<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 3, 1998
REGISTRATION NO.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
CLARK MATERIAL HANDLING COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 3537 61-1312827
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
172 TRADE STREET
LEXINGTON, KENTUCKY 40511
(606) 288-1200
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
JOSEPH F. LINGG
VICE PRESIDENT, FINANCE AND TREASURER
CLARK MATERIAL HANDLING COMPANY
172 TRADE STREET
LEXINGTON, KENTUCKY 40511
(606) 288-1200
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
WITH COPIES TO:
CHRISTOPHER G. KARRAS, ESQ.
DECHERT PRICE & RHOADS
4000 BELL ATLANTIC TOWER
1717 ARCH STREET
PHILADELPHIA, PENNSYLVANIA 19103
(215) 994-2769
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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- -----------------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) PRICE(1) REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
10 3/4% Senior Notes due
2006....................... $150,000,000 100% $150,000,000 $45,455
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13% Senior Exchangeable
Preferred Stock due 2007... $40,000,000 $1,000 $40,000,000 $12,121
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</TABLE>
(1) Estimated pursuant to Rule 457(f) solely for purposes of calculating the
registration fee. This Registration Statement also relates to and covers an
indeterminate amount of 13% Senior Exchangeable Series B Preferred Stock due
2007 that may be issued in payment of dividends on the 13% Senior
Exchangeable Series B Preferred Stock due 2007 in accordance with its terms.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL 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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- --------------------------------------------------------------------------------
<PAGE> 2
OFFER TO EXCHANGE
10 3/4% SERIES D SENIOR NOTES DUE 2006
FOR ALL OUTSTANDING
10 3/4% SERIES C SENIOR NOTES DUE 2006
AND
10 3/4% SERIES D SENIOR NOTES DUE 2006
FOR ALL OUTSTANDING
10 3/4% SERIES B SENIOR NOTES DUE 2006
AND
13% SENIOR EXCHANGEABLE SERIES B PREFERRED STOCK DUE 2007
FOR ALL OUTSTANDING
13% SENIOR EXCHANGEABLE SERIES A PREFERRED STOCK DUE 2007
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME ON , 1998, UNLESS EXTENDED
CLARK Material Handling Company, a Delaware corporation ("CLARK" or the
"Company"), hereby offers to exchange (i) an aggregate principal amount of up to
$20,000,000 of its 10 3/4% Series D Senior Notes due 2006 (the "New Notes") for
a like principal amount of its 10 3/4% Series C Senior Notes due 2006 (the
"Series C Notes") outstanding on the date hereof (the "C Note Exchange Offer"),
(ii) an aggregate principal amount of up to $130,000,000 of its New Notes for a
like principal amount of its 10 3/4% Series B Senior Notes due 2006 (the "Series
B Notes" and, together with the Series C Notes, the "Existing Notes")
outstanding on the date hereof (the "B Note Exchange Offer") and (iii) an
aggregate liquidation preference of up to $20,000,000 of its 13% Senior
Exchangeable Series B Preferred Stock due 2007 (the "New Preferred Stock") for a
like liquidation preference amount of its 13% Senior Exchangeable Series A
Preferred Stock due 2007 (the "Existing Preferred Stock") outstanding on the
date hereof (the "Preferred Stock Exchange Offer") upon the terms and subject to
the conditions set forth in this Prospectus and in the accompanying letters of
transmittal (each, a "Letter of Transmittal" and collectively the "Letters of
Transmittal"). The C Note Exchange Offer, the B Note Exchange Offer and the
Preferred Stock Exchange Offer are hereinafter individually referred to as an
"Exchange Offer" and collectively as the "Exchange Offers". The New Notes and
the Existing Notes are hereinafter collectively referred to as the "Notes", the
New Preferred Stock and the Existing Preferred Stock are hereinafter
collectively referred to as the "Senior Preferred Stock," the New Notes and the
New Preferred Stock are hereinafter collectively referred to as the "New
Securities" and the Existing Notes and the Existing Preferred Stock are
sometimes collectively referred to as the "Existing Securities."
The terms of the New Notes are identical in all material respects to those
of the Series C Notes, except that (i) interest on the New Notes shall accrue
from the most recent date to which interest has been paid on the Series C Notes
surrendered in exchange therefor or, if no interest has been paid on the Series
C Notes, from May 15, 1998 and (ii) the New Notes are being registered under the
Securities Act of 1933, as amended (the "Securities Act"), and will not bear any
legends restricting their transfer. The terms of the New Notes are identical in
all material respects to those of the Series B Notes, except that interest on
the New Notes shall accrue from the most recent date to which interest has been
paid on the Series B Notes surrendered in exchange therefor. The terms of the
New Preferred Stock are identical in all material respects to the terms of the
Existing Preferred Stock, except that (i) dividends on the New Preferred Stock
shall accrue from the most recent date to which dividends have been paid on the
Existing Preferred Stock surrendered in exchange therefor or, if no dividends
have been paid on the Existing Preferred Stock, from the date of issuance of the
Existing Preferred Stock and (ii) the New Preferred Stock is being registered
under the Securities Act and will not bear any legend restricting its transfer.
The New Notes will evidence the same debt as the Existing Notes and will be
issued pursuant to, and entitled to the benefits of, the indenture governing the
Series C Notes. The New Preferred Stock will evidence the same equity as the
Existing Preferred Stock and will be issued pursuant to, and entitled to the
benefits of, the Certificate of Designation (as defined). The Exchange Offers
are being made in order to satisfy certain contractual obligations of the
Company.
(continued on next page)
---------------------
SEE "RISK FACTORS" COMMENCING ON PAGE 20 FOR A DISCUSSION OF
CERTAIN MATTERS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
---------------------
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 , 1998
<PAGE> 3
Interest on the New Notes will be payable semi-annually on November 15 and
May 15 of each year, commencing November 15, 1998 at a rate of 10 3/4% per
annum. Dividends on the New Preferred Stock will accrue in each period ending on
January 15, April 15, July 15 and October 15 of each year at a rate of 13% per
annum of the liquidation preference.
The New Notes will mature on November 15, 2006. The New Notes will be
redeemable at the option of the Company, in whole or in part, on or after
November 15, 2001, at the redemption prices set forth herein, plus accrued and
unpaid interest, if any, to the date of redemption. At any time or from time to
time prior to November 15, 1999, the Company may redeem up to one third of the
aggregate principal amount of the Notes issued on or after the Issue Date (as
defined) at the redemption price of 110.75% of the principal amount thereof,
plus accrued and unpaid interest, if any, to the date of redemption, with the
net cash proceeds of one or more Public Equity Offerings (as defined); provided,
that at least two thirds of the aggregate principal amount of Notes issued on or
after the Issue Date remains outstanding immediately thereafter. See
"Description of Notes -- Redemption." The shares of New Preferred Stock will be
redeemable at the option of the Company, in whole or in part, on or after July
15, 2003, at the redemption prices set forth herein, plus accrued dividends, if
any, to the date of redemption. In addition, at the option of the Company, the
New Preferred Stock may be redeemed in whole, but not in part, at any time prior
to July 15, 2003 at the redemption price set forth herein, plus accrued and
unpaid dividends, if any, to the date of redemption, with the net cash proceeds
of one or more Public Equity Offerings. See "Description of Preferred Stock --
Redemption."
Upon a Change of Control (as defined), the Company will be required to
offer to purchase all of the outstanding New Notes at 101% of the principal
amount thereof, plus accrued and unpaid interest, if any, to the date of
purchase and all of the outstanding shares of New Preferred Stock at 101% of the
liquidation preference thereof, plus accrued and unpaid dividends, if any, to
the date of purchase. See "Description of Notes -- Change of Control" and
"Description of Preferred Stock -- Change of Control."
On any scheduled dividend payment date, the Company may, at its option,
exchange all but not less than all of the shares of New Preferred Stock then
outstanding for the Company's Preferred Stock Exchange Notes (as defined). See
"Description of Preferred Stock -- Exchange."
Holders whose Existing Notes or Existing Preferred Stock are accepted for
exchange will be deemed to have waived the right to receive any interest or
dividends accrued on the Existing Notes or Existing Preferred Stock.
The New Notes will be senior unsecured obligations of the Company, pari
passu in right of payment with all existing and future senior indebtedness of
the Company and senior to all subordinated indebtedness of the Company. The New
Notes will be effectively subordinated to all senior secured indebtedness of the
Company, to the extent of the assets securing such indebtedness, and to all
existing and future indebtedness and other obligations of the Company's Foreign
Subsidiaries (as defined). As of June 30, 1998 the Company had approximately
$10.5 million of senior secured indebtedness outstanding (exclusive of unused
commitments of $20.6 million which may be borrowed by the Company under the
Revolving Credit Facility (as defined)) and the Company's Foreign Subsidiaries
had approximately $43.3 million of liabilities reflected on the Company's
consolidated balance sheet. See "Description of Notes -- General." The New
Senior Preferred Stock will rank senior in right of payment with respect to all
Junior Securities (as defined), pari passu with respect to Parity Securities (as
defined) and junior with respect to all indebtedness and other obligations of
the Company and its subsidiaries. See "Risk Factors -- Ranking; Subsidiary
Operations" and "Description of Preferred Stock -- Ranking."
The Company is offering the New Securities in reliance on certain
interpretive letters issued by the staff of the Securities and Exchange
Commission (the "Commission") to third parties in unrelated transactions. Based
on such interpretive letters, the Company is of the view that holders of
Existing Securities (other than any holder who is an "affiliate" of the Company
or any Guarantor (as defined) within the meaning of Rule 405 under the
Securities Act of 1933, as amended (the "Securities Act")) who exchange their
Existing Securities for New Securities pursuant to the Exchange Offer generally
may offer such New Securities for resale, resell such New Securities and
otherwise transfer such New Securities without compliance with the
<PAGE> 4
registration and prospectus delivery provisions of the Securities Act, provided
such New Securities 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 Securities. Each broker-dealer that receives New
Securities 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
Securities. The Letters of Transmittal state 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. 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 Securities received in exchange
for Existing Securities where such Existing Securities were acquired by such
broker-dealer as a result of market-making activities or other trading
activities. The Company has agreed that, for a period of 180 days after the
Expiration Date, it will make this Prospectus available to any broker-dealer for
use in connection with any such resale. See "Plan of Distribution."
Prior to the Exchange Offers there has been no public market for the Series
C Notes and the Existing Preferred Stock. If a market for the New Securities
should develop, such New Securities could trade at a discount from their
principal amount. The Company currently does not intend to list the New
Securities on any securities exchange or to seek approval for quotation through
any automated quotation system, and no active public market for the New
Securities is currently anticipated. There can be no assurance that an active
public market for the New Securities will develop.
The Exchange Offer is not conditioned upon any minimum principal amount of
Existing Notes or liquidation amount of Existing Preferred Stock being tendered
for exchange pursuant to the Exchange Offers. The Company will pay all the
expenses incident to the Exchange Offer.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL THE COMPANY ACCEPT
SURRENDERS FOR EXCHANGE FROM, HOLDERS OF EXISTING SECURITIES IN ANY JURISDICTION
IN WHICH THE EXCHANGE OFFER OR THE ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE
WITH THE SECURITIES OR BLUE SKY LAWS OF SUCH JURISDICTION.
<PAGE> 5
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-4 (the "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 Securities being
offered hereby. This Prospectus does not contain all the information set forth
in the Registration Statement. For further information with respect to the
Company and the Exchange Offer, reference is made to the 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
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 Company is currently subject to the informational reporting
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith files periodic reports and other information
with the Commission. Such periodic reports and other information filed with the
Commission, including the Registration Statement, may be inspected without
charge at the Public Reference Section of the Commission at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and will also be available
for inspection and copying at the regional offices of the Commission located at
Seven World Trade Center, 13th Floor, New York, New York 10048 and the Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of
all or any portion of such material may be obtained from the Public Reference
Section of the Commission upon payment of certain prescribed fees. In addition,
the Commission maintains a website that contains periodic reports and other
information filed by the Company. This website can be accessed at
http://www.sec.gov. Copies of such material can also be obtained from the
Company upon request.
While any New Securities remain outstanding, the Company will make
available, on request, to any holder and any prospective purchaser of New
Securities the information required pursuant to Rule 144A(d)(4) under the
Securities Act during any period in which CLARK is not subject to Section 13 or
15(d) of the Exchange Act.
i
<PAGE> 6
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act. All
statements other than statements of historical facts included in this
Prospectus, including, without limitation, the statements under "Summary,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business" and located elsewhere herein regarding industry
prospects and the Company's financial position are forward-looking statements.
Although the Company believes that the expectations reflected in such
forward-looking statements are reasonable, it can give no assurance that such
expectations will prove to have been correct. Important factors that could cause
actual results to differ materially from the Company's expectations ("Cautionary
Statements") are disclosed in the Prospectus, including, without limitation, in
conjunction with the forward-looking statements in this Prospectus under "Risk
Factors." All subsequent written and oral forward-looking statements
attributable to the Company or persons acting on its behalf are expressly
qualified in their entirety by the Cautionary Statements.
ii
<PAGE> 7
SUMMARY
The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information and financial statements
(including notes thereto) included elsewhere in this Prospectus. Unless the
context otherwise requires, references to the "Company" or "CLARK" are to CLARK
Material Handling Company (including its predecessors) and the other material
handling operations acquired from certain subsidiaries of Terex Corporation (the
"Predecessor's Parent") in 1996 (the "1996 Acquisition") for periods prior to
November 26, 1996, and to CLARK Material Handling Company and its subsidiaries
for periods from and after November 26, 1996. The Company, which is a
wholly-owned subsidiary of CMH Holdings Corporation, a Delaware Corporation
("Holdings"), acquired in July 1998 (the "Samsung Forklift Acquisition")
substantially all of the assets and certain liabilities of the forklift division
("Samsung Forklift") of Samsung Heavy Industries Co., Ltd. ("Samsung"). The pro
forma financial information presented herein has been adjusted to give effect to
the Company's acquisition of the assets of Blue Giant (as defined) in November
1997 but unless otherwise indicated does not give effect to the offering of the
Series C Notes, the Existing Preferred Stock or the New Securities or the
acquisition of Samsung Forklift.
THE COMPANY
CLARK is a leading international designer, manufacturer, and marketer of a
complete line of forklift trucks, including internal combustion ("IC") trucks,
electric riders, narrow aisle stackers and powered hand trucks. The Company
invented the platform forklift truck in 1917 and has since established CLARK as
one of the most recognized brand names of forklift trucks in North America.
Management believes that CLARK has a large installed fleet in North America with
over 250,000 units and has a total of approximately 350,000 units in operation
worldwide. This large installed fleet has allowed CLARK to generate significant
ongoing replacement parts sales, which typically generate substantially higher
gross margins and provide a more stable revenue base than new forklift truck
sales. CLARK manufactures its products through five facilities in the United
States, Europe and Canada and distributes its products to a diverse customer
base through a global network of approximately 300 dealers from more than 560
locations. In addition, the Company's Blue Giant subsidiaries distribute their
products through a network of over 350 North American dealers and agents. For
the twelve months ended June 30, 1998 ("LTM"), on a pro forma basis, CLARK
generated net sales of $534.1 million and EBITDA (as defined) of $36.5 million.
Since 1993, CLARK has undertaken a series of initiatives aimed at reducing
fixed costs, developing a largely variable cost structure and offering a highly
competitive product portfolio. Specifically, the Company (i) eliminated
redundant manufacturing and distribution facilities, (ii) reduced head-count,
(iii) eliminated non-core unprofitable product lines, and (iv) improved
outsourcing of certain manufacturing operations. In addition to cost
rationalization, the Company made a series of new product introductions allowing
it to offer one of the most modern product portfolios in the industry. CLARK's
product development strategy emphasizes (i) product innovations and improvements
to meet the evolving needs of CLARK's customer base and (ii) lowering production
costs through better design, thereby enhancing margins. As a result of these
initiatives, the Company increased EBITDA (as defined) by $26.2 million from
$10.3 million in fiscal 1994 to $36.5 million on a pro forma basis in the LTM
period. EBITDA (as defined) consistently increased during this period despite a
declining forklift market in 1996 relative to 1995.
BUSINESS STRATEGY
Management believes that CLARK's strong brand name, extensive distribution
network, modern product portfolio and streamlined fixed cost structure provide a
strong foundation for increased growth and profitability. The Company's
operating strategy focuses on the following key components:
Introduce New Products. The Company's new product introduction strategy is
based on the Genesis(R) forklift truck platform which was introduced in December
1994. The purpose of the Genesis(R) forklift truck design project was to develop
a production platform which reduced the number of parts used in each model, used
like parts in various forklift models and enhanced functionality of operation.
As a result of the Genesis(R) model, the Company achieved purchasing
efficiencies from its vendors and streamlined the production process, which
resulted in significantly reduced production costs and enhanced margins. Due to
the wide customer acceptance of the Genesis(R) truck and the significantly
reduced production costs relative to its
1
<PAGE> 8
predecessor models, the Company has introduced four completely redesigned
electric riders and five new IC forklift models based on the Genesis(R)
platform. CLARK's new product development pipeline is focused on lower cost,
enhanced feature products, extending the Genesis(R) platform to the few
remaining older models in its product offering and improving the performance of
its electric powered hand truck designs. Each of these new products is designed
to reduce production costs and increase margins. In addition, the Company's
engineering team is continuously working toward achieving increased production
efficiencies and reduced manufacturing costs through improved design.
In addition, the Company seeks to acquire businesses which offer
complementary product lines that can be sold through the Company's existing
global network. For example, in 1997 the Company acquired substantially all of
the assets of Blue Giant USA Corporation and Blue Giant Canada Limited
(collectively "Blue Giant"), which design and manufacture a successful product
line of powered handtrucks, dock equipment and scissor lifts. Similarly, the
Company expects to significantly increase the distribution of the value priced
Samsung Forklift product line by leveraging the Company's global distribution
network, especially in North and South America. In addition, Samsung Forklift
expands the Company's product line in the entry level segment for IC forklift
truck models.
Augment the Distribution Network. CLARK distributes its products to a
diverse customer base through a global network of approximately 300 dealers from
more than 560 locations, with a majority in North America and Europe. Management
is focusing on enhancing the performance of its distribution network by offering
various incentive packages and support programs, replacing underperforming
dealers and adding new dealers in selected geographic areas. Since 1993, the
number of units exported to CLARK's international customers has more than
tripled from 689 to over 2,400 in 1997. The Company intends to continue
expanding the dealer base of its international operations, and management
believes that the Company is well positioned for continued growth in the
African, Middle Eastern, Caribbean and South American markets.
Improve Aftermarket Parts Sales. CLARK's worldwide installed fleet of
approximately 350,000 forklift trucks generates an estimated $240.0 million in
annual global aftermarket parts sales, of which CLARK has historically captured
an estimated 40% share. Management plans to increase the Company's share of
these high margin sales in North America and Europe as a result of the
introduction of the Totalift(TM) and PartsPro(TM) software systems and the
addition of a parts marketing manager at CLARK Europe. In 1998, the Company
developed the Totalift(TM) system which was designed as a parts database of
major competitor forklift brands and models. Management believes that the
Totalift(TM) system will allow the Company to increase its aftermarket parts
sales by supplying parts for all of the CLARK and competitor forklift trucks.
Also in 1998, the Company introduced PartsPro(TM), which provides the Company's
dealers with an advanced parts identification system that enables suppliers to
place on-line orders with CLARK, prepare quotes for customers and track work
orders by customer.
Further Reduce Product Cost. Although CLARK has made significant progress
in reducing its operating costs, management believes that ongoing opportunities
exist to improve profitability by reducing material costs. In 1997, material
costs amounted to over 80% of the cost of goods sold. Management plans to
continue to reduce the Company's material costs and increase purchasing
efficiencies, thereby enhancing its gross margins, through (i) the introduction
of new product designs that increase commonality of parts among different lift
truck models and reduce the overall number of parts and components, thereby
improving manufacturing and (ii) the further reduction of the number of
suppliers to increase volume discounts. Management believes that these
initiatives should also result in more timely delivery from suppliers, thereby
reducing costly manufacturing disruptions and the Company's working capital
investment.
THE SAMSUNG FORKLIFT ACQUISITION
In July 1998, CLARK acquired substantially all of the assets and certain
liabilities of Samsung Forklift. The purchase price for Samsung Forklift equaled
$30.4 million (based upon the stated purchase price of 39.1 billion South Korean
Won, subject to certain adjustments). The assets acquired pursuant to the
Samsung Forklift Acquisition include a 213,000-square-foot production facility
(the "Korean Plant"), working capital items and intellectual property. The
Company estimates that it will make approximately $5.0 million of capital
2
<PAGE> 9
expenditures for upgrades and to install new equipment in the Korean Plant. See
"The Samsung Forklift Acquisition" and "Risk Factors -- Risks Relating to the
Samsung Forklift Acquisition."
Samsung Forklift is a leading designer and manufacturer of forklift trucks
in South Korea. The Company believes that, for the year ended December 31, 1997,
Samsung Forklift maintained a market share of approximately 25% in South Korea
and generated approximately $90.0 million of net sales (based upon an average
1997 exchange rate of 950 South Korean Won to the U.S. dollar), approximately
60% of which were generated in South Korea. See "Risk Factors -- Risks Relating
to the Samsung Forklift Acquisition." In addition, Samsung Forklift has a
distribution network in Europe, Asia, Australia and New Zealand. The Company
plans to utilize the low cost manufacturing operations of Samsung Forklift to
produce a value-priced line of light IC forklift trucks under various brand
names, including the Samsung brand name for a period of three years. The Company
intends to market these forklift trucks through CLARK's and Samsung Forklift's
global distribution networks, as a complement to CLARK's product line.
Consequently, management estimates that it will sell approximately 75% of
Samsung Forklift's production outside of South Korea.
From 1986 through the mid-1990s, CLARK participated in a joint venture with
Samsung to manufacture forklift trucks in South Korea for worldwide
distribution. The partnership provided CLARK with an understanding of the South
Korean forklift market generally and an ongoing relationship with Samsung
managers, while providing Samsung Forklift with a product platform consistent
with the Genesis(R) line.
The Samsung Forklift Acquisition, together with the application of the
proceeds from the sale of the Series C Notes and Existing Preferred Stock, are
collectively referred to herein as the "Transactions." See "Use of Proceeds" and
"The Samsung Forklift Acquisition."
3
<PAGE> 10
THE EXCHANGE OFFERS
THE C NOTE EXCHANGE OFFER
The C Note Exchange Offer applies to up to $20.0 million aggregate
principal amount of the Series C Notes. The form and terms of the New Notes will
be the same as the form and terms of the Series C Notes except that (i) interest
on the New Notes will accrue from the most recent date to which interest has
been paid on the Series C Notes surrendered in exchange therefor or, if no
interest has been paid on the Series C Notes, from May 15, 1998, and (ii) the
New Notes are being registered under the Securities Act and, therefore, will not
bear legends restricting their transfer. The New Notes will evidence the same
debt as the Series C Notes and will be entitled to the benefits of the Indenture
(as defined) pursuant to which the Series C Notes were issued. See "Description
of Notes."
The C Note Exchange Offer..... Up to $20,000,000 aggregate principal amount of
10 3/4% Series D Senior Notes due 2006 in
exchange for a like principal amount of the
Company's 10 3/4% Series C Senior Notes due
2006. As of the date hereof, Series C Notes
representing $20.0 million aggregate principal
amount are outstanding. The terms of the New
Notes and the Series C Notes are substantially
identical.
Based on an interpretation by the Commission's
staff set forth in no-action letters issued to
third parties unrelated to CLARK and the
Guarantors (as defined), CLARK and the
Guarantors believe that New Notes issued
pursuant to the C Note Exchange Offer in
exchange for Series C Notes may be offered for
resale, resold and otherwise transferred by any
person receiving the New Notes, whether or not
that person is the holder (other than any such
holder or such other person that is an
"affiliate" of CLARK or any Guarantor 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 (i) the New Notes
are acquired in the ordinary course of business
of that holder or such other person, (ii)
neither the holder nor such other person is
engaging in or intends to engage in a
distribution of the New Notes, and (iii)
neither the holder nor such other person has an
arrangement or understanding with any person to
participate in the distribution of the New
Notes. See "The Exchange Offers -- Purpose and
Effect." Each broker-dealer that receives New
Notes for its own account in exchange for
Series C Notes, where those Series C Notes were
acquired by the broker-dealer as a result of
its market-making activities or other trading
activities, must acknowledge that it will
deliver a prospectus in connection with any
resale of such New Notes. See "Plan of
Distribution."
Registration Rights
Agreement..................... The Series C Notes were sold by the Company on
July 17, 1998, in a private placement. In
connection with the sale, the Company entered
into a Registration Rights Agreement, dated
July 17, 1998, with Jeffries & Company, Inc.
and Bear, Stearns & Co. Inc. (the "Initial
Purchasers") (the "Notes Registration Rights
Agreement") providing for, among other things,
the C Note Exchange Offer. See "The Exchange
Offers -- Purpose and Effect."
Expiration Date............... The C Note Exchange Offer will expire at 5:00
p.m., New York City time, on , 1998,
or such later date and time to which it is
extended (the "C Note Expiration Date").
4
<PAGE> 11
Withdrawal.................... The tender of Series C Notes pursuant to the C
Note Exchange Offer may be withdrawn at any
time prior to the C Note Expiration Date. Any
Series C 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 C Note Exchange Offer.
Interest on the New Notes..... Interest on each New Note will accrue from the
most recent date to which interest has been
paid on the Series C Notes surrendered in
exchange therefor or, if no interest has been
paid on the Series C Notes, from May 15, 1998.
Conditions to the C Note
Exchange Offer.............. The C Note Exchange Offer is subject to certain
customary conditions, certain of which may be
waived by the Company. See "The Exchange
Offers -- Conditions to the Exchange Offers."
Procedures for Tendering
Series C Notes.............. Each holder of Series C Notes wishing to accept
the C Note Exchange Offer must complete, sign
and date the accompanying letter of transmittal
relating to the C Note Exchange Offer (the "C
Note Letter of Transmittal"), or a copy
thereof, in accordance with the instructions
contained herein and therein, and mail or
otherwise deliver the C Note Letter of
Transmittal, together with the Series C Notes
and any other required documentation, to the
Exchange Agent (as defined) at the address set
forth in the C Note Letter of Transmittal.
Persons holding Series C Notes through the
Depository Trust Company ("DTC") and wishing to
accept the C Note Exchange Offer must do so
pursuant to the DTC's Automated Tender Offer
Program, by which each tendering Participant
will agree to be bound by the C Note Letter of
Transmittal. By executing or agreeing to be
bound by the C Note Letter of Transmittal, each
holder will represent to the Company that,
among other things, (i) the New Notes acquired
pursuant to the C Note Exchange Offer are being
obtained in the ordinary course of business of
the person receiving such New Notes, whether or
not such person is the holder of the Series C
Notes, (ii) 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 within the
meaning of the Securities Act, (iii) neither
the holder nor any such person is an
"affiliate," as defined under Rule 405
promulgated under the Securities Act, of the
Company or any Guarantor, or if it is an
affiliate, such holder or such other person
will comply with the registration and
prospectus delivery requirements of the
Securities Act to the extent applicable, (iv)
if such holder or other person is not a
broker-dealer, neither the holder nor any such
other person is engaged in or intends to engage
in the distribution of such New Notes, and (v)
if such holder or other person is a
broker-dealer, that it will receive New Notes
for its own account in exchange for Series C
Notes that were acquired as a result of
market-making activities or other trading
activities and that it acknowledges that it
will be required to deliver a prospectus in
connection with any
5
<PAGE> 12
resale of such New Notes. See "The Exchange
Offers -- Procedures for Tendering."
Shelf Registration
Requirement................... Pursuant to the Notes Registration Rights
Agreement, the Company is required to file a
"shelf" registration statement for a continuous
offering pursuant to Rule 415 under the
Securities Act in respect of the Series C Notes
(and use its reasonable best efforts to cause
such shelf registration statement to be
declared effective by the Commission and keep
it continuously effective, supplemented and
amended for prescribed periods) if (i) prior to
the consummation of the C Note Exchange Offer,
the Company determines that a majority in
aggregate principal amount of the New Notes to
be exchanged for Series C Notes would not, upon
receipt, be tradeable by the holders thereof
without restriction under the Securities Act
and the Exchange Act and without material
restrictions under the applicable Blue Sky or
state securities laws, (ii) the Company is not
permitted to effect the C Note Exchange Offer
because of any change in law or in applicable
interpretations thereof by the staff of the
Commission, (iii) the C Note Exchange Offer is
not consummated within 240 days of the date of
issuance of the Series C Notes, (iv) under
certain circumstances, upon the request of the
Initial Purchasers, or (v) any holder of Series
C Notes is not eligible to participate in the C
Note Exchange Offer or, in the case of any
holder of Series C Notes (other than an
Exchanging Dealer) that participates in the C
Note Exchange Offer, such holder does not
receive freely tradable New Notes upon
consummation of the C Note Exchange Offer
(other than due solely to the status of such
holder as an affiliate of the Company within
the meaning of the Securities Act) and such
holder notifies the Company within six months
of the consummation of the exchange.
Acceptance of Series C Notes
and
Delivery of New Notes....... The Company will accept for exchange any and
all Series C Notes which are properly tendered
in the C Note Exchange Offer prior to the C
Note Expiration Date. The New Notes issued
pursuant to the C Note Exchange Offer will be
delivered promptly following the C Note
Expiration Date. See "The Exchange
Offers -- Terms of the C Note Exchange Offer."
Exchange Agent................ United States Trust Company of New York is
serving as Exchange Agent (the "Exchange
Agent").
Federal Income Tax
Considerations................ The exchange pursuant to the C Note Exchange
Offer should not be a taxable event for federal
income tax purposes. See "Certain Federal
Income Tax Considerations of the Exchange
Offers."
Effect of Not Tendering....... Following the completion of the C Note Exchange
Offer, Series C Notes that are not tendered
will not have any further registration rights
(except in certain circumstances with respect
to shelf registration as noted above) and will
continue to be subject to the existing
restrictions upon transfer thereof. See "The
Exchange Offers -- Consequences of Failure to
Exchange."
