptcy Code), indemnity and
reimbursement obligations, charges, expenses, fees, attorneys' fees and
disbursements and any other amounts owing thereunder (all of the aforesaid
indebtedness, obligations and liabilities of the Borrower or the Company and its
Subsidiaries being herein called the "Secured Obligations", and all of the
documents, agreements and instruments among the Borrower, the Company, the
Subsidiaries, the Agent, the Banks, or any of them, evidencing or securing the
repayment of, or otherwise pertaining to, the Secured Obligations including
without limitation the Credit Agreement, the Notes and the Security Documents,
being herein collectively called the "Operative Documents"), for value received
and pursuant to the Credit Agreement, the Company hereby grants, assigns and
transfers to the Agent for the benefit of the Banks a first-priority security
interest, subject only to Permitted Liens, in and to the following described
property whether now owned or existing or hereafter acquired or arising and
wherever located (all of which
<PAGE> 2
is herein collectively called the "Collateral"):
(a) All of the Company's present and future accounts, documents,
instruments, general intangibles and chattel paper, including, but without
limitation, all accounts receivable, contract rights, all deposit accounts and
all monies and claims for money due or to become due to the Company, security
held or granted to the Company, and all assets described in clause (d) below;
(b) All of the Company's furniture, fixtures, machinery and
equipment, whether now owned or hereafter acquired, and wherever located, and
whether used by the Company or any other person, or leased by the Company to
any person and whether the interest of Company is as owner, lessee or otherwise;
(c) All of the Company's present and future inventory of every type,
wherever located, including but not limited to raw materials, work in process,
finished goods and all inventory that is available for leasing or leased to
others by the Company;
(d) All other present and future assets of the Company (whether
tangible or intangible), including but not limited to all trademarks,
tradenames, service marks, patents, industrial designs, masks, trade names,
trade secrets, copyrights, franchises, customer lists, service marks, computer
programs, software, tax refund claims, licenses and permits, and the good will
associated therewith and all federal, state, foreign and other applications and
registrations therefor, all reissues, divisions, continuations, renewals,
extensions and continuations-in-part thereof now or hereafter in effect, all
income, license royalties, damages and payments now and hereafter due or payable
under and with respect thereto, including, without limitation, any damages,
proceeds or payments for past or future infringements thereof and all income,
royalties, damages and payments under all licenses thereof, the right to sue for
past, present and future infringements thereof, all right, title and interest of
the Company as licensor under any of the foregoing whether now owned and
existing or hereafter arising, and all other rights and other interests
corresponding thereto throughout the world (all of the assets described in this
clause (d) collectively referred to as the "Intellectual Property");
(e) All books, records, files, correspondence, computer programs,
tapes, disks, cards, accounting information and other data of the Company
related in any way to the Collateral described in clauses (a), (b), (c) and (d)
above, including but not limited to any of the foregoing necessary to
administer, sell or dispose of any of the Collateral;
(f) All substitutions and replacements for, and all additions and
accessions to, any and all of the foregoing; and
(g) All products and all proceeds of any and all of the foregoing,
and, to the extent not otherwise included, all payments under insurance
(whether or not the Agent is the loss payee thereof), and any indemnity,
warranty or guaranty, payable by reason of loss or damage to or otherwise with
respect to any of the foregoing.
1. Representations, Warranties, Covenants and Agreements. The
Company further represents, warrants, covenants, and agrees with the Agent for
the benefit of the Banks as follows:
(a) Ownership of Collateral; Security Interest Priority.
At the time any Collateral becomes subject to a security interest of the Agent
hereunder, unless the Agent shall otherwise consent, the
SECURITY AGREEMENT
-2-
<PAGE> 3
Company shall be deemed to have represented and warranted that (i) the Company
is the lawful owner of such Collateral and has the right and authority to
subject the same to the security interest of the Agent; (ii) other than
Permitted Liens and lessors' interest with respect to any security interest in
any property leased by the Company as lessee, none of the Collateral is
subject to any Lien other than that in favor of the Agent and other Permitted
Liens and, to the best of its knowledge, there is no effective financing
statement or other filing covering any of the Collateral on file in any public
office, other than in favor of the Agent. This Security Agreement creates in
favor of the Agent a valid first-priority security interest, subject only to
Permitted Liens, in the Collateral enforceable against the Company and all third
parties and securing the payment of the Secured Obligations. All financing
statements necessary to perfect such security interest in the Collateral have
been delivered by the Company to the Agent for filing.
(b) Location of Offices, Records and Facilities. The
Company's chief executive office and chief place of business and the office
where the Company keeps its records concerning its accounts, contract rights,
chattel papers, instruments, general intangibles and other obligations arising
out of or in connection with the sale or lease of goods or the rendering of
services orotherwise ("Receivables"), and all originals of all leases and
other chattel paper which evidence Receivables, are located in the State of
Michigan, County of Macomb at 24331 Sherwood, P.O. Box 3067, Center Line. The
Company will provide the Agent with prior written notice of any proposed change
in the location of its chief executive office. The Company's only other offices
and facilities are at the locations set forth in Schedule 1(b) hereto. The
Company will provide the Agent with prior written notice of any change in the
locations of its other offices and the facilities at which any assets of the
Company are located. The tax identification number of the Company is
66-0441945. The name of the Company is Aetna Export Sales Corp., and the
Company operates under no other names. The Company shall not change its name
without the prior written consent of the Agent.
(c) Location of Inventory, Fixtures, Machinery and
Equipment. (i) All Collateral consisting of inventory is, and will be, located
at the locations listed on Schedule 1(c)(i) hereto, and at no other locations
without the prior written consent of the Agent. (ii) All Collateral consisting
of fixtures, machinery or equipment, is, and will be, located at the locations
listed on Schedule 1(c)(ii) hereto, and at no other locations without the prior
written consent of the Agent.
(d) Liens, Etc. The Company will keep the Collateral free
at all times from any and all liens, security interests or encumbrances other
than Permitted Liens and those consented to in writing by the Required Banks.
The Company will not, without the prior written consent of the Agent,
sell, lease, license, transfer, assign or otherwise dispose, or permit or
suffer to be sold, leased, licensed, transferred, assigned or otherwise
disposed, any of the Collateral, except for, prior to an event of default only
(notwithstanding any other agreement), the following: inventory sold in the
ordinary course of business and other assets permitted to be sold, leased,
licensed, transferred, assigned or otherwise disposed under Section 5.2(f) of
the Credit Agreement. The Agent or its attorneys may at any and all reasonable
times, and absent an event of default with reasonable prior notice to the
Company, inspect the Collateral and for such purpose may enter upon any and all
premises where the Collateral is or might be kept or located.
(e) Insurance. The Company shall keep the tangible
Collateral insured at all times against loss by theft, fire and other
casualties. Said insurance shall be issued by a company rated A or better by
Best and shall be in amounts sufficient to protect the Agent against any and all
loss or damage to the Collateral. The policy or policies which evidence said
insurance shall be delivered to the Agent upon
SECURITY AGREEMENT
-3-
<PAGE> 4
request, shall contain a lender loss payable clause in favor of the Agent, shall
name the Agent for the benefit of the Banks as an additional insured, as its
interest may appear, shall not permit amendment, cancellation or termination
without giving the Agent at least 30 days prior written notice thereof, and
shall otherwise be in form and substance satisfactory to the Agent.
Reimbursement under any liability insurance maintained by the Company pursuant
to this paragraph 1(e) may be paid directly to the person who shall have
incurred liability covered by such insurance, provided that if there is no
Default or Event of Default (whether before or after any event which caused any
reimbursement under any liability insurance) the Company may use the proceeds of
such insurance solely to repair or replace the property damaged if the insurance
proceeds are less than $250,000 and if there is any Event of Default or Default,
and if such reimbursement is greater than $250,000 or there is any Default or
Event of Default such amounts shall be paid to the Agent for application to the
Secured Obligations.
(f) Taxes, Etc. The Company will pay promptly, and within
the time that they can be paid without interest or penalty, any taxes,
assessments and similar imposts and charges, not being contested in good faith,
which are now or hereafter may become a Lien upon any of the Collateral. If the
Company fails to pay any such taxes, assessments or other imposts or charges in
accordance with this Section, the Agent shall have the option to do so and the
Company agrees to repay forthwith all amounts so expended by the Agent with
interest at the Overdue Rate.
(g) Further Assurances. The Company will do all acts and
things and will execute all financing statements and writings reasonably
requested by the Agent to establish, maintain and continue a perfected and valid
security interest of the Agent in the Collateral, and will promptly on demand
pay all reasonable costs and expenses of filing and recording all instruments,
including the costs of any reasonable searches requested by the Agent, to
establish and determine the validity and the priority of the Agent's security
interests. A carbon, photographic or other reproduction of this Security
Agreement or any financing statement covering the Collateral shall be sufficient
as a financing statement.
(h) List of Patents, Copyrights, Mask Works and Trademarks.
Attached hereto as Schedule 1(h)(i) is a list of all registered patents and
patent applications owned by the Company. Attached hereto as Schedule 1(h)(ii)
is a list of all registered copyrights and all registered mask works and
applications therefor owned by the Company. Attached hereto as Schedule
1(h)(iii) is a list of all registered trademarks and service marks owned by the
Company. If the Company at any time owns any additional registered patents,
copyrights, mask works, trademarks or any applications therefor not listed on
such schedules, the Company shall give the Agent prompt written notice thereof
and hereby authorizes the Agent to modify this Agreement by amending Schedules
1(h)(i), 1(h)(ii) and 1(h)(iii) to include all future registered patents,
copyrights, mask works, trademarks and applications therefor and agrees to
execute all further instruments and agreements, if any, if requested by the
Agent to evidence the Agent's interest therein.
(i) Maintenance of Tangible Collateral. The Company will
cause the tangible Collateral material to the conduct of its business to be
maintained and preserved in the same condition, repair and working order as when
new, ordinary wear and tear excepted, and in accordance with any
manufacturer's manual, and shall forthwith, or, in the case of any loss or
damage to any of the tangible Collateral as quickly as practicable after the
occurrence thereof, make or cause to be made all repairs, replacements, and
other improvements which in its judgment is in the best interest of the
Company. The Company shall promptly furnish to the Agent a statement respecting
any material loss or damage to any of the tangible Collateral.
SECURITY AGREEMENT
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<PAGE> 5
(j) Special Rights Regarding Receivables. The Agent or
andirrespective of the existence of any event of default under this Security
Agreement, verify, directly with each person (collectively, the "Obligors")
which owes any Receivables to the Company, the Receivables in any manner,
provided that the Agent will not contact Chrysler or General Motors for such
purpose more than twice a year for each of them if no event of default exists.
The Agent or any of its agents may, at any time from time to time after and
during the continuance of an event of default under this Security Agreement,
notify the Obligors of the security interest of the Agent in the Collateral
and/or direct such account debtors that all payments in connection with such
obligations and the Collateral be made directly to the Agent in the Agent's
name. If the Agent or any of its agents shall collect such obligations directly
from the Obligors after any event of default, the Agent or any of its agents
shall have the right to resolve any disputes relating to returned goods directly
with the Obligors in such manner and on such terms as the Agent or any of its
agents shall deem appropriate. After any event of default, the Company directs
and authorizes any and all of its present and future account debtors to comply
with requests for information from the Agent, the Agent's designees and agents
and/or auditors, relating to any and all business transactions between the
Company and the Obligors. After any event of default, the Company further
directs and authorizes all of its Obligors upon receiving a notice or request
sent by the Agent or the Agent's agents or designees to pay directly to the
Agent any and all sums of money or proceeds now or hereafter owing by the
Obligors to the Company, and any such payment shall act as a discharge of any
debt of such Obligor to the Company in the same manner as if such payment had
been made directly to the Company. The Company agrees to take any and all action
as the Agent may reasonably request to assist the Agent in exercising the rights
described in this Section.
(k) Maintenance of Intellectual Property and Other
Intangible Collateral. The Company shall preserve and maintain all rights of
the Company and the Agent in all material Intellectual Property and all other
material intangible Collateral, including without limitation the payment of all
maintenance fees, filing fees and the taking of all appropriate action at the
Company's expense to halt the infringement of any of the Intellectual Property
or other Collateral, provided that, with respect to halting the infringement of
any Intellectual Property or other Collateral, the Company does not need to take
all such appropriate action if the Company has, or after event of default the
Required Banks have, reasonably determined that it is not in its best interest
to demand or enforce cessation of such infringement or other conduct because it
is either not material or because the adverse consequences to the Company would
outweigh the benefits gained by such demand or enforcement.
2. Events of Default. The occurrence of any Event of Default under
the Credit Agreement shall be deemed an event of default under this Security
Agreement.
3. Remedies. Upon the occurrence of any event of default
specified in Paragraph 2 hereof, the Agent shall have and may exercise any one
or more of the rights and remedies provided to it under this Security
Agreement or any of the other Operative Documents or provided by law, including
but not limited to all of the rights and remedies of a secured party under the
Uniform Commercial Code, and the Company hereby agrees to assemble the
Collateral and make it available to the Agent at a place to be designated by
the Agent which is reasonably convenient to both parties, authorizes the Agent
to take possession of the Collateral with or without demand and with or without
process of law and to sell and dispose of the same at public or private sale
and to apply the proceeds of such sale to the costs and expenses thereof
(including reasonable attorneys' fees and disbursements, incurred by the Agent)
and then to the payment and satisfaction of the Secured Obligations. Any
requirement of reasonable notice shall be met if the Agent sends such
SECURITY AGREEMENT
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<PAGE> 6
notice to the Company, by registered or certified mail, at least 10 days prior
to the date of sale, disposition or other event giving rise to a required
notice. The Agent or any ank may be the purchaser at any such sale. The
Company expressly authorizes such sale or sales of the Collateral in advance of
and to the exclusion of any sale or sales of or other realization upon any other
collateral securing the Secured Obligations. The Agent shall have no obligation
to preserve rights against prior parties. The Company hereby waives as to the
Agent and each Bank any right of subrogation or marshalling of such Collateral
and any other collateral for the Secured Obligations. To this end, the Company
hereby expressly agrees that any such collateral or other security of the
Company or any other party which the Agent may hold, or which may come to any
of the Banks or any of their possession, may be dealt with in all respects and
particulars as though this Security Agreement were not in existence. The
parties hereto further agree that public sale of the Collateral by auction
conducted in any county in which any Collateral is located or in which the Agent
or the Company does business after advertisement of the time and place thereof
shall, among other manners of public and private sale, be deemed to be a
commercially reasonable disposition of the Collateral. The Company shall be
liable for any deficiency remaining after disposition of the Collateral.
4. Special Remedies Concerning Certain Collateral.
(a) Upon the occurrence of any event of default, the
Company shall, if requested to do so in writing, and to the extent so requested
(i) promptly collect and enforce payment of all amounts due the Company on
account of, in payment of, or in connection with, any of the Collateral, (ii)
hold all payments in the form received by the Company as trustee for the Agent,
without commingling with any funds belonging to the Company, and (iii) forthwith
deliver all such payments to the Agent with endorsement to the Agent's order of
any checks or similar instruments.
(b) Upon the occurrence of any event of default, the Company
shall, if requested to do so, and to the extent so requested, notify all
Obligors and other persons with obligations to the Company on account of or in
connection with any of the Collateral of the security interest of the Agent in
the Collateral and direct such account debtors and other persons that all
payments in connection with such obligations and the Collateral be made directly
to the Agent. The Agent itself may, upon the occurrence of an event of default,
so notify and direct any such account debtor or other person that such payments
are to be made directly to the Agent.
(c) Upon the occurrence of any event of default, for
purposes of assisting the Agent in exercising its rights and remedies provided
to it under this Security Agreement, the Company (i) hereby irrevocably
constitutes and appoints the Agent its true and lawful attorney, for and in the
Company's name, place and stead, to collect, demand, receive, sue for,
compromise, and give good and sufficient releases for, any monies due or to
become due on account of, in payment of, or in connection with the Collateral,
(ii) hereby irrevocably authorizes the Agent to endorse the name of the Company,
upon any checks, drafts, or similar items which are received in payment of, or
in connection with, any of the Collateral, and to do all things necessary in
order to reduce the same to money, (iii) with respect to any Collateral, hereby
irrevocably assents to all extensions or postponements of the time of payment
thereof or any other indulgence in connection therewith, to each substitution,
exchange or release of collateral, to the addition or release of any party
primarily or secondarily liable, to the acceptance of partial payments thereon
and the settlement, compromise or adjustment (including adjustment of insurance
payments) thereof, all in such manner and at such time or times as the Agent
shall deem advisable and (iv) hereby irrevocably authorizes the Agent to notify
the post office authorities to change the address for delivery of the Company's
mail to an address
SECURITY AGREEMENT
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<PAGE> 7
designated by the Agent, and the Agent may receive, open and dispose of all mail
addressed to the Company. Notwithstanding any other provisions of this Security
Agreement, it is expressly understood and agreed that the Agent shall
have no duty, and shall not be obligated in any manner, to make any demand or to
make any inquiry as to the nature or sufficiency of any payments received by it
or to present or file any claim or take any other action to collect or enforce
the payment of any amounts due or to become due on account of or in connection
with any of the Collateral.
5. Remedies Cumulative. No right or remedy conferred upon or
reserved to the Agent under any Operative Document is intended to be exclusive
of any other right or remedy, and every right and remedy shall be cumulative in
addition to every other right or remedy given hereunder or now or hereafter
existing under any applicable law. Every right and remedy of the Agent under
any Operative Document or under applicable law may be exercised from time to
time and as often as may be deemed expedient by the Agent. To the extent that
it lawfully may, the Company agrees that it will not at any time insist upon,
plead, or in any manner whatever claim or take any benefit or advantage of any
applicable present or future stay, extension or moratorium law, which may affect
observance or performance of any provisions of any Operative Document except as
provided under the Bankruptcy Code; nor will it claim, take or insist upon any
benefit or advantage of any present or future law providing for the valuation or
appraisal of any security for its obligations under any Operative Document prior
to any sale or sales thereof which may be made under or by virtue of any
instrument governing the same; nor will the Company, after any such sale or
sales, claim or exercise any right, under any applicable law to redeem any
portion of such security so sold.
6. Conduct No Waiver. No waiver of default shall be effective
unless in writing executed by the Agent and waiver of any default or
forbearance on the part of the Agent in enforcing any of its rights under this
Security Agreement shall not operate as a waiver of any other default or of the
same default on a future occasion or of such right.
7. Governing Law; Consent to Jurisdiction; Definitions. This
Security Agreement is a contract made under, and shall be governed by and
construed in accordance with, the law of the State of Michigan applicable to
contracts made and to be performed entirely within such State and without giving
effect to choice of law principles of such State. The Company agrees that any
legal action or proceeding with respect to this Security Agreement or the
transactions contemplated hereby may be brought in any court of the State of
Michigan, or in any court of the United States of America sitting in Michigan,
and the Company hereby submits to and accepts generally and unconditionally the
jurisdiction of those courts with respect to its person and property, and
irrevocably appoints the Vice President and Treasurer of the Company, at the
Company's address set forth in the Credit Agreement, as its agent for service of
process and irrevocably consents to the service of process in connection with
any such action or proceeding by personal delivery to such agent or to the
Company or by the mailing thereof by registered or certified mail, postage
prepaid to the Company at its address set forth in the Credit Agreement. Nothing
in this paragraph shall affect the right of the Agent to serve process in any
other manner permitted by law or limit the right of the Agent to bring any such
action or proceeding against the Company or its property in the courts of any
other jurisdiction. The Company hereby irrevocably waives any objection to the
laying of venue of any such suit or proceeding in the above described courts.
Terms used but not defined herein shall have the respective meanings ascribed
thereto in the Credit Agreement. Unless otherwise defined herein or in the
Credit Agreement, terms used in Article 9 of the Uniform Commercial Code in the
State of Michigan are used herein as therein defined on the date hereof. The
headings of the various subdivisions hereof are for convenience of reference
only and shall in no way modify any of the terms or provisions hereof.
SECURITY AGREEMENT
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<PAGE> 8
8. Notices. All notices, demands, requests, consents and other
communications hereunder shall be delivered in the manner described in the
Credit Agreement.
9. Rights Not Construed as Duties. The Agent neither assumes nor
shall it have any duty of performance or other responsibility under any
contracts in which the Agent has or obtains a security interest hereunder. If
the Company fails to perform any agreement contained herein, the Agent may but
is in no way obligated to itself perform, or cause performance of, such
agreement, and the reasonable expenses of the Agent incurred in connection
therewith shall be payable by the Company under paragraph 12. The powers
conferred on the Agent hereunder are solely to protect its interests in the
Collateral and shall not impose any duty upon it to exercise any such powers.
Except for the safe custody of any Collateral in its possession and accounting
for monies actually received by it hereunder, the Agent shall have no duty as to
any Collateral or as to the taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Collateral.
10. Amendments. None of the terms and provisions of this Security
Agreement may be modified or amended in any way except by an instrument in
writing executed by each of the parties hereto.
11. Severability. If any one or more provisions of this Security
Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected, impaired or prejudiced thereby.
12. Expenses. (a) The Company agrees to indemnify the Agent from
and against any and all claims, losses and liabilities growing out of or
resulting from this Security Agreement (including, without limitation,
enforcement of this Security Agreement), except claims, losses or liabilities
resulting from the Agent's gross negligence or willful misconduct.
(b) The Company will, upon demand, pay to the Agent an
amount of any and all reasonable expenses, including the reasonable fees and
disbursements of its counsel and of any experts and agents, which the Agent may
incur in connection with (i) the administration of this Security Agreement, (ii)
the custody, preservation, use or operation of, or the sale of, collection
from or other realization upon, any of the Collateral, (iii) the exercise or
enforcement of any of the rights of the Agent hereunder or under the Operative
Documents, or (iv) the failure of the Company to perform or observe any of the
provisions hereof.
13. Successors and Assigns; Termination. This Security
Agreement shall create a continuing security interest in the Collateral and
shall be binding upon the Company, its successors and assigns, and inure,
together with the rights and remedies of the Agent hereunder, to the benefit of
the Agent and its successors, transferees and assigns. Upon the payment in full
in immediately available funds of all of the Secured Obligations and the
termination of all commitments to lend under the Operative Documents, the
security interest granted hereunder shall terminate and all rights to the
Collateral shall revert to the Company.
14. Waiver of Jury Trial. The Agent and the Banks, in accepting
this Security Agreement, and the Company, after consulting or having had the
opportunity to consult with counsel, knowingly, voluntarily and intentionally
waive any right any of them may have to a trial by jury in any litigation based
upon or arising out of this Security Agreement or any related instrument or
agreement or any of the transactions
SECURITY AGREEMENT
-8-
<PAGE> 9
contemplated by this Security Agreement or any course of conduct, dealing,
statements (whether oral or written) or actions of any of them. Neither the
Agent, the Banks nor the Company shall seek to consolidate, by counterclaim or
otherwise, any such action in which a jury trial has been waived with any other
action in which a jury trial cannot be or has not been waived. These provisions
shall not be deemed to have been modified in any respect or relinquished by
either the Agent, the Banks or the Company except by a written instrument
executed by all of them.
SECURITY AGREEMENT
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<PAGE> 10
IN WITNESS WHEREOF, the Company has caused this Security Agreement to be
duly executed as of the day and year first set forth above.
AETNA EXPORT SALES CORP.
By: /s/ Harold Brown
------------------------------
Its: Secretary
-----------------------------
Accepted and Agreed:
NBD BANK, as Agent and
on behalf of the Banks
By: /s/ Randy Balluff
---------------------------
Its: Senior Vice President
--------------------------
SECURITY AGREEMENT
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<PAGE> 11
SCHEDULE 1(b) TO SECURITY AGREEMENT
List of Other Office and Facility Locations
Type of Office of Facility Address City County State
SECURITY AGREEMENT
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<PAGE> 12
SCHEDULE 1(c)(i) TO SECURITY AGREEMENT
List of Inventory Locations
Address City County State If Leased or Warehoused,
Name and Address of
Lessor/Warehouseman
SECURITY AGREEMENT
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<PAGE> 13
SCHEDULE (1)(c)(ii) TO SECURITY
AGREEMENT
List of Fixtures, Machinery and Equipment Locations
Address City County State Legal Description,
Record Owner and
Tax Parcel No. (if
fixtures are at
this location)
SECURITY AGREEMENT
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<PAGE> 14
SCHEDULE 1(h)(i) TO SECURITY AGREEMENT
Patents and Applications
NONE
SECURITY AGREEMENT
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<PAGE> 15
SCHEDULE 1(h)(ii) TO SECURITY AGREEMENT
Copyrights, Maskworks and Applications
NONE
SECURITY AGREEMENT
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<PAGE> 16
SCHEDULE 1(h)(iii) TO SECURITY AGREEMENT
Trademarks, Service Marks and Applications
NONE
SECURITY AGREEMENT
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<PAGE> 1
EXHIBIT 10.7
PLEDGE AGREEMENT AND IRREVOCABLE PROXY
THIS PLEDGE AGREEMENT dated as of May 2, 1996 (this "Pledge Agreement"),
is given by AETNA INDUSTRIES, INC., a Michigan corporation (the "Company"), in
favor of NBD Bank, a Michigan banking corporation, as agent (in such capacity,
the "Agent") for the benefit of itself and the banks (the "Banks") now or
hereafter parties to the Credit Agreement described below.
RECITALS
A. The Company has entered into a Credit Agreement, dated as of even date
herewith, (as amended or modified from time to time, including any agreement
entered into in substitution therefor, the "Credit Agreement"), with the Banks
parties thereto and the Agent pursuant to which the Banks may make Advances (as
therein defined) to the Company.
B. Under the Credit Agreement, the Company has agreed to pledge to the
Agent, for the benefit of the Banks, and grant a first-priority security
interest to the Agent, for the benefit of the Banks, in and to the collateral
described herein and to execute this Pledge Agreement.
For value received and pursuant to the Credit Agreement, the Company
hereby grants a first-priority security interest to the Agent, for the benefit
of the Banks, in and to all of the outstanding capital stock of the companies
listed on the schedule attached hereto as Schedule A (the "Pledged
Subsidiaries", and said shares of stock, together with any other shares and
securities from time to time receivable or otherwise distributed in respect of
or in exchange for any or all of such shares, being called the "Pledged
Stock"), to secure, (a) the prompt and complete payment of all indebtedness and
other obligations of the Company or any Subsidiary now or hereafter owing to
the Banks or the Agent under or on account of the Credit Agreement, any
Security Document or any letters of credit, notes or other instruments issued
to the Agent or Banks pursuant thereto, (b) the performance of the covenants
under the Credit Agreement and the Security Documents and any monies expended
by the Agent in connection therewith, (c) the prompt and complete payment of
all obligations and performance of all covenants of the Company under any
hedging contract with any Bank and (d) the prompt and complete payment of any
and all other indebtedness, obligations and liabilities of any kind of the
Company or any Subsidiary to the Agent and the Banks, or any of them, in all
cases, of any kind or nature, howsoever created or evidenced and whether now or
hereafter existing, direct or indirect (including without limitation any
participation interest acquired by any Bank in any such indebtedness,
obligations or liabilities of the Company or any Subsidiary to any other
person), absolute or contingent, joint and/or several, secured or unsecured,
arising by operation of law or otherwise, and whether incurred by the Company
or any Subsidiary as principal, surety, endorser, guarantor, accommodation
party or otherwise, including without limitation all principal and all interest
(including any interest accruing subsequent to any petition filed by or against
the Company or any Subsidiary under the U.S. Bankruptcy Code), indemnity and
reimbursement obligations, charges, expenses, fees, attorneys' fees and
disbursements and any other amounts owing thereunder (all of the aforesaid
indebtedness, obligations and liabilities of the Company and its Subsidiaries
being herein called the "Secured Obligations", and all of the documents,
agreements and instruments among the Company, the Subsidiaries, the Agent, the
Banks, or any of them, evidencing or securing the repayment of, or otherwise
pertaining to, the Secured Obligations being herein collectively called the
"Operative Documents"). The Company is herewith delivering to the Agent for
the benefit of the Banks originals of all stock certificates of the Pledged
Stock or taking such other action
<PAGE> 2
acceptable to the Agent and the Required Banks to perfect the security interest
in the Pledged Stock granted hereby.
The Company further represents and warrants to, and agrees with, the Agent
for the benefit of the Banks as follows:
1. Representations and Warranties. The Company represents and warrants
that the Pledged Stock is represented by the stock certificate or certificates
or shares described on Schedule 1 hereto, and that such stock certificate or
certificates, accompanied by an instrument of assignment or transfer duly
executed in blank by the Company as the owner named in such stock certificate or
certificates, have been delivered to the Agent by the Company. The Company
further represents and warrants that (a) the Pledged Stock is duly authorized
and validly issued, fully paid and nonassessable and constitutes 100% of all of
the issued and outstanding shares of the capital stock of each Pledged
Subsidiary, (b) the Company is the legal and beneficial owner of the Pledged
Stock, free and clear of all Liens other than the Lien of Agent hereunder, with
full right and power to deliver, pledge and assign the Pledged Stock to the
Agent hereunder, and (c) the pledge of the Pledged Stock pursuant to this
Pledge Agreement creates in favor of the Agent a valid and perfected first
priority security interest in the Pledged Stock enforceable against the Company
and all third parties and securing the payment of the Secured Obligations.
2. Title; Stock Rights, Dividends, Etc. The Company will warrant and
defend the Agent's title to the Pledged Stock, and the security interest herein
created, against all claims of all persons, and will maintain and preserve such
security interest. It is understood and agreed that the collateral hereunder
includes any stock rights, stock dividends, liquidating dividends, new
securities, payments, distributions and proceeds (including cash dividends and
sale proceeds) and other property to which the Company may become entitled by
reason of the ownership of the Pledged Stock during the existence of this Pledge
Agreement, and any such property received by the Company shall be held in trust
and forthwith delivered to the Agent to be held hereunder in accordance with the
terms of this Pledge Agreement.
3. Registration Rights. If any Pledged Subsidiary at any time or from time
to time proposes to register any of its securities under the Securities Act of
1933, the Company will at each such time give notice to the Agent of such
Pledged Subsidiary's intentions so to do. Upon the request of the Agent given
30 days after receipt of such notice, the Company will cause all Pledged Stock
of such Pledged Subsidiary to be included in the registration statement proposed
to be filed, all to the extent requisite to permit the public sale or other
public disposition of such Pledged Stock so registered by the holders thereof.
The costs and expenses of all such registrations and qualifications under said
Act shall be paid by the Company or such Pledged Subsidiary, except that
underwriting discounts and commissions in respect of any Pledged Stock sold
pursuant to any such registration statement shall be borne by the sellers
thereof. As expeditiously as possible after the effective date of any such
registration statement, the Company will deliver in exchange for any
certificates representing shares of Pledged Stock so registered pursuant to such
registration, which bear any restrictive legend, new Pledged Stock certificates
not bearing such legend or any similar legend. In the event of any such
registration, the Company hereby agrees to indemnify and hold harmless the Agent
and the Banks as pledgee of the Pledged Stock against any losses, claims,
damages or liabilities to which the Agent and the Banks may become subject to
the extent that such losses, claims, damages or liabilities arise out of or are
based upon any untrue statement or alleged untrue statement of any material fact
contained in
PLEDGE AGREEMENT AND IRREVOCABLE PROXY
- 2 -
<PAGE> 3
any such registration statement, any preliminary prospectus or filed prospectus,
or in 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
will reimburse the Agent and the Banks for any legal or other expenses
reasonably incurred by the Agent and the Banks in connection with investigating
or defending any such loss, claim, damage or liability. The indemnifications
contained in this paragraph shall include each person, if any, who controls the
Agent or any Bank.
4. Events of Default; Remedies. (a) Upon the occurrence of any Event of
Default under the Credit Agreement, an Event of Default shall be deemed to have
occurred hereunder and the Agent shall have all of the rights and remedies
provided by law and/or by this Pledge Agreement, including but not limited to
all of the rights and remedies of a secured party under the Michigan Uniform
Commercial Code, and the Company hereby authorizes the Agent to sell all or any
part of the Pledged Stock at public or private sale and to apply the proceeds of
such sale to the costs and expenses thereof (including the reasonable attorneys'
fees and disbursements incurred by the Agent) and then to the payment of the
other Secured Obligations. Any requirement of reasonable notice shall be met if
the Agent sends such notice to the Company, by registered or certified mail, at
least 5 days prior to the date of sale, disposition or other event giving rise
to the required notice. The Agent or any Bank may be the purchaser at any such
sale. The Company expressly authorizes such sale or sales of the Pledged Stock
in advance of and to the exclusion of any sale or sales of or other realization
upon any other collateral securing indebtedness or other obligations owed to the
Banks. The Agent shall be under no obligation to preserve rights against prior
parties.
(b) The Company hereby waives as to the Agent and the Banks any right
of subrogation or marshalling of such stock and other collateral for
indebtedness or other obligations owed to the Agent and the Banks. To this end,
the Company hereby expressly agrees that any such collateral or other security
of the Company or any other party which the Agent or any Bank may hold, or which
may come to any of their possession, may be dealt with in all respects and
particulars as though this Pledge Agreement were not in existence. The Company
agrees and acknowledges that because of applicable securities laws, the Agent
may not be able to effect a public sale of the Pledged Stock and sales at a
private sale may be on terms less favorable than if such securities were sold at
a public sale and may be at a price less favorable than a public sale. The
Company agrees that all such private sales made under the foregoing
circumstances shall be deemed to have been made in a commercially reasonable
manner.
(c) The Company irrevocably designates, makes, constitutes and
appoints the Agent (and all persons designated by the Agent) as its true and
lawful attorney (and agent-in-fact) and the Agent, or the Agent's agent, may,
upon and after an Event of Default hereunder which has not been waived, with
notice to the Company if the Secured Obligations have not been accelerated and
without notice if the Secured Obligations have been accelerated, take any action
as the Agent reasonably deems necessary under the circumstances to enforce or
otherwise take action in respect to the Pledged Stock as required hereby, or to
carry out any other obligation or duty of the Company under this Agreement. The
Company shall pay all reasonable fees and expenses, including reasonable
attorneys' fees and expenses, incurred by the Agent in connection with such
action.
PLEDGE AGREEMENT AND IRREVOCABLE PROXY
- 3 -
<PAGE> 4
5. Additional Remedies; Irrevocable Proxy. (a) Upon the occurrence of any
Event of Default, the Agent shall have also the right to vote the Pledged Stock
on all questions after giving notice to the Company of its election to exercise
such rights. In the absence of any such Event of Default, the Company shall
have the right to vote the Pledged Stock on all questions, provided that voting
by the Company of the Pledged Stock shall be in conformity with performance of
the obligations of the Company under the Operative Documents.
(b) Whenever an Event of Default has occurred, the Agent may transfer
into its name, or into the name of its nominee or nominees, any or all of the
Pledged Stock and, as provided above, may vote any or all of the Pledged Stock
(whether or not so transferred) and may otherwise act with respect thereto as
though it were the outright owner thereof, the Company hereby irrevocably
constituting and appointing the Agent as the proxy and attorney-in-fact of the
Company, with full power of substitution, to do so.
(c) In furtherance of the foregoing, it is acknowledged that the Agent
may vote the Pledged Stock to remove the directors and officers of any Pledged
Subsidiary, and to elect new directors and officers of any Pledged Subsidiary,
who thereafter shall manage the affairs of such Pledged Subsidiary, operate its
properties and carry on its business and otherwise take any action with respect
to the business, properties and affairs of such Pledged Subsidiary which such
new directors shall deem necessary or appropriate, including, but not limited
to, the maintenance, repair, renewal or alteration of any or all of the
properties of such Pledged Subsidiary, the leasing, subleasing, sale or other
disposition of any or all of such properties, the borrowing of money on the
credit of such Pledged Subsidiary, and the employment of attorneys, agents or
other employees deemed by such new directors to be necessary for the proper
operation, conduct, winding up or liquidation of the business, properties and
affairs of such Pledged Subsidiary, and all revenues from the operation,
conduct, winding up or liquidation of the business, properties and affairs of
such Pledged Subsidiary after the payment of expenses thereof shall be applied
to the payment of the Secured Obligations.
(d) The Company agrees that the proxy granted in this paragraph 5 is
coupled with an interest and is and shall be both valid and irrevocable so long
as the Pledged Stock is subject to this Pledge Agreement. The Company further
acknowledges that the term of said proxy may exceed three years from the date
hereof.
6. Remedies Cumulative. No right or remedy conferred upon or reserved to
the Agent and the Banks under any Operative Document is intended to be exclusive
of any other right or remedy, and every right and remedy shall be cumulative in
addition to every other right or remedy given hereunder or now or hereafter
existing under any applicable law. Every right and remedy of the Agent and the
Banks under any Operative Document or under applicable law may be exercised from
time to time and as often as may be deemed expedient by the Agent and the Banks.
To the extent that it lawfully may, the Company agrees that it will not at any
time insist upon, plead, or in any manner whatever claim or take any benefit or
advantage of any applicable present or future stay, extension or moratorium law,
which may affect observance or performance of any provisions of any Operative
Document; nor will it claim, take or insist upon any benefit or advantage of any
present or future law providing for the valuation or appraisal of any security
for its obligations under any Operative Document prior to any sale or sales
thereof which may be made under or
PLEDGE AGREEMENT AND IRREVOCABLE PROXY
- 4 -
<PAGE> 5
by virtue of any instrument governing the same; nor will it, after any such sale
or sales, claim or exercise any right, under any applicable law to redeem any
portion of such security so sold.
7. Conduct No Waiver. No waiver of default shall be effective unless in
writing executed by the Agent and waiver of any default or forbearance on the
part of the Agent in enforcing any of its rights under this Pledge Agreement
shall not operate as a waiver of any other default or of the same default on a
future occasion or of such right.
8. Governing Law; Definitions. This Pledge Agreement is a contract made
under, and shall be governed by and construed in accordance with, the law of the
State of Michigan applicable to contracts made and to be performed entirely
within such State and without giving effect to choice of law principles of such
State. The Company agrees that any legal action or proceeding with respect to
this Pledge Agreement or the transactions contemplated hereby may be brought in
any court of the State of Michigan, or in any court of the United States of
America sitting in Michigan, and the Company hereby submits to and accepts
generally and unconditionally the jurisdiction of those courts with respect to
its person and property, and irrevocably appoints the Chief Financial Officer of
the Company, at the Company's address set forth in the Credit Agreement, as its
agent for service of process and irrevocably consents to the service of process
in connection with any such action or proceeding by personal delivery to such
agent or to the Company or by the mailing thereof by registered or certified
mail, postage prepaid to the Company at its address set forth in the Credit
Agreement. Nothing in this paragraph shall affect the right of the Agent to
serve process in any other manner permitted by law or limit the right of the
Agent to bring any such action or proceeding against the Company or its property
in the courts of any other jurisdiction. The Company hereby irrevocably waives
any objection to the laying of venue of any such suit or proceeding in the above
described courts. Terms used but not defined herein shall have the respective
meanings ascribed thereto in the Credit Agreement. Unless otherwise defined
herein or in the Credit Agreement, terms used in Article 9 of the Uniform
Commercial Code in the State of Michigan are used herein as therein defined on
the date hereof. The headings of the various subdivisions hereof are for
convenience of reference only and shall in no way modify any of the terms or
provisions hereof.
9. Notices. All notices, demands, requests, consents and other
communications hereunder shall be delivered in the manner described in the
Credit Agreement.
10. Rights Not Construed as Duties. The Agent neither assumes nor shall it
have any duty of performance or other responsibility under any contracts in
which the Agent has or obtains a security interest hereunder. If the Company
fails to perform any agreement contained herein, the Agent may but is in no way
obligated to itself perform, or cause performance of, such agreement, and the
reasonable expenses of the Agent incurred in connection therewith shall be
payable by the Company under paragraph 13. The powers conferred on the Agent
hereunder are solely to protect its interests in the Pledged Stock and shall not
impose any duty upon it to exercise any such powers. Except for the safe
custody of any Pledged Stock in its possession and accounting for monies
actually received by it hereunder, the Agent shall have no duty as to any
Pledged Stock or as to the taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Pledged Stock.
PLEDGE AGREEMENT AND IRREVOCABLE PROXY
- 5 -
<PAGE> 6
11. Amendments. None of the terms and provisions of this Pledge Agreement
may be modified or amended in any way except by an instrument in writing
executed by each of the parties hereto.
12. Severability. If any one or more provisions of this Pledge Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected, impaired or prejudiced thereby.
13. Expenses. (a) The Company agrees to indemnify the Agent from and
against any and all claims, losses and liabilities growing out of or resulting
from this Pledge Agreement (including, without limitation, enforcement of this
Pledge Agreement), except claims, losses or liabilities resulting from the
Agent's gross negligence or willful misconduct.
(b) The Company will, upon demand, pay to the Agent an amount of any
and all reasonable expenses, including the reasonable fees and disbursements of
its counsel and of any experts and agents, which the Agent may incur in
connection with (i) the administration of this Pledge Agreement, (ii) the
custody, preservation, use or operation of, or the sale of, collection from or
other realization upon, any of the Pledged Stock, (iii) the exercise or
enforcement of any of the rights of the Agent hereunder or under the Operative
Documents, or (iv) the failure of the Company to perform or observe any of the
provisions hereof.
14. Successors and Assigns; Termination. This Pledge Agreement shall
create a continuing security interest in the Pledged Stock and shall be binding
upon the Company, its successors and assigns, and inure, together with the
rights and remedies of the Agent hereunder, to the benefit of the Agent and its
successors, transferees and assigns. Upon the payment in full in immediately
available funds of all of the Secured Obligations and the termination of all
commitments to lend under the Operative Documents, the security interest granted
hereunder shall terminate and upon such termination the Agent shall assign,
transfer and deliver without recourse and without warranty the Pledged Stock to
the Company (and any property received in respect thereof) as has not
theretofore been sold or otherwise applied pursuant to the provisions of this
Pledge Agreement.
15. Waiver of Jury Trial. The Agent and the Banks, in accepting this
Pledge Agreement, and the Company, after consulting or having had the
opportunity to consult with counsel, knowingly, voluntarily and intentionally
waive any right any of them may have to a trial by jury in any litigation based
upon or arising out of this Pledge Agreement or any related instrument or
agreement or any of the transactions contemplated by this Pledge Agreement or
any course of conduct, dealing, statements (whether oral or written) or actions
of any of them. Neither the Agent, the Banks, nor the Company shall seek to
consolidate, by counterclaim or otherwise, any such action in which a jury trial
has been waived with any other action in which a jury trial cannot be or has not
been waived. These provisions shall not be deemed to have been modified in any
respect or relinquished by either the Agent and the Banks or the Company except
by a written instrument executed by all of them.
PLEDGE AGREEMENT AND IRREVOCABLE PROXY
- 6 -
<PAGE> 7
IN WITNESS WHEREOF, the Company has caused this Pledge Agreement to be
duly executed as of the day and year first above written.
AETNA INDUSTRIES, INC.
By: /s/ Harold Brown
-----------------------------------------------
Its: Vice President Finance, Chief Financial Officer
-----------------------------------------------
Accepted and Agreed:
NBD BANK, as Agent
By: /s/ Randy Balluff
--------------------------
Its: Senior Vice President
--------------------------
PLEDGE AGREEMENT AND IRREVOCABLE PROXY
- 7 -
<PAGE> 8
SCHEDULE 1
<TABLE>
<CAPTION>
Percentage
of total
Jurisdiction Number of Number of Stock shares of
Name of of Issued Stock Ownership Pledged Percentage
Subsidiary Incorporation Shares Certificates Owned By Subsidiary Owned
- ------------ ------------- ------------ -------------- ------------ --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Aetna Export U.S. Virgin Islands 100 1 Company 100% 100%
Sales Corp.
</TABLE>
PLEDGE AGREEMENT AND IRREVOCABLE PROXY
- 8 -
<PAGE> 1
EXHIBIT 10.8
- --------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
Dated as of August 13, 1996
by and among
AETNA INDUSTRIES, INC.,
MS ACQUISITION CORP.,
AETNA HOLDINGS, INC.
and
AETNA EXPORT SALES CORP.
and
SMITH BARNEY INC.,
SCHRODER WERTHEIM & CO. INCORPORATED
and
FIRST CHICAGO CAPITAL MARKETS, INC.
(as Initial Purchasers)
- --------------------------------------------------------------------------------
$85,000,000
11 7/8% SENIOR NOTES DUE 2006
<PAGE> 2
This Registration Rights Agreement is dated as of August 13, 1996, by
and among Aetna Industries, Inc., a Delaware corporation (the "Company"), MS
Acquisition Corp., a Delaware corporation ("MS Acquisition), Aetna Holdings,
Inc., a Delaware corporation ("Holdings" and, together with MS Acquisition, the
"Guarantors"), Aetna Export Sales Corp., a U.S. Virgin Islands corporation (the
"Subsidiary Guarantor" and, together with the Company and the Guarantors, the
"Issuers"), and Smith Barney Inc., Schroder Wertheim & Co. Incorporated and
First Chicago Capital Markets, Inc. (collectively, the "Initial Purchasers").
This Agreement is made pursuant to the Purchase Agreement, dated
August 8, 1996, among the Issuers and the Initial Purchasers (the "Purchase
Agreement"). In order to induce the Initial Purchasers to enter into the
Purchase Agreement, the Issuers have agreed to provide the registration rights
provided for in this Agreement to the Initial Purchasers and their direct and
indirect transferees and assigns. The execution and delivery of this Agreement
is a condition to the closing of the transactions contemplated by the Purchase
Agreement.
The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following terms shall have the
following meanings:
Additional Interest: As defined in Section 4(a) hereof.
Affiliate: With respect to any specified person, "Affiliate" shall
mean any other person directly or indirectly controlling or controlled by or
under direct or indirect common control with such specified person. For the
purposes of this definition, "control," when used with respect to any person,
means the power to direct the management and policies of such person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise and the terms "affiliated," "controlling" and "controlled" have
meanings correlative to the foregoing.
Agreement: This Registration Rights Agreement, as the same may be
amended, supplemented or modified from time to time in accordance with the terms
hereof.
Business Day: Any day except a Saturday, a Sunday or a day on which
banking institutions in New York, New York generally are required or authorized
by law or other government action to be closed.
Company: As defined in the preamble hereof.
Consummate or consummate: When used to qualify the term "Exchange
Offer", shall mean validly and lawfully to issue and deliver the Exchange Notes
pursuant to the Exchange Offer for all Notes validly tendered and not validly
withdrawn pursuant thereto in accordance with the terms of this Agreement.
<PAGE> 3
-2-
Consummation Date: The date that is 20 Business Days immediately
following the date that the Exchange Registration Statement shall have been
declared effective by the SEC.
Effectiveness Period: As defined in Section 3(a) hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated by the SEC pursuant thereto.
Exchange Date: As defined in Section 2(d) hereof.
Exchange Notes: The 11 7/8% Senior Notes due 2006 of the Company,
guaranteed on a senior basis by each of the Guarantors and the Subsidiary
Guarantor, that are identical to the Notes in all material respects, except that
the provisions regarding restrictions on transfer shall be modified, as provided
in the Indenture (or the indenture pursuant to which the Exchange Notes are
issued), and the issuance thereof pursuant to the Exchange Offer shall have been
registered pursuant to an effective Registration Statement in compliance with
the Securities Act.
Exchange Offer: An offer to issue, in exchange for any and all of the
Notes validly tendered, a like aggregate principal amount of Exchange Notes,
which offer shall be made by the Company pursuant to Section 2 hereof.
Exchange Registration Statement: As defined in Section 2(a) hereof.
Guarantors: As defined in the preamble hereof.
Indemnified Holder: As defined in Section 7(a) hereof.
Indemnified Person: As defined in Section 7(a) hereof.
Indenture: The Indenture, dated as of August 1, 1996, among the
Issuers and Norwest Bank Minnesota, N.A., as trustee thereunder, pursuant to
which the Notes are issued, as amended or supplemented from time to time in
accordance with the terms thereof.
Initial Purchasers: As defined in the preamble hereof.
Issue Date: As defined in Section 2(a).
Issuer Indemnified Persons: As defined in Section 7(c) hereof.
Issuers: As defined in the preamble hereof.
<PAGE> 4
-3-
Notes: The 11 7/8% Senior Notes due 2006 of the Company, guaranteed
on a senior basis by each of the Guarantors and the Subsidiary Guarantor, issued
pursuant to the Indenture.
Participating Broker-Dealer: As defined in Section 2(e) hereof.
Private Exchange: As defined in Section 2(c) hereof.
Private Exchange Notes: As defined in Section 2(c) hereof.
Prospectus: The prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated pursuant to the Securities
Act), as amended or supplemented by any prospectus supplement, with respect to
the terms of the offering of any portion of the Notes, Exchange Notes or Private
Exchange Notes covered by such Registration Statement, and all other amendments
and supplements to any such prospectus, including post-effective amendments, and
all material incorporated by reference or deemed to be incorporated by
reference, if any, in such prospectus.
Registration Default: As defined in Section 4(a) hereof.
Registration Statement: Any registration statement of the Issuers
that covers any of the Notes, Exchange Notes or Private Exchange Notes pursuant
to the provisions of this Agreement, including the Prospectus, amendments and
supplements to such registration statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material incorporated
by reference or deemed to be incorporated by reference, if any, in such
registration statement.
Requesting Participating Broker-Dealer: As defined in Section 2(e)
hereof.
Rule 144(k): Rule 144(k) promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
Rule 144A: Rule 144A promulgated by the SEC pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
Rule 158: Rule 158 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
<PAGE> 5
-4-
Rule 174: Rule 174 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
Rule 415: Rule 415 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
Rule 424: Rule 424 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and the rules
and regulations promulgated by the SEC thereunder.
Shelf Blackout Period: As defined in Section 3(a) hereof.
Shelf Filing Event: As defined in Section 3(a) hereof.
Shelf Registration: As defined in Section 3(a) hereof.
Shelf Registration Statement: As defined in Section 3(a) hereof.
Special Counsel: Cahill Gordon & Reindel, special counsel to the
holders of Transfer Restricted Notes, or such other counsel as shall be agreed
upon by the Issuers and holders of a majority in aggregate principal amount of
Transfer Restricted Notes, the reasonable expenses of which holders of Transfer
Restricted Notes will be reimbursed by the Issuers pursuant to Section 6 hereof.
Subsidiary Guarantor: As defined in the preamble hereof.
TIA: The Trust Indenture Act of 1939, as amended.
Transfer Restricted Note: Each Note, upon original issuance thereof,
and at all times subsequent thereto, each Exchange Note as to which Section
3(a)(ii) hereof is applicable upon original issuance and at all times subsequent
thereto and each Private Exchange Note upon original issuance thereof and at all
times subsequent thereto, until in the case of any such Note, Exchange Note or
Private Exchange Note, as the case may be, the earliest to occur of (i) the date
on which any such Note has been exchanged by a person other than a Participating
Broker-Dealer for an Exchange
<PAGE> 6
-5-
Note (other than with respect to an Exchange Note as to which Section 3(a)(ii)
hereof applies) pursuant to the Exchange Offer, (ii) with respect to Exchange
Notes received by Participating Broker-Dealers in the Exchange Offer, the
earlier of (x) the date on which such Exchange Note has been sold by such
Participating Broker-Dealer by means of the Prospectus contained in the Exchange
Registration Statement and (y) the date on which the Exchange Registration
Statement has been effective under the Securities Act for a period of six months
after the Consummation Date, (iii) a Shelf Registration Statement covering such
Note, Exchange Note or Private Exchange Note has been declared effective by the
SEC and such Note, Exchange Note or Private Exchange Note, as the case may be,
has been disposed of in accordance with such effective Shelf Registration
Statement, (iv) the date on which such Note, Exchange Note or Private Exchange
Note, as the case may be, is eligible for distribution to the public without
volume or manner of sale restrictions pursuant to Rule 144(k) or (v) the date on
which such Note, Exchange Note or Private Exchange Note, as the case may be,
ceases to be outstanding for purposes of the Indenture or any other indenture
under which such Exchange Note or Private Exchange Note was issued.
Trustee: The trustee under the Indenture.
Underwritten registration or underwritten offering: A registration in
connection with which securities are sold to an underwriter for reoffering to
the public pursuant to an effective Registration Statement.
2. Exchange Offer
(a) To the extent not prohibited by any applicable law or applicable
interpretation of the staff of the SEC, the Issuers shall (A) prepare and, on or
prior to 30 days after the date of original issuance of the Notes (the "Issue
Date"), file with the SEC a Registration Statement under the Securities Act with
respect to an offer by the Company to the holders of the Notes to issue and
deliver to such holders, in exchange for Notes, a like principal amount of
Exchange Notes, (B) use their best efforts to cause the Registration Statement
relating to the Exchange Offer to be declared effective by the SEC under the
Securities Act on or prior to 90 days after the Issue Date, and (C) promptly
following the declaration of the effectiveness of the Exchange Registration
Statement, commence the Exchange Offer and use their best efforts to issue, on
or prior to the Consummation Date, the Exchange Notes. The offer and sale of
the Exchange Notes pursuant to the Exchange Offer shall be registered pursuant
to the Securities Act on an appropriate form (the "Exchange Registration
Statement") and duly registered or qualified under all applicable state
securities or Blue Sky laws and will comply with all applicable tender offer
rules and regulations under the Exchange Act and state securities or Blue Sky
laws. The Exchange Offer shall not be subject to any condition, other than that
the Exchange Offer does not violate any applicable law or interpretation of the
staff of the SEC. No securities shall be included in the Exchange Registration
Statement other than the Exchange Notes.
<PAGE> 7
-6-
(b) The Issuers may require each holder of Notes, as a condition to
its participation in the Exchange Offer, to represent to the Issuers and their
counsel in writing (which may be contained in the applicable letter of
transmittal) that at the time of the consummation of the Exchange Offer (i) any
Exchange Notes received by such holder will be acquired in the ordinary course
of its business, (ii) such holder will have no arrangement or understanding with
any person to participate in the distribution (within the meaning of the
Securities Act) of the Exchange Notes and (iii) such holder is not an Affiliate
of an Issuer, or if it is an Affiliate of an Issuer, it will comply with the
registration and prospectus delivery requirements of the Securities Act, to the
extent applicable.
(c) If, prior to consummation of the Exchange Offer, any Initial
Purchaser holds any Notes acquired by it and having, or which are reasonably
likely to be determined to have, based on the written advice of Special Counsel,
the status of an unsold allotment in the initial distribution, or any other
holder of Notes is not entitled, as a matter of law or based on an
interpretation or position of the staff of the SEC, to participate in the
Exchange Offer, the Issuers, upon the request of such Initial Purchaser or any
such holder, shall, simultaneously with the delivery of the Exchange Notes in
the Exchange Offer, issue and deliver to such Initial Purchaser and any such
holder, in exchange (the "Private Exchange") for such Notes held by such Initial
Purchaser and any such holder, a like principal amount of debt securities of the
Issuers that are identical in all material respects to the Exchange Notes (the
"Private Exchange Notes") (and which are issued pursuant to the same indenture
as the Exchange Notes). The Private Exchange Notes shall bear the same CUSIP
number as the Exchange Notes.