6
<PAGE> 13
THE B NOTE EXCHANGE OFFER
The B Note Exchange Offer applies to up to $130.0 million aggregate
principal amount of the Series B Notes. The form and terms of the New Notes will
be the same as the form and terms of the Series B Notes except that interest on
the New Notes will accrue from the most recent date to which interest has been
paid on the Series B Notes surrendered in exchange therefor. The New Notes will
evidence the same debt as the Series B Notes and will be entitled to the
benefits of the Indenture pursuant to which the Series C Notes were issued. See
"Description of Notes."
The B Note Exchange Offer..... Up to $130,000,000 aggregate principal amount
of 10 3/4% Series D Senior Notes due 2006 in
exchange for a like principal amount of the
Company's 10 3/4% Series B Senior Notes due
2006. As of the date hereof, Series B Notes
representing $130.0 million aggregate principal
amount are outstanding. The terms of the New
Notes and the Series B Notes are substantially
identical.
Based on an interpretation by the Commission's
staff set forth in no-action letters issued to
third parties unrelated to CLARK and the
Guarantors, CLARK and the Guarantors believe
that New Notes issued pursuant to the B Note
Exchange Offer in exchange for Series B Notes
may be offered for resale, resold and otherwise
transferred by any person receiving the New
Notes, whether or not that person is the holder
(other than any such holder or such other
person that is an "affiliate" of CLARK or any
Guarantor 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
(i) the New Notes are acquired in the ordinary
course of business of that holder or such other
person, (ii) neither the holder nor such other
person is engaging in or intends to engage in a
distribution of the New Notes, and (iii)
neither the holder nor such other person has an
arrangement or understanding with any person to
participate in the distribution of the New
Notes. See "The Exchange Offers -- Purpose and
Effect." Each broker-dealer that receives New
Notes for its own account in exchange for
Series B Notes, where those Series B Notes were
acquired by the broker-dealer as a result of
its market-making activities or other trading
activities, must acknowledge that it will
deliver a prospectus in connection with any
resale of such New Notes. See "Plan of
Distribution."
Registration Rights
Agreement..................... The Series C Notes were sold by the Company on
July 17, 1998, in a private placement. In
connection with the sale, the Company entered
into the Notes Registration Rights Agreement
providing for, among other things, the B Note
Exchange Offer. See "The Exchange
Offers -- Purpose and Effect."
Expiration Date............... The B Note Exchange Offer will expire at 5:00
p.m., New York City time, on , 1998,
or such later date and time to which it is
extended (the "B Note Expiration Date").
Withdrawal.................... The tender of Series B Notes pursuant to the B
Note Exchange Offer may be withdrawn at any
time prior to the B Note Expiration Date. Any
Series B 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 B Note Exchange Offer.
7
<PAGE> 14
Interest on the New Notes..... Interest on each New Note will accrue from the
most recent date to which interest has been
paid on the Series B Notes surrendered in
exchange therefor.
Conditions to the B Note
Exchange Offer.............. The Series B Note Exchange Offer is subject to
certain customary conditions, certain of which
may be waived by the Company. See "The Exchange
Offers -- Conditions to the Exchange Offers."
Procedures for Tendering
Series B Notes.............. Each holder of Existing Notes wishing to accept
the B Note Exchange Offer must complete, sign
and date the accompanying letter of transmittal
relating to the B Note Exchange Offer (the "B
Note Letter of Transmittal"), or a copy
thereof, in accordance with the instructions
contained herein and therein, and mail or
otherwise deliver the B Note Letter of
Transmittal, together with the Series B Notes
and any other required documentation, to the
Exchange Agent (as defined) at the address set
forth in the B Note Letter of Transmittal.
Persons holding Series B Notes through the
Depository Trust Company ("DTC") and wishing to
accept the B Note Exchange Offer must do so
pursuant to the DTC's Automated Tender Offer
Program, by which each tendering Participant
will agree to be bound by the B Note Letter of
Transmittal. By executing or agreeing to be
bound by the B Note Letter of Transmittal, each
holder will represent to the Company that,
among other things, (i) the New Notes acquired
pursuant to the B Note Exchange Offer are being
obtained in the ordinary course of business of
the person receiving such New Notes, whether or
not such person is the holder of the Series B
Notes, (ii) 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 within the
meaning of the Securities Act, (iii) neither
the holder nor any such person is an
"affiliate," as defined under Rule 405
promulgated under the Securities Act, of the
Company or any Guarantor, or if it is an
affiliate, such holder or such other person
will comply with the registration and
prospectus delivery requirements of the
Securities Act to the extent applicable, (iv)
if such holder or other person is not a
broker-dealer, neither the holder nor any such
other person is engaged in or intends to engage
in the distribution of such New Notes, and (v)
if such holder or other person is a
broker-dealer, that it will receive New Notes
for its own account in exchange for Series B
Notes that were acquired as a result of
market-making activities or other trading
activities and that it acknowledges that it
will be required to deliver a prospectus in
connection with any resale of such New Notes.
See "The Exchange Offers -- Procedures for
Tendering."
Acceptance of Series B Notes
and Delivery of New Notes..... The Company will accept for exchange any and
all Series B Notes which are properly tendered
in the B Note Exchange Offer prior to the B
Note Expiration Date. The New Notes issued
pursuant to the B Note Exchange Offer will be
delivered promptly following the B Note
Expiration Date. See "The Exchange
Offers -- Terms of the B Note Exchange Offer."
8
<PAGE> 15
Exchange Agent................ United States Trust Company of New York is
serving as Exchange Agent (the "Exchange
Agent").
Federal Income Tax
Considerations................ The exchange pursuant to the B Note Exchange
Offer should not be a taxable event for federal
income tax purposes. See "Certain Federal
Income Tax Considerations of the Exchange
Offers."
THE PREFERRED STOCK EXCHANGE OFFER
The Preferred Stock Exchange Offer applies to $20,000,000 aggregate
liquidation preference of the Existing Preferred Stock. The form and terms of
the New Preferred Stock will be the same as the form and terms of the Existing
Preferred Stock except that (i) dividends on the New Preferred Stock will accrue
from the most recent date to which dividends have been paid on the Existing
Preferred Stock surrendered in exchange therefor or, if no dividends have been
paid on the Existing Preferred Stock, from the date of issuance of the Existing
Preferred Stock, and (ii) the New Preferred Stock is being registered under the
Securities Act and, therefore, will not bear a legends restricting its transfer.
The New Preferred Stock will evidence the same equity as the Existing Preferred
Stock and will be entitled to the benefits of the Certificate of Designation
filed with the Secretary of State of the State of Delaware on July 17, 1998, as
amended by the Certificate of Correction filed with the Secretary of State of
the State of Delaware on September 1, 1998 (collectively, the "Certificate of
Designation") pursuant to which the Existing Preferred Stock was issued. See
"Description of New Preferred Stock."
The Preferred Stock Exchange
Offer......................... Up to $20,000,000 aggregate liquidation
preference of 13% Series B Senior Exchangeable
Preferred Stock due 2007 in exchange for a like
liquidation preference amount of 13% Series A
Senior Exchangeable Preferred Stock due 2007.
As of the date hereof, Existing Preferred Stock
representing $20,000,000 aggregate liquidation
amount is outstanding. The terms of the New
Preferred Stock and the Existing Preferred
Stock are substantially identical.
Based on an interpretation by the Commission's
staff set forth in no-action letters issued to
third parties unrelated to the Company, the
Company believes that New Preferred Stock
issued pursuant to the Preferred Stock Exchange
Offer in exchange for Existing Preferred Stock
may be offered for resale, resold and otherwise
transferred by any person receiving the New
Preferred Stock, whether or not that person is
the holder (other than any such holder or such
other person that is an "affiliate" of the
Company or any Guarantor 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 (i) the New Preferred Stock is
acquired in the ordinary course of business of
that holder or such other person, (ii) neither
the holder nor such other person is engaging in
or intends to engage in a distribution of the
New Preferred Stock, and (iii) neither the
holder nor such other person has an arrangement
or understanding with any person to participate
in the distribution of the New Preferred Stock.
See "The Exchange Offers -- Purpose and
Effect." Each broker-dealer that receives New
Preferred Stock for its own account in exchange
for Existing Preferred Stock, where the
Existing Preferred Stock was acquired by the
broker-dealer as a result of its market-making
activities or other trading activities, must
acknowledge that it will deliver a prospectus
in connection with any resale of such New
Preferred Stock. See "Plan of Distribution."
9
<PAGE> 16
Registration Rights
Agreement..................... The Existing Preferred Stock was sold by the
Company on July 17, 1998, in a private
placement. In connection with the sale, the
Company entered into the Registration Rights
Agreement, dated July 17, 1998, between the
Company and the Initial Purchasers relating to
the Existing Preferred Stock (the "Preferred
Stock Registration Rights Agreement" and,
together with the Notes Registration Rights
Agreement, the "Registration Rights
Agreements") providing for, among other things,
the Preferred Stock Exchange Offer. See "The
Exchange Offers -- Purpose and Effect."
Expiration Date............... The Preferred Stock Exchange Offer will expire
at 5:00 p.m., New York City time, on
, 1998, or such later date and time
to which it is extended (the "Preferred Stock
Expiration Date").
Withdrawal.................... The tender of Existing Preferred Stock pursuant
to the Preferred Stock Exchange Offer may be
withdrawn at any time prior to the Preferred
Stock Expiration Date. Any Existing Preferred
Stock 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 Preferred Stock Exchange Offer.
Dividends on the New Preferred
Stock......................... Dividends on the New Preferred Stock will
accrue from the most recent date to which
dividends have been paid on the Existing
Preferred Stock surrendered in exchange
therefor or, if no dividends have been paid on
the Existing Preferred Stock, from the date of
issuance of the Existing Preferred Stock.
Conditions to the Preferred
Stock Exchange Offer.......... The Preferred Stock Exchange Offer is subject
to certain customary conditions, certain of
which may be waived by the Company. See "The
Exchange Offers -- Conditions to the Exchange
Offers."
Procedures for Tendering
Existing Preferred Stock...... Each holder of Existing Preferred Stock wishing
to accept the Preferred Stock Exchange Offer
must complete, sign and date the accompanying
letter of transmittal relating to the Preferred
Stock Exchange Offer (the "Preferred Stock
Letter of Transmittal"; the Preferred Stock
Letter of Transmittal, the C Note Letter of
Transmittal and the B Note Letter of
Transmittal are sometimes referred to herein
individually as a "Letter of Transmittal" and
collectively as the "Letters of Transmittal")
or a copy thereof, in accordance with the
instructions contained herein and therein, and
mail or otherwise deliver the Preferred Stock
Letter of Transmittal, or the copy, together
with the Existing Preferred Stock and any other
required documentation, to the Exchange Agent
(as defined) at the address set forth in the
Preferred Stock Letter of Transmittal. Persons
holding Existing Preferred Stock through (DTC)
and wishing to accept the Preferred Stock
Exchange Offer must do so pursuant to DTC's
Automated Tender Offer Program, by which each
tendering Participant will agree to be bound by
the Preferred Stock Letter of Transmittal. By
executing or agreeing to be bound by the
Preferred Stock Letter of Transmittal, each
holder will
10
<PAGE> 17
represent to the Company that, among other
things, (i) the New Preferred Stock acquired
pursuant to the Preferred Stock Exchange Offer
is being obtained in the ordinary course of
business of the person receiving such New
Preferred Stock, whether or not such person is
the holder of Existing Preferred Stock, (ii)
neither the holder nor any such other person
has an arrangement or understanding with any
person to participate in the distribution of
such New Preferred Stock within the meaning of
the Securities Act, (iii) neither the holder
nor any such other person is an "affiliate," as
defined under Rule 405 promulgated under the
Securities Act, of the Company or any
Guarantor, or if it is an affiliate, such
holder or such other person will comply with
the registration and prospectus delivery
requirements of the Securities Act to the
extent applicable, (iv) if such holder or other
person is not a broker-dealer, neither the
holder nor any such other person is engaged in
or intends to engage in the distribution of
such New Preferred Stock, and (v) if such
holder or other person is a broker-dealer, that
it will receive New Preferred Stock for its own
account in exchange for Existing Preferred
Stock that was acquired as a result of
market-making activities or other trading
activities and that it acknowledges that it
will be required to deliver a prospectus in
connection with any resale of such New
Preferred Stock.
Shelf Registration
Requirement................... Pursuant to the Preferred Stock Registration
Rights Agreement, the Company is required to
file a "shelf" registration statement for a
continuous offering pursuant to Rule 415 under
the Securities Act in respect of the Existing
Preferred Stock (and use its reasonable best
efforts to cause such shelf registration
statement to be declared effective by the
Commission and keep it continuously effective,
supplemented and amended for prescribed
periods) if (i) prior to the consummation of
the Preferred Stock Exchange Offer, the Company
determines that a majority in aggregate
liquidation preference of the New Preferred
Stock would not, upon receipt, be tradeable by
the holders thereof without restriction under
the Securities Act and the Exchange Act and
without material restrictions under applicable
Blue Sky or state securities laws, (ii) the
Company is not permitted to effect the
Preferred Stock Exchange Offer because of any
change in law or in applicable interpretations
thereof by the staff of the Commission, (iii)
the Preferred Stock Exchange Offer is not
consummated within 240 days of the date of
issuance of the Existing Preferred Stock, (iv)
under certain circumstances, upon the request
of the Initial Purchasers, or (v) any holder of
Existing Preferred Stock (other than an
Exchanging Dealer) is not eligible to
participate in the Preferred Stock Exchange
Offer or, in the case of any holder of Existing
Preferred Stock that participates in the
Preferred Stock Exchange Offer, such holder
does not receive freely tradeable New Preferred
Stock upon consummation of the Preferred Stock
Exchange Offer (other than due solely to the
status of such holder as an affiliate of the
Company within the meaning of the Securities
Act) and such holder notifies the Company
within six months of the consummation of the
exchange.
11
<PAGE> 18
Acceptance of Existing
Preferred Stock and Delivery
of New Preferred Stock...... The Company will accept for exchange any and
all Existing Preferred Stock which is properly
tendered in the Preferred Stock Exchange Offer
prior to the Preferred Stock Expiration Date.
The New Preferred Stock issued pursuant to the
Preferred Stock Exchange Offer will be
delivered promptly following the Preferred
Stock Expiration Date. See "The Exchange
Offers -- Terms of the Preferred Stock Exchange
Offer."
Exchange Agent................ United States Trust Company of New York is
serving as Exchange Agent.
Federal Income Tax
Considerations................ The exchange pursuant to the Preferred Stock
Exchange Offer should not be a taxable event
for federal income tax purposes. See "Certain
Federal Income Tax Considerations of the
Exchange Offers."
Effect of Not Tendering....... Following the completion of the Preferred Stock
Exchange Offer. Existing Preferred Stock that
is not tendered or that is tendered but not
accepted will not have any further registration
rights (except in certain circumstances with
respect to shelf registration as noted above)
and will continue to be subject to the existing
restrictions upon transfer thereof. See "The
Exchange Offers -- Consequences of Failure to
Exchange."
12
<PAGE> 19
TERMS OF THE NEW SECURITIES
NEW NOTES
Issuer........................ CLARK Material Handling Company.
Securities Offered............ $150.0 million aggregate principal amount of
10 3/4% Series D Senior Notes due 2006 (the
"New Notes"). The New Notes are being issued
under the Indenture between the Company and
United States Trust Company of New York, as
trustee (the "Original Trustee"), dated as of
July 17, 1998, as amended by the First
Supplemental Indenture, dated as of August 18,
1998 between the Company and the Trustee (such
Indenture and First Supplemental Indenture
shall collectively be referred to herein as the
"Indenture") relating to the Company's $20.0
million 10 3/4% Series C Senior Notes due 2006
(the "Series C Notes" together with the Series
B Notes and the New Notes, the "Notes").
Maturity Date................. November 15, 2006.
Interest Rate and Payment
Dates......................... The New Notes will bear interest at a rate of
10 3/4% per annum. Interest on the New Notes
will be payable semi-annually in cash in
arrears on November 15 and May 15 of each year,
commencing November 15, 1998.
Ranking....................... The New Notes will be senior unsecured
obligations of the Company, pari passu in right
of payment with all existing and future senior
indebtedness of the Company and senior to all
subordinated indebtedness of the Company. The
New Notes will be effectively subordinated to
all senior secured indebtedness of the Company,
including indebtedness under the Revolving
Credit Facility (as defined), to the extent of
the assets securing such indebtedness, and to
all existing and future indebtedness and other
obligations of the Company's Foreign
Subsidiaries. At June 30, 1998, after giving
effect to the Transactions, the Company would
have had $10.5 million of senior secured
indebtedness outstanding (exclusive of unused
commitments of $20.6 million under the
Revolving Credit Facility). See "Description of
Notes -- General."
Optional Redemption........... The New Notes will be redeemable at the option
of the Company, in whole or in part, on or
after November 15, 2001, at the redemption
prices set forth herein, plus accrued and
unpaid interest, if any, to the date of
redemption. Notwithstanding the foregoing, at
any time or from time to time prior to November
15, 1999, the Company may redeem up to one
third of the aggregate principal amount of the
Notes issued on or after the Issue Date at the
redemption price of 110.75% of the principal
amount thereof, plus accrued and unpaid
interest, if any, to the date of redemption,
with the net cash proceeds of one or more
Public Equity Offerings, provided that at least
two thirds of the aggregate principal amount of
the Notes issued on or after the Issue Date
remains outstanding immediately thereafter. See
"Description of Notes -- Redemption."
Mandatory Redemption.......... None.
13
<PAGE> 20
Guarantors.................... Repayment of the New Notes is unconditionally
and irrevocably guaranteed on a senior basis by
all Restricted Subsidiaries (as defined) of the
Company that are not Foreign Subsidiaries (the
"Guarantors"). On the date of initial issuance
of the Series C Notes (the "Issue Date"), the
Company had, and on the date hereof the Company
has, two Restricted Subsidiaries other than
Foreign Subsidiaries and, accordingly, there
are two Guarantors as of the date hereof.
Change of Control............. Upon the occurrence of a Change of Control, the
Company will be required to offer to purchase
all of the outstanding Notes at 101% of the
principal amount thereof, together with accrued
and unpaid interest, if any, to the date of
purchase. See "Description of
Notes -- Repurchase Upon Change of Control."
Certain Covenants............. The Indenture contains certain covenants,
including covenants that limit the ability of
the Company and its Restricted Subsidiaries to:
(i) incur additional indebtedness; (ii) make
restricted payments; (iii) enter into certain
transactions with affiliates; (iv) create
certain liens; (v) sell assets; and (vi) merge,
consolidate or sell substantially all of the
Company's assets. All of these limitations are
subject to various qualifications. See
"Description of Notes -- Certain Covenants."
Use of Proceeds............... The Company will not receive any proceeds from
the B Note Exchange Offer or the C Note
Exchange Offer.
For a more detailed discussion of the terms of the New Notes, see
"Description of Notes."
NEW PREFERRED STOCK
Securities Offered............ 20,000 shares of 13% Series B Senior
Exchangeable Preferred Stock due 2007 (the "New
Preferred Stock").
Dividends..................... Dividends on the New Preferred Stock will
accrue in each period ending on January 15,
April 15, July 15 and October 15 of each year
at a rate of 13% per annum of the liquidation
preference. On or before July 15, 2003 the
Company may, at its option, pay dividends in
cash or in additional fully paid and
non-assessable shares of New Preferred Stock
having an aggregate liquidation preference
equal to the amount of such dividends.
Thereafter, dividends may be paid in cash only.
Liquidation Preference........ $1,000 per share.
Ranking....................... The New Preferred Stock will rank senior in
right of payment with respect to all Junior
Securities, pari passu with respect to all
Parity Securities and junior with respect to
all indebtedness and other obligations of the
Company and its subsidiaries. See "Risk
Factors -- Ranking; Subsidiary Operations" and
"Description of Preferred Stock -- Ranking."
Mandatory Redemption.......... July 15, 2007.
Optional Redemption........... The New Preferred Stock will be redeemable at
the option of the Company, in whole or in part,
on or after July 15, 2003 at the redemption
prices set forth herein, plus accrued and
unpaid dividends, if any, to the date of
redemption. In addition, at the option of the
Company, the New Preferred Stock may be
redeemed in whole, but not in part, at any time
prior to July 15, 2003 at the redemption price
set forth herein, plus accrued and unpaid divi-
14
<PAGE> 21
dends, if any, to the date of redemption, with
the net cash proceeds of one or more Public
Equity Offerings. See "Description of Preferred
Stock -- Redemption."
Change of Control............. If a Change of Control occurs, each holder of
New Preferred Stock will have the right to
require the Company to purchase all or any part
of such holder's New Preferred Stock at 101% of
the liquidation preference thereof, plus
accrued and unpaid dividends, if any, to the
date of purchase.
Certain Covenants............. The Certificate of Designation contains
customary covenants that limit the ability of
the Company to redeem or repurchase Junior
Securities or Parity Securities or pay
dividends thereon, to merge or consolidate with
any other entity, to sell assets and to enter
into transactions with affiliates. The
Certificate of Designation also requires the
Company to deliver certain reports and
information to the holders of the New Preferred
Stock.
Exchange Feature.............. On any scheduled dividend payment date, the
Company may, at its option, exchange all but
not less than all of the shares of New
Preferred Stock then outstanding for the
Company's Preferred Stock Exchange Notes (as
defined).
For a more detailed description of the terms of the New Preferred Stock,
see "Description of Preferred Stock."
PREFERRED STOCK EXCHANGE NOTES
Securities Offered............ 13% Subordinated Notes due 2007 (the "Preferred
Stock Exchange Notes").
Maturity Date................. July 15, 2007.
Interest Rate and Payment
Dates......................... The Preferred Stock Exchange Notes will bear
interest at a rate of 13% per annum. Interest
on the Preferred Stock Exchange Notes will be
payable semi-annually in arrears on January 15
and July 15 of each year, commencing with the
first such date to occur after the date of
exchange. On or before July 15, 2003 the
Company may, at its option, pay interest in
cash or in additional Preferred Stock Exchange
Notes having an aggregate principal amount
equal to the amount of such interest.
Thereafter, interest may be paid in cash only.
Ranking....................... The Preferred Stock Exchange Notes will be
unsecured obligations of the Company, junior in
right of payment to all existing and future
Senior Indebtedness (as defined), including the
Notes, and pari passu with all other
Indebtedness of the Company. At June 30, 1998,
after giving effect to the Transactions, the
Company would have had $160.5 million aggregate
principal amount of Senior Indebtedness
outstanding (exclusive of unused commitments of
$20.6 million under the Revolving Credit
Facility). See "Risk Factors -- Ranking;
Subsidiary Operations" and "Description of
Preferred Stock Exchange Notes -- Ranking."
Optional Redemption........... The Preferred Stock Exchange Notes will be
redeemable at the option of the Company, in
whole or in part, on or after July 15, 2003, at
the redemption prices set forth herein, plus
accrued and unpaid interest, if any, to the
date of redemption. In addition, at any time
prior to July 15, 2003, the Company may redeem
the Preferred Stock Exchange Notes in whole,
but not in part, at the
15
<PAGE> 22
redemption price set forth herein, plus accrued
and unpaid interest, if any, to the date of
redemption, with the net cash proceeds of one
or more Public Equity Offerings. See
"Description of Preferred Stock Exchange
Notes -- Redemption."
Change of Control............. Upon a Change of Control, the Company will be
required to purchase all of the outstanding
Preferred Stock Exchange Notes at 101% of the
principal amount thereof, together with accrued
and unpaid interest, if any, to the date of
purchase.
Certain Covenants............. The indenture governing the Preferred Stock
Exchange Notes (the "Preferred Stock Exchange
Note Indenture") will contain certain
covenants, including covenants that limit the
ability of the Company and its Restricted
Subsidiaries to: (i) make restricted payments;
(ii) enter into certain transactions with
affiliates; (iii) sell assets; and (iv) merge,
consolidate or sell substantially all of the
Company's assets. All of these limitations are
subject to various qualifications.
For a more detailed description of the terms of the Preferred Stock
Exchange Notes, see "Description of Preferred Stock Exchange Notes."
RISK FACTORS
An investment in the securities offered hereby involves a high degree of
risk. For a discussion of certain matters that should be considered by
prospective investors in connection with the Exchange Offer, see "Risk Factors."
16
<PAGE> 23
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL INFORMATION
Through November 26, 1996, the Company operated as wholly owned
subsidiaries of the Predecessor's Parent. On November 27, 1996, the Company was
acquired by Holdings. Accordingly, the summary financial data shown below is not
necessarily comparable as a result of these ownership changes and the resulting
adjustments required for purchase business combinations under generally accepted
accounting principles. The summary historical data for the year ended December
31, 1994 have been derived from the audited financial statements of the Company.
The summary historical data for the year ended December 31, 1995, the eleven
month period ended November 26, 1996, the one month period ended December 31,
1996, and the year ended December 31, 1997 have been derived from the audited
consolidated financial statements of the Company included elsewhere in this
Prospectus. The summary historical data for the six month periods ended June 30,
1997 and 1998 and the actual balance sheet data at June 30, 1998 were derived
from the unaudited consolidated financial statements of the Company included
elsewhere in this Prospectus. In the opinion of management, the historical
unaudited financial data for the six month periods ended June 30, 1997 and 1998,
and the LTM period, contain all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the information shown. The information
contained in this table should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
"Unaudited Pro Forma Combined Financial Information" and the historical
consolidated financial statements of the Company, including the notes thereto,
included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
WHOLLY OWNED SUBSIDIARIES
OF THE PREDECESSOR'S PARENT THE COMPANY
------------------------------ ---------------------------------------------------------
LAST
ELEVEN ONE SIX MONTHS TWELVE
YEAR ENDED MONTHS MONTH YEAR ENDED MONTHS
DECEMBER 31, ENDED ENDED ENDED JUNE 30, ENDED
--------------- NOVEMBER 26, DECEMBER 31, DECEMBER 31, --------------- JUNE 30,
1994 1995 1996 1996 1997 1997 1998 1998
------ ------ ------------ ------------ ------------ ------ ------ ---------
($ IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Net Sales...................... $472.7 $528.8 $404.6 $46.8 $489.3 $229.9 $269.0 $528.4
Gross Profit................... 42.9 44.2 45.6 4.9 58.2 26.4 33.4 65.2
Engineering, Selling and
Administrative Expenses....... 41.7 30.6 26.6 3.0 37.1 17.7 22.5 41.9
Income (Loss) from
Operations(2)................. (14.0) 3.1 13.3 1.9 21.0 8.7 10.9 23.2
Ratio of Earnings to Fixed
Charges(3).................... -- -- -- 1.4x 1.5x 1.2x 1.3x 1.5x
OTHER DATA:
EBITDA(4)...................... $ 10.3 $ 24.1 $ 27.4 $ 3.0 $ 33.3 $ 15.2 $ 17.8 $ 35.9
Net Income (Loss).............. (25.8) (18.8) (2.1) 0.5 7.9 1.3 1.5 8.1
Net Income (Loss) Available
for Common
Stockholder(5)................ (25.8) (18.8) (2.1) 0.5 7.9 1.3 1.5 8.1
Net Cash Provided By (Used In)
Operating Activities.......... 9.0 7.2 4.1 2.8 11.1 8.0 (1.8) 1.3
Net Cash Provided By (Used In)
Investing Activities.......... 16.7 (4.8) (3.1) (0.3) (21.0) (2.6) (5.6) (19.1)
Net Cash Provided By (Used In)
Financing Activities.......... (29.2) (2.1) 1.5 0.3 0.3 (5.1) 8.1 8.6
Depreciation and
Amortization(6)............... 10.6 12.3 10.1 1.1 12.3 6.5 6.9 12.7
Capital Expenditures........... 6.6 5.3 3.2 0.3 6.3 2.6 5.6 9.3
Ratio of EBITDA To Net Interest Expense(7).................................................................................
Ratio of EBITDA To Net Fixed Charges(8)....................................................................................
<CAPTION>
PRO FORMA(1)
------------------------
LAST
TWELVE
YEAR MONTHS
ENDED ENDED
DECEMBER 31, JUNE 30,
1997 1998
------------ ---------
($ IN MILLIONS)
<S> <C> <C>
OPERATING DATA:
Net Sales...................... $509.2 $534.1
Gross Profit................... 62.7 66.9
Engineering, Selling and
Administrative Expenses....... 41.2 43.3
Income (Loss) from
Operations(2)................. 21.6 23.6
Ratio of Earnings to Fixed
Charges(3).................... 1.5x 1.5x
OTHER DATA:
EBITDA(4)...................... $ 34.3 $ 36.5
Net Income (Loss).............. 6.0 5.9
Net Income (Loss) Available
for Common
Stockholder(5)................ 3.3 3.2
Net Cash Provided By (Used In)
Operating Activities.......... -- --
Net Cash Provided By (Used In)
Investing Activities.......... -- --
Net Cash Provided By (Used In)
Financing Activities.......... -- --
Depreciation and
Amortization(6)............... 12.7 12.9
Capital Expenditures........... 6.8 9.5
Ratio of EBITDA To Net Interest 2.1x 2.2x
Ratio of EBITDA To Net Fixed Ch 1.8x 1.9x
</TABLE>
(footnotes on following page)
17
<PAGE> 24
<TABLE>
<CAPTION>
AT JUNE 30, 1998
---------------------
AS
ACTUAL ADJUSTED(9)
------ -----------
($ IN MILLIONS)
<S> <C> <C>
BALANCE SHEET DATA:
Cash and Cash Equivalents(10)............................... $ 7.1 $ 8.9
Debt(11).................................................... 140.5 160.5
Senior Preferred Stock...................................... -- 20.0
Stockholder's Equity........................................ 25.7 25.7
</TABLE>
- ---------------
(1) The summary pro forma financial data for the year ended December 31, 1997
and the LTM period were derived from the "Unaudited Pro Forma Combined
Financial Information" included elsewhere in this Prospectus which adjusts
the Company's operating data to reflect the acquisition of Blue Giant.
Furthermore, the Pro Forma Other Data has been adjusted to reflect the sale
of the Series C Notes and the Existing Preferred Stock as follows: includes
the amortization of debt issuance costs of $0.1 million, the effect of the
interest relating to the Series C Notes of $2.2 million and the dividends
on the Existing Preferred Stock of $2.7 million. The pro forma financial
data are presented for informational purposes only and do not purport to
represent what the Company's financial position or results of operations
would actually have been if the acquisition of Blue Giant had occurred on
the assumed dates or to project the Company's financial position or results
of operations at any future date or for any future periods.
(2) Includes corporate charges allocated to the Company by the Predecessor's
Parent of $8.5 million, $7.0 million and $5.7 million in the years ended
December 31, 1994 and 1995, and the eleven month period ended November 26,
1996, respectively. Also includes severance and exit charges of $6.7
million and $3.5 million in the years ended December 31, 1994 and 1995,
respectively. See the Company's historical financial statements included
elsewhere herein.
(3) The Ratio of Earnings to Fixed Charges is computed as follows: (a) earnings
consists of consolidated income (loss) before income taxes and
extraordinary items plus fixed charges; (b) fixed charges consist of
interest expense, amortization of deferred debt issuance costs, along with
any discount or premiums and the amount of rental expense considered by
management to reasonably represent the interest factor related to such
rental expense. During the years ended December 31, 1994, 1995 and the
eleven month period ended November 26, 1996, the earnings were insufficient
to cover fixed charges by $24.5 million, $17.3 million and $2.1 million,
respectively.
(4) EBITDA represents Income (Loss) from Operations plus Depreciation and
Amortization, severance and exit charges, and corporate charges allocated
to the Company by the Predecessor's Parent described in Note 2 above, less
the addition of certain legal, accounting and administrative expenses to
replace such services previously provided by the Predecessor's Parent
(estimated to be $1.5 million for each of 1994 and 1995 and $1.4 million
for the eleven months ended November 26, 1996). For subsequent periods,
actual amounts are included in administrative expenses. In addition, for
the year ended December 31, 1995 and the eleven months ended November 26,
1996, EBITDA has been adjusted by $0.2 million and $0.2 million,
respectively, to eliminate amortization of deferred gain relating to the
predecessor's sale leaseback of certain facilities and eliminate rental and
related costs of an abandoned facility, net of the incremental costs at
other facilities for relocated employees. The Company has included
information concerning EBITDA herein because it understands that such
information is used by certain investors as one measure of an issuer's
historical ability to service debt. EBITDA should not be considered as an
alternative to, or more meaningful than, earnings from operations or other
traditional indicators under generally accepted accounting principles.
EBITDA as reported by the Company may not be comparable to similarly titled
measures reported by other issuers of securities.
(5) Net Income (Loss) Available for Common Stockholder is defined as Net Income
(Loss) less dividends on Senior Preferred Stock.
(6) Excludes amortization of historical debt issuance costs of $0.8 million,
$0.5 million and $0.3 million for the years ended December 31, 1994 and
1995 and the eleven months ended November 26, 1996, respectively, which
have not been deducted from Income (Loss) from Operations. For subsequent
periods, the amortization of debt issuance costs is included in Other
Income and Expenses.
(7) Net Interest Expense is defined as Interest Expense less Interest Income
and excludes interest on capital lease obligations. These capital leases
represent forklift trucks sold to financial institutions in
18
<PAGE> 25
Europe and leased back by the Company and then leased to customers. The
related income and interest expense are reflected in Income (Loss) from
Operations and EBITDA.
(8) Net Fixed Charges is defined as the sum of Net Interest Expense and
dividends on Senior Preferred Stock.
(9) Adjusted to give effect to the Transactions. See "Use of Proceeds" and
"Capitalization."
(10) Includes cash, cash equivalents and cash securing letters of credit.
(11) Excludes capital lease obligations of $7.3 million discussed in Note 7
above. See "Capitalization."
19
<PAGE> 26
RISK FACTORS
An investment in the securities offered hereby involves a high degree of
risk. Holders of the Existing Securities should give careful consideration to
the specific factors set forth below and the other information set forth herein
in connection with the Exchange Offer. The Risk Factors set forth below are
generally applicable to the Exchange Securities.
SIGNIFICANT LEVERAGE
The Company is highly leveraged. At June 30, 1998, after giving effect to
the Transactions, the Company's debt, Senior Preferred Stock and stockholder's
equity would have been $160.5 million (including subsidiary indebtedness), $20.0
million and $25.7 million, respectively. The Company would also have had
borrowing availability under the Revolving Credit Facility of $20.6 million,
subject to the borrowing conditions contained therein. For the year ended
December 31, 1997 and the LTM period ended June 30, 1998, the ratio of EBITDA
(as defined) to net interest expense would have been 2.1 to 1 and 2.2 to 1,
respectively, after giving pro forma effect to the acquisition of Blue Giant and
the sale of the Series C Notes and Existing Preferred Stock as if each had
occurred on January 1, 1997 and July 1, 1997. For the year ended December 31,
1997 and the LTM period ended June 30, 1998, the ratio of EBITDA (as defined) to
net fixed charges would have been 1.8 to 1 and 1.9 to 1, respectively, after
giving pro forma effect to the acquisition of Blue Giant and the sale of the
Series C Notes and Existing Preferred Stock as if each had occurred on January
1, 1997 and July 1, 1997.
The Company's high level of debt and debt service requirements will have
several important consequences, including the following: (i) a substantial
portion of the Company's cash flow from operations will be dedicated to
servicing its indebtedness; (ii) the covenants contained in the Company's
indebtedness will impose certain restrictions on the Company which, among other
things, will limit its ability to borrow additional funds; (iii) the Company's
ability to obtain additional financing in the future for working capital,
capital expenditures, acquisitions, general corporate purposes or other purposes
may be impaired; and (iv) the Company's ability to withstand competitive
pressures, adverse economic conditions and adverse changes in governmental
regulations may be negatively affected.
The Company's ability to meet its debt service obligations and to pay
dividends on the New Preferred Stock will depend upon its future performance,
which will be subject to general economic conditions, its ability to achieve
cost savings and other factors affecting the operations of the Company, many of
which are beyond its control. If the Company cannot generate sufficient cash
flow from operations in the future to service its debt, it may be required to
refinance all or a portion of such debt (including the Notes), sell assets or
obtain additional financing. There can be no assurance that any such refinancing
or asset sales would be possible or that any additional financing could be
obtained.
RANKING; SUBSIDIARY OPERATIONS
The New Notes, like the Existing Notes, will effectively rank junior to any
secured Indebtedness of the Company, to the extent of the assets securing such
Indebtedness, including Indebtedness incurred under the Revolving Credit
Facility. As of June 30, after giving effect to the Transactions, the Company
would have had $10.5 million of secured indebtedness outstanding, exclusive of
unused commitments of $20.6 million under the Revolving Credit Facility.
The Preferred Stock Exchange Notes, if issued, will be unsecured
obligations of the Company and will be subordinated in right of payment to all
existing and future Senior Indebtedness of the Company, including the New Notes
and the Existing Notes. In the event of the insolvency, liquidation,
reorganization, dissolution or other winding up of the Company, or upon the
maturity of any Senior Indebtedness, whether by lapse of time, acceleration or
otherwise, the holders of Senior Indebtedness must be paid in full in cash
before any payment of principal or interest in respect of the Preferred Stock
Exchange Notes. As a result, holders of Preferred Stock Exchange Notes may
recover ratably less than general creditors of the Company.
20
<PAGE> 27
The New Preferred Stock will rank junior to all Indebtedness and other
obligations of the Company and its subsidiaries.
Although the Company's North American operations are owned directly and
through Restricted Subsidiaries that are Guarantors of the New Notes, its
foreign operations are conducted through the Foreign Subsidiaries. The Foreign
Subsidiaries have not guaranteed or otherwise become obligated with respect to
the New Notes, and no Subsidiary has guaranteed or otherwise become obligated
with respect to the New Preferred Stock or, if issued, the Preferred Stock
Exchange Notes. The New Notes, New Preferred Stock and, if issued, the Preferred
Stock Exchange Notes will therefore be effectively subordinated to all existing
and future liabilities, including indebtedness, of the Foreign Subsidiaries and,
in the case of the New Preferred Stock and the Preferred Stock Exchange Notes,
of each other Subsidiary. At June 30, 1998, the Foreign Subsidiaries had
liabilities of approximately $43.3 million reflected on the Company's
consolidated balance sheet. In addition, the Foreign Subsidiaries assumed
liabilities of approximately $8.0 million in connection with the Samsung
Forklift Acquisition.
GUARANTEES
The repayment of the New Notes will be unconditionally and irrevocably
guaranteed on a senior basis by all Restricted Subsidiaries of the Company that
are not Foreign Subsidiaries. On the date hereof, the Company has two
subsidiaries other than the Foreign Subsidiaries and, accordingly, there are two
Guarantors on the date hereof. The guarantees of any present or future
Guarantors may be subject to legal challenge under applicable provisions of the
United States Bankruptcy Code or comparable provisions of state fraudulent
transfer or conveyance laws. If such a challenge were upheld, the guarantees of
such Guarantors would be invalidated and unenforceable, and it is possible that
the holders of the New Notes would be ordered by a court to turn over to other
creditors of such Guarantors or to their trustees in bankruptcy all or a portion
of the payments made to them pursuant to the guarantees.
CHANGE OF CONTROL PROVISIONS; LIMITATIONS ON RIGHTS OF REPAYMENT
Upon the occurrence of a Change of Control, each holder of New Notes, New
Preferred Stock and, if issued, Preferred Stock Exchange Notes will have the
right to require the Company to purchase all or part of such holder's New Notes,
New Preferred Stock or Preferred Stock Exchange Notes, as the case may be. The
Change of Control provisions will not afford any protection in a highly
leveraged transaction, including such a transaction initiated by the Company,
management of the Company or an affiliate of the Company, if such transaction
does not result in a Change of Control. Existing or future indebtedness of the
Company or obligations of the Subsidiaries may prohibit the Company from
repurchasing or redeeming any of the New Notes, New Preferred Stock and, if
issued, Preferred Stock Exchange Notes, as the case may be, upon a Change of
Control. Moreover, the ability of the Company to repurchase or redeem the New
Notes, New Preferred Stock and, if issued, Preferred Stock Exchange Notes, as
the case may be, following a Change of Control will be limited by the Company's
then-available resources. Accordingly, the Change of Control provisions are
likely to be of limited usefulness in such situations. See "Description of
Notes -- Purchase Upon Change of Control," "-- Amendment, Supplement and
Waiver," "Description of Preferred Stock -- Change of Control" and "Description
of Preferred Stock Exchange Notes -- Purchase Upon Change of Control."
TAX CONSEQUENCES OF DEEMED DISTRIBUTIONS AND STOCK DISTRIBUTIONS WITH RESPECT TO
THE NEW PREFERRED STOCK AND ORIGINAL ISSUE DISCOUNT ON PREFERRED STOCK EXCHANGE
NOTES
Because the issue price of the New Preferred Stock distributed in lieu of
payments of cash dividends will be equal to the fair market value of such
distributed New Preferred Stock at the time of distribution, it is possible,
depending on its fair market value at that time, that such New Preferred Stock
may be issued with a significant amount of redemption premium. In such event
holders would be required to include such premium in income as a distribution
over the remaining term of the New Preferred Stock in advance of receiving the
cash attributable to such income, and such New Preferred Stock might not trade
separately, which might adversely affect the liquidity of the New Preferred
Stock. Further, to the extent holders of New Preferred
21
<PAGE> 28
Stock receive additional shares of New Preferred Stock as a distribution with
respect to such New Preferred Stock, such holders would be required to include
in gross income for Federal income tax purposes the fair market value of such
stock, even though such holders have not received such fair market value in
cash.
Finally, the Company may, at its option and under certain circumstances,
exchange Preferred Stock Exchange Notes for the New Preferred Stock. Any such
exchange will be a taxable event to holders of the New Preferred Stock.
Furthermore, the Preferred Stock Exchange Notes may in certain circumstances be
treated as having been issued with original issue discount for Federal income
tax purposes. In such event, holders of Preferred Stock Exchange Notes will be
required to include such original issue discount in income over the term of the
Preferred Stock Exchange Notes, in advance of the receipt of the cash
attributable to such income. Depending upon a holder's particular circumstances,
the tax consequences of holding Preferred Stock Exchange Notes may be less
advantageous than the tax consequences of holding New Preferred Stock because,
for example, payments of interest on the Preferred Stock Exchange Notes will not
be eligible for any dividends received deduction that may be available to
corporate holders and Preferred Stock Exchange Notes may be issued with greater
amounts of original issue discount than the redemption premium on the New
Preferred Stock. See "Certain Federal Income Tax Considerations."
PRODUCT LIABILITY AND OTHER CLAIMS
From time to time product liability claims are asserted against the Company
for various injuries alleged to have resulted from defects in the manufacture
and/or design of its products. As of August 25, 1998, the Company had
approximately 66 pending lawsuits relating to claims arising from accidents
involving its products. Most of these lawsuits are in various stages of pretrial
completion, and certain plaintiffs are seeking punitive as well as compensatory
damages. The Company is self-insured, up to certain limits, for these product
liability claims, as well as certain exposures related to general workers'
compensation and automobile liability. The Company has recorded and maintains on
its balance sheet reserves relating to the estimated liability, based in part
upon actuarial determinations, of the Company's aggregate exposure for such
self-insured risks. There can be no assurance that these reserves are adequate.
Even if the Company's reserves are adequate to cover its exposure to potential
judgements, the payment by the Company of a significant judgement rendered
against it would affect the cash position of the Company.
The Company also has certain other contingent liabilities or uncertainties
for other obligations, including contingent liabilities relating to the
Company's guarantees of certain floor plan obligations and its obligation to
repurchase equipment from certain dealers and customers upon the occurrence of
certain events. The unfavorable resolution of product liability claims or any
other contingencies or uncertainties in the future could have a material adverse
effect on the Company. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Contingencies and Uncertainties" and
"Business -- Legal Proceedings."
INDUSTRY CYCLICALITY AND SUBSTANTIAL COMPETITION
Sales of products manufactured and sold by the Company have historically
been subject to substantial cyclical variation based, among other things, on
general economic conditions. The Company has been experiencing a strong demand
for forklift trucks in North America during the past several years. Industry
sources estimate that this market strength will soften in 1999 with a modest
improvement thereafter. There can be no assurance as to the magnitude or timing
of any future decline or recovery, or that any future decline will not have a
material adverse effect on the Company. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
The lift truck market in which the Company competes is highly competitive.
The Company encounters significant competition particularly from lower cost
foreign competitors, including manufacturers located in Japan and South Korea.
The Company competes on the basis of quality, price, on-time delivery, product
line, ease of use, safety, comfort and customer service. Many of the Company's
competitors have greater financial resources than the Company. Additionally,
certain of the Company's products are subject to changing technology which could
place the Company at a competitive disadvantage relative to product innovations
by
22
<PAGE> 29
competitors. There can be no assurance that the Company will be able to achieve
the technological advances that may be necessary to remain competitive.
DEPENDENCE ON KEY SUPPLIERS
The Company's future success will depend, in part, on its ability to
maintain continuity of supply of critical parts and to develop alternative
supply arrangements as needed. The failure of a key supplier to meet the
Company's requirements on a timely basis or the loss of a key supplier could
lead to delays in the Company's manufacturing operations and have a material
adverse effect on the Company.
FOREIGN OPERATIONS
The Company's products are sold in more than 80 countries worldwide.
Accordingly, a substantial portion of the sales of the Company are generated in
foreign currencies, while the costs associated with these sales are only
partially incurred in the same currencies. Consequently, the Company's financial
performance and results of operations are affected by fluctuations between the
U.S. dollar and such foreign currencies. In addition, currency fluctuations
could improve the competitive position of the Company's foreign competitors if
the value of the U.S. dollar rises in relation to the local currencies of such
competitors. The Company is also subject to other risks associated with
operating in foreign countries, including imposition of limitations on
conversion of foreign currencies into dollars or remittance of dividends and
other payments by foreign subsidiaries, imposition or increase of withholding
and other taxes on remittances and other payments by foreign subsidiaries,
hyperinflation in certain foreign countries and imposition or increase of
investment and other restrictions by foreign governments.
Several countries in Southeast Asia, including South Korea, have recently
experienced significant devaluation of their currencies, a reduction in the
value of their capital markets and a general decline in overall economic
conditions. In addition, these countries have experienced a number of bank
failures and consolidations. CLARK Asia (as defined) will conduct substantially
all of its manufacturing operations in South Korea. As a result, despite
management's expectation that only approximately five percent of the Company's
sales will be to countries within the Southeast Asia region, the business,
financial condition and results of operations of the Company may be influenced
by the general political, social and economic situation in Southeast Asia. The
Company may be subject to political and economic risks, including political
instability, currency controls and exchange rate fluctuations, and changes in
import/export regulations, tariffs, duties and quotas. No assurance can be given
that the risks associated with operating in foreign countries, including in
Southeast Asia, will not have a material adverse effect on the Company in the
future.
RISKS RELATING TO SOUTH KOREA
In addition to the risks specified above under "-- Foreign Operations,"
businesses in South Korea are presently subject to significant labor unrest. A
week-long work stoppage occurred at Samsung upon the announcement of the sale of
Samsung's construction equipment business to CLARK and another third party.
Although the Samsung Forklift business represents a relatively minor portion of
the overall construction equipment assets sold by Samsung, there can be no
assurance that CLARK Asia will not experience labor strife in the future.
Relations between South Korea and the Democratic People's Republic of Korea
("North Korea") have been tense over most of South Korea's history. Recent
events involving, among other things, North Korea's refusal to comply with the
Nuclear Non-Proliferation Treaty and the deployment of armed troops by North
Korea into the demilitarized zone dividing North Korea and South Korea in July
1997, have caused the level of tension between the two Koreas to increase.
Incidents affecting relations between the two Koreas continually occur. No
assurance can be given as to whether or when this situation will be resolved or
change abruptly as a result of current or future events. An adverse change in
economic or political conditions in South Korea or in its relations with North
Korea could have a material adverse effect on CLARK Asia's business.
23
<PAGE> 30
RISKS RELATING TO THE SAMSUNG FORKLIFT ACQUISITION
Samsung Forklift was not operated as a separate business unit by Samsung
and, as such, did not have regularly prepared financial statements prior to the
Samsung Forklift Acquisition. In addition, Samsung Forklift's books and records
have not been audited, and the Company has been granted only limited access to
these books and records. Consequently, financial information presented herein
concerning Samsung Forklift has required estimation by the Company and must
therefore not be relied upon to a material extent. There likely will be changes,
perhaps significant, to the financial information relating to Samsung Forklift
relied upon by the Company.
The realization of the full benefits of the Samsung Forklift Acquisition by
the Company will require the coordination of each company's operations, the
implementation of appropriate operational, financial and management systems and
controls, and the integration of the Samsung Forklift business into the
Company's administrative, finance and marketing organizations. This will in turn
require substantial attention from the Company's management team. The diversion
of management attention, as well as any other difficulties which may be
encountered in the transition and integration process, could have an adverse
impact on the Company. In addition, there can be no assurance that the Company
will be successful in integrating the operations of Samsung Forklift, or that
any planned benefits will be realized.
INTEGRATION OF ACQUIRED OPERATIONS
In connection with making acquisitions and in evaluating potential
acquisition opportunities, including the Samsung Forklift Acquisition, the
Company makes certain assumptions regarding the future combined results of the
existing and acquired operations. In certain acquisition transactions, the
acquisition analysis includes assumptions regarding the consolidation of
operations and improved operating cost structures for the combined operations.
There can be no assurance, however, that such consolidations or improved cost
structures will be achieved on the assumed time schedule, if at all. Any failure
to integrate the operations of an acquired business or significant delay in such
integration could have a material adverse effect on the Company's financial
condition and results of operations. In addition, the Company expects to
continue to evaluate and, where appropriate, pursue acquisition opportunities
that provide products or services that complement those offered by the Company.
There can be no assurance, however, that suitable acquisition candidates will be
identified in the future, or that the Company will be able to finance such
acquisitions on favorable terms. Further, there can be no assurances that any
future acquisitions will be integrated successfully into the Company's
operations or will achieve desired financial objectives.
GOVERNMENT REGULATION
The Company's facilities and operations are required to comply with and are
subject to federal, state, local and foreign environmental and worker health and
safety laws, regulations and ordinances, including those relating to air
emissions, wastewater discharges and the management and disposal of certain
materials, substances and wastes ("Environmental Laws"). The nature of the
Company's operations and the history of industrial uses at some of its
facilities expose the Company to the risk of liabilities or claims with respect
to environmental and worker health and safety matters. The Company may also have
contingent responsibility for liabilities with respect to environmental matters
arising in connection with the prior operations of the material handling
business of CLARK Equipment Company, a predecessor of the Company ("CEC"). There
can be no assurance that material costs will not be incurred in connection with
such liabilities or claims.
Future events, such as changes in existing laws and regulations or their
interpretations, may give rise to additional compliance costs or liabilities
that could have a material adverse effect on the Company's business, financial
condition or results of operations. Compliance with more stringent laws or
regulations, as well as more vigorous enforcement policies of regulatory
agencies or stricter or different interpretations of existing laws, may require
additional expenditures by the Company which may be material. See "Business --
Environmental Matters."
24
<PAGE> 31
DEPENDENCE ON MANAGEMENT AND KEY PERSONNEL
Certain of the executive officers of the Company, including among others
Dr. Martin M. Dorio, President and Chief Executive Officer of the Company, are
key to the management and direction of the Company. The loss of the services of
such persons could have a material adverse effect on the Company, and there can
be no assurance that the Company would be able to find replacements for such
persons with equivalent business experience and skills.
LABOR DISPUTES
Management believes that its relations with its employees are good.
However, there can be no assurance that labor disputes will not occur in the
future which, depending upon the timing and duration of such disputes, could
have a material adverse effect on the Company. See "Business -- Employees."
OWNERSHIP OF HOLDINGS AND THE COMPANY
Citicorp Venture Capital Ltd. ("CVC"), Dr. Martin M. Dorio, President and
Chief Executive Officer of the Company, Thomas J. Snyder, Michael A. Delaney,
James A. Urry and Diether Klingelnberg, who are members of the Board of
Directors of the Company, certain other members of the management of the Company
and certain employees of CVC own all of the outstanding voting stock of
Holdings, which owns all of the outstanding capital stock of the Company. By
virtue of such stock ownership, such persons have the power to direct the
affairs of the Company and are able to determine the outcome of all matters
required to be submitted to stockholders for approval, including the election of
a majority of the Company's directors and amendment of the Company's certificate
of incorporation. See "Ownership of the Company."
POTENTIAL DILUTION OF VOTING INTEREST
To the extent Existing Notes are exchanged for New Notes, up to $150
million aggregate principal amount of New Notes will be outstanding following
consummation of the Exchange Offer, and such New Notes will be deemed to be a
single series of debt securities outstanding under the Indenture. Accordingly,
the individual voting interest of each holder of Series B Notes under the
Original Indenture and Series C Notes under the Indenture will be substantially
diluted. See "Description of Notes."
LACK OF PUBLIC MARKET
The Existing Securities are currently eligible for trading in the PORTAL
Market. The New Notes, the New Preferred Stock and, if issued, the Preferred
Stock Exchange Notes will be new securities for which there is currently no
public market. The Company does not intend to list the New Notes, New Preferred
Stock and, if issued, the Preferred Stock Exchange Notes on any national
securities exchange or to seek the admission thereof to trading in the National
Association of Securities Dealers Automated Quotation System. The Initial
Purchasers have advised the Company that they currently intend to make a market
in the New Notes, New Preferred Stock and, if issued, the Preferred Stock
Exchange Notes. However, the Initial Purchasers are not obligated to do so and
any market making may be discontinued at any time without notice. There can be
no assurance as to the development of any market or the liquidity of any market
that may develop for the New Notes, New Preferred Stock and, if issued, the
Preferred Stock Exchange Notes.
YEAR 2000
The Company is aware of the issues associated with the programming code in
existing computer systems as the millennium approaches. The "year 2000" problem
is pervasive and complex as virtually every computer operation will be affected
in some way by the rollover of the two digit year value to 00. The issue is
whether computer systems will properly recognize date-sensitive information when
the year changes to 2000. Systems that do not recognize such information could
generate erroneous data or cause a system to fail. The Company plans to install
new year 2000 compliant software in its information technology systems at each
of its worldwide locations during 1998 and 1999. In addition, CLARK is in the
process of making contact with each of the third party suppliers, dealers and
other parties with which it has a material relationship in order to assess
25
<PAGE> 32
whether the Company faces any risks relating to third party year 2000 problems.
There can be no assurance that a year 2000 problem on the computer systems of
CLARK or a third party will not have a material adverse effect on the Company.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Year 2000."
26
<PAGE> 33
USE OF PROCEEDS
The Company will not receive any proceeds from the Exchange Offer. The net
proceeds to the Company from the sale of the Series C Notes and the Existing
Preferred Stock, after deducting the Initial Purchasers' discount, was
approximately $40.6 million, excluding $0.4 million in accrued interest on the
Series C Notes from May 15, 1998. The Company used and will continue to use the
proceeds of the sale of the Series C Notes and the Existing Preferred Stock as
follows: (i) approximately $30.4 million was applied to finance the Samsung
Forklift Acquisition; (ii) approximately $3.4 million was or will be applied to
pay fees and expenses relating to the Transactions; and (iii) approximately $6.8
million was or will be applied to fund capital expenditures and working capital
requirements relating to the Samsung Forklift Acquisition. See "The Samsung
Forklift Acquisition."
27
<PAGE> 34
CAPITALIZATION
The following table sets forth the capitalization of the Company as of June
30, 1998 and as adjusted to give effect to the sale of the Series C Notes and
the Existing Preferred Stock and the application of the net proceeds therefrom
to consummate the Samsung Forklift Acquisition. This table should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations," the Company's historical financial statements, the
"Unaudited Pro Forma Financial Information" and the notes thereto, and "The
Samsung Forklift Acquisition" included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
AS OF JUNE 30, 1998
------------------------
ACTUAL AS ADJUSTED(5)
------ --------------
($ IN MILLIONS)
<S> <C> <C>
Cash(1)..................................................... $ 7.1 $ 8.9
====== ======
Debt (including current portion):
The Revolving Credit Facility(2).......................... $ 9.4 $ 9.4
Other Debt(3)............................................. 1.1 1.1
The Original Notes........................................ 130.0 130.0
The New Notes............................................. 0.0 20.0
------ ------
Total Debt(4)..................................... 140.5 160.5
Senior Preferred Stock...................................... -- 20.0
Stockholder's Equity........................................ 25.7 25.7
------ ------
Total Capitalization.............................. $166.2 $206.2
====== ======
</TABLE>
- ---------------
(1) Includes cash, cash equivalents and cash securing letters of credit.
(2) Borrowings of up to $30.0 million under the Revolving Credit Facility are
available to the Company for working capital and general corporate purposes,
subject to the borrowing conditions contained therein. The Company has an
outstanding balance of $10.1 million under the Revolving Credit Facility as
of August 14, 1998. See "Description of Certain Indebtedness."
(3) Includes debt held by the Company's Foreign Subsidiaries of $1.1 million.
See "Description of Certain Indebtedness."
(4) Excludes capital lease obligations of $7.3 million. These capital leases
represent forklift trucks sold to financial institutions in Europe and
leased back by the Company and then leased to customers.
(5) Adjusted to give effect to the Transactions. See "Use of Proceeds."
28
<PAGE> 35
SELECTED HISTORICAL FINANCIAL DATA
Through November 26, 1996, the Company operated as wholly owned
subsidiaries of the Predecessor's Parent. On November 27, 1996, the Company was
acquired by Holdings. Accordingly, the selected financial data shown below is
not necessarily comparable as a result of these ownership changes and the
resulting adjustments required for purchase business combinations under
generally accepted accounting principles. The selected operating data and
balance sheet data for the periods from December 31, 1993 through December 31,
1997 (excluding the six months ended June 30, 1997) have been derived from the
audited consolidated financial statements of the Company. The audited
consolidated financial statements of the Company for the year ended December 31,
1995, the eleven month period ended November 26, 1996, the one month period
ended December 31, 1996 and the year ended December 31, 1997 are included
elsewhere in this Prospectus. The selected historical financial data at and for
the six month periods ended June 30, 1997 and 1998 were derived from the
unaudited consolidated financial statements of the Company included elsewhere in
this Prospectus. In the opinion of management, the historical financial data for
the six month periods ended June 30, 1997 and 1998 contain all adjustments
(consisting only of normal recurring adjustments) necessary to present fairly
the information shown. The information contained in this 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, including the notes thereto, included elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
WHOLLY OWNED SUBSIDIARIES OF
THE PREDECESSOR'S PARENT THE COMPANY
--------------------------------------- ---------------------------------------------
ELEVEN ONE SIX MONTHS
MONTHS MONTH YEAR ENDED
YEAR ENDED DECEMBER 31, ENDED ENDED ENDED JUNE 30,
------------------------ NOVEMBER 26, DECEMBER 31, DECEMBER 31, ---------------
1993 1994 1995 1996 1996 1997 1997 1998
------ ------ ------ ------------ ------------ ------------ ------ ------
($ IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Net Sales.................. $395.6 $472.7 $528.8 $404.6 $46.8 $489.3 $229.9 $269.0
Gross Profit............... 22.3 42.9 44.2 45.6 4.9 58.2 26.4 33.4
Engineering, Selling and
Administrative
Expenses................. 46.5 41.7 30.6 26.6 3.0 37.1 17.7 22.5
Parent Company Management
Fees..................... 4.4 8.5 7.0 5.7 -- -- -- --
Severance and Exit
Charges.................. -- 6.7 3.5 -- -- -- -- --
Income (Loss) from
Operations............... (28.6) (14.0) 3.1 13.3 1.9 21.0 8.7 10.9
Income (Loss) before
Extraordinary Items...... (44.9) (25.3) (17.4) (2.1) 0.5 7.9 1.3 1.5
Ratio of Earnings to Fixed
Charges(1)............... -- -- -- -- 1.4x 1.5x 1.2x 1.3x
BALANCE SHEET DATA (AT END
OF PERIOD):
Working Capital(2)......... $ 50.8 $ 41.4 $ 46.4 $ 51.4 $45.0 $ 55.8 $ 46.4 $ 63.8
Net Property, Plant and
Equipment................ 75.3 60.7 58.2 51.2 51.0 47.8 46.7 49.4
Total Assets............... 208.0 194.7 192.7 192.7 301.3 313.3 293.7 321.7
Long-Term Obligations(3)... 120.0 125.9 143.0 151.3 133.6 133.9 133.2 134.4
</TABLE>
(footnotes on following page)
29
<PAGE> 36
- ---------------
(1) The Ratio of Earnings to Fixed Charges is computed as follows: (a) earnings
consists of consolidated income (loss) before income taxes and extraordinary
items plus fixed charges; (b) fixed charges consist of interest expense,
amortization of deferred debt issuance costs, along with any discount or
premiums and the amount of rental expense considered by management to
reasonably represent the interest factor related to such rental expense.