(d) Unless the Exchange Offer would not be permitted by any
applicable law or interpretation thereof of the staff of the SEC, the Company
shall mail the Exchange Offer Prospectus and appropriate accompanying documents,
including appropriate letters of transmittal, to each holder of Notes
providing, in addition to such other disclosures as are required by applicable
law:
(i) that the Exchange Offer is being made pursuant to this
Agreement and that all Notes validly tendered will be accepted for
exchange;
(ii) the date of acceptance for exchange (the "Exchange Date"),
which date shall in no event be later than the Consummation Date (unless
otherwise required by applicable law);
(iii) that a holder of a Note electing to have a Note exchanged
pursuant to the Exchange Offer will be required to surrender such Note,
together with the enclosed letters of transmittal, to the institution and
at the address (located in the Borough of Manhattan, The City of New York)
specified in the notice prior to the close of business on the Exchange
Date; and
<PAGE> 8
-7-
(iv) that holders of Notes that do not validly tender all such
securities pursuant to the Exchange Offer may no longer have any
registration rights hereunder with respect to Notes not validly tendered.
Promptly after the Exchange Date, the Company shall:
(i) accept for exchange all Notes or portions thereof validly
tendered and not validly withdrawn pursuant to the Exchange Offer; and
(ii) deliver, or cause to be delivered, to the Trustee for
cancellation all Notes or portions thereof so accepted for exchange by the
Company, and issue, cause the Trustee under the Indenture (or the indenture
pursuant to which the Exchange Notes are issued) to authenticate, and mail
to each holder of Notes, Exchange Notes equal in principal amount to the
principal amount of the Notes surrendered by such holder.
(e) The Issuers and the Initial Purchasers acknowledge that the
staff of the SEC has taken the position that any broker-dealer that elects to
exchange Notes that were acquired by such broker-dealer for its own account as a
result of market-making or other trading activities for Exchange Notes in the
Exchange Offer (a "Participating Broker-Dealer") may be deemed to be an
"underwriter" within the meaning of the Securities Act and must deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resale of such Exchange Notes (other than a resale of an unsold allotment
resulting from the original offering of the Notes).
The Issuers and the Initial Purchasers also acknowledge that it is the
SEC staff's position that if the Prospectus contained in the Exchange
Registration Statement includes a plan of distribution containing a statement to
the above effect and the means by which Participating Broker-Dealers may resell
the Exchange Notes, without naming the Participating Broker-Dealers or
specifying the amount of Exchange Notes owned by them, such Prospectus may be
delivered by Participating Broker-Dealers to satisfy their prospectus delivery
obligations under the Securities Act in connection with resales of Exchange
Notes for their own accounts, so long as the Prospectus otherwise meets the
requirements of the Securities Act.
In light of the foregoing, if requested by a Participating
Broker-Dealer (a "Requesting Participating Broker-Dealer"), the Issuers agree
(x) to use their best efforts to keep the Exchange Registration Statement
continuously effective for a period of up to six months after the Consummation
Date or such earlier date as each Requesting Participating Broker-Dealer shall
have notified the Company in writing that such Requesting Participating
Broker-Dealer has resold all Exchange Notes acquired in the Exchange Offer and
(y) to comply with the provisions of Section 5 of this Agreement, as they relate
to the Exchange Offer and the Exchange Registration Statement.
<PAGE> 9
-8-
(f) The Initial Purchasers shall have no liability to any Requesting
Participating Broker-Dealer with respect to any request made pursuant to Section
2(e).
(g) Interest on the Exchange Notes and the Private Exchange Notes
will accrue from the last interest payment date on which interest was paid on
the Notes surrendered in exchange therefor or, if no interest has been paid on
the Notes, from the Issue Date.
(h) The Exchange Notes and the Private Exchange Notes may be issued
under (i) the Indenture or (ii) an indenture identical in all material respects
to the Indenture, which in either event shall provide that the Exchange Notes
shall not be subject to the transfer restrictions set forth in the Indenture.
The Indenture or such indenture shall provide that the Exchange Notes, the
Private Exchange Notes and the Notes shall vote and consent together on all
matters as one class and that neither the Exchange Notes, the Private Exchange
Notes nor the Notes will have the right to vote or consent as a separate class
on any matter.
3. Shelf Registration
(a) If (i) the Issuers are not permitted to file the Exchange Offer
Registration Statement or to consummate the Exchange Offer because the Exchange
Offer is not permitted by any applicable law or applicable interpretation
thereof by the staff of the SEC or (ii) any holder of a Note notifies the
Company on or prior to the Consummation Date that (A) due to a change in law or
applicable interpretation thereof by the Staff of the SEC it is not entitled to
participate in the Exchange Offer, (B) due to a change in law or applicable
interpretation thereof by the Staff of the SEC it may not resell Exchange Notes
acquired by it in the Exchange Offer to the public without delivering a
prospectus and the Prospectus contained in the Exchange Registration Statement
is not appropriate or available for such resales by such holder or (C) it owns
Notes (including the Initial Purchasers with respect to Notes that may be deemed
to be a part of an unsold allotment from the original offering of the Notes)
acquired directly from an Issuer or an Affiliate of an Issuer or (iii) any
holder of Private Exchange Notes so requests after the consummation of the
Private Exchange or (iv) the Company has not consummated the Exchange Offer by
the Consummation Date and holders of a majority in principal amount of Notes
outstanding so request (each such event referred to in clauses (i) through (iv),
a "Shelf Filing Event"), the Issuers shall cause to be filed with the SEC
pursuant to Rule 415 a shelf registration statement (the "Shelf Registration
Statement") prior to the later of (x) 60 days after the Issue Date or (y) 30
days after the occurrence of such Shelf Filing Event, relating to all Transfer
Restricted Notes (the "Shelf Registration") the holders of which have provided
the information required pursuant to Section 3(b) hereof, and shall use their
best efforts to have the Shelf Registration Statement declared effective by the
SEC on or prior to 90 days after such Shelf Filing Event. In such
circumstances, the Issuers shall use their best efforts to keep the Shelf
Registration Statement continuously effective under the Securities Act, until
(A) 36 months following the Issue Date or (B) if sooner, the date immediately
following the date that all Transfer Restricted Notes covered by the Shelf
Registration Statement have been sold pursuant thereto or
<PAGE> 10
-9-
otherwise cease to be Transfer Restricted Notes (the "Effectiveness Period");
provided that the Effectiveness Period shall be extended to the extent required
to permit dealers to comply with the applicable prospectus delivery requirements
of Rule 174; provided, further, that the Issuers may suspend the effectiveness
of a Shelf Registration Statement, in the event that, and for a period not to
exceed 45 days in any calendar year (a "Shelf Blackout Period") if, (i) an event
occurs and is continuing as a result of which the Shelf Registration Statement
would, in the Company's good faith judgment, contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein not misleading and (ii) if the Company determines in good
faith that the disclosure of such event at such time would have a material
adverse effect on the business, operations or prospects of the Company or (b)
the disclosure otherwise relates to a pending material business transaction
which has not yet been publicly disclosed.
(b) No holder of Transfer Restricted Notes may include any of its
Transfer Restricted Notes in any Shelf Registration Statement pursuant to
Section 3(a) of this Agreement unless and until such holder furnishes to the
Company in writing, within 7 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 Notes shall be entitled to Additional
Interest pursuant to Section 4 hereof unless and until such holder shall have
provided all such reasonably requested information within the time periods set
forth herein. Each holder of Transfer Restricted Notes 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.
4. Additional Interest
(a) The parties hereto agree that the holders of Transfer Restricted
Notes will suffer damages if the Issuers fail to fulfill their obligations
pursuant to Section 2 or Section 3, as applicable, and that it would not be
feasible to ascertain the extent of such damages. Accordingly, in the event
that (i) the applicable Registration Statement is not filed with the SEC on or
prior to the date specified herein for such filing, (ii) the applicable
Registration Statement has not been declared effective by the SEC on or prior to
the date specified herein for such effectiveness after such obligation arises,
(iii) if the Exchange Offer is required to be Consummated hereunder, the Company
has not exchanged Exchange Notes for all Notes validly tendered and not validly
withdrawn in accordance with the terms of the Exchange Offer by the Consummation
Date or (iv) except during a Shelf Blackout Period, the applicable Registration
Statement is filed and declared effective but shall thereafter cease to be
effective or usable in connection with the Exchange Offer or resales of Transfer
Restricted Notes during a period in which it is required to be effective
hereunder without being succeeded immediately by any additional Registration
Statement covering the Notes, the Exchange Notes or the Private Exchange Notes,
as the case may be, which has been filed and declared effective (each such event
referred to in clauses (i) through (iv), a "Registration Default"),
<PAGE> 11
-10-
then the interest rate on Transfer Restricted Notes will increase ("Additional
Interest"), with respect to the first 90-day period immediately following the
occurrence of such Registration Default, by 0.5% per annum and will increase by
an additional 0.5% per annum with respect to each subsequent 90-day period until
such Registration Default has been cured, up to a maximum amount of 2.0% per
annum with respect to all Registration Defaults. Following the cure of a
Registration Default, the accrual of Additional Interest with respect to such
Registration Default will cease and upon the cure of all Registration Defaults
the interest rate will revert to the original rate.
(b) The Company shall notify the Trustee and paying agent under the
Indenture (or the trustee and paying agent under such other indenture under
which any Transfer Restricted Notes are issued) immediately upon the happening
of each and every Registration Default. The Company shall pay the Additional
Interest due on the Transfer Restricted Notes by depositing with the paying
agent (which shall not be the Company for these purposes) for the Transfer
Restricted Notes, in trust, for the benefit of the holders thereof, prior to
11:00 A.M. on the next interest payment date specified by the Indenture (or such
other indenture), sums sufficient to pay the Additional Interest then due. The
Additional Interest due shall be payable on each interest payment date specified
by the Indenture (or such other indenture) to the record holders entitled to
receive the interest payment to be made on such date. Each obligation to pay
Additional Interest shall be deemed to accrue from and including the applicable
Registration Default.
(c) The parties hereto agree that the Additional Interest provided
for in this Section 4 constitutes a reasonable estimate of the damages that will
be suffered by holders of Transfer Restricted Notes by reason of the happening
of any Registration Default.
5. Registration Procedures
In connection with the Issuers' registration obligations hereunder,
the Issuers shall effect such registrations on the appropriate form available
for the sale of the Notes, the Exchange Notes or Private Exchange Notes, as
applicable, to (i) in the case of the Exchange Offer, permit the exchange of
Exchange Notes for Notes in the Exchange Offer and, if applicable, resales of
Exchange Notes by Participating Broker-Dealers and (ii) in the case of a Shelf
Registration, permit the sale of the applicable Transfer Restricted Notes in
accordance with the method or methods of disposition thereof specified by the
holders of such Transfer Restricted Notes, and pursuant thereto the Issuers
shall as expeditiously as reasonably possible:
(a) Furnish to the Initial Purchasers and the holders of the
Transferred Restricted Notes included therein prior to the filing thereof
with the SEC, a copy of the Registration Statement and each amendment
thereto and each supplement, if any, to the prospectus included therein
and, in the event that the Initial Purchasers (with respect to any portion
of an unsold allotment from the original offering) are participating in the
Exchange Offer or the Shelf Registration, shall use reasonable efforts to
reflect in each such document, when so
<PAGE> 12
-11-
filed with the SEC, such comments as the Initial Purchasers or their
Special Counsel reasonably may propose;
(b) Prepare and file with the SEC such amendments, including
post-effective amendments, to each Registration Statement as may be
necessary to keep such Registration Statement continuously effective for
the applicable time period required hereunder; cause the related Prospectus
to be supplemented by any required Prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424; and comply with the
provisions of the Securities Act and the Exchange Act with respect to the
disposition of all securities covered by such Registration Statement
during such period in accordance with the intended methods of disposition
by the sellers thereof set forth in such Registration Statement as so
amended or in such Prospectus as so supplemented;
(c) Notify the holders of Transfer Restricted Notes to be sold or,
in the case of an Exchange Offer, tendered for, their Special Counsel and
the managing underwriters, if any, promptly, and (if requested by any such
person), confirm such notice in writing, (i)(A) when a Prospectus or any
Prospectus supplement or post-effective amendment is proposed to be filed,
and (B) with respect to a Registration Statement or any post-effective
amendment, when the same has become effective, (ii) of any request by the
SEC or any other Federal or state governmental authority for amendments or
supplements to a Registration Statement or related Prospectus or for
additional information, (iii) of the issuance by the SEC, any state
securities commission, any other governmental agency or any court of any
stop order or injunction suspending or enjoining the use of a Prospectus or
the effectiveness of a Registration Statement or the initiation of any
proceedings for that purpose, (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification or
exemption from qualification of any of the Notes, Exchange Notes or Private
Exchange Notes for sale in any jurisdiction, or the initiation or, to the
actual knowledge of any Issuer, threatening of any proceeding for such
purpose, and (v) of the happening of any event or information becoming
known to any Issuer that makes any statement made in a Registration
Statement or related Prospectus or any document incorporated or deemed to
be incorporated therein by reference untrue in any material respect or that
requires the making of any changes in such Registration Statement,
Prospectus or documents so that it will not contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, not misleading, and
that in the case of a Prospectus, it will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(d) Use their best efforts to avoid the issuance of or, if issued,
obtain the withdrawal of any order enjoining or suspending the use of a
Prospectus or the effectiveness of a Registration Statement or the lifting
of any suspension of the qualification (or exemption
<PAGE> 13
-12-
from qualification) of any of the Notes, Exchange Notes or Private Exchange
Notes for sale in any jurisdiction, at the earliest practicable moment;
(e) If a Shelf Registration Statement is filed pursuant to Section 3
hereof and if requested by the managing underwriters, if any, or the
holders of a majority in aggregate principal amount of the Transfer
Restricted Notes being sold pursuant to such Shelf Registration Statement,
(i) promptly incorporate in a Prospectus supplement or post-effective
amendment such information as the managing underwriters, if any, and such
holders reasonably believe should be included therein based on written
advice of counsel to such managing underwriter, if any, and/or Special
Counsel, and (ii) make all required filings of such Prospectus supplement
or such post-effective amendment under the Securities Act as soon as
practicable after the Company has received notification of the matters to
be incorporated in such Prospectus supplement or post-effective amendment;
provided, however, that the Issuers shall not be required to take any
action pursuant to this Section 5(e) that would, in the opinion of counsel
for the Issuers, violate applicable law;
(f) Upon written request to the Company by a holder of Notes,
Exchange Notes or Private Exchange Notes to be exchanged or sold pursuant
to a Registration Statement, their Special Counsel and each managing
underwriter, if any, without charge, furnish at least one conformed copy of
such Registration Statement and each amendment thereto, including financial
statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference, and all exhibits to the extent requested
(including those previously furnished or incorporated by reference) as soon
as reasonably practicable after the filing of such documents with the SEC;
(g) Deliver to each holder of Notes, Exchange Notes or Private
Exchange Notes to be exchanged or sold pursuant to a Registration
Statement, their Special Counsel, and the underwriters, if any, without
charge, as many copies of the Prospectus (including each form of
prospectus) and each amendment or supplement thereto as such persons
reasonably request; and the Issuers hereby consent to the use of such
Prospectus and each amendment or supplement thereto by each of the selling
holders of Transfer Restricted Notes and the underwriters, if any, in
connection with the offering and sale of the Transfer Restricted Notes
covered thereby in accordance with the terms thereof and with U.S. Federal
securities laws and Blue Sky laws covered by such Prospectus and any
amendment or supplement thereto;
(h) Prior to any public offering of Notes, Exchange Notes or Private
Exchange Notes, use their best efforts to register or qualify or cooperate
with the holders of Notes, Exchange Notes or Private Exchange Notes to be
sold or tendered for, the underwriters, if any, and their respective
counsel in connection with the registration or qualification (or exemption
from such registration or qualification) of such Notes, Exchange Notes or
Private Exchange Notes for offer and sale under the securities or Blue Sky
laws of such jurisdictions
<PAGE> 14
-13-
within the United States as any such holder or underwriter reasonably
requests in writing; keep each such registration or qualification (or
exemption therefrom) effective during the period such Registration
Statement is required to be kept effective hereunder and do any and all
other acts or things necessary or advisable to enable the disposition in
such jurisdictions of the Notes, Exchange Notes or Private Exchange Notes
covered by the applicable Registration Statement; provided, however, that
the Issuers shall not be required to (i) qualify generally to do business
in any jurisdiction where they are not then so qualified or (ii) take any
action which would subject them to general service of process or to
taxation in any jurisdiction where they are not so subject;
(i) In connection with any sale or transfer of Transfer Restricted
Notes that will result in such securities no longer being Transfer
Restricted Notes, cooperate with the holders thereof and the managing
underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing Transfer Restricted Notes to be sold, which
certificates shall not bear any restrictive legends and shall be in a form
eligible for deposit with The Depository Trust Company and to enable such
Transfer Restricted Notes to be in such denominations and registered in
such names as the managing underwriters, if any, or such holders may
request at least two Business Days prior to any sale of Transfer Restricted
Notes;
(j) Upon the occurrence of any event contemplated by Section
5(c)(v), as promptly as practicable, prepare a supplement or amendment,
including, if appropriate, a post-effective amendment, to each Registration
Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, and file
any other required document so that, as thereafter delivered, such
Prospectus will not contain 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, in light of the circumstances under which they were
made, not misleading;
(k) Prior to the effective date of the Exchange Registration
Statement, to provide a CUSIP number for the Exchange Notes (and, as
promptly as practicable, the Private Exchange Notes, if applicable);
(l) In connection with a Shelf Registration Statement filed pursuant
to Section 3 hereof, use their best efforts to enter into such agreements
(including an underwriting agreement in form, scope and substance as is
customary in underwritten offerings) and take all such other reasonable
actions in connection therewith (including those reasonably requested by
the managing underwriters, if any, or the holders of a majority in
aggregate principal amount of the Transfer Restricted Notes being sold) in
order to expedite or facilitate the disposition of such Transfer Restricted
Notes, and, whether or not an underwriting agreement is entered into and
whether or not the registration is an underwritten
<PAGE> 15
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registration, (i) make such representations and warranties to the holders
of such Transfer Restricted Notes and the underwriters, if any, with
respect to the business of the Issuers and their subsidiaries (including
with respect to businesses or assets acquired or to be acquired by any of
them), and the Shelf Registration Statement, Prospectus and documents, if
any, incorporated or deemed to be incorporated by reference therein, in
each case, in form, substance and scope as are customarily made by issuers
to underwriters in underwritten offerings, and confirm the same if and when
customarily requested; (ii) use their best efforts to obtain opinions of
counsel to the Issuers and updates thereof relating to the applicable
Registration Statement and the Notes, Exchange Notes or Private Exchange
Notes covered thereby in customary form (which counsel and opinions (in
form, scope and substance) shall be reasonably satisfactory to the managing
underwriters, if any, and Special Counsel to the holders of the Transfer
Restricted Notes being sold), addressed to each selling holder of Transfer
Restricted Notes and each of the underwriters, if any, covering the matters
customarily covered in opinions requested in underwritten offerings and
such other matters as may be reasonably requested by such Special Counsel
and the managing underwriters, if any; (iii) use their best efforts to
obtain customary "cold comfort" letters and updates thereof from the
independent certified public accountants of the Issuers (and, if necessary,
any other independent certified public accountants of any subsidiary of the
Issuers or of any business acquired by an Issuer or any such subsidiary for
which financial statements and financial data is, or is required to be,
included in the Shelf Registration Statement), addressed (where reasonably
possible) to each selling holder of Transfer Restricted Notes and each of
the underwriters, if any, such letters to be in customary form and covering
matters of the type customarily covered in "cold comfort" letters in
connection with underwritten offerings; (iv) if an underwriting agreement
is entered into, the same shall contain customary indemnification
provisions and procedures (or such other provisions and procedures
acceptable to holders of a majority in aggregate principal amount of
Transfer Restricted Notes covered by such Shelf Registration Statement and
the managing underwriters, if any); and (v) deliver such documents and
certificates as may be reasonably requested by the holders of a majority in
aggregate principal amount of the Transfer Restricted Notes being sold,
their Special Counsel and the managing underwriters, if any, to evidence
the continued validity of the representations and warranties made pursuant
to clause (i) above and to evidence compliance with any customary
conditions contained in the underwriting agreement or other agreement
entered into by the Issuers;
(m) In the case of a Shelf Registration, make available for
inspection by a representative of the holders of Transfer Restricted Notes
being sold, any underwriter participating in any such disposition of
Transfer Restricted Notes, and any attorney, consultant or accountant
acting for the holders of a majority in aggregate principal amount of such
Transfer Restricted Notes or such underwriter, at the offices where
normally kept, during reasonable business hours, all relevant financial and
other records, pertinent corporate documents and properties of the Issuers
and their subsidiaries (including with respect to
<PAGE> 16
-15-
businesses and assets acquired or to be acquired to the extent that such
information is available to the Issuers), and cause the officers,
directors, agents and employees of the Issuers and their subsidiaries
(including with respect to businesses and assets acquired or to be acquired
to the extent that such information is available to the Issuers) to supply
all information in each case reasonably requested by any such
representative, underwriter, attorney, consultant or accountant in
connection with such Shelf Registration; provided, however, that such
persons shall first agree in writing with the Company that any information
that is reasonably and in good faith designated by the Company in writing
as confidential at the time of delivery of such information shall be kept
confidential by such persons, unless and to the extent that (i) disclosure
of such information is required by court or administrative order or is
necessary to respond to inquiries of regulatory authorities, (ii)
disclosure of such information is required by law (including any disclosure
requirements pursuant to Federal securities laws in connection with the
filing of the Shelf Registration Statement or the use of any Prospectus),
(iii) such information becomes generally available to the public other than
as a result of a disclosure or failure to safeguard such information by
such person or (iv) such information becomes available to such person from
a source other than the Issuers and their subsidiaries and such source is
not bound by a confidentiality agreement;
(n) Provide an indenture trustee for the Notes and/or the Exchange
Notes and Private Exchange Notes, as the case may be, and cause an
indenture to be qualified under the TIA not later than the effective date
of the first Registration Statement relating to the Notes and/or the
Exchange Notes and Private Exchange Notes, as the case may be; and if such
indenture shall be the Indenture, in connection therewith, cooperate with
the Trustee and the holders of the Notes and/or the Exchange Notes and
Private Exchange Notes, to effect such changes to the Indenture, if any,
as may be required for the Indenture to be so qualified in accordance with
the terms of the TIA; and execute, and use its reasonable efforts to cause
the Trustee to execute, all customary documents as may be required to
effect such changes, and all other forms and documents required to be filed
with the SEC to enable the Indenture to be so qualified in a timely manner;
(o) Comply with all applicable rules and regulations of the SEC and
make generally available to their securityholders earning statements
satisfying the provisions of Section 11(a) of the Securities Act and Rule
158, no later than 45 days after the end of any 12-month period (or 90 days
after the end of any 12-month period if such period is a fiscal year) (i)
commencing at the end of any fiscal quarter in which Transfer Restricted
Notes are sold to underwriters in a firm commitment or reasonable efforts
underwritten offering and (ii) if not sold to underwriters in such an
offering, commencing on the first day of the first fiscal quarter after the
effective date of a Registration Statement, which statement shall cover
said period, consistent with the requirements of Rule 158; and
<PAGE> 17
-16-
(p) Cooperate with each seller of Transfer Restricted Notes covered
by any Registration Statement and each underwriter, if any, participating
in the disposition of such Transfer Restricted Notes and their respective
counsel in connection with any filings required to be made with the
National Association of Securities Dealers, Inc.
The Issuers may require a holder of Transfer Restricted Notes to be
included in a Registration Statement to furnish to the Issuers such information
regarding the distribution of such Transfer Restricted Notes as is required by
law to be disclosed in such Registration Statement and the Issuers may exclude
from such Registration Statement the Transfer Restricted Notes of any holder who
unreasonably fails to furnish such information within a reasonable time after
receiving such request.
If any such Registration Statement refers to any holder by name or
otherwise as the holder of any securities of an Issuer, then such holder shall
have the right to (i) require the insertion therein of language, in form and
substance reasonably satisfactory to such holder, to the effect that the holding
by such holder of such securities is not to be construed as a recommendation by
such holder of the investment quality of the Issuers' securities covered thereby
and that such holding does not imply that such holder will assist in meeting any
future financial requirements of the Issuers, or (ii) in the event that such
reference to such holder by name or otherwise is not required by the Securities
Act, the deletion of the reference to such holder in any amendment or supplement
to the Registration Statement filed or prepared subsequent to the time that such
reference ceases to be required.
In the case of a Shelf Registration pursuant to Section 3 hereof, each
holder of Transfer Restricted Notes agrees by acquisition of such Transfer
Restricted Notes that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 5(c)(ii), 5(c)(iii),
5(c)(iv) or 5(c)(v) hereof, such holder will forthwith discontinue disposition
of such Transfer Restricted Notes covered by such Registration Statement or
Prospectus until such holder's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 5(j) hereof, or until it is advised
in writing by the Company that the use of the applicable Prospectus may be
resumed, and, in either case, has received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated by
reference in such Prospectus.
6. Registration Expenses
All fees and expenses incident to the performance of or compliance
with this Agreement by the Issuers shall be borne by the Issuers whether or not
any Registration Statement is filed or becomes effective and whether or not any
Notes, Exchange Notes or Private Exchange Notes are issued or sold pursuant to
any Registration Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees
<PAGE> 18
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(including, without limitation, fees and expenses (A) with respect to filings
required to be made with the National Association of Securities Dealers, Inc.
and (B) in compliance with securities or Blue Sky laws), (ii) printing expenses
(including, without limitation, expenses of printing certificates for Notes,
Exchange Notes and Private Exchange Notes in a form eligible for deposit with
The Depository Trust Company and of printing Prospectuses), (iii) reasonable
fees and disbursements of counsel for the Issuers and the Special Counsel (not
to exceed one firm of counsel), (iv) fees and disbursements of all independent
certified public accountants referred to in Section 2(e) and Section 5(l)(iii)
hereof (including, without limitation, the expenses of any special audit and
"cold comfort" letters required by or incident to such performance), (v) if
required, the reasonable fees and expenses of any "qualified independent
underwriter" and its counsel as may be required by the rules and regulations of
the National Association of Securities Dealers, Inc., and (vi) fees and expenses
of all other persons retained by the Issuers. In addition, the Issuers shall
pay their internal expenses (including, without limitation, all salaries and
expenses of their respective officers and employees performing legal or
accounting duties) and the expense of any annual audit. Notwithstanding the
foregoing or anything in this Agreement to the contrary, each holder of Transfer
Restricted Notes shall pay all underwriting discounts and commissions of any
underwriters with respect to any Notes, Exchange Notes or Private Exchange Notes
sold by or on behalf of it.
7. Indemnification
(a) The Issuers agree, jointly and severally, to indemnify and hold
harmless (i) each Initial Purchaser, each holder of Notes, Exchange Notes and
Private Exchange Notes and each Participating Broker-Dealer (each such person,
an "Indemnified Holder"), (ii) each person, if any, who controls (within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act) any of the
foregoing (any of the persons referred to in this clause (ii) being hereinafter
referred to as a "controlling person"), and (iii) the respective officers,
directors, partners, employees, representatives and agents of each Initial
Purchaser, each holder of Notes, Exchange Notes and Private Exchange Notes, each
Participating Broker-Dealer and any controlling person (any person referred to
in clause (i), (ii) or (iii) may hereinafter be referred to as an "Indemnified
Person"), from and against any and all losses, claims, damages, liabilities and
judgments arising out of or relating to any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement, Prospectus
or preliminary prospectus or in any amendment or supplement thereto, or arising
out of or relating to any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein (in the case of any Prospectus or preliminary prospectus or supplement
thereto, in light of the circumstances under which they were made) not
misleading, except insofar as such losses, claims, damages, liabilities or
judgments are caused by or arise out of any untrue statement or omission or
alleged untrue statement or omission based upon information relating to any
Indemnified Person furnished in writing to the Issuers by or on behalf of such
Indemnified Person expressly for use therein; provided that the foregoing
indemnity with respect to any preliminary prospectus shall not inure to the
benefit of any Indemnified Person from whom the person asserting such losses,
claims, damages, liabilities and judgments purchased
<PAGE> 19
-18-
securities if such untrue statement or omission or alleged untrue statement or
omission made in such preliminary prospectus is eliminated or remedied in the
Prospectus and a copy of the Prospectus shall not have been furnished to such
person in a timely manner due to the wrongful action or wrongful inaction of
such Indemnified Person.
(b) In case any action shall be brought against any Indemnified
Person, based upon any Registration Statement or any such Prospectus or
preliminary prospectus or any amendment or supplement thereto and with respect
to which indemnity may be sought against the Issuers hereunder, such Indemnified
Person shall promptly notify the Issuers in writing and the Company shall assume
the defense thereof, including the employment of counsel reasonably satisfactory
to such Indemnified Person and payment of all fees and expenses incurred by the
Issuers in the assumption of such defense. Any Indemnified Person shall have
the right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Person, unless (i) the employment of such counsel
shall have been specifically authorized in writing by the Issuers, (ii) the
Company shall have failed to assume the defense and employ counsel or pay all
such fees and expenses of the assumption of such defense or (iii) the named
parties to any such action (including any impleaded parties) include both such
Indemnified Person and an Issuer and such Indemnified Person shall have been
advised by counsel that there may be one or more legal defenses available to it
which are different from or additional to those available to any such Issuer (in
which case the Company shall not have the right to assume the defense of such
action on behalf of such Indemnified Person, it being understood, however, that
the Issuers shall not, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the reasonable fees
and expenses of more than one separate firm of attorneys (in addition to any
local counsel) for all such Indemnified Persons, which firm shall be designated
in writing by such Indemnified Persons, and that all such reasonable fees and
expenses shall be reimbursed as they are incurred upon presentation to the
Issuers of invoices setting forth and describing such fees and expenses in
reasonable detail). The Issuers shall not be liable for any settlement of any
such action effected without their written consent but if settled with the
written consent of the Issuers, the Issuers agree, jointly and severally, to
indemnify and hold harmless each Indemnified Person from and against any loss or
liability by reason of such settlement. No Issuer shall, without the prior
written consent of each Indemnified Person, effect any settlement of any pending
or threatened proceeding in respect of which any Indemnified Person is a party
and indemnity could have been sought hereunder by such Indemnified Person,
unless such settlement includes an unconditional release of such Indemnified
Person from all liability on claims that are the subject matter of such
proceeding.
(c) In connection with any Registration Statement pursuant to which
an Indemnified Holder offers or sells Transfer Restricted Notes, such
Indemnified Holder agrees, severally and not jointly, to indemnify and hold
harmless (i) the Issuers, (ii) each of their respective directors and officers
and (iii) any person controlling an Issuer within the meaning of Section 15 of
<PAGE> 20
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the Securities Act or Section 20 of the Exchange Act (the persons referred to in
clauses (i), (ii) and (iii) hereinafter referred to as "Issuer Indemnified
Persons") from and against any and all losses, claims, damages, liabilities and
judgments arising out of or relating to any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement, Prospectus
or preliminary prospectus or in any amendment or supplement thereto, or arising
out of or relating to any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statement
therein (in the case of any Prospectus or preliminary prospectus or supplement
thereto, in light of the circumstances under which they were made) not
misleading, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions made in a Registration Statement, Prospectus or
preliminary prospectus or in any amendment or supplement thereto in reliance on
and in conformity with written information furnished to any of the Issuers by
such Indemnified Holder expressly for use in such Registration Statement,
Prospectus or preliminary prospectus or in any amendment or supplement thereto.
In any such case in which any action shall be brought against an Issuer
Indemnified Person based on such Registration Statement, Prospectus or
preliminary prospectus or in any amendment or supplement thereto and in respect
of which indemnity may be sought against an Indemnified Holder, such Indemnified
Holder shall have the rights and duties given to the Issuers (except that if an
Issuer shall have assumed the defense thereof, such Indemnified Holder shall not
be required to do so, but may employ separate counsel therein and participate in
the defense thereof but the fees and expenses of such counsel shall be at the
expense of such Indemnified Holder), and the Issuer Indemnified Persons shall
have the rights and duties given to the Indemnified Persons by Section 7(b)
hereof.
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party in respect of any losses, claims, damages,
liabilities or judgments referred to herein, then each indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims,
damages, liabilities and judgments (i) in such proportion as is appropriate to
reflect the relative benefits received by each indemnifying party on the one
hand and the indemnified party on the other hand from the offering of the Notes,
the Exchange Notes or the Private Exchange Notes, as the case may be (it being
expressly understood and agreed that the relative benefits received by the
Issuers from the offering of the Notes, Exchange Notes or Private Exchange
Notes, as the case may be, shall be the amount of the net proceeds received by
the Company from the sale of the Notes to the Initial Purchasers), or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of each indemnifying
party on the one hand and the indemnified party on the other hand in connection
with the statements or omissions which resulted in such losses, claims, damages,
liabilities or judgments, as well as any other relevant equitable
considerations. The relative fault of the each indemnifying party on the one
hand the indemnified party on the other hand shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates to information
supplied
<PAGE> 21
-20-
by an indemnifying party or such indemnified party and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Issuers and the Initial Purchasers agree that it would not be just
and equitable if contribution pursuant to this Section 7(d) were determined by
pro rata allocation (even if all Indemnified Persons were treated as one entity
for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages, liabilities or judgments referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 7, no
Indemnified Person shall be required to contribute any amount in excess of the
amount by which the net proceeds received by it in connection with the sale of
the Notes, Exchange Notes or Private Exchange Notes contemplated by this
Agreement (or, in the case of an underwriter that is an Indemnified Person, the
total underwriting discounts received by such underwriter) exceeds the amount of
any damages which such Indemnified Person 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 Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Indemnified Person's obligations to contribute pursuant to this Section 7(d) are
several in proportion to the respective amount of Notes, Exchange Notes or
Private Exchange Notes included in any such Registration Statement by each
Indemnified Person and not joint.
8. Rule 144A
Each of Issuers shall use its best efforts to file the reports
required to be filed by it under the Securities Act and the Exchange Act in a
timely manner and, if at any time it is not required to file such reports but in
the past had been required to or did file such reports, it will, upon the
request of any holder of Transfer Restricted Notes, make available other
information as required by, and so long as necessary to permit sales of Transfer
Restricted Notes pursuant to Rule 144A. Notwithstanding the foregoing, nothing
in this Section 8 shall be deemed to require an Issuer to register any of its
securities pursuant to the Exchange Act.
9. Underwritten Registrations
If any of the Transfer Restricted Notes covered by any Shelf
Registration are to be sold in an underwritten offering, the investment banker
or investment bankers and manager or managers that will administer the offering
will be selected by the holders of a majority in aggregate principal amount of
the Transfer Restricted Notes included in such offering, subject to the consent
of the Company (which will not be unreasonably withheld or delayed).
<PAGE> 22
-21-
No person may participate in any underwritten registration hereunder
unless such person (i) agrees to sell such Transfer Restricted Notes on the
basis reasonably provided in any underwriting arrangements approved by the
persons entitled hereunder to approve such arrangements and (ii) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such underwriting
arrangements.
10. Miscellaneous
(a) Remedies. In the event of a breach by an Issuer or by a holder
of Notes, Exchange Notes or Private Exchange Notes of any of its obligations
under this Agreement, each holder of Notes, Exchange Notes or Private Exchange
Notes and each Issuer, in addition to being entitled to exercise all rights
granted by law, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement. Notwithstanding the provisions
of Section 4 hereof, the Issuers and each holder of Notes, Exchange Notes and
Private Exchange Notes agree that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach of any of the
provisions of this Agreement and each hereby further agrees that, in the event
of any action for specific performance in respect of such breach, it shall waive
the defense that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Issuers will not enter into any
agreement with respect to their securities that is inconsistent with the rights
granted to the holders of Notes, Exchange Notes and Private Exchange Notes and
Indemnified Persons in this Agreement or otherwise conflicts with the provisions
hereof. Without the written consent of the holders of a majority in aggregate
principal amount of the outstanding Transfer Restricted Notes, the Issuers shall
not grant to any person any rights which conflict with or are inconsistent with
the provisions of this Agreement.
(c) No Piggyback on Registrations. The Issuers shall not grant to
any of their securityholders (other than the holders of Transfer Restricted
Notes in such capacity) the right to include any of their securities in any
Registration Statement other than Transfer Restricted Notes.
(d) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, otherwise than with the prior written consent of the holders
of not less than a majority of the then outstanding aggregate principal amount
of Transfer Restricted Notes; provided, however, that, for the purposes of this
Agreement, Transfer Restricted Notes that are owned, directly or indirectly, by
the Issuers or any of their Affiliates are not deemed outstanding.
Notwithstanding the foregoing, a waiver or consent to depart from the provisions
hereof with respect to a matter that relates exclusively to the rights of
holders of Transfer Restricted Notes whose securities are being sold or tendered
pursuant to a Registration Statement and that does not directly or indirectly
affect the rights of other holders of Transfer Restricted Notes
<PAGE> 23
-22-
may be given by holders of a majority in aggregate principal amount of the
Transfer Restricted Notes being sold or tendered by such holders pursuant to
such Registration Statement; provided, however, that the provisions of this
sentence may not be amended, modified or supplemented except in accordance with
the provisions of the immediately preceding sentence. Notwithstanding the
foregoing, no amendment, modification, supplement, waiver or consent with
respect to Section 7 shall be made or given otherwise than with the prior
written consent of each Indemnified Person affected thereby.
(e) Notices. All notices and other communications provided for
herein shall be made in writing by hand-delivery, next-day air courier,
certified first-class mail, return receipt requested, telex or telecopier:
(i) if to the Issuers, as provided in the Purchase Agreement,
(ii) if to the Initial Purchasers, as provided in the Purchase
Agreement, or
(iii) if to any other person who is then the registered holder of
Notes, Exchange Notes or Private Exchange Notes, to the address of such
holder as it appears in the register therefor of the Company.
Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given: when delivered by hand,
if personally delivered; one Business Day after being timely delivered to a
next-day air courier; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; and when receipt is
acknowledged by the recipient's telecopier machine, if telecopied.
(f) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of each of
the parties and shall inure to the benefit of each holder of Notes, Exchange
Notes and Private Exchange Notes and each Indemnified Person. The Issuers may
not assign any of their rights or obligations hereunder without the prior
written consent of each holder of Transfer Restricted Notes and each Indemnified
Person. Notwithstanding the foregoing, no successor or assignee of an Issuer
shall have any of the rights granted under this Agreement until such person
shall acknowledge its rights and obligations hereunder by a signed written
statement of such person's acceptance of such rights and obligations.
(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.
<PAGE> 24
-23-
(h) Governing Law; Submission to Jurisdiction. THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK.
THE ISSUERS HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY NEW YORK STATE
COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL
COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF
ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND
EACH IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY
AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS.
(i) Severability. The remedies provided herein are cumulative and
not exclusive of any remedies provided by law. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
(j) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof. All
references made in this Agreement to "Section" and "paragraph" refer to such
Section or paragraph of this Agreement, unless expressly stated otherwise.
(k) This Agreement is intended by the parties as a final expression
of their agreement and is 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 Issuers with respect to the Notes, the
Exchange Notes and the Private Exchange Notes. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.
<PAGE> 25
-24-
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of the date first written above.
THE COMPANY:
AETNA INDUSTRIES, INC.
By: /s/ Ueli Spring
--------------------------------
Name: Ueli Spring
Title: President and Chief Executive
Officer
THE GUARANTORS:
MS ACQUISITION CORP.
By: /s/ Ueli Spring
---------------------------------
Name: Ueli Spring
Title: President and Chief Executive
Officer
AETNA HOLDINGS, INC.
By: /s/ Ueli Spring
----------------------------------
Name: Ueli Spring
Title: President and Chief Executive
Officer
THE SUBSIDIARY GUARANTOR:
AETNA EXPORT SALES CORP.
By: /s/ Ueli Spring
-----------------------------------
Name: Ueli Spring
Title: President and Chief Executive
Officer
<PAGE> 26
-25-
THE INITIAL PURCHASERS:
SMITH BARNEY INC.
By: /s/ A. Reid Marsh, Jr.
------------------------------
Name: A. Reid Marsh, Jr.
Title: Director
SCHRODER WERTHEIM & CO. INCORPORATED
By: /s/ James L. Amine
-----------------------------
Name: James L. Amine
Title: Director
FIRST CHICAGO CAPITAL MARKETS, INC.
By: /s/ Evonne W. Taylor
-----------------------------
Name: Evonne W. Taylor
Title: Vice President
<PAGE> 1
EXHIBIT 10.9
EXECUTION COPY
--------------------------------
STOCKHOLDERS AGREEMENT
AMONG
MS ACQUISITION CORP
AND
ITS STOCKHOLDERS
--------------------------------
<PAGE> 2
STOCKHOLDERS AGREEMENT (this "Agreement") dated as of August 13, 1996, by
and among MS Acquisition Corp., a Delaware corporation ("Holding"), Aetna
Holdings, Inc., a Delaware corporation ("Aetna Holdings"), Citicorp Venture
Capital, Ltd., a New York corporation ("CVC"), The Berkshire Fund, a
Massachusetts limited partnership ("Berkshire"), each of the Persons whose names
appear under the heading "Berkshire Group" on the signature pages hereto
(individually, a "Berkshire Group Member" and collectively, the "Berkshire
Group"), The Prudential Insurance Company of America, a New Jersey mutual
insurance company ("Prudential"), Pruco Life Insurance Company, an Arizona
corporation ("Pruco"), and the entities comprising the various retirement
systems listed on the signature pages hereto (the "State of Michigan"; and
together with Berkshire, the Berkshire Group, Prudential and Pruco, the
"Institutional Investors"), each of the individuals whose names appear under the
heading "Former Management Group" on the signature pages hereto (individually, a
"Former Management Group Member" and collectively, the "Former Management
Group"), and each of the individuals whose names appear under the heading
"Management Group" on the signature pages hereto (individually, a "Management
Group Member" and collectively, the "Management Group"). Capitalized terms used
and not otherwise defined herein have the respective meanings ascribed thereto
in Article I.
RECITALS
WHEREAS, Holding, Aetna Holdings, CVC and the Institutional Investors, have
entered into that certain Recapitalization and Stock Purchase Agreement and that
certain Stock Purchase Agreement, each dated as of August 13, 1996
(collectively, the "Recapitalization and Stock Purchase Agreements"), pursuant
to which all of the issued and outstanding capital stock of Holding shall be
owned as set forth in Annex I hereto;
WHEREAS, each of the Stockholders and Holding desires to enter into this
Agreement to regulate certain aspects of their relationship and to provide for,
among other things, restrictions on the transfer or other disposition of
securities of Holding and matters relating to the corporate governance of
Holding and its Subsidiaries.
NOW, THEREFORE, the parties hereto hereby agree as follows:
<PAGE> 3
ARTICLE I
CERTAIN DEFINITIONS
1.1 DEFINED TERMS.
(a) The following capitalized terms, when used in this Agreement,
have the respective meanings set forth below:
"Additional Stockholder" means any Person (other than Aetna Holdings,
any Institutional Stockholder, CVC Stockholder, Former Management
Stockholder or Management Stockholder) to whom Holding issues or sells or
Aetna Holdings sells Restricted Securities after the date hereof other than
pursuant to a public offering registered under the Securities Act, in each
case who has executed a Joinder Agreement as an Additional Stockholder
pursuant to Section 6.2, and its direct and indirect Permitted Transferees,
so long as any such Person shall hold Restricted Securities.
"Aetna Holdings" means Aetna Holdings, Inc., a Delaware corporation
and a wholly-owned subsidiary of Holding, and the owner of all the issued
and outstanding capital stock of the Company.
"Affiliate" means, with respect to any Person, any other Person that
controls, is controlled by or is under common control with such Person. For
the purposes of this definition, "control" (including, with its correlative
meanings, the terms "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
and policies of such Person, whether through the ownership of securities,
by contract or otherwise. For purposes of this Agreement, employees,
officers and directors of CVC and its Affiliates shall be "Affiliates" of
CVC.
"Affirmative Board Vote" means the affirmative vote of at least a
majority of the members of the Board (assuming no vacancies), which
majority shall include, unless the CVC Stockholders have elected in writing
not to designate CVC Nominees, one director who is a CVC Nominee.
"Associate" means, with respect to any Person, (i) any corporation or
organization of which such Person is an officer or partner or is, directly
or indirectly, the beneficial owner of 10 percent or more of any class of
equity securities; (ii) any trust or other estate in which such Person has
a substantial beneficial interest or as to which such Person serves as
trustee or in a similar fiduciary capacity; and (iii) any relative or
spouse of such
-2-
<PAGE> 4
of such Person, or any relative of such spouse, who has the same home as
such Person or who is a director or officer of such Person or any of its
parents or subsidiaries.
"Berkshire Stockholder" means Berkshire, each Berkshire Group Member
and each of their respective direct and indirect Permitted Transferees, so
long as any such Person shall hold Restricted Securities.
"Board" means the Board of Directors of Holding.
"Cause" means, with respect to a Management Stockholder or Additional
Stockholder, (i) a material breach by such Management Stockholder or
Additional Stockholder of this Agreement, the Individual Investor
Agreement, or any employment or confidentiality agreement to which such
Management Stockholder is a party or (ii) the commission by such Management
Stockholder of a felony, a crime involving moral turpitude or other act
causing material harm to the standing and reputation of Holding or any of
its Subsidiaries.
"Certificate" means the Certificate of Incorporation of Holding, as
the same may be amended and restated as of the Closing Date and as the same
thereafter may be amended or restated from time to time.
"Class A Common" means Holding's newly issued Class A Common Stock,
par value $.01 per share, and any securities into which such Class A Common
shall have been changed or any securities resulting from any
reclassification or recapitalization of such Class A Common.
"Class B Common" means Holding's newly issued Class B Common Stock,
par value $.01 per share, and any securities into which such Class B Common
shall have been changed or any securities resulting from any
reclassification or recapitalization of such Class B Common.
"Closing Date" is the date on which the Closings under the
Recapitalization and Stock Purchase Agreements occur.
"Commission" means the Securities and Exchange Commission and any
other similar or successor agency of the federal government administering
the Securities Act or the Exchange Act.
"Common Stock" means the Class A Common and the Class B Common, any
securities into which such Class A Common or Class B Common shall have been
changed or any securities resulting from any reclassification or
recapitalization of such Class A Common or Class B Common, and all other
securities of any class or classes (however designated) of Holding the
holders of which have the right, without limitation
-3-
<PAGE> 5
as to amount, after payment on any securities entitled to a preference on
dividends or other distributions upon any dissolution, liquidation or
winding-up, either to all or to a share of the balance of payments upon
such dissolution, liquidation or winding-up.
"Company" means Aetna Industries, Inc., a Delaware corporation.
"Company Value" shall mean the fair market value of Holding and its
Subsidiaries on a consolidated basis, as determined by the Board. In
making such determination of fair market value, except as set forth in the
proviso at the end of this sentence, there shall be no discount to reflect
the fact that there is no public market for the Restricted Securities or
that any shares are subject to any restrictions on transferability or
constitute less than 50% of the total number of Common Stock Equivalents
on a Diluted Basis or otherwise do not provide the holder with voting
control; provided, that in making its determination of fair market value
the Board shall take into account the value of the business of Holding and
its Subsidiaries as a whole rather than by reference to a public market
valuation if the Board determines that Holding cannot effect an initial
public offering of its Common Stock within a reasonable period of time
following the date of such determination.
"CVC Stockholders" means CVC, and each of its direct and indirect
Permitted Transferees, so long as any such Person shall hold Restricted
Securities.
"Debentures" means Aetna Holdings' Junior Subordinated Notes due 2007.
"Diluted Basis" means, with respect to the calculation of the number
of shares of Common Stock, (i) all shares of Common Stock outstanding at
the time of determination (other than shares of Common Stock owned by
Aetna Holdings) and (ii) all shares of Common Stock issuable upon exercise
of the Options.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission thereunder.
"Fair Market Value" means, with respect to each share of Common Stock
as of a particular date, the average of the closing prices of such Common
Stock on the New York Stock Exchange, Inc., on each of the thirty (30)
trading days next preceding such date or, if such Common Stock is not then
listed or admitted to trading on such exchange, on the principal national
securities exchange on which such Common Stock is listed or admitted to
trading or, if not listed or admitted to trading on any national
securities exchange, on the Nasdaq National Market, or if such Common
Stock is not then listed or admitted to trading on a national securities
exchange or quoted on the Nasdaq National Market, the average of the
closing bid and asked prices in the over-the-counter market as furnished
by any New York Stock Exchange member firm selected by Holding or if no
such prices are available, the fair market value per share as determined
in good faith by
-4-
<PAGE> 6
the Board acting by Affirmative Board Vote; and (ii) with respect to the
Series A Preferred, the fair market-value per share as determined in good
faith by the Board acting by Affirmative Board Vote.
"Former Management Stockholders" means the Former Management Group and
each of their direct or indirect Permitted Transferees, so long as such
Persons shall hold Restricted Securities.
"Funded Debt" means, without duplication, with respect to any Person
(i) all indebtedness for borrowed money or for the deferred purchase price
of property, (ii) the face amount of all letters of credit, banker's
acceptances and other credit facilities issued for the account of such
Person and, without duplication, all drafts drawn thereunder, (iii) all
liabilities secured by any lien on any property owned by such Person, to
the extent attributable to such Person's interest in such property, even
though such Person has not assumed or become liable for the payment
thereof, (iv) lease obligations of such Person which, in accordance with
generally accepted accounting principles, should be capitalized, (v)
obligations with respect to any conditional sale agreement or title
retention agreement and (vi) guarantees by such Person of the Funded Debt
of another Person; but excluding in each case trade and other accounts
payable in the ordinary course of business.
"Institutional Stockholder" means Berkshire, the Berkshire Group,
Prudential, Pruco, the State of Michigan and each of their respective
direct and indirect Permitted Transferees, if any, so long as any such
Person shall hold Restricted Securities.
"Institutional Investor Agreement" means the Institutional Investor
Agreement dated as of the date hereof among Holding and the Institutional
Stockholders.
"Individual Investor Agreement" means the Individual Investor
Agreement dated as of the date hereof among Holding and certain of the
Institutional Stockholders which are natural Persons.
"Involuntary Transfer" means, with respect to Restricted Securities of
any Management Stockholder or Additional Stockholder, any involuntary
Transfer or Transfer by operation of law of such Restricted Securities
(other than to a Permitted Transferee of such Management Stockholder or
Additional Stockholder) by or in which such Management Stockholder or
Additional Stockholder shall be deprived or divested of any right, title
or interest in or to Restricted Securities, including, without limitation,
by seizure under levy of attachment or execution, by foreclosure upon a
pledge, in connection with any voluntary or involuntary bankruptcy or
other court proceeding to a debtor in possession, trustee in bankruptcy or
receiver or other officer or agency, pursuant to any statute pertaining to
escheat or abandoned property, pursuant to a divorce or separation
agreement or a final decree of a court in a divorce action, upon or
-5-
<PAGE> 7
occasioned by the incompetence of any Management Stockholder or Additional
Stockholder and to a legal representative of any Management Stockholder or
Additional Stockholder.
"Joinder Agreement" means a Joinder Agreement substantially in the
form attached hereto as Exhibit A.
"Lien" means any lien, claim, change, encumbrance, security interest
or other adverse claim of any kind.
"Management Stockholders" means the Management Group and their
respective Permitted Transferees, so long as any such Person shall hold
Restricted Securities.
"New Common Stock" means any Common Stock or any security exercisable,
exchangeable or convertible for or into Common Stock ("Common Stock
Equivalents"), other than any (i) Common Stock and Common Stock Equivalents
issued in connection with any stock split, stock dividend or
reclassification of any Restricted Securities or Common Stock Equivalents;
(ii) Common Stock or Common Stock Equivalents issuable in a public offering
registered under the Securities Act; or (iii) Common Stock or Common Stock
Equivalents issuable upon conversion of the Class A Common or Class B
Common or upon exercise of the Options.
"Officer's Certificate" means a certificate signed by the Chief
Financial Officer of Holding stating that (i) the officer signing such
certificate has made or has caused to be made such investigations as are
necessary in order to permit him to verify the accuracy of the information
set forth in such certificate or any documents accompanying such
certificate and (ii) such certificate does not misstate any material fact
and does not omit to state any fact necessary to make the certificate not
misleading.
"Options" means the granted and outstanding vested Options to purchase
an aggregate of 100,000 shares of Common Stock to the Management
Stockholders pursuant to the Option Plan and any Options issued upon
subdivision or combination, or in substitution thereof.
"Option Plan" means that certain Option Plan Agreement dated as of
August 13, 1996, and the individual grants dated as of even date therewith
between Holding and certain Management Stockholders.
"Original Cost" means, (i) as to each share of Common Stock purchased
or otherwise acquired from Holding or owned by any Stockholder on the
Closing Date, $1.419520803; (ii) as to each share of Common Stock purchased
or otherwise acquired from Holding after the Closing Date, the price paid
to Holding therefor, in each case appropriately adjusted to reflect all
stock splits, stock dividends, recapitalizations or
-6-
<PAGE> 8
similar events affecting the Common Stock subsequent to the date of
purchase thereof, (iii) as to each share of Series A Preferred purchased or
otherwise acquired from Holding or owned on the Closing Date, $100.00 and
(iv) as to each share of Series A Preferred purchased or otherwise acquired
from Holding after the Closing Date, the price paid to Holding therefor in
each case appropriately adjusted to reflect all stock splits, stock
dividends, recapitalizations or similar events affecting the Series A
Preferred subsequent to the date of purchase thereof.
"Permitted Transferee" means:
(i) as to any Stockholder who is a natural person, (a) the spouse
or any lineal descendant (including by adoption) of such Stockholder,
or (b) any trust (i) (including a charitable trust) of which such
Stockholder is the trustee or (ii) which is established solely for the
benefit of any such Stockholder or such Stockholder's spouse or any
lineal descendant (including by adoption) and in the case of each of
(b)(i) or (b)(ii) above the terms of any such trust is not
inconsistent with the terms of this Agreement, or (c) any partnership
whose terms are not inconsistent with the terms of this Agreement, the
general partner(s) and limited partner(s) (if any) of which are one or
more Persons identified in this clause (i)(a);
(ii) as to any CVC Stockholder, any other CVC Stockholder; any
director, officer, employee, representative, general partner or
limited partner, Associate or Affiliate of CVC; any director, officer,
employee, representative, general partner or limited partner of any
such Affiliate; and any trust, a majority in interest of the
beneficiaries of which, or corporation or partnership, a majority in
interest of the stockholders or limited partners of which, or
partnership, the managing general partner of which, are (or is) one or
more of the Persons identified in this clause (ii), the spouse of any
such Person and/or such Person's lineal descendants (including by
adoption); or, if it would be impracticable or not advisable, in the
good faith opinion of CVC to transfer Restricted Securities to such
Persons named above, to any other Person in order to avoid a
Regulatory Problem;
(iii) as to any Institutional Stockholder, any Affiliate or
Associate of such Institutional Stockholder; provided, that with
respect to the State of Michigan, Permitted Transferee also means any
successor fiduciary for the State of Michigan;
(iv) as to any Berkshire Stockholder, any other Berkshire
Stockholder; any director, officer, employee, general partner or
limited partner, or Affiliate of Berkshire; any director, officer,
employee, general partner or limited partner of any such Affiliate;
and any trust, a majority in interest of the
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beneficiaries of which, or corporation or partnership, a majority in
interest of the stockholders or limited partners of which, or
partnership, the managing general partner of which, are (or is) one or
more of the Persons identified in this clause (ii), the spouse of any
such Person and/or such Person's lineal descendants (including by
adoption); and
(v) as to Prudential and Pruco, any trust managed by Prudential.