During the years ended December 31, 1993, 1994, 1995 and the eleven month
period ended November 26, 1996, the earnings were insufficient to cover
fixed charges by $44.8 million, $24.5 million, $17.3 million and $2.1
million, respectively.
(2) Calculated as net trade receivables plus net inventories less trade
payables.
(3) The amounts of Long-Term Obligations as of December 31, 1993, 1994 and 1995,
and November 26, 1996, include Due to Parent of $40.2 million, $68.5
million, $87.6 million and $96.4 million, respectively; such amounts also
include the long-term portion of capital lease obligations. At December 31,
1996 and 1997 and at June 30, 1997 and 1998, the amount of long-term
obligations includes the Series B Notes and the long-term portion of capital
lease obligations.
30
<PAGE> 37
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company manufactures products in the U.S., Canada and Germany and sells
products in more than 80 countries worldwide. A portion of the Company's raw
materials are acquired from foreign suppliers and denominated in foreign
currencies. Consequently, the Company's operating results are subject to
fluctuations in foreign currency exchange rates, as well as the translation of
its foreign operations into U.S. dollars. The risks associated with operating in
foreign countries could adversely affect the Company's future operating results.
In addition, currency fluctuations could improve the competitive position of the
Company's foreign competitors if the value of the U.S. dollar rises in relation
to the local currencies of such competitors. The Company has not historically
hedged its foreign currency risk.
Sales of products manufactured and sold by the Company have historically
been subject to cyclical variation based, among other things, on general
economic conditions. Management believes that the Company has improved its
ability to sustain profitability in changing market conditions. There can be no
assurance, however, as to the magnitude or timing of any decline or recovery, or
that any future decline will not have a material adverse effect on the Company's
business.
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
WHOLLY OWNED SUBSIDIARIES OF
THE PREDECESSOR'S PARENT THE COMPANY
------------------------------- ----------------------------------------------------------------
ELEVEN MONTHS ONE MONTH SIX MONTHS SIX MONTHS
YEAR ENDED ENDED ENDED YEAR ENDED ENDED ENDED
DECEMBER 31, NOVEMBER 26, DECEMBER 31, DECEMBER 31, JUNE 30, JUNE 30,
1995 1996 1996 1997 1997 1998
-------------- -------------- ------------- -------------- -------------- --------------
($) (%) ($) (%) ($) (%) ($) (%) ($) (%) ($) (%)
------ ----- ------ ----- ----- ----- ------ ----- ------ ----- ------ -----
($ IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Sales.................... $528.8 100.0% $404.6 100.0% $46.8 100.0% $489.3 100.0% $229.9 100.0% $269.0 100.0%
Gross Profit................. 44.2 8.4% 45.6 11.3% 4.9 10.5% 58.2 11.9% 26.4 11.5% 33.4 12.4%
Engineering, Selling and
Administrative
Expenses(1)................. 37.6 7.1% 32.3 8.0% 3.0 6.4% 37.1 7.6% 17.7 7.7% 22.5 8.4%
Income from
Operations(1)(2)............ 3.1 0.6% 13.3 3.3% 1.9 4.0% 21.0 4.3% 8.7 3.8% 10.9 4.1%
</TABLE>
- ---------------
(1) Includes corporate charges allocated by the Predecessor's Parent of $7.0
million and $5.7 million in the year ended 1995 and the eleven months ended
November 26, 1996, respectively.
(2) Includes severance and exit charges of $3.5 million in the year ended
December 31, 1995.
Six months ended June 30, 1998, compared to the six months ended June 30, 1997
Net Sales
Net sales were $269.0 million for the six months ended June 30, 1998, an
increase of $39.1 million or 17.0% from $229.9 million for the same period in
1997. Machine and other sales increased 20.0% mainly due to stronger markets,
while parts sales increased 4.9% over the same time period last year. The
acquisition of Blue Giant contributed $13.0 million toward the Company's
increased sales for the period.
Gross Profit
Gross profit increased 26.5% or $7.0 million to $33.4 million in the first
six months of 1998 compared to $26.4 million in the first six months of 1997.
Increased sales and mix contributed $2.0 million of additional gross profit and
the acquisition of Blue Giant added $2.8 million of gross profit. Cost reduction
programs, lower product liability and higher production levels absorbing more
fixed costs contributed to the balance of the increase. As a percentage of
sales, gross profits were 12.4% for the six months ended June 30, 1998 compared
to 11.5% for the same period in the prior year.
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<PAGE> 38
Engineering, Selling and Administrative Expense
Engineering, selling and administrative expense increased $4.8 million to
$22.5 million for the six months ended June 30, 1998 from $17.7 million during
the same period of 1997. As a percent of sales, engineering, selling and
administrative expense was 8.4% and 7.7% for the same period in 1998 and 1997,
respectively. The 1997 acquisitions, HLT (as defined) (February 1997) and Blue
Giant accounted for $1.7 million of this increased expense while investments in
engineering and selling expense, to support programs for growth, accounted for
the balance.
Income from Operations
Income from operations increased 25.3% or $2.2 million to $10.9 million for
the six months ended June 30, 1998, compared to $8.7 million for the same period
in 1997 due to the reasons discussed above.
Interest and Other Expense
Net interest and other expense of the Company was $8.9 million during the
six months ended June 30, 1998, compared to $7.2 million during the six months
ended June 30, 1997. This was due, in part, to increases in net interest expense
and exchange losses of foreign subsidiaries.
Income Taxes
The provision for income taxes was $0.6 million during the six months ended
June 30, 1998 compared to $0.2 million during the six months ended June 30,
1997. The increase in income taxes is primarily due to foreign income taxes
recorded for Blue Giant Limited, which was acquired in November 1997.
Fiscal Year Ended December 31, 1997 compared to the month ended December 31,
1996, and the eleven months ended November 26, 1996
The acquisition of the Company on November 26, 1996 resulted in a
significant change in the Company's capital structure and a revaluation of the
Company's assets and liabilities in accordance with the provisions of purchase
accounting required by generally accepted accounting principles. Accordingly,
the results of operations for the year ended December 31, 1997 are not
comparable to the results of operations for the month ended December 31, 1996,
the eleven-month period ended November 26, 1996 or the year ended December 31,
1995.
Net Sales
Net sales were $489.3 million in 1997, an increase of $37.9 million or 8.4%
from $451.4 million in the twelve month period ended December 31, 1996. Truck
sales increased $38.1 million and parts sales were relatively consistent. The
increase in truck sales was primarily due to improved market conditions in 1997
and the acquisition of Blue Giant, which increased sales by $4.8 million or
1.2%. In 1997, CLARK derived 73.5% and 25.7% of its net sales from its North
American operations and CLARK Material Handling GmbH ("CLARK Europe"),
respectively, compared to 70.0% and 30.0%, respectively, in 1996. A change in
the German Deutsche mark ("DM") annual average currency translation rate from
1.505 DM to one U.S. dollar for 1996 to 1.734 DM to one U.S. dollar for 1997 had
a negative impact on reported sales (and income) in U.S. dollars from the
Company's European operations.
Gross Profit
Gross profit increased $7.7 million, or 15.2%, to $58.2 million in 1997
from $50.5 million in 1996. As a percentage of net sales, gross profit was 11.9%
and 11.2% for 1997 and 1996, respectively. Increased sales accounted for
approximately $4.2 million of the increased gross profit and lower costs due to
the Company's cost reduction efforts in the areas of materials, labor and
overhead accounted for the balance of the improvement.
32
<PAGE> 39
Engineering, Selling and Administrative Expenses
Engineering, selling and administrative expenses increased $1.8 million to
$37.1 million for the twelve month period ended December 31, 1997 from $35.3
million for the twelve month period ended December 31, 1996. Certain
administrative functions performed by the Predecessor's Parent were replaced,
but at a lower cost than was charged in 1996. The Company increased its
engineering and selling expenses by $4.4 million in 1997. This increase was to
support new product and sales initiatives in 1997 and beyond. Engineering,
selling and administrative expenses expressed as a percentage of sales were 7.6%
and 7.8%, respectively, in 1997 and 1996.
Income from Operations
Income from operations increased $5.8 million to $21.0 million for the
twelve month period ended December 31, 1997 from $15.2 million for the twelve
month period in 1996. This increase was due to the reasons noted above. Income
from operations expressed as a percentage of net sales was 4.3% and 3.4% for the
twelve months ended December 31, 1997 and December 31, 1996, respectively.
Eleven Months Ended November 26, 1996 compared to Year Ended December 31, 1995
Net Sales
Net sales were $404.6 million for the eleven months ended November 26, 1996
compared to $528.8 million for the twelve month period in 1995, a decrease of
$124.2 million or 23.5%. This decrease was primarily due to reduced demand by
CLARK's customers, which management believes was related to lower industry
activity beginning in the last quarter of 1995. Net truck sales decreased $112.6
million, or 26.0%, primarily due to a softening in the demand for lift trucks in
North America and Europe, while parts sales declined 12.1%. CLARK derived 70.3%
and 29.7% of its net sales from its North American operations and CLARK Europe,
respectively, in the eleven months ended November 26, 1996, and 71.6% and 28.4%,
respectively, in the twelve months ended December 31, 1995.
Gross Profit
Gross profit increased $1.4 million, or 3.2%, to $45.6 million for the
eleven months ended November 26, 1996, compared to $44.2 million for the twelve
month period in 1995, despite the 23.5% decline in net sales. As a percentage of
net sales, gross profit was 11.3% and 8.4% for the eleven months ended November
26, 1996 and the twelve month period of 1995, respectively. Cost reduction
efforts and production improvements accounted for most of this increase. Factory
overhead expenses were reduced by $13.9 million. This decrease was attributable
to lower salaries, wages, benefits and other significant areas of cost decreases
including lower product liability costs, lower freight costs and lower material
costs from improved outsourcing. These improvements were partially offset by
lower absorption of fixed costs due to lower production levels and by lower
margins for aftermarket parts due to a change in product mix.
Engineering, Selling and Administrative Expenses
For the eleven months ended November 26, 1996, engineering, selling and
administrative expenses decreased $5.3 million to $32.3 million from $37.6
million for the twelve month period in 1995 primarily due to the rationalization
of staff levels, facilities and support costs in response to lower industry
activity. Engineering, selling and administrative expenses as a percentage of
net sales were 8.0% and 7.1% in the eleven months ended November 26, 1996 and
the twelve months ended December 31, 1995, respectively.
Income from Operations
Income from operations increased $10.2 million to $13.3 million for the
eleven months ended November 26, 1996, compared to $3.1 million for the twelve
months ended December 31, 1995. In addition, CLARK had $3.5 million of severance
and exit charges related to workforce rationalization in Europe and the
termination of certain leases in 1995, which did not recur in 1996. The
Predecessor's Parent allocated
33
<PAGE> 40
corporate charges to CLARK of $5.7 million and $7.0 million in the 1996 and 1995
periods, respectively. Income from operations, expressed as a percentage of net
sales, were 3.3% and 0.6% for the eleven months ended November 26, 1996 and the
twelve months ended December 31, 1995, respectively.
BACKLOG
The Company's backlog of orders at June 30, 1998 and December 31, 1997 and
1996 were $108.0 million, $114.8 million and $80.4 million, respectively. The
backlog orders are due to strong market conditions and the acquisition of Blue
Giant, which added $5.1 million and $6.1 million to the backlog at June 30, 1998
and December 31, 1997. Substantially all of the Company's backlog orders are
expected to be filled within one year, although there can be no assurance that
all such orders will be filled within that time period. The cancellation or
delay of certain orders could have a material adverse affect on the Company.
CAPITAL RESOURCES, LIQUIDITY AND FINANCIAL CONDITION
The Company's business is capital intensive and requires funding for
purchases of production and replacement parts inventories, capital expenditures
for repair, replacement and upgrading of existing facilities as well as
financing of accounts receivable due from customers and dealers. The Company
will continue to have significant debt service requirements. At June 30, 1998,
the Company had 7.1 million of cash, cash equivalents and cash securing letters
of credit, $130.0 million of long-term debt and $7.3 million of capital lease
obligations. The Company's overall financial condition did not change
significantly at June 30, 1998 from December 31, 1997. However, working capital
(as defined) increased $8.0 million during the first six months of 1998
primarily due to higher accounts receivable and inventories somewhat offset by
higher accounts payable.
Cash used in operating activities through the first six months of 1998 was
$1.8 million primarily due to the increase in working capital discussed
previously. The Company had $5.6 million of capital expenditures for the first
six months of 1998 and anticipates $7.6 million of additional capital
expenditures during the balance of the year. Included in actual and anticipated
1998 capital expenditures are approximately $4.0 million on the installation of
new software and $5.0 million on new plant and equipment expenses to be incurred
at the facility acquired pursuant to the Samsung Forklift Acquisition. The
Company purchased substantially all the assets of Hydroelectric Lift Trucks,
Inc. ("HLT") on February 28, 1997, in exchange for a $4.9 million short-term
note, which matured and was paid in the second quarter of 1997. In addition to
paying the note issued to acquire HLT, the Company closed its acquisition of
Blue Giant in two separate purchase business combinations using existing cash of
$9.7 million (see note 4 to the consolidated financial statements). Blue Giant
manufactures manual and electric stackers and pallet trucks, electric tow
tractors, vehicle restraint devices, hydraulic scissor lifts and dock levelers
for sale in the U.S., Canada and other countries. In addition to the acquisition
price, the Company agreed to pay a total of $1.1 million over three years to a
former shareholder of Blue Giant in exchange for consulting services and a
noncompetition agreement.
In 1996, the Company entered into a $30.0 million revolving credit facility
(the "Revolving Credit Facility"), which is secured by the accounts receivable
and inventory of the Company's domestic operations, excluding Blue Giant. The
Revolving Credit Facility had an aggregate undrawn availability of $20.6 million
at June 30, 1998, subject to the borrowing conditions contained therein.
Management believes that it has adequate available borrowing capacity under the
Revolving Credit Facility to cover its foreseeable working capital requirements
for the next twelve months and that cash flow from operations and its borrowing
arrangements will be adequate to meet other liquidity and capital needs in 1998.
The Company expects that CLARK Europe will enter into a working capital
credit line of approximately $10.0 million, as permitted under the terms of the
Indenture.
CONTINGENCIES AND UNCERTAINTIES
From time to time product liability claims are asserted against the Company
for various injuries alleged to have resulted from defects in the manufacture
and/or design of its products. In addition, the Company is
34
<PAGE> 41
involved in various other legal proceedings, which have arisen in the normal
course of its operations. See "Business -- Legal Proceedings."
The Company is contingently liable as a guarantor for certain of its
dealers' and customers' financing arrangements with financial institutions. The
guarantees under these financing arrangements aggregated approximately $136.1
million at June 30, 1998. Historically, the Company has incurred only minimal
losses relating to these arrangements.
CLARK is contingently liable for a portion of the residual value of
machines sold to and leased by a third party to users for terms generally
ranging from three to five years. CLARK repurchases certain machines leased
under this program and then sells or leases such machines to other users. At
June 30, 1998, the maximum contingent liability under this program was
approximately $5.5 million. CLARK has historically recorded profits on the sale
of repurchased machines.
Pursuant to certain dealer sales agreements, CLARK has agreed to repurchase
certain new and unused equipment in the event of the termination of the dealer.
Similar repurchase obligations exist in the event of the dealer's default under
the dealer's financing agreements with financial institutions. CLARK has
historically incurred minimal losses from the foregoing arrangements.
For additional information on contingencies and uncertainties, see Note 11
to the audited financial statements of the Company included elsewhere in this
Prospectus, and "Risk Factors," "Business -- Environmental Matters" and
" -- Legal Proceedings."
YEAR 2000
The Company is aware of the issues associated with the programming code in
existing computer systems as the millennium approaches. The "year 2000" problem
is pervasive and complex as virtually every computer operation will be affected
in some way by the rollover of the two digit year value to 00. The issue is
whether computer systems will properly recognize date-sensitive information when
the year changes to 2000. Systems that do not recognize such information could
generate erroneous data or cause a system to fail.
The Company is utilizing both internal and external resources with respect
to its year 2000 issues. With regard to its information technology ("IT")
systems, CLARK is in the process of installing new software to provide improved
operational and financial functionality at each of its worldwide locations. This
new software is year 2000 compliant. The installation is expected to be
completed at the North American and European headquarter locations in Kentucky
and Germany during the last quarter of 1998 and the first quarter of 1999,
respectively. Following the installation and testing of this new software at
these sites, the Company intends to begin software installation at the Blue
Giant, HLT and CLARK Asia (as defined) facilities. The installation of the new
software by CLARK is a result of a strategic plan to upgrade its company-wide
computer systems which pre-dated the Company's efforts to make its IT systems
year 2000 compliant. Therefore, the Company has not incurred and does not
anticipate incurring any material costs specifically related to year 2000 issues
that are in addition to the costs associated with its overall computer system
upgrade.
CLARK does not believe that it has any material year 2000 issues with
regard to its non-IT systems. The Company's products employ chips and
microprocessors which use interval timers as opposed to real-time clocks and
therefore should not be affected by the year 2000 rollover. In addition, CLARK
does not utilize any computer controlled machines in its factory production,
thereby eliminating any potential year 2000 problem relating to its
manufacturing equipment.
The Company has ongoing business relationships with many suppliers, dealers
and other parties, each of which may have their own year 2000 issues. CLARK is
in the process of making contact with each of these third parties with which it
has a material relationship in order to assess whether the Company faces any
risks relating to third party year 2000 problems. The Company expects to be in a
position to make this assessment regarding third party risks during the first
quarter of 1999. There can be no assurance at this time that these third parties
are taking appropriate actions to safeguard their computer systems.
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Management can not at this time predict with any certainty CLARK's most
reasonably likely worst case scenario relating to the year 2000 problem.
However, the Company intends to perform test-runs at each of its facilities
following installation of its new year 2000 compliant software. If a year 2000
problem is identified during any of these test-runs, the Company intends to
immediately seek correction of the problem from its software vendor at no cost
to the Company.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income" and SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." In February 1998, the FASB issued SFAS No.
132, "Employers' Disclosures about Pensions and other Postretirement Benefits."
These statements require certain modifications and additional information
relating to financial statement disclosure of the components of comprehensive
income, operating segment information and pensions and other postretirement
benefits. These statements only impact the disclosure in financial statements;
therefore, management does not expect that the adoption of these new standards
in 1998 will have a significant impact on the Company's financial condition or
results of operations.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which establishes accounting and reporting
standards for these items and will be effective for fiscal years beginning after
June 15, 1999. Historically, the Company has not entered into derivative or
hedging transactions; therefore, management does not expect that the adoption of
this new standard will have a significant impact on the Company's financial
position or results of operations.
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THE EXCHANGE OFFERS
PURPOSE AND EFFECT
The Series C Notes and Existing Preferred Stock were sold by the Issuers on
July 17, 1998 to the Initial Purchasers pursuant to the Purchase Agreement. In
connection with that placement, the Company entered into the Registration Rights
Agreements, which require that the Company file a registration statement under
the Securities Act with respect to the New Securities and, upon the
effectiveness of that registration statement, offer to the holders of the
Existing Securities the opportunity to exchange their Existing Securities for a
like principal amount (or principal amount at maturity) or a like liquidation
preference amount of New Securities, which will be issued without a restrictive
legend and may be reoffered and resold by the holder without registration under
the Securities Act. The Registration Rights Agreements further provide that the
Company must use their best efforts to cause the registration statement with
respect to the Exchange Offers to be declared effective on or before November
16, 1998. Except as provided below, upon the completion of the Exchange Offers,
the Company's obligations with respect to the registration of the Existing
Securities and the New Securities will terminate. Copies of the Registration
Rights Agreements have been filed as exhibits to the Registration Statement of
which this Prospectus is a part.
Following the completion of the Exchange Offers (except as set forth in the
paragraph immediately below), holders of the Series C Notes and the Existing
Preferred Stock not tendered will not have any further registration rights and
those securities will continue to be subject to certain restrictions on
transfer. Accordingly, the liquidity of the market for the Existing Securities
could be adversely affected upon completion of the Exchange Offer.
Pursuant to the Registration Rights Agreements, the Company is required to
file a "shelf" registration statement for a continuous offering pursuant to Rule
415 under the Securities Act in respect of the Senior C Notes and the Existing
Preferred Stock (and use its reasonable best efforts to cause such shelf
registration statement to be declared effective by the Commission and keep it
continuously effective, supplemented and amended for prescribed periods) if (i)
prior to the consummation of the C Note Exchange Offer or the Preferred Stock
Exchange Offer, whichever applicable, the Company determines that a majority in
aggregate principal amount of the New Notes to be exchanged for Series C Notes
or a majority in aggregate liquidation preference of New Preferred Stock to be
exchanged for Existing Preferred Stock would not, upon receipt, be tradeable by
the holders thereof without restriction under the Securities Act and the
Exchange Act and without material restrictions under the applicable Blue Sky or
state securities laws, (ii) the Company is not permitted to effect the C Note
Exchange Offer or the Preferred Stock Exchange Offer, whichever applicable,
because of any change in law or in applicable interpretations thereof by the
staff of the Commission, (iii) the C Note Exchange Offer or the Preferred Stock
Exchange Offer, whichever applicable, is not consummated within 240 days of the
date of issuance of the Series C Notes and Existing Preferred Stock, (iv) under
certain circumstances, upon the request of the Initial Purchasers, or (v) any
holder of Series C Notes or Existing Preferred Stock, whichever applicable, is
not eligible to participate in the C Note Exchange Offer or the Preferred Stock
Exchange Offer, whichever applicable, or, in the case of any holder of Series C
Notes or Existing Preferred Stock that participates in the C Note Exchange Offer
or the Preferred Stock Exchange Offer, whichever applicable, such holder does
not receive freely tradable New Notes or New Preferred Stock upon consummation
of the C Note Exchange Offer or the Preferred Stock Exchange Offer, whichever
applicable, (other than due solely to the status of such holder as an affiliate
of the Company or any Guarantor within the meaning of the Securities Act) and
such holder notifies the Company within six months of the consummation of the
exchange.
In the event that the Company is obligated to file a "shelf" registration
statement, it may be required to keep such "shelf" registration statement
effective for at least three years. Other than as set forth in this paragraph,
no holder will have the right to participate in the "shelf" registration
statement nor otherwise to require that the Company register such holder's
Existing Securities under the Securities Act. See "-- Procedures for Tendering."
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<PAGE> 44
In order to participate in an Exchange Offer, a holder must represent to
the Company, among other things, that (i) the New Securities acquired pursuant
to such Exchange Offer are being obtained in the ordinary course of business of
the person receiving such New Securities, whether or not such person is the
holder of the Existing Securities, (ii) neither the holder nor any such other
person has an arrangement or understanding with any person to participate in the
distribution of such New Securities within the meaning of the Securities Act,
(iii) neither the holder nor any such other person is an "affiliate," as defined
under Rule 405 promulgated under the Securities Act, of the Company or any
Guarantor, or if it is an affiliate, such holder or such other person will
comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable, (iv) if such holder or other person is
not a broker-dealer, neither the holder nor any such other person is engaged in
or intends to engage in the distribution of such New Securities, and (v) if such
holder or other person is a broker-dealer, that it will receive New Securities
for its own account in exchange for Existing Securities that were acquired as a
result of market-making activities or other trading activities and that it will
be required to acknowledge that it will deliver a prospectus in connection with
any resale of such New Securities.
Based on an interpretation by the Commission's staff set forth in no-action
letters issued to third-parties unrelated to the Company or any of the
Guarantors, the Company believes that, with the exceptions set forth below, New
Securities issued pursuant to the Exchange Offers in exchange for Existing
Securities may be offered for resale, sold and otherwise transferred by any
person receiving such New Securities, whether or not such person is the holder
(other than any such holder or such other person which is an "affiliate" of the
Company or any of the Guarantors 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 (i) the New Securities are
acquired in the ordinary course of business of that holder or such other person,
(ii) neither the holder nor such other person is engaging in or intends to
engage in a distribution of the New Securities, and (iii) neither the holder nor
such other person has an arrangement or understanding with any person to
participate in the distribution of the New Securities. Any holder who tenders in
an Exchange Offer for the purpose of participating in a distribution of New
Securities cannot rely on this interpretation by the Commission's staff and must
comply with the registration and prospectus delivery requirements of the
Securities Act in connection with a secondary resale transaction. Each
broker-dealer that receives New Securities for its own account in exchange for
Existing Securities, where the Existing Securities were acquired by that
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such New Securities. See "Plan of Distribution."
CONSEQUENCES OF FAILURE TO EXCHANGE
Following the completion of the Exchange Offers, holders of Series C Notes
and Existing Preferred Stock not tendered will not have any further registration
rights (except in certain circumstances as set forth above with respect to shelf
registration (See "-- Purpose and Effect")) and those securities will continue
to be subject to the existing restrictions on transfer. Accordingly, the
liquidity of the market for a holder's Existing Securities could be adversely
affected upon completion of the Exchange Offers if the holder does not
participate in the Exchange Offers.
TERMS OF THE C NOTE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the C Note Letter of Transmittal (which together constitute the C Note
Exchange Offer), the Company will accept for exchange Series C Notes properly
tendered prior to the C Note Expiration Date and not withdrawn as permitted
below. As used herein, the term "C Note Expiration Date" means 5:00 p.m., New
York City time, on , 1998; provided, however, that if the Company
has extended the period of time for which the C Note Exchange Offer is open, the
term "C Note Expiration Date" shall mean the latest time and date to which the C
Note Exchange Offer is extended.
The form and terms of the New Notes will be substantially the same as the
form and terms of the Series C Notes except that (i) interest on the New Notes
will accrue from the most recent date to which interest has been paid on the
Series C Notes surrendered in exchange therefor or, if no interest has been paid
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<PAGE> 45
on the Series C Notes, from May 15, 1998 and (ii) the New Notes are being
registered under the Securities Act and will not bear legends restricting their
transfer. The New Notes will evidence the same debt as the Series C Notes and
will be issued pursuant to, and entitled to benefits of the Indenture.
As of the date of this Prospectus, Series C Notes representing $20,000,000
aggregate principal amount are outstanding. This Prospectus, together with the C
Note Letter of Transmittal is being sent to all holders of the Series C Notes
known to the Company. The Company's obligation to accept Series C Notes for
exchange pursuant to the C Note Exchange Offer is subject to certain conditions
as set forth under "-- Certain Conditions to the Exchange Offer" below.
The Company shall be deemed to have accepted validly tendered Series C
Notes when as and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering holders
of Series C Notes for the purposes of receiving the New Notes from the Company.
The Company expressly reserves the right, at any time or from time to time,
to extend the period of time during which the C Note Exchange Offer is open and
thereby delay acceptance for any exchange of any Series C Notes, by giving
notice of such extension to the Exchange Agent and the holders thereof. During
any such extension, all Series C Notes previously tendered will remain subject
to the C Note Exchange Offer and may be accepted for exchange by the Company.
Any Series C 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 C Note Exchange Offer.
The Company reserves the right, in its sole discretion, (i) to delay
accepting any Series C Notes, (ii) to extend the C Note Exchange Offer, or (iii)
if any conditions set forth below under "-- Certain Conditions to the Exchange
Offers" shall not have been satisfied, to terminate the C Note Exchange Offer by
giving oral or written notice of such delay, extension or termination to the
Exchange Agent. Any such delay in acceptance, extension, termination or
amendment will be followed as promptly as practicable by oral or written notice
thereof to the registered holders. If the C Note Exchange Offer is amended in a
manner determined by the Company to constitute a material change, the Company
will promptly disclose such amendment by means of a prospectus supplement that
will be distributed to the registered holders, and the Company will extend the C
Note Exchange Offer for a period of five to 10 business days, depending upon the
significance of the amendment and the manner of disclosure to the registered
holders, if the C Note Exchange Offer would otherwise expire during such five to
10 business day period.
Holders of Series C Notes do not have any appraisal or dissenters' rights
under the Delaware Corporation Law in connection with the C Note Exchange Offer.
The Company intends to conduct the C Note Exchange Offer in accordance with the
provisions of the Notes Registration Rights Agreement and the applicable
requirements of the Securities Act, the Exchange Act and the rules and
regulations of the Commission thereunder.
TERMS OF THE B NOTE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the B Note Letter of Transmittal (which together with the Prospectus
constitute the B Note Exchange Offer), the Company will accept for exchange
Series B Notes properly tendered prior to the B Note Expiration Date and not
withdrawn as permitted below. As used herein, the term "B Note Expiration Date"
means 5:00 p.m., New York City time, on , 1998; provided,
however, that if the Company has extended the period of time for which the B
Note Exchange Offer is open, the term "B Note Expiration Date" shall mean the
latest time and date to which the B Note Exchange Offer is extended.
The form and terms of the New Notes will be substantially the same as the
form and terms of the Series B Notes except that interest on the New Notes will
accrue from the most recent date to which interest has been paid on the Series B
Notes surrendered in exchange therefor. The New Notes will evidence the same
debt as the Series B Notes and will be issued pursuant to, and entitled to the
benefits of the Indenture.
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<PAGE> 46
As of the date of this Prospectus, Series B Notes representing $130,000,000
aggregate principal amount are outstanding. This Prospectus, together with the B
Note Letter of Transmittal is being sent to all holders of the Series B Notes
known to the Company. The Company's obligation to accept Series B Notes for
exchange pursuant to the B Note Exchange Offer is subject to certain conditions
as set forth under "-- Certain Conditions to the Exchange Offer" below.