"Person" means an individual, partnership, corporation, trust,
unincorporated organization, limited liability company, joint venture,
government (or agency or political subdivision thereof) or any other entity
of any kind.
"Pro Rata" means, with respect to one or more Stockholders or Option
holders, (i) as it relates to Common Stock, in proportion to the number of
shares of Common Stock on a Diluted Basis owned by such Stockholder or
Stockholders or which may be acquired by any Stockholder or Stockholders or
by any Option holder or Option holders pursuant to any Option, and (ii) as
it relates to Series A Preferred, in proportion to the number of shares of
Series A Preferred, owned by such Stockholder or Stockholders.
"Pruco Stockholder" means Pruco and each of its Permitted Transferees,
so long as any such Person shall hold Restricted Securities.
"Prudential Stockholder" means Prudential and each of its Permitted
Transferees, so long as any such Person shall hold Restricted Securities.
"Qualifying Offering" means the consummation of an underwritten
primary or secondary public offering of Common Stock pursuant to an
effective registration statement under the Securities Act as a result of
which (together with any prior public offering of Common Stock registered
under the Securities Act) Holding raises at least $20 million of aggregate
gross proceeds to the Company.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date hereof, among Holding and the parties
hereto, as the same may be amended from time to time.
"Restricted Securities" means the Common Stock, the Series A Preferred
and the Options, and any securities issued with respect thereto as a result
of any stock dividend, stock split, reclassification, recapitalization,
reorganization, merger, consolidation or similar event or upon the
conversion, exchange or exercise thereof.
"Sale of the Company" means the sale of Holding, Aetna Holdings or the
Company (whether by merger, consolidation, recapitalization,
reorganization, sale of securities, sale of assets or otherwise) in one
transaction or a series of related transactions
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to a Person or Persons that is not an Affiliate of CVC pursuant to
which such Person or Persons (together with its Affiliates) acquires
(i) securities representing at least a majority of the voting power of
all securities of Holding or the Company, assuming the conversion,
exchange or exercise of all securities convertible, exchangeable or
exercisable for or into voting securities, or (ii) all or
substantially all of Holding's or the Company's assets; provided that
a merger or consolidation of Aetna Holdings into or with Holding or
the Company shall not constitute a Sale of the Company.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder.
"Senior Debt" means (i) the "Obligations" as such term is defined
in the guaranties by Holding or any of its Subsidiaries, including
without limitation any interest accruing on any Obligation after the
date of filing of a petition in any bankruptcy, insolvency,
arrangement, reorganization and receivership proceeding involving
Holding or any of its Subsidiaries (or any other obligor with respect
to the underlying debt), whether or not such interest is an allowed
claim in such proceeding, and (ii) any and all refundings, renewals,
refinancings, replacements and extensions of any Senior Debt described
in clause (i) above, whether or not with the original lender or
holders thereof.
"Series A Preferred" means Holding's Series A Preferred Stock,
par value $.01 per share.
"Significant Transaction" means: (i) any merger, consolidation
or other business combination of Holding or any of its Subsidiaries
with or into any Person or any formation by Holding or any of its
Subsidiaries of any Subsidiary; (ii) any sale, lease, exchange or
other disposition by Holding or any of its Subsidiaries of a
significant portion of Holding's assets on a consolidated basis, in a
single transaction or a series of related transactions, to or with any
Person; (iii) any amendment to or modification or repeal of any
provision of the Restated Certificate of Incorporation or the By-Laws
of Holding; (iv) any acquisition by Holding or any of its Subsidiaries
of securities or assets, in a single transaction or a series of
related transactions, if such securities or assets will represent a
significant portion of the total assets of Holding, as reflected on
Holding's most recent consolidated balance sheet, as such is
determined in accordance with the generally accepted accounting
principles used to prepare such balance sheet; (v) any increase or
reduction of the capital of Holding or any of its Subsidiaries or the
creation of any additional class of capital stock of Holding or any of
its Subsidiaries, or the issuance, except pursuant to the terms of the
Series A Preferred or the Debentures, by Holding or any of its
Subsidiaries of capital stock or securities convertible, exercisable
or exchangeable for or into shares of capital stock on a basis other
than pro rata to the holders of capital stock other than (A) the
issuance of Common Stock upon the exercise of securities exercisable,
convertible or exchangeable for or into Common Stock where the
issuance of such securities has been approved by Affirmative Board
Vote and (B) the
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issuance of Common Stock upon the conversion of any class of Common
Stock; (vi) the incurrence after the Closing Date by Holding or any of
its Subsidiaries of Funded Debt or any modification or amendment to
any agreement governing the extension thereof (other than any
incurrence pursuant to the terms of an agreement previously approved
by the Board by Affirmative Board Vote); (vii) the dissolution of
Holding, the adoption of a plan of liquidation by Holding, any action
by Holding to commence any suit, case, proceeding or other action (A)
under any existing or future law of any jurisdiction relating to
bankruptcy, insolvency, reorganization or relief of debtors seeking to
have an order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it, or (B) seeking
appointment of a receiver, trustee, custodian or other similar
official for it or for all or any substantial part of its assets, or
making a general assignment for the benefit of its creditors; and
(viii) any transaction or dealing between Holding or any of its
Subsidiaries and one or more of its Stockholders not entered into in
the ordinary course of business on an arm's-length basis.
"State of Michigan Stockholder" means the State of Michigan and
each of its Permitted Transferees, so long as they hold Restricted
Securities.
"Stockholders" means each of the CVC Stockholders, the
Institutional Stockholders, the Former Management Stockholders, the
Management Stockholders and the Additional Stockholders.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, association or other business entity of which (i) if a
corporation, a majority of the total voting power of shares of 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 that Person or
one or more of the other Subsidiaries of that Person or a combination
thereof, or (ii) if a partnership, association or other business
entity, a majority of the partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or
indirectly, by any Person or one or more Subsidiaries of that Person
or a combination thereof. For purposes hereof, a Person or Persons
shall be deemed to have a majority ownership interest in a
partnership, association or other business entity if such Person or
Persons shall be allocated a majority of partnership, association or
other business entity gains or losses or shall be or control the
managing director or general partner of such partnership, association
or other business entity.
"Transfer" means, directly or indirectly, any sale, transfer,
assignment, hypothecation, pledge or other disposition of any
Restricted Securities or any interests therein.
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(b) Unless otherwise provided herein, all accounting terms used
in this Agreement shall be interpreted in accordance with generally
accepted accounting principles as in effect from time to time, applied on a
consistent basis.
(c) The following terms, when used in this Agreement, shall have
the meanings defined for such terms in the Section set forth below:
Term Section
---- --------
"Acceptance Date" 7.1
"Acceptance Notice" 7.1
"Agreement" Preamble
"Article III Offer" 3.1(a)
"Berkshire Group" Preamble
"Berkshire Group Member" Preamble
"Buyer" 3.1(a)
"Common Stock Equivalents" 1.1
"Company" 1.1
"CVC" Preamble
"CVC Nominee" 5.1(a)
"CVC Nominees" 5.1(a)
"CVC Observer" 5.6
"Disinterested Director Nominee" 5.1(a)
"Disinterested Director Nominees" 5.1(a)
"Former Management Group" Preamble
"Former Management Group Member" Preamble
"Holding" Preamble
"Holding Designee" 4.1
"Holding Notice" 2.5(b)
"Inclusion Notice" 3.1(a)
"Inclusion Right" 3.1(b)
"Institutional Investors" Preamble
"Institutional Observer" 5.6
"Management Group" Preamble
"Management Group Member" Preamble
"Management Nominee" 5.1(a)
"Management Representative" 5.4
"New Common Stock Notice" 7.1
"New Common Stock Offer" 7.1
"New Common Stock Offerees" 7.1
"New Common Stock Units" 7.1
"Nominating Committee" 5.1(a)
"Nominee" 5.1(a)
"Nominees" 5.1(a)
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<PAGE> 13
"Notice of Intention" 2.5(a)
"Observer" 5.6
"Offer Price" 2.5(a)
"Offered Securities" 2.5(a)
"Offerees" 3.1(a)
"Prospective Buyers" 2.5(a)
"Prospective Buyer Notice" 2.5(c)
"Pruco" Preamble
"Prudential" Preamble
"Purchase Notice" 4.1
"Recapitalization and Stock Purchase Agreements" Recitals
"Regulatory Problem" 6.4(c)
"Regulatory Right" 5.9
"Resale" 4.6(a)
"Resale Closing" 4.6(c)
"Resale Closing Date" 4.6(c)
"Resale Price" 4.6(a)
"Sale Event" 4.1
"Sale Event Acceptance Date" 4.5
"Sale Event Agent" 4.1
"Sale Event Notice" 4.5
"Sale Event Offer" 4.5
"Sale Event Purchasers" 4.1
"Sale Event Stock" 4.5
"Sell Notice" 4.6(b)
"Sellers" 4.1
"Selling Stockholder" 2.5(a)
"State of Michigan" Preamble
"Third Party" 2.5(e)
"Transferor" 3.1(a)
"Transferor Shares" 3.1(a)
ARTICLE II
TRANSFERS OF RESTRICTED SECURITIES
2.1 RESTRICTIONS GENERALLY; SECURITIES ACT. (a) Each Stockholder agrees
that it will not, directly or indirectly, Transfer any Restricted Securities
except in accordance with the terms of this Agreement. Any attempt to Transfer
any Restricted Securities not in accordance with the terms of this Agreement
shall be null and void and neither the issuer of such securities
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nor any transfer agent of such securities shall give any effect to
such attempted Transfer in its stock records.
(b) Each Stockholder agrees that, in addition to the other
requirements herein, it will not Transfer any Restricted Securities except
pursuant to an effective registration statement under the Securities Act, or
upon receipt by Holding of an opinion of counsel to the Stockholder reasonably
satisfactory to Holding or, if agreed by the Board, counsel to Holding, or a
no-action letter from the Commission addressed to Holding, to the effect that no
registration statement is required because of the availability of an exemption
from registration under the Securities Act.
2.2 LEGEND. (a) Each certificate representing Restricted
Securities shall be endorsed with the following legends and such other legends
as may be required by applicable state securities laws:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO THE RESTRICTIONS, RIGHTS TO REPURCHASE AND TO REQUIRE
TRANSFERS CONTAINED IN THE STOCKHOLDERS AGREEMENT, DATED AS
OF AUGUST 13, 1996 AMONG MS ACQUISITION CORP. (THE
"COMPANY") AND ITS STOCKHOLDERS, AS MAY BE AMENDED FROM TIME
TO TIME AND MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF (A "TRANSFER") EXCEPT
IN ACCORDANCE WITH THE PROVISIONS THEREOF, AND ANY
TRANSFEREE OF THESE SECURITIES SHALL BE SUBJECT TO THE TERMS
OF SUCH AGREEMENT AND THE RECAPITALIZATION AND STOCK
PURCHASE AGREEMENT DATED AS OF AUGUST 13, 1996 AMONG THE
COMPANY AND THE OTHER PARTIES THERETO, AND THE STOCK
PURCHASE AGREEMENT DATED AS OF AUGUST 13, 1996 AMONG THE
COMPANY AND THE OTHER PARTIES THERETO AS SUCH AGREEMENTS MAY
BE AMENDED OR MODIFIED FROM TIME TO TIME. COPIES OF THE
STOCKHOLDERS AGREEMENT, THE RECAPITALIZATION AND STOCK
PURCHASE AGREEMENT AND THE STOCK PURCHASE AGREEMENT, EACH AS
AMENDED, ARE MAINTAINED WITH THE CORPORATE RECORDS OF THE
COMPANY AND ARE AVAILABLE FOR INSPECTION AT THE PRINCIPAL
EXECUTIVE OFFICES OF THE COMPANY.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR STATE SECURITIES LAWS, AND NO TRANSFER OF THESE
SECURITIES MAY BE MADE EXCEPT
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<PAGE> 15
(A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT OR (B) PURSUANT TO AN EXEMPTION THEREFROM WITH
RESPECT TO WHICH THE COMPANY MAY REQUIRE AN OPINION OF COUNSEL
FOR THE HOLDER THAT SUCH TRANSFER IS EXEMPT FROM THE REQUIREMENTS
OF THE ACT, AS PROVIDED BY THE TERMS OF THE STOCKHOLDERS AGREEMENT
DESCRIBED ABOVE.
THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE
PARTICIPATING, OPTIONAL OR OTHER SPECIAL RIGHTS, AND THE
QUALIFICATIONS, LIMITATIONS, OR RESTRICTIONS OF SUCH
PREFERENCES AND/OR RIGHTS OF EACH CLASS OR SERIES OF CAPITAL
STOCK OF THE COMPANY ARE SET FORTH IN THE CERTIFICATE OF
INCORPORATION. THE CORPORATION WILL FURNISH A COPY OF THE
CERTIFICATE OF INCORPORATION TO THE HOLDER OF THIS
CERTIFICATE WITHOUT CHARGE UPON REQUEST.
(b) Any certificate issued at any time in exchange or
substitution for any certificate bearing such legends (except a new certificate
issued upon the completion of a Transfer pursuant to a registered public
offering under the Securities Act and made in accordance with the Securities
Act) shall also bear such legends, unless in the opinion of counsel for Holding,
the Restricted Securities represented thereby are no longer subject to the
provisions of this Agreement or the restrictions imposed under the Securities
Act or state securities laws, in which case the applicable legend (or legends)
shall at the request of Holder be removed.
2.3 LIMITATIONS ON REPURCHASES, DIVIDENDS, ETC. Each Stockholder
understands that Holding is entering or has entered into certain financing
agreements which will or do contain prohibitions, restrictions and limitations,
among other things, on the ability of Holding to purchase any Restricted
Securities (whether pursuant to this Agreement or otherwise), to pay dividends
and to waive, modify or discharge any rights or obligations under this
Agreement.
2.4 TRANSFERS BY INSTITUTIONAL STOCKHOLDERS, FORMER MANAGEMENT
STOCKHOLDERS, MANAGEMENT STOCKHOLDERS AND ADDITIONAL STOCKHOLDERS. Each of the
Institutional Stockholders, each of the Management Stockholders and each of the
Additional Stockholders severally agree that it will not Transfer any
Restricted Securities, except (a) to a Permitted Transferee who shall have
executed a Joinder Agreement and thereby become a party to this Agreement; (b)
with the approval of the Board acting by Affirmative Board Vote, including,
without limitation, pursuant to a merger or consolidation of Holding; (c)
pursuant to the exercise of any rights such Stockholder may have under the
Registration Rights Agreement; (d) to any CVC Stockholder; (e) subject to
Section 8.9, any Institutional Stockholder may Transfer Restricted Securities to
any other Institutional Stockholder; (f) pursuant to Section 2.6
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<PAGE> 16
or 2.7, Article III (in the capacity of an Offeree thereunder) or, with respect
to Management Stockholders and Additional Stockholders, Article IV; (g) pursuant
to Section 2.5 (and to the extent applicable in the capacity of a Transferor
under Article III); provided, however, that none of the Management Stockholders
or Additional Stockholders shall Transfer any Restricted Securities pursuant to
Section 2.5 (or as a Transferor under Article III) for a period of five years
following the Closing Date, and none of the Management Stockholders or
Additional Stockholders shall transfer any Options except pursuant to Section
2.6, 2.7 or 3.2 or Article IV, (h) after August 13, 2006; or (i) after a Sale of
the Company. Notwithstanding anything to the contrary contained herein, no
Transfer (including without limitation any Involuntary Transfer but excluding
any Transfer made in accordance with this Agreement in connection with a Sale of
the Company) or entry into any agreement or arrangements with respect to
Transfer or the exercise of rights under Article V hereof (including without
limitation any agreement or arrangement entered into by the Management
Stockholders which would cause the Management Stockholders to cease to have the
full right and power to designate the Management Director) by an Institutional
Stockholder, Former Management Stockholder, Management Stockholder or Additional
Stockholder of Restricted Securities will be permitted or will be effective
(other than pursuant to Inclusion Rights exercised in connection with a Transfer
by the Institutional Stockholders and the Former Management Stockholders,
pursuant to the exercise of an Article III Offer by the Institutional
Stockholders or the Former Management Stockholders (as the case may be) or in
connection with any registered public offering) to the extent such Transfer,
agreement or other arrangement would result in (i) a change of control, event of
default or other prepayment obligation by Holding (or any of its Subsidiaries)
under (A) any agreement or instrument evidencing Senior Debt or the Series A
Preferred or (B) any successor agreement or instrument with respect to Senior
Debt that contains such a provision which is no more restrictive of the rights
of any Institutional Stockholder, Former Management Stockholder, Management
Stockholder or Additional Stockholder (as the case may be) to transfer the
securities of Holding or any Subsidiary than the most restrictive provision
contained in the agreements and instruments referred to in clause (A) above or
(ii) the Management Stockholders no longer having the right to designate the
Management Director pursuant to Section 5.1 by virtue of their ownership of
shares of Restricted Securities.
2.5 RIGHT OF FIRST OFFER. (a) Except for Transfers permitted pursuant to
clauses (a) (i) through (vi) of Section 2.4, if any Institutional Stockholder,
Former Management Stockholder, Management Stockholder or Additional Stockholder
(a "Selling Stockholder") desires to Transfer any Restricted Securities (the
"Offered Securities"), prior to any Transfer it shall give written notice of the
proposed Transfer (the "Notice of Intention") to Holding and to CVC on behalf of
each of the CVC Stockholders and to the Institutional Investors (the
"Prospective Buyers"), specifying the type and number of Offered Securities
which such Selling Stockholder wishes to Transfer, the proposed purchase price
(the "Offer Price") therefor and all other material terms and conditions of the
proposed Transfer.
(b) For a period of twenty (20) days following its receipt of the Notice
of Intention, Holding shall have an irrevocable right to purchase all or any
portion of the Offered
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<PAGE> 17
Securities at the Offer Price and on the other terms specified in the Notice of
Intention, exercisable by delivery of notice (the "Holding Notice") to the
Selling Stockholder, with a copy to each of the Prospective Buyers, specifying
the number of Offered Securities with respect to which Holding is exercising its
option.
(c) For a period of twenty (20) days following its receipt of the Holding
Notice or, if no Holding Notice is so received, for a period of forty-five (45)
days following its receipt of the Notice of Intention, each of the Prospective
Buyers shall have the irrevocable right to purchase at the Offer Price and on
the other terms required to be specified in the Notice of Intention, any or all
of the Offered Securities which Holding has elected not to purchase, Pro Rata
among the Prospective Buyers; provided, however, that in the event any
Prospective Buyer does not purchase any or all of its Pro Rata portion of the
Offered Securities, the other Prospective Buyers shall have the right to
purchase such portion, Pro Rata, until all of such Offered Securities are
purchased or until such other Prospective Buyers do not desire to purchase any
more Offered Securities. The right of the Prospective Buyers pursuant to this
Section 2.5(c) shall be exercisable by delivery of a notice (the "Prospective
Buyer Notice") setting forth the maximum number of Offered Securities that such
Prospective Buyer wishes to purchase, including any number which would be
allocated to such Prospective Buyer in the event any other Prospective Buyer
does not purchase all or any portion of its Pro Rata portion, to the Selling
Stockholder, Holding and the other Prospective Buyers and shall expire if
unexercised within such 20-day or 45-day period, as applicable.
(d) Notwithstanding the foregoing provisions of this Section 2.5, unless
the Selling Stockholder shall have consented to the purchase of less than all of
the Offered Securities, neither Holding nor any Prospective Buyer may purchase
any Offered Securities unless all of the Offered Securities are to be purchased
(whether by Holding or the Prospective Buyers, or any combination thereof).
(e) If all notices required to be given pursuant to this Section 2.5 have
been duly given and (i) Holding and the Prospective Buyers determine not to
exercise their respective options to purchase the Offered Securities at the
Offer Price and on the other terms specified in the Notice of Intention or (ii)
Holding and the Prospective Buyers determine, with the consent of the Selling
Stockholder, to exercise their options to purchase less than all of the Offered
Securities or (iii) Holding or any CVC Stockholder that is a Prospective Buyer
fails to purchase any Offered Securities pursuant to and in accordance with this
Section 2.5 other than as a result of a breach of this Section 2.5 by the
Selling Stockholder, then the Selling Stockholder shall have the right, for a
period of one hundred (100) days from the earlier of (A) the expiration of the
last applicable option period pursuant to this Section 2.5 or (B) the date on
which such Selling Stockholder receives notice from Holding and the Prospective
Buyers that they will not exercise in whole or in part the options granted
pursuant to this Section 2.5, to sell to a third party (a "Third Party") the
Offered Securities remaining unsold under this Section 2.5 at a price not less
than the Offer Price and on the other terms required to be set forth in the
Notice of Intention; provided that prior to any such Transfer to a Third Party,
such Third Party executes
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<PAGE> 18
and delivers to Holding, for the benefit of Holding and all Stockholders, a
Joinder Agreement and thereby becomes a party to this Agreement and such Selling
Stockholder first complies with the provisions of Article III.
(f) The closing of any purchase and sale to Holding or any Prospective
Buyer pursuant to this Section 2.5 shall take place on such date, not later than
fifteen (15) business days after the later of delivery to the Selling
Stockholder of (i) the Holding Notice and (ii) the Prospective Buyer Notice, as
Holding and the Selling Stockholder shall select. At the closing of such
purchase and sale, the Selling Stockholder shall deliver certificates evidencing
the Offered Securities being sold duly endorsed, or accompanied by written
instruments of transfer in form satisfactory to the purchasers thereof, duly
executed by the Selling Stockholder, free and clear of any Liens, against
delivery of the Offer Price therefor.
(g) The Stockholders hereby agree that the following events shall be
deemed a Transfer of Restricted Securities owned or held of record by any
Stockholder for purposes of this Agreement: Any change of control of such
Stockholder, whereby (i) all or substantially all of the assets of, or equity
interest in such Stockholder is sold, whether by merger or otherwise, to any
Person or Persons other than a Permitted Transferee of such Stockholder; or (ii)
a majority of the economic interest of such Stockholder is transferred to any
Person or Persons other than a Permitted Transferee.
2.6 INVOLUNTARY TRANSFERS. (a) Upon the occurrence of any event which
would cause any Restricted Securities owned by a Management Stockholder or by an
Additional Stockholder to be Transferred by Involuntary Transfer, such
Management Stockholder or Additional Stockholder (or his legal representative or
successor) shall give Holding written notice thereof stating the terms of such
Involuntary Transfer, the identity of the transferee or proposed transferee, the
price or other consideration, if readily determinable, for which the Restricted
Securities are proposed to be or have been Transferred and the number of
Restricted Securities which are the subject of such Transfer, and Holding shall
notify all of the Stockholders of the same. After its receipt of such notice
or, failing such receipt, after Holding otherwise obtains actual knowledge of
such a proposed or completed Involuntary Transfer, Holding shall have the right
and option to purchase (or to have any designee purchase) all or any portion of
such Restricted Securities, which right shall be exercised by written notice
given by Holding to the transferor (or transferee following the occurrence of
any Involuntary Transfer) within sixty (60) days following the later of (i)
Holding's receipt of such notice or, failing such receipt, Holding's obtaining
actual knowledge of such proposed or completed Transfer and (ii) the date of
such Involuntary Transfer.
(b) Any purchase pursuant to this Section 2.6 shall be at the price and on
the terms applicable to such Involuntary Transfer; provided, however, that if
the nature of the event giving rise to such Involuntary Transfer is such that no
readily determinable consideration is to be paid for or assigned to the Transfer
of the Restricted Securities, the price to be paid by Holding and the applicable
terms shall be the purchase price and terms applicable to a Sale
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Event pursuant to Section 4.2. The closing of the purchase and sale of such
Restricted Securities pursuant to this Section 2.6 shall be held at the place
and on the date established by Holding, which in no event shall be less than ten
(10) nor more than forty-five (45) days from the date on which Holding gives
notice of its election to purchase such Restricted Securities, and such purchase
price shall be determined as of the date of the notice of election to purchase
such Restricted Securities. At such closing, the Management Stockholder or
Additional Stockholder (or his legal representative or successor) shall deliver
the certificates evidencing the Restricted Securities to be purchased by
Holding, as applicable, accompanied by stock powers, duly endorsed in blank, or
duly executed instruments of transfer, and any other documents that are
necessary to Transfer to Holding good title to such Restricted Securities free
and clear of all Liens and, concurrently with such delivery, Holding shall
deliver to the transferor thereof the full amount of the purchase price therefor
by certified or bank cashier's check.
(c) Notwithstanding anything to the contrary contained herein, in the
event a purchase (or the payment of the purchase price) by Holding pursuant to
this Section 2.6 would violate or conflict with any statute, rule, injunction,
regulation, order, judgment or decree applicable to Holding or any of its
Subsidiaries or by which any of them or their respective properties may be bound
or affected or would result in any breach of, or constitute a default (or an
event which with notice or lapse of time, or both, would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a Lien on any of the property or
assets of Holding or any of its Subsidiaries pursuant to any note, bond,
mortgage, indenture, contract, agreement, lease, license, franchise or other
instrument or obligation to which Holding or any of its Subsidiaries is a party
or by which any of their respective properties is bound or affected, with the
prior written consent of CVC, the rights of Holding to purchase (or to have any
designee purchase) the Restricted Securities of any Management Stockholder or
Additional Stockholder shall be suspended until the date which falls thirty (30)
days following such time as such prohibition first lapses or is waived and no
such default would be caused. For the purposes of this Section 2.6 only, the
date of such lapse or waiver shall be deemed the date of the Involuntary
Transfer for purposes of the purchase and sale of Restricted Securities pursuant
to this Section 2.6 and such purchase price shall be determined as of the date
such prohibition lapses or is waived. Holding shall use its reasonable efforts
to obtain a waiver of any such prohibition but shall not be obligated to incur
any additional interest or other costs or charges or to make any prepayment with
respect to any indebtedness in connection with such efforts.
(d) Notwithstanding anything to the contrary contained in this Section
2.6, any event giving rise to an Involuntary Transfer which is also subject to
the provisions of Article IV shall be governed by the provisions of Article IV.
2.7 SALE OF THE COMPANY. If CVC Stockholders, so long as they own at least
thirty-five (35) percent of the shares of Common Stock on a Diluted Basis or
thirty-five (35) percent of the Series A Preferred on a Diluted Basis desire to
effect a Sale of the Company providing aggregate consideration to the non-CVC
Stockholders at least equal to the non-CVC
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Stockholders' pro rata share of the aggregate Company Value at the time of such
sale, the CVC Stockholders shall notify each other Stockholder, in writing, of
such desire and the material terms and conditions of such proposed sale.
Notwithstanding any other provision of this Agreement, each such other
Stockholder and Holding will take all actions reasonably requested by either
the CVC Stockholders or Holding in connection with the consummation of such Sale
of the Company, and if such transaction is structured as a sale of Restricted
Securities within ten (10) business days of the receipt of such notice (or such
longer period of time as the CVC Stockholders shall designate in such notice)
such other Stockholders shall cause their respective Restricted Securities to be
sold to the designated purchaser on the same terms and conditions, in the same
proportionate amount and for the same per share consideration as the Restricted
Securities being sold by the CVC Stockholders, provided, however, that if any of
such Restricted Securities are Options, the purchase price of such Options shall
equal the aggregate price that would be paid for the shares of Common Stock
issuable upon the exercise thereof minus the aggregate exercise price under such
Options for such shares of Common Stock and if any Stockholders are given a
choice as to the type or amount of consideration to be received, all
Stockholders will be given the same choice; provided, further, that upon the
consummation of any transaction resulting in a sale or transfer of all or
substantially all of the assets or business of Holding (whether by merger, sale
or otherwise) Holding will immediately distribute all of the net proceeds of
such transaction to the Stockholders, in accordance with their respective rights
and privileges. In furtherance of, and not in limitation of the foregoing, in
connection with a Sale of the Company, each Stockholder, will (i) raise no
commercially unreasonable objections against the Sale of the Company or the
process pursuant to which it was arranged, (ii) waive any appraisal rights under
Section 262 of the Delaware General Corporation Law and other similar rights,
and (iii) execute all documents containing such terms and conditions as those
executed by other Stockholders as reasonably directed by the CVC Stockholders,
as applicable except that the State of Michigan and Prudential for so long as
they shall hold Restricted Securities, shall not be required to deliver powers
of attorney. Each Stockholder required to make any indemnification payment in
connection with a Sale of the Company shall have a right to recover from the
other Stockholders to the extent that the amount required to be paid by such
Stockholder is disproportionate to the proportion of the total consideration
received by all Stockholders, compared to the consideration actually received by
such Stockholder (except to the extent such indemnification payment arises from
a misrepresentation or breach relating to such Stockholder). No Stockholder
shall be required to make indemnification payments or contribution payments if
the aggregate amount thereof would exceed the total consideration received by
such Stockholder in connection with a Sale of the Company (except to the extent
such indemnification or contribution payment arises from a misrepresentation or
breach relating to such Stockholder (rather than to Holding)). All Stockholders
will bear their Pro Rata share of the costs and expenses incurred in connection
with a Sale of the Company to the extent such costs are incurred for the benefit
of all Stockholders and are not otherwise paid by Holding or the purchaser.
Costs incurred by any Stockholder on its own behalf will not be shared by other
Stockholders.
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ARTICLE III
RIGHTS OF INCLUSION
3.1 RIGHTS OF INCLUSION. (a) If any CVC Stockholder (the "Transferor")
proposes to Transfer any Restricted Securities ("Transferor Shares") to any
Person (the "Buyer"), other than to a Permitted Transferee who shall have
executed a Joinder Agreement and thereby became a party to this Agreement or as
permitted by Section 3.3, then, as a condition to such Transfer, the Transferor
shall cause the Buyer to include an offer (the "Article III Offer") to each of
the CVC Stockholders who are not Transferors, the Institutional Stockholders,
the Former Management Stockholders, the Management Stockholders and the
Additional Stockholders (collectively, the "Offerees"), to sell to the Buyer, at
the option of each Offeree, that number of shares of Restricted Securities
determined in accordance with Section 3.1(b), at the same time(s) and on the
same terms and conditions as are applicable to the Transferor Shares. The
Transferor shall provide a written notice (the "Inclusion Notice") of the
Article III Offer to each Offeree.
(b) Each Offeree shall have the right (an "Inclusion Right") to sell
pursuant to the Article III Offer part or all of a Pro Rata number of its shares
of Restricted Securities as is sold by the Transferor, provided, however, that
in the event any Offeree does not exercise his or its Inclusion Right as to any
or all of its Pro Rata portion of its Restricted Securities, the other Offerees
shall have the right to sell their Restricted Securities, Pro Rata, in an amount
equal to such remaining portion of Restricted Securities not being sold by such
non-exercising Offeree until all of such remaining portion is eliminated or
until such other Offerees do not desire to sell any more of their Restricted
Securities. The Inclusion Right shall be exercisable by delivery of a notice by
each Offeree (the "Inclusion Notice"), setting forth the number of Restricted
Securities that such Offeree wishes to sell, including any number which would be
allocated to such Offeree in the event any other Offeree does not exercise his
or its Inclusion Right as to all or any of its Pro Rata portion, to the
Transferor within twenty (20) days of delivery of the Inclusion Notice. The
Transferor shall have the right to sell the balance of the shares of Common
Stock not being sold by such Offerees as provided for above and no other Offeree
shall have any Inclusion Right with respect thereto. Any Offeree which owns
Options may exercise and sell shares of Common Stock pursuant to the Article III
Offer, and the purchase price therefor shall equal the aggregate price that
would be paid for the shares of Common Stock issuable upon the exercise thereof
minus the aggregate exercise price under such Option Plan for such shares of
Common Stock.
3.2 ARTICLE III SALES. (a) Upon its exercise of an Inclusion Right, each
Offeree shall deliver to the Transferor a certificate or certificates
representing the shares of Common Stock to be sold or otherwise disposed of
pursuant to the Article III Offer by such Offeree, free and clear of all Liens,
and a limited power-of-attorney authorizing the Transferor to sell or otherwise
dispose of such shares of Common Stock pursuant to the terms of the Article III
Offer; provided, however, for so long as they own Restricted Securities and are
subject to this
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Agreement, Prudential and the State of Michigan shall not be required to execute
a limited power-of-attorney; and provided, further, Prudential and the State of
Michigan hereby agree to take all reasonable actions to effectuate a sale by
such Stockholder pursuant to an Article III Offer.
The Transferor shall have one hundred (100) days, commencing on the
expiration of the Inclusion Rights, in which to sell or otherwise dispose of, on
behalf of itself and the Offerees, up to the number of shares of Common Stock
covered by the Article III Offer (and the number of Transferor Shares) to the
Buyer. If all such shares are not sold to the Buyer, the Transferor, at its
option, may elect to sell on behalf of itself and the Offerees such number of
shares as the Buyer will purchase, Pro Rata among the Transferor and the
Offerees, as nearly as practicable. The material terms of such sale, including,
without limitation, price and form of consideration, shall be as set forth in
the Inclusion Notice. If at the end of such 100-day period the Transferor has
not completed the sale or other disposition of all the Transferor Shares and all
the Offerees' Common Stock or Options (if any) proposed to be sold, the
Transferor shall return to each of the Offerees its respective certificates, if
any, representing shares of Common Stock or Options which the Offerees delivered
for sale or other disposition pursuant to this Article III and which were not
sold pursuant thereto and the provisions of this Article III shall continue to
be in effect.
(b) Promptly after the consummation of the sale or other disposition of
the Transferor Shares and shares of Common Stock or Options of the Offerees to
the Buyer pursuant to the Article III Offer, the Transferor shall notify the
Offerees thereof, and the Buyer shall pay to the Transferor and each of the
Offerees their respective portions of the sales price of the shares of Common
Stock or Options sold or otherwise disposed of pursuant thereto, and shall
furnish such other evidence of the completion of such sale or other disposition
and the terms thereof as may be reasonably requested by the Offerees.
(c) Notwithstanding anything to the contrary contained in this Article
III, except for the Transferor's obligation to return to each Offeree any
certificates representing the Offerees' Common Stock or Options, there shall be
no liability on the part of the Transferor to any Stockholder in the event that
the proposed sale pursuant to this Article III is not consummated for whatever
reason. Whether a sale of Common Stock is effected pursuant to this Article III
by the Transferor is in the sole and absolute discretion of the Transferor.
3.3 CERTAIN TRANSFERS. The provisions of this Article III shall not apply
to any Transfer or proposed Transfer of Restricted Securities by a CVC
Stockholder: (a) pursuant to a registration statement filed under the
Securities Act, or (b) to any Person who shall execute a Joinder Agreement and
thereby become a party to this Agreement, if such Transfer is consented to by
the CVC Stockholders and such Transfer, taken together with all other Transfers
of Restricted Securities by a Transferor who is a CVC Stockholder or other CVC
Stockholders (not including Transfers described in clause (a) above or to
Permitted Transferees) that were previously consented to by the CVC Stockholders
represent, in the aggregate, less than five (5)
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percent of the Common Stock, on a Diluted Basis, held in the aggregate by the
CVC Stockholders on the Closing Date, appropriately adjusted to reflect any
stock split, stock dividend, recapitalization or similar event.
ARTICLE IV
REPURCHASE OF RESTRICTED SECURITIES OWNED
BY MANAGEMENT STOCKHOLDERS OR ADDITIONAL STOCKHOLDERS
4.1 SALE EVENT. In the event that any Management Stockholder shall cease to
be employed by Holding or any of its Subsidiaries for any reason, or any
Additional Stockholder that is a director of Holding or any of its Subsidiaries
shall cease to be such a director for any reason, or in each case, including
death, permanent disability, termination for cause or without cause, retirement
or otherwise (such termination being referred to herein as a "Sale Event"), but
in each case subject to Section 4.4, such Management Stockholder (or his
personal representative) or Additional Stockholder (or his personal
representative) shall promptly notify Holding and each other Stockholder of the
applicable Sale Event and, within ninety (90) days after Holding's receipt of
such notice, Holding or, at the option of Holding, any employee or director of
Holding (who is not a Permitted Transferee of CVC) or any of its designees (who
is not CVC or a Permitted Transferee of CVC) who shall have been designated by
the Board acting by Affirmative Board Vote (a "Holding Designee") may, at its
option elect to purchase, exercisable by written notice (a "Purchase Notice")
delivered to such Management Stockholder (or his personal representative) or
Additional Stockholder (or his personal representative) and, in each case, his
respective Permitted Transferees who hold Restricted Securities (collectively,
"Sellers") (with a copy to CVC, as agent (the "Sale Event Agent") for each of
the CVC Stockholders and the Institutional Stockholders (collectively, the "Sale
Event Purchasers"), and upon the giving of such notice, Sellers shall be
obligated to sell, those Restricted Securities of Sellers which are designated
in the Purchase Notice; provided, however, that in the event notice of a Sale
Event is not given, a Purchase Notice (or notice from the Sale Event Agent as
described in the next sentence) may in any event be given at any time following
a Sale Event. To the extent Holding or any Holding Designee fails to deliver a
Purchase Notice or otherwise does not purchase all of the Restricted Securities
then owned by Sellers, the Sale Event Agent (or any designees thereof) may at
its sole option, exercisable by written notice delivered to Sellers within
fifteen (15) days after delivery of the Purchase Notice (or one hundred (100)
days after written notice from Sellers (or any legal representative) to Holding
of the applicable Sale Event, if no Purchase Notice is given by Holding or any
Holding Designee), elect on behalf of the Sale Event Purchasers to purchase the
Restricted Securities not so purchased by Holding which are designated in such
written notice from the Sale Event Agent (or its designee).
4.2 PURCHASE PRICE. The purchase price for each share of Common Stock to be
purchased pursuant to Section 4.1 shall be (a) if the Sale Event did not occur
as a result of
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termination for Cause the Fair Market Value thereof as of the date of the Sale
Event, (b) if the occurred as a result of a termination for Cause the lower of
(x) the Fair Market Value thereof as of the date of the Sale Event and (y) the
Original Cost thereof. Such purchase price shall be paid in cash or by
certified or cashier's bank check. Notwithstanding anything to the contrary
contained herein, no provision of this Agreement shall prevent or otherwise
restrict the Board acting by Affirmative Board Vote from determining (in its
discretion) that Holding will purchase Restricted Securities from Management
Stockholders or Additional Stockholders pursuant to Section 4.1 at a price per
share in excess of the purchase price specified in this Section 4.2.
4.3 CLOSING. Subject to Section 4.4, the closing for all purchases and
sales of Restricted Securities provided for in this Article IV shall be held at
the principal executive offices of Holding at 10:00 a.m., local time, on the
30th day after the determination of the purchase price in respect thereof
determined in accordance with Section 4.2 or at such other date and time as
shall have been agreed to by the Board of Holding (acting by Affirmative Board
Vote) and the Seller; provided, however, that if any Seller who has become
obligated to sell Restricted Securities is deceased on such 30th day as
aforesaid and such deceased person's personal representative shall not have been
appointed and qualified by such date, then unless otherwise agreed to as
provided above, the closing shall be postponed until the 10th day after the
appointment and qualification of such personal representative.
All Restricted Securities to be sold pursuant to this Article IV shall be
delivered to the purchaser at the aforesaid closing free and clear of all Liens.
The purchaser will be entitled to receive customary representations as to title,
authority and capacity to sell and to require a guaranteed signature of the
Seller, as applicable. Each Seller hereby appoints Holding as attorney-in-fact
to transfer such Restricted Securities on the books of Holding in the event of a
sale pursuant to this Article IV. Such Sellers shall take all such actions as
Holding or any other purchaser shall request as necessary to vest in Holding or
any other purchaser at such closing good title to such Restricted Securities,
free and clear of all Liens.
4.4 POSTPONEMENT. Notwithstanding anything to the contrary contained
herein, in the event a purchase (or the payment of the purchase price) by
Holding pursuant to this Article IV would (a) violate or conflict with any
statute, rule, injunction, regulation, order, judgment or decree applicable to
Holding or any of its Subsidiaries or by which any of them or their respective
properties may be bound or affected, (b) result in any breach of, or constitute
a default (or an event which with notice or lapse of time, or both, would become
a default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a Lien on any of
the property or assets of Holding or any of its Subsidiaries pursuant to any
note, bond, mortgage, indenture, contract, agreement, lease, license, franchise
or other instrument or obligation to which Holding or any of its Subsidiaries is
a party or by which any of their respective properties is bound or affected or
(c) in the judgment of the Board, jeopardize the financial health of Holding,
Aetna Holdings or the Company or otherwise have a material adverse effect on the
business, condition (financial or otherwise), results of operations
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or assets or properties of the Company, with the prior written consent of the
Sale Event Agent, the rights of Holding or the Sale Event Agent to purchase the
Restricted Securities of the Sellers with respect to whom the Sale Event has
occurred pursuant to this Article IV shall be suspended, in the case of clauses
(a) or (b) above, until the date which falls thirty (30) days following such
time as such prohibition first lapses or is waived and no such default would be
caused and in the case of clause (c) above, until the date which falls thirty
(30) days following such time as the Board determines that such purchase (or
payment of the purchase price) would no longer jeopardize the financial health
of Holding on a consolidated basis or otherwise have a material adverse effect
on Holding on a consolidated basis. For the purposes of this Section 4.4 only,
the date of such lapse, waiver or determination shall be deemed the date of the
relevant Sale Event for purposes of the purchase and sale and determination of
the Purchase Price of Restricted Securities pursuant to this Article IV.
Holding shall use its reasonable efforts to obtain a waiver of any such
prohibition but shall not be obligated to incur any additional interest or other
costs or charges or to make any prepayment with respect to any indebtedness in
connection with such efforts.
4.5 SALE EVENT AGENT. In the event that the Sale Event Agent elects to
purchase Restricted Securities pursuant to Section 4.1 ("Sale Event Stock"),
each Sale Event Purchaser will be entitled to purchase Sale Event Stock on the
same terms and conditions as each other Sale Event Purchaser pro rata among all
of the Sale Event Purchasers. Promptly after making such election, the Sale
Event Agent shall make an offer (a "Sale Event Offer") by providing each Sale
Event Purchaser with a notice (the "Sale Event Notice") setting forth (i) each
Sale Event Purchaser's pro rata portion of such Sale Event Stock, (ii) the cash
consideration to be paid for each share of Sale Event Stock, and (iii) all other
material terms of such Sale Event Offer.
In order for any Sale Event Purchaser to accept the Sale Event Offer, such
Sale Event Purchaser shall on or before twenty (20) days following its receipt
of a Notice (the expiration of such twenty (20) days being referred to herein as
the "Sale Event Acceptance Date") provide written notice to the Sale Event Agent
of its acceptance of the Sale Event Offer, and such notice shall set forth the
number of shares of Sale Event Stock allocated to such Sale Event Purchaser that
are accepted thereby.
To the extent any Sale Event Purchaser does not elect to accept the Sale
Event Offer on or before the Sale Event Acceptance Date, the Sale Event Stock
allocated to such non-accepting Sale Event Purchaser in the Sale Event Notice,
shall be re-offered, pro rata, to all other Sale Event Purchasers until all such
shares of Sale Event Stock have been accepted for purchase.
4.6 SALE EVENT CLAW-BACK PROVISION. (a) Each Sale Event Purchaser hereby
agrees with each of Holding and CVC that at the written request of the Sale
Event Agent or Holding, it shall sell (a "Resale") shares of Sale Event Stock,
pro rata, to current or future officers, directors, employees or independent
contractors of Holding or any of its Subsidiaries at
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a price equal to the greater of (i) the price paid by such Sale Event Purchaser
pursuant to Section 4.4 and (ii) the price determined by the Board (the "Resale
Price").
(b) Either CVC or Holding may at any time following a sale of Sale Event
Stock by the Sale Event Purchaser request a resale of such stock to a
prospective Management Stockholder by delivering a written notice (the "Sell
Notice") to such Sale Event Purchasers. The Sell Notice shall set forth (i) the
total number of shares of Sale Event Stock and (ii) the pro rata number of
shares of Sale Event Stock each Sale Event Purchaser is required to sell
hereunder.
(c) The closing of the Resale purchase of the shares of Sale Event Stock
specified in the Sell Notice (the "Resale Closing") shall take place at the
offices of Holding at the time and on the date (the "Resale Closing Date") set
forth in the Sell Notice (which date shall not be earlier than ten business days
nor more than thirty business days after the date the Sell Notice is given).
Each such Sale Event Purchaser has an obligation to deliver the shares of Sale
Event Stock specified in the Sell Notice at the Resale Closing in return for
receipt of the Resale Price.
ARTICLE V
CORPORATE GOVERNANCE
5.1 BOARD OF DIRECTORS. (a) From and after the date hereof, each
Institutional Stockholder, Former Management Stockholder, Management Stockholder
and Additional Stockholder shall vote or cause to be voted all shares of voting
Common Stock and any other voting securities of Holding over which such
Stockholder has voting control, at any regular or special meeting of
stockholders called for the purpose of filling positions on the Board, or to
execute a written consent in lieu of such a meeting of stockholders for the
purpose of filling positions on the Board, and shall take all actions necessary,
to ensure that the Board consists of five (5) members, as follows: (i) for so
long as the CVC Stockholders own at least ten (10) percent of the outstanding
Common Stock on a Diluted Basis, two (2) individuals (individually, each a "CVC
Nominee" and, collectively, the "CVC Nominees") to be designated by the CVC
Stockholders (provided that, at any time, and from time to time, the CVC
Stockholders, in their sole discretion, may determine not to designate any or
either of the CVC Nominees), (ii) one (1) individual to be designated by the
Management Stockholders (a "Management Nominee") and (iii) subject to the
Regulatory Right described in Section 5.9, two (2) individuals (individually,
each a "Disinterested Director Nominee" and, collectively, the "Disinterested
Director Nominees") who are not (A) an Affiliate of CVC, (B) employed by Holding
or any Subsidiary of Holding, (C) an Institutional Stockholder or a Management
Stockholder or (D) an Affiliate of any Institutional Stockholder or Management
Stockholder, and who is designated by a nominating committee consisting of (x)
one (1) CVC Nominee, (y) one (1) Management Nominee and (z) one (1)
Disinterested Director Nominee (collectively, the "Nominating
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Committee"), acting by a majority vote; provided, however, that with the consent
of the CVC Nominees, a Management Stockholder may be a Disinterested Director
Nominee and upon the closing under the Recapitalization and Stock Purchase
Agreements, the Board shall consist of Michael A. Delaney and David Y. Howe as
the CVC Nominees, Ueli Spring as the Management Nominee and John F. Wurster and
Harold A. Brown as the Disinterested Director Nominees, and the Nominating
Committee shall consist of one (1) CVC Nominee, the Management Nominee and one
(1) Disinterested Director Nominee who initially shall be John F. Wurster;
provided, however, that if the CVC Stockholders do not designate any or either
of the CVC Nominees, the Nominating Committee will consist of, during such
period when there is no CVC Nominee, two (2) Disinterested Director Nominees and
the Management Nominee. The CVC Nominees, the Management Nominee and the
Disinterested Director Nominees are from time to time collectively referred to
herein as the "Nominees" and, individually, as a "Nominee". No CVC Stockholder
shall have any obligation to vote its shares of voting Common Stock or other
voting securities of Holding in favor of any Nominees other than any CVC
Nominee.
(b) If, prior to his election to the Board pursuant to Section 5.1(a), any
Nominee shall be unable or unwilling to serve as a director of Holding, the
group of Stockholders or Nominating Committee who nominated any such Nominee
shall be entitled to nominate a replacement who shall then be a Nominee for
purposes of Section 5.1(a).
(c) If at any time any CVC Nominee or any Disinterested Director Nominee
is not then serving as a director of Holding, upon the written request of the
CVC Stockholders, the Board shall promptly take such action as may be necessary
to approve and appoint individuals designated by the CVC Stockholders (in the
case of any CVC Nominee) and by the Nominating Committee (in the case of any
Disinterested Director Nominee) to serve as directors from and after the time of
such request and each Stockholder agrees to take such action as may be necessary
to effect the foregoing. In the event that at any time there shall be no
Disinterested Director serving as a director of Holding, the remaining members
of the Nominating Committee shall have authority to designate the appropriate
number of Disinterested Director Nominees to fill such vacancy or vacancies.
5.2 REMOVAL. If (a) the CVC Stockholders request that a CVC Nominee
elected as a director be removed (with or without cause), by written notice to
the other Stockholders; (b) the Management Stockholders request that the
Management Nominee elected as a director be removed (with or without cause), by
written notice to the other Stockholders; or (c) the Nominating Committee
requests that a Disinterested Director Nominee elected as a director be removed
(with or without cause), by written notice to other Stockholders, or such
director ceases to be a Disinterested Director; then in each such case, such
director shall be removed and each Institutional Stockholder, Management
Stockholder and Additional Stockholder hereby agrees to vote all shares of
Common Stock owned by such Stockholder and other securities over which such
Stockholder has voting control to effect such removal or to consent in writing
to effect such removal upon such request. The Stockholders will not take any
action to remove any director that is a CVC Nominee without cause except as
provided in this Section 5.2. In the event (x) the
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CVC Stockholders or (y) the CVC Stockholders, together with other Persons who
have granted a proxy to any of the CVC Stockholders or who have agreed with the
CVC Stockholders with respect to the removal of directors as provided below, at
any time hold shares of Class A Common (or any other voting securities of
Holding) which in the aggregate represent more than 50 percent of the total
number of votes of all outstanding shares of Class A Common (and any other
voting securities of Holding) which would be entitled to vote in an ordinary
election of directors, the CVC Stockholders or the CVC Stockholders together
with such other Persons, as applicable, may remove any director, with or without
cause, including, but not limited to, any director that is a Disinterested
Director Nominee and may fill the vacancy resulting from such removal with any
Person of their choosing. Notwithstanding any provision in this Article V to
the contrary, no Stockholder shall have any obligation under this Article V with
respect to any Nominee to the extent such obligation would be in conflict with
any action taken under the foregoing sentence.
5.3 VACANCIES. In the event that a vacancy is created on the Board at any
time by the death, disability, retirement, resignation or removal (with or
without cause) of a director, each Stockholder agrees to vote all shares of
Common Stock owned by such Stockholder and other securities over which such
Stockholder has voting control for the individual designated to fill such
vacancy by whichever of the Stockholders or Nominating Committee designated
and/or approved (pursuant to Section 5.1 hereof) the director whose death,
disability, retirement, resignation or removal (with or without cause) resulted
in such vacancy on the Board in the manner set forth in Section 5.1 hereof;
provided, however, that such other individual so designated may not previously
have been a director of Holding who was removed for cause from the Board;
provided, further, that the CVC Stockholders shall not be required to cause the
directors designated by them to vote for any Nominee.
5.4 DESIGNATION OF PROXY. In order to effectuate the provisions of this
Article V and in addition to and not in lieu of Sections 5.1 through 5.3 hereof,
each of the Management Stockholders and Additional Stockholders hereby grants to
Ueli Spring, or if Ueli Spring shall cease to be the Chief Executive Officer of
Holding, to his successor as Chief Executive Officer of Holding (the "Management
Representative"), an irrevocable proxy (which proxy is coupled with an interest)
to vote at any annual or special meeting of stockholders, or to take action by
written consent in lieu of such meeting with respect to, all of the shares of
Common Stock owned or held of record by the Management Stockholders and
Additional Stockholders solely for (a) the election of directors designated in
accordance with Section 5.1, (b) the removal of directors in accordance with
Section 5.2 and (c) the election of a director to fill any vacancy on the Board
in accordance with Section 5.3.
5.5 COMMITEES OF THE BOARD; SUBSIDIARY BOARDS. Unless otherwise consented
to by CVC, the Stockholders shall take all action necessary or appropriate (to
the extent permitted by law) to cause Holding to have an audit committee and a
compensation committee of the Board each of which shall consist of one (1)
director who is a CVC Nominee, the Disinterested Director Nominee which
initially shall be John F. Wurster and one (1)
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Management Nominee. The Stockholders shall take all action necessary or
appropriate (to the extent permitted by law) to cause each additional committee
of the Board to have the same number of directors and composition of Nominees as
such audit committee and compensation committee. The Stockholders agree that
the composition of the board of directors of each Subsidiary of Holding and of
each committee thereof shall be consistent with the composition of the Board and
each corresponding committee thereof; provided that no member of the Board shall
be required to serve as a director or committee member of any Subsidiary of
Holding.
5.6 OBSERVER'S RIGHTS. In the event the CVC Stockholders elect not to
exercise, or are prohibited by applicable law from exercising, their rights to
designate either or both of the CVC Nominees, or once appointed, the CVC
Stockholders desire to remove one (1) or both of the CVC Nominees, the CVC
Stockholders shall have the right to one (1) individual (a "CVC Observer")
attend any meeting of the Board or any committee thereof unless attendance at
such meeting, in Holding's reasonable judgment, would create a conflict of
interest for such Stockholder. The Institutional Stockholders holding a majority
of Common Stock held by all Institutional Stockholders shall have the right to
one (1) individual (an "Institutional Observer"; and together with the CVC
Observer, an "Observer") who may attend any meeting of the Board or any
committee thereof unless attendance at such meeting, in Holding's reasonable
judgment, would create a conflict of interest for such Stockholder. In
addition, the Institutional Stockholders holding a majority of Restricted
Securities held by all Institutional Stockholders and the CVC Stockholders shall
each have the right to appoint an Institutional Observer and CVC Observer,
respectively, to the Board of Directors of any Subsidiary. An Observer shall
not have the right to vote on any matter presented to the Board or any committee
thereof. Holding shall give CVC, the CVC Observer and the Institutional
Investors written notice of each meeting thereof at the same time and in the
same manner as the members of the Board or such committee receive notice of such
meetings, and Holding shall permit each Observer to attend as an observer at all
meetings thereof; provided that in the case of telephonic meetings, such
Stockholders need receive only actual notice thereof at the same time and in the
same manner as notice is given to the directors. Each Observer shall be
entitled to receive all written materials and other information given to the
directors in connection with such meetings at the same time such materials and
information are given to the directors, and each Observer shall keep such
materials and information confidential. If Holding proposes to take any action
by written consent in lieu of a meeting of the Board, Holding shall give written
notice thereof to each Observer prior to the effective date of such consent
describing the nature and substance of such action.
5.7 AFFIRMATIVE BOARD VOTE. In addition to any other action requiring an
Affirmative Board Vote, an Affirmative Board Vote shall be required prior to
Holding or any of its Subsidiaries entering into any Significant Transaction.
5.8 ACTION BY WRITTEN CONSENT STOCKHOLDERS. The parties hereto agree that
whenever any action is proposed to be taken by Stockholders without a meeting,
the Stockholders proposing to act by such consent shall, or shall cause Holding
to, give CVC at least
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seven (7) days' prior written notice of such proposed action specifying the
action to be taken and the purpose thereof.