The Company shall be deemed to have accepted validly tendered Series B
Notes when as and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering holders
of Series B Notes for the purposes of receiving the New Notes from the Company.
The Company expressly reserves the right, at any time or from time to time,
to extend the period of time during which the B Note Exchange Offer is open and
thereby delay acceptance for any exchange of any Series B Notes, by giving
notice of such extension to the Exchange Agent and the holders thereof. During
any such extension, all Series B Notes previously tendered will remain subject
to the B Note Exchange Offer and may be accepted for exchange by the Company.
Any Series B 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 B Note Exchange Offer.
The Company reserves the right, in its sole discretion, (i) to delay
accepting any Series B Notes, (ii) to extend the B Note Exchange Offer, or (iii)
if any conditions set forth below under "-- Certain Conditions to the Exchange
Offers" shall not have been satisfied, to terminate the B Note Exchange Offer by
giving oral or written notice of such delay, extension or termination to the
Exchange Agent. Any such delay in acceptance, extension, termination or
amendment will be followed as promptly as practicable by oral or written notice
thereof to the registered holders. If the B Note Exchange Offer is amended in a
manner determined by the Company to constitute a material change, the Company
will promptly disclose such amendment by means of a prospectus supplement that
will be distributed to the registered holders, and the Company will extend the B
Note Exchange Offer for a period of five to 10 business days, depending upon the
significance of the amendment and the manner of disclosure to the registered
holders, if the B Note Exchange Offer would otherwise expire during such five to
10 business day period.
Holders of Series B Notes do not have any appraisal or dissenters' rights
under the Delaware Corporation Law in connection with the B Note Exchange Offer.
The Company intends to conduct the B Note Exchange Offer in accordance with the
provisions of the Notes Registration Rights Agreement and the applicable
requirements of the Securities Act, the Exchange Act and the rules and
regulations of the Commission thereunder.
TERMS OF THE PREFERRED STOCK EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Preferred Stock Letter of Transmittal (which together constitute the
Preferred Stock Exchange Offer), the Company will accept for exchange Existing
Preferred Stock properly tendered prior to the Preferred Stock Expiration Date
and not withdrawn as permitted below. As used herein, the term "Preferred Stock
Expiration Date" means 5:00 p.m., New York City time, on , 1998;
provided, however, that if the Company has extended the period of time for which
the Preferred Stock Exchange Offer is open, the term "Preferred Stock Expiration
Date" shall mean the latest time and date to which the Preferred Stock Exchange
Offer is extended. The C Note Expiration Date, the B Note Expiration Date and
the Preferred Stock Expiration Date are hereinafter individually referred to as
an "Expiration Date."
As of the date of this Prospectus, Existing Preferred Stock representing
$20,000,000 aggregate liquidation preference amount was outstanding. This
Prospectus, together with the Preferred Stock Letter of Transmittal, is being
sent to all holders of Existing Preferred Stock known to the Company. The
Company's obligation to accept Existing Preferred Stock for exchange pursuant to
the Preferred Stock Exchange Offer is subject to certain conditions as set forth
under "-- Certain Conditions to the Exchange Offers" below.
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<PAGE> 47
The Company shall be deemed to have accepted validly tendered Existing
Preferred Stock when, as and if the Company has given oral or written notice
thereof to the Exchange Agent. The Exchange Agent will act as agent for the
tendering holders of Existing Preferred Stock for the purposes of receiving the
New Preferred Stock from the Company.
The Company expressly reserves the right, at any time or from time to time,
to extend the period of time during which the Preferred Stock Exchange Offer is
open, and thereby delay acceptance for any exchange of any Existing Preferred
Stock, by giving notice of such extension to the Exchange Agent and the holders
thereof. During any such extension, all Existing Preferred Stock previously
tendered will remain subject to the Preferred Stock Exchange Offer and may be
accepted for exchange by the Company. Any Existing Preferred Stock 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 Preferred Stock Exchange Offer.
The Company reserves the right in its sole discretion, (i) to delay
accepting any Existing Preferred Stock, (ii) to extend the Preferred Stock
Exchange Offer or (iii) if any conditions set forth below under "-- Certain
Conditions to the Exchange Offers" shall not have been satisfied, to terminate
the Preferred Stock Exchange Offer by giving oral or written notice of such
delay, extension or termination to the Exchange Agent. Any such delay in
acceptance, extension, termination or amendment will be followed as promptly as
practicable by oral or written notice thereof to the registered holders. If the
Preferred Stock Exchange Offer is amended in a manner determined by the Company
to constitute a material change, the Company will promptly disclose such
amendment by means of a prospectus supplement that will be distributed to the
registered holders, and the Company will extend the Preferred Stock Exchange
Offer for a period of five to 10 business days, depending upon the significance
of the amendment and the manner of disclosure to the registered holders, if the
Preferred Stock Exchange Offer would otherwise expire during such five to 10
business day period.
Holders of Existing Preferred Stock do not have any appraisal or
dissenter's rights under the Delaware Corporation Law in connection with the
Preferred Stock Exchange Offer. The Company intends to conduct the Preferred
Stock Exchange Offer in accordance with the provisions of the Preferred Stock
Registration Rights Agreement and the applicable requirements of the Securities
Act, the Exchange Act and the rules and regulations of the Commission
thereunder.
PROCEDURES FOR TENDERING
Only a registered holder of Existing Securities may tender the Existing
Securities in an Exchange Offer. Except as set forth under "-- Book Entry
Transfer," to tender in an Exchange Offer a holder must complete, sign and date
the Letter of Transmittal applicable to such Exchange Offer, or a copy thereof,
have the signatures thereon guaranteed if required by such Letter of
Transmittal, and mail or otherwise deliver such Letter of Transmittal or copy to
the Exchange Agent prior to the Expiration Date for such Exchange Offer. In
addition, either (i) certificates for such Existing Securities must be received
by the Exchange Agent along with the Letter of Transmittal applicable to such
Exchange Offer, or (ii) a timely confirmation of a book-entry transfer (a
"Book-Entry Confirmation") of such Existing Securities, if that procedure is
available, into the account of the Exchange Agent for such Exchange Offer at the
Depository (the "Book-Entry Transfer Facility") pursuant to the procedure for
book-entry transfer described below, must be received by such Exchange Agent
prior to the Expiration Date, or (iii) the Holder must comply with the
guaranteed delivery procedures described below. To be tendered effectively, a
Letter of Transmittal and other required documents must be received by the
Exchange Agent at its address set forth under "-- Exchange Agent" prior to the
Expiration Date.
The tender by a holder that is not withdrawn before the Expiration Date
will constitute an agreement between that holder and the Company in accordance
with the terms and subject to the conditions set forth herein and in the Letter
of Transmittal applicable to the Company's Exchange Offer.
THE METHOD OF DELIVERY OF EXISTING SECURITIES, A LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK
OF THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE
AN OVERNIGHT OR HAND DELIVERY SERVICE, PROP-
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ERLY INSURED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE DELIVERY
TO AN EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR
EXISTING SECURITIES SHOULD BE SENT TO THE COMPANY. HOLDERS MAY REQUEST THEIR
RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST COMPANIES, OR NOMINEES TO
EFFECT THESE TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner whose Existing Securities are registered in the name
of a broker, dealer, commercial bank, trust company, or other nominee and who
wishes to tender should contact the registered holder promptly and instruct the
registered holder to tender on the beneficial owner's behalf. If the beneficial
owner wishes to tender on the owner's own behalf, the owner must, prior to
completing and executing a Letter of Transmittal and delivering the owner's
Existing Securities, either make appropriate arrangements to register ownership
of the Existing Securities in the beneficial owner's name or obtain a properly
completed bond or stock power, whichever applicable, from the registered holder.
The transfer of registered ownership may take considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case maybe, must be guaranteed by an Eligible Institution (as defined below)
unless Existing Securities tendered pursuant thereto are tendered (i) by a
registered holder who has not completed the box entitled "Special Registration
Instructions" or "Special Delivery Instructions" on such Letter of Transmittal
or (ii) for the account of an Eligible Institution. If signatures on a Letter of
Transmittal or a notice of withdrawal, as the case may be, are required to be
guaranteed, the guarantee must be by any eligible guarantor institution that is
a member of or participant in the Securities Transfer Agents Medallion Program,
the New York Stock Exchange Medallion Signature Program, the Stock Exchange
Medallion Program, or an "eligible guarantor institution" within the meaning of
Rule 17Ad-15 under the Exchange Act (an "Eligible Institution").
If a Letter of Transmittal is signed by a person other than the registered
holder of any Existing Securities listed therein, the Existing Securities must
be endorsed or accompanied by a properly completed bond or stock power,
whichever applicable, signed by the registered holder as that registered
holder's name appears on the Existing Securities.
If a Letter of Transmittal or any Existing Securities or bond or stock
power 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
evidence satisfactory to the Company of their authority to so act must be
submitted with such Letter of Transmittal unless waived by the Company.
The Exchange Agent and the DTC have confirmed that any financial
institution that is a participant in the Depositary's system may utilize the
DTC's Automated Tender Offer Program to tender Existing Securities.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance, and withdrawal of tendered Existing Securities will be
determined by the Company in its sole discretion, which determination will be
final and binding. The Company reserves the absolute right to reject any and all
Existing Securities not properly tendered or any Existing Securities the
acceptance of which would, in the opinion of counsel for such Company, be
unlawful. The Company also reserves the right to waive any defects,
irregularities, or conditions of tender as to particular Existing Securities.
The Company's interpretation of the terms and conditions of its Exchange Offer
(including the instructions in a Letter of Transmittal) will be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Existing Securities must be cured within such time as
the Company shall determine. Although the Company intends to notify holders of
defects or irregularities with respect to tenders of Existing Securities,
neither the Company, the Exchange Agent, nor any other person shall incur any
liability for failure to give such notification. Tenders of Existing Securities
will not be deemed to have been made until such defects or irregularities have
been cured or waived. Any Existing Securities received by an Exchange Agent that
are not properly tendered and as to which the defects or irregularities have not
been cured or waived will be returned by such Exchange Agent to the tendering
holders,
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unless otherwise provided in the Letter of Transmittal accompanying such
Existing Securities, as soon as practicable following the Expiration Date.
In addition, the Company reserves the right in its sole discretion to
purchase or make offers for any Existing Securities that remain outstanding
after the Expiration Date or, as set forth under "-- Conditions to the Exchange
Offers," to terminate its Exchange Offer and, to the extent permitted by
applicable law, purchase Existing Securities in the open market, in privately
negotiated transactions, or otherwise. The terms of any such purchases or offers
could differ from the terms of the Company's Exchange Offer.
By tendering, each holder will represent to the Company that, among other
things, (i) the New Securities acquired pursuant to such Exchange Offer are
being obtained in the ordinary course of business of the person receiving such
New Securities, whether or not such person is the holder of the Existing
Securities, (ii) neither the holder nor any such other person has an arrangement
or understanding with any person to participated in the distribution of such New
Securities within the meaning of the Securities Act, (iii) the holder or such
other person acknowledges and agrees that any person who is a broker-dealer
registered under the Exchange Act or is participating in the Exchange Offer for
the purposes of distributing the New Securities must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale transaction of the New Securities acquired by
such person and cannot rely on the position of the staff of the Commission set
forth in certain no-action letters, (iv) the holder or such other person
understands that a secondary resale transaction described in clause (iii) above
and any resale of New Securities obtained by such holder or other person in
exchange for Existing Securities acquired by such holder or other person
directly from the Company should be covered by an effective registration
statement containing the selling securityholder information required by Item 507
or Item 508, as applicable, of Regulation S-K of the Commission, and (v) neither
the holder nor any such other person is an "affiliate," as defined under Rule
405 promulgated under the Securities Act, of the Company or any Guarantor. The
Company shall be deemed to have accepted properly tendered Existing Securities
when, as and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering holders
for the purpose of receiving the New Securities from the Company.
In all cases, issuance of New Securities for Existing Securities that are
accepted for exchange pursuant to an Exchange Offer will be made only after
timely receipt by the Exchange Agent of certificates for such Existing
Securities or a timely Book-Entry Confirmation of such Existing Securities into
Exchange Agent's account at the Book-Entry Transfer Facility, a properly
completed and duly executed Letter of Transmittal (or, with respect to the
Depositary and its participants, electronic instructions in which the tendering
holder acknowledges its receipt of and agreement to be bound by the Letter of
Transmittal for such Exchange Offer) and all other required documents. If any
tendered Existing Securities are not accepted for any reason set forth in the
terms and conditions of the Exchange Offer for such Existing Securities or if
Existing Securities are submitted for a greater principal amount or liquidation
preference amount than the holder desires to exchange, such unaccepted or
non-exchanged Existing Securities will be returned without expense to the
tendering Holder thereof (or, in the case of Existing Securities 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 Existing Securities will be credited to an account maintained with
such Book-Entry Transfer Facility) as promptly as practicable after the
expiration or termination of the Exchange Offer for such Existing Securities.
BOOK-ENTRY TRANSFER
The Exchange Agent will make requests to establish accounts with respect
the Existing Securities at the Book-Entry Transfer Facility for purposes of the
Exchange Offers within two business days after the date of this Prospectus, and
any financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of the Existing Securities being
tendered by causing the Book-Entry Transfer Facility to transfer such Existing
Securities into the Exchange Agent's account for such Existing Securities at the
Book-Entry Transfer Facility in accordance with such Book-Entry Transfer
Facility's procedures for transfer. However, although delivery of Existing
Securities may be effected through book-entry transfer at the Book-Entry
Transfer Facility, a Letter of Transmittal or copy thereof, with any required
signature guarantees
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and any other required documents, must, in any case other than as set forth in
the following paragraph, be transmitted to and received by the Exchange Agent at
its address set forth under "-- Exchange Agent" on or prior to the Expiration
Date or the guaranteed delivery procedures described below must be complied
with.
DTC's Automated Tender Offer Program ("ATOP") is the only method of
processing exchange offers through DTC. To accept an Exchange Offer through
ATOP, participants in DTC must send electronic instructions to DTC through DTC's
communication system in place of sending a signed, hard copy Letter of
Transmittal. DTC communicates those electronic instructions to the Exchange
Agent. To tender Existing Securities through ATOP, the electronic instructions
sent to DTC and transmitted by DTC to the Exchange Agent must contain the
participant acknowledgment of its receipt of and agreement to be bound by the
Letter of Transmittal for such Existing Securities.
GUARANTEED DELIVERY PROCEDURES
If a registered holder of Existing Securities desires to tender such
Existing Securities and the Existing Securities are not immediately available,
or time will not permit such holder's Existing Securities 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 completed 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
transmission, mail or hand delivery), setting forth the name and address of the
holder of such Existing Securities and the amount of Existing Securities
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 Existing Securities, in proper form for transfer, or a
Book-Entry Confirmation, as the case may be, and any other documents required by
the applicable Letter of Transmittal will be deposited by the Eligible
Institution with the appropriate Exchange Agent, and (iii) the certificates for
all physically tendered Existing Securities, in proper form for transfer, or a
Book-Entry Confirmation, as the case may be, and all other documents required by
the applicable Letter of Transmittal, are received by the Exchange Agent within
five NYSE trading days after the date of execution of the Notice of Delivery.
WITHDRAWAL RIGHTS
Tenders of Existing Securities may be withdrawn at any time prior to 5:00
p.m., New York City time, on the applicable Expiration Date.
For a withdrawal of a tender of Existing Securities to be effective, a
written or (for DTC participants) electronic ATOP transmission notice of
withdrawal must be received by the Exchange Agent at its address set forth in
this prospectus prior to 5:00 p.m., New York City time, on the Expiration Date.
Any such notice of withdrawal must (i) specify the name of the person having
deposited the Existing Securities to be withdrawn (the "Depositor"), (ii)
identify the Existing Securities to be withdrawn (including the certificate
number or numbers and principal amount of such Existing Securities), (iii) be
signed by the holder in the same manner as the original signature on the Letter
of Transmittal by which such Existing Securities were tendered (including any
required signature guarantees) or be accompanied by documents of transfer
sufficient to have the Trustee of such Existing Securities register the transfer
of such Existing Securities into the name of the person withdrawing the tender,
and (iv) specify the name in which any such Existing Securities are to be
registered, if different from that of the holder who tendered such Existing
Securities. 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 Existing Securities
so withdrawn will be deemed not to have been validly tendered for exchange for
purposes of the Exchange Offer relating to such Existing Securities. Any
Existing Securities 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 as soon as practicable after withdrawal, rejection of tender, or
termination of the Exchange Offer relating to such
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Existing Security. Properly withdrawn Existing Securities may be retendered by
following one of the procedures under "-- Procedures for Tendering" at any time
on or prior to the applicable Expiration Date.
CONDITIONS TO THE EXCHANGE OFFERS
Notwithstanding any other provision of the Exchange Offers, the Company
shall not be required to accept for exchange, or to issue New Securities in
exchange for, any Existing Securities and may terminate or amend the Company's
Exchange Offers if at any time before the acceptance of such Existing Securities
for exchange or the exchange of the New Securities for such Existing Securities,
the Company determines that its 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 sole discretion. The failure by the Company at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be asserted
at any time and from time to time.
In addition, the Company will not accept for exchange any Existing
Securities tendered, and no New Securities will be issued in exchange for any
such Existing Securities, 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 relating to the
Company's Existing Securities 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
All executed Letters of Transmittal should be directed to the Exchange
Agent. The United States Trust Company of New York has been appointed as the
Exchange Agent. Questions, requests for assistance and requests for additional
copies of the Prospectus or the Letter of Transmittal should be directed to the
Exchange Agent addressed as follows:
To: THE UNITED STATES TRUST COMPANY OF NEW YORK,
<TABLE>
<S> <C> <C>
By Overnight Courier Or By By Hand Up to 4:30 PM: By Registered Or
Hand After 4:30 PM on the Certified Mail:
Expiration Date Only: United States Trust Company
of New York United States Trust Company of
United States Trust Company 111 Broadway Lower Level New York
of New York New York, New York 10006 P.O. Box 844, Cooper Station
770 Broadway, 13th Floor Attn: Corporate Trust Services New York, New York
New York, New York 10003 10276-0844
Attn. Corporate Trust Services By Facsimile: Attn: Corporate Trust Services
Telephone: (800) 548-6565 United States Trust Company Telephone: (800) 548-6565
Facsimile: (212) 780-0592 of New York Facsimile: (212) 780-0592
(212) 420-6152
Attn: Corporate Trust Services
Confirm by Telephone:
(800) 548-6565
</TABLE>
FEES AND EXPENSES
The Company will not make any payments to brokers, dealers, or others
soliciting acceptances of the Exchange Offers. 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.
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The expenses to be incurred in connection with the Exchange Offers will be
paid by the Company. Such expenses include fees and expenses of the Trustee for
the Existing Notes and the Registrar and Transfer Agent for the Existing
Preferred Stock, accounting, legal, printing, and related fees and expenses.
TRANSFER TAXES
Holders who tender their Existing Securities for exchange will not be
obligated to pay any transfer taxes in connection therewith except that holders
who instruct the Company to register New Securities in the name of, or request
that Existing Securities not tendered or not accepted in an 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.
ACCOUNTING TREATMENT
The New Securities will be recorded at the same carrying value as the
Existing Securities, which is the principal amount or the liquidation
preference, whichever applicable, 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 debt issuance costs will be capitalized for
accounting purposes.
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
RELATING TO THE EXCHANGE OFFERS
The following discussion summarizes certain United States Federal income
tax consequences of the Exchange Offers to a holder of Existing Securities that
is an individual citizen or resident of the United States or a United States
corporation that purchased Existing Securities 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. The following relates only to the
Existing Securities, and the New Securities received therefor, that are held by
U.S. Holders as "capital assets" within the meaning of Section 1221 of the Code.
It does not discuss state, local or foreign tax consequences, nor does it
discuss tax consequences to subsequent purchasers (persons who did not purchase
the Existing Securities pursuant to their original issue), or 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 Internal Revenue Service with respect to the
Federal income tax consequences of the Exchange Offers.
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 EXISTING
SECURITIES FOR NEW SECURITIES. 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 EXISTING
SECURITIES FOR NEW SECURITIES.
THE EXCHANGE OFFER
The exchange of Existing Securities pursuant to the Exchange Offer should
be treated as a continuation of the corresponding Existing Securities for
federal income tax purposes (or, in the case of the Existing Preferred Stock, as
a recapitalization of the Existing Preferred Stock for New Preferred Stock).
Accordingly, (i) no gain or loss should be realized by a U.S. Holder upon
receipt of a New Security, (ii) the holding period of the New Security should
include the holding period of the Existing Security exchanged therefor and (iii)
the adjusted tax basis of the New Security should be the same as the adjusted
tax basis of the Existing Security exchanged therefor immediately before the
exchange. For further discussion of the Federal income tax consequences of
holding the New Securities, see "Certain Federal Income Tax Considerations."
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BUSINESS
GENERAL
CLARK is a leading international designer, manufacturer, and marketer of a
complete line of forklift trucks, including internal combustion trucks, electric
riders, narrow aisle stackers and powered hand trucks. The Company invented the
platform forklift truck in 1917 and has since established CLARK as one of the
most recognized brand names of forklift trucks in North America. Management
believes that CLARK has the largest installed fleet in North America with over
250,000 units and has a total of approximately 350,000 units in operation
worldwide. This large installed fleet has allowed CLARK to generate significant
ongoing replacement parts sales, which typically generate substantially higher
gross margins and provide a more stable revenue base than new forklift truck
sales. CLARK manufactures its products through five facilities in the United
States, Europe and Canada and distributes its products to a diverse customer
base through a global network of approximately 300 dealers from more than 560
locations. In addition, the Company's Blue Giant subsidiaries distribute their
products through a network of over 350 North American dealers and agents. For
the LTM period, on a pro forma basis, CLARK generated net sales of $534.1
million and EBITDA (as defined) of $36.5 million.
Since 1993, CLARK has undertaken a series of initiatives aimed at reducing
fixed costs, developing a largely variable cost structure and offering a highly
competitive product portfolio. Specifically, the Company (i) eliminated
redundant manufacturing and distribution facilities, (ii) reduced head-count,
(iii) eliminated non-core unprofitable product lines, and (iv) improved
outsourcing of certain manufacturing operations. In addition to cost
rationalization, the Company made a series of new product introductions allowing
it to offer one of the most modern product portfolios in the industry. CLARK's
product development strategy emphasizes (i) product innovations and improvements
to meet the evolving needs of CLARK's customer base and (ii) lowering production
costs through better design, thereby enhancing margins. As a result of these
initiatives, the Company increased its EBITDA (as defined) by $26.2 million from
$10.3 million in fiscal 1994 to $36.5 million on a pro forma basis in the LTM
period. EBITDA (as defined) consistently increased during this period despite a
declining forklift market in 1996 relative to 1995.
For information concerning the Company's backlog orders, see "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Backlog."
The Company's principal business office and headquarters in North America
is located at 172 Trade Street, Lexington, Kentucky 40511 and its telephone
number is (606) 288-1200. The Company's principal business office and
headquarters in Europe is located at 19-23 Rheinstrass, Mulheim, Germany, and
its telephone number is 011-49-208-588-1201.
BUSINESS STRATEGY
Management believes that CLARK's strong brand name, extensive distribution
network, modern product portfolio and streamlined fixed cost structure provide a
strong foundation for increased growth and profitability. The Company's
operating strategy focuses on the following key components:
Introduce New Products. The Company's new product introduction strategy is
based on the Genesis(R) forklift truck platform which was introduced in December
1994. The purpose of the Genesis(R) forklift truck design was to develop a
production platform which reduced the number of parts used in each model, used
like parts in various forklift models and enhanced functionality of operation.
As a result of the Genesis(R) model, the Company achieved purchasing
efficiencies from its vendors and streamlined the production process, which
resulted in significantly reduced production costs and enhanced margins. Due to
the wide customer acceptance of the Genesis(R) truck and the significantly
reduced production costs relative to its predecessor models, the Company has
introduced four completely redesigned electric riders and five new IC forklift
models based on the Genesis(R) platform. CLARK's new product development
pipeline is focused on lower cost, enhanced feature products, extending the
Genesis(R) platform to the few remaining older models in its product offering
and improving the performance of its electric powered hand truck designs. Each
of these new products is designed to reduce production costs and increase
margins. In addition, the Company's engineering team is
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continuously working toward achieving increased production efficiencies and
reduced manufacturing costs through improved design. In addition, the Company
seeks to acquire businesses which offer complementary product lines that can be
sold through the Company's existing global network. For example, in 1997 the
Company acquired Blue Giant, which designs and manufactures a successful product
line of powered handtrucks, dock equipment and scissor lifts. Similarly, the
Company expects to significantly increase the distribution of the value priced
Samsung Forklift product line by leveraging the Company's global distribution
network, especially in North and South America. In addition, Samsung Forklift
will further expand the Company's product line in the entry level segment for IC
forklift truck models.
Augment the Distribution Network. CLARK distributes its products to a
diverse customer base through a global network of approximately 300 dealers from
more than 560 locations, with a majority in North America and Europe. Management
is focusing on enhancing the performance of its distribution network by offering
various incentive packages and support programs, replacing underperforming
dealers and adding new dealers in selected geographic areas. Since 1993, the
number of units exported to CLARK's international customers has more than
tripled from 689 to over 2,400 in 1997. The Company intends to continue
expanding the dealer base of its international operations, and management
believes that the Company is well positioned for continued growth in the
African, Middle Eastern, Caribbean and South American markets.
Improve Aftermarket Parts Sales. CLARK's worldwide installed fleet of
approximately 350,000 forklift trucks generates an estimated $240.0 million in
annual global aftermarket parts sales, of which CLARK has historically captured
an estimated 40% share. Management plans to increase the Company's share of
these high margin sales in North America and Europe as a result of the
introduction of the Totalift(TM) and PartsPro(TM) software systems and the
addition of a parts marketing manager at CLARK Europe. In 1998, the Company
developed the Totalift(TM) system which was designed as a parts database of
major competitor forklift brands and models. Management believes that the
Totalift(TM) system will allow the Company to increase its aftermarket parts
sales by supplying parts for all of the CLARK and competitor forklift trucks.
Also in 1998, the Company introduced PartsPro(TM), which provides the Company's
dealers with an advanced parts identification system that enables suppliers to
place on-line orders with CLARK, prepare quotes for customers and track work
orders by customer.
Further Reduce Product Cost. Although CLARK has made significant progress
in reducing its operating costs, management believes that ongoing opportunities
exist to improve profitability by reducing material costs. In 1997, material
costs amounted to over 80% of the cost of goods sold. Management plans to
continue to reduce the Company's material costs and increase purchasing
efficiencies, thereby enhancing its gross margins, through (i) the introduction
of new product designs that increase commonality of parts among different lift
truck models and reduce the overall number of parts and components, thereby
improving manufacturing and (ii) the further reduction of the number of
suppliers to increase volume discounts. Management believes that these
initiatives should also result in more timely delivery from suppliers, thereby
reducing costly manufacturing disruptions and the Company's working capital
investment.
PRODUCTS
CLARK currently offers over 100 truck designs within five major product
lines: light IC trucks (with a capacity of 1.0 to 5.0 tons), heavy IC trucks
(with a capacity of 5.5 to 17.5 tons), narrow-aisle trucks (with a capacity of
1.5 to 2.5 tons), electric counterbalanced riders (with a capacity of 1.3 to 6.0
tons) and manual and powered hand trucks (with a capacity of 2.0 to 4.0 tons).
Light IC trucks are used for general warehousing needs and are generally
powered by liquid propane. Such trucks are well suited for manufacturing and
distribution applications which require a high degree of maneuverability. Heavy
IC trucks are specialty products designed for use in more demanding situations
such as heavy manufacturing or container handling applications. Narrow-aisle
trucks provide solutions for high density storage needs and operate in six to
eight foot aisles and reach heights of more than 30 feet. Electric
counterbalanced riders are designed for indoor use in warehousing,
manufacturing, distribution and other applications and are powered by a
rechargeable electric battery. As a result of the increasing focus on the
environment, electric riders have become increasingly popular. Management
estimates that light IC trucks,
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heavy IC trucks, narrow-aisle trucks and electric counterbalanced riders
represent approximately 58%, 3%, 15% and 24%, respectively, of the unit volume
of the forklift truck industry, as reported by industry sources. Powered hand
trucks are generally used in the transportation and order-selecting businesses.
CLARK tailors its products to meet customers' particular material handling
needs. To further meet these needs, CLARK adds attachments such as container
handlers, side shifters, roll clamps, block handlers, carton clamps, push-pulls
(slip-sheet) and fork positioners.
The Company's new product introduction strategy is based on the Genesis(R)
forklift truck platform which was introduced in December 1994. The purpose of
the Genesis(R) forklift truck design was to develop a production platform which
reduced the number of parts used in each model, using like parts in various
forklift models and enhanced functionality of operation. As a result of the
Genesis(R) model, the Company achieved purchasing efficiencies from its vendors
and streamlined the production process, which resulted in significantly reduced
production costs, enhanced margins and increased the return on research and
development expenditures. Due to the wide customer acceptance of the Genesis(R)
truck and the significantly reduced production costs relative to its predecessor
models, the Company has introduced four completely redesigned electric riders
and five new IC forklift models based on the Genesis(R) platform. CLARK's new
product development pipeline is focused on lower cost, enhanced feature
products, extending the Genesis(R) platform to the few remaining older models in
its product offering and improving the performance of its electric powered hand
truck designs. Each of these new products is designed to reduce production costs
and increase margins. In addition, the Company's engineering team is
continuously working toward achieving increased production efficiencies and
reduced manufacturing costs through improved design.
Since 1993, CLARK has redesigned a substantial portion of its product line.
In December 1994, CLARK introduced the 2-3 ton Genesis(R) IC truck targeting the
light IC market. CLARK invested approximately $15.0 million to develop the
Genesis(R) truck. The Genesis(R) truck provides improved ergonomics,
performance, reliability and serviceability, and provides higher gross margins
than its predecessor primarily due to its lower production cost.