5.9 REGULATORY RIGHT. If the CVC Stockholders determine in their sole
discretion that applicable law permits the CVC Stockholders to have the right to
designate a majority of the directors of the Board or directors having a
majority of the weighted votes on the Board, then notwithstanding the provisions
of Section 5.1 the CVC Stockholders may, upon the giving of notice thereof to
the Company and the Institutional Stockholders, designate each of the
Disinterested Directors instead of the Nominating Committee and take any and all
other actions otherwise permitted or required to be taken by the Nominating
Committee in this Agreement or otherwise and provided that from and after the
date such notice is given the qualifications of a Disinterested Director set
forth in clauses (A) - (C) of Section 5.1(a)(iii) shall no longer be required.
Such right exercised under this Section 5.9 is referred to as the "Regulatory
Right".
ARTICLE VI
CERTAIN COVENANTS OF THE PARTIES
6.1 REGISTRATION OF COMMON STOCK. In the event of a registration by
Holding of Common Stock under the Securities Act each Stockholder shall, at a
meeting convened for the purpose of amending the Certificate, vote (which vote
shall become effective immediately prior to the closing of the sale of Common
Stock pursuant to such registration by Holding): (a) to remove from the
Certificate requirements, if any such requirements are at such time imposed
thereby, that the Board act by Affirmative Board Vote, except as otherwise
required by law; (b) to remove from the Certificate requirements, if any such
requirements are at such time imposed thereby, relating to preemptive rights
with respect to Common Stock; and (c) to change the number of authorized shares
of Common Stock and, if necessary, change the number of issued and outstanding
shares of Common Stock, whether by stock split, stock dividend or otherwise, or
change its par value or effect any other reclassification, recapitalization or
similar event relating to the Common Stock; in the case of each of clauses (a),
(b) and (c) above, as recommended by a majority of the members of the Board to
facilitate such registration. Notwithstanding the foregoing, nothing set forth
herein shall be construed to allow any stock of any class or series to be
treated differently from any other stock of the same class or series or to
reduce the rights afforded under Article VII hereof.
6.2 MANAGEMENT STOCKHOLDERS; ADDITIONAL STOCKHOLDERS. The parties hereto
agree that as a condition precedent to the issuance by Holding of shares of
Common Stock or of securities convertible, exchangeable or exercisable for or
into shares of Common Stock (a) to any employee of Holding or its Subsidiaries
or (b) any Person other than any such employee, any CVC Stockholder, any
Institutional Stockholder or any Management Stockholder, Holding shall require
such employee or other Person to execute a Joinder Agreement and thereby enter
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into and become a party to this Agreement. From and after such time, the term
"Management Stockholder" shall be deemed to include such employees and the term
"Additional Stockholder" shall be deemed to include such other Person. Nothing
contained herein nor the ownership of any Restricted Securities shall confer
upon any Management Stockholder the right to employment or to remain in the
employ of Holding or any of its Subsidiaries. Notwithstanding the foregoing, to
the extent approved by a majority of the Board (which shall include any members
of the Board who are Disinterested Director Nominees) and specified in any
Joinder Agreement (or amendment thereto) pursuant to which any Management
Stockholder or Additional Stockholder may become a party hereto, the provisions
of this Agreement may be varied to be more or less restrictive with respect to
any such Management Stockholder or Additional Stockholder or to reduce the
rights afforded by Article VII hereof.
6.3 STOCKHOLDERS LIST; CERTAIN NOTICES. Upon the request of any CVC
Stockholder, Prudential, Pruco, Berkshire or the State of Michigan, Holding
shall deliver promptly to such CVC Stockholder, Prudential, Pruco, Berkshire or
the State of Michigan, respectively, as the case may be, a list setting forth
the names of all Stockholders and the number of shares of Class A Common and
Class B Common owned by each Stockholder. In addition, Holding shall give each
of the CVC Stockholders prior written notice of (a) the conversion of any shares
of any class of Common Stock and (b) any record transfer of Restricted
Securities, setting forth the name of the transferee and the number and type of
Restricted Securities being so transferred.
6.4 REGULATORY COMPLIANCE COOPERATION. Before Holding redeems, purchases
or otherwise acquires, directly or indirectly, or converts or takes any action
with respect to the voting rights of, any shares of any class of its capital
stock or any securities convertible, exchangeable or exercisable for or into any
shares of any class of its capital stock, Holding will give written notice of
such pending action to CVC. Upon the written request of any CVC Stockholder
made within twenty (20) days after its receipt of any such notice, stating that
after giving effect to such action such CVC Stockholder would have a Regulatory
Problem (as defined below), Holding will defer taking such action for such
period (not to extend beyond forty-five (45) days after such CVC Stockholder's
receipt of Holding's original notice) as such CVC Stockholder requests to permit
it and its Affiliates to reduce the quantity of securities owned by them in
order to avoid the Regulatory Problem. In the event Holding or any CVC
Stockholder is precluded from taking any action under this Agreement within any
allotted period of time as a consequence of this Section, such period of time
shall be extended by the number of days during which Holding or such CVC
Stockholder is precluded from acting.
(b) In the event that CVC determines that it has a Regulatory Problem (as
defined below), Holding agrees to take all such actions as are reasonably
requested by CVC in order to (i) effectuate and facilitate any transfer by the
CVC Stockholders of any securities of Holding then held by the CVC Stockholders
to any Person designated by CVC, such transfer to be at the expense of CVC only
to the extent that the expenses in facilitating such transfer were incurred
solely to cure a Regulatory Problem, (ii) permit the CVC Stockholders (or any of
their
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Affiliates) to exchange all or a portion of any voting security then held by
them on a share-for-share basis for shares of a non voting security of Holding,
which non voting security shall be identical in all respects to the voting
security exchanged for it, except that it shall be non voting and shall be
convertible into a voting security on such terms as are requested by the CVC
Stockholders in light of regulatory considerations then prevailing, and (iii)
continue and preserve the respective allocation of the voting interests with
respect to Holding provided for herein, and with respect to CVC's ownership of
Holding's securities. Such actions may include, but shall not necessarily be
limited to, entering into such additional agreements, adopting such amendments
to the Certificate and by-laws of Holding and taking such additional actions as
are reasonably requested by CVC in order to effectuate the intent of the
foregoing.
(c) In addition, Holding will not be a party to any merger, consolidation,
recapitalization or other transaction pursuant to which CVC would be required to
take any voting securities, or any securities convertible, exchangeable or
exercisable for or into voting securities, which might reasonably be expected to
cause CVC to have a Regulatory Problem. For purposes of this Agreement,
"Regulatory Problem" means any set of facts or circumstances wherein it has been
asserted by any governmental agency or other authority or CVC reasonably
believes that, such Person and such Person's Affiliates own, control or have
power over a greater quantity of securities of any kind issued by Holding than
are permitted under any requirement of any governmental authority.
6.5 FINANCIAL DISCLOSURE. For so long as any of CVC, Prudential, Pruco,
Berkshire, the State of Michigan, Jerome Singer, Douglas A. Thal, Robert J.
Klein or Steven Singer owns any Restricted Securities or securities convertible,
exchangeable or exercisable for or into Common Stock, Holding shall deliver to
CVC, Prudential, Pruco, Berkshire, the State of Michigan, Jerome Singer, Douglas
A. Thal, Robert J. Klein or Steven Singer as the case may be: (a) as soon as
available but in any event within thirty (30) days after the end of each monthly
accounting period in each fiscal year, unaudited consolidating and consolidated
statements of income and cash flows of Holding and its Subsidiaries for such
monthly period and for the period from the beginning of the fiscal year to the
end of such month, and unaudited consolidating and consolidated balance sheets
of Holding and its Subsidiaries as of the end of such monthly period, setting
forth in each case comparisons to the annual budget and to the corresponding
period in the preceding fiscal year, and all such statements shall be prepared
in accordance with generally accepted accounting principles, consistently
applied, subject to the absence of footnote disclosures and to normal year-end
adjustments, and shall be accompanied by an Officer's Certificate; (b) within
forty-five (45) days after the end of each quarterly accounting period in each
fiscal year, unaudited consolidating and consolidated statements of income and
cash flows of Holding and its Subsidiaries for such quarterly period, and
unaudited consolidating and consolidated balance sheets of Holding and its
Subsidiaries as of the end of such quarterly period, setting forth in each case
comparisons to the annual budget and to the corresponding period in the
preceding fiscal year, and all such statements shall be prepared in accordance
with generally accepted accounting principles, consistently applied, subject to
the absence of footnote disclosures and to normal year-end adjustments, and
shall be accompanied
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by an Officer's Certificate; (c) within ninety (90) days after the end of each
fiscal year, audited consolidating and consolidated statements of income and
cash flows of Holding and its Subsidiaries for such fiscal year, and audited
consolidating and consolidated balance sheets of Holding and its Subsidiaries as
of the end of such fiscal year, setting forth in each case comparisons to the
annual budget and to the preceding fiscal year, all prepared in accordance
accompanied by (i) with respect to the consolidated portions of such statements,
an opinion of an independent accounting firm of recognized national standing,
(ii) a certificate from such accounting firm, addressed to the Board, stating
that in the course of its examination nothing came to its attention that caused
it to believe that there was any default by Holding or any Subsidiary in the
fulfillment of or compliance with any of the terms, covenants, provisions or
conditions of any material agreement to which Holding or any Subsidiary is a
party or, if such accountants have reason to believe any default by Holding or
any Subsidiary exists, a certificate specifying the nature and period of
existence thereof and (iii) a copy of such firm's annual management letter to
the Board; (d) promptly upon receipt thereof, any additional reports, management
letters or other detailed information concerning significant aspects of the
operations or financial affairs of Holding given to Holding by its independent
accountants (and not otherwise contained in other materials provided hereunder);
(e) at least thirty (30) days prior to the end of each fiscal year, an annual
budget prepared on a monthly basis for Holding and its Subsidiaries for the
following fiscal year (displaying anticipated statements of income and cash
flows and balance sheets), and following preparation thereof quarterly revisions
of such budget and any other significant budgets prepared by Holding or its
Subsidiaries, and within thirty (30) days after any monthly period in which
there is a material adverse deviation from the annual budget, an Officer's
Certificate explaining the deviation and what actions Holding has taken and
proposes to take with respect thereto; (f) promptly upon their becoming
available drafts of the annual financial statements of Holding and its
Subsidiaries, together with a draft report of Holding's independent public
accountants thereon, and will afford CVC reasonable opportunity to review and
comment on such drafts; and (g) with reasonable promptness, such other
information and financial data concerning Holding and its Subsidiaries as any
Person entitled to receive information under this Section 6.5 may reasonably
request (provided that any Institutional Investor or Former Management Group
Member may elect in writing not to receive any such financials described in this
Section 6.5). Additionally, CVC and the Institutional Observer, if any, shall
have the right to inspect all books and records of Holding and its Subsidiaries.
6.6 PURCHASER REPRESENTATIVE. If Holding enters into any negotiation or
transaction involving the issuance of securities of another Person to the
Stockholders for which Rule 506 (or any similar rule then in effect) promulgated
under the Securities Act by the Commission may be available with respect to such
negotiation or transaction (including a merger, consolidation or other
reorganization), each Management Stockholder and Additional Stockholder (if an
individual) will, at the request of Holding, appoint a purchaser representative
(as such term is defined in Rule 501 under the Securities Act) reasonably
acceptable to Holding. If any Management Stockholder or Additional Stockholder
appoints the purchaser representative designated by Holding, Holding will pay
the fees of such purchaser representative, but if any
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such Management Stockholder or Additional Stockholder declines to appoint the
purchaser representative designated by Holding, such Management Stockholder or
Additional Stockholder will appoint, at his own expense, another purchaser
representative reasonably acceptable to Holding.
ARTICLE VII
RIGHT OF OFFER
7.1 RIGHTS OF OFFER. Prior to Holding issuing or selling, or Aetna
Holdings selling, any New Common Stock to the CVC Stockholders, Holding or Aetna
Holdings, as the case may be, shall offer (the "New Common Stock Offer") each
Institutional Stockholder, Former Management Stockholder, Management Stockholder
and Additional Stockholder (the "New Common Stock Offerees") an opportunity to
purchase any or all of its Pro Rata portion of such New Common Stock on the same
terms and conditions as the New Common Stock being offered to the CVC
Stockholders and, if such New Common Stock is to be issued as a part of a unit
of securities, Holding or Aetna Holdings, as the case may be, shall offer each
such New Common Stock Offeree an opportunity to purchase any or all of its Pro
Rata portion of such unit of securities (together with the New Common Stock, the
"New Common Stock Units") on the same terms and conditions as the New Common
Stock being offered to the CVC Stockholders; provided, however, that in the
event any New Common Stock Offeree does not purchase any or all of its Pro Rata
portion of either New Common Stock or New Common Stock Units, as the case may
be, the other New Common Stock Offerees and the CVC Stockholders shall have the
right to purchase such portion, Pro Rata, until all of such New Common Stock or
New Common Stock Units, as the case may be, are purchased or until such other
New Common Stock Offerees or the CVC Stockholders do not desire to purchase any
more New Common Stock or New Common Stock Units, as the case may be. Holding
shall make such New Common Stock Offer by providing each New Common Stock
Offeree with a notice (the "New Common Stock Notice") setting forth (i) each New
Common Stock Offeree's Pro Rata portion of such New Common Stock or of such New
Common Stock Units, as the case may be, (ii) the consideration to be paid for
each share of New Common Stock or each unit of New Common Stock Units, as the
case may be, and (iii) all other material terms of such New Common Stock Offer.
In order for any New Common Stock Offerees to accept the New Common Stock
Offer, such New Common Stock Offeree shall on or before twenty (20) days
following its receipt of a New Common Stock Notice deliver written notice of its
acceptance ("Acceptance Notice") to Holding, CVC and the other New Common Stock
Offerees (the expiration of such twenty (20) days being referred to herein as
the "Acceptance Date"). The Acceptance Notice shall set forth the maximum
number of New Common Stock or New Common Stock Units, as the case may be, that
such New Common Stock Offeree wishes to purchase, including any number which
would be allocated to such New Common Stock Offeree in the event any other New
Common Stock Offeree does not purchase all or any portion of its Pro Rata
portion.
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Notwithstanding the foregoing, if the issuance and sale to CVC is in conjunction
with the borrowing of money from CVC or its Affiliates or the guaranteeing of
debt of Holding or its Subsidiaries by CVC or its Affiliates, then no New Common
Stock Offeree shall have any preemptive rights as set forth herein unless such
New Common Stock Offeree purchases or participates, on a Pro Rata basis, in the
related financing or guarantee, as the case may be, on the same terms as CVC and
its Affiliates.
Within one hundred twenty (120) days following the Acceptance Date, Holding
or Aetna Holdings, as the case may be, (i) shall issue or sell New Common Stock
or New Common Stock Units, as the case may be, to each New Common Stock Offeree
who timely accepted such New Common Stock Offer upon the terms specified in such
New Common Stock Offer and the CVC Stockholders, if applicable, and (ii) may
issue or sell New Common Stock or New Common Stock Units, as the case may be, to
any other Person or Persons in an amount not to exceed the aggregate amount
offered pursuant to the New Common Stock Offer (less the aggregate amount of
shares of New Common Stock or units of New Common Stock Units, as the case may
be, issued or sold to New Common Stock Offerees and the CVC Stockholders
pursuant to the foregoing clause (i)) and for a price which equals or exceeds
the price per share of New Common Stock or per unit of New Common Stock Units,
as the case may be, specified in the New Common Stock Offer. This Section 7.1
shall terminate automatically and be of no further force and effect upon the
consummation of a Qualifying Offering.
ARTICLE VIII
MISCELLANEOUS
8.1 GOVERNING LAW. The construction, validity and interpretation of this
Agreement shall be governed and construed in accordance with the domestic laws
of the State of Delaware, without giving effect to any choice of law or conflict
of law provision or rule (whether of the State of Delaware or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Delaware.
8.2 ENTIRE AGREEMENT; AMENDMENTS. This Agreement (when read in conjunction
with the Recapitalization and Stock Purchase Agreements) constitutes the entire
agreement of the parties with respect to the subject matter hereof and may be
amended, modified or supplemented only by a written instrument duly executed by
Holding and the CVC Stockholders; provided that Holding shall provide twenty
(20) days' prior written notice of any such amendment not governed by the next
proviso; and provided further that (a) any amendment, modification or supplement
that adversely or disproportionately affects the Institutional Stockholders,
Former Management Stockholders, Management Stockholders or the Additional
Stockholders, as the case may be, shall require the consent of the Institutional
Stockholders, Former Management Stockholders, Management Stockholders or
Additional
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Stockholders, respectively, and (b) any amendment, modification or supplement
that disproportionately affects less than all of the Institutional Stockholders,
Former Management Stockholders, Management Stockholders or Additional
Stockholders, as the case may be, shall require the consent of the Institutional
Stockholders, Former Management Stockholders, Management Stockholders or the
Additional Stockholders so affected. In the event of an amendment, modification
or supplement of this Agreement in accordance with its terms, the Stockholders
shall cause the Board to meet within thirty (30) calendar days following such
amendment, modification or supplement, or as soon thereafter as is practicable
for the purpose of adopting any amendment to the Certificate and By-Laws of
Holding that may be required as a result of such amendment, modification or
supplement to this Agreement, and, if required, proposing such amendments to the
stockholders entitled to vote thereon. The Stockholders hereby agree to vote
their shares of voting Common Stock to approve such amendments to the
Certificate and By-Laws of Holding.
8.3 TERM. This Agreement shall terminate upon the earliest to occur of (i)
a Qualifying Offering, (ii) a Sale of the Company pursuant to clause (i) of the
definition of "Sale of the Company", and (iii) upon the distribution of any
proceeds from a Sale of the Company to the Stockholders pursuant to clause (ii)
of the definition of "Sale of the Company".
8.4 CERTAIN ACTIONS. Unless otherwise expressly provided herein, whenever
any action is required under this Agreement by:
(i) the CVC Stockholders, it shall be by the affirmative vote of the
holders of shares of Common Stock representing more than 50 percent of the
Common Stock then held by the CVC Stockholders as a group, or as otherwise
agreed in writing by the CVC Stockholders as a group;
(ii) the Berkshire Stockholders, it shall be by the affirmative vote
of the holders of shares of Common Stock representing more than 50 percent
of the Common Stock on a Diluted Basis then held by the Berkshire
Stockholders, as a group;
(iii) the Prudential Stockholders, it shall be by the affirmative vote
of the holders of shares of Common Stock representing more than 50 percent
of the Common Stock on a Diluted Basis then held by the Prudential
Stockholders, as a group;
(iv) the Pruco Stockholders, it shall be by the affirmative vote of
the holders of shares of Common Stock representing more than 50 percent of
the Common Stock on a Diluted Basis then held by the Pruco Stockholders, as
a group;
(v) the Former Management Stockholders, it shall be by the affirmative
vote of the holders of shares of Common Stock representing more than 50
percent of the Common Stock on a Diluted Basis then held by the Former
Management Stockholders, as a group;
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(vi) the State of Michigan Stockholders, it shall be by the
affirmative vote of the holders of shares of Common Stock representing
more than 50 percent of the Common Stock on a Diluted Basis then held
by the State of Michigan Stockholders, as a group;
(vii) the Management Stockholders, it shall be by the Management
Representative; or
(viii) the Additional Stockholders, it shall be by the
affirmative vote of the holders of shares of Common Stock representing
more than 50% of the Common Stock on a Diluted Basis then held by the
Additional Stockholders as a group.
8.5 INSPECTION For so long as this Agreement shall remain in effect, this
Agreement shall be made available for inspection by any Stockholder at the
principal executive offices of Holding.
8.6 RECAPITALIZATION, EXCHANGES, ETC. AFFECTING RESTRICTED SECURITIES. The
provisions of this Agreement shall apply, to the full extent set forth herein
with respect to the Restricted Securities, to any and all shares of Holding
capital stock or any successor or assign of Holding (whether by merger,
consolidation, sale of assets, or otherwise, including shares issued by a parent
corporation in connection with a triangular merger) which may be issued in
respect of, in exchange for, or in substitution of, Restricted Securities and
shall be appropriately adjusted for any stock dividends, splits, reverse splits,
combinations, reclassifications and the like occurring after the date hereof.
8.7 COMPLIANCE WITH REGULATIONS. Whenever a Stockholder is entitled to
purchase Restricted Securities pursuant to the provisions of this Agreement, any
closing time period specified in such provision shall be tolled until any
necessary governmental approval is received including without limitation,
approval under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
provided that such tolling period shall not exceed sixty (60) days.
8.8 WAIVER. No waiver by any party of any term or condition of this
Agreement, in one or more instances, shall be valid unless in writing, and no
such waiver shall be deemed to be construed as a waiver of any subsequent breach
or default of the same or similar nature.
8.9 SUCCESORS AND ASSIGNS. Except as otherwise expressly provided herein,
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, personal representatives, successors and
permitted assigns (including without limitation transferees of Restricted
Securities); provided, however, that (a) nothing contained herein shall be
construed as granting any Stockholder the right to transfer any of its
Restricted Securities except in accordance with this Agreement, (b) any Third
Party which acquires Restricted Securities in accordance with Section 2.5 shall
be bound by and have the benefits of the provisions of Sections 2.1, 2.2, 2.4,
2.5, 2.6, 2.7 and Article III to the same extent as the
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transferor of such Restricted Securities, but the remaining provisions of this
Agreement shall not inure to the benefit of, and the provisions of Article IV
shall not apply to the Restricted Securities of, such Third Party; provided,
however, such Third Party will be entitled to the same rights and benefits
granted to the transferor of such Restricted Securities with respect to Article
III Offers, Article V, Section 6.5 and Section 7.1, (c) unless otherwise
provided in the terms of the Transfer, none of the provisions of this Agreement,
other than those set forth in Sections 2.1 and 2.2 to the extent those Sections
require compliance with the Securities Act, delivery of opinions of counsel and
placement of Securities Act (or state securities laws) legends, shall apply to
any Transfer of Restricted Securities (or to the transferee thereof) subsequent
to a Transfer of those securities pursuant to Article III or by a CVC
Stockholder in accordance with Section 3.3(b), (d) none of the provisions of
this Agreement shall apply to any Transfer of Restricted Securities subsequent
to a Transfer pursuant to a registered public offering under the Securities Act
made in accordance with the Securities Act, (e) notwithstanding any Transfer of
Restricted Securities by any Berkshire Stockholder, Prudential Stockholder,
Pruco Stockholder, State of Michigan Stockholder, Former Management Stockholder,
Management Stockholder or Additional Stockholder to a CVC Stockholder, only the
provisions of this Agreement which are expressly applicable to CVC Stockholders
shall be applicable to such CVC Stockholder and to such Restricted Securities in
the hands of such CVC Stockholder, (f) notwithstanding any Transfer of
Restricted Securities by any Additional Stockholder, CVC Stockholder, Prudential
Stockholder, Pruco Stockholder, Former Management Stockholder, State of Michigan
Stockholder or Management Stockholder to a Berkshire Stockholder, only the
provisions of this Agreement which are expressly applicable to such Berkshire
Stockholder shall be applicable to such Berkshire Stockholder and to such
Restricted Securities in the hands of such Berkshire Stockholder, (g)
notwithstanding any Transfer of Restricted Securities by any CVC Stockholder,
Berkshire Stockholder, Pruco Stockholder, State of Michigan Stockholder, Former
Management Stockholder, Management Stockholder, or Additional Stockholder to a
Prudential Stockholder, only the provisions of this Agreement which are
expressly applicable to such Prudential Stockholder shall be applicable to such
Prudential Stockholder and to such Restricted Securities in the hands of such
Prudential Stockholder, (h) notwithstanding any Transfer of Restricted
Securities by any CVC Stockholder, Berkshire Stockholder, Prudential
Stockholder, State of Michigan Stockholder, Former Management Stockholder,
Management Stockholder or Additional Stockholder to any Pruco Stockholder, only
the provisions of this Agreement
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which are expressly applicable to such Pruco Stockholder shall be applicable to
such Pruco Stockholder and to the Restricted Securities in the hands of such
Pruco Stockholder, (i) notwithstanding any Transfer of Restricted Securities by
any CVC Stockholder, Berkshire Stockholder, Prudential Stockholder, Pruco
Stockholder, Former Management Stockholder, Management Stockholder or Additional
Stockholder to any State of Michigan Stockholder, only the provisions of this
Agreement which are expressly applicable to such State of Michigan Stockholder
shall be applicable to such State of Michigan Stockholder and to the Restricted
Securities in the hands of such State of Michigan Stockholder and to the
Restricted Securities in the hands of such State of Michigan Stockholder, (j)
notwithstanding any Transfer of Restricted Securities by any CVC Stockholder,
State of Michigan Stockholder, Management Stockholder or Additional Stockholder
to any Former Management Stockholder, only the provisions of this Agreement
which are expressly applicable to such Former Management Stockholder shall be
applicable to such Former Management Stockholder and to such Restricted
Securities in the hands of such Former Management Stockholder, (k)
notwithstanding any Transfer of Restricted Securities by any Additional
Stockholder, CVC Stockholder, Berkshire Stockholder, Prudential Stockholder,
State of Michigan Stockholder or Pruco Stockholder to a Management Stockholder,
only the provisions of this Agreement which are expressly applicable to such
Management Stockholder shall be applicable to such Management Stockholder and to
such Restricted Securities in the hands of such Management Stockholder, and (l)
notwithstanding any Transfer of Restricted Securities by any CVC Stockholder,
Management Stockholder, Berkshire Stockholder, Prudential Stockholder, Former
Management Stockholder, State of Michigan Stockholder or Pruco Stockholder to an
Additional Stockholder, only the provisions of this Agreement which are
expressly applicable to such Additional Stockholder shall be applicable to such
Additional Stockholder and to such Restricted Securities in the hands of such
Additional Stockholder.
8.10 REMEDIES. In the event of a breach by any party to this Agreement of
its obligations under this Agreement, any party injured by such breach, in
addition to being entitled to exercise all rights granted by law, including
recovery of damages and costs (including reasonable attorneys' fees), will be
entitled to specific performance of its rights under this Agreement. The
parties agree that the provisions of this Agreement shall be specifically
enforceable, it being agreed by the parties that the remedy at law, including
monetary damages, for breach of any such provision will be inadequate
compensation for any loss and that any defense in any action for specific
performance that a remedy at law would be adequate is waived.
8.11 INCOME TAX WITHOLDING. Each Management Stockholder and Additional
Stockholder authorizes Holding to make any required withholding from such
Management Stockholder's (or the Additional Stockholder, as the case may be)
compensation for the payment of any and all income taxes and other sums that may
be due any governmental authority as a result of the receipt by either the
Management Stockholders of compensation income under Section 83 of the Internal
Revenue Code of 1986, as amended, or similar provisions of state or local law,
if required by applicable law, and agrees, if requested by Holding, and in lieu
of all or a portion of such withholding, to pay Holding in a lump sum such
amounts as Holding may be required to remit to any governmental authority on
behalf of Management Stockholder (or Additional Stockholder, as the case may be)
in respect of any such taxes and other sums.
8.12 INVALID PROVISIONS. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future law, and if the
rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (a) such provision will be fully
severable, (b) this Agreement will be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part hereof, (c) the
remaining provisions of this Agreement will remain in full force and effect and
will not be affected by the illegal, invalid or unenforceable provision or by
its severance here from and (d) in lieu of such illegal, invalid or
unenforceable provision, there will be added automatically as a part of this
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Agreement a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible.
8.13 HEADINGS. The headings used in this Agreement have been inserted for
convenience of reference only and do not define or limit the provisions hereof.
8.14 FURTHER ASSURANCES. Each party hereto shall cooperate and shall take
such further action and shall execute and deliver such further documents as may
be reasonably requested by any other party in order to carry out the provisions
and purposes of this Agreement. Any provision herein that by its terms requires
a Subsidiary of Holding to take any action or refrain from taking any action
shall be interpreted to require Holding to cause such Subsidiary to take such
action or to refrain from taking such action, respectively, to the fullest
extent permitted by law.
8.15 GENDER. Whenever the pronouns "he" or "his" are used herein, they
shall also be deemed to mean "she" or "hers" or "it" or "its" whenever
applicable. Words in the singular shall be read and construed as though in the
plural, and words in the plural shall be construed as though in the singular in
all cases where they would so apply.
8.16 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
8.17 NOTICES. (a) All notices, requests and other communications hereunder
must be in writing and will be deemed to have been duly given only if delivered
personally against written receipt or by facsimile transmission or mailed (by
registered or certified mail, return receipt requested) or by reputable
overnight courier, fee prepaid to the parties at the following addresses or
facsimile numbers:
(i) If to any CVC Stockholder, to:
Citicorp Venture Capital, Ltd.
399 Park Avenue
New York, New York 10043
Facsimile No.: 212-888-2940
Attn: David Y. Howe
with a copy to:
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178
Facsimile No.: 212-309-6273
-39-
<PAGE> 41
Attn: Philip H. Werner
(ii) If to any Berkshire Stockholder, to:
Berkshire Partners
One Boston Place, Suite 3425
Boston, MA 02108
Facsimile No.: 617-227-6105
Attn: Russell L. Epker
with a copy to:
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, MA 02109-2881
Facsimile No.: 617-523-1231
Attn: Stephen W. Carr, P.C.
(iii) If to any Prudential Stockholder, to:
The Prudential Insurance Company of America
c/o Financial Restructuring Group
Gateway Center Four
100 Mulberry Street
Newark, NJ 07102
Facsimile No.: 201-802-2662
Attn: Managing Director
with copies to:
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, NY 10022
Facsimile No.: 212-821-8111
Attn: Duncan J. Stewart
The Prudential Insurance Company of America
c/o Law Department
Gateway Center Four
100 Mulberry Street
Newark, NJ 07102
Facsimile No.: 201-802-3853
-40-
<PAGE> 42
Attn: Jack Pfeilsticker
(iv) If to any Pruco Stockholder, to
Pruco Life Insurance Company
c/o Financial Restructuring Group
Gateway Center Four
100 Mulberry Street
Newark, NJ 07102
Facsimile No.: 201-802-2662
Attn: Managing Director
with copies to:
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, NY 10022
Facsimile No.: 212-821-8111
Attn: Duncan J. Stewart
Pruco Life Insurance Company
c/o Law Department
Gateway Center Four
100 Mulberry Street
Newark, NJ 07102
Facsimile No.: 201-802-3853
Attn: Jack Pfeilsticker
(v) If to any State of Michigan Stockholder, to
Michigan Department of Treasury
450 West Allegan
Lansing, MI 48922
Facsimile No.: 517-335-3668
Attn: Thomas Hufnagel
with a copy to:
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
-41-
<PAGE> 43
New York, NY 10022
Facsimile No.: 212-821-8111
Attn: Duncan J. Stewart
(vi) If to Holding, to:
MS Acquisition Corp.
c/o Aetna Industries, Inc.
24331 Sherwood Avenue
P.O. Box 3067
Centerline, MI 48015
Facsimile No.: 816-759-2209
Attn: Chief Executive Officer
with copies to:
Citicorp Venture Capital, Ltd.
399 Park Avenue - 14th Floor
New York, NY 10043
Facsimile No.: 212-888-2940
Attn: Michael A. Delaney
and
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, NY 10178
Facsimile No.: 212-309-6273
Attn: Philip H. Werner
(vii) If to a Stockholder other than a CVC Stockholder,
Berkshire Stockholder, Prudential Stockholder, Pruco
Stockholder or State of Michigan Stockholder, to the
address of such Person set forth in the stock records of
Holding.
(b) All such notices, requests and other communications will (w) if
delivered personally to the address as provided in this Section 8.17 be deemed
given upon delivery, (x) if delivered by facsimile transmission to the facsimile
number as provided in this Section 8.17 be deemed given upon receipt, (y) if
delivered by mail in the manner described above to the address as provided in
this Section 8.17, be deemed given upon the earlier of the third business day
following mailing or upon receipt and (z) if delivered by reputable overnight
courier to the address as provided in this Section 8.17, be deemed given upon
the earlier of the first business
-42-
<PAGE> 44
day following the date sent by such reputable overnight courier or upon receipt
(in each case regardless of whether such notice, request or other communication
is received by any other Person to whom a copy of such notice is to be delivered
pursuant to this Section 8.17). Any party from time to time may change its
address, facsimile number or other information for the purpose of notices to
that party by giving notice specifying such change to the other parties hereto.
8.18 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
EACH OF THE PARTIES HERETO, OTHER THAN THE STATE OF MICHIGAN, CONSENTS TO
THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF NEW
YORK, STATE OF NEW YORK, AND IRREVOCABLY AGREES THAT ALL ACTIONS OR PROCEEDINGS
RELATING TO THIS AGREEMENT MAY BE LITIGATED IN SUCH COURTS. EACH SUCH PARTY
ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND
BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. EACH SUCH
PARTY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES
THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE PARTY AT THE
ADDRESS SPECIFIED IN THIS AGREEMENT, SUCH SERVICE TO BECOME EFFECTIVE FIFTEEN
(15) DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL IN ANY WAY BE DEEMED TO
LIMIT THE ABILITY OF ANY PARTY HERETO TO SERVE ANY SUCH LEGAL PROCESS, SUMMONS,
NOTICES AND DOCUMENTS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW OR TO
OBTAIN JURISDICTION OVER OR TO BRING ACTIONS, SUITS OR PROCEEDINGS AGAINST ANY
OF THE OTHER PARTIES HERETO IN SUCH OTHER JURISDICTIONS, AND IN SUCH MANNER, AS
MAY BE PERMITTED BY ANY APPLICABLE LAW.
8.19 WAIVER OF JURY TRIAL.
EACH PARTY, OTHER THAN THE STATE OF MICHIGAN, HEREBY WAIVES ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT. EACH SUCH PARTY ALSO WAIVES ANY BOND OR SURETY
OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF
SUCH PARTY. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY
AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT
MATTER OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER
-43-
<PAGE> 45
COMMON LAW AND STATUTORY CLAIMS. EACH SUCH PARTY WARRANTS AND REPRESENTS THAT IT
HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-44-
<PAGE> 46
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
MS ACQUISITION CORP.
By: /s/ Ueli Spring
---------------------------
Name: Ueli Spring
Title: President and
Chief Executive
Officer
AETNA HOLDINGS, INC.
By: /s/ Ueli Spring
---------------------------
Name: Ueli Spring
Title: President and
Chief Executive
Officer
CITICORP VENTURE CAPITAL, LTD.
By: /s/ David Y. Howe
---------------------------
Name: David Y. Howe
Title: Assistant Vice
President
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By: /s/ Stephen R. Haeckel
---------------------------
Vice President
PRUCO LIFE INSURANCE COMPANY
By: /s/ B. Ross Smead
---------------------------
Vice President
<PAGE> 47
THE BERKSHIRE FUND,
A LIMITED PARTNERSHIP
By: BERKSHIRE CAPITAL
ASSOCIATES,
LIMITED PARTNERSHIP
Its General Partner
By: /s/ Russell L. Epker
----------------------------
A General Partner
BERKSHIRE STOCKHOLDERS
/s/ Bradley M. Bloom
------------------------------
BRADLEY M. BLOOM
/s/ J. Christopher Clifford
------------------------------
J. CHRISTOPHER CLIFFORD
/s/ Russell L. Epker
------------------------------
RUSSELL L. EPKER
/s/ Carl Ferenbach
------------------------------
CARL FERENBACH
/s/ Richard K. Lubin
------------------------------
RICHARD K. LUBIN
/s/ Lea Anne S. Ottinger
------------------------------
LEA ANNE S. OTTINGER
/s/ Kevin T. Callaghan
------------------------------
KEVIN T. CALLAGHAN
<PAGE> 48
STATE OF MICHIGAN
STATE TREASURER OF THE STATE OF
MICHIGAN, AS CUSTODIAN OF THE
PUBLIC SCHOOL EMPLOYEES'
RETIREMENT SYSTEM; STATE
EMPLOYEES' RETIREMENT SYSTEM;
MICHIGAN STATE POLICE
RETIREMENT SYSTEM; JUDGES'
RETIREMENT SYSTEM; AND PROBATE
JUDGES' RETIREMENT SYSTEM
By: /s/ Paul E. Rice
---------------------------
Title: Administrator
FORMER MANAGEMENT STOCKHOLDERS
/s/ Jerome Singer
--------------------------------
JEROME SINGER
/s/ Douglas A. Thal
--------------------------------
DOUGLAS A. THAL
/s/ Robert J. Klein
--------------------------------
ROBERT J. KLEIN
/s/ Steven Singer
--------------------------------
STEVEN SINGER
<PAGE> 49
MANAGEMENT STOCKHOLDERS
/s/ Ueli Spring
--------------------------
UELI SPRING
/s/ Harold Brown
--------------------------
HAROLD BROWN
/s/ Gary Easterly
--------------------------
GARY EASTERLY
/s/ Edward Lawson
--------------------------
EDWARD LAWSON
/s/ Daniel Pierce
--------------------------
DANIEL PIERCE
/s/ David Thal
--------------------------
DAVID THAL
/s/ Ralph Bredenbeck
--------------------------
RALPH BREDENBECK
/s/ Theresa Johnson
--------------------------
THERESA JOHNSON
<PAGE> 50
Annex I
Ownership Chart
[To Come]
<PAGE> 51
Exhibit A
Form of Joinder Agreement
Attention: Chief Executive Officer
Gentlemen:
In consideration of the [transfer][issuance] to the undersigned of [a
Warrant to purchase] _____ shares of [Class A] [Class B] Common Stock, par
value $.01 per share, [Describe any other security being transferred] of MS
Acquisition Corp., a Delaware corporation (the "Company"), the undersigned
[represents that it is a Permitted Transferee of [Insert name of transferor]
and]* agrees that, as of the date written below, [he] [she] [it] shall become a
party to[, and a Permitted Transferee as defined in,]* that certain
Stockholders Agreement dated as of August 13, 1996, as such agreement may have
been amended from time to time (the "Agreement"), among the Company and the
persons named therein, and [as a Permitted Transferee shall be fully bound by,
and subject to, all of the covenants, terms and conditions of the Agreement
that were applicable to the undersigned's transferor,]* [shall be fully bound
by, and subject to, the provisions of Sections 2.1, 2.2, 2.4, 2.5, 2.6, 2.7 and
3.2 of the Agreement that were applicable to the undersigned's transferor,]**
[shall be fully bound by, and subject to, all of the covenants, terms and
conditions of the Agreement,]*** [shall be fully bound by, and subject to, the
provisions of Sections 2.1 and 2.2 [insert other provisions, if
applicable]]**** as though an original party thereto and shall be deemed a [CVC
Stockholder] [Management Stockholder] [Institutional Stockholder] [Former
Management Stockholder] [Additional Stockholder] for [all]* [solely for]**
[all]*** [solely for]**** purposes thereof.
Executed as of the day of , .
TRANSFEREE:
-------------------------------
Address:
-------------------------------
-------------------------------
ACKNOWLEDGED AND ACCEPTED:
MS ACQUISITION CORP.
By:
---------------------------------
Name:
Title:
<PAGE> 52
* Include if transferee is a Permitted Transferee
** Include if transferee is a Third Party
*** Include if transferee is an Additional Stockholder
**** Include if transferee is receiving securities from CVC
<PAGE> 53
TABLE OF CONTENTS
Page
----
RECITALS.................................................................... 1
ARTICLE I
CERTAIN DEFINITIONS
1.1 Defined Terms.......................................................... 2
ARTICLE II
TRANSFERS OF RESTRICTED SECURITIES
2.1 Restrictions Generally; Securities Act................................. 13
2.2 Legend................................................................. 13
2.3 Limitations on Repurchases, Dividends, Etc............................. 14
2.4 Transfers by Institutional Stockholders, Former Management
Stockholders, Management Stockholders, and Additional Stockholders.... 15
2.5 Right of First Offer................................................... 16
2.6 Involuntary Transfers.................................................. 17
2.7 Sale of the Company.................................................... 19
ARTICLE III
RIGHTS OF INCLUSION
3.1 Rights of Inclusion.................................................... 20
3.2 Article III Sales...................................................... 21
3.3 Certain Transfers...................................................... 22
ARTICLE IV
REPURCHASE OF RESTRICTED SECURITIES OWNED
BY MANAGEMENT STOCKHOLDERS OR ADDITIONAL STOCKHOLDERS
4.1 Sale Event............................................................. 22
4.2 Purchase Price......................................................... 23
4.3 Closing................................................................ 23
4.4 Postponement........................................................... 24
4.5 Sale Event Agent....................................................... 24
4.6 Sale Event Claw-Back Provision......................................... 25
ARTICLE V
CORPORATE GOVERNANCE
5.1 Board of Directors..................................................... 26
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<PAGE> 54
5.2 Removal............................................................. 27
5.3 Vacancies........................................................... 27
5.4 Designation of Proxy................................................ 28
5.5 Committees of the Board; Subsidiary Boards.......................... 28
5.6 Observer's Rights................................................... 28
5.7 Affirmative Board Vote.............................................. 29
5.8 Action by Written Consent of Stockholders........................... 29
5.9 Regulatory Right.................................................... 29
ARTICLE VI
CERTAIN COVENANTS OF THE PARTIES
6.1 Registration of Common Stock........................................ 30
6.2 Management Stockholders; Additional Stockholders.................... 30
6.3 Stockholders List; Certain Notices.................................. 31
6.4 Regulatory Compliance Cooperation................................... 31
6.5 Financial Disclosure................................................ 32
6.6 Purchaser Representative............................................ 33
ARTICLE VII
RIGHTS OF OFFER
7.1 Rights of Offer..................................................... 34
ARTICLE VIII
MISCELLANEOUS
8.1 Governing Law....................................................... 35
8.2 Entire Agreement; Amendments........................................ 35
8.3 Term................................................................ 36
8.4 Certain Actions..................................................... 36
8.5 Inspection.......................................................... 37
8.6 Recapitalization, Exchanges, Etc., Affecting Restricted Securities.. 37
8.7 Compliance with Regulations......................................... 37
8.8 Waiver.............................................................. 37
8.9 Successors and Assigns.............................................. 37
8.10 Remedies............................................................ 39
8.11 Income Tax Withholding.............................................. 39
8.12 Invalid Provisions.................................................. 39
8.13 Headings............................................................ 40
8.14 Further Assurances.................................................. 40
8.15 Gender.............................................................. 40
8.16 Counterparts........................................................ 40
8.17 Notices............................................................. 40
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<PAGE> 55
8.18 Consent to Jurisdiction and Service of Process...................... 44
8.19 Waiver of Jury Trial................................................ 45
Annex I - Ownership Chart
Exhibit A - Form of Joinder Agreement
-iii-
<PAGE> 1
EXHIBIT 10.10
- --------------------------------------------------------------------------------
MS ACQUISITION CORP.
REGISTRATION RIGHTS AGREEMENT
- --------------------------------------------------------------------------------
<PAGE> 2
REGISTRATION RIGHTS AGREEMENT (this "Agreement") dated as of August _____,
1996 by and among, MS Acquisition Corp., a Delaware corporation (the "Company"
), Citicorp Venture Capital, Ltd., a New York corporation ("CVC"), The
Berkshire Fund, a Delaware limited partnership ("Berkshire"), and each of the
individuals listed under the heading "Berkshire Group" on the signature pages
hereto (individually, a "Berkshire Group Member" and collectively, with
Berkshire, the "Berkshire Group"), The Prudential Insurance Company of America
("Pru"), Pruco Life Insurance Company ("Pruco"), the various retirement systems
of the State of Michigan listed on the signature pages hereto under the
heading "State of Michigan" (the "State of Michigan" and collectively with the
Berkshire Group, Pru and Pruco, the "Institutional Stockholders"), each of the
individuals whose names appear under the heading "Former Management Group" on
the signature pages hereto (individually, a "Former Management Group Member"
and collectively, the "Former Management Group"), and each of the individuals
(individually, a "Management Group Member" and collectively, the "Management
Group") who is listed as a Management Group Member on the signature pages
hereof [or who shall become a party to this Agreement in connection with the
grant to each such individual of an option to purchase shares of Common Stock].
Capitalized terms are used as defined in Article I hereto.
RECITALS
WHEREAS, contemporaneously with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Stockholders
Agreement among the parties hereto and dated the date hereof (as amended,
modified or supplemented from time to time, the "Stockholders Agreement"), and
in connection therewith, the Company has agreed to provide the other parties
hereto with the registration rights set forth in this Agreement;
NOW THEREFORE, in connection with the Stockholders Agreement and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINED TERMS IN STOCKHOLDERS AGREEMENT.
Unless otherwise defined herein, defined terms used in this Agreement
shall have the meanings set forth in the Stockholders Agreement.
<PAGE> 3
1.2 DEFINITIONS.
The following capitalized terms, when used in this Agreement, have the
respective meanings set forth below (such definitions to be equally applicable
to both singular and plural forms of the terms defined):
"Additional Management Stockholder" means an Additional Stockholder who is
an officer, director or employee of the Company or any of its Subsidiaries.
"Additional Stockholder" means any Person who has executed a Joinder
Agreement pursuant to the Stockholders Agreement, and its direct and indirect
Permitted Transferees, so long as any such Person shall hold (either directly
or indirectly) Registrable Securities, and only to the extent that (i) the
Company has granted such person registration rights as a Stockholder hereunder
and (ii) such Person has executed a Registration Rights Joinder Agreement.
"Commission" means the Securities and Exchange Commission and any other
similar or successor agency of the federal government administering the
Securities Act or the Exchange Act.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, and the rules and regulations of the Commission thereunder.
"Initial Public Offering" means the first time a registration statement
filed under the Securities Act with the Commission respecting an offering,
whether primary or secondary, of Common Stock of the Company (or securities
convertible, exercisable or exchangeable for or into Common Stock of the
Company or rights to acquire Common Stock of the Company or such securities),
which is underwritten on a firmly committed basis, is declared effective and
the securities so registered are issued and sold.
"Registrable Securities" means, at any time, the shares of Common Stock
then issued and outstanding or which are issuable upon conversion, exercise or
exchange of the Series A Preferred Stock or the Options and any securities into
which such Common Stock shall have been changed or any securities resulting
from any reclassification or recapitalization of such Common Stock; provided,
that "Registrable Securities" shall not include any shares of Common Stock
obtained or transferred pursuant to an effective registration statement under
the Securities Act or in a Rule 144 Transaction, and provided, further, that
"Registrable Securities" shall not include any shares of Common Stock which are
held by a Person who is not a Stockholder.
"Registration Rights Joinder Agreement" means a Registration Rights Joinder
Agreement in the form attached hereto as Exhibit A.
-2-
<PAGE> 4
"Required CVC Stockholders" means, as of the date of any determination
thereof, CVC and CVC Stockholders that hold Registrable Securities representing
at such time at least a majority (by number of shares) of the Registrable
Securities, on a fully diluted basis, held by all CVC Stockholders.
"Required Institutional Stockholders" means, as of the date of any
determination thereof, Institutional Stockholders that hold Registrable
Securities representing at such time at least a majority (by number of shares)
of the Registrable Securities, on a fully diluted basis, held by all
Institutional Stockholders.
"Rule 144 Transaction" means a transfer of Restricted Securities (A)
complying with Rule 144 under the Securities Act as such Rule is in effect on
the date of such transfer (but not including a sale other than pursuant to a
"brokers transaction" as defined in clauses (1) and (2) of paragraph (g) of such
Rule as in effect on the date hereof) and (B) occurring at a time when
Restricted Securities are registered pursuant to Section 12 of the Exchange Act
(or any successor to such Section).
"Stockholders" means the CVC Stockholders, Institutional Stockholders, the
Former Management Stockholders, the Management Stockholders and the Additional
Stockholders and any transferee of any of the foregoing persons who has
acquired Registrable Securities in accordance with the Stockholders Agreement
and who has executed a Registration Rights Joinder Agreement.
1.3 CROSS-REFERENCES.
The following defined terms, when used in this Agreement, shall have the
meaning ascribed to them in the corresponding Sections of this Agreement listed
below:
"Berkshire" -- Preamble
"Berkshire Group" -- Preamble
"Berkshire Group Member" -- Preamble
"Black-Out Notice" -- Section 2.7(b)
"Company" -- Preamble
"CVC" -- Preamble
"Demand Registrations" -- Section 2.1
"Former Management Group" -- Preamble
"Former Management Group Member" -- Preamble
"Institutional Stockholders" -- Preamble
"Long-Form Registrations" -- Section 2.1
"Management Group" -- Preamble
"Management Group Member" -- Preamble
-3-
<PAGE> 5
"Piggyback Holders" -- Section 3.1
"Piggyback Registration" -- Section 3.1
"Pru" -- Preamble
"Pruco" -- Preamble
"Registration Expenses" -- Section 6.1
"Requesting Investor" -- Section 2.1(a)
"Short-Form Registrations" -- Section 2.1
"State of Michigan" -- Preamble
"Stockholders Agreement" -- Recitals
ARTICLE II
DEMAND REGISTRATIONS
2.1 REQUESTS FOR REGISTRATION.
(a) As provided in Sections 2.2 and 2.3, from and after the date that is
ninety-one (91) days after the closing of an Initial Public Offering, the
Required CVC Stockholders or the Required Institutional Stockholders (each of
which being, a "Requesting Investor") shall be entitled to request registration
under the Securities Act of all or part of their Registrable Securities (i) on
Form S-1 or any similar long-form registration ("Long-Form Registrations"), and
(ii) on Form S-2 or S-3 or any similar short-form registration ("Short-Form
Registrations") if the Company qualifies to use such short form. Within ten
(10) days after receipt of any such request, the Company will give written
notice of such request to all Stockholders holding Registrable Securities.
Thereafter, the Company will use all reasonable efforts to effect the
registration under the Securities Act on the form requested by the applicable
Requesting Investors and will include in such registration all Registrable
Securities with respect to which the Company has received written requests for
inclusion therein by the Stockholders within thirty (30) days after the receipt
of the Company's notice, subject to the provisions of Section 2.5. All
registrations requested pursuant to this Section 2.1 are referred to herein as
"Demand Registrations."
(b) Any Requesting Investor that requests a Demand Registration under this
Article II may, at any time prior to the effective date of the registration
statement relating to such registration, revoke such request by providing
written notice to the Company; provided, however, that notwithstanding such
revocation, such Demand Registration shall be deemed a request for purposes of
Section 2.2 or 2.4 unless, after consultation with the Company and any proposed
underwriter, the Requesting Investor in good faith determines that the
Registrable Securities that it has requested to be registered would not be sold
pursuant to such Demand Registration within a reasonable amount of time or at a
price acceptable to such Requesting Investor.
-4-
<PAGE> 6
(c) Any request for a Demand Registration pursuant to this Article II
shall specify the number of shares of Registrable Securities proposed to be
sold by the Requesting Investor and the intended method of disposition thereof.
(d) Notwithstanding the provisions of Section 2.1(a), the Required CVC
Stockholders may request that the Company effect an Initial Public Offering
with gross proceeds to the Company in the amount requested by the Required CVC
Stockholders and the Company shall use all reasonable efforts to effect such
Initial Public Offering within ninety (90) days after receipt of such request.
No such request shall count toward the limit on Long-Form Registrations
provided in Section 2.2.
2.2 LONG-FORM REGISTRATIONS.
The Required CVC Stockholders will be entitled to request pursuant to this
Article II up to three (3) Long-Form Registrations, and the Required
Institutional Stockholders will be entitled to request pursuant to this Article
II one (1) Long-Form Registration. The Company will pay all Registration
Expenses in connection with any such Long-Form Registrations. All Long-Form
Registrations (unless otherwise requested by the relevant Requesting Investor)
shall be underwritten registrations.
2.3 SHORT-FORM REGISTRATIONS.
In addition to the Long-Form Registrations provided pursuant to Section
2.2, the Required CVC Stockholders will be entitled to request an unlimited
number of Short-Form Registrations, and the Required Institutional Stockholders
will be entitled to request three (3) Short-Form Registrations. The Company
will pay all Registration Expenses in connection with any Short-Form
Registrations. Demand Registrations will be Short-Form Registrations whenever
the Company is qualified to use any applicable short form. Once the Company
has become subject to the reporting requirements of the Exchange Act, the
Company will use its reasonable best efforts to make Short-Form Registrations
available for the sale of Registrable Securities.
2.4 EFFECTIVE REGISTRATION STATEMENT.
No Demand Registration shall be deemed to have been effected for purposes
of Section 2.2:
(i) unless a registration statement with respect
thereto has become effective;
-5-
<PAGE> 7
(ii) if, after it has become effective, any stop
order, injunction or other order or requirement of the
Commission or other governmental agency or court for
any reason, affecting any of the securities covered by
such registration statement, is issued or threatened
by the Commission or other governmental agency or
court;
(iii) if the Company delivers a Black-Out Notice with
respect to such requested registration;
(iv) if the conditions to closing specified in the
purchase agreement or underwriting agreement entered
into in connection with such registration are not
satisfied by reason of a failure by or inability of
the Company to satisfy any of such conditions, or the
occurrence of an event outside the reasonable control
of the relevant Requesting Investor;
(v) the revocation notice described in the proviso to
Section 2.1(b) has been delivered by the Requesting
Investor; or
(vi) if the Requesting Investor is not able to
register and sell at least ninety percent (90%) of the
amount of Registrable Securities which were requested
to be included by it in such registration;
provided that the Company will pay all Registration Expenses in connection with
any registration if pursuant to this Section 2.4 the registration is deemed not
to have been effected.
2.5 PRIORITY ON DEMAND REGISTRATIONS.
(a) The Company will not include in any Demand Registration any securities
which are not Registrable Securities without the written consent of either the
Required CVC Stockholders (if the Required CVC Stockholders have requested such
Demand Registration) or without the written consent of the Required
Institutional Stockholders (if the Required Institutional Stockholders have
requested such Demand Registration).
(b) If the Requesting Investors and other holders of Registrable
Securities request Registrable Securities to be included in a Demand
Registration that is an underwritten offering and the managing underwriters
advise the Company in writing that in their opinion the number of Registrable
Securities requested to be included exceeds the number of Registrable
Securities that can be sold in such offering within a price range acceptable to
the Requesting
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Investors who have made such Demand Registration, then the Company will include
any securities to be sold in such Demand Registration in the following order
and priority:
(A) (i) first, the Registrable Securities owned by
the Requesting Investors that have requested such
registration, provided, that if the managing underwriters
determine in good faith that a lower number of Registrable
Securities should be included, then only that lower number of
Registrable Securities requested to be included by the
Requesting Investors shall be included in such registration,
and the Requesting Investors shall participate in the
registration pro rata based upon their total ownership, on a
fully diluted basis, of Registrable Securities, (ii) second,
the number of Registrable Securities requested to be included
by other Stockholders, which, in the opinion of such
underwriters, can be sold, pro rata among the respective
holders based upon their total ownership, on a fully diluted
basis, of Registrable Securities and provided, further, that
if the managing underwriters determine in good faith that a
lower number of Registrable Securities held by Management
Stockholders and/or Additional Stockholders than such pro rata
portion should be included, then such lower number shall be
included and, as a result thereof, a greater number of
Registrable Securities owned by the other Stockholders may be
sold; (iii) third, the securities the Company proposes to sell
and (iv) fourth, any securities other than Registrable
Securities to be sold by persons other than the Company
included pursuant to Section 2.5(a) hereof.
(B) Any Person other than Stockholders including any
securities in such registration pursuant to Article II hereof
must pay its share of the Registration Expenses as provided in
Article VI hereof.
2.6 SELECTION OF UNDERWRITERS.
The Requesting Investors that have requested such registration will have
the right to select the underwriters and the managing underwriter to administer
any Demand Registration (which underwriters and managing underwriter shall be
reasonably acceptable to the Company).
2.7 BLACK-OUT RIGHTS AND POSTPONEMENT.
(a) The Company shall not be required to provide a Demand Registration if
the Company, within the 90-day period preceding the date of a request for a
Demand Registration, has effected a registration of securities in which the
Requesting Investors were entitled to participate without cutback pursuant to
Demand Registration rights under Article II hereof or Piggyback Registration
rights under Article III hereof.
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<PAGE> 9
(b) The Company may, upon written notice (a "Black-Out Notice") to each
Requesting Investor requesting a Demand Registration, require such Requesting
Investor to withdraw such Demand Registration upon the good faith determination
by the Company that such postponement is necessary (i) to avoid disclosure of
material non-public information or (ii) as a result of a pending material
financing or acquisition transaction. In each case, each of the Requesting
Investors may not request another Demand Registration for a period of up to
sixty (60) days, as specified by the Company in such Black-Out Notice. The
Company may only give a Black-Out Notice where the giving of such notice has
been specifically approved by the Company's Board of Directors. Upon receipt
of a Black-Out Notice, the Demand Registration shall be deemed to be rescinded
and retracted and shall not be counted as a Demand Registration for any
purpose. The Company may not deliver more than one Black-Out Notice in any
twelve-month period.
ARTICLE III
PIGGYBACK REGISTRATIONS
3.1 RIGHT TO PIGGYBACK.
Whenever the Company proposes (other than pursuant to a Demand
Registration or an Initial Public Offering (unless otherwise agreed by the
Company)) to register any of its equity securities under the Securities Act
(whether for the Company's own account (other than on Forms S-4 or S-8 or any
successor forms), or for the account of any other Person) (a "Piggyback
Registration"), the Company will give prompt written notice to all CVC
Stockholders, Institutional Stockholders, Management Stockholders and
Additional Stockholders (the "Piggyback Holders") of its intention to effect
such a registration, and such notice shall offer the Piggyback Holders the
opportunity to register on the same terms and conditions such number of shares
of Registrable Securities as such Piggyback Holder may request. The Company
will include in such registration all Registrable Securities with respect to
which the Company has received written requests for inclusion therein within 30
days after the receipt by such Piggyback Holder of the Company s notice,
subject to the provisions of Sections 3.3 and 3.4.
3.2 PIGGYBACK EXPENSES.
The Registration Expenses of the holders of Registrable Securities will be
paid by the Company in all Piggyback Registrations.
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3.3 PRIORITY ON PRIMARY REGISTRATIONS.
If a Piggyback Registration is an underwritten primary registration on
behalf of the Company, and the managing underwriters advise the Company in
writing that in their opinion the number of securities requested to be included
in such registration are such that the success of the offering would be
materially and adversely affected, the Company will include any securities to
be sold in such registration in the following order: (i) first, the securities
the Company proposes to sell, (ii) second, the Registrable Securities requested
to be included in such registration by the Piggyback Holders, provided that, if
the managing underwriters in good faith determine that a lower number of
Registrable Securities should be included, then the Company shall be required
to include in such registration only that lower number of Registrable
Securities, and the Piggyback Holders shall participate in the registration pro
rata based upon their total ownership, on a fully diluted basis, of Registrable
Securities, provided, further, that if the managing underwriters determine in
good faith that a lower number of Registrable Securities held by Management
Stockholders and/or Additional Stockholders than such pro rata portion should
be included, then such lower number shall be included and, as a result thereof,
a greater number of Registrable Securities owned by the other Stockholders
shall be included and (iii) third, other securities requested to be included in
such registration.
3.4 PRIORITY ON SECONDARY REGISTRATIONS.
If a Piggyback Registration is an underwritten secondary registration on
behalf of holders of the Company's securities and the managing underwriters
advise the Company in writing that in their opinion the number of securities
requested to be included in such registration are such that the success of the
offering would be materially and adversely affected, the Company will include
any securities to be sold in such registration in the following order: (i)
first, the securities of such holders, (ii) second, the Registrable Securities
requested to be included in such registration by the Piggyback Holders pursuant
to Section 3.1 hereof, provided that, if the managing underwriters in good
faith determine that a lower number of Registrable Securities should be
included, then the Company shall be required to include in such registration
only that lower number of Registrable Securities, and the Piggyback Holders
shall participate in the registration pro rata based upon their total
ownership, on a fully diluted basis, of Registrable Securities, provided,
further, that if the managing underwriters determine in good faith that a lower
number of Registrable Securities held by Management Stockholders and/or
Additional Stockholders than such pro rata portion should be included, then
such lower number shall be included and, as a result thereof, a greater number
of Registrable Securities owned by the other Stockholders may be sold and (iii)
third, other securities requested to be included in such registration.
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ARTICLE IV
HOLDBACK AGREEMENTS
4.1 HOLDBACK.
Each holder of Registrable Securities agrees not to effect any public sale
or distribution of Registrable Securities, or any securities convertible,
exchangeable or exercisable for or into such securities, during the seven days
prior to, and the 90-day period beginning on, the effective date of an Initial
Public Offering or any underwritten Demand Registration or any underwritten
Piggyback Registration in which such holder had an opportunity to participate
without cutback under Article III hereof (in each case except as part of such
underwritten registration), unless the managing underwriters of the registered
public offering otherwise agree.
4.2 COMPANY HOLDBACK.
The Company agrees (i) not to effect any public sale or distribution of
its equity securities, or any securities convertible, exchangeable or
exercisable for or into such securities, during the fourteen (14) days prior
to, and during the 90-day period beginning on, the effective date of any
underwritten Demand Registration or any underwritten Piggyback Registration in
which holders of Registrable Securities are selling stockholders (except as
part of such underwritten registration or pursuant to registrations on Forms
S-4 or S-8 or any successor form), unless the managing underwriters of such
underwritten Demand Registration or underwritten Piggyback Registration
otherwise agree, and (ii) to use all reasonable efforts to cause each holder of
at least five percent (5%) (on a fully diluted basis) of its equity securities,
or any securities convertible, exchangeable or exercisable for or into such
securities, to agree not to effect any public sale or distribution of any such
securities during such period (except as part of such underwritten
registration, if otherwise permitted), unless the managing underwriters of such
underwritten Demand Registration or underwritten Piggyback Registration
otherwise agree.
ARTICLE V
REGISTRATION PROCEDURES
Whenever the Stockholders have requested that any Registrable Securities
be registered pursuant to this Agreement, the Company will use all reasonable
efforts to effect the registration and the sale of such Registrable Securities
in accordance with the intended method of disposition thereof, and pursuant
thereto the Company will as expeditiously as possible (or, in the case of
clause (p) below, will not):
(a) prepare and file with the Commission a registration statement with
respect to such Registrable Securities (such registration statement to include
all information which the
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<PAGE> 12
holders of the Registrable Securities to be registered thereby shall reasonably
request) and use all reasonable efforts to cause such registration statement to
become effective, provided that as promptly as practicable before filing a
registration statement or prospectus or any amendments or supplements thereto,
the Company will (i) furnish to counsel selected by the holders of a majority
(by number of shares) of the Registrable Securities covered by such
registration statement (and, if any CVC Stockholders have requested inclusion
of any Registrable Securities pursuant to Article II or Article III, to one
counsel for such CVC Stockholders) copies of all such documents proposed to be
filed, and the Company shall not file any such documents to which such counsel
shall have reasonably objected on the grounds that such document does not
comply in all material respects with the requirements of the Securities Act,
and (ii) notify each holder of Registrable Securities covered by such
registration statement of (x) any request by the Commission to amend such
registration statement or amend or supplement any prospectus or (y) any stop
order issued or threatened by the Commission, and take all reasonable actions
required to prevent the entry of such stop order or to remove it if entered;
(b) (i) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective until all Registrable Securities covered by such Registration
Statement are sold in accordance with the intended plan of distribution set
forth in such Registration Statement and (ii) comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by
such registration statement during such period in accordance with the intended
methods of disposition by the sellers thereof set forth in such registration
statement;
(c) furnish to each seller such number of conformed copies of such
registration statement, each amendment and supplement thereto, the prospectus
included in such registration statement (including each preliminary prospectus
and, in each case, including all exhibits thereto and documents incorporated by
reference therein) and such other documents as such seller may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such seller;
(d) use its best efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such jurisdictions
as any seller thereof shall reasonably request, to keep such registration or
qualification in effect for so long as such registration statement remains in
effect and do any and all other acts and things which may be reasonably
necessary or advisable to enable such seller to consummate the disposition in
such jurisdictions of the Registrable Securities owned by such seller,
provided, however, that the Company will not be required to (i) qualify
generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this clause (d), (ii) subject itself to taxation in
any such jurisdiction or (iii) consent to general service of process in any
such jurisdiction;
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<PAGE> 13
(e) furnish to each seller of Registrable Securities a signed copy,
addressed to such seller (and the underwriters, if any) of an opinion of
counsel for the Company or special counsel to the selling stockholders, dated
the effective date of such registration statement (and, if such registration
statement includes an underwritten public offering, dated the date of the
closing under the underwriting agreement), reasonably satisfactory in form and
substance to such seller, covering substantially the same matters with respect
to such registration statement (and the prospectus included therein) as are
customarily covered in opinions of issuer's counsel delivered to the
underwriters in underwritten public offerings, and such other legal matters as
the seller (or the underwriters, if any) may reasonably request;
(f) notify each seller of Registrable Securities, at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, of the occurrence of any event known to the Company as a result of which
the prospectus included in such registration statement, as then in effect,
contains an untrue statement of a material fact or omits to state any fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances under which they were made, and, at
the request of any such seller, the Company will prepare and furnish to such
seller a reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such Registrable Securities, such prospectus shall not include 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
in the light of the circumstances under which they were made and in the event
the Company shall give such notice, the Company shall extend the period during
which such registration statement shall be maintained effective by the number
of days during the period from and including the date of the giving of such
notice to such seller to the date when the Company made available to such
seller an appropriately amended or supplemented prospectus;
(g) cause all such Registrable Securities to be listed on each securities
exchange on which similar securities issued by the Company are then listed and
to enter into such customary agreements as may be required in furtherance
thereof, including without limitation listing applications and indemnification
agreements in customary form;
(h) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
(i) enter into such customary arrangements and take all such other actions
as the holders of a majority (by number of shares) of the Registrable
Securities being sold or the underwriters, if any, reasonably request in order
to expedite or facilitate the disposition of such Registrable Securities
(including without limitation use of its best efforts to effect a stock split
or a combination of shares);
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<PAGE> 14
(j) make available for inspection by any seller of Registrable Securities,
any underwriter participating in any disposition pursuant to such registration
statement and any attorney, accountant or other agent retained by any such
seller or underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors, employees and independent accountants to supply all information
reasonably requested by any such seller, underwriter, attorney, accountant or
agent in connection with such registration statement;
(k) subject to other provisions hereof, use all reasonable efforts to
cause such Registrable Securities covered by such registration statement to be
registered with or approved by such other governmental agencies or authorities
or self-regulatory organizations as may be necessary to enable the sellers
thereof to consummate the disposition of such Registrable Securities;
(l) use all reasonable efforts to obtain a "comfort" letter, dated the
effective date of such registration statement (and, if such registration
includes an underwritten offering, dated the date of the closing under the
underwriting agreement), signed by the independent public accountants who have
certified the Company's financial statements, addressed to each seller, and to
the underwriters, if any, covering substantially the same matters with respect
to such registration statement (and the prospectus included therein) and with
respect to events subsequent to the date of such financial statements, as are
customarily covered in accountants' letters delivered to the underwriters in
underwritten public offerings of securities and such other financial matters as
such seller (or the underwriters, if any) may reasonably request;
(m) otherwise use all reasonable efforts to comply with all applicable
rules and regulations of the Commission and make available to its security
holders, in each case as soon as practicable, an earnings statement covering a
period of at least twelve months, beginning with the first month after the
effective date of the registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act;
(n) permit any holder of Registrable Securities, if such holder
determines, in its sole judgment, exercised in good faith, that it might be
deemed to be a controlling person of the Company (within the meaning of the
Securities Act or the Exchange Act), to participate in the preparation of any
registration statement covering such holder's Registrable Securities and to
include therein material, furnished to the Company in writing, which in the
reasonable judgment of such holder should be included and which is reasonably
acceptable to the Company;
(o) use all reasonable efforts to obtain the lifting at the earliest
possible time of any stop order suspending the effectiveness of any
registration statement or of any order preventing or suspending the use of any
preliminary prospectus;
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(p) at any time file or make any amendment to a registration statement, or
any amendment of or supplement to a prospectus (including amendments of the
documents incorporated by reference into the prospectus), of which each seller
of Registrable Securities or the managing underwriters shall not have
previously been advised and furnished a copy or to which any sellers of
Registrable Securities, the managing underwriters, or counsel for such sellers
or for the underwriters shall reasonably object;
(q) make such representations and warranties (subject to appropriate
disclosure schedule exceptions) to sellers of Registrable Securities and the
underwriters, if any, in form, substance and scope as are customarily made by
issuers to underwriters and selling holders, as the case may be, in
underwritten public offerings of substantially the same type; and
(r) if any proposed registration statement refers to any holder by name or
otherwise as the holder of any securities of the Company then (whether or not
such holder is or might be deemed to be a controlling person of the Company),
(i) the Company shall be required at the request of such holder to insert
therein language, in form and substance reasonably satisfactory to such holder,
the Company and the managing underwriters, to the effect that the holding by
such holder of such securities is not to be construed as a recommendation by
such holder of the investment quality of the Company s securities covered
thereby and that such holding does not imply that such holder will assist in
meeting any future financial requirements of the Company, or (ii) in the event
that such reference to such holder by name or otherwise is not required by the
Securities Act, any similar Federal or state statute, or any rule or regulation
of any other regulatory body having jurisdiction over the offering, then in
force, the Company shall be required at the request of such holder to delete
the reference to such holder.
ARTICLE VI
REGISTRATION EXPENSES
6.1 FEES GENERALLY.
All expenses incident to the Company's performance of or compliance with
this Agreement, including without limitation internal expenses (including
without limitation all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit or
quarterly review, the expense of any liability insurance, the expenses and fees
for listing the securities to be registered on each securities exchange on
which similar securities issued by the Company are then listed, all
registration and filing fees, fees and expenses of compliance with securities
or blue sky laws (including without limitation reasonable fees and
disbursements of counsel in connection with blue sky qualifications of the
Registrable Securities), printing expenses, messenger and delivery expenses,
and fees and disbursements of counsel for the Company and all independent
certified public accountants, underwriters
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(excluding discounts and commissions) and other Persons retained by the Company
(all such expenses being herein called "Registration Expenses") shall be borne
as provided for in Sections 2.2, 2.3, 2.4, 2.5, 3.2 and this Article VI;
provided, that each Stockholder shall pay any underwriting fees, discounts or
commissions attributable to the sale of its Registrable Securities.
6.2 COUNSEL FEES.
In connection with each Demand Registration, the Company will reimburse
the Requesting Investor for such Demand Registration for the reasonable fees
and disbursements of one counsel chosen by the relevant Requesting Investor.
ARTICLE VII
UNDERWRITTEN OFFERINGS
7.1 DEMAND UNDERWRITTEN OFFERINGS.
If requested by the underwriters for any underwritten offerings of
Registrable Securities pursuant to a Demand Registration, the Company will
enter into an underwriting agreement with such underwriters for such offering,
such agreement to be satisfactory in substance and form to a majority (by
number of shares) of holders of Registrable Securities being offered and the
underwriters, and to contain such representations and warranties by the Company
and such other terms as are generally included in agreements of this type,
including without limitation indemnities customarily included in such
agreements. The holders of the Registrable Securities will cooperate in good
faith with the Company in the negotiation of the underwriting agreement. The
holders of Registrable Securities to be distributed by such underwriters may be
parties to such underwriting agreement and may, at their option, require that
any or all of the representations and warranties by, and the other agreements
on the part of, the Company to and for the benefit of such underwriters shall
also be made to and for the benefit of such holders of Registrable Securities
and that any or all of the conditions precedent to the obligations of such
underwriters under such underwriting agreement be conditions precedent to the
obligations of such holders of Registrable Securities. The Company shall
cooperate with any such holder of Registrable Securities in order to limit any
representations or warranties to, or agreements with, the Company or the
underwriters to be made by such holder only to those representations,
warranties or agreements regarding such holder, such holder's Registrable
Securities and such holder's intended method of distribution and any other
representation required by applicable law.
7.2 INCIDENTAL UNDERWRITTEN OFFERINGS.
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If the Company at any time proposes to register any of its securities
under the Securities Act as contemplated by Article III of this Agreement and
such securities are to be distributed by or through one or more underwriters,
the Company will, if requested by any holder of Registrable Securities as
provided in Article III of this Agreement, arrange for such underwriters to
include all the Registrable Securities to be offered and sold by such holder,
subject to the limitations set forth in Article III hereof, among the
securities to be distributed by such underwriters. The holders of Registrable
Securities to be distributed by such underwriters shall be parties to the
underwriting agreement between the Company and such underwriters, and may, at
their option, require that any or all of the representations and warranties by,
and the other agreements on the part of, the Company to and for the benefit of
such underwriters shall also be made to and for the benefit of such holders of
Registrable Securities and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement be
conditions precedent to the obligations of such holders of Registrable
Securities. The Company shall cooperate with any such holder of Registrable
Securities in order to limit any representations or warranties to, or
agreements with, the Company or the underwriters to be made by such holder only
to those representations, warranties or agreements regarding such holder, such
holder's Registrable Securities and such holder's intended method of
distribution and any other representation required by applicable law.
ARTICLE VIII
INDEMNIFICATION
8.1 INDEMNIFICATION BY THE COMPANY.
The Company agrees to indemnify and hold harmless, to the fullest extent
permitted by law, each of the holders of any Registrable Securities covered by
such registration statement, each other Person, if any, who controls such
holder within the meaning of the Securities Act or the Exchange Act, and each
of their respective directors, general partners and officers, as follows:
(i) against any and all loss, liability, claim, damage
or expense arising out of or based upon an untrue
statement or alleged untrue statement of a material
fact contained in any registration statement (or any
amendment or supplement thereto), including all
documents incorporated therein by reference, or in any
preliminary prospectus or final or summary prospectus
(or any amendment or supplement thereto) or the
omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to
make the statements therein, in light of the
circumstances under which they were made, not
misleading;
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(ii) against any and all loss, liability, claim,
damage and expense to the extent of the aggregate
amount paid in settlement of any litigation,
investigation or proceeding by any governmental agency
or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or
omission or any such alleged untrue statement or
omission, if such settlement is effected with the
written consent of the Company; and
(iii) against any and all expense incurred by them in
connection with investigating, preparing or defending
against any litigation, or investigation or proceeding
by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any
such untrue statement or omission or any such alleged
untrue statement or omission, to the extent that any
such expense is not paid under clause (i) or (ii)
above;
provided, that this indemnity does not apply to any loss, liability, claim,
damage or expense to the extent arising out of an untrue statement or alleged
untrue statement or omission or alleged omission made in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
such holder expressly for use in the preparation of any registration statement
(or any amendment or supplement thereto), including all documents incorporated
therein by reference, or in any preliminary prospectus or final or summary
prospectus (or any amendment or supplement thereto); and provided, further,
that the Company will not be liable to any holder under the indemnity agreement
in this Section 8.1, with respect to any preliminary prospectus or the final
prospectus or the final prospectus as amended or supplemented, as the case may
be, to the extent that any such loss, liability, claim, damage or expense of
such controlling Person or holder results from the fact that such holder sold
Registrable Securities to a Person to whom there was not sent or given, at or
prior to the written confirmation of such sale, a copy of the final prospectus
or of the final prospectus as then amended or supplemented, whichever is most
recent, if the Company has previously and timely furnished copies thereof to
such holder. Such indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of such holder or any such director,
officer, general partner or other controlling person and shall survive the
transfer of such securities by such seller.
8.2 INDEMNIFICATION BY A SELLING STOCKHOLDER.
In connection with any registration statement in which a holder of
Registrable Securities is participating, each such holder agrees to indemnify
and hold harmless (in the same manner and to the same extent as set forth in
Section 8.1 of this Agreement), to the extent permitted by law, the Company and
its directors, officers and controlling Persons, and their respective
directors, officers and general partners, with respect to any statement or
alleged
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statement in or omission or alleged omission from such registration statement,
any preliminary, final or summary prospectus contained therein, or any
amendment or supplement thereto, if such statement or alleged statement or
omission or alleged omission was made in reliance upon and in conformity with
written information that relates only to such holder or the plan of
distribution that is expressly furnished to the Company by or on behalf of such
holder for use in the preparation of such registration statement, preliminary,
final or summary prospectus, amendment or supplement. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of the Company, or such holder, as the case may be, or any of their
respective directors, officers, controlling Persons or general partners and
shall survive the transfer of such securities by such holder. With respect to
each claim pursuant to this Section 8.2, each holder s maximum liability under
this Section shall be limited to an amount equal to the net proceeds actually
received by such holder (after deducting any underwriting discount and
expenses) from the sale of Registrable Securities being sold pursuant to such
registration statement or prospectus by such holder.
8.3 INDEMNIFICATION PROCEDURE.
Promptly after receipt by an indemnified party hereunder of written notice
of the commencement of any action or proceeding involving a claim referred to
in Section 8.1 or Section 8.2 of this Agreement, such indemnified party will,
if a claim in respect thereof is to be made against an indemnifying party, give
written notice to the latter of the commencement of such action; provided that
the failure of any indemnified party to give notice as provided herein shall
not relieve the indemnifying party of its obligations under Section 8.1 or
Section 8.2 of this Agreement except to the extent that the indemnifying party
is actually prejudiced by such failure to give notice. In case any such action
is brought against an indemnified party, the indemnifying party will be
entitled to participate in and to assume the defense thereof, jointly with any
other indemnifying party similarly notified, to the extent that it may wish,
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, the indemnifying party will not be liable to
such indemnified party for any legal fees and expenses subsequently incurred by
the latter in connection with the defense thereof, unless in such indemnified
party's reasonable judgment an actual or potential conflict of interest between
such indemnified and indemnifying parties may exist in respect of such claim,
in which case the indemnifying party shall not be liable for the fees and
expenses of (i) more than one counsel (in addition to any local counsel) for
all holders of Registrable Securities, selected by a majority (by number of
shares) of the holders of Registrable Securities, or (ii) more than one counsel
(in addition to any local counsel) for the Company in connection with any one
action or separate but similar or related actions. An indemnifying party who
is not entitled to (pursuant to an immediately preceding sentence), or elects
not to, assume the defense of a claim will not be obligated to pay the fees and
expenses of more than one counsel (in addition to any local counsel) for all
parties indemnified by such indemnifying party with respect to such claim,
unless in the reasonable judgment of any
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<PAGE> 20
indemnified party an actual or potential conflict of interest may exist between
such indemnified party and any other of such indemnified parties with respect
to such claim, in which event the indemnifying party shall be obligated to pay
the fees and expenses of such additional counsel or counsels. The indemnifying
party will not, without the prior written consent of each indemnified party,
settle or compromise or consent to the entry of any judgment in any pending or
threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not such indemnified party
or any Person who controls such indemnified party is a party to such claim,
action, suit or proceeding), unless such settlement, compromise or consent
includes an unconditional release of such indemnified party from all liability
arising out of such claim, action, suit or proceeding. Notwithstanding
anything to the contrary set forth herein, and without limiting any of the
rights set forth above, in any event any party will have the right to retain,
at its own expense, counsel with respect to the defense of a claim.
8.4 UNDERWRITING AGREEMENT.
The Company and each holder of Registrable Securities requesting
registration shall provide for the foregoing indemnity (with appropriate
modifications) in any underwriting agreement with respect to any required
registration or other qualification of securities under any federal or state
law or regulation of any governmental authority.
8.5 CONTRIBUTION.
If the indemnification provided for in Sections 8.1 and 8.2 of this
Agreement is unavailable (for any reason other than a determination of its
inapplicability by a court of competent jurisdiction) to hold harmless an
indemnified party under such Sections, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of the losses, claims, damages or liabilities referred to in Section 8.1 or
Section 8.2 of this Agreement in such proportion as is appropriate to reflect
the relative fault of the indemnifying party on the one hand, and the
indemnified party on the other, in connection with statements or omissions
which resulted in such losses, liabilities, claims, damages or expenses, as
well as any other relevant equitable considerations, including without
limitation the relative benefits received by each party from the offering of
the securities covered by such registration statement, the parties' relative
knowledge and access to information concerning the matter with respect to which
the claim was asserted and the opportunity to correct and prevent any statement
or omission. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the indemnifying party or the indemnified party and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statements or omission. The parties hereto
agree that it would not be just
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<PAGE> 21
and equitable if contributions pursuant to this Section 8.5 were to be
determined by pro rata or per capita allocation (even if the underwriters were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to in the
first and second sentences of this Section 8.5. The amount paid by an
indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this Section 8.5 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any action or claim (which
shall be limited as provided in Section 8.3 of this Agreement if the
indemnifying party has assumed the defense of any such action in accordance
with the provisions thereof) which is the subject of this Section 8.5.
Promptly after receipt by an indemnified party under this Section 8.5 of notice
of the commencement of any action against such party in respect of which a
claim for contribution may be made against an indemnifying party under this
Section 8.5, such indemnified party shall notify the indemnifying party in
writing of the commencement thereof if the notice specified in Section 8.3 of
this Agreement has not been given with respect to such action; provided that
the omission to so notify the indemnifying party shall not relieve the
indemnifying party from any liability which it may otherwise have to any
indemnified party under this Section 8.5, except to the extent that the
indemnifying party is actually prejudiced by such failure to give notice. The
Company and each holder of Registrable Securities agrees with each other and
the underwriters of the Registrable Securities, if requested by such
underwriters, (i) that the underwriters' portion of such contribution shall not
exceed the underwriting discount and (ii) that the amount of such contribution
shall not exceed an amount equal to the net proceeds actually received by such
indemnifying party from the sale of Registrable Securities in the offering to
which the losses, liabilities, claims, damages or expenses of the indemnified
parties relate. No Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
8.6 PERIODIC PAYMENTS.
The indemnification required by this Article VIII 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.
ARTICLE IX
RULE 144
If the Company shall have filed a registration statement pursuant to the
requirements of Section 12 of the Exchange Act or a registration statement
pursuant to the requirements of the Securities Act, the Company covenants that
it will file the reports required to be filed by it under the Securities Act
and the Exchange Act (or, if the Company is not required
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<PAGE> 22
to file such reports, it will, upon the request of any holder of Registrable
Securities, make publicly available other information), and it will take such
further action as any holder of Registrable Securities may reasonably request,
all to the extent required from time to time to enable such holder to sell
shares of Registrable Securities without registration under the Securities Act
in compliance with (i) Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or (ii) any similar rule or regulation hereafter
adopted by the Commission. Upon the request of any holder of Registrable
Securities, the Company will deliver to such holder a written statement as to
whether it has complied with such requirements.
ARTICLE X
PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No Person may participate in any underwritten registration hereunder
unless such Person (i) agrees to sell such Person's securities on the basis
provided in any underwriting arrangements approved by the Person or Persons
entitled hereunder to approve such arrangements and (ii) completes and executes
all questionnaires, powers of attorney, indemnities, underwriting agreements,
escrow agreements and other documents reasonably required under the terms of
such underwriting arrangements and consistent with the provisions of this
Agreement.
ARTICLE XI
MISCELLANEOUS
11.1 NO INCONSISTENT AGREEMENTS.
The Company represents and warrants that it does not currently have, and
covenants that it will not hereafter enter into, any agreement which is
inconsistent with, or would otherwise restrict the performance by the Company
of, its obligations hereunder.
11.2 ADJUSTMENTS AFFECTING REGISTRABLE SECURITIES.
The Company will not take any action, or fail to take any action which it
may properly take, with respect to its securities which would adversely affect
the ability of the holders of Registrable Securities to include Registrable
Securities in a registration undertaken pursuant to this Agreement or which, to
the extent within its control, would adversely affect the marketability of such
Registrable Securities in any such registration (including without limitation
effecting a stock split or a combination of shares).
11.3 SPECIFIC PERFORMANCE.
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<PAGE> 23
The parties hereto agree that irreparable damage would occur in the event
any provision of this Agreement was not performed in accordance with the terms
hereof and that the parties shall be entitled to specific performance of the
terms hereof, in addition to any other remedy at law or equity; provided,
however, that each of the parties agrees to provide the other parties with
written notice at least two business days prior to filing any motion or other
pleading seeking a temporary restraining order, a temporary or permanent
injunction, specific performance, or any other equitable remedy and to give
such other parties and their counsel a reasonable opportunity to attend and
participate in any judicial or administrative hearing or other proceeding held
to adjudicate or rule upon any such motion or pleading.
11.4 ACTIONS TAKEN; AMENDMENTS AND WAIVERS.
Except as otherwise provided herein, no modification, amendment or waiver
of any provision of this Agreement will be effective against the Company or any
holder of Registrable Securities, unless such modification, amendment or waiver
is approved in writing by each of the parties hereto. The failure of any party
to enforce any of the provisions of this Agreement will in no way be construed
as a waiver of such provisions and will not affect the right of such party
thereafter to enforce each and every provision of this Agreement in accordance
with its terms.
11.5 SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Agreement by or on behalf of any of
the parties hereto will bind and inure to the benefit of the respective
successors and assigns of the parties hereto whether so expressed or not; in
addition, whether or not any express assignment has been made, the provisions
of this Agreement which are for the benefit of purchasers or holders of
Registrable Securities are also for the benefit of, and enforceable by, any
subsequent holder of Registrable Securities, except to the extent reserved to
or by the transferor in connection with any such transfer; provided, that the
benefits of this Agreement shall inure to and be enforceable by any transferee
of Registrable Securities so long as such transferee shall have acquired such
securities in accordance with the terms of the Agreement and shall have
executed a Registration Rights Joinder Agreement. The parties hereto agree
that in connection with the award of the Options to any employee, the Company
may allow such employee to execute a Registration Rights Joinder Agreement, and
thereby enter into and become a party to this Agreement as an Additional
Management Stockholder hereunder.
11.6 NOTICES.
(a) All notices, requests and other communications hereunder must be in
writing and will be deemed to have been duly given only if delivered personally
against written
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<PAGE> 24
receipt or by facsimile transmission or mailed (by registered or certified
mail, return receipt requested) or by reputable overnight courier, fee prepaid
to the parties at the following addresses or facsimile numbers:
(i) If to any CVC Stockholder, to:
Citicorp Venture Capital, Ltd.
399 Park Avenue - 14th Floor
New York, NY 10043
Facsimile No.: 212-888-2940
Attn: Michael Delaney
with a copy to:
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, NY 10178
Facsimile No.: 212-309-6273
Attn: Philip Werner
(ii) If to the Company, to:
MS Acquisition Corp.
c/o Aetna Industries, Inc.
24331 Sherwood Avenue
P.O. Box 3067
Centerline, MI 48015
Facsimile No.: 810-759-2209
Attn: Chief Executive Officer
with copies to:
Citicorp Venture Capital, Ltd.
399 Park Avenue - 14th Floor
New York, NY 10043
Facsimile No.: 212-888-2940
Attn: Michael Delaney
and
Morgan, Lewis & Bockius LLP
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<PAGE> 25
101 Park Avenue
New York, NY 10178
Facsimile No.: 212-309-6273
Attn: Philip Werner
(iii) If to a Stockholder other than an CVC Stockholder, then to
the address of such Person as set forth in the stock records
of the Company.
(b) All such notices, requests and other communications will be deemed
delivered upon receipt. Any party from time to time may change its address,
facsimile number or other information for the purpose of notices to that party
by giving notice specifying such change to the other parties hereto.
11.7 HEADINGS.
The headings used in this Agreement have been inserted for convenience of
reference only and do not affect the provisions hereof.
11.8 GENDER.
Whenever the pronouns "he" or "his" are used herein, they shall also be
deemed to mean "she" or "hers" or "it" or "its" whenever applicable. Words in
the singular shall be read and construed as though in the plural, and words in
the plural shall be construed as though in the singular in all cases where they
would so apply.
11.9 INVALID PROVISIONS.
If any provision of this Agreement is held to be illegal, invalid or
unenforceable under any present or future law, and if the rights or obligations
of any party hereto under this Agreement will not be materially and adversely
affected thereby, (i) such provision will be fully severable, (ii) this
Agreement will be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof, (iii) the remaining
provisions of this Agreement will remain in full force and effect and will not
be affected by the illegal, invalid or unenforceable provision or by its
severance herefrom and (iv) in lieu of such illegal, invalid or unenforceable
provision, there will be added automatically as a part of this Agreement a
legal, valid and enforceable provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible.
11.10 GOVERNING LAW.
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<PAGE> 26
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
DOMESTIC LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANY CHOICE OR
CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK OR ANY
OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY
JURISDICTION OTHER THAN THE STATE OF NEW YORK.
11.11 COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of
which will be deemed an original, but all of which together will constitute one
and the same instrument.
11.12 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
EACH PARTY OTHER THAN THE STATE OF MICHIGAN, CONSENTS TO THE JURISDICTION
OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF NEW YORK, STATE OF
NEW YORK AND IRREVOCABLY AGREES THAT ALL ACTIONS OR PROCEEDINGS RELATING TO
THIS AGREEMENT MAY BE LITIGATED IN SUCH COURTS. EACH SUCH PARTY ACCEPTS FOR
ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY,
THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF
FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. EACH SUCH PARTY FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE PARTY AT THE ADDRESS
SPECIFIED IN THIS AGREEMENT, SUCH SERVICE TO BECOME EFFECTIVE FIFTEEN (15) DAYS
AFTER SUCH MAILING. NOTHING HEREIN SHALL IN ANY WAY BE DEEMED TO LIMIT THE
ABILITY OF ANY PARTY HERETO TO SERVE ANY SUCH LEGAL PROCESS, SUMMONS, NOTICES
AND DOCUMENTS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW OR TO OBTAIN
JURISDICTION OVER OR TO BRING ACTIONS, SUITS OR PROCEEDINGS AGAINST ANY OF THE
OTHER PARTIES HERETO IN SUCH OTHER JURISDICTIONS, AND IN SUCH MANNER, AS MAY BE
PERMITTED BY ANY APPLICABLE LAW.
11.13 WAIVER OF JURY TRIAL.
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<PAGE> 27
EACH PARTY, OTHER THAN THE STATE OF MICHIGAN, HEREBY WAIVES ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT. EACH SUCH PARTY ALSO WAIVES ANY BOND OR SURETY
OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF
SUCH PARTY. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY
AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT
MATTER OF THIS AGREEMENT, INCLUDING WITHOUT LIMITATION CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.
EACH SUCH PARTY FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS
WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS
JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO THIS AGREEMENT. IN THE EVENT OF LITIGATION, THIS AGREEMENT
MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 28
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
MS ACQUISITION CORP.
By: /s/ Ueli Spring
---------------------------------------------
Name: Ueli Spring
Title: President and Chief Executive Officer
CITICORP VENTURE CAPITAL, LTD.
By: /s/ David Y. Howe
---------------------------------------------
Name: David Y. Howe
Title: Assistant Vice President
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By: /s/ Stephen R. Haeckel
---------------------------------------------
Vice President
PRUCO LIFE INSURANCE COMPANY
By: /s/ B. Ross Smead
---------------------------------------------
Vice President
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<PAGE> 29
THE BERKSHIRE FUND,
A LIMITED PARTNERSHIP
By: BERKSHIRE CAPITAL ASSOCIATES,
LIMITED PARTNERSHIP
Its General Partner
By: /s/ Russell L. Epker
---------------------------------
A General Partner
BERKSHIRE STOCKHOLDERS
/s/ Bradley M. Bloom
---------------------------------
BRADLEY M. BLOOM
/s/ J. Christopher Clifford
---------------------------------
J. CHRISTOPHER CLIFFORD
/s/ Russell L. Epker
---------------------------------
RUSSELL L. EPKER
/s/ Carl Ferenbach
---------------------------------
CARL FERENBACH
/s/ Richard K. Lubin
---------------------------------
RICHARD K. LUBIN
/s/ Lea Anne S. Ottinger
---------------------------------
LEA ANNE S. OTTINGER
/s/ Kevin T. Callaghan
---------------------------------
KEVIN T. CALLAGHAN
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<PAGE> 30
STATE OF MICHIGAN
STATE TREASURER OF THE STATE OF
MICHIGAN, CUSTODIAN OF THE PUBLIC
SCHOOL EMPLOYEES' RETIREMENT
SYSTEM; STATE EMPLOYEES'
RETIREMENT SYSTEM; MICHIGAN STATE
POLICE RETIREMENT SYSTEM; JUDGES'
RETIREMENT SYSTEM; AND PROBATE
JUDGES' RETIREMENT SYSTEM
By: /s/ Paul E. Rice
--------------------------------
Title: Administrator
FORMER MANAGEMENT STOCKHOLDERS
/s/ Jerome Singer
-----------------------------------
JEROME SINGER
/s/ Douglas A. Thal
-----------------------------------
DOUGLAS A. THAL
/s/ Robert J. Klein
-----------------------------------
ROBERT J. KLEIN
/s/ Steven Singer
-----------------------------------
STEVEN SINGER
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<PAGE> 31
MANAGEMENT STOCKHOLDERS
/s/ Ueli Spring
--------------------------------
UELI SPRING
/s/ Harold Brown
--------------------------------
HAROLD BROWN
/s/ Gary Easterly
--------------------------------
GARY EASTERLY
/s/ Edward Lawson
--------------------------------
EDWARD LAWSON
/s/ Daniel Pierce
--------------------------------
DANIEL PIERCE
/s/ David Thal
--------------------------------
DAVID THAL
/s/ Ralph Bredenbeck
--------------------------------
RALPH BREDENBECK
/s/ Theresa Johnson
--------------------------------
THERESA JOHNSON
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<PAGE> 32
EXHIBIT A
Form of Registration Rights Joinder Agreement
MS Acquisition Corp.
c/o Aetna Industries, Inc.
24331 Sherwood Avenue
P.O. Box 3062
Centerline, MI 48015
Attention: Chief Executive Officer
Ladies and Gentlemen:
In consideration of the [issuance to the undersigned of Options to
purchase]*** [transfer to the undersigned of] _____ shares of [either Class A
Common Stock or Class B Common Stock, no par value per share,] [Series A
Preferred Stock, par value $.01 per share,] of MS Acquisition Corp., a Delaware
corporation (the "Company"), the undersigned [represents that it is a Permitted
Transferee of [Insert name of transferor] and]* agrees that, as of the date
written below, [he] [she] [it] shall become a party to[, and a Permitted
Transferee as defined in,]* that certain Registration Rights Agreement, dated
as of August _____, 1996, as such agreement may have been amended from time to
time (the "Agreement"), among the Company and the persons named therein, and
[as a Permitted Transferee] shall be fully bound by, and subject to, all of the
covenants, terms and conditions of the Agreement, as though an original party
thereto and shall be deemed a [CVC], [Institutional] [ Former] [Management]
Stockholder [for all] purposes thereof.
Executed as of the day of , .
Name: ________________________
Address: _____________________
_____________________
ACKNOWLEDGED AND ACCEPTED:
MS ACQUISITION CORP.
By:___________________________
Name:
Title:
<PAGE> 33
* Include if transferee is a Permitted Transferee
** Include if transferee is a Third Party
*** Include if in connection with issuance of Options
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<PAGE> 34
TABLE OF CONTENTS
Page
RECITALS................................................... 1
ARTICLE I
DEFINITIONS ........................................... 1
1.1 Defined Terms in Stockholders Agreement ......... 1
1.2 Definitions ..................................... 2
1.3 Cross-References ................................ 3
ARTICLE II
DEMAND REGISTRATIONS .................................. 4
2.1 Requests for Registration ....................... 4
2.2 Long-Form Registrations ......................... 5
2.3 Short-Form Registrations ........................ 5
2.4 Effective Registration Statement ................ 5
2.5 Priority on Demand Registrations ................ 6
2.6 Selection of Underwriters ....................... 7
2.7 Black-Out Rights and Postponement ............... 8
ARTICLE III
PIGGYBACK REGISTRATIONS ............................... 8
3.1 Right to Piggyback .............................. 8
3.2 Piggyback Expenses .............................. 9
3.3 Priority on Primary Registrations ............... 9
3.4 Priority on Secondary Registrations ............. 9
ARTICLE IV
HOLDBACK AGREEMENTS ................................... 10
4.1 Holdback ........................................ 10
4.2 Company Holdback ................................ 10
ARTICLE V
REGISTRATION PROCEDURES ............................... 10
ARTICLE VI
REGISTRATION EXPENSES ................................. 15
6.1 Fees Generally .................................. 15
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<PAGE> 35
Page
6.2 Counsel Fees .................................... 15
ARTICLE VII
UNDERWRITTEN OFFERINGS ................................ 15
7.1 Demand Underwritten Offerings ................... 15
7.2 Incidental Underwritten Offerings ............... 16
ARTICLE VIII
INDEMNIFICATION ....................................... 17
8.1 Indemnification by the Company .................. 17
8.2 Indemnification by a Selling Stockholder ........ 18
8.3 Indemnification Procedure ....................... 19
8.4 Underwriting Agreement .......................... 20
8.5 Contribution .................................... 20
8.6 Periodic Payments ............................... 21
ARTICLE IX
RULE 144............................................... 21
ARTICLE X
PARTICIPATION IN UNDERWRITTEN REGISTRATIONS ........... 22
ARTICLE XI
MISCELLANEOUS ......................................... 22
11.1 No Inconsistent Agreements ...................... 22
11.2 Adjustments Affecting Registrable Securities .... 22
11.3 Specific Performance ............................ 22
11.4 Actions Taken; Amendments and Waivers ........... 23
11.5 Successors and Assigns .......................... 23
11.6 Notices ......................................... 23
11.7 Headings ........................................ 25
11.8 Gender .......................................... 25
11.9 Invalid Provisions .............................. 25
11.10 Governing Law ................................... 25
11.11 Counterparts .................................... 26
11.12 Consent to Jurisdiction and Service of Process .. 26
11.13 Waiver of Jury Trial ............................ 26
-ii-
<PAGE> 36
Page
Exhibit A - Form of Registration Rights Joinder Agreement
-iii-
<PAGE> 1
EXHIBIT 10.11
MANAGEMENT AGREEMENT
MANAGEMENT AGREEMENT, dated as of August 13, 1996, between MS
Acquisition Corp., a Delaware corporation ("MS Acquisition"), and Aetna
Industries, Inc., a Delaware corporation ("Aetna").
RECITALS
WHEREAS, MS Acquisition is the indirect parent corporation and owner
of all the outstanding capital stock of Aetna; and
WHEREAS, Aetna desires that MS Acquisition provide, and MS Acquisition
is willing to provide, certain administrative and management services on the
terms and conditions hereinafter set forth;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree
as follows:
SECTION 1.
(a) Commencing on the date hereof and during the term of this
Agreement, MS Acquisition shall provide to Aetna and its subsidiaries, as may
be reasonably requested by Aetna, management and similar services, including,
but not limited to, executive management, corporate support, administrative,
data processing, human resources, legal, environmental, audit, treasury and tax
services (the "Aetna Services"). It is understood and agreed that MS
Acquisition may fulfill its obligations hereunder by contracting with third
parties. At any time on 30 days' notice, Aetna may reduce, on a temporary or
permanent basis, the scope of services to be provided by MS Acquisition
hereunder; provided, however, that Aetna may not decline services that MS
Acquisition has contracted for with third parties to the extent MS Acquisition
would remain liable to pay for such services.
(b) It is understood and agreed that Aetna and its subsidiaries
will directly benefit from savings and efficiencies derived from the management
and operations of MS Acquisition and from the management and financial support
provided by MS Acquisition's stockholders and resulting from MS Acquisition's
corporate structure (the "Additional Services"). Aetna and its subsidiaries
shall therefore be responsible for payment of their allocable share of MS
Acquisition's overhead and general operating costs including, without
limitation, compensation of the officers and employees of MS Acquisition.
<PAGE> 2
SECTION 2. FEES.
(a) During the term hereof, Aetna will pay MS Acquisition a fee
for the Aetna Services and the Additional Services provided under Section 1
hereof equal to MS Acquisition's actual cost of providing such services. MS
Acquisition will invoice Aetna for services rendered within 10 business days of
the end of each calendar quarter, and such fees will be due and payable within
30 days of receipt of invoice. Notwithstanding the foregoing, out-of-pocket
costs incurred by MS Acquisition in connection with the provision of services
hereunder will, upon the request of MS Acquisition, be paid directly and
promptly by Aetna or its subsidiaries to the relevant third parties.
(b) If at any time a payment required to be made to MS Acquisition
by Aetna hereunder (or any portion thereof) is not permitted by the terms of
the Indenture, dated as of August 13, 1996, relating to Aetna's 11-7/8% Senior
Notes due 2006 (the "Indenture"), or the Credit Agreement dated as of May 2,
1996, as amended by the First Amendment thereto dated as of August 13, 1996
among Aetna, the guarantors thereto and NBD Bank (the "Credit Agreement")
Aetna's obligation to pay such amount shall be deferred, without interest,
until such time as such payment shall no longer be so restricted by the
Indenture or Credit Agreement.
SECTION 3. TERM. This Agreement shall continue in effect until
December 31, 1997, and shall thereafter be renewed automatically for
successive one-year periods unless (i) either party gives the other written
notice of termination on or prior to December 1 of any year, such notice to be
effective on December 31 of such year, or (ii) the parties mutually agree to
terminate this agreement.
SECTION 4. INDEMNIFICATION.
(a) It is understood and agreed that in no event will MS
Acquisition or any of its stockholders, directors, officers, employees,
affiliates and agents (collectively, "Affiliates and Representatives") be
liable to Aetna and its subsidiaries and their respective financing parties for
any loss incurred by any of such persons resulting from the services provided
by MS Acquisition hereunder or otherwise relating in any way to this Agreement,
except for any such loss resulting from the gross negligence, willful
misfeasance or bad faith of MS Acquisition Affiliates and Representation. It
is understood and agreed that in no event will MS Acquisition or its Affiliates
or Representatives be liable hereunder for any lost profits or any exemplary,
punitive, consequential or other similar damages.
(b) Aetna agrees to indemnify and hold harmless MS Acquisitions
and its Affiliates and Representatives for any and all losses, damages, costs,
expenses (including reasonable attorney's fees and expenses), penalties and
liabilities (whether or not arising from the negligence, but excluding the
gross negligence, willful misfeasance or bad faith of MS Acquisition or its
Affiliates or Representatives) with respect to all losses, liabilities, costs,
duties and obligations of any kind whatsoever of MS Acquisition or its
Affiliates or Representatives resulting from the
- 2 -
<PAGE> 3
services to be provided pursuant to this Agreement or otherwise relating in any
way to this Agreement. At the request of MS Acquisition, Aetna shall cause
each of its insurance carriers providing property, liability or worker's
compensation insurance to Aetna and its subsidiaries to waive any rights of
subrogation against MS Acquisition and its Affiliates and Representatives.
SECTION 5. INDEPENDENT CONTRACTOR; NO PARTNERSHIP.
(a) MS Acquisition shall select the MS Acquisition employees to
provide services hereunder.
(b) Notwithstanding anything herein to the contrary, no
partnership or joint venture has been created in or by this Agreement or as a
result of the provision of services hereunder.
SECTION 6. ASSIGNMENT; AMENDMENT.
(a) This Agreement shall not be assignable by either party without
the express prior written consent of the other party.
(b) This Agreement may be amended only by an instrument in writing
executed by the parties hereto.
SECTION 7. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of New York
without giving effect to any choice or conflict of law provision or rule
(whether of the State of New York or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of New
York.
SECTION 8. SEVERABILITY. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any jurisdiction shall
not affect the validity or enforceability of the offending term or provision
in any other situation or in any other jurisdiction.
SECTION 9. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
- 3 -
<PAGE> 4
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
MS ACQUISITION CORP.
By /s/ David Y. Howe
-----------------------------
Name: David Y. Howe
Title: Assistant Secretary
AETNA INDUSTRIES, INC.
By /s/ David Y. Howe
-----------------------------
Name: David Y. Howe
Title: Assistant Secretary
[SIGNATURE PAGE TO MANAGEMENT AGREEMENT]
<PAGE> 5
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE> 1
EXHIBIT 10.12
FORM OF 11% JUNIOR SUBORDINATED PROMISSORY NOTES DUE 2007
THE SECURITY REPRESENTED BY THIS NOTE WAS ORIGINALLY
ISSUED ON AUGUST 13, 1996, AND HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER
ANY STATE SECURITIES LAWS. THIS NOTE MAY NOT BE
RESOLD OR TRANSFERRED, IN WHOLE OR IN PART, UNLESS
REGISTERED OR EXEMPT FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND ALL APPLICABLE
STATE SECURITIES LAWS.
AETNA HOLDINGS, INC.
Junior Subordinated Promissory
Note Due 2007
August 13, 1996 $________
New York, New York
FOR VALUE RECEIVED, AETNA HOLDINGS, INC., a Delaware corporation (the
"Company"), promises to pay to ______________________, or its registered
assigns (each a "Holder"), the principal sum of_____________________________
____________________________________________________ ($_______), as such sum
may be decreased by prepayments made pursuant to Section 4 below, on August 13,
2007 (the "Maturity Date"), all in accordance with the provisions of this Note.
This Note is one of the junior subordinated promissory notes required to
be issued pursuant to Section 1.2 of the Stock Purchase Agreement dated as of
August 13, 1996, among the Company, MS Acquisition Corp., a Delaware
corporation and the parent of the Company ("Parent"), the Holder and the other
stockholders of Parent named therein (as the same may be amended, supplemented
or modified from time to time, the "Purchase Agreement"). This Note, any notes
issued pursuant to Section 2 below, and any notes issued upon registration of
transfer or exchange of this Note or any of the aforementioned notes are
collectively referred to herein as the "Notes".
1. Interest. Interest will accrue on the principal amount of this Note at
the rate of 11% per annum and on any due and unpaid amount of principal hereof
or interest hereon (to the extent permitted by applicable law) after the
Maturity Date at the rate of 13% per annum. The Company will pay interest in
arrears on the 13th day of February and August of each year, beginning February
13, 1997, and on the Maturity Date.
<PAGE> 2
IN WITNESS WHEREOF, the Company has executed and delivered this Note as of
the date first above written.
AETNA HOLDINGS, INC.
By:________________________________
Name:
Title:
<PAGE> 1
EXHIBIT 10.14
MS ACQUISITION CORP.
AMENDED AND RESTATED
EXECUTIVE STOCK OPTION PLAN
1. PURPOSE
The MS Acquisition Corp. Amended and Restated Executive Stock Option
Plan (the "Plan") is intended as a performance incentive for officers,
employees and other key persons of MS ACQUISITION CORP. (the "Company") or
its Subsidiaries (as hereinafter defined) to enable the persons to whom options
are granted (the "Optionees") to acquire or increase a proprietary interest in
the success of the Company. The Company intends that this purpose will be
effected by the granting of nonqualified stock options (as opposed to
"incentive" stock options, as defined in Section 422(b) of the Internal Revenue
Code of 1986, as amended) under the Plan (the "Options"). As used herein, the
terms "Subsidiary" or "Subsidiaries" include any corporation in which stock
possessing one hundred percent (100%) of the total combined voting power of all
classes of stock is owned directly or indirectly by the Company.
The Plan was initially adopted by the Company prior to the merger of the
Company with and into DCI Acquisition Corp., a Delaware corporation ("DCI"),
with DCI as the surviving corporation in the merger. Pursuant to a
recapitalization (the "Recapitalization") of the Company, Citicorp Venture
Capital, Ltd. and related parties have acquired a significant equity interest
in the Company from the equity holders of the Company. As part of the
Recapitalization, the Company has, among other things, amended its charter to
provide for the reclassification of its capital stock into two new classes
(voting and non-voting) of common stock and a new class of preferred stock.
All references in this Plan to the "Common Stock" shall be deemed to refer to
the Class A Common Stock, $.01 par value per share, of the Company. In
connection with the consummation of the transactions related to the
Recapitalization, all Options which have been granted under the Plan prior to
the consummation of such transactions have been terminated and canceled. The
Company desires that the Plan be amended and restated in its present form to
provide for additional grants of nonqualified Options to executives of the
Company or its Subsidiaries after the Recapitalization. The number of shares
issuable under the Plan pursuant to the exercise of Options granted under this
Amended and Restated Plan shall be 100,000 shares of the Common Stock.
2. OPTIONS TO BE GRANTED AND ADMINISTRATION
(a) Options granted under the Plan shall be nonqualified Options.
(b) The Plan shall be administered by a committee (the "Option
Committee") of not less than three (3) directors appointed by the board of
directors of the Company (the "Board of Directors"). Action by the Option
Committee shall require the affirmative vote of a majority of all its members.
<PAGE> 2
(c) Subject to the terms and conditions of the Plan, the Option
Committee shall have the power:
(i) to determine, with the approval of the Board of
Directors, the Options to be granted to eligible persons under
the Plan, to prescribe the terms and provisions (which need
not be identical) of each Option granted under the Plan to such
persons, and to recommend to the Board of Directors for its
approval the grant of Options;
(ii) to construe and interpret the Plan and Option
Agreements granted thereunder and to establish, amend and
revoke rules and regulations for administration of the Plan;
provided, however, that, in the event of a conflict in
construction or interpretation between the Option Committee and
the Board of Directors, any construction or interpretation made
by the Board of Directors regarding the Plan shall be binding
and conclusive on the Company and the Optionees; and
(iii) generally, to exercise such powers and to perform
such acts as are deemed necessary or expedient to promote the
best interests of the Company with respect to the Plan.
3. STOCK SUBJECT TO PLAN
(a) The stock subject to the Options granted under the Plan shall be
shares of the Company's authorized but unissued Common Stock (as defined in
Section 1 hereof), or shares of Common Stock reacquired by the Company. The
total number of shares that may be issued pursuant to Options granted under the
Plan shall not exceed an 100,000 shares of Common Stock. Such number shall be
subject to adjustment as provided in Section 7 hereof.
(b) Unless otherwise determined by the Board of Directors, in the
event outstanding Options under the Plan are forfeited or are canceled for any
reason (other than by exercise), the shares of Common Stock allocable to the
unexercised portion of such Option shall become available for reissuance under
the Plan.
4. ELIGIBILITY
Options may be granted, in the sole discretion of the Board of
Directors, to officers or other key employees of the Company or its
Subsidiaries.
5. OPTION TERMS
(a) Subject to the terms and conditions of the Plan, each grant of
an Option hereunder shall be evidenced by an Option agreement, which shall
contain such provisions regarding the grant as the Board of Directors shall
from time to time deem appropriate (an "Option Agreement"). Option Agreements
need not contain identical provisions.
2
<PAGE> 3
(b) Notwithstanding any other provisions of the Plan or any Option
Agreement, each Option shall expire on the date specified in the Option
Agreement, which date shall not be later than the tenth (10th) anniversary of
the date on which the Option was granted.
(c) Other than (i) in connection with the termination of the
Optionee's employment as provided in Section 5(g) of the Plan, or (ii) after the
occurrence of a Change of Control as provided in Section 8 of the Plan, each
Option shall be exercisable in such installments (which need not be equal) and
at such times as set forth in the Option Agreement. Subject to the provisions
of Sections 5(g) and 8 of the Plan, to the extent not exercised, installments
shall accumulate and be exercisable, in whole or in part, at any time after
becoming exercisable, but no later than the date the Option expires.