CLARK Europe introduced the Genesis(R) 2-3 ton gas and diesel MegaStat(TM)
model in April 1995. The Genesis(R) 2-3 ton MegaStat(TM) IC received the
"General Lift Truck Innovation" award in 1996 from the Fork Truck Association in
the United Kingdom. In 1996, CLARK continued to expand its Genesis(R) family
with the addition of a 4-5.5 ton pneumatic tired IC lift truck, and a 2-3.2 ton
electric four-wheel sit down rider. CLARK has also made significant additions to
its narrow aisle stackers product line which was expanded to include double
reach and straddle models.
During 1997, CLARK added three more trucks to its Genesis(R) family, a
4.0-5.0 ton cushion tired IC lift truck, a 6.0-7.0 ton cushion tired IC lift
truck, and a 1.2-2.5 ton three wheel electric sit down rider. CLARK also
expanded its Genesis(R) heart-of-the-line 2-3 ton IC trucks by increasing the
capacity to 3.2 tons and adding a 3.0 liter GM engine option. A new 80V AC
electric drive 2-3.5 ton Mega AC(TM) truck was also introduced. CLARK Europe
also introduced its MegaValve(TM) forklift trucks that are electronically
controlled and allow for "joystick" operation. These new products generate
higher gross margins than their predecessor models.
CLARK's product introductions in 1998 include a 10-16.4 ton IC pneumatic
tired truck, a re-powered and ergonomically enhanced narrow aisle reach truck
and, building on its introduction of MegaStat(TM) in Europe, a 1-2 ton
MegaStat(TM). In addition, in June 1998 CLARK began marketing the complete
Samsung Forklift product line worldwide. CLARK's new product development
pipeline is focused on lower cost, enhanced feature products, extending the
Genesis(R) platform to the few remaining older models in its product offering
and improving the performance of its electric powered hand truck designs.
In 1997, CLARK purchased HLT and Blue Giant. Blue Giant produces a full
line of CLARK branded manual and powered walkie pallet trucks and stackers and
continues to produce and sell under the Blue Giant name. HLT produces forklift
masts mainly for CLARK's own use.
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AFTERMARKET PARTS
Since the Company's inception, more than one million forklift trucks have
been manufactured by CLARK and its predecessors, and it currently has in service
approximately 350,000 trucks worldwide, with approximately 250,000 in North
America, 70,000 in Europe, and 30,000 in other international markets, generating
a substantial aftermarket parts business for CLARK. CLARK's worldwide installed
fleet of approximately 350,000 forklift trucks generates an estimated $240.0
million in annual global aftermarket parts sales, of which CLARK has
historically captured an estimated 40% share. CLARK supplies both original
equipment parts to fit CLARK brand forklifts and Totalift(R) parts to fit other
brands. CLARK's parts distribution operation undertakes purchasing and customer
services for aftermarket parts. CLARK distributes its aftermarket parts in North
America through a distribution center in Southaven, Mississippi, in Europe
through a warehouse located in Mulheim/Saarn, Germany and for the international
operations of CLARK, through two sales and distribution facilities located in
Seoul, South Korea and the State of Sao Paulo, Brazil. CLARK shares the
Southaven Facility with the Predecessor's Parent and, pursuant to the 1996
Acquisition, CLARK and the Predecessor's Parent entered into a Service Agreement
providing for the continued use by CLARK of such facility. For information
regarding the Service Agreement, see "Certain Relationships and Related
Transactions."
MANUFACTURING OPERATIONS
CLARK's Lexington, Kentucky facility produces both IC and electric
forklifts with lift capacities ranging from 1-16.4 tons and is equipped with
four assembly lines and one heavy IC assembly bay. The Lexington facility is
primarily an assembly operation with welding and painting capabilities, operates
one shift per day, and produces an average of 60 lift trucks per day. The
Lexington facility is ISO-9001 certified, which indicates that the Company has
implemented a system to ensure a high degree of quality and consistency with
respect to its products.
CLARK Europe's Mulheim manufacturing facility produces both IC forklifts
(Diesel, LP gas and natural gas) with hydrodynamic as well as electronically
controlled hydrostatic drive (MegaStat(TM)) and electric powered forklifts
equipped with D/C as well as frequency-controlled A/C motors (MegaAC(TM)) in the
capacity range of 1-5 tons. The Mulheim facility is equipped with four assembly
lines, one for electric trucks, two for IC trucks and one for uprights. The
manufacturing process includes pre-production and welding production of frames
and uprights and a powder dry paint system was recently installed to ensure
high-quality painting of frames and uprights. CLARK Europe's facility currently
operates one shift per day and produces an average of 26 lift trucks per day.
The Mulheim facility has also been awarded ISO-9001 certification.
Blue Giant has two facilities, one in Pell City, Alabama, and one in
Brampton, Ontario, Canada. The Pell City, Alabama facility produces tow
tractors, pallet trucks and stackers and its capabilities include machining,
welding, painting and assembly. The Brampton, Ontario facility, produces dock
equipment and scissor lifts and its primary operations include machining and
welding. HLT is located in Wilmington, Ohio, and produces forklift masts in
support of the CLARK Lexington plant's forklift production. HLT's primary
operations are welding, painting and assembly and the facility operates two
shifts per day. The Brampton, Ontario and Wilmington, Ohio facilities are
ISO-9001 certified.
Pursuant to the Samsung Forklift Acquisition, CLARK has added the
213,000-square-foot Korean Plant in Changwon, South Korea to its manufacturing
operations. The Korean Plant, which will become a center for CLARK's Asia
Pacific operations, is currently being modified and is expected to be completed
by November 1998. In the interim period between the closing of the Samsung
Forklift Acquisition and the opening of the Korean Plant, CLARK Asia is
operating from Samsung Forklift's current manufacturing plant under the terms of
a transition services and lease agreement executed in connection with the
closing.
DEALER NETWORK
CLARK markets both original equipment and parts through a worldwide dealer
network of approximately 300 dealers from more than 560 locations. CLARK's
dealers and distributors generally market the full CLARK product line and
maintain comprehensive service capabilities. CLARK's sales organization coordi-
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nates sales and promotional activities, provides ongoing dealer training and
facilitates dealer communications. CLARK sells to a diversified customer base,
with no single customer accounting for more than 5% of total sales.
Blue Giant markets its products through a network of independent
distributors. Typically these distributors also sell forklifts (manufactured by
CLARK and other companies) and related equipment. Blue Giant has over 350 active
North American dealers and agents and approximately 44 international
distributors and agents including distributors in Mexico, the Caribbean, South
America, Europe and Asia/Pacific.
Management continues to enhance the performance of its dealer network by
offering various incentive packages and support programs, replacing
underperforming dealers and adding new dealers in selected geographic areas. The
number of units sold by the Company's international operations has more than
tripled from 689 in 1993 to over 2,400 in 1997. The Company intends to continue
expanding the dealer base of its international operations and management
believes the Company is well positioned for continued growth in the African,
Middle Eastern, Caribbean and South American markets.
SUPPLIERS
The Company strategically relies upon outside suppliers for a vast majority
of the individual components of a lift truck. Management believes that such
outsourcing allows CLARK greater flexibility in varying its cost structure in
response to changing market conditions.
Management believes that significant opportunities exist to improve
profitability by reducing its material costs. CLARK is consolidating its vendor
base to realize volume discounts and purchasing efficiencies. The Company
regularly evaluates its relationships with current and potential suppliers on
the basis of their ability to meet CLARK's requirements and standards. Since
January 1995, CLARK has reduced the number of its regular worldwide suppliers
from approximately 1,000 to 750 in 1997 (excluding the effect of the acquisition
of Blue Giant) and intends to further reduce this number.
Principal materials used by CLARK in its various manufacturing processes
include steel, castings, engines, tires, electric controls, uprights,
transaxles, motors and a variety of other fabricated or manufactured items.
While substantially all such materials are typically available from multiple
suppliers, CLARK depends upon certain suppliers of key parts used in its lift
trucks. From time to time, certain of CLARK's suppliers have experienced
difficulties in meeting CLARK's production schedules. See "Risk
Factors -- Dependence on Key Suppliers."
COMPETITION
The material handling business is highly competitive. CLARK produces one of
the leading forklift truck brands in North America, although NACCO Industries,
Inc. ("NACCO"), through its Hyster and Yale divisions, produces more forklift
trucks annually. In addition to NACCO, other major North American competitors in
both IC trucks and electric riders include Toyota Industrial Equipment, Inc.,
Mitsubishi Caterpillar Forklift America Inc., Nissan Forklift Corp. North
America, Komatsu Forklift USA Inc. and Daewoo and in electric riders include
Crown Equipment Corp. and Raymond Corporation. In Europe, CLARK competes with
Linde AG, the European market leader, as well as Jungheinreich AG, Toyota
Industrial Equipment, Inc. and NACCO. CLARK also competes with a number of
specialty manufacturers. See "Risk Factors -- Industry Cyclicality and
Substantial Competition."
INTELLECTUAL PROPERTY
The Company relies on a combination of trademarks, service marks, trade
names, patents, licensing arrangements, trade secrets, know-how and proprietary
technology to secure and protect its intellectual property rights. In
particular, the Company's CLARK(R), CLARKlift(R), Powrworker(R), Genesis(R) and
Blue Giant(R) trademarks are of particular importance to the Company's business.
The Company is currently undertaking to obtain trademark registrations for its
MegaValve(TM), MegaStat(TM) and MegaAC(TM) marks. The loss
52
<PAGE> 59
of the Company's rights under one or more of the Company's trademarks could have
a material adverse effect on the Company's business.
There can be no assurance that the Company will be successful in obtaining
approval of any present or future patent or trademark applications; that any
patents, patent applications and patent licenses will adequately cover the
Company's technologies or protect the Company from potential infringements by
third parties; that any nondisclosure and confidentiality agreements will
provide meaningful protection for the Company's trade secrets, know-how or
proprietary technology in the event of any unauthorized use or disclosure of
such information; or that others will not obtain access to, or independently
develop technologies or know-how similar to, that of the Company. There also can
be no assurance that future litigation by the Company will not be necessary to
enforce its trademark, patent and other proprietary rights, or to defend the
Company against claimed infringement of the rights of others, adverse
determinations of which could have a material adverse effect on the Company.
EMPLOYEES
As of August 1, 1998, CLARK's total work force worldwide consisted of
approximately 1,650 salaried, hourly and temporary employees. Of these
employees, 1,000 are in the Company's North American operations and 650 work in
the international operations.
On July 27, 1998, the Company received from the National Labor Relations
Board a petition by the United Steelworkers for an election at the Blue Giant
facility in Pell City, Alabama. On August 25, 1998, this petition was withdrawn
by the United Steelworkers. In addition, the United Steelworkers are presently
attempting to organize the employees at the Company's Lexington, Kentucky plant.
In the past, there have been repeated attempts by unions to organize employees
at the Lexington facility. However, to date, efforts to unionize the Company's
Kentucky plant have been unsuccessful. The Company plans to actively continue
its efforts to maintain and promote a non-union workforce in its facilities.
Since moving to Kentucky ten years ago, there has not been a union at any of
CLARK's North American manufacturing operations.
In Europe, the Mulheim facility is represented by the German Metal Workers
(Industrie Gewerkschaft Metal) and the aftermarket parts facility at
Mulheim/Saarn is represented by the German Union for Trading, Banking and
Insurance (Gewerkschaft Handel, Banken und Versicherungen). The Mulheim facility
has a total work force of approximately 300 employees, of which approximately
200 are members of the German Metal Workers. There are no contracts between
CLARK and the unions, but CLARK follows standard practices by complying with
contracts between the unions and the employers' association. The Company's sales
and administration offices in France and Spain employ approximately 90
employees, all of whom are non-union. CLARK Asia employs approximately 250
employees, all of whom are non-union employees.
The union employees of the Predecessor's Parent at the Southaven Facility
engaged in a labor dispute beginning in 1995, which had a short-term effect on
the Company's distribution operations at the facility but had no appreciable
effect on the conduct of business or results of operations. See "-- Aftermarket
Parts." Although such union employees filed a petition with the National Labor
Relations Board in May 1996 for decertification of the union, there can be no
assurance that similar labor disputes will not occur in the future which,
depending upon the timing and duration of such disputes, could have a material
adverse effect on the Company.
Management believes that its relationships with its employees and unions
are good.
PROPERTIES
The Company is headquartered in Lexington, Kentucky. The Company currently
owns or leases 14 facilities in North America, Europe, Brazil and South Korea
which are used for manufacturing, distribution, sales, warehousing and service
center activities.
53
<PAGE> 60
The following table outlines the principal facilities owned or leased by
CLARK or its subsidiaries:
<TABLE>
<CAPTION>
FACILITY LOCATION TYPE OF FACILITY
- ----------------- ----------------
<S> <C>
Lexington, Kentucky...................... Manufacturing, warehouse and office
Lexington, Kentucky*..................... Sales, training and engineering
Lexington, Kentucky...................... Warehouse
Manufacturing, engineering, power
Mulheim, Germany**....................... generation,
maintenance and office
Mulheim/Saarn, Germany................... Warehouse
Barcelona, Spain......................... Sales branch
Paris, France............................ Sales branch
Lyon, France............................. Sales branch
State of Sao Paulo, Brazil............... Parts distribution
Seoul, South Korea....................... Parts distribution and office
Changwon, South Korea*................... Manufacturing, warehouse and office
Wilmington, Ohio......................... Manufacturing, warehouse and office
Pell City, Alabama....................... Manufacturing, warehouse and office
Brampton, Ontario, Canada*............... Manufacturing, warehouse and office
</TABLE>
- ---------------
* Owned.
** A portion of the facility is owned.
CLARK also owns a manufacturing facility in Banwael, South Korea which was
closed in the fourth quarter of 1994 and is presently held for sale. CLARK
Europe also presently leases unoccupied office space in Mulheim-Ruhr, Germany.
Management believes that the Company's facilities are suitable for its
operations and provide sufficient capacity to meet the Company's requirements
for the foreseeable future.
ENVIRONMENTAL MATTERS
As with most industrial companies, the Company's facilities and operations
are required to comply with and are subject to a wide variety of Environmental
Laws relating to the use, storage, handling, generation, treatment, emission,
release, discharge and disposal of certain materials, substances and wastes.
Certain of these Environmental Laws hold owners or operators of land or
businesses liable for their own and for previous owners' or operators' releases
of hazardous or toxic substances, materials or wastes and pollutants or
contaminants, including, in some instances, petroleum and petroleum products.
Compliance with Environmental Laws also may require the acquisition of permits
or other authorizations for certain activities and compliance with various
standards or procedural requirements. Although the Company believes that its
operations are in substantial compliance with current regulatory requirements
under material applicable Environmental Laws, the nature of the Company's
operations and the history of industrial uses at some of its facilities expose
the Company to the risk of liabilities or claims with respect to environmental
and worker health and safety matters. The Company may also have contingent
responsibility for liabilities with respect to environmental matters arising in
connection with the prior operations of CEC's material handling business and
other predecessor companies. There can be no assurance that material costs or
liabilities will not be incurred in connection with such liabilities or claims.
In connection with the 1996 Acquisition, the Company agreed to indemnify
the Predecessor's Parent and hold it harmless from and against all losses which
are incurred or suffered by the Predecessor's Parent with respect to or arising
out of the Company's business and assets except for such losses which arise from
or are in connection with any real property, business entities or assets which
were not acquired as part of the 1996 Acquisition (which the Predecessor's
Parent agreed to retain responsibility for and indemnified the Company against).
No specific environmental losses were identified by the parties in the 1996
Acquisition Agreement
54
<PAGE> 61
nor are there any known material losses which have been asserted by the
Predecessor's Parent pursuant to the environmental indemnity provisions of the
1996 Acquisition Agreement or incurred by the Company. The environmental
indemnities are subject to certain deductibles, caps and time limitations
depending on the nature of the environmental claim.
Based upon the Company's experience to date and the indemnities obtained in
connection with the 1996 Acquisition, the Company believes that the future cost
of compliance with existing Environmental Laws (or liability for known
environmental liabilities or claims) should not have a material adverse effect
on the Company's business, financial condition or results of operations.
Compliance with such laws has, and will, require expenditures by the Company on
a continuing basis. Future events, such as changes in existing laws and
regulations or their interpretation, may give rise to additional compliance
costs or liabilities that could have a material adverse effect on the Company's
business, financial condition or results of operations. Compliance with more
stringent laws or regulations, as well as more vigorous enforcement policies of
regulatory agencies or stricter or different interpretations of existing laws,
may require additional expenditures by the Company that may be material. See
"Risk Factors -- Government Regulation."
LEGAL PROCEEDINGS
From time to time product liability claims are asserted against the Company
for various injuries alleged to have resulted from defects in the manufacture
and/or design of its products. As of August 25, 1998, the Company had
approximately 66 pending lawsuits relating to claims arising from accidents
involving its products. Most of these lawsuits are in various stages of pretrial
completion, and certain plaintiffs are seeking punitive as well as compensatory
damages. The Company is self-insured, up to certain limits, for these product
liability claims, as well as certain exposures related to general workers'
compensation and automobile liability. The Company has recorded and maintains on
its balance sheet reserves relating to the estimated liability, based in part
upon actuarial determinations, of the Company's aggregate exposure for such
self-insured risks. The Company is involved in various other legal proceedings
which have arisen in the normal course of its operations. The Company has
recorded provisions for estimated losses in circumstances where a loss is
probable and the amount or range of possible amounts of the loss is estimable.
There can be no assurance that any of the foregoing reserves are adequate. See
"Risk Factors -- Product Liability and Other Claims" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations -- Contingencies and Uncertainties."
55
<PAGE> 62
THE SAMSUNG FORKLIFT ACQUISITION
On July 15, 1998, the Company acquired substantially all of the assets and
certain liabilities of Samsung Forklift. The purchase price for Samsung Forklift
was $30.4 million (based upon the stated purchase price of 39.1 billion South
Korean Won and is subject to certain adjustments (as described below)). The
assets acquired pursuant to the Samsung Forklift Acquisition include the Korean
Plant, working capital items and intellectual property. The Company estimates
that it will spend approximately $5.0 million on plant and equipment expenses at
the Korean Plant prior to the end of 1998.
Samsung Forklift is a leading designer and manufacturer of forklift trucks
in South Korea. The Company believes that, for the year ended December 31, 1997,
Samsung Forklift maintained a market share of approximately 25% in South Korea
and generated approximately $90.0 million of net sales (based upon an average
1997 exchange rate of 950 South Korean Won to the U.S. dollar), approximately
60% of which were generated in South Korea. In addition, Samsung Forklift has a
distribution network in Europe, Asia, Australia and New Zealand. The Company
plans to utilize the low cost manufacturing operations of Samsung Forklift to
produce a value-priced line of light IC forklift trucks under various brand
names including the Samsung brand name for a period of three years. The Company
intends to market these forklift trucks through CLARK's and Samsung Forklift's
global distribution networks, as a complement to CLARK's product line.
Consequently, management estimates that it will sell approximately 75% of
Samsung Forklift's production outside of South Korea.
From 1986 through the mid-1990s, CLARK participated in a joint venture with
Samsung to manufacture forklift trucks in South Korea for worldwide
distribution. The partnership provided CLARK with an understanding of the South
Korean forklift market generally and an ongoing relationship with Samsung
managers, while providing Samsung Forklift with a product platform consistent
with the Genesis(R) line. See "Risk Factors -- Risks Relating to the Samsung
Forklift Acquisition."
The Korean Plant, which will become a center for CLARK's Asia Pacific
operations, is currently being modified and is expected to be completed by
November 1998. In the interim period between the closing of the Samsung Forklift
Acquisition and the opening of the Korean Plant (the "Transition Period"), CLARK
Asia is operating from Samsung Forklift's current manufacturing plant under the
terms of a transition services and lease agreement executed in connection with
the closing. CLARK also obtained a license to use the Samsung name in connection
with the Samsung Forklift business during the Transition Period plus three years
in exchange for an agreed upon royalty payment.
CLARK formed a new wholly-owned subsidiary, CLARK Material Handling Asia,
Inc., a company organized under the laws of South Korea ("CLARK Asia"), to
acquire Samsung Forklift. It is anticipated that CLARK's present South Korean
subsidiary, CLARK Forklift Korea, Inc., will be consolidated with CLARK Asia
sometime in the future.
The consideration to be paid by the Company for the Samsung Forklift
Acquisition will be adjusted following the closing to reflect changes in the net
asset value of the Samsung Forklift business from December 31, 1997. Pursuant to
the Samsung Forklift Acquisition Agreement, CLARK is obligated to pay to Samsung
the value-added tax (the "VAT") related to the purchase price (estimated to
equal $2.4 million), although Samsung has agreed to reimburse CLARK for such
payment in the event that the Company is unable to receive reimbursement from
the South Korean government, subject to certain conditions. CLARK and Samsung do
not have an exchange rate variation sharing arrangement with regard to the VAT
payments. As of July 15, 1998, the exchange rate equaled 1281.50 South Korean
Won to the U.S. dollar. In addition, a portion of the purchase price for the
Samsung Forklift Acquisition, equal to 10 billion South Korean Won, subject to
certain post-closing adjustments (the "Holdback Amount"), will be held in a bank
account in South Korea for a period of up to eighteen (18) months (the
"Collection Period") pending the collection of the receivables of Samsung
Forklift outstanding as of the closing date of the Samsung Forklift Acquisition
(the "Pre-Closing Receivables"). At the conclusion of the Collection Period,
CLARK will retain an amount of the Holdback Amount equal to the then remaining
Pre-Closing Receivables and the remainder of the Holdback Amount will be
transferred to Samsung, along with the then remaining Pre-Closing Receivables.
Interest accruing on the Holdback Amount during the Collection Period will be
split equally between the Company and Samsung.
See "Risk Factors -- Risks Relating to the Samsung Forklift Acquisition."
56
<PAGE> 63
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
persons who are members of the Board of Directors or executive officers of the
Company. Directors serve for a term of one year or until their successors are
elected and qualified; officers serve at the discretion of the Board of
Directors. The directors of the Company also serve as the directors of Holdings.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Dr. Martin M. Dorio.................... 52 President, Chief Executive Officer and
Director
Dr. J. Frithjof Timm................... 55 Managing Director and President, CLARK Europe
Joseph F. Lingg........................ 53 Vice President, Finance, Treasurer and
Assistant Secretary
Kevin M. Reardon....................... 53 President and Managing Director, CLARK Asia
Michael J. Grossman.................... 48 Vice President, General Counsel and Secretary
Robert J. O'Brien...................... 48 Vice President, Manufacturing, North America
Thomas J. Snyder....................... 53 Director
Diether Klingelnberg................... 54 Director
Michael A. Delaney..................... 44 Director
James A. Urry.......................... 44 Director
</TABLE>
Dr. Martin M. Dorio, President, Chief Executive Officer and Director. Dr.
Dorio joined the Company in June 1995 as President and Chief Executive Officer.
From 1990 until he joined the Company, Dr. Dorio served in various positions
with Case Corporation, a manufacturer of tractors and construction equipment,
including Vice President, Corporate Planning and Development. Dr. Dorio has over
20 years of experience in manufacturing and has served in key management
positions of FMC Corp. and General Electric Co.
Dr. J. Frithjof Timm, Managing Director and President, CLARK Europe. Dr.
Timm joined the Company in May 1995 as Managing Director and President of CLARK
Europe. From 1992 to 1995, he was President of Komatsu Europe and, prior to
that, he was Managing Director of Sales of the Hydraulic Mobile Crane Division
of Krupp A.G.
Joseph F. Lingg, Vice President, Finance and Treasurer. Mr. Lingg joined
the Company in January 1996 as Vice President, Finance and Treasurer. In 1998,
he was named Assistant Secretary of the Company. In 1995, Mr. Lingg served as
Vice President and Chief Financial Officer of RBC Company of America, a
manufacturer of bearings, and for more than five years prior thereto he served
as Vice President and Chief Financial Officer of Mosler Inc., a manufacturer and
servicer of security products.
Kevin M. Reardon, President and Managing Director of CLARK Asia. Mr.
Reardon joined the Company in 1984 and in 1998 was elected President and
Managing Director of CLARK Asia. From 1995 to 1998, he was Vice President of
Sales and Marketing, North America and from 1997 to 1998, he was Vice President
of Sales and Marketing, International. Previously, Mr. Reardon served as
Director of Marketing and National Sales Manager for the Company.
Michael J. Grossman, Vice President, General Counsel and Secretary. Since
joining the Company in 1978, Mr. Grossman has held several key legal positions
with CLARK. In 1991, he was named Vice President, General Counsel and Assistant
Secretary of the Company. In 1992, he was also named Secretary of the Company.
Robert J. O'Brien, Vice President, Manufacturing, North America. Mr.
O'Brien joined the Company in March of 1995, as Director of Manufacturing. From
1980 until he joined the Company, he served in various key operations positions
with Allied Signal Aerospace. Mr. O'Brien has over 20 years of experience in
manufacturing operations in the Aerospace industry.
57
<PAGE> 64
Thomas J. Snyder, Director. Mr. Snyder has been President, Chief Operating
Officer and a director of Delco Remy International, Inc. since 1994. From 1962
to 1994, Mr. Snyder held several executive positions with the Delco Remy
Division of General Motors, most recently as Product Manager, Heavy Duty
Systems. He is also a director of St. John's Health Systems.
Diether Klingelnberg, Director. Mr. Klingelnberg served as Chief Executive
Officer of International Knife & Saw, Inc. until March 1996. In addition, he
served as Chairman of the Board and Chief Executive Officer of IKS Corporation
from 1979 until November 1996. Mr. Klingelnberg is currently Managing Director
of Klingelnberg Beteillgungs-GmbH and is a director of Honsel AG, IKS
Corporation, the Alfred H. Schuette Company, and Eickhoff, Bochum, and Oerlikon
Geartec AG, Zuerich.
Michael A. Delaney, Director. Mr. Delaney has been a Managing Director of
Citicorp Venture Capital Ltd. ("CVC") since 1989. From 1986 through 1989, he was
Vice President of Citicorp Mergers and Acquisitions. Mr. Delaney is a director
of Aetna Industries, Inc., AmeriSource Health Corporation, MSX International,
CORT Business Services Corporation, Delco Remy International, Inc., Enterprise
Media Inc., Fabri-Steel Products Incorporated, GVC Holdings, IKS Corporation,
JAC Holdings, MSX International, Palomar Technologies, Inc., SC Processing,
Inc., and Triumph Holdings, Inc.
James A. Urry, Director. Mr. Urry has been with Citibank, N.A. since 1981,
serving as a Vice President since 1986. He has been a Vice President of CVC
since 1989. He is a director of AmeriSource Health Corporation, CORT Business
Services Corporation, Hancor Holding Corporation, IKS Corporation, Airxcel,
Inc., Palomar Technologies, Inc. and York International Corporation.
DIRECTOR COMPENSATION AND ARRANGEMENTS
The directors of the Company do not receive compensation for their services
as directors. Members of the Board of Directors are elected pursuant to certain
voting agreements among Holdings and its stockholders. See "Ownership of the
Company -- Stockholders' Agreement."
EXECUTIVE COMPENSATION
The compensation of executive officers of the Company will be determined by
the Board of Directors of the Company. The Company adopted a 401(k) retirement
plan in 1997. See "-- 401(k) Plan."
The following table sets forth certain information concerning the
compensation received by the Chief Executive Officer and the four most highly
compensated officers of the Company for services rendered in 1997.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION AWARDS
------------------------------------ -------------------------------------------
OTHER RESTRICTED STOCK
ANNUAL STOCK OPTIONS ALL OTHER
SALARY BONUS COMPENSATION AWARDS (# SHARES) COMPENSATION(1)
-------- -------- ------------ ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Dr. Martin M. Dorio.......... $293,750 $188,745 -- -- -- $11,490
President and Chief Executive
Officer
Dr. J. Frithjof Timm......... 193,195 60,723 -- -- -- 31,719
President, CLARK Europe(2)
Joseph F. Lingg.............. 124,375 48,367 -- -- -- 6,905
Vice President, Finance and
Treasurer
Kevin M. Reardon............. 118,067 33,132 -- -- -- 4,148
Vice President of Sales and
Marketing
Michael J. Grossman.......... 125,000 49,335 -- -- -- 5,639
Vice President and General
Counsel
</TABLE>
- ---------------
(1) Includes Company 401(k) contributions and group term life insurance
premiums, respectively, as follow: Dr. Dorio, $8,501 and $2,989; Mr.
Reardon, $1,171 and $2,977; Mr. Grossman, $3,868 and $1,772; and Mr. Lingg,
$3,866 and $3,039. Includes $31,719 for pension and disability for Dr. Timm.
(2) Dr. Timm's salary, bonus, and other compensation are paid in Deutsche Marks
and have been converted to U.S. dollars using a conversion rate of 1.734
DM/$.
58
<PAGE> 65
EMPLOYMENT AGREEMENTS
In 1996, Holdings entered into a three-year employment contract with Dr.
Martin M. Dorio pursuant to which Dr. Dorio is employed as the President and
Chief Executive Officer of Holdings and the Company. The agreement provides for
an annual base salary of $225,000, which is subject to annual merit increases,
and an annual performance bonus. The Company has agreed that, in the event that
Holdings is unable to pay Dr. Dorio any amounts due to him with respect to
annual bonuses, the Company will pay such amounts. Since November 1996, the
Company has paid Dr. Dorio's compensation. In addition, the agreement provides
for the receipt by Dr. Dorio of standard company benefits. The agreement is
terminable by Holdings with or without cause. In the event the agreement is
terminated without cause or as a result of the total disability of Dr. Dorio,
Dr. Dorio will be entitled to continue to receive his base salary and certain
other benefits for specified periods. Following any termination of Dr. Dorio's
employment, he will be subject to a non-competition covenant for up to two
years.