(d) The purchase price per share of Common Stock under each Option
shall be as determined by the Board of Directors and as set forth in the Option
Agreement.
(e) No Optionee shall be deemed for any purpose to be the owner of
any shares of Common Stock subject to any Option unless and until (i) the Option
shall have been exercised pursuant to the terms thereof, (ii) all requirements
under applicable law and regulations shall have been complied with to the
satisfaction of the Company, (iii) the Company shall have issued and delivered
the shares to the Optionee, and (iv) the Optionee's name shall have been
entered as a stockholder of record on the books of the Company. Thereupon, the
Optionee shall have full voting, dividend and other ownership rights with
respect to such shares of Common Stock, subject to the limitations set forth in
the Stockholders Agreement (as hereinafter defined).
(f) No Options shall be transferable by the Optionee other than by
will or by the laws of descent and distribution, and may be exercised during
the Optionee's lifetime only by the Optionee, his or her guardian or legal
representative.
(g) An Option granted pursuant to this Plan shall cease to vest
and shall terminate whenever the Optionee is for any reason no longer
employed by the Company or any Subsidiary; provided, however, that any portion
of the Option that was vested and exercisable as of the date of such
termination may be exercised as to any Common Stock not theretofore purchased
for a period of three months following such date, except that if such
termination of employment results from the Optionee's death or permanent, total
disability (as defined in the long-term disability policy maintained by the
Company or its Subsidiaries applicable to the Optionee), any such portion of
this Stock Option may be exercised (in the case of Optionee's death by his
executors or administrators) for a period of twelve months following such
termination date.
(h) No Option shall confer upon an Optionee any right to continued
employment by the Company, nor will it interfere in any way with Optionee's
right or the Company's right to terminate, or otherwise modify, the terms of
the Optionee's employment at any time for any reason.
3
<PAGE> 4
6. METHOD OF EXERCISE; PAYMENT OF PURCHASE PRICE
(a) Unless otherwise indicated in the Option Agreement, an Option
granted under the Plan shall be exercised by the Optionee by delivering to the
Option Committee on any business day prior to the Expiration Date set forth in
the Option Agreement a notice of his or her election to purchase some or all of
the Common Stock purchasable at the time of such notice (the "Notice"). The
Notice shall specify the number of shares of Common Stock to be purchased and
shall be accompanied (i) by payment therefor in cash, and (ii) by such
agreement, statement or other evidence as the Company may require in order to
satisfy itself that the issuance of the Common Stock being purchased pursuant
to such exercise and any subsequent resale thereof will be in compliance with
applicable laws and regulations including without limitation all applicable
federal and state securities laws and regulations.
(b) Certificates for the Common Stock so purchased will be issued
to the Optionee upon compliance to the satisfaction of the Company with all
requirements under applicable laws or regulations in connection with such
issuance. The Company shall be under no obligation to issue the Common Stock
subject to the Option until the Optionee has (i) executed and delivered to the
Company a certain Stockholders Agreement between the Company and the Optionee
in the form attached hereto as Exhibit A (the "Stockholders Agreement") and
(ii) complied with the requirements of the Plan and the Option Agreement and
provided that the determination of the Board of Directors as to such compliance
shall be final and binding on the Optionee.
(c) No portion of the Option shall be exercisable after the
Expiration Date .
7. ADJUSTMENT UPON CHANGES IN CAPITALIZATION
(a) If the shares of the Company's Common Stock as a whole are
increased, decreased, changed into or exchanged for a different number or kind
of shares or securities of the Company, whether through merger, consolidation,
reorganization, recapitalization, reclassification, stock dividend, stock
split, combination of shares, exchange of shares, change in corporate structure
or the like (other than in connection with a Change of Control (as herein
defined), in which case the provisions of Section 8 shall control), an
appropriate and proportionate adjustment shall be made in the number and kind
of shares subject to the Plan, and in the number, kind and per share exercise
price of shares or other securities subject to unexercised Options or portions
thereof granted prior to any such change.
(b) Adjustments under this Section 7 shall be determined by the
Board of Directors and such determinations shall be conclusive. No fractional
shares of Common Stock shall be issued under the Plan on account of any
adjustment specified above.
4
<PAGE> 5
8. EFFECT OF CHANGE OF CONTROL
(a) Notwithstanding anything in the Plan or Option Agreement which
may be construed to the contrary, upon the occurrence of a Change of Control (as
herein defined), all Options granted pursuant to this Plan which have not
previously terminated or expired pursuant to the operation of the Plan or the
Option Agreement and which remain unvested as of the date of the occurrence of
the Change of Control shall become 100% vested and exercisable immediately
prior thereto.
(b) In the event of the occurrence of a Change of Control, to the
extent that any outstanding Options under the Plan are not exercised and
extinguished upon the consummation of the transactions in connection with the
Change of Control, all Options which remain outstanding under the Plan after the
consummation of such transactions shall be immediately terminated and canceled
without the necessity of further action by any party, by operation of this
Section 8(b), unless determined otherwise by the Board of Directors in its sole
discretion.
(c) For purposes of the Plan, "Change of Control" means the following
(capitalized terms not defined in the Plan shall have the meaning ascribed to
them in the Stockholders Agreement): the sale of the Company, Aetna Holdings or
Aetna Industries, Inc. ("Aetna") (whether by merger, consolidation,
recapitalization, reorganization, sale of securities, sale of assets or
otherwise) in one transaction or a series of related transactions to a Person
or Persons that is not an Affiliate of CVC pursuant to which such Person or
Persons (together with its Affiliates) acquires (i) securities representing at
least a majority of the voting power of all securities of the Company or Aetna,
assuming the conversion, exchange or exercise of all securities convertible,
exchangeable or exercisable for or into voting securities, or (ii) all or
substantially all of the Company's or Aetna's assets; provided that a merger or
consolidation of Aetna Holdings into or with the Company or Aetna shall not
constitute a Change of Control.
9. AMENDMENT OF THE PLAN
The Board of Directors may amend the Plan at any time, and from time to
time. Rights and obligations under any Option granted before any amendment of
the Plan shall not be altered or impaired by such amendment, except with the
consent of the Optionee.
10. NONEXCLUSIVITY OF THE PLAN
The adoption of the Plan by the Board of Directors shall not be construed
as creating any limitations on the power of the Board of Directors to adopt
such other incentive arrangements as it may deem desirable, including,
without limitation, the granting of stock options otherwise than under the
Plan, and such arrangements may be either applicable generally or only in
specific cases.
5
<PAGE> 6
11. GOVERNMENT AND OTHER REGULATIONS
The obligation of the Company to sell and deliver shares of Common Stock
with respect to Options granted under the Plan shall be subject to all
applicable laws, rules and regulations, including all applicable federal and
state securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Board of Directors.
12. EFFECTIVE DATE OF THE PLAN; STOCKHOLDER APPROVAL
This Amended and Restated Plan shall be effective August 13, 1996, subject
to the approval of the Company's stockholders. No Options granted under the
Plan prior to such stockholder approval may be exercised until such approval
has been obtained. No Option may be granted under the Plan after the tenth
(10th) anniversary of the effective date of this Amended and Restated Plan.
* * *
This MS Acquisition Corp. Amended and Restated Executive Stock Option Plan has
been adopted by the Board of Directors of the Company as of August 13, 1996.
6
<PAGE> 1
EXHIBIT 10.15
FORM OF STOCK OPTION AGREEMENT
MS ACQUISITION CORP.
STOCK OPTION AGREEMENT
Name of Optionee: _____________________________________
Number of Option Shares: ____________ Date of Grant: August 13, 1996
Option Exercise Price: $0.75 Expiration Date: August 13, 2006
Pursuant to the MS Acquisition Corp. Amended and Restated Executive Stock
Option Plan (the "Plan"), MS Acquisition Corp., a Delaware corporation, (the
"Company"), hereby grants to the Optionee named above, who is now employed by a
Subsidiary of the Company (as defined in the Plan), a stock option ("Stock
Option") to purchase on or prior to the Expiration Date specified above all or
any part of the number of shares of Common Stock (as defined in the Plan)
specified above (the "Option Shares") at the Option Exercise Price per share
determined by the Board of Directors and specified above, subject to the terms
and conditions set forth herein and in the Plan, a copy of which is attached
hereto, and subject to the approval of the Plan by the Company's stockholders.
This Stock Option is a nonqualified option.
1. Plan Incorporated by Reference. The terms and conditions of the Plan
are hereby incorporated into this Agreement by reference. All terms used herein
and not defined herein shall have the meanings as set forth in the Plan.
2. Vesting Schedule. No portion of this Stock Option may be exercised
until such portion shall have vested. Subject to the Plan provisions which
call for forfeitability in the event of a termination of the Optionee's
employment, or early acceleration of vesting in the event of a Change of
Control, this Stock Option shall be vested and exercisable with respect to the
following number of Option Shares at the expiration of the following period
from the Date of Grant specified above:
Number of Period from
Option Shares Exercisable the Date of Grant
------------------------- -----------------
20% 1 year
40% 2 years
60% 3 years
80% 4 years
100% 5 years
<PAGE> 2
Once vested, unless otherwise indicated in the Plan, the Stock Option shall
continue to be exercisable, in whole or in part, at any time or times prior to
the Expiration Date.
3. Nontransferability. This Agreement is personal to Optionee, is
non-assignable and is not transferable in any manner, by operation of law or
otherwise, other than by will or by the laws of descent and distribution, and
is exercisable, during Optionee's lifetime, only by Optionee, his or her
guardian or legal representative.
4. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
5. Choice of Law; Miscellaneous. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New York or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of New
York. Notice hereunder shall be mailed or delivered to the Company at its
principal place of business, and shall be delivered to Optionee in person or
mailed or delivered to Optionee at the address set forth below, or in either
case at such other address as one party may subsequently furnish to the other
party in writing.
MS ACQUISITION CORP.
By:_________________________________
Title:
2
<PAGE> 3
The foregoing Agreement is hereby accepted and the terms and conditions
thereof and the Plan are hereby agreed to by the undersigned.
____________________________________
Optionee's Signature
____________________________________
Optionee's address
____________________________________
3
<PAGE> 1
EXHIBIT 10.17
Execution Copy
EXECUTIVE EMPLOYMENT AGREEMENT
EXECUTIVE EMPLOYMENT AGREEMENT, dated as of August 13, 1996 (this
"Agreement"), by and among MS Acquisition, a Delaware corporation ("MS
Acquisition"), Aetna Industries, Inc., a Delaware corporation (the "Company";
and together with MS Acquisition, the "Companies") and Harold A. Brown (the
"Executive").
WHEREAS, the Executive entered into certain agreements and arrangements as
listed and described in Exhibit A hereto (the "Prior Agreements") with MS
Acquisition and/or its direct or indirect subsidiaries;
WHEREAS, the Companies and the Executive desire to terminate the Prior
Agreements; and
WHEREAS, the Companies desire to employ the Executive as Chief Financial
Officer and Vice President Finance of each of MS Acquisition and the Company,
and the Executive desires to be retained in such capacities, on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
made herein, the Companies and the Executive agree as follows:
1. Prior Agreements. The Executive represents and warrants to the
Companies that the Prior Agreements are the only agreements between the
Companies or any of their respective direct or indirect, current or former
subsidiaries on the one hand, and the Executive and his Affiliates and
Associates, on the other. The Companies and the Executive hereby terminate the
Prior Agreements and the Executive hereby releases the Companies and its direct
or indirect subsidiaries from all payments and other obligations thereunder, if
any.
2. Employment; Duties. The Companies shall employ the Executive as Chief
Financial Officer and Vice President Finance for the "Employment Period" as
defined in Section 3. The Executive, in his capacity as Chief Financial
Officer and Vice President Finance, shall have such duties, responsibilities
and authority normally incident to such offices, subject to the provisions of
the Bylaws of each of the Companies. Subject to the foregoing, the precise
duties, responsibilities and authority of the Executive may be expanded,
limited or modified, from time to time, at the discretion of the Board of
Directors of MS Acquisition (the "Board of Directors"). Further, MS
Acquisition, as the sole stockholder of the parent corporation of the Company
(Aetna Holdings, Inc., a Delaware corporation
<PAGE> 2
("Aetna Holdings")) agrees to make a lawful and reasonable effort to cause
Aetna Holdings to vote, on the date hereof, its shares of capital stock of the
Company for the election of the Executive to the Company's Board of Directors;
provided, however, neither the Companies nor their direct or indirect
subsidiaries have any obligation hereunder or elsewhere after the date hereof
to retain or elect the Executive as a member of the Board of Directors of
either the Companies or their direct or indirect subsidiaries. During the
Employment Period, the Executive shall render his business services solely in
the performance of his duties hereunder. The Executive agrees that during the
term of his employment hereunder, he shall devote his full working time,
attention, knowledge and experience and give his best effort, skill and
abilities, exclusively to promote the business and interests of the Companies
and their respective direct and indirect subsidiaries. The Executive may not
serve as an officer or director of, make investments in, or otherwise
participate in, any other entity without the prior written consent of the Board
of Directors; provided, that the foregoing shall not be deemed to prohibit the
Executive from acquiring, directly or indirectly, solely as an investment, not
more than two percent (2%) of any class of securities of any entity, other than
MS Acquisition, that are registered under Section 12(b) or 12(g) of the
Securities Exchange Act of 1934, as amended, including the regulations issued
thereunder; and provided further, that so long as it does not interfere with
the Executive's employment, the Executive may (a) serve as an officer, director
or otherwise participate in purely educational, welfare, social, religious and
civic organizations, and (b) manage personal and family investments.
3. Employment Period. This Agreement shall have a term of three years,
commencing as of the date hereof and ending on the third anniversary of the
date hereof (the "Initial Period"), unless sooner terminated in accordance with
the provisions of Section 8 or Section 9. On the expiration of the Initial
Period and on each yearly anniversary thereof, this Agreement shall
automatically renew for an additional one-year period (each such one-year
period being referred to as a "Renewal Period"), unless sooner terminated in
accordance with the provisions of Section 8 or Section 9, unless the Company or
the Executive notifies the other in writing of its intention not to renew this
Agreement not less than ninety (90) days prior to such expiration date or
anniversary, as the case may be. The term of this Agreement, as in effect from
time to time, is referred to herein as the "Employment Period".
4. Compensation and Benefits.
(a) Base Compensation. The Executive shall be paid an aggregate base
salary (the "Base Salary") of $115,000 per annum, less statutory deductions
and withholdings. The Base Salary shall be payable in a manner consistent with
the normal payroll practices of the Company in effect from time to time. The
Board of Directors, in its sole discretion, or at the recommendation of the
Compensation Committee, may increase (but not decrease) the Base Salary, at any
time.
(b) Annual Bonus. In addition to the Base Salary, the Executive may be
entitled to receive a discretionary annual bonus for each fiscal year of the
Company that
2
<PAGE> 3
ends during the Employment Period of up to 60% of his annual Base Salary (the
"Bonus Award") based upon the achievement of annual Company and individual
performance goals to be set by the Board of Directors. The Bonus Award shall
be payable reasonably soon after the beginning of the Company's fiscal year,
consistent with the past practice of the Company.
(c) Benefits. The Executive shall also be entitled to participate in
the employee benefit and group insurance programs provided by the Company
for its officers and employees generally and in accordance with the terms of
the applicable plan documents as they may be revised from time to time.
(d) Fringe Benefits. The Executive shall also be entitled to such other
benefits as are made available to executive officers of the Companies. Such
benefits shall include: (i) the use of one (1) full size automobile,
comparable to the automobile currently provided to him, which shall be selected
by and leased or purchased by the Company or an automobile allowance covering
one (1) automobile as determined by the Company, (ii) full family medical and
dental coverage, (iii) twenty (20) business days of paid vacation,(iv)
long-term disability insurance and (v) life insurance benefits. With respect
to items (ii), (iv) and (v) above, such coverage shall be similar to and of
like tenor with the coverage currently provided to the Executive.
5. Trade Secrets. The Executive recognizes that it is in the legitimate
business interest of the Companies to restrict his disclosure or use of Trade
Secrets and Other Confidential Information relating to the Companies and their
respective direct or indirect subsidiaries for any purpose other than in
connection with his performance of his duties to the Companies, and to limit
any potential appropriation of such Trade Secrets and Other Confidential
Information by the Executive. The Executive therefore agrees that all Trade
Secrets and Other Confidential Information relating to the Companies and their
respective direct or indirect subsidiaries heretofore or in the future obtained
by the Executive shall be considered confidential and the proprietary
information of the Companies and their respective direct or indirect
subsidiaries. During the Employment Period the Executive shall not use or
disclose, or authorize any other person or entity to use or disclose, any Trade
Secrets or Other Confidential Information, other than as necessary to further
the business objectives of the Company in accordance with the terms of his
employment hereunder. Each of the terms "Trade Secrets" and "Other
Confidential Information" include, by way of example and without limitation,
matters of a technical nature, such as scientific, trade and engineering
secrets, "know-how", formulas, secret processes, drawings, works of authorship,
machines, inventions, computer programs (including documentation of such
programs), services, materials, patent applications, new product plans, other
plans, technical information, technical improvements, manufacturing techniques,
specifications, manufacturing and test data, progress reports and research
projects, and matters of a business nature, such as business plans, prospects,
financial information, proprietary information about costs, profits, markets,
sales, lists of customers and suppliers of the Companies and their respective
direct or indirect subsidiaries, procurement and promotional information,
credit and financial data concerning
3
<PAGE> 4
customers or suppliers of the Companies and their respective direct or indirect
subsidiaries, information relating to the management, operation and planning of
the Companies and their respective direct and indirect subsidiaries, and other
information of a similar nature and plans for future development; provided,
however, the terms "Trade Secrets" and "Other Confidential Information" do not
include information which is or becomes generally available to the public.
After termination of the Executive's employment with the Companies for any
reason, the Executive shall not use or disclose Trade Secrets or Other
Confidential Information.
6. Return of Documents and Property. Upon the termination of the
Executive's employment with the Companies, or at any time upon the request
of the Companies, the Executive (or his heirs or personal representatives)
shall deliver to the Company (a) all documents and materials (including,
without limitation, computer files) containing Trade Secrets or Other
Confidential Information relating to the business and affairs of the Companies
and their respective direct and indirect subsidiaries, and (b) all documents,
materials and other property (including, without limitation, computer files)
belonging to the Companies or their respective direct or indirect subsidiaries,
which in either case are in the possession or under the control of the
Executive (or his heirs or personal representatives).
7. Discoveries and Work. All Discoveries and Works made or conceived by
the Executive during his employment by the Companies, whether during the
Employment Period or at any time prior thereto, jointly or with others,
that relate to the present or anticipated activities of the Companies or their
respective direct or indirect subsidiaries, or are used or usable by the
Companies or their respective direct or indirect subsidiaries shall be owned by
the Companies or their respective direct or indirect subsidiaries. The term
"Discoveries and Works" includes, by way of example but without limitation,
Trade Secrets and Other Confidential Information, patents and patent
applications, trademarks and trademark registrations and applications, service
marks and service mark registrations and applications, trade names, copyrights
and copyright registrations and applications. The Executive shall (a) promptly
notify, make full disclosure to, and execute and deliver any documents
requested by, the Companies, as the case may be, to evidence or better assure
title to Discoveries and Works in the Companies or their respective direct or
indirect subsidiaries, as so requested, (b) renounce any and all claims,
including but not limited to claims of ownership and royalty, with respect to
all Discoveries and Works and all other property owned or licensed by the
Companies or their respective direct or indirect subsidiaries, (c) assist the
Companies or their respective direct or indirect subsidiaries in obtaining or
maintaining for itself at its own expense United States and foreign patents,
copyrights, trade secret protection or other protection of any and all
Discoveries and Works, and (d) promptly execute, whether during his employment
with the Companies or thereafter, all applications or other endorsements
necessary or appropriate to maintain patents and other rights for the Companies
or their respective direct or indirect subsidiaries and to protect the title of
the Companies or their respective direct or indirect subsidiaries thereto,
including but not limited
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<PAGE> 5
to assignments of such patents and other rights. Any Discoveries and Works
which, within six months after the termination of the Executive's employment
with the Companies, are made, disclosed, reduced to a tangible or written form
or description, or are reduced to practice by the Executive and which pertain
to the business carried on or products or services being sold or developed by
the Companies or their respective direct or indirect subsidiaries at the time
of such termination shall, as between the Executive and, the Companies, be
presumed to have been made during the Executive's employment by the Companies.
The Executive acknowledges that all Discoveries and Works shall be deemed
"works made for hire" under the Copyright Act of 1976, as amended, 17 U.S.C.
Section 101.
8. Termination.
(a) The Companies or the Executive may terminate this Agreement,
with or without cause, with or without prior notice. Except as provided in
Sections 8(b) and 19, in the event the Companies or the Executive terminates
this Agreement, the Executive's rights and the obligations of the Companies
hereunder shall cease as of the effective date of the termination, including,
without limitation, the right to receive the Base Salary, any Bonus Award and
all other compensation or benefits provided for in this Agreement.
(b) In the event the Companies terminate this Agreement without "cause"
or in the event that the Executive terminates this Agreement upon notice for
"Good Reason", the Executive shall be entitled to continue to receive payments
of his Base Salary and the benefits described in Section 4(d)(ii) and 4(d)(v)
hereof for the balance of the then existing Employment Period, payable or in
the case of benefits, provided, at such times and in such amounts as if this
Agreement were not terminated, provided, however, that if such termination
occurs during the Initial Term, or on account of the Company's action pursuant
to Section 3 which prevents the automatic renewal of the Agreement upon (and
only upon) expiration of the Initial Term, then the period during which the
Executive shall be entitled to continue to receive payments of his Base Salary
and the benefits described in Section 4(d)(ii) and 4(d)(v) hereof shall be no
less than twelve (12) months from the date of termination and in the case of a
termination during the Initial Term, the Bonus Award, if any (as determined in
accordance with Section 4(b) hereof), shall be prorated for the number of days
the Executive was employed during the fiscal year in which the termination
occurs. All other compensation and benefits provided for in Section 4 of this
Agreement shall cease upon such termination.
For purposes of this Agreement, "cause" shall mean (i) the willful failure
of the Executive to follow the lawful directions of the Board of Directors or
the President and Chief Executive Officer (other than any such failure in any
material respect resulting from his incapacity due to physical or mental
illness or disability which is subject to the provisions of Section 9), (ii)
any act of fraud or dishonesty, misappropriation or embezzlement, wilful
misconduct or gross negligence in connection with the performance of the
Executive's duties hereunder, (iii) a breach by the Executive of any material
provision hereof or of any contractual or legal duty to the Companies
(including, but not limited to, the unauthorized
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<PAGE> 6
disclosure of Trade Secrets or Other Confidential Information, non-compliance
with the written policies, guidelines and procedures of the Companies), after
written notice thereof from the Board of Directors and a 30-day opportunity to
cure in the event that such breach was not wilful, (iv) the conviction of the
Executive of the commission of a crime or offense involving moral turpitude
(including pleading guilty or no contest to such a crime or offense or a lesser
charge which results from plea bargaining), whether or not committed in
connection with the business of the Companies, (v) alcohol or substance abuse
or (vi) breach by the Executive of the provisions of the Stockholders
Agreement.
For purposes of this Agreement, "Good Reason" shall mean (i) the Companies
change the Executive's status, title or position as an officer of each of the
Companies and such change represents a material reduction in such status, title
or position conferred hereunder, and/or (ii) the Companies materially breached
this Agreement, and such change or breach is not cured by the Companies within
thirty (30) days from the date the Executive delivers a Notice of Termination
for Good Reason. Such "Notice of Termination for Good Reason" shall include
the specific section of this Agreement which was relied upon and the reason
that the Companies act or failure to act has given rise to his termination for
Good Reason.
(c) In the event the Companies terminate this Agreement for cause or the
Executive terminates this Agreement (other than for Good Reason), the
Executive's rights hereunder shall cease as of the effective date of the
termination, including, without limitation, the right to receive the Base
Salary, any Bonus Award and all other compensation or benefits provided for in
this Agreement.
(d) Notwithstanding anything to the contrary set forth herein, upon 24
hours' written notice to the Executive, the Companies may relieve the Executive
of all his duties and responsibilities hereunder and may relieve the Executive
of authority to act on behalf of, or legally bind, the Companies, provided that
any such action by the Companies shall be without prejudice to the Executive's
right to the compensation and benefits provided under this Agreement or the
Executive's right to terminate his employment and receive the compensation and
benefits following his termination of employment as otherwise provided under
this Agreement.
(e) As a condition to his entitlement, if any, to Base Salary and all
other compensation and benefits provided for hereunder upon termination, the
Executive shall have executed and delivered to the Companies a release in the
form attached hereto as Exhibit B (the "Release"), as such Release may be
modified by the Companies from time to time in good faith, and such Release
shall have become irrevocable.
9. Disability; Death.
(a) If, prior to the expiration of the Employment Period or the
termination of this Agreement, the Executive shall be unable to perform his
duties by reason
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of mental or physical disability for at least ninety (90) consecutive days or
any ninety (90) days (whether or not consecutive) in any two hundred and fifty
(250) consecutive day period, the Companies shall have the right to terminate
this Agreement and the remainder of the Employment Period by giving written
notice to the Executive to that effect. Immediately upon the giving of such
notice, the Employment Period shall terminate.
(b) Upon termination of this Agreement pursuant to Section 9(a), the
Executive shall be paid his Base Salary for the month in which notice is given.
In the event of a dispute as to whether the Executive is disabled within the
meaning of Section 9(a), either party may from time to time request a medical
examination of the Executive by a doctor appointed by the Chief of Staff
of a hospital selected by mutual agreement of the parties, or as the parties
may otherwise agree, and the written medical opinion of such doctor shall be
conclusive and binding upon the parties as to whether the Executive has become
disabled and the date when such disability arose. The cost of any such medical
examination shall be borne by the Companies. If, prior to the expiration of
the Employment Period or the termination of this Agreement, the Executive shall
die, the Executive's estate shall be paid his Base Salary through the end of
the month in which the Executive's death has occurred, at which time the
Employment Period shall terminate without further notice and the Companies
shall have no further obligations hereunder.
10. No Conflicts. The Executive represents to the Companies that the
execution, delivery and performance by the Executive of this Agreement do not
conflict with or result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default under any contract,
agreement or understanding, whether oral or written, to which the Executive is
a party or of which the Executive is or should be aware.
11. Mitigation; Offset.
(a) Upon termination by the Companies without cause or voluntarily by
the Executive for Good Reason pursuant to Section 8(b) hereof, the
Executive shall have an obligation to the Companies to mitigate damages by
actively seeking other employment of comparable position and salary in
compliance with Section 12. At the Executive's option, the Executive may
select a reputable and established outplacement service firm and the Companies
shall continue to engage such reputable and established outplacement firm until
the earlier of (i) the total cost to the Companies for such outplacement
services reaches a total of $10,000, (ii) the date the Executive accepts new
employment and (iii) the date the Executive is no longer entitled to any
payments under this Agreement.
(b) If the Executive accepts other employment (i) all of the
Executive's rights to benefits under Sections 4(b) and (d) hereof shall
cease, and (ii) all compensation payable to the Executive from services as an
officer, consultant or employee of any other business after the termination of
the Executive's employment hereunder with respect to the balance of the
Employment Period, whether paid during or after such period,
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<PAGE> 8
shall be offset against and reduce any payments (but not below zero) required
to be paid to the Executive under this Agreement.
12. Non-competition. From and after the date hereof, the Executive will
not, except pursuant to the terms hereof, directly or indirectly, own, manage,
operate, join, finance, control or participate in the ownership, management,
operation or control of, or be employed or be otherwise connected in any manner
with, any business under a name similar to the name of either the Companies or
any direct or indirect subsidiary thereof. Prior to the termination of the
Executive's employment hereunder and for a twelve (12) month period after any
such termination or expiration of this Agreement; provided the Companies are
not in material default with respect to their obligations hereunder; and
provided, further, the Executive has delivered notice of such default and has
given the Companies fourteen (14) days to cure such default, the Executive will
not (except as an officer, director, employee, agent or consultant of the
Company) directly or indirectly, own, manage, operate, join, or have a
financial interest in, control or participate in the ownership, management,
operation or control of, or be employed as an employee, agent or consultant, or
in any other individual or representative capacity whatsoever, or use or permit
his name to be used in connection with, or be otherwise connected in any manner
with (i) any business or enterprise engaged (wherever located) in the design,
development, manufacture, distribution or sale of any products, or the
provision of any services, which the Companies or their direct or indirect
subsidiaries were designing, developing, manufacturing, distributing, selling
or providing at any time up to and including the date of termination of this
Agreement or (ii) any business which is similar to or competitive with the
business carried on or planned by the Company or its direct or indirect
subsidiaries at any time during the period of the Executive's employment by the
Company, whether during or prior to the Employment Period, unless the Executive
shall have obtained the prior written consent of the Board of Directors,
provided that the foregoing restriction shall not be construed to prohibit the
ownership by the Executive of not more than two percent (2%) of any class of
securities of any corporation which is engaged in any of the foregoing
businesses, having a class of securities registered pursuant to the Securities
Exchange Act of 1934, which securities are publicly owned and regularly traded
on any national exchange or in the over-the-counter market, provided, further,
that such ownership represents a passive investment and that neither the
Executive nor any group of persons including the Executive in any way, either
directly or indirectly, manages or exercises control of any such corporation,
guarantees any of its financial obligations, otherwise takes part in its
business other than exercising his rights as a shareholder, or seeks to do any
of the foregoing.
13. Non-Solicitation. Prior to the termination of the Executive's
employment hereunder and for a twelve (12) month period after any such
termination or expiration of this Agreement; provided the Companies are not in
material default with respect to their obligations hereunder; and provided,
further, the Executive has delivered notice of such default and has given the
Companies fourteen (14) days to cure such default, the Executive agrees,
directly or indirectly, whether for his own account or for the account of any
other individual or entity, not to solicit or canvas the trade, business or
patronage of, or sell
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<PAGE> 9
any products or services which are the same as or similar to those designed,
developed, manufactured, distributed or sold by the Companies or their
respective direct or indirect subsidiaries to, any individuals or entities that
were either customers of the Companies or any of their respective direct or
indirect subsidiaries during the time the Executive was employed by the
Companies, whether during or prior to the Employment Period, or prospective
customers with respect to whom a sales effort, presentation or proposal was
made by the Companies or any of their respective direct or indirect
subsidiaries during the twelve months preceding the date of termination or
expiration, as the case may be. The Executive further agrees that prior to the
termination of the Executive's employment hereunder and for a period of two
years thereafter, he shall not, directly or indirectly, (i) solicit, induce,
enter into any agreement with, or attempt to influence any individual who was
an employee or consultant of the Companies or any of their respective direct or
indirect subsidiaries at any time during the time the Executive was employed by
the Companies, whether during or prior to the Employment Period, to terminate
his or her employment relationship with the Companies or any of their
respective direct or indirect subsidiaries or to become employed by the
Executive or any individual or entity by which Executive is employed or (ii)
interfere in any other way with the employment, or other relationship, of any
employee or consultant of the Companies or any of their respective direct or
indirect subsidiaries.
14. Enforcement. (a) The Executive agrees that the remedies at law for
any breach or threat of breach by him of any of the provisions of Sections 5,
6, 7, 12 and 13 hereof will be inadequate, and that, in addition to any other
remedy to which the Companies may be entitled at law or in equity, the
Companies shall be entitled to a temporary or permanent injunction or
injunctions or temporary restraining order or orders to prevent breaches of the
provisions of Sections 5, 6, 7, 12 and 13 hereof and to enforce specifically
the terms and provisions thereof, in each case without the need to post any
security or bond. Nothing herein contained shall be construed as prohibiting
the Companies from pursuing, in addition, any other remedies available to the
Companies for such breach or threatened breach. A waiver by the Companies of
any breach of any provision hereof shall not operate or be construed as a
waiver of a breach of any other provision of this Agreement or of any
subsequent breach by the Executive.
(b) It is expressly understood and agreed that although the Companies and
the Executive consider the restrictions contained in Sections 5, 6, 7, 12 and
13 hereof to be reasonable for the purpose of preserving the goodwill,
proprietary rights and going concern value of the Company, if a final judicial
determination is made by a court having jurisdiction that the time or territory
or any other restriction contained in such Sections 5, 6, 7, 12 and 13 is an
unenforceable restriction on the Executive's activities, the provisions of such
Sections 5, 6, 7, 12 and 13 shall not be rendered void but shall be deemed
amended to apply as to such maximum time and territory and to such other extent
as such court may judicially determine or indicate to be reasonable.
Alternatively, if the court referred to above finds that any restriction
contained in Sections 5, 6, 7, 12 or 13 or any remedy provided herein is
unenforceable, and such restriction or remedy cannot be amended so as to make
it
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<PAGE> 10
enforceable, such finding shall not affect the enforceability of any of the
other restrictions contained therein or the availability of any other remedy.
The provisions of Sections 5, 6, 7, 12 and 13 shall in no respect limit or
otherwise affect the Executive's obligations under other agreements with either
of the Companies.
15. Assignment. The rights and obligations of the parties under this
Agreement shall not be assignable by either of the Companies or the Executive,
provided that this Agreement is assignable by either of the Companies to any
Affiliate of the Companies, to any successor in interest to the business of the
Company, or to a purchaser of all or substantially all of the assets of any of
the Companies.
16. Notices. Any notice required or permitted under this Agreement shall
be deemed to have been effectively made or given if in writing and personally
delivered, mailed properly addressed in a sealed envelope, postage prepaid by
certified or registered mail, delivered by a reputable overnight delivery
service or sent by facsimile. Unless otherwise changed by notice, notice shall
be properly addressed to the Executive if addressed to:
Harold A. Brown
4061 Water Wheel Lane
Bloomfield Hills, MI 48302
and properly addressed to the Companies if addressed to:
MS Acquisition Corp.
c/o Aetna Industries, Inc.
24331 Sherwood Avenue
P.O. Box 3067
Centerline, MI 48015-0067
Attention: Board of Directors
Fax No. 810-759-2209
with copies to:
Citicorp Venture Capital, Ltd.
399 Park Avenue - 14th Floor
New York, NY 10043
Attention: Michael A. Delaney
Fax No. 212-888-2940
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and
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, NY 10178
Attention: Philip Werner
Fax No. 212-309-6273
17. Severability. Wherever there is any conflict between any provision of
this Agreement and any statute, law, regulation or judicial precedent, the
latter shall prevail, but in such event the provisions of this Agreement thus
affected shall be curtailed and limited only to the extent necessary to bring
them within the requirements of the law. In the event that any provision of
this Agreement shall be held by a court of proper jurisdiction to be
indefinite, invalid, void or voidable or otherwise unenforceable, the balance
of the Agreement shall continue in full force and effect unless such
construction would clearly be contrary to the intentions of the parties or
would result in an unconscionable injustice.
18. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
19. Effect of Termination. Notwithstanding anything to the contrary
contained herein, if this Agreement or the Executive's employment is validly
terminated pursuant to Section 8 or Section 9 or expires by its terms, the
provisions of Sections 5, 6, 7, 11, 12, 13, 14, and 17 shall continue in full
force and effect.
20. Miscellaneous; Choice of Law. This Agreement constitutes the entire
agreement, and supersedes all prior agreements, of the parties hereto relating
to the subject matter hereof, and there are no written or oral terms or
representations made by either party other than those contained herein. This
Agreement shall be governed by and construed in accordance with the domestic
laws of the State of New York, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of New York or any
other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of New York.
21. Consent to Jurisdiction and Service of Process.
EACH OF THE PARTIES HERETO IRREVOCABLY CONSENTS TO THE JURISDICTION OF
EITHER (X) ANY STATE COURT LOCATED WITHIN THE COUNTY OF OAKLAND, STATE OF
MICHIGAN OR (Y) ANY FEDERAL COURT LOCATED IN THE EASTERN DISTRICT OF MICHIGAN
(SOUTHERN DIVISION), AND IRREVOCABLY AGREES THAT ANY AND ALL ACTIONS OR
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PROCEEDINGS RELATING TO OR ARISING OUT OF THIS AGREEMENT SHALL BE LITIGATED
ONLY IN SUCH COURTS. EACH SUCH PARTY ACCEPTS FOR ITSELF AND IN CONNECTION WITH
ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE JURISDICTION OF
THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND
IRREVOCABLY AGREES TO BE BOUND, SUBJECT TO ANY AVAILABLE APPEALS, BY ANY
JUDGMENT, DECISION OR ORDER RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT.
EACH SUCH PARTY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS IN
CONNECTION WITH ANY SUCH ACTION OR PROCEEDING BEFORE THE AFOREMENTIONED COURTS
BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE
PREPAID, TO THE PARTY (INCLUDING ANY COPIES REQUIRED TO BE SENT TO OTHER
PERSONS UNDER SECTION 16 HEREOF) AT THE ADDRESS SPECIFIED IN THIS AGREEMENT,
SUCH SERVICE TO BECOME EFFECTIVE FIFTEEN (15) DAYS AFTER SUCH MAILING.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties have executed this Employment Agreement as
of the day and year first above written.
MS ACQUISITION CORP.
/s/ David Y. Howe
----------------------------------
By: David Y. Howe
Its: Assistant Secretary
AETNA INDUSTRIES, INC.
/s/ David Y. Howe
----------------------------------
By: David Y. Howe
Its: Assistant Secretary
/s/ Harold A. Brown
----------------------------------
HAROLD A. BROWN
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EXHIBIT A
Prior Agreements
[Describe prior compensation arrangement with the Company]
14
<PAGE> 15
EXHIBIT B
Form of Release
I, ______________________, hereby release and discharge ________________
(the "Company"); its present and former subsidiaries and affiliates; the
Company's, any such subsidiaries' and any such affiliates' present and former
partners, officers, directors, stockholders, employees, representatives and
agents; and the successors and assigns of each of the foregoing persons and
entities (collectively, the "Released Persons"), from any and all actions,
causes of action, suits, debts, dues, sums of money, including, without
limitation, any compensation owed or potentially owed, any accounts, reckonings,
bonds, bills, specialties, covenants, contracts, controversies, agreements,
promises, variances, trespasses, damages, judgments, executions, claims, and
demands whatsoever (including, without limitation, under the Age Discrimination
in Employment Act, 29 U.S.C. Section 621 et seq. ("ADEA"), or the Employee
Retirement Income Security Act, 29 U.S.C. Section 1001 et seq.), known or
unknown, fixed, conditional or contingent, in law or in equity, which I and my
respective heirs, executors, administrators, legal representatives, successors
and assigns ever had, now have or hereafter can, shall or may have against the
Released Persons, individually or collectively, derivatively or otherwise, for,
upon or by reason of any matter, cause or thing whatsoever from the beginning
of time to the date hereof.
The Company has advised me to consult with an attorney of my choosing
prior to executing this Release regarding this Release and I hereby represent
to the Company that I have in fact consulted with such an attorney prior to the
execution of this Release with respect hereto. I acknowledge that I shall have
up to twenty-one days prior to the execution of this Release to consider the
waiver of my rights under ADEA pursuant to this Release, provided that once I
have executed this Release, I shall have seven days from the date of execution
to revoke my consent to the release of my rights under ADEA. If no such
revocation occurs, my release of rights under ADEA pursuant to this Release
shall become effective seven days from the date I execute this Release. I
acknowledge that any revocation of consent pursuant to this Release must be in
writing and must be hand-delivered or telecopied to
_____________________________, counsel to the Company, at
________________________________________________, facsimile number ________,
within such seven-day period.
IN WITNESS WHEREOF, the undersigned has executed this Release as of
_______ of ______________.
____________________________
[Name]
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EXHIBIT 10.18
EXECUTIVE EMPLOYMENT AGREEMENT
EXECUTIVE EMPLOYMENT AGREEMENT, dated as of August 13, 1996 (this
"Agreement"), by and between Aetna Industries, Inc., a Delaware corporation
("Aetna"), MS Acquisition Corp., a Delaware corporation ("MS Acquisition"; and,
together with Aetna, the "Companies") and Gary Easterly (the "Executive").
WHEREAS, the Executive entered into certain agreements and arrangements as
listed and described in Exhibit A hereto (the "Prior Agreements") with the
Companies, and/or their direct or indirect subsidiaries;
WHEREAS, the Companies and the Executive desire to terminate the Prior
Agreements; and
WHEREAS, the Companies desire to employ the Executive as Vice President
Manufacturing, and the Executive desires to be retained in such capacity, on
the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
made herein, the Companies and the Executive agree as follows:
1. Prior Agreements. The Executive represents and warrants to the
Companies that the Prior Agreements are the only agreements between MS
Acquisition, Aetna or any of their respective direct or indirect, current or
former subsidiaries on the one hand, and the Executive and his Affiliates and
Associates, on the other. The Companies and the Executive hereby terminate
the Prior Agreements and the Executive hereby releases the Companies and their
respective direct or indirect subsidiaries from all payments and other
obligations thereunder, if any.
2. Employment; Duties. The Companies shall employ the Executive as Vice
President Manufacturing, for the "Employment Period" as defined in Section 3.
The Executive, in his capacity as Vice President Manufacturing, shall have such
duties, responsibilities and authority normally incident to such office,
subject to the provisions of the Bylaws of the Companies. Subject to the
foregoing, the precise duties, responsibilities and authority of the Executive
may be expanded, limited or modified, from time to time, at the discretion of
the Boards of Directors of the Companies. During the Employment Period, the
Executive shall render his business services solely in the performance of his
duties hereunder. The Executive agrees that during the term of his employment
hereunder, he shall devote his full working time, attention, knowledge and
experience and give his best effort, skill and abilities, exclusively to
promote the business and interests of MS Acquisition, Aetna and their
respective direct and
<PAGE> 2
indirect subsidiaries. The Executive may not serve as an officer or director
of, make investments in, or otherwise participate in, any other entity without
the prior written consent of the Boards of Directors of the Companies;
provided, that the foregoing shall not be deemed to prohibit the Executive from
acquiring, directly or indirectly, solely as an investment, not more than two
percent (2%) of any class of securities of any entity, other than MS
Acquisition, that are registered under Section 12(b) or 12(g) of the Securities
Exchange Act of 1934, as amended, including the regulations issued thereunder;
and provided further, that so long as it does not interfere with the
Executive's employment, the Executive may (a) serve as an officer, director or
otherwise participate in purely educational, welfare, social, religious and
civic organizations, and (b) manage personal and family investments.
3. Employment Period. This Agreement shall have a term of three years,
commencing as of the date hereof and ending on the second anniversary of the
date hereof (the "Initial Period"), unless sooner terminated in accordance with
the provisions of Section 8 or Section 9. On the expiration of the Initial
Period and on each yearly anniversary thereof, this Agreement shall
automatically renew for an additional one-year period (each such one-year
period being referred to as a "Renewal Period"), unless sooner terminated in
accordance with the provisions of Section 8 or Section 9, unless either of the
Companies or the Executive notifies the other in writing of its intention not
to renew this Agreement not less than ninety (90) days prior to such expiration
date or anniversary, as the case may be. The term of this Agreement, as in
effect from time to time, is referred to herein as the "Employment Period".
4. Compensation and Benefits.
(a) Base Compensation. The Executive shall be paid an aggregate
base salary (the "Base Salary") of $105,000 per annum, less statutory
deductions and withholdings. The Base Salary shall be payable in a manner
consistent with the normal payroll practices of the Companies in effect from
time to time. The Boards of Directors of the Companies, in their sole
discretion, or at the recommendation of the Compensation Committee, may
increase (but not decrease) the Base Salary, at any time.
(b) Annual Bonus. In addition to the Base Salary, the Executive
may be entitled to receive a discretionary annual bonus for each fiscal
year of Aetna that ends during the Employment Period of up to 60% (the "Maximum
Amount") of his annual Base Salary (the "Bonus Award") based upon the
achievement of annual Aetna and individual performance goals to be set by the
Board of Directors of Aetna. The Boards of Directors of the Companies, in
their sole discretion, or at the recommendation of the Compensation Committee,
may increase the Maximum Amount, at any time.
(c) Benefits. The Executive shall also be entitled to participate
in the employee benefit and group insurance programs provided by the
Companies for their officers and
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employees generally and in accordance with the terms of the applicable plan
documents as they may be revised from time to time.
5. Trade Secrets. The Executive recognizes that it is in the legitimate
business interest of the Companies to restrict his disclosure or use of Trade
Secrets and Confidential Information relating to MS Acquisition, Aetna and
their respective direct or indirect subsidiaries for any purpose other than in
connection with his performance of his duties to the Companies, and to limit
any potential appropriation of such Trade Secrets and Confidential Information
by the Executive. The Executive therefore agrees that all Trade Secrets and
Confidential Information relating to MS Acquisition, the Companies and their
respective direct or indirect subsidiaries heretofore or in the future obtained
by the Executive shall be considered confidential and the proprietary
information of MS Acquisition, the Companies and their respective direct or
indirect subsidiaries. During the Employment Period the Executive shall not
use or disclose, or authorize any other person or entity to use or disclose,
any Trade Secrets or other Confidential Information, other than as necessary to
further the business objectives of the Companies in accordance with the terms
of his employment hereunder. The term "Trade Secrets or other Confidential
Information" includes, by way of example and without limitation, matters of a
technical nature, such as scientific, trade and engineering secrets,
"know-how", formulas, secret processes, drawings, works of authorship,
machines, inventions, computer programs (including documentation of such
programs), services, materials, patent applications, new product plans, other
plans, technical information, technical improvements, manufacturing techniques,
specifications, manufacturing and test data, progress reports and research
projects, and matters of a business nature, such as business plans, prospects,
financial information, proprietary information about costs, profits, markets,
sales, lists of customers and suppliers of MS Acquisition, Aetna and their
respective direct or indirect subsidiaries, procurement and promotional
information, credit and financial data concerning customers or suppliers of MS
Acquisition, Aetna and their respective direct or indirect subsidiaries,
information relating to the management, operation and planning of MS
Acquisition, Aetna and their respective direct and indirect subsidiaries, and
other information of a similar nature to the extent not available to the
public, and plans for future development. After termination of the Executive's
employment with the Companies for any reason, the Executive shall not use or
disclose Trade Secrets or other Confidential Information.
6. Return of Documents and Property. Upon the termination of the
Executive's employment with the Companies, or at any time upon the
request of the Companies, the Executive (or his heirs or personal
representatives) shall deliver to the Companies (a) all documents and materials
(including, without limitation, computer files) containing Trade Secrets or
other Confidential Information relating to the business and affairs of MS
Acquisition, Aetna and their respective direct and indirect subsidiaries, and
(b) all documents, materials and other property (including, without limitation,
computer files) belonging to MS Acquisition, Aetna or their respective direct
or indirect subsidiaries, which in either case are in the possession or under
the control of the Executive (or his heirs or personal representatives).
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<PAGE> 4
7. Discoveries and Work. All Discoveries and Works made or conceived by
the Executive during his employment by the Companies, whether during
the Employment Period or at any time prior thereto, jointly or with others,
that relate to the present or anticipated activities of MS Acquisition, Aetna
or their respective direct or indirect subsidiaries, or are used or usable by
MS Acquisition, Aetna or their respective direct or indirect subsidiaries shall
be owned by MS Acquisition, Aetna or their respective direct or indirect
subsidiaries. The term "Discoveries and Works" includes, by way of example but
without limitation, Trade Secrets and other Confidential Information, patents
and patent applications, trademarks and trademark registrations and
applications, service marks and service mark registrations and applications,
trade names, copyrights and copyright registrations and applications. The
Executive shall (a) promptly notify, make full disclosure to, and execute and
deliver any documents requested by, the Companies, as the case may be, to
evidence or better assure title to Discoveries and Works in MS Acquisition,
Aetna or their respective direct or indirect subsidiaries, as so requested, (b)
renounce any and all claims, including but not limited to claims of ownership
and royalty, with respect to all Discoveries and Works and all other property
owned or licensed by MS Acquisition, Aetna or their respective direct or
indirect subsidiaries, (c) assist MS Acquisition, Aetna or their respective
direct or indirect subsidiaries in obtaining or maintaining for itself at its
own expense United States and foreign patents, copyrights, trade secret
protection or other protection of any and all Discoveries and Works, and (d)
promptly execute, whether during his employment with the Companies or
thereafter, all applications or other endorsements necessary or appropriate to
maintain patents and other rights for MS Acquisition, Aetna or their respective
direct or indirect subsidiaries and to protect the title of MS Acquisition,
Aetna or their respective direct or indirect subsidiaries thereto, including
but not limited to assignments of such patents and other rights. Any
Discoveries and Works which, within six months after the termination of the
Executive's employment with the Companies, are made, disclosed, reduced to a
tangible or written form or description, or are reduced to practice by the
Executive and which pertain to the business carried on or products or services
being sold or developed by MS Acquisition, Aetna or their respective direct or
indirect subsidiaries at the time of such termination shall, as between the
Executive and, the Companies, be presumed to have been made during the
Executive's employment by the Companies. The Executive acknowledges that all
Discoveries and Works shall be deemed "works made for hire" under the Copyright
Act of 1976, as amended, 17 U.S.C. Section 101.
8. Termination.
(a) The Companies or the Executive may terminate this Agreement,
with or without cause, with or without prior notice. Except as
provided in Sections 8(b) and 19, in the event either of the Companies or the
Executive terminates this Agreement, the Executive's rights and the obligations
of the Companies hereunder shall cease as of the effective date of the
termination, including, without limitation, the right to receive the Base
Salary, any Bonus Award and all other compensation or benefits provided for in
this Agreement.
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<PAGE> 5
(b) In the event the Companies terminate this Agreement without
"cause" or in the event that the Executive terminates this Agreement
upon notice for "Good Reason", the Executive shall be entitled to continue to
receive payments of his Base Salary for the balance of the then existing
Employment Period, payable at such times and in such amounts as if this
Agreement were not terminated, provided, however, that if such termination
occurs during the Initial Term, or on account of the Companies' action pursuant
to Section 3 which prevents the automatic renewal of the Agreement upon (and
only upon) expiration of the Initial Term, then the period during which the
Executive shall be entitled to continue to receive payments of his Base Salary
shall be no less than twelve (12) months from the date of termination. All
other compensation and benefits provided for in Section 4 of this Agreement
shall cease upon such termination.
For purposes of this Agreement, "cause" shall mean (i) the willful failure
of the Executive to follow the directions of the Boards of Directors of the
Companies or the President and Chief Executive Officer (other than any such
failure resulting from his incapacity due to physical or mental illness or
disability which is subject to the provisions of Section 9), (ii) any act of
fraud or dishonesty, misappropriation or embezzlement, wilful misconduct or
gross negligence in connection with the performance of the Executive's duties
hereunder, (iii) a breach by the Executive of any provision hereof or of any
contractual or legal duty to the Companies (including, but not limited to, the
unauthorized disclosure of Trade Secrets or other Confidential Information,
non-compliance with the written policies, guidelines and procedures of the
Companies), after written notice thereof from the Board of Directors of either
of the Companies and a 30-day opportunity to cure in the event that such breach
was not wilful, (iv) the conviction of the Executive of the commission of a
crime or offense involving moral turpitude (including pleading guilty or no
contest to such a crime or offense or a lesser charge which results from plea
bargaining), whether or not committed in connection with the business of the
Companies, (v) alcohol or substance abuse or (vi) breach by the Executive of
the provisions of the Stockholders Agreement.
For purposes of this Agreement, "Good Reason" shall mean (i) the Companies
change the Executive's status, title or position as an officer of the Companies
and such change represents a material reduction in such status, title or
position conferred hereunder, and/or (ii) the Companies materially breached
this Agreement, and such change or breach is not cured by the Companies within
thirty (30) days from the date the Executive delivers a Notice of Termination
for Good Reason. Such "Notice of Termination for Good Reason" shall include
the specific section of this Agreement which was relied upon and the reason
that the Companies act or failure to act has given rise to his termination for
Good Reason.
(c) In the event the Companies terminate this Agreement for cause or
the Executive terminates this Agreement (other than for Good Reason),
the Executive's rights hereunder shall cease as of the effective date of the
termination, including, without limitation, the right to receive the Base
Salary, any Bonus Award and all other compensation or benefits provided for in
this Agreement.
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<PAGE> 6
(d) Notwithstanding anything to the contrary set forth herein, upon
24 hours' written notice to the Executive, the Companies may relieve
the Executive of all his duties and responsibilities hereunder and may relieve
the Executive of authority to act on behalf of, or legally bind, the Companies,
provided that any such action by the Companies shall be without prejudice to
the Executive's right to the compensation and benefits provided under this
Agreement or the Executive's right to terminate his employment and receive the
compensation and benefits following his termination of employment as otherwise
provided under this Agreement.
(e) As a condition to his entitlement, if any, to Base Salary and
all other compensation and benefits provided for hereunder upon
termination, the Executive shall have executed and delivered to the Companies a
release in the form attached hereto as Exhibit B (the "Release"), as such
Release may be modified by the Companies from time to time in good faith, and
such Release shall have become irrevocable.
9. Disability; Death.
(a) If, prior to the expiration of the Employment Period or the
termination of this Agreement, the Executive shall be unable to perform
his duties by reason of mental or physical disability for at least ninety (90)
consecutive days or any ninety (90) days (whether or not consecutive) in any
two hundred and fifty (250) consecutive day period, the Companies shall have
the right to terminate this Agreement and the remainder of the Employment
Period by giving written notice to the Executive to that effect. Immediately
upon the giving of such notice, the Employment Period shall terminate.
(b) Upon termination of this Agreement pursuant to Section 9(a), the
Executive shall be paid his Base Salary for the month in which notice
is given. In the event of a dispute as to whether the Executive is disabled
within the meaning of Section 9(a), any party may from time to time request a
medical examination of the Executive by a doctor appointed by the Chief of
Staff of a hospital selected by mutual agreement of the parties, or as the
parties may otherwise agree, and the written medical opinion of such doctor
shall be conclusive and binding upon the parties as to whether the Executive
has become disabled and the date when such disability arose. The cost of any
such medical examination shall be borne by the Companies. If, prior to the
expiration of the Employment Period or the termination of this Agreement, the
Executive shall die, the Executive's estate shall be paid his Base Salary
through the end of the month in which the Executive's death has occurred, at
which time the Employment Period shall terminate without further notice and the
Companies shall have no further obligations hereunder.
10. No Conflicts. The Executive represents to the Companies that the
execution, delivery and performance by the Executive of this Agreement do not
conflict with or result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default under any contract,
agreement or understanding, whether oral or written, to which the Executive is
a party or of which the Executive is or should be aware.
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<PAGE> 7
11. Mitigation; Offset.
(a) Upon termination by the Companies without cause or voluntarily
by the Executive for Good Reason pursuant to Section 8(b) hereof, the
Executive shall have an obligation to the Companies to mitigate damages by
actively seeking other employment of comparable position and salary in
compliance with Section 12. The Companies may, at their option, engage an
outplacement service firm to assist the Executive in his attempt to seek other
employment until the earlier of the time the Executive (i) accepts new
employment or (ii) is no longer entitled to payments under this Agreement.
(b) If the Executive accepts other employment (i) all of the
Executive's rights to benefits under Sections 4 and 8(b) hereof shall
cease, and all compensation payable to the Executive from services as an
officer, consultant or employee of any other business after the termination of
the Executive's employment hereunder with respect to the balance of the
Employment Period, whether paid during or after such period, shall be offset
against and reduce any payments (but not below zero) required to be paid to the
Executive under this Agreement.
12. Non-Competition. From and after the date hereof, the Executive will
not, except pursuant to the terms hereof, directly or indirectly, own,
manage, operate, join, finance, control or participate in the ownership,
management, operation or control of, or be employed or be otherwise connected
in any manner with, any business under a name similar to the name of any of the
Companies or any direct or indirect subsidiary thereof. Prior to the
termination of the Executive's employment hereunder and for a period after any
such termination or expiration of this Agreement equal to the greater of (i)
twelve (12) months and (ii) the balance of the then existing Employment Period
(as if this Agreement were not terminated), the Executive will not (except as
an officer, director, employee, agent or consultant of the Companies) directly
or indirectly, own, manage, operate, join, or have a financial interest in,
control or participate in the ownership, management, operation or control of,
or be employed as an employee, agent or consultant, or in any other individual
or representative capacity whatsoever, or use or permit his name to be used in
connection with, or be otherwise connected in any manner with (i) any business
or enterprise engaged (wherever located) in the design, development,
manufacture, distribution or sale of any products of the Companies which are
engaged in businesses substantially similar to the business of Aetna ("Related
Subsidiaries"), or the provision of any services, which Aetna or those direct
or indirect subsidiaries were designing, developing, manufacturing,
distributing, selling or providing at any time up to and including the date of
termination of this Agreement or (ii) any business which is similar to or
competitive with the business carried on or planned by Aetna or the Related
Subsidiaries at any time during the period of the Executive's employment by the
Companies, whether during or prior to the Employment Period, unless the
Executive shall have obtained the prior written consent of the Boards of
Directors of the Companies, provided that the foregoing restriction shall not
be construed to prohibit the ownership by the Executive of not more than two
percent (2%) of any class of securities of any corporation which is engaged in
any of the foregoing businesses, having a class of securities registered
pursuant to the Securities Exchange Act of 1934, which securities are
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<PAGE> 8
publicly owned and regularly traded on any national exchange or in the
over-the-counter market, provided further, that such ownership represents a
passive investment and that neither the Executive nor any group of persons
including the Executive in any way, either directly or indirectly, manages or
exercises control of any such corporation, guarantees any of its financial
obligations, otherwise takes part in its business other than exercising his
rights as a shareholder, or seeks to do any of the foregoing.
13. Non-Solicitation. Prior to the termination of the Executive's
employment hereunder and for a period after any such termination or
expiration of this Agreement equal to the greater of (i) twenty-four (24)
months and (ii) the balance of the then existing Employment Period (as if this
Agreement were not terminated), the Executive agrees, directly or indirectly,
whether for his own account or for the account of any other individual or
entity, not to solicit or canvas the trade, business or patronage of, or sell
any products or services which are the same as or similar to those designed,
developed, manufactured, distributed or sold by Aetna or the Related
Subsidiaries to, any individuals or entities that were either customers of
Aetna or the Related Subsidiaries during the time the Executive was employed by
the Companies, whether during or prior to the Employment Period, or prospective
customers with respect to whom a sales effort, presentation or proposal was
made by Aetna or the Related Subsidiaries during the twelve months preceding
the date of termination or expiration, as the case may be. The Executive
further agrees that prior to the termination of the Executive's employment
hereunder and for a period of two years thereafter, he shall not, directly or
indirectly, (i) solicit, induce, enter into any agreement with, or attempt to
influence any individual who was an employee or consultant of Aetna or the
Related Subsidiaries at any time during the time the Executive was employed by
the Companies, whether during or prior to the Employment Period, to terminate
his or her employment relationship with Aetna or the Related Subsidiaries or to
become employed by the Executive or any individual or entity by which Executive
is employed or (ii) interfere in any other way with the employment, or other
relationship, of any employee or consultant of Aetna or the Related
Subsidiaries.
14. Enforcement. (a) The Executive agrees that the remedies at law for
any breach or threat of breach by him of any of the provisions of
Sections 5, 6, 7, 12 and 13 hereof will be inadequate, and that, in addition to
any other remedy to which the Companies may be entitled at law or in equity,
the Companies shall be entitled to a temporary or permanent injunction or
injunctions or temporary restraining order or orders to prevent breaches of the
provisions of Sections 5, 6, 7, 12 and 13 hereof and to enforce specifically
the terms and provisions thereof, in each case without the need to post any
security or bond. Nothing herein contained shall be construed as prohibiting
the Companies from pursuing, in addition, any other remedies available to the
Companies for such breach or threatened breach. A waiver by the Companies of
any breach of any provision hereof shall not operate or be construed as a
waiver of a breach of any other provision of this Agreement or of any
subsequent breach by the Executive.
(b) It is expressly understood and agreed that although the
Companies and the Executive consider the restrictions contained in
Sections 5, 6, 7, 12 and 13 hereof to be
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<PAGE> 9
reasonable for the purpose of preserving the goodwill, proprietary rights and
going concern value of the Companies, if a final judicial determination is made
by a court having jurisdiction that the time or territory or any other
restriction contained in such Sections 5, 6, 7, 12 and 13 is an unenforceable
restriction on the Executive's activities, the provisions of such Sections 5,
6, 7, 12 and 13 shall not be rendered void but shall be deemed amended to apply
as to such maximum time and territory and to such other extent as such court
may judicially determine or indicate to be reasonable. Alternatively, if the
court referred to above finds that any restriction contained in Sections 5, 6,
7, 12 or 13 or any remedy provided herein is unenforceable, and such
restriction or remedy cannot be amended so as to make it enforceable, such
finding shall not affect the enforceability of any of the other restrictions
contained therein or the availability of any other remedy. The provisions of
Sections 5, 6, 7, 12 and 13 shall in no respect limit or otherwise affect the
Executive's obligations under other agreements with the Companies.
15. Assignment. The rights and obligations of the parties under this
Agreement shall not be assignable by either the Companies or the Executive,
provided that this Agreement is assignable by the Companies to any affiliate of
the Companies, to any successor in interest to the business of any of the
Companies, or to a purchaser of all or substantially all of the assets of any
of the Companies.
16. Notices. Any notice required or permitted under this Agreement shall
be deemed to have been effectively made or given if in writing and
personally delivered, mailed properly addressed in a sealed envelope, postage
prepaid by certified or registered mail, delivered by a reputable overnight
delivery service or sent by facsimile. Unless otherwise changed by notice,
notice shall be properly addressed to the Executive if addressed to:
Gary Easterly
1289 Tobias
Clio, MI 48420
and properly addressed to the Companies if addressed to:
Aetna Industries, Inc.
MS Acquisition Corp.
24331 Sherwood Avenue
P.O. Box 3067
Centerline, MI 48015-0067
Attention: Board of Directors
Fax No. 810-759-2209
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with a copy to:
Citicorp Venture Capital, Ltd.
399 Park Avenue - 14th Floor
New York, NY 10043
Attention: Michael A. Delaney
Fax No. 212-888-2940
17. Severability. Wherever there is any conflict between any provision of
this Agreement and any statute, law, regulation or judicial precedent,
the latter shall prevail, but in such event the provisions of this Agreement
thus affected shall be curtailed and limited only to the extent necessary to
bring them within the requirements of the law. In the event that any provision
of this Agreement shall be held by a court of proper jurisdiction to be
indefinite, invalid, void or voidable or otherwise unenforceable, the balance
of the Agreement shall continue in full force and effect unless such
construction would clearly be contrary to the intentions of the parties or
would result in an unconscionable injustice.
18. Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
19. Effect of Termination. Notwithstanding anything to the contrary
contained herein, if this Agreement or the Executive's employment is
validly terminated pursuant to Section 8 or Section 9 or expires by its terms,
the provisions of Sections 5, 6, 7, 11, 12, 13, 14, and 17 shall continue in
full force and effect.
20. Disputes. Any claim or controversy arising out of or relating to this
Agreement, or any breach thereof, or otherwise arising out of or relating to
the Executive's employment, compensation and benefits with the Companies or the
termination thereof, shall be settled by arbitration in Detroit, Michigan in
accordance with the rules established by the American Arbitration Association,
provided, however, that the parties agree that (i) the arbitrator shall be
prohibited from disregarding, adding to or modifying the terms of this
Agreement; (ii) the arbitrator shall be required to follow established
principles of substantive law and the law governing burdens of proof; (iii)
only legally protected rights may be enforced in arbitration; (iv) the
arbitrator shall be without authority to award punitive or exemplary damages;
(v) the arbitrator shall be an attorney licensed to practice law in Michigan
who has experience in similar matters; and (vi) any demand for arbitration made
by the Executive must be filed and served, if at all, within 180 days of the
occurrence of the act or omission complained of. Any claim or controversy not
submitted to arbitration in accordance with this Section 21 shall be considered
waived and, thereafter, no arbitration panel or tribunal or court shall have
the power to rule or make any award on any such claim or controversy. The
award rendered in any arbitration proceeding held under this Section 21 shall
be final and binding, and judgment upon the award
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may be entered in any court having jurisdiction thereof, provided that the
judgment conforms to established principles of law and is supported by
substantial record evidence.
21. Miscellaneous; Choice of Law. This Agreement constitutes the entire
agreement, and supersedes all prior agreements, of the parties hereto relating
to the subject matter hereof, and there are no written or oral terms or
representations made by either party other than those contained herein. This
Agreement shall be governed by and construed in accordance with the domestic
laws of the State of New York, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of New York or any
other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of New York.
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IN WITNESS WHEREOF, the parties have executed this Employment Agreement as
of the day and year first above written.
AETNA INDUSTRIES, INC.
/s/ David Y. Howe
------------------------------------
By: David Y. Howe
Its: Assistant Secretary
MS ACQUISITION CORP.
/s/ David Y. Howe
------------------------------------
By: David Y. Howe
Its: Assistant Secretary
/s/ Gary Easterly
------------------------------------
Gary Easterly
12
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EXHIBIT A
Prior Agreements
None
13
<PAGE> 14
EXHIBIT B
Form of Release
I, ______________________, hereby release and discharge ________________
(the "Company"); its present and former subsidiaries and affiliates; the
Company's, any such subsidiaries' and any such affiliates' present and former
partners, officers, directors, stockholders, employees, representatives and
agents; and the successors and assigns of each of the foregoing persons and
entities (collectively, the "Released Persons"), from any and all actions,
causes of action, suits, debts, dues, sums of money, including without
limitation any compensation owed or potentially owed, any accounts, reckonings,
bonds, bills, specialties, covenants, contracts, controversies, agreements,
promises, variances, trespasses, damages, judgments, executions, claims, and
demands whatsoever (including, without limitation, under the Age Discrimination
in Employment Act, 29 U.S.C. Section 621 et seq. ("ADEA"), or the Employee
Retirement Income Security Act, 29 U.S.C. Section 1001 et seq.), known or
unknown, fixed, conditional or contingent, in law or in equity, which I and my
respective heirs, executors, administrators, legal representatives, successors
and assigns ever had, now have or hereafter can, shall or may have against the
Released Persons, individually or collectively, derivatively or otherwise, for,
upon or by reason of any matter, cause or thing whatsoever from the beginning
of time to the date hereof.
The Company has advised me to consult with an attorney of my choosing
prior to executing this Release regarding this Release and I hereby represent
to the Company that I have in fact consulted with such an attorney prior to the
execution of this Release with respect hereto. I acknowledge that I shall have
up to twenty-one days prior to the execution of this Release to consider the
waiver of my rights under ADEA pursuant to this Release, provided that once I
have executed this Release, I shall have seven days from the date of execution
to revoke my consent to the release of my rights under ADEA. If no such
revocation occurs, my release of rights under ADEA pursuant to this Release
shall become effective seven days from the date I execute this Release. I
acknowledge that any revocation of consent pursuant to this Release must be in
writing and must be hand-delivered or telecopied to __________________________,
counsel to the Company, at ________________________________________________,
facsimile number ________, within such seven-day period.
IN WITNESS WHEREOF, the undersigned has executed this Release as of
_______ of ______________.
____________________________
[Name]
14
<PAGE> 1
EXHIBIT 10.19
PURCHASE ORDER TERMS AND CONDITIONS
1. ACCEPTANCE: Seller has read and understands this order and agrees that
Seller's written acceptance or commencement of any work or service under this
order shall constitute Seller's acceptance of these terms and conditions only.
All terms and conditions proposed by Seller which are different from or in
addition to this order are unacceptable to Buyer, are expressly rejected by
Buyer, and shall not become a part of this order. Any modifications to this
order shall be made in accordance with Paragraph 31.
2. SHIPPING, BILLING AND FLSA CERTIFICATION: Seller agrees (a) to properly
pack, mark and ship goods in accordance with the requirements of Buyer and
involved carriers in a manner to secure lowest transportation cost; (b) to
route shipments in accordance with instructions from Buyer's Traffic
Department; (c) to make no charge for handling, packaging, storage,
transportation or drayage of goods unless otherwise stated in this order; (d)
to provide with each shipment packaging slips with Buyer's order number marked
thereon; (e) to properly mark each package with this order number, the factory,
plant and dock number, and where multiple packages comprise a single shipment,
to consecutively number each package; and (f) to promptly forward the original
bill of lading or other shipping receipt for each shipment in accordance with
Buyer's instructions. Seller will include on bills of lading or other shipping
receipts correct classification identification of the goods shipped in
accordance with Buyer's instructions and carriers requirements. The marks on
each package and identification of the goods on packing slips, bills of lading
and invoices shall be sufficient to enable Buyer to easily identify the goods
purchased. Seller further agrees: (a) to promptly render, after delivery of
goods or performance of services, correct and complete invoices to Buyer; and
(b) to accept payment by check or, at Buyer's discretion, other cash equivalent
including (electronic transfer of funds). Seller's invoice must include a
certification that all goods were produced in compliance with the applicable
requirements of sections 6, 7, and 12 of the Fair Labor Standards Act, as
amended, and of regulation and orders of the United States Department of Labor
issued in connection therewith. The payment date is set forth on the face side
of this order, or if not stated, shall be on the 25th day of the month
following Buyer's receipt of a proper invoice (except as may otherwise be
agreed upon by Buyer and Seller in connection with a program providing for
electronic funds transfer). Time for payment shall not begin until correct and
complete invoices are received, and Seller's cash discount privileges to Buyer
shall be extended until such time as payment is due. Buyer may withhold
payment pending receipt of evidence, in such form and detail as Buyer may
direct, of the absence of any liens, encumbrances and claims on the goods or
services under this order.
3. DELIVERY SCHEDULES: Deliveries shall be made both in quantities and at
times specified in Buyer's schedules. Buyer shall not be required to make
payment for goods delivered to Buyer which are in excess of quantities
specified in Buyer's delivery schedules. Buyer may change rate of scheduled
shipments or direct temporary suspension of scheduled shipments, neither of
which shall entitle Seller to a modification of the price for goods or services
covered by this order. For orders of goods where quantities and/or delivery
schedules are not specified, Seller shall deliver goods in such quantities and
times as Buyer may direct in subsequent releases.
<PAGE> 2
4. PREMIUM SHIPMENTS: If Seller's acts or omissions result in Seller's failure
to meet Buyer's delivery requirements and Buyer requires a more expeditious
method of transportation for the goods than the transportation method
originally specified by Buyer, Seller shall, at Buyer's option, (i) promptly
reimburse Buyer the difference in cost between the more expeditious method and
the original method, (ii) allow Buyer to reduce its payment of Seller's
invoices by such difference, or (iii) ship the goods as expeditiously as
possible at Seller's expense and invoice Buyer for the amount which Buyer would
have paid for normal shipment.
5. CHANGES: Buyer reserves the right at any time to direct changes, or cause
Seller to make changes, to drawings and specifications of the goods or to
otherwise change the scope of the work covered by this order, including work
with respect to such matters as inspection, testing or quality control, and
Seller agrees to promptly make such changes; any difference in price or time
for performance resulting from such changes shall be equitably adjusted by
Buyer after receipt of documentation in such form and detail as Buyer may
direct. Any changes to this order shall be made in accordance with Paragraph
31.
6. INSPECTION: Seller agrees that Buyer shall have the right to enter Seller's
facility at reasonable times to inspect the facility, goods, materials and any
property of Buyer covered by this order. Buyer's inspection of the goods;
whether during manufacture, prior to delivery or within a reasonable time after
delivery, shall not constitute acceptance of any work-in-process or finished
goods.
7. NONCONFORMING GOODS: To the extent Buyer rejects goods as nonconforming,
the quantities under this order will automatically be reduced unless Buyer
otherwise notifies Seller. Seller will not replace quantities so reduced
without a new order or schedule from Buyer. Nonconforming goods will be held by
Buyer for disposition in accordance with Seller's instructions at Seller's
risk. Seller's failure to provide written instructions within ten (10) days,
or such shorter period as may be commercially reasonable under the
circumstances, after notice of nonconformity shall entitle Buyer, at Buyer's
option, to charge Seller for storage and handling, or to dispose of the goods,
without liability to Seller. Payment for nonconforming goods shall not
constitute an acceptance thereof, limit or impair Buyer's right to assert any
legal or equitable remedy, or relieve Seller's responsibility for latent
defects.
8. FORCE MAJEURE: Any delay or failure of either party to perform its
obligations hereunder shall be excused if, and to the extent that it is caused
by an event or occurence beyond the reasonable control of the party and without
its fault or negligence, such as, by way of example and not by way of
limitation, acts of God, action by any governmental authority (whether valid or
invalid), fires, floods, windstorms, explosions, riots, natural disasters,
wars, sabotage, labor problems (including lockouts, strikes and slowdowns),
inability to obtain power, material, labor, equipment or transportation, or
court injunction or order; provided that written notice of such delay
(including the anticipated duration of the delay) shall be given by the
affected party to the other party within ten (10) days. During the period of
such delay or failure to perform by Seller, Buyer, at its option, may purchase
goods from other sources and reduce its schedules to Seller by
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<PAGE> 3
such quantities, without liability to Seller, or have Seller provide the
goods from other sources in quantities and at times requested by Buyer and at
the price set forth in this order. If requested by the Buyer, Seller shall,
within ten (10) days of such request, provide adequate assurances that the
delay shall not exceed thirty (30) days. If the delay lasts more than thirty
(30) days or Seller does not provide adequate assurance that the delay will
cease within thirty (30) days, Buyer may immediately cancel the order without
liability.
9. WARRANTY: Seller expressly warrants that all goods or services covered by
this order will conform to the specifications, drawings, samples, or
descriptions furnished to or by Buyer, and will be merchantable, of good
material and workmanship and free from defect. In addition, Seller
acknowledges that Seller knows of Buyer's intended use and expressly warrants
that all goods covered by this order which have been selected, designed,
manufactured, or assembled by Seller, based upon Buyer's stated use, will be
fit and sufficient for the particular purposes intended by Buyer.
10. INGREDIENTS DISCLOSURE AND SPECIAL WARNINGS AND INSTRUCTIONS: If requested
by Buyer, Seller shall promptly furnish to Buyer in such form and detail as
Buyer may direct (a) a list of all ingredients in the goods purchased
hereunder; (b) the amount of one or more ingredients; and (c) information
concerning any changes in or additions to such ingredients. Prior to and with
the shipment of the goods purchased hereunder, Seller agrees to furnish to
Buyer sufficient warning and notice in writing (including appropriate labels on
goods, containers and packing) of any hazardous material which is an ingredient
or a part of any of the goods, together with such special handling instructions
as may be necessary to advise carriers, Buyer, and the respective employees of
how to exercise that measure of care and precaution which will best prevent
bodily injury or property damage in the handling, transportation, processing,
use, or disposal of the goods, containers and packing shipped to Buyer.
11. INSOLVENCY: Buyer may immediately cancel this order without liability to
Seller in the event of the happening of any of the following or any other
comparable event: (a) insolvency of the Seller; (b) filing of a voluntary
petition in bankruptcy by Seller; (c) filing of any involuntary petition in
bankruptcy against Seller; (d) appointment of a receiver or trustee for Seller;
(e) or execution of an assignment for the benefit of creditors by Seller,
provided that such petition, appointment, or assignment is not vacated or
nullified within fifteen (15) days of such event.
12. CANCELLATION FOR BREACH: Buyer reserves the right to cancel all or any
part of this order, without liability to Seller, if Seller: (a) repudiates or
breaches any of the terms of this order, including Seller's warranties; (b)
fails to perform services or deliver goods as specified by Buyer; or (c) fails
to make progress so as to endanger timely and proper completion of services or
delivery of goods; and does not correct such failure or breach within ten (10)
days (or such shorter period of time if commercially reasonable under the
circumstances) after receipt of written notice from Buyer specifying such
failure or breach.
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13. TERMINATION: In addition to any other rights of Buyer to cancel or
terminate this order, Buyer may at its option immediately terminate all or any
part of this order, at any time and for any reason, by giving written notice to
Seller. Upon such termination, Buyer shall pay to Seller the following amounts
without duplication: (a) the order price for all goods or services which have
been completed in accordance with this order and not previously paid for; and
(b) the actual costs of work-in-process and raw materials incurred by Seller in
furnishing the goods or services under this order to the extent such costs are
reasonable in amount and are properly allocable or apportionable under
generally accepted accounting principles to the terminated portion of this
order; less, however, the reasonable value or cost (whichever is higher) of any
goods or materials used or sold by Seller with Buyer's written consent, and the
cost of any damaged or destroyed goods or material. Buyer will make no
payments for finished goods, work-in-process or raw materials fabricated or
procured by Seller in amounts in excess of those authorized in delivery
releases nor for any undelivered goods which are in Seller's standard stock or
which are readily marketable. Payments made under this Paragraph shall not
exceed the aggregate price payable by Buyer for finished goods which would be
produced by Seller under delivery or release schedules outstanding at the date
of termination. Except as provided in this Paragraph, Buyer shall not be
liable for and shall not be required to make payments to Seller, directly or on
account of claims by Seller's subcontractors, for loss of anticipated profit,
unabsorbed overhead, interest on claims, product development and engineering
costs, facilities and equipment rearrangement costs or rental, unamortized
depreciation costs, and general and administrative burden charges from
termination of this order. Within sixty (60) days from the effective date of
termination, Seller shall submit a comprehensive termination claim to Buyer
with sufficient supporting data to permit Buyer's audit, and shall thereafter
promptly furnish such supplemental and supporting information as Buyer shall
request. Buyer, or its agents, shall have the right to audit and examine all
books, records, facilities, work, material, inventories and other items
relating to any termination claim of Seller.
14. INTELLECTUAL PROPERTY: Seller agrees: (a) to defend, hold harmless and
indemnify Buyer, its successors and customers against all claims, demands,
losses, suits, damages, liability and expenses (including reasonable attorney
fees) arising out of any suit, claim or action for actual or alleged direct or
contributory infringement of, or inducement to infringe, any United States or
foreign patent, trademark, copyright or mask work right by reason of the
manufacture, use or sale of the goods or services ordered including
infringement arising out of compliance with specifications furnished by Buyer
or for actual or alleged misuse or misappropriation of a trade secret resulting
directly or indirectly from Seller's actions; (b) to waive any claim against
Buyer under the Uniform Commercial Code or otherwise, including any hold
harmless or similar claim, in any way related to a claim asserted against
Seller or Buyer for patent, trademark, copyright or mask work right
infringement or the like, including claims arising out of compliance with
specifications furnished by Buyer; and (c) to grant to Buyer a worldwide,
nonexclusive, royalty-free, irrevocable license to repair and have repaired, to
reconstruct and have reconstructed the goods ordered hereunder. Seller assigns
to Buyer all right, title and interest in and to all trademarks, copyrights and
mask work rights in any material created for Buyer under this order.
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15. TECHNICAL INFORMATION DISCLOSED TO BUYER: Seller agrees not to assert any
claim (other than a claim for patent infringement) with respect to any
technical information which Seller shall have disclosed or may hereafter
disclose to Buyer in connection with the goods or services covered by this
order.
16. INDEMNIFICATION: If Seller performs any work on Buyer's premises or
utilizes the property of Buyer, whether on or off Buyer's premises, Seller
shall indemnify and hold Buyer harmless from and against any liability, claims,
demands or expenses (including reasonable attorney fees) for damages to the
property of or injuries (including death) to Buyer, its employees or any other
person arising from or in connection with Seller's performance of work or use
of Buyer's property except for such liability, claim, or demand arising out of
the sole negligence of Buyer.
17. INSURANCE: Seller shall maintain insurance coverage in amounts not less
than the following: (a) Worker's Compensation - Statutory Limits for the
state or states in which this order is to be performed (or evidence of
authority to self-insure); (b) Employer's Liability - $250,000; (c)
Comprehensive General Liability (including Products/Completed Operations and
Blanket Contractual Liability) - $1,000,000 per person, $1,000,000 per
occurrence Personal Injury, and $1,000,000 per occurrence Property Damage, or
$1,000,000 per occurrence Personal Injury and Property Damage combined single
limit; and (d) Automobile Liability (including owned, non-owned and hired
vehicles) - $1,000,000 per person, $1,000,000 per occurrence Personal Injury
and $1,000,000 per occurrence Property Damage, or $1,000,000 per occurrence
Personal Injury and Property Damage combined single limit. At Buyer's request,
Seller shall furnish to Buyer certificates of insurance setting forth the
amount(s) of coverage, policy number(s) and date(s) of expiration for insurance
maintained by Seller and, if further requested by Buyer, such certificates will
provide that Buyer shall receive thirty (30) days prior written notification
from the insurer of any termination or reduction in the amount or scope of
coverages. Seller's purchase of appropriate insurance coverage or the
furnishing of certificates of insurance shall not release Seller of its
obligations or liabilities under this order. In the event of Seller's breach
of this provision, Buyer shall have the right to cancel the undelivered portion
of any goods or services covered by this order and shall not be required to
make further payments except for conforming goods delivered or services
rendered prior to cancellation.
18. TOOLS: Unless otherwise agreed to by Buyer, Seller at its own expense
shall furnish, keep in good condition, and replace when necessary all tools,
jigs, dies, gauges, fixtures, molds and patterns ("tools") necessary for the
production of the goods. The cost of changes to the Tools necessary to make
design and specification changes authorized by Buyer shall be paid for by
Buyer. Seller shall insure the Tools with full fire and extended coverage
insurance for the replacement value thereof. Seller grants Buyer an
irrevocable option to take possession of and title to the Tools that are
special for the production of the goods upon payment to Seller of the book
value thereof less any amount which Buyer has previously paid to seller for the
cost of such Tools; provided, however, that this option shall not apply if such
Tools are used to produce goods
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that are the standard stock of Seller or if a substantial quantity of like
goods are being sold by Seller to others.
19. BAILED PROPERTY: All supplies, materials, tools, jigs, dies, gauges,
fixtures, molds, patterns, equipment and other items furnished by Buyer, either
directly or indirectly to Seller to perform this order, or for which Seller has
been reimbursed by Buyer, shall be and remain the property of Buyer. Seller
shall bear the risk of loss of and damage to Buyer's property. Buyer's
property shall at all times be properly housed and maintained by Seller; shall
not be used by Seller for any purpose other than the performance of this order;
shall be deemed to be personalty; shall be conspicuously marked "Property of
General Motors Corporation" by Seller; shall not be commingled with the
property of Seller or with that of a third person and shall not be moved from
Seller's premises without Buyer's prior written approval. Upon the request of
Buyer, such property shall be immediately released to Buyer or delivered to
Buyer by Seller, either (i) F.O.B. transport equipment at Seller's plant,
properly packed and marked in accordance with the requirements of the carrier
selected by Buyer to transport such property, or (ii) to any location
designated by Buyer, in which event Buyer shall pay to Seller the reasonable
cost of delivering such property to such location. Buyer shall have the right
to enter onto Seller's premises at all reasonable times to inspect such
property and Seller's records with respect thereto.
20. REMEDIES: The rights and remedies reserved to Buyer in this order shall be
cumulative, and additional to all other or further remedies provided in law or
equity.
21. DUTY DRAWBACK RIGHTS: This order includes all related customs duty and
import drawback rights, if any, (including rights developed by substitution and
rights which may be acquired from Seller's suppliers) which Seller can transfer
to Buyer. Seller agrees to inform Buyer of the existence of any such rights and
upon request to supply such documents as may be required to obtain such
drawback.
22. SETOFF: In addition to any right of setoff provided by law, all amounts
due Seller shall be considered net of indebtedness of Seller to General Motors
Corporation and its subsidiaries; and General Motors Corporation may deduct any
amounts due or to become due from Seller to General Motors Corporation and its
subsidiaries from any sums due or to become due General Motors Corporation to
Seller.
23. ADVERTISING: Seller shall not, without first obtaining the written consent
of Buyer, in any manner advertise or publish the fact that Seller has
contracted to furnish Buyer the goods or services herein ordered, or use any
trademarks or tradenames of Buyer in Seller's advertising or promotional
materials. In the event of Seller's breach of this provision Buyer shall have
the right to cancel the undelivered portion of any goods or services covered by
this order and shall not be required to make further payments except for
conforming goods delivered or services rendered prior to cancellation.
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<PAGE> 7
24. GOVERNMENT COMPLIANCE: Seller agrees to comply with all federal, state and
local laws, Executive Orders, rules, regulations and ordinances which may be
applicable to Seller's performance of its obligations under this order.
25. EQUAL OPPORTUNITY AND AFFIRMATIVE ACTION: This order incorporates by
reference: (a) all provisions of 41 C.F.R. 60-1.4, as amended, pertaining to
the equal opportunity clause in government contracts; (b) all provisions of 41
C.F.R. 60-250, as amended, pertaining to affirmative action for disabled
veterans of the Vietnam Era; and (c) all provisions of 41 C.F.R. 60-741, as
amended, pertaining to affirmative action for handicapped workers. Seller
certifies that it is in compliance with all applicable provisions of 41 C.F.R.
60-1, including but not limited to: (a) developing and presently having in full
force and effect a written affirmative action compliance program for each of
its establishments as required by 41 C.F.R. 60-1.40, as amended; (b) filing
EEO-1 Reports as required by 41 C.F.R. 60-1.7, as amended; and (c) neither
maintaining segregated facilities nor permitting its employees to perform
services at segregated facilities as prohibited by 41 C.F.R. 60-1.8 as amended.
Buyer requests that Seller adopt and implement a policy to extend employment
opportunities to qualified applicants and employees on an equal basis
regardless of an individual's age, race, color, sex, religion or national
origin.
26. NO IMPLIED WAIVER: The failure of either party at any time to require
performance by the other party of any provision of this order shall in no way
affect the right to require such performance at any time thereafter, nor shall
the waiver of either party of a breach of any provision of this order
constitute a waiver by any succeeding breach of the same or any other
provision.
27. NON-ASSIGNMENT: Seller may not assign or delegate its obligations under
this order without Buyer's prior written consent.
28. RELATIONSHIP OF PARTIES: Seller and Buyer are independent contracting
parties and nothing in this order shall make either party the agent or legal
representative of the other for any purchase whatsoever, nor does it grant
either party any authority to assume or to create any obligation on behalf of
or in the name of the other.
29. GOVERNING LAW: This order is to be construed according to the laws of the
state from which this order issues as shown in the address of Buyer on the face
side of this order.
30. SEVERABILITY: If any term of this order is invalid or unenforceable under
any statue, regulation, ordinance, executive order or other rule of law, such
term shall be deemed reformed or deleted, but only to the extent necessary to
comply with such statute, regulation, ordinance, order or rule, and the
remaining provisions of this order shall remain in full force and effect.
31. ENTIRE AGREEMENT: This order, together with the attachments, exhibits, or
supplements, specifically referenced in this order, constitutes the entire
agreement between Seller and Buyer respect to the matter contained herein and
supersedes all prior oral or written
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representations and agreements. This order may only be modified by a purchased
order amendment/alteration issued by Buyer.
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<PAGE> 1
EXHIBIT 10.20
GENERAL TERMS
& CONDITIONS/
CLAUSE MANUAL
---------------------------------------
Component Procurement and
Supply Development
Facilities and Materials
Purchasing
Service Parts Purchasing
<PAGE> 2
PRODUCTION PURCHASING
GENERAL TERMS AND CONDITIONS
1. AGREEMENT. Seller agrees to sell and deliver the goods or services
specified in Chrysler's order in ACCORDANCE WITH THE TERMS AND CONDITIONS
CONTAINED IN THE ORDER, INCLUDING THE CLAUSES REFERENCED IN THE ORDER, THE
TERMS OF THIS FORM AND ANY SIGNED DOCUMENTS REFERENCED IN THE ORDER, all of
which constitute the entire and final agreement of the parties and cancels and
supersedes any prior or contemporaneous negotiation or agreements. The
Chrysler clauses referenced are in Booklet 84-806-1824 (10/94), the receipt of
which Seller hereby acknowledges by acceptance of Chrysler's order. CHRYSLER'S
ORDER EXPRESSLY LIMITS ACCEPTANCE TO THE TERMS OF THE ORDER AND ANY ADDITIONAL
OR DIFFERENT TERMS, WHETHER CONTAINED IN SELLER'S FORMS OR OTHERWISE PRESENTED
BY SELLER ARE REJECTED UNLESS EXPRESSLY AGREED TO AND SELLER SPECIFICALLY
WAIVES ITS SIGNED ACCEPTANCE OF THIS ORDER BY CHRYSLER. "Order" means a
purchase order transmitted to Seller via Chrysler's Electronic Data Interchange
system or delivered to Seller in a paper format.
2. ACCEPTANCE. This order constitutes Chrysler's offer to Seller and is not
binding on Chrysler until accepted by Seller and Seller specifically waives its
signed acceptance of this order or by a delivery of the goods, rendering of
services, or the commencement of work on goods to be specially manufactured by
Chrysler pursuant to this order.
3. DELIVERY. Time is of the essence. Delivery must be effected within the
time specified in this order, or in accordance with Chrysler's releases or
procedures, if so indicated in this order. If Seller fails to make deliveries
or perform services at the agreed time, all damages suffered by Chrysler and
any premium transportation or other costs required to meet the specified
delivery schedule will be at the expense of Seller.
4. PACKING, MARKING AND SHIPMENT. a) Seller will pack and mark goods and make
shipments (including shipping on Saturdays and holidays, when requested) in
accordance with Chrysler's instructions, meet carrier requirements and assure
delivery free of damage and deterioration. All shipments of goods to Chrysler
plants must include two packing slips, or four packing slips in the case of
shipments directed to a Chrysler consolidation point. Whenever shipment is
made by truck, Seller will enclose one of the packing slips (or packing slip
sets in the case of multiple item shipments) in an envelope and Seller will
record written instructions on the bill of lading directing the delivering
driver to deliver the envelope to Chrysler's traffic representative upon
arrival at Chrysler's plant. Seller is responsible for the goods until
delivery at the designated FOB point.
b) Chrysler may specify the carrier and/or method of transportation and
Seller will process shipping documents and route shipments of the goods from
the FOB point accordingly.
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PRODUCTION PURCHASING
GENERAL TERMS AND CONDITIONS
Seller will comply with all of Chrysler's transportation routing instructions,
including, but not limited to, mode of transportation, utilization of assigned
carrier and identification of the shipping point. Seller will be responsible
for all excess costs incurred because of its failure to comply with Chrysler's
transportation instructions.
c) Chrysler will not be responsible for delays in the payment of invoices
if the following requirements are not met: invoices and packing slips must bear
the Chrysler-assigned supplier code, purchase order number, part number, the
requisition number on quantity buys or the release number on blanket orders,
the "Ship-to" address, Chrysler-assigned plant location code, invoice-to
address, and whether containers used are "returnable" or "non-returnable."
5. RELEASE AUTHORIZATION. When deliveries are specified to be in accordance
with Chrysler's written releases, Seller will not fabricate or assemble any
goods, nor procure required materials, nor ship any supplies, except to the
extent authorized by such written releases or provisions of this order
specifying minimum fabrication or delivery quantities.
6. INSPECTION AND REJECTIONS. Chrysler may inspect and evaluate all goods
(including all tooling and material used in their manufacture), and all
services at times and places designated by Chrysler. Seller will provide and
maintain a Supplier Quality Assurance System approved by Chrysler and which
meets Chrysler specifications. Seller's plan will be in compliance with
Chrysler's Supplier Quality Assurance manual #84-231-1200, (revision date
8/91). Seller will promptly comply with any revisions to such manual, or its
successors. Seller will perform inspections as designated by Chrysler and
Seller will make inspection systems, procedures and records available to
Chrysler upon request. Notwithstanding payment or any prior inspection,
Chrysler may revoke acceptance, reject or require correction and return the
goods to the Seller (at Seller's expense and risk of loss) any goods delivered
or services rendered that do not conform to applicable requirements. This
order is issued for the part specifically identified in the order and any
substitution of material, without prior Chrysler approval will be considered a
breach of this order. Without limiting its remedies, after notice to Seller,
Chrysler may (i) replace or correct any non-conforming goods or services and
charge Seller the cost of such replacement or correction, (ii) cancel the order
for default under Clause 21 hereof, (iii) subject Seller's account to a debit
for the damages suffered by Chrysler, and/or (iv) cause the removal of Seller
as an approval Chrysler supplier.
7. LABOR DISPUTES. Seller will notify Chrysler immediately of any actual or
potential labor dispute delaying or threatening to delay timely performance of
this order, and will include all relevant information to Chrysler. Seller will
notify Chrysler in writing six (6) months in advance of the expiration of any
current labor contract. Prior to the expiration of any labor contract of
Seller, Seller will establish, at its expense, a forty (40) working day supply
of goods
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<PAGE> 4
PRODUCTION PURCHASING
GENERAL TERMS AND CONDITIONS
in a neutral warehouse site to be located in the United States at least fifty
(50) miles from Seller's manufacturing locations. Such supply of goods will be
in place at least ten (10) working days prior to the expiration of any such
contract.
8. GENERAL WARRANTY. (a) Seller warrants that the goods or services will (i)
comply with all specifications, drawings, descriptions or samples furnished
and/or specified by Chrysler, (ii) be merchantable, and (iii) be free from
defects in material and workmanship. Seller further warrants that all goods
not designed by Chrysler will be fit and sufficient for the purposes intended.
The warranty term will be coterminous with the warranty extended to Chrysler's
customers by Chrysler. Seller's liability for a breach of the warranties given
herein will be determined by Chrysler's analysis of a sample of parts against
which claims are made that the parts are defective. Seller will participate in
such analysis in accordance with Chrysler procedures.
(b) Seller further warrants that on delivery Chrysler will receive good
title to the goods and services, free and clear of all liens and encumbrances
and that all goods and services will be free from any actual or claimed patent,
copyright or trademark infringement.
(c) These warranties are in addition to any warranties implied by law or
otherwise made by Seller and will survive acceptance and payment by Chrysler.
9. PRICE WARRANTY. (a) Seller warrants that the prices for the articles sold
to Chrysler hereunder are no less favorable than Seller currently extends to
any other customer for the same or similar goods or services in similar
quantities. If Seller reduces its prices to others for the same or similar
goods or services during the term of this order, Seller will reduce the prices
to Chrysler for such goods or services correspondingly. Seller warrants that
prices shown on this order are complete, and that no additional charges of any
type will be added without Chrysler's express written consent.
(b) If Seller sells the part covered by this order to a third party for
incorporation into an assembly which is to be sold to Chrysler, the price for
such part will be no more than the price provided in this order, plus any
additional costs actually incurred by Seller in providing the part to such
third party.
10. PROPERTY AND SPECIAL TOOLING. Unless otherwise provided in his order,
property of every description including all tools, equipment, material,
drawings, manufacturing aids and replacements of the foregoing furnished by
Chrysler, either directly or indirectly, or as acquired or manufactured by
Seller for use in the performance of this order, for which Seller has been
reimbursed by Chrysler ("Special Tooling"), will be (i) the property of
Chrysler, (ii) plainly
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PRODUCTION PURCHASING
GENERAL TERMS AND CONDITIONS
marked or otherwise adequately identified by Seller as the property of
Chrysler, and (iii) safety stored separate and apart from Seller's property.
Seller will adhere to the Chrysler procedure in effect at the time for
submitting requests for reimbursement for tooling costs, including but not
limited to the use of the Chrysler "Tool Record Form." All requests for
reimbursement for tooling costs are subject to review, approval and audit by
Chrysler. Seller will retain and not use or rework tooling or property of
Chrysler except for performance of work hereunder or as authorized in writing
by Chrysler. Seller will keep such tooling or property in its possession
and/or control in good condition, fully covered by insurance, free of liens and
encumbrances and will replace such tooling or property when lost, damaged or
destroyed. All Chrysler tooling or property will be transferred as Chrysler
may direct at any time. If Seller makes any unauthorized transfer of Special
Tooling, Seller will reimburse Chrysler for any costs incurred by Chrysler in
returning the tooling to Chrysler or moving the tooling as directed by
Chrysler.
11. INSURANCE AND INDEMNIFICATION. (a) Insurance. Seller will provide
worker's compensation, comprehensive general liability, automobile, public
liability, and property damage insurance in amounts and coverages sufficient to
cover all claims hereunder. Such policies will name Chrysler as an additional
insured thereunder and shall contain endorsements stating that the policies are
primary and not excess over or contributory with any other valid, applicable,
and collectible insurance in force for Chrysler. Chrysler may require Seller
to furnish evidence of the foregoing insurance but failure to comply with these
insurance requirements will not relieve Seller of its liability and obligations
under this clause. Chrysler's action or inaction will not act as a waiver of
any of Chrysler's rights described in this clause.
(b) Indemnification. Seller will defend, indemnify, and hold Chrysler
harmless against all claims, liabilities, losses, damages, and settlement
expenses in connection with any breach by Seller of these general conditions or
for injury or death of any person and damage or loss of any property allegedly
or actually resulting from or arising out of any act, omission or negligent
work of Seller or its employees, agents, or subcontractors in connection with
performing this order, either on Chrysler's property or in the course of their
employment.
12. CHANGES. a) Chrysler may, at any time, make changes in this order. Any
claim by Seller for a change in price adjustment must be asserted in writing
within ten (10) days from date of receipt by Seller of Chrysler's notification
of any change. Chrysler will have the right to verify all claims hereunder by
auditing relevant records, facilities, work or materials of Seller. Seller
agrees to proceed with the order as changed under this Clause 12.
b) All engineering changes, whether initiated by Chrysler or Seller, will
be processed pursuant to Chrysler practices in effect at the time of the change
using the Chrysler "Product Change Notice (PCN)" system, or it successors. All
Chrysler approved engineering changes to
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PRODUCTION PURCHASING
GENERAL TERMS AND CONDITIONS
the part specification will be promptly implemented by Seller as directed by
Chrysler. Price changes for Chrysler approved engineering changes are to be
based solely on the design cost variance from the superseded design and must be
substantiated with appropriate documentation satisfactory to Chrysler.
c) Seller certifies the location(s) from which it will ship the goods
covered by the order are as specified in the order. If Seller at any time
intends to change such location(s), Seller must notify Chrysler prior to the
change so that the effect of such change can be evaluated, and negotiated as
necessary, for its effect on transit time, packaging methods, and other
significant impact on Chrysler. If Seller does not notify Chrysler of any
increased transportation charges in advance of a change in shipping point(s),
Seller will be responsible for such costs.
13. SERVICE PARTS. a) Seller will make parts for Chrysler's service and
warranty requirements for ten years or for such longer time as may be required
by Chrysler after the order is terminated. The price of the part for
Chrysler's service requirements will be the price provided in the order plus
costs actually incurred for special packaging.
b) If the part is no longer required for Chrysler's vehicle production,
then the price of the part for Chrysler's service requirements will be no
greater than the last price stated in the order plus or minus (1) any changes
in the cost of materials since the order was terminated, plus (2) a volume
adjustment reflecting the actual increase in the cost per unit of producing
fewer units, plus (3) a set-up charge reflecting the actual cost of preparation
for the production run, plus (4) any additional costs actually incurred for
special packaging. All of the foregoing components of the price will be
documented to Chrysler's reasonable satisfaction including, but not limited to,
set-up detail, machine productivity, scrap allowance, labor inefficiencies and
excess raw material requirements.
c) If the parts are manufactured in a country other than the country in
which the goods are delivered to Chrysler. Seller will mark the goods shipped
for Chrysler's service requirements "Made in (country of origin)"
14.CLAIMS ADJUSTMENT. Chrysler may at any time and without notice deduct or
set- off Seller's claims for money due or to become due from Chrysler against
any claims that Chrysler has or may have arising out of this or any other
transaction between Chrysler and Seller.
15. CUSTOMS. a) Seller will promptly notify Chrysler in writing of material or
components used by Seller in filling this order which Seller purchases in a
country other than the country in which the goods are delivered to Chrysler.
Seller will furnish Chrysler with any documentation and information necessary
to establish the country of origin or to comply with the
6
<PAGE> 7
PRODUCTION PURCHASING
GENERAL TERMS AND CONDITIONS
applicable country's rules of origin requirements. Seller will promptly advise
Chrysler of any material or components imported into the country of origin and
any duty included in the purchase price of the goods.
b) The rights to and benefits of any duty drawback, including rights
developed by substitution and rights which may be acquired from Seller's
suppliers and export credits, to the extent transferable to Chrysler, are the
property of Chrysler. Seller will provide all documentation and information
and take any necessary steps to drawback any duty, taxes or fees paid to, and
to receive export credits from, the government of the country of origin upon
exportation of the goods from such country.
c) The responsibility for customs duty and customs brokers' fees will be
determined in accordance with the transportation code stated in this order. If
Chrysler is responsible for customs duties, it will be responsible for normal
duties only. Seller will be responsible for any special duties, including but
not limited to, marking, anti-dumping and countervailing duties, to the extent
permitted under the law of the country of importation. Seller will provide
Chrysler or the appropriate governmental authority all documentation and
information required by law or regulation or otherwise necessary to determine
the proper minimum duty to be paid upon the importation of the goods into any
country or to obtain any refunds or drawbacks of duties paid.
d) Seller will advise Chrysler if the importation or exportation of the
goods requires an import or export license. Seller will assist Chrysler in
obtaining any such license.
e) Seller will provide to Chrysler and the appropriate governmental
agency the documentation necessary to determine the admissibility and the
effect of entry of the goods into the country in which the goods are delivered
to Chrysler. Seller warrants that the information regarding the import or
export of the goods supplied to Chrysler is true and correct in every respect
and that all sales covered by this order will be made at not less than fair
value under the anti-dumping laws of the countries to which the goods are
exported.
16. USE OF CHRYSLER'S NAME. Seller will not, without the prior written consent
of Chrysler, in any manner publish the fact that Seller has furnished or
contracted to furnish Chrysler goods and/or services, or use the name or
trademarks of Chrysler, its products, or any of its associated companies in
Seller's advertising or other Publication. Seller will not place its, or any
third party's trademark or other designation on the part it the part bears a
Chrysler trademark or an identifying mark specified by Chrysler, or if the part
is peculiar to Chrysler's design ("Marked Parts"). Seller will sell Marked
Parts, and similar goods, only to Chrysler and will not sell Marked Parts or
similar goods to third parties without Chrysler's prior written consent.
7
<PAGE> 8
PRODUCTION PURCHASING
GENERAL TERMS AND CONDITIONS
17. INFORMATION DISCLOSED. The specifications, drawings, designs,
manufacturing data and other information transmitted to Seller by Chrysler in
connection with the performance of this order are the property of Chrysler and
may be covered by one or more Chrysler patents, patent applications or
copyrights. Seller will handle all of this information in such a manner to
insure that it is not used for any purpose detrimental to the interests of
Chrysler. Unless expressly provided in this order or otherwise agreed to in
writing by Chrysler, Seller's disclosure rights regarding products or services
related to this order, and information relating thereto shall be limited to any
valid copyright thereon or patent Seller may hold covering the manufacture, use
and sale of the products or services.
18. PATENTS. No rights are granted to Seller under any Chrysler patents except
as may be necessary to fulfill Seller's obligations under this order. Seller
agrees to defend all suits, actions or proceedings which may be brought against
Chrysler, any of its associated companies or its customers for alleged
infringement of any proprietary interest resulting from the use or sale of the
goods or services provided hereunder and to pay all expense and fees of counsel
which may be incurred in defending, and all costs, damages, or other recoveries
in every such suit.
19. ASSIGNMENT. This order will not be assigned or delegated, in whole or in
part, without Chrysier's prior written consent, including, but not limited to,
the subcontracting of work to be performed hereunder or the transfer of Special
Tooling to third parties for the performance of work hereunder.
20. TERMINATION AT CHRYSLER'S OPTION. Chrysler may terminate this order at any
time without cause in whole or in part by written notice, whereupon Seller will
stop work on the date and to the extent specified in such notice and terminate
all orders and subcontracts that relate to the terminated order. Within thirty
(30) days after receipt or termination notice, Seller will submit all claims
resulting from such termination. Chrysler will have the right to verify such
claims by auditing the relevant records, facilities, work or materials of
Seller and/or its subcontractors. Chrysler will pay Seller for finished work
accepted by Chrysler as well as for the documented cost to Seller of work in
process and raw material allocable to the terminated work which is not in
excess of any prior Chrysler authorization. Payment made under this Clause 20
will constitute Chrysler's only liability for termination hereunder with title
and right of possession to all delivered goods and services vesting in Chrysler
immediately upon Chrysler's tender of such payment. The provisions of this
Clause 20 will not apply to any cancellation by Chrysler for default by Seller
or for any other cause recognized by law or specified by this order.
21. CANCELLATION FOR DEFAULT. If Seller (i) fails to deliver goods or perform
services at the time specified herein, or (ii) fails to perform any other
provisions hereof and does not cure such failure within a period a ten (10)
days after receipt of written notice from Chrysler
8
<PAGE> 9
PRODUCTION PURCHASING
GENERAL TERMS AND CONDITIONS
specifying such failure, or (iii) becomes insolvent, makes an assignment in
favor of creditors, or enters bankruptcy or dissolution procedures, or (iv) is
merged into another company and/or is expropriated or nationalized, Chrysler
may cancel the whole or any part of this order without any liability, except
for payment due for goods and services delivered and accepted. Upon such
termination Chrysler will have the right, and on notice to Seller, to take
title to and possession of all or any part of such work performed by Seller
under this order.
22. TAXES. (a) The goods purchased hereunder are for resale or for an exempt
purpose and are exempt from state and local sales or use taxes. The following
retail license numbers are applicable for the states indicated in clause 023,
which is shown in its entirety in Section V of the booklet 84-806-1824 (10/92)
Illinois 0798-9318
Missouri 13808460
Texas 1-38-2673623
Wisconsin VT00532
The following direct payment permit numbers are applicable for the states
indicated:
Alabama (Huntsville Electronics) 80 RA 101
Indiana 003279910 0001
New York DP-000224
Ohio (Twinsburg) 98-000293
Ohio (Toledo Machining) 98-000294
Ohio (Dayton) 98-001782
Ohio (Sandusky Plastics) 98-001753
Ohio (Toledo Assembly) 98-000843
Michigan (Chrysler Corporation) 38-2673623
Michigan (Acustar, Inc.) 38-2741429
(b) Canada Federal Sales Tax License number is W-527. Chrysler certifies that
the goods are ordered for resale. Ontario Sales Tax permit number is
57190003-G.
23. REMEDIES. The rights and remedies herein reserved to Chrysler are
cumulative and in addition to any other or further rights and remedies
available at law or in equity. No waiver of any breach of any provision of
this order will constitute a waiver of any other breach or a waiver of such
provision.
9
<PAGE> 10
PRODUCTION PURCHASING
GENERAL TERMS AND CONDITIONS
24. REQUIRED COMPLIANCE. In providing goods or services hereunder, Seller will
comply with any and all applicable Federal, State and Local laws (including
Canadian or other foreign laws), and regulations promulgated thereunder.
Seller will defend, indemnify and hold Chrysler harmless from and against any
and all claims, losses, damages, costs and expenses resulting from or arising
out of any failure of Seller or Seller's employees, agents and subcontractors
to comply with any applicable governmental regulations and/or statutes.
25. SUPPLIERS WITH SPECIAL NEEDS. Chrysler actively seeks suppliers with
special needs and encourages Seller to use suppliers with special needs. A
supplier with special needs is a business establishment which meets one or more
of the following conditions:
(i) a small business, as defined in Title 15, Section 632 of the United States
Code and related regulations; (ii) a small business owned and controlled by
socially disadvantaged individuals (at least 51 percent of the business is
owned and controlled by one or more socially and economically disadvantaged
individuals and the management and daily business operations are controlled by
one or more such individuals); and (iii) a business that is at least 51 percent
owned by a woman or women who also control and operate the business. Seller
will inform Chrysler annually the percentage, based on a dollar value, of the
content provided by suppliers with special needs for the part purchased
hereunder as well as the basis for claiming that such content was provided by a
supplier with special needs.
26. GOVERNING LAW. This order and all transactions between Chrysler
Corporation and Seller will be governed by and construed in accordance with the
laws of Michigan as if entirely performed therein. In the case of Chrysler
Canada Ltd., this order between Chrysler Canada Ltd. and Seller will be
governed by and construed in accordance with the laws of the province of
Ontario, Canada as if entirely performed therein. The 1980 United Nations
Convention on Contracts for the International Sale of Goods, to the extent it
may be deemed to apply, shall not, pursuant to Article 6 thereof, apply to this
order or any transactions pursuant hereto.
10
<PAGE> 11
FACILITIES & MATERIALS PURCHASING
GENERAL TERMS AND CONDITIONS
1. AGREEMENT. Seller agrees to sell and deliver the goods or services
specified in Chrysler's order in ACCORDANCE WITH THE TERMS AND CONDITIONS
CONTAINED IN THE ORDER, INCLUDING THE CLAUSES REFERENCED IN THE ORDER, THE
TERMS OF THIS FORM AND ANY SIGNED DOCUMENTS REFERENCED IN THE ORDER, all of
which constitute the entire and final agreement of the parties and cancels and
supersedes any prior or contemporaneous negotiation or agreements. The
Chrysler clauses referenced are in Booklet 84-806-1824 (10/94), the receipt of
which Seller hereby acknowledges by acceptance of Chrysler's order. CHRYSLER'S
ORDER EXPRESSLY LIMITS ACCEPTANCE TO THE TERMS OF THE ORDER AND ANY ADDITIONAL
OR DIFFERENT TERMS, WHETHER CONTAINED IN SELLER'S FORMS OR OTHERWISE PRESENTED
BY SELLER ARE REJECTED UNLESS EXPRESSLY AGREED TO AND SELLER SPECIFICALLY
WAIVES ITS SIGNED ACCEPTANCE OF THIS ORDER BY CHRYSLER. "Order" means a
purchase order transmitted to Seller via Chrysler's Electronic Data Interchange
system or delivered to Seller in a paper format.
2. ACCEPTANCE. This order constitutes Chrysler's offer to Seller and is not
binding on Chrysler until accepted by Seller and Seller specifically waives its
signed acceptance of this order or by a delivery of the goods, rendering of
services, or the commencement of work on goods to be specially manufactured for
Chrysler pursuant to this order.
3. DELIVERY. Time is of the essence. Delivery must be effected within the
time specified on the face of this order. If Seller fails to make deliveries
or perform services at the agreed time, all damages suffered by Chrysler and
any premium transportation or other costs required to meet the specified
delivery schedule will be at the expense of Seller.