401(k) PLAN
In 1997, the Company adopted a qualified 401(k) retirement plan. Subject to
certain statutory limitations, eligible employees are able to contribute a
percentage of their compensation to the plan on a pre-tax basis ("elective
deferrals"). For 1997, the maximum amount of elective deferrals that could be
made by any employee was $9,500. Employees are fully vested in their elective
deferrals at all times. Generally, employees may not receive a distribution of
their account balances prior to their death, disability, termination of
employment or retirement, and their account balances cannot be assigned or
alienated.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Although the Company has no compensation committee, each of Messrs. Snyder,
Klingelnberg, Delaney and Urry participated in deliberations of the Board of
Directors concerning executive compensation.
59
<PAGE> 66
OWNERSHIP OF THE COMPANY
All of the outstanding common stock of the Company is currently owned by
Holdings. In addition, the Company also has outstanding senior preferred stock.
See "Description of Preferred Stock." The following table sets forth certain
information with respect to the beneficial ownership of the Holdings Preferred
Stock and Holdings Common Stock by (i) each person or entity who owns five
percent or more thereof, (ii) each director of the Company who is a stockholder,
(iii) the Chief Executive Officer of the Company and the other executive
officers named in "Management -- Executive Compensation" above who are
stockholders, and (iv) all directors and executive officers of the Company as a
group. Unless otherwise specified, all shares are directly held.
<TABLE>
<CAPTION>
NUMBER AND PERCENT OF SHARES
---------------------------------------------------------------------
HOLDINGS PREFERRED HOLDINGS CLASS A HOLDINGS CLASS B
STOCK STOCK(1) STOCK(2)
------------------- --------------------- ---------------------
NUMBER PERCENT NUMBER PERCENT NUMBER PERCENT
-------- ------- ---------- ------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
Citicorp Venture Capital Ltd....... 12,207.4 71.8% 102,671.40 37.5% 550,220.04 75.7%
399 Park Avenue
New York, NY 10043
Dr. Martin M. Dorio................ 404.8 2.4% 55,180.7 20.2% -- --
172 Trade Street
Lexington, KY 40511
Dr. J. Frithjof Timm............... 130.1 0.8% 19,879.5 7.3% -- --
172 Trade Street
Lexington, KY 40511
Kevin M. Reardon................... 37.1 0.2% 5,391.6 2.0% -- --
Michael J. Grossman................ 68.4 0.4% 6,566.3 2.4% -- --
Joseph F. Lingg.................... 40.5 0.2% 5,518.1 2.0% -- --
Thomas J. Snyder................... -- -- 5,000.0 1.8% -- --
Diether Klingelnberg............... -- -- 42.0 0.02% 8,943.5 1.2%
Michael A. Delaney................. 101.5 0.6% 855.0 0.3% 4,536.3 0.6%
James A. Urry...................... 101.5 0.6% 855.0 0.3% 4,536.3 0.6%
All directors and executive
officers as a group (10
persons)......................... 966.8 5.7% 106,396.6 38.9% 18,016.1 2.4%
</TABLE>
- ---------------
(1) Does not include shares of Holdings Class A Stock issuable upon conversion
of Holdings Class B Stock. See "-- Holdings Common Stock." Assuming the
conversion of all of a holder's shares of Holdings Class B Stock into
Holdings Class A Stock, but no such conversion by any other holder of
Holdings Class B Stock, the number of shares and the percentage of total
Holdings Class A Stock held by the converting holder would be as follows:
for CVC, 652,891.0 and 79.3%; for Diether Klingelnberg, 8,985.5 and 3.2%;
for Michael A. Delaney, 5,391.3 and 1.9%; for James A. Urry, 5,391.3 and
1.9%; and for all directors and executive officers as a group, 124,412.7 and
42.7%.
(2) Does not include shares of Holdings Class B Stock issuable upon conversion
of Holdings Class A Stock. See "-- Holdings Common Stock." Assuming the
conversion of all of a holder's shares of Holdings Class A Stock into
Holdings Class B Stock, but no such conversion by any other holder of
Holdings Class A Stock, the number of shares and the percentage of total
Holdings Class B Stock held by the converting holder would be as follows:
for CVC, 652,891.0 and 78.7%; for Dr. Martin M. Dorio, 55,180.7 and 7.1%;
for Dr. J. Frithjof Timm, 19,879.5 and 2.7%; for Kevin M. Reardon, 5,391.6
and 0.7%; for Michael J. Grossman, 6,566.3 and 0.9%; for Joseph F. Lingg,
5,518.1 and 0.7%; for Thomas J. Snyder, 5,000 and 0.7%; for Diether
Klingelnberg, 8,985.5 and 1.2%; for Michael A. Delaney, 5,391.3 and 0.7%;
and for James A. Urry, 5,391.3 and 0.7%; and for all directors and executive
officers as a group, 124,412.7 and 14.9%.
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<PAGE> 67
HOLDINGS PREFERRED STOCK
The Holdings Certificate of Incorporation provides that Holdings may issue
20,000 shares of Holdings Preferred Stock, all of which is designated as Series
A Cumulative Compounding Preferred Stock. Holdings Preferred Stock has a stated
value of $1,000 per share and is entitled to annual dividends when, as and if
declared, which dividends are cumulative, whether or not earned or declared, and
accrue at a rate of 12%, compounding annually. The vote of a majority of the
outstanding shares of the Holdings Preferred Stock, voting as a separate class,
will be required to (i) create, authorize or issue any other class or series of
stock entitled to a preference prior to the Holdings Preferred Stock upon any
dividend or distribution or any liquidation, distribution of assets, dissolution
or winding up of Holdings, or increase the authorized amount of any such other
class or series, or (ii) amend Holdings' Certificate of Incorporation if such
amendment would adversely affect the relative rights and preferences of the
holders of the Holdings Preferred Stock. Except as described in the immediately
preceding sentence or as otherwise required by law, the Holdings Preferred Stock
is not entitled to vote. Holdings may not pay any dividend upon (except for a
dividend payable in Junior Stock, as defined below), or redeem or otherwise
acquire shares of, capital stock junior to the Holdings Preferred Stock
(including the Holdings Common Stock) ("Junior Stock") unless all cumulative
dividends on the Holdings Preferred Stock have been paid in full. Upon
liquidation, dissolution or winding up of Holdings, holders of Holdings
Preferred Stock will be entitled to receive out of the legally available assets
of Holdings, before any amount shall be paid to holders of Junior Stock, an
amount equal to $1,000 per share of Holdings Preferred Stock, plus all accrued
and unpaid dividends to the date of final distribution. If such available assets
are insufficient to pay the holders of the outstanding shares of Holdings
Preferred Stock in full, such assets, or the proceeds thereof, will be
distributed ratably among such holders. The Holdings Preferred Stock is not
mandatorily redeemable prior to the maturity of the Notes. Holdings may
optionally redeem, in whole or in part, the Holdings Preferred Stock at any time
at a price per share of $1,000, plus accrued and unpaid dividends to the date of
redemption.
HOLDINGS COMMON STOCK
The Certificate of Incorporation of Holdings provides that Holdings may
issue 2,500,000 shares of Holdings Common Stock, divided into two classes
consisting of 1,250,000 shares of Holdings Class A Stock and 1,250,000 shares of
Holdings Class B Stock. The holders of Holdings Class A Stock are entitled to
one vote for each share held of record on all matters submitted to a vote of the
stockholders. Except as required by law, the holders of Holdings Class B Stock
have no voting rights. Under the Certificate of Incorporation of Holdings, a
holder of either class of Holdings Common Stock may convert any or all of his
shares into an equal number of shares of the other class of Holdings Common
Stock; provided that in the case of a conversion from Holdings Class B Stock,
which is nonvoting, into Holdings Class A Stock, which is voting, the holder of
shares to be converted would be permitted under applicable law to hold the total
number of shares of Holdings Class A Stock which would be held after giving
effect to the conversion.
STOCKHOLDERS' AGREEMENT
Pursuant to the Securities Purchase and Holders Agreement entered into
among the stockholders of Holdings (the "Stockholders' Agreement"), the Board of
Directors of Holdings and the Company will be composed at all times of five
directors as follows: the President of the Company, Dr. Martin M. Dorio (so long
as he continues to serve as President); two individuals designated by CVC; and
two additional directors who shall not be employees of CVC but who shall be
designated by CVC, subject to the right of holders of the majority of the
outstanding shares of Holdings Class A Stock to veto the election of either of
such additional directors.
The Stockholders' Agreement contains certain provisions which, with certain
exceptions, restrict the ability of the stockholders to transfer any Holdings
Common Stock, Holdings Preferred Stock or Holdings Debentures except pursuant to
the terms of the Stockholders' Agreement. So long as Holdings has not
consummated a public offering of Holdings Common Stock resulting in aggregate
net proceeds of $30.0 million or more, if holders of at least 50% of the
Holdings Common Stock then outstanding approve the sale of the Company (an
"Approved Sale"), each stockholder has agreed to consent to such sale and, if
such sale
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includes the sale of stock, each stockholder has agreed to sell all of such
stockholder's Holdings Common Stock on the terms and conditions approved by
holders of a majority of the Holdings Common Stock then outstanding. In the
event Holdings proposes to issue and sell (other than in a public offering
pursuant to a registration statement) any shares of Holdings Common Stock and/or
Holdings Preferred Stock or any securities containing options or rights to
acquire any shares of Holdings Common Stock and/or Holdings Preferred Stock or
any securities convertible into Holdings Common Stock and/or Holdings Preferred
Stock to CVC or its corporate affiliates, Holdings must first offer to each of
the other shareholders a pro rata portion of such shares. Such preemptive rights
will not be applicable in certain circumstances including the issuance of shares
of Holdings Common Stock and/or Holdings Preferred Stock upon the conversion of
shares of one class of Holdings Common Stock and/or Holdings Preferred Stock
into shares of the other class or upon an initial public offering.
The Stockholders' Agreement also provides for certain additional
restrictions on transfer of shares by Management Investors, including the right
of Holdings to repurchase shares upon termination of such stockholder's
employment prior to 2001, at a formula price, and the grant of a right of first
refusal in favor of Holdings in the event a Management Investor elects to
transfer shares of Holdings Common Stock.
REGISTRATION RIGHTS AGREEMENT
In connection with their entry into the Stockholders' Agreement, Holdings,
CVC, and the other stockholders of Holdings entered into a Registration Rights
Agreement (the "Holdings Registration Rights Agreement"). Pursuant to the
Holdings Registration Rights Agreement, upon the written request of CVC,
Holdings has agreed to (subject to certain exceptions) prepare and file a
registration statement with the Commission concerning the distribution of all or
part of the shares held by CVC and use its best efforts to cause such
registration statement to become effective. If at any time Holdings files a
registration statement for the Holdings Common Stock pursuant to a request by
CVC or otherwise (other than a registration statement of Form S-8, Form S-4 or
any similar form, a registration statement filed in connection with a share
exchange or an offering solely to Holdings' employees or existing stockholders,
or a registration statement registering a unit offering), Holdings will use its
best efforts to allow the other parties to the Holdings Registration Rights
Agreement to have their shares of Holdings Common Stock (or a portion of their
shares under certain circumstances) included in such offering of Holdings Common
Stock if the registration form proposed to be used may be used to register such
shares. Registration expenses of the selling stockholders (other than
underwriting fees, brokerage fees and transfer taxes applicable to the shares
sold by such stockholders or the fees and expenses of any accountants or other
representatives retained by a selling stockholder) will be paid by Holdings.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
SERVICE AGREEMENT
In connection with the 1996 Acquisition, the Company entered into a Service
Agreement with the Predecessor's Parent pursuant to which the Company shares
space in the Southaven Facility with another division of the Predecessor's
Parent. In addition, pursuant to such agreement the Company hired approximately
38 employees who are responsible for aftermarket customer support and
administration. The Company pays an aggregate annual fee under such Service
Agreement of approximately $5.9 million (the "Base Fee"), payable in monthly
installments. In addition to the Base Fee, certain provisions of the Service
Agreement may require each of the Predecessor's Parent and CLARK to share the
responsibility for additional costs and savings resulting from, among other
things, changes or increases in the provision of services or the implementation
of certain cost savings. The term of the agreement is for three years.
Management believes that the terms of the Service Agreement are no less
favorable to the Company than those that could have been obtained from
non-affiliated parties at the time the agreement was entered into. Management
anticipates that it will be able to find an appropriate replacement facility in
the event that the Company does not renew the Service Agreement upon its
expiration in 1999.
TAX SHARING AGREEMENT
Holdings and the Company are included in the consolidated United States
federal income tax return of Holdings. Holdings and the Company entered into a
tax sharing agreement (the "Tax Sharing Agreement") whereby the Company will pay
Holdings (or Holdings will pay the Company) its pro rata share of the total tax
liability, as set out in the Tax Sharing Agreement. In the event the Company is
included in a joint, combined, consolidated or unitary state or local income or
franchise tax return with Holdings, the Company shall make payments to Holdings,
and Holdings shall make payments to the Company, in a manner consistent with
that described above for federal tax purposes.
LICENSE AGREEMENTS
In connection with the 1996 Acquisition, Holdings acquired certain patents
and patent applications related to the Company's business from the Predecessor's
Parent. Pursuant to a License Agreement dated as of November 27, 1996, Holdings
granted to the Company a perpetual, world-wide, exclusive royalty-free,
fully-paid-up license to practice methods, and to make, use, import, offer for
sale or sell any products, covered by such patents and patent applications.
In addition, in connection with the Samsung Forklift Acquisition, CLARK
Asia has obtained a license to use the Samsung name in connection with the
Samsung Forklift business for the Transition Period plus three years in exchange
for an agreed upon royalty payment.
OTHER
The Company and Holdings were formed by CVC and certain members of
management of CLARK (the "Management Investors") to effect the acquisition (the
"1996 Acquisition") of substantially all the assets and certain liabilities of
CLARK Material Handling Company, a Kentucky corporation, and all of the
outstanding capital stock of certain of its affiliates, including its German,
South Korean, Brazilian and Canadian affiliates. The 1996 Acquisition was
consummated on November 27, 1996 pursuant to a Stock and Asset Purchase and Sale
Agreement dated as of November 9, 1996 among the Predecessor's Parent and
certain of its subsidiaries, as sellers, and the Company, as buyer (the "1996
Acquisition Agreement"). The aggregate consideration for the 1996 Acquisition
was $139.5 million. To finance the 1996 Acquisition (including the payment of
related fees and expenses): (i) CVC, Dr. Martin M. Dorio, President and Chief
Executive Officer of the Company, and Thomas J. Snyder, who was elected to the
Board of Directors of the Company in connection with the 1996 Acquisition,
purchased $17.0 million of preferred stock (the "Holdings Preferred Stock"),
$1.0 million of voting common stock (the "Holdings Class A Stock") and
non-voting common stock (the "Holdings Class B Stock," and together with the
Holdings Class A Stock, the "Holdings Common Stock"), and $7.0 million of
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junior subordinated debentures (the "Holdings Debentures") from Holdings for
$25.0 million in cash; (ii) Holdings contributed $25.0 million to the Company in
exchange for all of the capital stock of the Company; and (iii) the Company
issued and sold $130 million of Original Notes (as defined).
At the time of the 1996 Acquisition, it was contemplated that certain
shares of capital stock of Holdings would be issued to the members of
management. In furtherance of that intent, effective as of January 31, 1997,
Holdings repurchased certain outstanding shares of Holdings Preferred Stock and
Holdings Class B Stock having an aggregate value of approximately $1.1 million
from CVC and, simultaneously therewith, issued and sold shares of Holdings
Preferred Stock and Holdings Common Stock having an equivalent value to Dr.
Martin M. Dorio and other members of management. In connection therewith, the
Company loaned Dr. Dorio $200,000 toward the purchase price of the securities
acquired by him. Such loan is evidenced by a demand promissory note that does
not bear interest. In addition, effective as of February 20, 1997, Holdings
repurchased certain outstanding shares of Holdings Class A Stock, Holdings Class
B Stock and 12% Junior Subordinated Notes (the "Junior Subordinated Notes") of
Holdings having an aggregate value of $250,000 from CVC and, simultaneously
therewith, issued and sold shares of Holdings Class A Stock, Holdings Class B
Stock and the Junior Subordinated Notes having an equivalent value to Diether
Klingelnberg.
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DESCRIPTION OF CERTAIN INDEBTEDNESS
The following is a summary of certain indebtedness of the Company and
Holdings which will be outstanding following consummation of the Exchange. To
the extent such summary contains descriptions of the Revolving Credit Facility
and other loan documents, such descriptions do not purport to be complete and
are qualified in their entirety by reference to such documents, which are
available upon request from the Company.
REVOLVING CREDIT FACILITY
In connection with the 1996 Acquisition, the Company entered into a $30.0
million Revolving Credit Facility with Congress Financial Corporation (the
"Bank"). Borrowings under the Revolving Credit Facility are available for
working capital and general corporate purposes, including letters of credit. The
Revolving Credit Facility is secured by first priority liens on all accounts
receivable and inventory of the Company's domestic operations, excluding Blue
Giant. The Revolving Credit Facility has an aggregate undrawn availability of
$20.6 million at June 30, 1998, subject to the borrowing conditions contained
therein.
The Revolving Credit Facility will expire on November 27, 1999, unless
extended. The interest rate per annum applicable to the Revolving Credit
Facility is the prime rate, as announced by CoreStates Bank N.A., plus 0.50% or,
at the Company's option, the adjusted Eurodollar rate plus 2.50%. The Revolving
Credit Facility permits the Company to prepay loans and to permanently reduce
revolving credit commitments or letters of credit, in whole or in part, at any
time in certain minimum amounts. The Company is required to pay certain fees in
connection with the Revolving Credit Facility, including a commitment fee of
0.25% on the undrawn portion of the revolving credit commitment.
The Revolving Credit Facility contains customary representations and
warranties, events of default and certain other covenants.
SUBSIDIARY CREDIT FACILITIES
CLARK's Foreign Subsidiaries have various term and revolving loan
facilities which have an aggregate principal amount outstanding as of June 30,
1998 of approximately $1.1 million. In addition, the Company expects that CLARK
Europe will enter into a revolving credit facility to provide working capital
for its European operations. It is expected that any such facility will provide
up to $10.0 million of revolving credit loans and will be secured by certain
assets of CLARK Europe.
THE ORIGINAL NOTES
On November 22, 1996 the Company issued $130 million aggregate principal
amount of 10 3/4% Series A Senior Notes due 2006 (the "Original Notes") pursuant
to an indenture (the "Original Indenture") initially between the Company and
United States Trust Company of New York, as trustee (the "Original Trustee")
dated as of November 27, 1996. The Company issued the Original Notes to the
Initial Purchasers, who resold the Original Notes to "qualified institutional
buyers" (within the meaning of Rule 144A) in transactions meeting the
requirements of Rule 144A and to a limited number of institutional "accredited
investors" (within the meaning of Rule 501 under the Securities Act) in
transactions not involving a public offering. The Original Notes were offered in
connection with the 1996 Acquisition. The Company applied the net proceeds of
the offering of the Original Notes, together with an equity contribution, (i) to
finance the 1996 Acquisition, (ii) to pay certain fees and expenses related to
the 1996 Acquisition and related transactions, and (iii) for general corporate
purposes. The Original Notes were exchanged for Series B Notes by the holders
thereof pursuant to an exchange offer by the Company in 1997.
HOLDINGS DEBENTURES
In connection with the 1996 Acquisition, Holdings issued an aggregate of
$7.0 million original principal amount of Holdings Debentures, designated as
Junior Subordinated Notes. The Holdings Debentures mature on December 1, 2007
and bear interest at a rate of 12% per annum. All interest due on the Holdings
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Debentures prior to their maturity is paid by adding such interest to the then
outstanding principal amount of the Holdings Debentures. Such amount accrues
interest as a portion of the principal amount of the Holdings Debentures from
the applicable interest payment date. The Holdings Debentures contain certain
covenants in favor of the holders of the Holdings Debentures including, but not
limited to: (i) restrictions on the payment by Holdings of dividends and the
purchase, redemption or prepayment by Holdings and its subsidiaries of its
capital stock or indebtedness which is, by its terms or by operation of law,
junior in right of payment to the Holdings Debentures, and (ii) restrictions on
subsidiaries entering into agreements (other than with respect to the Notes)
restricting their ability to pay dividends or make certain other distributions
to Holdings or any subsidiary of Holdings.
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DESCRIPTION OF NOTES
GENERAL
The Series C Notes were issued pursuant to an Indenture, dated July 17,
1998, between the Company and United States Trust Company of New York, as
trustee (the "Trustee") as amended by the First Supplemental Indenture, dated
August 18, 1998, between the Company and the Trustee (such Indenture and First
Supplemental Indenture shall collectively be referred to herein as the
"Indenture"). The terms of the Indenture apply to the Series C Notes and to the
New Notes to be issued in exchange for the Series C Notes and the Series B Notes
pursuant to the Exchange Offer (all such Notes being referred to herein
collectively as the "Notes"). The terms of the New Notes include those stated in
the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). The following
summary of the material provisions of the Indenture does not purport to be
complete and is qualified in its entirety by reference to the Indenture,
including the definitions therein of certain terms used below. A copy of the
form of Indenture is available from the Company upon request. The definitions of
certain terms used in the following summary are set forth below under
"-- Certain Definitions."
The Notes are senior unsecured obligations of the Company and rank senior
in right of payment to all subordinated Indebtedness of the Company and pari
passu in right of payment with all senior Indebtedness.
The Notes are effectively subordinated to all senior secured indebtedness
of the Company, including indebtedness under the Revolving Credit Facility, to
the extent of the assets securing such debt. As of June 30, 1998, after giving
effect to the Transactions, the Company would have had secured indebtedness
outstanding equal to $10.5 million, exclusive of unused commitments of $20.6
million which may be borrowed by the Company under the Revolving Credit
Facility.
Although the Company's U.S. operations are owned directly, its foreign
operations are conducted through the Foreign Subsidiaries. The Foreign
Subsidiaries have not guaranteed or otherwise become obligated with respect to
the Notes. The Notes are therefore effectively subordinated to all existing and
future liabilities, including indebtedness, of the Foreign Subsidiaries. At June
30, 1998, the Foreign Subsidiaries would have had liabilities of approximately
$43.3 million reflected on the Company's combined balance sheet. In addition,
the Foreign Subsidiaries assumed liabilities of approximately $8.0 million in
connection with the Samsung Forklift Acquisition. Claims of creditors of the
Foreign Subsidiaries, including trade creditors, will generally have priority as
to the assets of such subsidiaries over the claims of the Company and the
holders of the Company's indebtedness, including the Notes.
The Notes are issued in registered form, without coupons, and in
denominations of $1,000 and integral multiples thereof.
PRINCIPAL MATURITY AND INTEREST
The New Notes are limited in aggregate principal amount to $150.0 million
and will mature on November 15, 2006. Interest on the Notes will be payable
semi-annually on November 15 and May 15 of each year, to holders of record on
the immediately preceding November 1 and May 1, respectively. The Notes will
bear interest at 10 3/4% per annum. Interest on the New Notes will accrue from
the most recent date to which interest has been paid or, if no interest has been
paid, from May 15, 1998. Interest will be computed on the basis of a 360-day
year comprised of twelve 30-day months. The Notes will be payable both as to
principal and interest at the office or agency of the Company maintained for
such purpose within the City of New York or, at the option of the Company,
payment of interest may be made by check mailed to the holders of the Notes at
their respective addresses set forth in the register of holders of Notes. Until
otherwise designated by the Company, the Company's office or agency will be the
office of the Trustee maintained for such purpose. If a payment date is a Legal
Holiday, payment may be made at that place on the next succeeding day that is
not a Legal Holiday, and no interest shall accrue for the intervening period.
REDEMPTION
The Notes are not redeemable at the Company's option prior to November 15,
2001. Thereafter, the Notes will be subject to redemption at the option of the
Company, in whole or in part, upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of principal amount)
set
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forth below plus accrued and unpaid interest thereon, if any, to the applicable
date of redemption, if redeemed during the 12-month period beginning on November
15 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---- ----------
<S> <C>
2001...................................................... 105.375%
2002...................................................... 102.688
2003 and thereafter....................................... 100.000
</TABLE>
Notwithstanding the foregoing, the Indenture provides that at any time or
from time to time prior to November 15, 1999, the Company may, at its option,
redeem up to one-third of the aggregate principal amount of the New Notes and
Series C Notes issued on or after the Issue Date, at a redemption price of
110.75% of the principal amount thereof, plus accrued and unpaid interest, if
any, to the applicable redemption date, with the net cash proceeds of one or
more Public Equity Offerings; provided, that (a) such redemption shall occur
within 90 days of the date of closing of such public offering and (b) at least
two-thirds of the aggregate principal amount of New Notes and Series C Notes
issued on or after the Issue Date remains outstanding immediately after giving
effect to each such redemption.
If less than all of the New Notes and Series C Notes are to be redeemed at
any time, selection of New Notes and Series C 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 New Notes and Series C Notes are
listed, or, if the New Notes and Series C Notes are not so listed, on a pro rata
basis, by lot or by such other method as the Trustee deems to be fair and
appropriate, provided, that New Notes and Series C Notes of $1,000 or less may
not be redeemed in part. Notice of redemption will be mailed by first-class mail
at least 30 but not more than 60 days before the redemption date to each holder
of New Notes and Series C Notes to be redeemed at such holder's registered
address. If any Note is to be redeemed in part only, the notice of redemption
that relates to such Note will state the portion of the principal amount thereof
to be redeemed. A new Note in principal amount equal to the unredeemed portion
thereof will be issued in the name of the holder thereof upon cancellation of
the original Note. On and after the date of redemption, interest will cease to
accrue on Notes or portions thereof called for redemption.
The Notes will not be entitled to any mandatory redemption or sinking fund.
PURCHASE UPON CHANGE OF CONTROL
Upon the occurrence of a Change of Control, the Company will be required to
offer to purchase all the Notes then outstanding (the "Change of Control Offer")
at a purchase price equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest, if any, to the date of repurchase (the "Change of
Control Payment"). Within 30 days following any Change of Control, the Company
must mail or cause to be mailed a notice to each holder stating, among other
things: (i) that the Change of Control Offer is being made pursuant to this
provision and that all Notes tendered will be accepted for payment, (ii) the
purchase price and the purchase date, which will be no earlier than 30 days nor
later than 60 days from the date such notice is mailed (the "Change of Control
Payment Date"), (iii) that any Note not tendered will continue to accrue
interest, (iv) that, unless the Company defaults in the payment of the Change of
Control Payment, all Notes accepted for payment pursuant to the Change of
Control Offer will cease to accrue interest on the Change of Control Payment
Date, (v) that any holder electing to have Notes purchased pursuant to a Change
of Control Offer will be required to surrender the Notes, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Notes completed, to
the paying agent with respect to the Notes (the "Paying Agent") at the address
specified in the notice prior to the close of business on the third business day
preceding the Change of Control Payment Date, (vi) that any holder will be
entitled to withdraw such election if the Paying Agent receives, not later than
the close of business on the second business day preceding the Change of Control
Payment Date, a telegram, telex, facsimile transmission or letter setting forth
the name of the holder, the principal amount of Notes delivered for purchase,
and a statement that such holder is withdrawing his election to have such Notes
purchased, and (vii) that a holder whose Notes are being purchased only in part
will be issued new Notes equal in principal amount to the unpurchased portion of
the Notes surrendered, which unpurchased portion must be equal to $1,000 in
principal amount or an integral multiple thereof.
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The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of the Notes in connection with a Change of Control. To the extent
that the provisions of any securities laws or regulations conflict with the
"Change of Control" provisions of the Indenture, the Company will 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.
On the Change of Control Payment Date, the Company will, to the extent
lawful, (i) accept for payment the Notes or portions thereof tendered pursuant
to the Change of Control Offer, (ii) deposit with the Paying Agent an amount
equal to the Change of Control Payment in respect of all Notes or portions
thereof so tendered and not withdrawn, and (iii) deliver or cause to be
delivered to the Trustee the Notes so accepted together with an Officer's
Certificate stating that the Notes or portions thereof tendered to the Company
are accepted for payment. The Paying Agent will promptly mail to each holder of
Notes so accepted payment in an amount equal to the purchase price for such
Notes, and the Trustee will authenticate and mail to each holder a new Note
equal in principal amount to any unpurchased portion of the Notes surrendered,
if any, provided, that each such new Note will be in principal amount of $1,000
or an integral multiple thereof. The Company will announce the result of the
Change of Control Offer on or as soon as practicable after the Change of Control
Payment Date.
The Board of Directors of the Company may not waive the covenant relating
to the Company's obligation to make a Change of Control Offer. Except as
described above with respect to a Change of Control, the Indenture does not
contain provisions that permit the holders of the Notes to require that the
Company purchase or redeem the Notes in the event of a takeover,
recapitalization or similar restructuring.
There can be no assurance that sufficient funds will be available at the
time of any Change of Control Offer to make required purchases.
"Change of Control" means (i) the transfer (in one transaction or a series
of transactions) of all or substantially all of the Company's assets to any
Person or group (as such term is used in Section 13(d)(3) of the Exchange Act)
other than to one or more Existing Holders, (ii) the liquidation or dissolution
of the Company or the adoption of a plan by the stockholders of the Company
relating to the dissolution or liquidation of the Company, (iii) the acquisition
by any Person or group (as such term is used in Section 13(d)(3) of the Exchange
Act), except for one or more Existing Holders, of beneficial ownership, directly
or indirectly, of more than 50% of the voting power of the total outstanding
Voting Stock of Holdings, (iv) after the consummation of an initial public
offering of any class of common stock of the Company or Holdings, during any
period of two consecutive years, individuals who at the beginning of such period
constituted the Board of Directors of the Company or Holdings (together with any
new directors who have been appointed by CVC, or any Affiliate of CVC or whose
nomination for election by the stockholders of the Company was approved by a
vote of at least 66 2/3% of the directors 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 constitute a
majority of the Board of Directors of the Company or Holdings, as the case may
be, then still in office or (v) the failure by Holdings to own more than 50% of
the voting power of the total outstanding Voting Stock of the Company.
The definition of Change of Control includes a phrase relating to the
transfer of "all or substantially all" of the Company's assets. Although there
is a developing body of case law interpreting the phrase "substantially all,"
there is no precise established definition of the phrase under applicable law.
Accordingly, the ability of a holder of Notes to require the Company to
repurchase such Notes as a result of a transfer of less than all of the assets
of the Company to another Person or group may be uncertain.