4. PACKING, MARKING AND SHIPMENT. Seller will pack and mark goods in
accordance with Chrysler's instructions, secure the lowest transportation
rates, meet carrier requirements and assure delivery free of damage and
deterioration. Seller is responsible for the goods until delivery at the
designated FOB point. Prices specified include all charges and expenses for
containers, packing and crating, and transportation to the FOB point. All
containers, packing and crating material will become the property of Chrysler
on delivery. Chrysler may specify the carrier and/or method of transportation
and Seller will process shipping documents and route shipment of the goods from
the FOB point accordingly.
5. RELEASE AUTHORIZATION. When deliveries are specified to be in accordance
with Chrysler's written releases, Seller will not fabricate or assemble any
goods, nor procure required materials, nor ship any supplies, except to the
extent authorized by such written releases or provisions of this order
specifying minimum fabrication or delivery quantities.
1
<PAGE> 12
FACILITIES & MATERIALS PURCHASING
GENERAL TERMS AND CONDITIONS
6. INSPECTION AND REJECTIONS. Chrysler may inspect and evaluate all goods
(including all tooling and material used in their manufacture), and all
services at times and places designated by Chrysler. Seller will perform its
inspections as designated by Chrysler and Seller will make inspection systems,
procedures and records available to Chrysler upon request. Notwithstanding
payment or any prior inspection, Chrysler may reject, require correction, or
return the goods to the Seller (at Seller's expense and risk of loss) any goods
delivered or services rendered that do not conform to applicable requirements.
Without limiting its remedies, after notice to Seller, Chrysler may either (i)
replace or correct any nonconforming goods or services and charge Seller the
cost of such replacement or correction, or (ii) cancel the order for default
under Clause 20 hereof.
7. LABOR DISPUTES. Seller will notify Chrysler immediately of any actual or
potential labor dispute delaying or threatening to delay timely performance of
this order, and will include all relevant information to Chrysler. Seller will
notify Chrysler in writing six (6) months in advance of the expiration of any
current labor contract(s). If requested by Chrysler, Seller will deliver a
supply of finished goods at least thirty (30) days prior to the expiration of
any such labor contract, in quantities and for storage at any place or places
designated by Chrysler.
8. GENERAL WARRANTY. Seller warrants that the goods or services will (i)
comply with all specifications, drawings, descriptions or samples furnished
and/or specified by Chrysler, (ii) be merchantable, and (iii) be free from
defects in material and workmanship. Seller further warrants that all goods
not designed by Chrysler will be fit and sufficient for the purposes intended.
Seller further warrants that on delivery Chrysler will receive good title to
the goods and services, free and clear of all liens and encumbrances and that
all goods and services will be free from any actual or claimed patent,
copyright or trademark infringement. These warranties are in addition to any
warranties implied by law or otherwise made by Seller and will survive
acceptance and payment by Chrysler.
9. PROPERTY AND SPECIAL TOOLING. Unless otherwise provided in this order,
property of every description including all tools, equipment, material,
drawings, manufacturing aids and replacements of the foregoing furnished by
Chrysler, either directly or indirectly, or as acquired of manufactured by
Seller for use in the performance of this order, for which Seller has been
reimbursed by Chrysler, will be (i) the property of Chrysler, (ii) plainly
marked or otherwise adequately identified by Seller as the property of
Chrysler, and (iii) safely stored separate and apart from Seller's property.
Seller will retain and not use or rework tooling or property of Chrysler except
for performance of work hereunder or as authorized in writing by Chrysler.
Seller will keep such tooling or property in its possession and/or control in
good condition, fully covered by insurance, free of liens and encumbrances and
will replace such
2
<PAGE> 13
FACILITIES & MATERIALS PURCHASING
GENERAL TERMS AND CONDITIONS
tooling or property when lost, damaged or destroyed. All Chrysler tooling or
property will be transferred as Chrysler may direct at any time.
10. INSURANCE AND INDEMNIFICATION. (a) Insurance. Seller will provide
worker's compensation, comprehensive general liability, automobile, public
liability, and property damage insurance in amounts and coverages sufficient to
cover all claims hereunder. Such policies will name Chrysler as an additional
insured thereunder and shall contain endorsements stating that the policies are
primary and not excess over or contributory with any other valid, applicable,
and collectible insurance in force for Chrysler. Chrysler may require Seller
to furnish evidence of the foregoing insurance but failure to comply with these
insurance requirements will not relieve Seller of its liability and obligations
under this clause. Chrysler's action or inaction will not act as a waiver of
any of Chrysler's right described in this clause.
(b) Indemnification. Seller will defend, indemnify, and hold Chrysler
harmless against all claims, liabilities, losses, damages, and settlement
expenses in connection with any breach by Seller of these general conditions or
for injury or death of any person and damage or loss of any property allegedly
or actually resulting from or arising out of any act, omission or negligent
work of Seller or its employees, agents, or subcontractors in connection with
performing this order, either on Chrysler's property or in the course of their
employment.
11. CHANGES. Chrysler may, at any time, make changes in this order. Any claim
by Seller for a change in price adjustment must be asserted in writing within
thirty (30) days from date or receipt by Seller of Chrysler's notification of
any change. Chrysler will have the right to verify all claims hereunder by
auditing relevant records, facilities, work or materials of Seller. Seller
agrees to proceed with the order as changed under this Clause 12.
12. CLAIMS ADJUSTMENT. Chrysler may at any time and without notice deduct or
set-off Seller's claims for money due or to become due from Chrysler against
any claims that Chrysler has or may have arising out of this or any other
transaction between Chrysler and Seller.
13. DUTY DRAWBACK RIGHTS. This order includes all related customs duty and
import drawback rights, if any (including rights developed by substitution and
rights which may be acquired from Seller's suppliers), which Seller can
transfer to Chrysler. Seller will inform Chrysler promptly of any such rights
and will supply documents as may be required to obtain such drawback.
14. USE OF CHRYSLER'S NAME. Seller will not, without the prior written consent
of Chrysler, in any manner publish the fact that Seller has furnished or
contracted to furnish Chrysler goods and/or services, or use the name or
trademarks of Chrysler, its products,
3
<PAGE> 14
FACILITIES & MATERIALS PURCHASING
GENERAL TERMS AND CONDITIONS
or any of its associated companies in Seller's advertising or other
publication. If Seller places on the goods a Chrysler trademark and/or
identifying mark, as specified by Chrysler, or if goods specified in this order
are peculiar to Chrysler's design, they will not bear the trademark or other
designation of the maker or Seller and similar goods will not be sold to anyone
other than Chrysler.
15. INFORMATION DISCLOSED. The specifications, drawings, designs,
manufacturing data and other information transmitted to Seller by Chrysler in
connection with the performance of this order are the property of Chrysler and
may be covered by one or more Chrysler patents, patent applications or
copyrights. Seller will handle all of this information in such a manner to
insure that it is not used for any purpose detrimental to the interests of
Chrysler. Unless expressly provided in this order or otherwise agreed to in
writing by Chrysler, Seller's disclosure rights regarding products or services
related to this order, and information relating thereto shall be limited to any
valid copyright thereon or patent Seller may hold covering the manufacture, use
and sale of the products or services.
16. PATENTS. No rights are granted to Seller under any Chrysler patents except
as may be necessary to fulfill Seller's obligations under this order. Seller
agrees to defend all suits, actions or proceedings which may be brought against
Chrysler, any of its associated companies or its customers for alleged
infringement of any proprietary interest resulting from the use or sale of the
goods or services provided hereunder any to pay all expense and fees of counsel
which may be incurred in defending, and all costs, damages, or other recoveries
in every such suit.
17. ASSIGNMENT. This order will not be assigned or delegated, in whole or in
part without Chrysler's prior written consent.
18. TERMINATION AT CHRYSLER'S OPTION. Chrysler may terminate this order at any
time without cause in whole or in part by written notice, whereupon Seller will
stop work on the date and to the extent specified in such notice and terminate
all orders and subcontracts that relate to the terminated order. Within thirty
(30) days after receipt of termination notice, Seller will submit all claims
resulting from such termination. Chrysler will have the right to verify such
claims by auditing the relevant records, facilities, work or materials of
Seller and/or its subcontractors. Chrysler will pay Seller for finished work
accepted by Chrysler as well as for the documented cost to Seller of work in
process and raw material allocable to the terminated work which is not in
excess of any prior Chrysler authorization. Payment made under this Clause 19
will constitute Chrysler's only liability for termination hereunder with title
and right of possession to all delivered goods and services vesting in Chrysler
immediately on Chrysler's tender of such payment. The provision of this Clause
19 will
4
<PAGE> 15
FACILITIES & MATERIALS PURCHASING
GENERAL TERMS AND CONDITIONS
not apply to any cancellation by Chrysler for default by Seller or for any
other cause recognized by law or specified by this order.
19. CANCELLATION FOR DEFAULT. If Seller (i) fails to deliver goods or perform
services at the time specified herein, or (ii) fails to perform any other
provisions hereof and does not cure such failure within a period of ten (10)
days after receipt of written notice from Chrysler specifying such failure, or
(iii) becomes insolvent, makes an assignment in favor of creditors, or enters
bankruptcy or dissolution procedures, or (iv) is merged into another company
and/or is expropriated or nationalized, Chrysler may cancel the whole or any
part of this order without any liability, except for payment due to goods and
services delivered and accepted. Upon such termination Chrysler will have the
right, and on notice to Seller, to take title to and possession of all or any
part of such work performed by Seller under this order.
20. REMEDIES. The rights and remedies herein reserved to Chrysler are
cumulative and in addition to any other or further rights and remedies
available at law or in equity. No waiver of any breach of any provision of
this order will constitute a waiver of any other breach or a waiver of such
provision.
21. REQUIRED COMPLIANCE. In providing goods or services hereunder, Seller will
comply with any and all applicable Federal, State and Local laws (including
Canadian or other foreign laws), and regulation promulgated hereunder. Seller
will defend, indemnity and hold Chrysler harmless from and against any and all
claims, losses, damages, costs and expenses resulting from or arising out of
any failure of Seller or Seller's employees, agents and subcontractors to
comply with any applicable governmental regulations and/or statutes.
22. GOVERNING LAW. This order and all transactions between Chrysler and Seller
will be governed by and construed in accordance with the laws of Michigan as if
entirely performed therein. In the case of Chrysler Canada Ltd., this order
between Chrysler Canada Ltd. and Seller will be governed by and construed in
accordance with the laws of the province of Ontario, Canada as if entirely
performed therein. The 1980 United Nations Convention on Contracts for the
International Sale of Goods, to the extent it may be deemed to apply, shall
not, pursuant to Article 6 thereof, apply to this order or any transactions
pursuant hereto.
5
<PAGE> 1
EXHIBIT 12
Aetna Industries, Inc.
Information on Ratio of Earnings
To fixed charges computation
(in thousands)
<TABLE>
<CAPTION>
Six months ended
Year ended December 31, June 30,
1991 1992 1993 1994 1995 1995 1996
<S> <C> <C> <C> <C> <C> <C> <C>
Net income before the
effect of accounting changes (2,287) (2,768) 915 6,595 4,576 5,466 2,806
Income taxes 218 (347) 930 4,000 1,877 2,243 2,163
Pretax income (2,069) (3,115) 1,845 10,595 6,453 7,709 4,969
Fixed charges per below 10,467 10,299 9,659 9,800 9,795 4,720 4,756
--------------------------------------------------------------
Earnings from operations 8,398 7,184 11,504 20,395 16,248 12,429 9,725
--------------------------------------------------------------
Fixed charges:
Interest expense 9,525 9,206 9,020 8,929 8,579 4,246 4,132
Debt amortization 432 557 99 198 442 99 221
Rent expense - portion of operating
rentals representative of the interest factor 510 536 540 673 774 375 403
--------------------------------------------------------------
Total fixed charges 10,467 10,299 9,659 9,800 9,795 4,720 4,756
--------------------------------------------------------------
Ratio of income to fixed charges (1) (1) 1.2 2.1 1.7 2.6 2.0
</TABLE>
(1) The deficiency of earnings from operations versus fixed charges
was $ 2.1 million and $3.1 million for the years ended December 31, 1991
and 1992, respectively.
<PAGE> 1
EXHIBIT 21
SUBSIDIARY OF AETNA INDUSTRIES, INC.
NAME OF SUBSIDIARY STATE OF INCORPORATION
- ------------------------------ ----------------------------
Aetna Export Sales Corporation United States Virgin Islands
<PAGE> 1
EXHIBIT 23.2
Consent of Independent Accountants
We hereby consent to use in the Prospectus constituting part of this
Registration Statement on Form S-4 of our report dated February 12, 1996,
except for notes 11 and 12 which are May 2, 1996 and August 13, 1996,
respectively, relating to the financial statements of Aetna Industries, Inc.,
which appears in such Prospectus. We also consent to the reference to us under
the headings "Experts" in such Prospectus.
PRICE WATERHOUSE LLP
Detroit, Michigan
September 10, 1996
<PAGE> 1
EXHIBIT 23.3
Consent of Independent Accountants
We hereby consent to use in the Prospectus constituting part of this
Registration Statement on Form S-4 of our report dated February 12, 1996,
except for notes 12 and 13 which are May 2, 1996 and August 13, 1996
respectively, relating to the financial statements of MS Acquisition Corp.,
which appears in such Prospectus. We also consent to the reference to us under
the headings "Experts" in such Prospectus.
PRICE WATERHOUSE LLP
Detroit, Michigan
September 10, 1996
<PAGE> 1
EXHIBIT 25
- --------------------------------------------------------------------------------
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)
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
A NATIONAL BANKING ASSOCIATION 41-1592157
(Jurisdiction of incorporation or (I.R.S. Employer
organization if not a U.S. national Identification No.)
bank)
SIXTH STREET AND MARQUETTE AVENUE
Minneapolis, Minnesota 55479
(Address of principal executive offices) (Zip code)
-----------------------------
AETNA INDUSTRIES, INC.
(Exact name of obligor as specified in its charter)
DELAWARE 38-2007550
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
24331 SHERWOOD AVENUE
P.O. BOX 3067
CENTERLINE, MI 48015-0067
(Address of principal executive offices) (Zip code)
------------------------------
11 7/8% SENIOR NOTES DUE 2006
(Title of the 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.
Comptroller of the Currency
Treasury Department
Washington, D.C.
Federal Deposit Insurance Corporation
Washington, D.C.
The Board of Governors of the Federal Reserve System
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
Item 2. Affiliations with Obligor. If the obligor is an affiliate of the
trustee, describe each such affiliation.
None with respect to the trustee.
No responses are included for Items 3-15 of this Form T-1 because the obligor
is not in default as provided under Item 13.
Item 16. List of Exhibits. List below all exhibits filed as a part of this
Statement of Eligibility. Norwest Bank
incorporates by reference into this Form T-1
the exhibits attached hereto.
Exhibit 1. a. A copy of Articles of Association of the
trustee now in effect. *
Exhibit 2. a. A copy of the certificate of authority of the
trustee to commence business issued June 28,
1872, by the Comptroller of the Currency to
The Northwestern National Bank of Minneapolis.*
b. A copy of the certificate of the Comptroller of
the Currency dated January 2, 1934, approving
the consolidation of the Northwestern National
Bank of Minneapolis and the Minnesota Loan and
Trust Company of Minneapolis.*
c. A copy of the certificate of the Acting
Comptroller of the Currency dated January 12,
1943, as to change of corporate title of
Northwestern National Bank and Trust Company of
Minneapolis to Northwestern National Bank of
Minneapolis.*
d. A copy of the certificate of the Comptroller of
the Currency dated May 1, 1983, authorizing
Norwest Bank Minneapolis, National
Association, to act as fiduciary.*
<PAGE> 3
Exhibit 3. A copy of the authorization of the trustee to
exercise corporate trust powers issued
January 2, 1934, by the Federal Reserve Board.*
Exhibit 4. Copy of By-laws of the trustee as now in
effect.*
Exhibit 5. 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.**
Exhibit 8. A copy of the certificate dated May 10, 1983 of
name change from Northwestern National Bank
Minneapolis to Norwest Bank Minneapolis,
National Association.*
Exhibit 9. A copy of the certificate dated January 11,
1988, of name change from Norwest Bank
Minneapolis, National Association to Norwest
Bank Minnesota, National Association.*
* Incorporated by reference to the exhibit of the same
number filed with the registration statement number 33-66086.
** Incorporated by reference to the exhibit of the same
number filed with the registration statement number
333-07005.
<PAGE> 4
EXHIBIT 6
[NORWEST BANKS LETTERHEAD]
August 27, 1996
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In accordance with Section 321 (b) of the Trust Indenture Act of 1939,
as amended, the undersigned hereby consents that reports of examination
of the undersigned made by Federal or State authorities authorized to
make such examination may be furnished by such authorities to the
Securities and Exchange Commission upon its request therefor.
Very truly yours,
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
Curtis D. Schwegman
Assistant Vice President
<PAGE> 5
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended,
the trustee, Norwest Bank Minnesota, National Association, a national banking
association organized and existing under the laws of the United States of
America, has duly caused this statement of eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of
Minneapolis and State of Minnesota on the 27th day of August, 1996.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
/s/ Curtis D. Schwegman
------------------------------------
Curtis D. Schwegman
Assistant Vice President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENTS OF OPERATIONS AND CONSOLIDATED BALANCE SHEETS AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH STATEMENTS.
</LEGEND>
<CIK> 0001022657
<NAME> AETNA INDUSTRIES, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 311
<SECURITIES> 0
<RECEIVABLES> 34,225
<ALLOWANCES> 265
<INVENTORY> 9,795
<CURRENT-ASSETS> 46,777
<PP&E> 78,941
<DEPRECIATION> 30,383
<TOTAL-ASSETS> 122,885
<CURRENT-LIABILITIES> 41,971
<BONDS> 60,947
0
0
<COMMON> 0
<OTHER-SE> 10,208
<TOTAL-LIABILITY-AND-EQUITY> 122,885
<SALES> 114,944
<TOTAL-REVENUES> 114,944
<CGS> 98,472
<TOTAL-COSTS> 105,843
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,132
<INCOME-PRETAX> 4,969
<INCOME-TAX> 2,163
<INCOME-CONTINUING> 2,806
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,806
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<PAGE> 1
EXHIBIT 99.1
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 1996, UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS OF OLD NOTES
MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M. ON THE EXPIRATION DATE.
AETNA INDUSTRIES, INC.
LETTER OF TRANSMITTAL
11 7/8% SENIOR NOTES DUE 2006
To: Norwest Bank Minnesota, National Association, The Exchange Agent
<TABLE>
<S> <C> <C>
By Registered or Certified Mail: By Overnight Courier:
Norwest Bank Minnesota, National Association Norwest Bank Minnesota, National Association
Corporate Trust Operations Corporate Trust Operations
P.O. Box 1517 Norwest Center
Minneapolis, MN 55480-1517 Sixth and Marquette
Minneapolis, MN 55479-0113
Attention: Curtis Schwegman Attention: Curtis Schwegman
By Hand: By Facsimile:
Norwest Bank Minnesota, National Association Norwest Bank Minnesota, National Association
Corporate Trust Operations Corporate Trust Operations
Norwest Center (612) 667-4927
Sixth and Marquette
Minneapolis, MN 55479-0113 Attention: Curtis Schwegman
Attention: Curtis Schwegman Confirm by telephone:
(612) 667-9764
</TABLE>
Delivery of this instrument to an address other than as set forth above or
transmission of instructions via a facsimile number other than the one 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.
HOLDERS WHO WISH TO BE ELIGIBLE TO RECEIVE NEW NOTES FOR THEIR OLD NOTES
PURSUANT TO THE EXCHANGE OFFER MUST VALIDLY TENDER (AND NOT WITHDRAW) THEIR OLD
NOTES TO THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE.
The undersigned acknowledges receipt of the Prospectus dated
, 1996 (the "Prospectus") of AETNA INDUSTRIES, INC. (the "Company") and this
Letter of Transmittal (the "Letter of Transmittal"), which together constitute
the Company's offer (the "Exchange Offer") to exchange $1,000 principal amount
of its 11 7/8% Senior Notes due 2006 (the "New 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 principal amount of its outstanding 11 7/8% Senior Notes due 2006
(the "Old Notes"), of which $85,000,000 principal amount is outstanding, upon
the terms and conditions set forth in the Prospectus. Other capitalized terms
used but not defined herein have the meaning given to them in the Prospectus.
For each Old Note accepted for exchange, the holder of such Old Note will
receive a New Note having a principal amount equal to that of the surrendered
Old Note. Interest on the New Notes will accrue from the last interest payment
date on which interest was paid on the Old Notes surrendered in exchange
therefor or, if no interest has been paid on the Old Notes, from the date of
original issue of the Old Notes. Holders of Old Notes accepted for exchange
will be deemed to have waived the right to receive any other payments or
accrued interest on the Old Notes. The Company reserves the right, at any time
or from time to time, to extend the Exchange Offer at its discretion, in which
event the term "Expiration Date" shall mean the latest time and date to which
the Exchange Offer is extended. The Company shall notify holders of the Old
Notes of any extension by means of a press release or other public announcement
prior to 9:00 A.M., New York City time, on the next business day after the
previously scheduled Expiration Date.
This Letter of Transmittal is to be used by Holders if: (i) certificates
representing Old Notes are to be physically delivered to the Exchange Agent
herewith by Holders; (ii) tender of Old Notes is to be made by book-entry
transfer to the Exchange Agent's account at The Depository Trust Company
("DTC"), pursuant to the procedures set forth in the Prospectus under "The
Exchange Offer--Procedures for Tendering" by any financial institution that is
a participant in DTC and whose name appears on a security position listing as
the owner of Old Notes; or (iii) tender of Old Notes
<PAGE> 2
is to be made according to the guaranteed delivery procedures set forth in the
prospectus under "The Exchange Offer--Guaranteed Delivery Procedures."
DELIVERY OF DOCUMENTS TO DTC DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
The term "Holder" with respect to the Exchange Offer means any person:
(i) in whose name Old 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; or (ii) whose Old Notes are held of record by DTC who
desires to deliver such Old Notes by book-entry transfer at DTC. 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.
The instructions included with this Letter of Transmittal must be
followed. Questions and requests for assistance or for additional copies of
the Prospectus, this Letter of Transmittal and the Notice of Guaranteed
Delivery may be directed to the Exchange Agent. See Instruction 10 herein.
HOLDERS WHO WISH TO ACCEPT THE EXCHANGE OFFER AND TENDER THEIR OLD NOTES
MUST COMPLETE THIS LETTER OF TRANSMITTAL IN ITS ENTIRETY.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE CHECKING ANY BOX BELOW
<TABLE>
<CAPTION>
DESCRIPTION OF 11 7/8% SENIOR NOTES DUE 2006 (OLD NOTES)
- ------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF AGGREGATE PRINCIPAL PRINCIPAL AMOUNT
REGISTERED HOLDER(S) CERTIFICATE AMOUNT REPRESENTED TENDERED (IF LESS
(PLEASE FILL IN, IF BLANK) NUMBER(S)* BY CERTIFICATE(S) THAN ALL)**
- -------------------------- ----------- ------------------- -----------------
<S> <C> <C> <C>
----------- ------------------- -----------------
----------- ------------------- -----------------
----------- ------------------- -----------------
----------- ------------------- -----------------
Total
- ------------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by Holders tendering by book-entry transfer.
** Unless indicated in the column labeled "Principal Amount Tendered," any
tendering Holder of Old Notes will be deemed to have tendered the entire
aggregate principal amount represented by the column labeled "Aggregate
Principal Amount Represented by Certificate(s)." If the space provided
above is inadequate, list the certificate numbers and principal amounts
on a separate signed schedule and affix the list to this Letter of
Transmittal.
The minimum permitted tender is $1,000 in principal amount of Old
Notes. All other tenders must be integral multiples of $1,000.
<TABLE>
<CAPTION>
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 4, 5 and 6) (See Instructions 4, 5 and 6)
<S> <C>
To be completed ONLY if certificates for Old Notes in To be completed ONLY if certificates for Old Notes in
a principal amount not tendered or not accepted for a principal amount not tendered or not accepted for
exchange, or New Notes issued in exchange for Old exchange, or New Notes issued in exchange for Old
Notes accepted for exchange, are to be issued in the Notes accepted for exchange, are to be sent to
name of someone other than the undersigned, or if the someone other than the undersigned, or to the
Old Notes tendered by book-entry transfer that are undersigned at an address other than that shown
not accepted for exchange are to be credited to an above.
account maintained by DTC.
Issue certificate(s) to: Mail to:
Name: Name:
------------------------------------------------- ------------------------------------------------
(Please Print) (Please Print)
Address: Address:
--------------------------------------------- ---------------------------------------------
(Include Zip code) (Include Zip Code)
- ------------------------------------------------------ ------------------------------------------------------
(Tax Identification or Social Security No.) (Tax Identification or Social Security No.)
</TABLE>
/ / CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER TO THE EXCHANGE AGENT'S ACCOUNT AT DTC AND COMPLETE THE
FOLLOWING:
-2-
<PAGE> 3
Name of Tendering Institution:
----------------------------------------------
DTC Book-Entry Account No.:
-------------------------------------------------
Transaction Code No.:
-------------------------------------------------------
/ / CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT
AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s):
--------------------------------------------
Window Ticket Number (if any):
----------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
-------------------------
IF DELIVERED BY BOOK-ENTRY TRANSFER, COMPLETE THE FOLLOWING:
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:
--------------------------------------------------------------------
-3-
<PAGE> 4
Ladies and Gentlemen:
Subject to the terms and conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the principal amount of Old Notes
indicated above. Subject to and effective upon the acceptance for exchange of
the principal amount of Old Notes tendered in accordance with this Letter of
Transmittal, the undersigned sells, assigns and transfers to, or upon the order
of, the Company all right, title and interest in and to the Old Notes tendered
hereby. The undersigned hereby irrevocably constitutes and appoints the
Exchange Agent its agent and attorney-in-fact (with full knowledge that the
Exchange Agent also acts as the agent of the Company and as Trustee under the
Indenture for the Old Notes and New Notes) with respect to the tendered Old
Notes with full power of substitution to (i) deliver certificates for such Old
Notes to the Company, or transfer ownership of such Old Notes on the account
books maintained by DTC and deliver all accompanying evidence of transfer and
authenticity to, or upon the order of, the Company and (ii) present such Old
Notes for transfer on the books of the Company and receive all benefits and
otherwise exercise all rights of beneficial ownership of such Old Notes, all in
accordance with the terms and subject to the conditions of the Exchange Offer.
The power of attorney granted in this paragraph shall be deemed irrevocable and
coupled with an interest.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Old Notes
tendered hereby and that the Company will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claim, when the same are acquired by the Company.
The undersigned hereby further represents that any New Notes acquired in
exchange for Old Notes tendered hereby will have been acquired in the ordinary
course of business of the Holder receiving such New Notes, whether or not such
person is the Holder, that neither the Holder nor any such other person has an
arrangement or understanding with any person to participate in the distribution
of such New Notes and that neither the Holder nor any such other person is an
"affiliate," as defined in Rule 405 under the Securities Act, of the Company or
any of its subsidiaries.
The undersigned also acknowledges that this Exchange Offer is being
made in reliance on an interpretation by the staff of the Securities and
Exchange Commission (the "SEC") that the New Notes issued in exchange for the
Old Notes pursuant to the Exchange Offer may be offered for resale, resold and
otherwise transferred by holders thereof (other than any such holder that is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act), without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such New Notes are acquired in
the ordinary course of such holders' business and such holders have no
arrangements with any person to participate in the distribution of such New
Notes. If the undersigned is not a broker-dealer, the undersigned represents
that it is not engaged in, and does not intend to engage in, a distribution of
New Notes. If the undersigned is a broker-dealer that will receive New Notes
for its own account in exchange for Old Notes that were acquired as a result of
market-making activities or other trading activities, it acknowledges that it
will deliver a prospectus in connection with any resale of such New 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 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 assignment, transfer and purchase of the Old Notes
tendered hereby. All authority conferred or agreed to be conferred by this
Letter of Transmittal shall survive the death, incapacity or dissolution of the
undersigned and every obligation of the undersigned under this Letter of
Transmittal shall be binding upon the undersigned's heirs, personal
representatives, successors and assigns, trustees in bankruptcy or other legal
representatives of the undersigned. This tender may be withdrawn only in
accordance with the procedures set forth in "The Exchange Offer--Withdrawal
Rights" section of the Prospectus.
For purposes of the Exchange Offer, the company shall be deemed to have
accepted validly tendered Old Notes when, as and if the Company has given oral
or written notice thereof to the Exchange Agent.
-4-
<PAGE> 5
If any tendered Old Notes are not accepted for exchange pursuant to the
Exchange Offer for any reason, certificates for any such unaccepted Old Notes
will be returned (except as noted below with respect to tenders through DTC),
without expense, to the undersigned at the address shown below or at a different
address as may be indicated under Special Delivery Instructions" as promptly as
practicable after the Expiration Date.
The undersigned understands that tenders of Old Notes pursuant to the
procedures described under the caption "The Exchange Offer--Procedures for
Tendering Old Notes" in the Prospectus and in the instructions hereto will
constitute a binding agreement between the undersigned and the Company upon the
terms and subject to the conditions of the Exchange Offer.
Unless otherwise indicated under "Special Payment Instructions," please
issue the certificates representing the New Notes issued in exchange for the Old
Notes accepted for exchange and return any Old Notes not tendered or not
exchanged in the name(s) of the undersigned (or in either such event in the case
of the Old Notes tendered by DTC, by credit to the undersigned's account, at
DTC). Similarly, unless otherwise indicated under "Special Delivery
Instructions," please send the certificates representing the New Notes issued in
exchange for the Old Notes accepted for exchange and any certificates for Old
Notes not tendered or not exchanged (and accompanying documents, as appropriate)
to the undersigned at the address shown below the undersigned's signature(s),
unless, in either event, tender is being made through DTC. In the event that
both "Special Payment Instructions" and "Special Delivery Instructions" are
completed, please issue the certificates representing the New Notes issued in
exchange for the Old Notes accepted for exchange and return any Old Notes not
tendered or not exchanged in the name(s) of, and send said certificates to, the
person(s) so indicated. The undersigned recognizes that the Company has no
obligation pursuant to the "Special Payment Instructions" and "Special Delivery
Instructions" to transfer any Old Notes from the name of the registered
Holder(s) thereof if the Company does not accept for exchange any of the Old
Notes so tendered.
Holders of Old Notes who wish to tender their Old Notes and (i) whose
Old Notes are not immediately available or (ii) who cannot deliver their Old
Notes, this Letter of Transmittal or any other documents required hereby to the
Exchange Agent, or cannot complete the procedure for book-entry transfer, prior
to the Expiration Date, may tender their Old Notes according to the guaranteed
delivery procedures set forth in the Prospectus under the caption "The Exchange
Offer--Guaranteed Delivery Procedures." See Instruction 1 regarding the
completion of the Letter of Transmittal printed below.
-5-
<PAGE> 6
PLEASE SIGN HERE WHETHER OR NOT
OLD NOTES ARE BEING PHYSICALLY TENDERED HEREBY
X
- ----------------------------------------------------------- ----------------
Date
X
- ----------------------------------------------------------- ----------------
Signature(s) of Registered Holder(s) Date
Or Authorized Signatory
Area Code and Telephone Number:
----------------------------
The above lines must be signed by the registered Holder(s) of Old Notes
as their name(s) appear(s) on the Old Notes or, if the Old Notes are tendered by
a participant in DTC, as such participant's name appears on a security position
listing as the owner of Old Notes, or by person(s) authorized to become
registered Holder(s) by a properly completed bond power form the registered
Holder(s), a copy of which must be transmitted with this Letter of Transmittal.
If Old Notes to which this Letter of Transmittal relates are held of record by
two or more joint Holders, then all such holders must sign this Letter of
Transmittal. If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, such person must (i) set forth his or her full title
below and (ii) unless waived by the Company, submit evidence satisfactory to the
Company of such person's authority to act. See Instruction 4 regarding the
completion of this Letter of Transmittal printed below.
Name(s):
------------------------------------------------------------------------
(Please Print)
Capacity:
-----------------------------------------------------------------------
Address:
------------------------------------------------------------------------
(Include Zip Code)
Signature(s) Guaranteed by an Eligible Institution:
(If required by Instruction 4)
------------------------------------------------------------------------
(Authorized Signature)
------------------------------------------------------------------------
(Title)
------------------------------------------------------------------------
(Name of Firm)
Dated: , 1996
--------------------------
-6-
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS
OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER AND NOTES; GUARANTEED DELIVERY PROCEDURES.
This Letter is to be completed by noteholders, either if certificates are to be
forwarded herewith or if tenders are to be made pursuant to the procedures for
delivery by book-entry transfer set forth in "The Exchange Offer--Book-Entry
Transfer" section of the Prospectus. Certificates for all physically tendered
Old Notes, or Book-Entry Confirmation, as the case may be, as well as a properly
completed and duly executed Letter (or manually signed facsimile hereof) and any
other documents required by this Letter, must be received by the Exchange Agent
at the address set forth herein on or prior to the Expiration Date, or the
tendering holder must comply with the guaranteed delivery procedures set forth
below. Old Notes tendered hereby must be in denominations of principal amount
of maturity of $1,000 and any integral multiple thereof.
Noteholders whose certificates for Old Notes are not immediately
available or who cannot deliver their certificates and all other required
documents to the Exchange Agent on or prior to the Expiration Date, or who
cannot complete the procedure for book-entry transfer on a timely basis, may
tender their Old Notes pursuant to the guaranteed delivery procedures set forth
in "The Exchange Offer--Guaranteed Delivery Procedures" section of the
Prospectus. Pursuant to such procedures, (i) such tender must be made through
an Eligible Institution (as defined in Instruction 4 below), (ii) prior to the
Expiration Date, the Exchange Agent must receive from such Eligible Institution
a properly completed and duly executed Letter (or facsimile thereof) and Notice
of Guaranteed Delivery, substantially in the form provided by the Company (by
facsimile transmission, mail or hand delivery), setting forth the name and
address of the holder of Old Notes and the amount of Old Notes tendered, stating
that the tender is being made thereby and guaranteeing that within five New York
Stock Exchange ("NYSE") trading days after the date of execution of the Notice
of Guaranteed Delivery, the certificates for all physically tendered Old Notes,
or a Book-Entry Confirmation, and any other documents required by the Letter
will be deposited by the Eligible Institution with the Exchange Agent, and (iii)
the certificates for all physically tendered Old Notes, in proper form for
transfer, or Book-Entry Confirmation, as the case may be, and all other
documents required by this Letter, are received by the Exchange Agent within
five NYSE trading days after the date of execution of the Notice of Guaranteed
Delivery.
The method of delivery of this Letter, the Old Notes and all other
required documents is at the election and risk of the tendering holders, but the
delivery will be deemed made only when actually received or confirmed by the
Exchange Agent. If Old Notes are sent by mail, it is suggested that the mailing
be made sufficiently in advance of the Expiration Date to permit the delivery to
the Exchange Agent prior to 5:00 p.m., New York City time, on the Expiration
Date.
See "The Exchange Offer" section in the Prospectus.
2. TENDER BY HOLDER. Only a holder of Old Notes may tender such Old
Notes in the Exchange Offer. Any beneficial holder of Old Notes who is not the
registered holder and who wishes to tender should arrange with the registered
holder to execute and deliver this Letter on his or her behalf or must, prior to
completing and executing this Letter and delivering his or her Old Notes, either
make appropriate arrangements to register ownership of the Old Notes in such
holder's name or obtain a properly completed bond power form the registered
holder.
3. PARTIAL TENDERS. Tenders of Old Notes will be accepted only in
integral multiples of $1,000. If less than the entire principal amount of any
Old Notes is tendered, the tendering holder should fill in the principal amount
tendered in the fourth column of the box entitled "Description of 11 % Senior
Notes due 2006 (Old Notes)" above. The entire principal amount of Old Notes
delivered to the Exchange Agent will be deemed to have been tendered unless
otherwise indicated. If the entire principal amount of all Old Notes is not
tendered, then Old Notes for the principal amount of Old Notes not tendered and
a certificate or certificates representing New Notes issued in exchange for any
-7-
<PAGE> 8
Old Notes accepted will be sent to the Holder at his or her registered address,
unless a different address is provided in the appropriate box on this Letter of
Transmittal, promptly after the Old Notes are accepted for exchange.
4. SIGNATURES ON THIS LETTER; POWERS OF ATTORNEY AND ENDORSEMENTS;
GUARANTEE OF SIGNATURES. If this Letter is signed by the registered holder of
the Old Notes tendered hereby, the signature must correspond exactly with the
name as written on the face of the certificates without any change whatsoever.
If any tendered Old Notes are owned of record by two or more joint
owners, all such owners must sign this Letter.
If any tendered Old Notes are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
copies of this Letter as there are different registrations of certificates.
When this Letter is signed by the registered holder or holders of the
Old Notes specified herein and tendered hereby, no endorsements of certificates
or separate powers of attorney are required. If, however, the New Notes are to
be issued, or any untendered Old Notes are to be reissued, to a person other
than the registered holder, then endorsements of any certificates transmitted
hereby or separate powers of attorney are required. Signatures on such
certificate(s) must be guaranteed by an Eligible Institution.
If this Letter is signed by a person other than the registered holder or
holders of any certificate(s) specified herein, such certificate(s) must be
endorsed or accompanied by appropriate powers of attorney, in either case
signed exactly as the name or names on the registered holder or holders
appear(s) on the certificate(s) and signatures on such certificate(s) must be
guaranteed by an Eligible Institution.
If this Letter or any certificates or powers of attorney are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and unless waived by the Company,
proper evidence satisfactory to the Company of their authority to so act must be
submitted.
Endorsements on certificates for Old Notes or signatures on powers of
attorney required by this Instruction 4 must be guaranteed by a firm which is a
participant in a recognized signature guarantee medallion program ("Eligible
Institutions").
Signatures on this Letter must be guaranteed by an Eligible Institution
unless the Old Notes are tendered (i) by a registered holder of Old Notes (which
term, for purposes of the Exchange Offer, includes any participant in the
Book-Entry Transfer Facility system whose name appears on a security position
listing as the holder of such Old Notes) who has not completed the box entitled
"Special Issuance Instructions" or "Special Delivery Instructions" on this
Letter, or (ii) for the account of an Eligible Institution.
5. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. Tendering holders should
indicate, in the applicable box or boxes, the name and address to which New
Notes or substitute Old Notes for principal amounts not tendered or not accepted
for exchange are to be issued or sent, if different from the name and address of
the person signing this Letter of Transmittal (or in the case of tender of Old
Notes through DTC, if different from DTC). In the case of issuance in a
different name, the taxpayer identification or social security number of the
person named must also be indicated. Noteholders tendering Old Notes by
book-entry transfer may request that Old Notes not exchanged be credited to such
account maintained at the Book-Entry Transfer Facility as such noteholder may
designate hereon. If no such instructions are given, such Old Notes not
exchanged will be returned to the name and address of the person signing this
Letter.
6. TAX IDENTIFICATION NUMBER. Federal income tax law requires that a
holder whose offered Old Notes are accepted for exchange must provide the
Company (as payer) with his, her or its correct Taxpayer Identification Number
("TIN"), which, in the case of an exchanging holder who is an individual, is his
or her social security number. If the
-8-
<PAGE> 9
Company is not provided with the correct TIN or an adequate basis for
exemption, such holder may be subject to a $50 penalty imposed by the Internal
Revenue Service (the "IRS"), and payments made with respect to Old Notes
purchased pursuant to the Exchange Offer may be subject to backup withholding
at a 31% rate. If withholding results in an overpayment of taxes, a refund may
be obtained. Exempt holders (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. See the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9."
To prevent backup withholding, each exchanging holder must provide his,
her or its correct TIN by completing the Substitute Form W-9 enclosed herewith,
certifying that the TIN provided is correct (or that such Holder is awaiting a
TIN) and that (i) the holder is exempt from backup withholding, (ii) the holder
has been notified by the IRS that he, she or it is subject to backup withholding
as a result of a failure to report all interest or dividends, or (iii) the IRS
has notified the holder that he, she or it is no longer subject to backup
withholding. In order to satisfy the Exchange Agent that a foreign individual
qualifies as an exempt recipient, such holder must submit a statement signed
under penalty of perjury attesting to such exempt status. Such statements may be
obtained from the Exchange Agent. If the Old Notes are in more than one name or
are not in the name of the actual owner, consult the Substitute Form W-9 for
information on which TIN to report. If you do not provide your TIN to the
Company within 60 days, backup withholding will begin and continue until you
furnish your TIN to the Company.
7. TRANSFER TAXES. The Company will pay all transfer taxes, if any,
applicable to the exchange of Old Notes pursuant to the Exchange Offer. If,
however, certificates representing New Notes or Old Notes for principal amounts
not tendered or accepted for exchange are to be delivered to, or are to be
registered or issued in the name of, any person other than the registered holder
of the Old Notes tendered hereby, or if tendered Old Notes are registered in the
name of any person other than the person signing this Letter of Transmittal, or
if a transfer tax is imposed for any reason other than the exchange of Old Notes
pursuant to the Exchange Offer, then the amount of any such transfer taxes
(whether imposed on the registered holder or on any other persons) will be
payable by the tendering holder. If satisfactory evidence of payment of such
taxes or exemption therefrom is not submitted herewith, the amount of such
transfer taxes will be billed directly to such tendering holder.
Except as provided in this Instruction 7, it will not be necessary for
transfer tax stamps to be affixed to the Old Notes listed in this Letter of
Transmittal.
8. WAIVER OF CONDITIONS. The Company reserves the absolute right to
amend, waive or modify specified conditions in the Exchange Offer in the case of
any Old Notes tendered.
9. NO CONDITIONAL TRANSFERS. No alternative, conditional, irregular or
contingent tenders will be accepted. All tendering holders of Old Notes, by
execution of this Letter, shall waive any right to receive notice of the
acceptance of their Old Notes for exchange.
Neither the Company, the Exchange Agent nor any other person is
obligated to give notice of any defect or irregularity with respect to any
tender of Old Notes nor shall any of them incur any liability for failure to
give any such notice.
10. MUTILATED, LOST, STOLEN OR DESTROYED OLD NOTES. Any tendering
holder whose Old Notes have been mutilated, lost, stolen or destroyed should
contact the Exchange Agent at the address indicated herein for further
instructions.
11. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and
requests for assistance for additional copies of the Prospectus, this Letter of
Transmittal and the Notice of Guaranteed Delivery may be directed to the
Exchange Agent at the address specified in the Prospectus.
-9-
<PAGE> 10
(DO NOT WRITE IN THE SPACE BELOW)
Certificate Old Notes Old Notes
Surrendered Tendered Accepted
----------- --------- ---------
----------- --------- ---------
----------- --------- ---------
=========== ========= =========
Delivery Prepared by Checked By Date
-------------------- ------------- ------------
-10-
<PAGE> 11
PAYER'S NAME: AETNA INDUSTRIES, INC.
- -------------------------------------------------------------------------------
SUBSTITUTE Name (if joint names, list first and circle the name of
the person or entity whose number you enter in Part 1
below. See instructions if your name has changed.)
---------------------------------------------------------
FORM W-9 Address
---------------------------------------------------------
Department of the City, state and ZIP code
Treasury
---------------------------------------------------------
Internal Revenue List account number(s) here (optional)
Service
---------------------------------------------------------
Part 1--PLEASE PROVIDE YOUR TAXPAYER Social security
IDENTIFICATION NUMBER ("TIN") IN THE number or TIN
BOX AT RIGHT AND CERTIFY BY SIGNING
AND DATING BELOW.
---------------------------------------------------------
Part 2--Check the box if you are NOT subject to backup
withholding under the provisions of section 3408(a)(1)(C)
of the Internal Revenue Code because (1) you have not
been notified that you are subject to backup withholding
as a result of failure to report all interest or
dividends or (2) the Internal Revenue Service has
notified you that you are no longer subject to backup
withholding.
---------------------------------------------------------
Payer's Request CERTIFICATION--UNDER THE PENALTIES OF PART 3 -
for PERJURY, I CERTIFY THAT THE INFORMATION
TIN PROVIDED NO THIS FORM IS TRUE, AWAITING
CORRECT AND COMPLETE. TIN
Signature Date / /
----------------- ---------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE EXCHANGE
OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER OR SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
-11-
<PAGE> 12
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens:
i.e. 000-00-0000. Employer identification numbers have nine digits separated
by only one hyphen: i.e. 00-0000000. The table below will help determine the
number to give the payer.
<TABLE>
<CAPTION>
Give the Give the EMPLOYER
SOCIAL SECURITY IDENTIFICATION
For this type of account: number of -- For this type of account: number of --
<S> <C> <C> <C>
1. An individual's account The individual 9. A valid trust, estate The legal entity (do
or pension trust not furnish the
identifying number
2. Two or more individuals The actual owner of of the personal
(joint account) the account or, if representative or
combined funds, any trustee unless the
one of the legal entity itself
individuals(1) is not designated in
the account
title.)(5)
3. Husband and wife (joint The actual owner of 10. Corporate account The corporation
account) the account or, if
joint funds, either
person(1) 11. Religious, The organization
charitable, or
4. Custodian account of a minor The minor (2) educational organization
(Uniform Gift to Minors Act) account
12. Partnership account The partnership
5. Adult and minor (joint The adult or, if held in the name of the
account) the minor is the business
only contributor,
the minor (1) 13. Association, club, The organization
or other tax-exempt
organization
14. A broker or The broker or nominee
6. Account in the name of The ward, minor, or registered nominee
guardian or committee for a incompetent
designated ward, minor or person(3)
incompetent person 15. Account with the The public entity
Department of
7. a The usual revocable The Agriculture in the name
savings trust account grantor-trustee(1) of a public entity (such
(grantor is also trustee) The actual owner(1) as a State or local
b So-called trust account government, school
that is not a legal and valid district, or prison)
trust under State law that receives
agricultural program
payments
8. Sole proprietorship account The owner(4)
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension
trust.
NOTE: If no name is circled when there is more than one name, the number will
be considered to be that of the first name listed.
-12-
<PAGE> 13
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or
Form SS-4, Application for Employer Identification Number, at the local office
of the Social Security Administration or the internal Revenue Service and apply
for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include
the following:
A corporation.
A financial institution.
An organization exempt from tax under section 501(a), or an individual
retirement plan.
The United States or any agency or instrumentality thereof.
A State, the District of Columbia, a possession of the United States,
or any subdivision or instrumentality thereof.
A foreign government, a political subdivision of a foreign government,
or any agency or instrumentality thereof.
An international organization or any agency, or instrumentality
thereof.
A registered dealer in securities or commodities registered in the U.S.
or a possession of the U.S.
A real estate investment trust.
A common trust fund operated by a bank under section 584(a).
An exempt charitable remainder trust, or a non-exempt trust described
in section 4947(a)(1).
An entity registered at all times under the Investment Company Act of
1940.
A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to
backup withholding include the following:
Payments to nonresident aliens subject to withhold-ing under section
1441.
Payments to partnerships not engaged in a trade or business in the U.S.
and which have at least one nonresident partner.
Payments of patronage dividends where the amount received is not paid
in money.
Payments made by certain foreign organizations.
Payments made to a nominee.
Payments of interest not generally subject to backup withholding include
the following:
Payments of interest on obligations issued by individ-uals. Note: You
may be subject to backup withhold-ing if this interest is $600 or more and
is paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
Payments of tax-exempt interest (including exempt-interest dividends
under section 852).
Payments described in section 6049(b)(5) to non-resident aliens.
Payments on tax-free covenant bonds under section 1451.
Payments made by certain foreign organizations.
Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS,
ALSO SIGN AND DATE THE FORM.
Certain payments other than interest, dividends and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recip-ients of dividend,
interest, or other payments to give tax-payer identification numbers to payers
who must report for payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Beginning January 1, 1994, payers must generally
withhold 31% of taxable interest, dividend, and certain other payments to a
payee who does not furnish a taxpayer identification number to a payer.
Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICA-TION NUMBER.--If you
fail to furnish your taxpayer identifi-cation number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 5% on any portion of an
under-payment attributable to that failure unless there is clear and convincing
evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Fal-sifying certifications
or affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
-13-
<PAGE> 1
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
FOR
11 7/8% SENIOR NOTES DUE 2006
OF
AETNA INDUSTRIES, INC.
As set forth in the Prospectus dated , 1996 (the
"Prospectus"), of AETNA INDUSTRIES, INC. (the "Company") and in the
accompanying Letter of Transmittal and instructions thereto (the "Letter of
Transmittal"), this form or one substantially equivalent hereto must be used to
accept the Company's Exchange Offer (the "Exchange Offer") to exchange all of
its outstanding 11 7/8% Senior Notes due 2006 (the "Old Notes") for its 11 7/8%
Senior Notes due 2006, which have been registered under the Securities Act of
1933, as amended, if certificates for the Old Notes are not immediately
available or if the Old Notes, the Letter of Transmittal or any other documents
required thereby cannot be delivered to the Exchange Agent, or the procedure
for book-entry transfer cannot be completed, prior to 5:00 P.M., New York City
time, on the Expiration Date (as defined in the Prospectus). This form may be
delivered by an Eligible Institution by hand or transmitted by facsimile
transmission, overnight courier or mail to the Exchange Agent as set forth
below. Capitalized terms used but not defined herein have the meaning given to
them in the Prospectus.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON ,
1996, UNLESS THE OFFER IS EXTENDED (THE "EXPIRATION DATE"). TENDERS OF
OLD NOTES MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M. ON THE BUSINESS DAY
PRIOR TO THE EXPIRATION DATE.
To: Norwest Bank Minnesota, National Association, The Exchange Agent
<TABLE>
<S> <C>
By Registered or Certified Mail: By Overnight Courier:
Norwest Bank Minnesota, National Association Norwest Bank Minnesota, National Association
Corporate Trust Operations Corporate Trust Operations
P.O. Box 1517 Norwest Center
Minneapolis, MN 55480-1517 Sixth and Marquette
Minneapolis, MN 55479-0113
Attention: Curtis Schwegman Attention: Curtis Schwegman
By Hand: By Facsimile:
Norwest Bank Minnesota, National Association Norwest Bank Minnesota, National Association
Corporate Trust Operations Corporate Trust Operations
Norwest Center (612) 667-4927
Sixth and Marquette
Minneapolis, MN 55479-0113 Attention: Curtis Schwegman
Attention: Curtis Schwegman Confirm by telephone:
(612) 667-9764
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION OF INSTRUCTIONS
VIA A FACSIMILE, OTHER THAN AS SET FORTH ABOVE, DOES NOT CONSTITUTE A VALID
DELIVERY.
This form is not to be used to guarantee signatures. If a signature on
the Letter of Transmittal to be used to tender Old Notes is required to be
guaranteed by an "Eligible Institution" under the instructions thereto, such
signature guarantee must appear in the applicable space provided in the Letter
of Transmittal.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to AETNA INDUSTRIES, INC., a Delaware
corporation (the "Company"), upon the terms and subject to the conditions set
forth in the Prospectus and the Letter of Transmittal (which together
constitute the "Exchange Offer"), receipt of which is hereby acknowledged,
(number of Old Notes) Old Notes pursuant to the guaranteed delivery
procedures set forth in Instruction 1 of the Letter of Transmittal.
The undersigned understands that tenders of Old Notes will be accepted
only in principal amounts equal to $1,000 or integral multiples thereof. The
undersigned understands that tenders of Old Notes pursuant to the Exchange
Offer may not be withdrawn after 5:00 p.m., New York City time, on the business
day prior to the Expiration Date.
All authority herein conferred or agreed to be conferred by this Notice of
Guaranteed Delivery shall survive the death, incapacity or dissolution of the
undersigned and every obligation of the undersigned under this Notice of
Guaranteed Delivery shall be binding upon the heirs, personal representatives,
executors, administrators, successors, assigns, trustees in bankruptcy and
other legal representatives of the undersigned.
NOTE: SIGNATURES MUST BE PROVIDED WHERE INDICATED BELOW.
<TABLE>
<S> <C>
Certificate No(s). for Old Notes (if available) Name(s) of Record Holder(s)
- ----------------------------------------------- ------------------------------
- ----------------------------------------------- ------------------------------
PLEASE PRINT OR TYPE
Principal Amount of Old Notes Address
-----------------------
- ----------------------------------------------- ------------------------------
Area Code and
Tel. No.
---------------------
Signature(s)
------------------
------------------------------
Dated:
------------------------
If Old Notes will be
delivered by book-entry
transfer at the Depository
Trust Company, Depository
Account No:
-------------------
</TABLE>
This Notice of Guaranteed Delivery must be signed by the registered
holder(s) of Old Notes exactly as its (their) name(s) appear on certificates
for Old Notes or on a security position listing as the owner of Old Notes, or
by person(s) authorized to become registered holder(s) by endorsements and
documents transmitted with this Notice of Guaranteed Delivery. If signature is
by a trustee, executor, administrator, guardian, attorney-in-fact, officer or
other person acting in a fiduciary or representative capacity, such person must
provide the following information:
2
<PAGE> 3
Please print name(s) and address(es)
Name(s):
------------------------------------------------------------------
------------------------------------------------------------------
Capacity:
------------------------------------------------------------------
Address(es):
------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member firm of a registered national securities
exchange or of the National Association of Securities Dealers, Inc., or 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 Securities Exchange Act of 1934, as amended (the "Exchange
Act"), hereby (a) represents that the above named person(s) "own(s)" the Old
Notes tendered hereby within the meaning of Rule 14e-4 under the Exchange Act,
(b) represents that such tender of Old Notes complies with Rule 14e-4 under the
Exchange Act and (c) guarantees that delivery to the Exchange Agent of
certificates for the Old Notes tendered hereby, in proper form for transfer (or
confirmation of the book-entry transfer of such Old Notes into the Exchange
Agent's Account at the Depository Trust Company, pursuant to the procedures for
book-entry transfer set forth in the Prospectus), with delivery of a properly
completed and duly executed Letter of Transmittal (or manually signed facsimile
thereof) with any required signatures and any other required documents, will be
received by the Exchange Agent at one of its addresses set forth above within
five business days after the Expiration Date.
THE UNDERSIGNED ACKNOWLEDGES THAT IT MUST DELIVER THE LETTER OF
TRANSMITTAL AND OLD NOTES TENDERED HEREBY TO THE EXCHANGE AGENT WITHIN THE TIME
PERIOD SET FORTH AND THAT FAILURE TO DO SO COULD RESULT IN FINANCIAL LOSS TO
THE UNDERSIGNED.
<TABLE>
<S> <C>
Name of Firm
-------------------- -----------------------------
AUTHORIZED SIGNATURE
Address Name
------------------------- -------------------------
PLEASE PRINT OR TYPE
Title
- -------------------------------- ------------------------
ZIP CODE
Area Code and Tel. No. Date
----------- ------------------------
Dated: , 1996
-----------------
</TABLE>
NOTE: DO NOT SEND OLD NOTES WITH THIS FORM; OLD NOTES SHOULD BE SENT WITH
YOUR LETTER OF TRANSMITTAL SO THAT THEY ARE RECEIVED BY THE EXCHANGE AGENT
WITHIN FIVE BUSINESS DAYS AFTER THE EXPIRATION DATE.
3