"Existing Holders" shall mean (i) CVC, (ii) any Affiliate of CVC, (iii) any
officer, employee or director of CVC, (iv) the Management Investors, (v) Thomas
Snyder and Diether Klingelnberg and (vi) in the case of any natural Person
specified in the foregoing clauses, any spouse or lineal descendant (including
by adoption) of such Person; provided, that in no event shall the Persons
specified in clauses (iii) through (vi) be deemed "Existing Holders" with
respect to more than 30% of the voting power of the total outstanding Voting
Stock of the Company or Holdings.
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CERTAIN COVENANTS
Limitation on Restricted Payments. The Company will not, and will not
permit any of its Restricted Subsidiaries to, directly or indirectly (i) declare
or pay any dividend or make any distribution on account of any Equity Interests
of the Company or any of its Subsidiaries (other than dividends or distributions
payable in Equity Interests (other than Disqualified Stock) of the Company or
dividends or distributions payable to the Company or any Wholly Owned
Subsidiary), (ii) purchase, redeem or otherwise acquire or retire for value any
Equity Interest of the Company, any Subsidiary or any other Affiliate of the
Company (other than any such Equity Interest owned by the Company or any Wholly
Owned Subsidiary), (iii) make any principal payment on, or purchase, redeem,
defease or otherwise acquire or retire for value any Indebtedness of the Company
or any Guarantor that is subordinated in right of payment to the Notes or such
Guarantor's Guarantee thereof, as the case may be, prior to any scheduled
principal payment, sinking fund payment or other payment at the stated maturity
thereof, or (iv) make any Restricted Investment (all such payments and other
actions set forth in clauses (i) through (iv) above being collectively referred
to as "Restricted Payments") unless, at the time of such Restricted Payment:
(a) no Default or Event of Default has occurred and is continuing or
would occur as a consequence thereof,
(b) immediately after giving effect thereto on a pro forma basis, the
Company could incur at least $1.00 of additional Indebtedness under the
Interest Coverage Ratio test set forth in the covenant described under
"-- Limitation on Incurrence of Indebtedness," and
(c) such Restricted Payment (the value of any such payment, if other
than cash, being determined in good faith by the Board of Directors and
evidenced by a resolution set forth in an Officers' Certificate delivered
to the Trustee), together with the aggregate of all other Restricted
Payments made after the date of the Original Indenture (including
Restricted Payments permitted by clauses (i) and (ii) of the next following
paragraph and excluding Restricted Payments permitted by the other clauses
therein), is less than the sum of (1) 50% of the Consolidated Net Income of
the Company for the period (taken as one accounting period) from the
beginning of the first quarter commencing immediately after the date of the
Original Indenture to the end of the Company's most recently ended fiscal
quarter for which internal financial statements are available at the time
of such Restricted Payment (or, if such Consolidated Net Income for such
period is a deficit, 100% of such deficit), plus (2) 100% of the aggregate
net cash proceeds (or of the net cash proceeds received upon the conversion
of non-cash proceeds into cash) received by the Company from the issuance
or sale, other than to a Subsidiary, of Equity Interests of the Company
(other than Disqualified Stock) after the date of the Original Indenture
and on or prior to the time of such Restricted Payment, plus (3) 100% of
the aggregate net cash proceeds (or of the net cash proceeds received upon
the conversion of non-cash proceeds into cash) received by the Company from
the issuance or sale, other than to a Subsidiary, of any convertible or
exchangeable debt security of the Company that has been converted or
exchanged into Equity Interests of the Company (other than Disqualified
Stock) pursuant to the terms thereof after the date of the Original
Indenture and on or prior to the time of such Restricted Payment (including
any additional net cash proceeds received by the Company upon such
conversion or exchange) plus (4) 100% of the aggregate after-tax net cash
proceeds (or of the after-tax net cash proceeds received upon the
conversion of non-cash proceeds into cash) received by the Company or a
Restricted Subsidiary from the sale or other disposition of any Investment
constituting a Restricted Payment that was made after the date of the
Original Indenture; provided, that the gain on such sale or disposition, if
any, shall be excluded in determining Consolidated Net Income for purposes
of clause (1) above.
The foregoing provisions will not prohibit (i) the payment of any dividend
within 60 days after the date of declaration thereof, if at said date of
declaration such payment would not have been prohibited by the provisions of the
Indenture, (ii) the redemption, purchase, retirement or other acquisition of any
Equity Interests of the Company in exchange for, or out of the proceeds of the
substantially concurrent sale (other than to a Subsidiary) of, other Equity
Interests of the Company (other than Disqualified Stock), (iii) the redemption,
repurchase or payoff of any Indebtedness (1) with proceeds of any Refinancing
Indebtedness
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<PAGE> 77
permitted to be incurred pursuant to the provision described under
"-- Limitation on Incurrence of Indebtedness" or (2) solely in exchange for, or
out of the proceeds of the substantially concurrent sale (other than to a
Subsidiary) of, any Equity Interests of the Company (other than Disqualified
Stock), (iv) Investments by the Company or any Restricted Subsidiary, in an
aggregate amount not to exceed $5.0 million, in an Unrestricted Subsidiary
formed primarily for the purpose of financing purchases and leases of inventory
manufactured by the Company or any of its Restricted Subsidiaries, (v) payments
by the Company to Holdings pursuant to the Tax Sharing Agreement, (vi)
distributions, loans or advances to Holdings in an aggregate amount not to
exceed $500,000 per fiscal year; provided, that such amounts are used by
Holdings to pay ordinary operating expenses (including, without limitation,
reasonable directors' fees and expenses, indemnification obligations and
professional fees and expenses) and certain CLARK management compensation
expenses, (vii) (A) payments to, and promptly used by, Holdings to repurchase
Capital Stock or Indebtedness of Holdings from directors, officers and employees
of the Company and its Subsidiaries, including Management Investors, who have
died or whose employment has been terminated, and (B) loans or advances to
employees of the Company or any of its Subsidiaries; provided, that the
aggregate amount of such payments, loans and advances in any fiscal year shall
not exceed the lesser of (x) $500,000 plus any amount available for such
payments pursuant to this clause (x) since the date of the Original Indenture
that have not been used for such purpose and (y) $2.0 million, (viii) Permitted
Transactions or (ix) other Restricted Payments in an aggregate amount not to
exceed $3.0 million; provided, that with respect to clauses (iv), (vii) and (ix)
above, no Default or Event of Default shall have occurred and be continuing at
the time, or shall occur as a consequence thereof. In addition, so long as any
of the Series B Notes are outstanding, the foregoing provisions will not
prohibit any Restricted Payment to the extent such prohibition would violate the
covenant in the Original Indenture relating to limitations on restrictions on
subsidiary dividends.
Not later than the date of making each Restricted Payment, the Company will
deliver to the Trustee an Officers' Certificate stating that such Restricted
Payment is permitted and setting forth the basis upon which the calculations
required by this covenant were computed, which calculations may be based upon
the Company's latest available financial statements.
Limitation on Incurrence of Indebtedness. The Company will not, and will
not permit any of its Restricted Subsidiaries to, directly or indirectly, (1)
create, incur, issue, assume, guaranty or otherwise become directly or
indirectly liable, contingently or otherwise, (collectively, "incur"), with
respect to any Indebtedness (including Acquired Debt) or (2) issue any
Disqualified Stock; provided, that the Company may incur Indebtedness (including
Acquired Debt) or issue shares of Disqualified Stock and any Restricted
Subsidiary may incur Acquired Debt, in each case if (x) no Default or Event of
Default shall have occurred and be continuing at the time of, or would occur
after giving effect on a pro forma basis to such incurrence or issuance, and (y)
the Interest Coverage Ratio for the Company's most recently ended four full
fiscal quarters for which internal financial statements are available
immediately preceding the date on which such additional Indebtedness is incurred
or such Disqualified Stock is issued would have been at least equal to the ratio
set forth below opposite the period in which such incurrence or issuance occurs,
determined on a pro forma basis (including a pro forma application of the net
proceeds therefrom), as if the additional Indebtedness had been incurred, or the
Disqualified Stock had been issued, as the case may be, at the beginning of such
four-quarter period:
<TABLE>
<CAPTION>
PERIOD ENDING RATIO
- ------------- -----
<S> <C>
November 15, 1998........................................... 2.00
Thereafter.................................................. 2.50
</TABLE>
The foregoing limitations will not prohibit the incurrence of:
(a) Indebtedness of the Company under the Revolving Credit Facility
and Indebtedness of CLARK Europe and its subsidiaries under the German
Subsidiary Facilities, provided, that the aggregate principal amount of
Indebtedness so incurred on any date, together with all other Indebtedness
incurred pursuant to this clause (a) and outstanding on such date, shall
not exceed the greater of (x) $40.0 million, less any required permanent
repayments (which are accompanied by a corresponding permanent commitment
reduction) thereunder, and (y) the sum, on such date, of (i) 90% of
Eligible Receivables
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(as defined) of the Company and the Restricted Subsidiaries, plus (ii) 65%
of Eligible Inventory (as defined) of the Company and the Restricted
Subsidiaries,
(b) performance bonds, appeal bonds, surety bonds, insurance
obligations or bonds and other similar bonds or obligations incurred in the
ordinary course of business,
(c) obligations incurred (i) to fix the interest rate on any variable
rate Indebtedness otherwise permitted by the Indenture, (ii) to hedge
currency risk with respect to any receivable or liability, the payment of
which is determined by reference to a foreign currency, or (iii) to protect
against fluctuations in the price of raw materials used in the ordinary
course of business of the Company and its Restricted Subsidiaries
(collectively, "Hedging Obligations"),
(d) Indebtedness arising out of Capital Lease Obligations or Purchase
Money Obligations (collectively, "Purchase Money Indebtedness") in an
aggregate amount not to exceed $10.0 million outstanding at any time,
(e) Indebtedness owed by (i) a Restricted Subsidiary to the Company or
to a Wholly Owned Subsidiary or (ii) the Company to a Wholly Owned
Subsidiary,
(f) Floor Plan Guarantees incurred in the ordinary course of business,
(g) Indebtedness outstanding on the date of the Indenture, including
the Series C Notes,
(h) Guarantees by the Company or any Guarantor of Indebtedness
otherwise permitted to be incurred by the Indenture,
(i) 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, that such Indebtedness
is extinguished within three business days of incurrence,
(j) Indebtedness of the Company or any Restricted Subsidiary in
addition to that described in clauses (a) through (i) above, so long as the
aggregate principal amount of all such Indebtedness incurred pursuant to
this clause (j) does not exceed $10.0 million at any one time outstanding
(which may be, but shall not be required to be, incurred, in whole or in
part, under the Revolving Credit Facility or the Germany Subsidiary
Facilities), and
(k) Indebtedness issued in exchange for, or the proceeds of which are
contemporaneously used to extend, refinance, renew, replace, or refund
(collectively, "Refinance") Indebtedness referred to in clause (g) above or
this clause (k) or Indebtedness incurred pursuant to the Interest Coverage
Ratio test set forth in the immediately preceding paragraph ("Refinancing
Indebtedness"); provided, that (1) the principal amount of such Refinancing
Indebtedness does not exceed the principal amount of Indebtedness so
Refinanced (plus the premiums required to be paid, and the out-of-pocket
expenses (other than those payable to an Affiliate of the Company)
reasonably incurred, in connection therewith), (2) the Refinancing
Indebtedness has a final scheduled maturity that exceeds the final stated
maturity, and a Weighted Average Life to Maturity that is equal to or
greater than the Weighted Average Life to Maturity, of the Indebtedness
being Refinanced and (3) the Refinancing Indebtedness ranks, in right of
payment, no less favorable to the Notes as the Indebtedness being
Refinanced.
Limitation on Asset Sales. The Company will not, and will not permit any
Restricted Subsidiary to, make any Asset Sale unless (i) the Company or such
Restricted Subsidiary receives consideration at the time of such Asset Sale at
least equal to the fair market value (as determined in good faith by the Board
of Directors as evidenced by a resolution of the Board of Directors set forth in
an Officers' Certificate delivered to the Trustee) of the assets subject to such
Asset Sale, (ii) at least 75% of the consideration for such Asset Sale is in the
form of cash, Cash Equivalents or liabilities of the Company or any Restricted
Subsidiary (other than liabilities that are by their terms subordinated to the
Notes or any Guarantee) that are assumed by the transferee of such assets
(provided, that there is no further recourse to the Company and its Restricted
Subsidiaries with respect to such liabilities), and (iii) within 12 months of
such Asset Sale, the Net Proceeds thereof are (a) invested in assets related to
the business of the Company or its Restricted Subsidiaries or (b) applied to
make an offer to purchase the Series B Notes, if any are then outstanding,
pursuant to the Original Indenture, at a price equal to 100% of the principal
amount of the Series B Notes, plus accrued and
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<PAGE> 79
unpaid interest, if any, to the date of purchase or (c) to the extent not used
in clauses (a) or (b), applied to make an offer to purchase the Series C Notes
and the New Notes as described below (an "Excess Proceeds Offer"); provided,
that if the amount of Net Proceeds from any Asset Sale not used pursuant to
clauses (a) and (b) above is less than $5.0 million, the Company will not be
required to make an offer pursuant to clause (c). Pending the final application
of any such Net Proceeds, the Company or any Restricted Subsidiary may
temporarily reduce Indebtedness under the Revolving Credit Facility or the
German Subsidiary Facilities, or temporarily invest such Net Proceeds in Cash
Equivalents.
The amount of Net Proceeds not used as set forth in the preceding clause
(a) and (b) constitutes "Excess Proceeds." If the Company elects, or becomes
obligated to make an Excess Proceeds Offer, the Company will offer to purchase
the applicable Notes having an aggregate principal amount equal to the Excess
Proceeds (the "Purchase Amount"), at a purchase price equal to 100% of the
aggregate principal amount thereof, plus accrued and unpaid interest, if any, to
the purchase date. The Company must commence such Excess Proceeds Offer not
later than 30 days after the expiration of the 12-month period following the
Asset Sale that produced Excess Proceeds. If the aggregate purchase price for
the Notes tendered pursuant to the Excess Proceeds Offer is less than the Excess
Proceeds, the Company and its Restricted Subsidiaries may use the portion of the
Excess Proceeds remaining after payment of such purchase price for general
corporate purposes.
Each Excess Proceeds Offer will remain open for a period of 20 business
days and no longer, unless a longer period is required by law (the "Excess
Proceeds Offer Period"). Promptly after the termination of the Excess Proceeds
Offer Period (the "Excess Proceeds Payment Date"), the Company will purchase and
mail or deliver payment for the Purchase Amount for the Notes or portions
thereof tendered, pro rata or by such other method as may be required by law,
or, if less than the Purchase Amount has been tendered, all Notes tendered
pursuant to the Excess Proceeds Offer. The principal amount of Notes to be
purchased pursuant to an Excess Proceeds Offer may be reduced by the principal
amount of Notes acquired by the Company through purchase or redemption (other
than pursuant to a Change of Control Offer) subsequent to the date of the Asset
Sale and surrendered to the Trustee for cancellation.
Any Excess Proceeds Offer will be conducted in compliance with applicable
regulations under the Federal securities laws, including Exchange Act Rule
14e-1. 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.
There can be no assurance that sufficient funds will be available at the
time of any Excess Proceeds Offer to make required repurchases. The Company's
failure to comply with the covenant described above will be an Event of Default
under the Indenture if such failure continues for a specified period and the
required notice is given by the Trustee or the holders of not less than 25% in
principal amount of the then outstanding Series C Notes and New Notes.
Limitation on Liens. The Company will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, create, incur, assume or
suffer to exist any Lien on any asset (including, without limitation, all real,
tangible or intangible property) of the Company or any Restricted Subsidiary,
whether now owned or hereafter acquired, or on any income or profits therefrom,
or assign or convey any right to receive income therefrom, except (i) Liens on
accounts receivable and inventory and proceeds thereof (and certain rights
relating thereto) securing Indebtedness permitted to be incurred under the
Revolving Credit Facility, (ii) Liens on property, plant, equipment, accounts
receivable and inventory of CLARK Europe and its subsidiaries, and proceeds
thereof (and certain rights relating thereto) securing Indebtedness permitted to
be incurred under the German Subsidiary Facilities, (iii) Purchase Money Liens,
and (iv) Permitted Liens.
Limitation on Restrictions on Subsidiary Dividends. The Company will not,
and will not permit any Restricted Subsidiary to, directly or indirectly, create
or otherwise cause or suffer to exist or become effective any encumbrance or
restriction on the ability of any Restricted Subsidiary (a) to (1) pay dividends
or make any other distributions to the Company or any of its Restricted
Subsidiaries (A) on such Restricted Subsidiary's Capital Stock or (B) with
respect to any other interest or participation in, or measured by, such
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<PAGE> 80
Restricted Subsidiary's profits or (2) pay any indebtedness owed to the Company
or any of its Restricted Subsidiaries, (b) make loans or advances to the Company
or any of its Restricted Subsidiaries, or (c) transfer any of its assets to the
Company or any of its Restricted Subsidiaries, except for such encumbrances or
restrictions existing under or by reason of (i) the Revolving Credit Facility,
as in effect on the Issue Date, or any refinancing thereof containing
restrictions that are not materially more restrictive than those contained in
the Revolving Credit Facility on the Issue Date, (ii) the Original Notes, the
Series B Notes and the Original Indenture, each as in effect on the Issue Date,
or any refinancing thereof containing restrictions that are not materially more
restrictive than those contained in the Original Notes, the Series B Notes and
the Original Indenture, respectively, on the Issue Date; (iii) customary net
worth restrictions on the actions specified in clause (a)(1) above contained in
the German Subsidiary Facilities, (iv) the Indenture and the Series C Notes and
the New Notes, (v) applicable law, (vi) restrictions with respect to a
Subsidiary that was not a Subsidiary on the Issue Date in existence at the time
such Person becomes a Subsidiary (but not created as a result of or in
anticipation of such Person becoming a Subsidiary); provided, that such
restrictions are not applicable to any other Person or the properties or assets
of any other Person, (vii) customary non-assignment and net worth provisions of
any contract or lease entered into in the ordinary course of business, (viii)
customary restrictions on the transfer of assets subject to a Lien permitted
under the Indenture imposed by the holder of such Lien, (ix) restrictions
imposed by any agreement to sell assets or Capital Stock to any Person pending
the closing of such sale, and (x) permitted Refinancing Indebtedness (including
Indebtedness Refinancing Acquired Debt), provided, that such restrictions
contained in any agreement governing such Refinancing Indebtedness are not
materially more restrictive than those contained in any agreements governing the
Indebtedness being Refinanced.
Merger, Consolidation or Sale of Assets. The Company may not consolidate
or merge with or into (whether or not the Company is the surviving corporation),
or sell, assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its properties or assets (determined on a consolidated
basis for the Company and its Restricted Subsidiaries) in one or more related
transactions to, any other Person unless (i) the Company is the surviving Person
or the Person formed by or surviving any such consolidation or merger (if other
than the Company) or to which such sale, assignment, transfer, lease, conveyance
or other disposition has been made is a corporation organized and existing under
the laws of the United States, any state thereof or the District of Columbia,
(ii) the Person formed by or surviving any such consolidation or merger (if
other than the Company) or the Person to which such sale, assignment, transfer,
lease, conveyance or other disposition has been made assumes all the Obligations
of the Company, pursuant to a supplemental indenture in a form reasonably
satisfactory to the Trustee, under the Notes, the Indenture and the Original
Indenture, (iii) immediately after such transaction, no Default or Event of
Default exists, and (iv) the Company, or any Person formed by or surviving any
such consolidation or merger, or to which such sale, assignment, transfer,
lease, conveyance or other disposition has been made, (A) has a Consolidated Net
Worth (immediately after the transaction but prior to any purchase accounting
adjustments resulting from the transaction) equal to or greater than the
Consolidated Net Worth of the Company immediately preceding the transaction and
(B) will be permitted, at the time of such transaction and after giving pro
forma effect thereto as if such transaction had occurred at the beginning of the
applicable four-quarter period, to incur at least $1.00 of additional
Indebtedness pursuant to the Interest Coverage Ratio test set forth in the
covenant described under "-- Limitation on Incurrence of Indebtedness."
In the event of any transaction (other than a lease) complying with the
conditions listed in the immediately preceding paragraph in which the Company is
not the surviving Person, such surviving Person or transferee shall succeed to,
and be substituted for, and may exercise every right and power of, the Company,
and the Company shall be discharged from its Obligations under, the Indenture,
the Original Indenture and the Notes.
Limitation on Transactions with Affiliates. The Company will not, and will
not permit any of its Restricted Subsidiaries to, directly or indirectly, sell,
lease, transfer or otherwise dispose of any of its properties or assets to, or
purchase any property or assets from, or enter into any contract, agreement,
understanding, loan, advance or guarantee with, or for the benefit of, any
Affiliate (each of the foregoing, an "Affiliate Transaction"), except for (i)
Affiliate Transactions, which together with all Affiliate Transactions that are
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<PAGE> 81
part of a common plan, have an aggregate value of not more than $1.0 million;
provided, that such transactions are conducted in good faith and on terms that
are no less favorable to the Company or the relevant Restricted Subsidiary than
those that would have been obtained in a comparable transaction at such time on
an arm's-length basis from a Person that is not an Affiliate of the Company or
such Restricted Subsidiary, (ii) Affiliate Transactions, which together with all
Affiliate Transactions that are part of a common plan, have an aggregate value
of not more than $5.0 million; provided, that a majority of the disinterested
members of the Board of Directors of the Company determine that such
transactions are conducted in good faith and on terms that are no less favorable
to the Company or the relevant Restricted Subsidiary than those that would have
been from a Person that is not an Affiliate of the Company or such Restricted
Subsidiary, and (iii) Affiliate Transactions for which the Company delivers to
the Trustee an opinion as to the fairness to the Company or such Restricted
Subsidiary from a financial point of view, issued by an investment banking firm
of national standing; provided, that the following will not be deemed to be
Affiliate Transactions: (i) employment agreements entered into by the Company or
any Restricted Subsidiary in the ordinary course of business with the approval
of a majority of the disinterested members of the Company's Board of Directors,
(ii) transactions between or among the Company and/or its Wholly Owned
Subsidiaries, (iii) Restricted Payments permitted by the provisions of the
Indenture described above under "-- Limitation on Restricted Payments," and (iv)
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 a majority of the disinterested
directors of the Company's Board of Directors or, if none, unanimously by the
Board of Directors.
Restrictions on Sale and Issuance of Subsidiary Stock. The Company shall
not sell, and shall not permit any of its Restricted Subsidiaries to issue or
sell, any shares of Capital Stock (other than directors' qualifying shares) of
any Restricted Subsidiary to any Person other than the Company or a Wholly Owned
Subsidiary; provided, that the Company and its Restricted Subsidiaries may sell
all of the Capital Stock of a Restricted Subsidiary owned by the Company and its
Restricted Subsidiaries if the Net Proceeds from such Asset Sale are used in
accordance with the terms of the covenant described under "-- Limitation on
Asset Sales."
Line of Business. The Company will not, and will not permit any Restricted
Subsidiary to, engage in any business other than (a) the business conducted or
proposed to be conducted by the Company and the Restricted Subsidiaries on the
Issue Date and (b) any business that in the reasonable, good faith judgment of
the Board of Directors of the Company is ancillary, complementary,
supplementary, or related to, or an extension of, any business described in
clause (a) above.
Guarantors. The Indenture will provide that as long as any Series C Notes
or New Notes remain outstanding, any Restricted Subsidiary that is not a Foreign
Subsidiary 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 Series C Notes, the New 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 Guarantor for all purposes of the Indenture. On the date hereof, the
Company has two Restricted Subsidiaries other than Foreign Subsidiaries and,
accordingly, there are two Guarantors.
If all of the Capital Stock of any Guarantor is sold to a Person (other
than the Company or any of its Restricted Subsidiaries) and the Net Proceeds
from such Asset Sale are used in accordance with the terms of the covenant
described under "-- Limitation on Asset Sales," then such Guarantor will be
released and discharged from all of its obligations under its Guarantee of the
Series C Notes, the New Notes and the Indenture.
The obligations of each Guarantor will be limited to the maximum amount as
will, after giving effect to all other contingent and fixed liabilities of such
Guarantor and after giving effect to any collections from or payments made by or
on behalf of any other Guarantor in respect of the obligations of such other
Guarantor under its Guarantee of the Notes, result in the obligations of such
Guarantor under its Guarantee of the Notes
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not constituting a fraudulent conveyance or fraudulent transfer under Federal or
state law. See "Risk Factors -- Guarantees."
Rule 144A Information Requirement. The Company will furnish to the holders
of the Notes and prospective purchasers of Notes designated by the holders of
Notes, upon their request, the information required to be delivered pursuant to
Rule 144A(d)(4) under the Securities Act for so long as is required for an offer
or sale of the Notes to qualify for an exemption under Rule 144A. The Company
will provide a copy of the Registration Rights Agreement to prospective
investors upon request.
Reports. Whether or not required by the rules and regulations of the
Commission, so long as any Notes are outstanding, the Company will furnish to
the Trustee, and deliver or cause to be delivered to the holders of Notes, (i)
all quarterly and annual financial information that would be required to be
contained in a filing with the Commission on Forms 10-Q and 10-K if the Company
were required to file such Forms, including for each a "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and, with respect
to the annual information only, a report thereon by the Company's independent
certified public accountants and (ii) all reports that would be required to be
filed with the Commission on Form 8-K if the Company were required to file such
reports. From and after the time a registration statement with respect to the
Notes is declared effective by the Commission, the Company will file such
information with the Commission, provided that the Commission will accept such
filing.
EVENTS OF DEFAULT AND REMEDIES
Each of the following will constitute an Event of Default under the
Indenture: (i) default for 30 days in the payment when due of interest on the
New Notes and Series C Notes, (ii) default in payment of principal (or premium,
if any) on the New Notes and Series C Notes when due at maturity, redemption, by
acceleration or otherwise, (iii) default in the performance or breach of the
provisions of "-- Merger, Consolidation or Sale of Assets," (iv) failure by the
Company or any Guarantor for 60 days after notice to comply with certain other
agreements in the Indenture the New Notes or the Series C Notes, (v) default
under (after giving effect to any applicable grace periods or any extension of
any maturity date) any mortgage, indenture or instrument under which there may
be issued or by which there may be secured or evidenced any Indebtedness for
money borrowed by the Company or any Restricted Subsidiary (or the payment of
which is guaranteed by the Company or any Restricted Subsidiary), whether such
Indebtedness or guarantee now exists or is created after the date of the
Indenture, if (a) either (1) such default results from the failure to pay
principal on such Indebtedness or (2) as a result of such default the maturity
of such Indebtedness has been accelerated, and (b) the principal amount of such
Indebtedness, together with the principal amount of any other such Indebtedness
with respect to which such a payment default (after the expiration of any
applicable grace period or any extension of the maturity date) has occurred, or
the maturity of which has been so accelerated, exceeds $5.0 million in the
aggregate, (vi) failure by the Company or any Restricted Subsidiary to pay final
non-appealable judgments (other than any judgment as to which a reputable
insurance company has accepted full liability) aggregating in excess of $2.5
million which judgments are not discharged, bonded or stayed within 60 days
after their entry, (vii) written assertion by the Company or any of the
Guarantors, of the unenforceability of their obligations under the Indenture,
the New Notes, the Series C Notes or the Guarantees, and (viii) certain events
of bankruptcy or insolvency with respect to the Company or any Material
Subsidiary.
If any Event of Default occurs and is continuing, the Trustee or the
holders of at least 25% in principal amount of the then outstanding New Notes
and Series C Notes may declare by written notice to the Company and the Trustee
all the New Notes and Series C Notes to be due and payable immediately.
Notwithstanding the foregoing, in the case of an Event of Default arising from
certain events of bankruptcy or insolvency, all outstanding New Notes and Series
C Notes will become due and payable without further action or notice. Holders of
the New Notes and Series C Notes may not enforce the Indenture, the New Notes or
the Series C Notes except as provided in the Indenture. Subject to certain
limitations, holders of a majority in principal amount of the then outstanding
New Notes may direct the Trustee in its exercise of any trust or power.
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The holders of a majority in aggregate principal amount of the New Notes
and Series C Notes then outstanding, by written notice to the Company and the
Trustee, may on behalf of the holders of all of the New Notes and Series C Notes
(i) waive any existing Default or Event of Default and its consequences under
the Indenture except a continuing Default or Event of Default in the payment of
interest on, or the principal of, the New Notes or Series C Notes or a Default
or an Event of Default with respect to any covenant or provision which cannot be
modified or amended without the consent of the holder of each outstanding New
Note or Series C Note affected, and/or (ii) rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default (except nonpayment of principal or
interest that has become due solely because of the acceleration) have been cured
or waived.
The Company is required upon becoming aware of any Default or Event of
Default, to deliver to the Trustee a statement specifying such Default or Event
of Default and what action the Company is taking or proposes to take with
respect thereto.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator, stockholder or controlling
person of the Company or any Guarantor, as such, will have any liability for any
obligations of the Company under the Notes or the Indenture or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each holder of the Notes by accepting a Note waives and releases all such
liability. The waiver and release will be part of the consideration for issuance
of the Notes and the Guarantees. Such waiver may not be effective to waive
liabilities under the Federal securities laws and it is the view of the
Commission that such a waiver is against public policy.
DEFEASANCE AND DISCHARGE OF THE INDENTURE AND THE NOTES
The Indenture provides that the Company will be discharged from any and all
obligations in respect of the Series C Notes and the New Notes, other than the
obligation to duly and punctually pay the principal of, and premium, if any, and
interest on, the Series C Notes and the New Notes in accordance with the terms
of the Series C Notes and the New Notes and the Indenture upon irrevocable
deposit with the Trustee, in trust, of money and/or U.S. government obligations
that will provide money in an amount sufficient in the opinion of a nationally
recognized accounting firm to pay the principal of and premium, if any, and each
installment of interest, if any, on the due dates thereof on the Series C Notes
and the New Notes. Such trust may only be established if, among other things,
(i) the Company has delivered to the Trustee an opinion of independent counsel
to the effect that the holders of the Series C Notes and the New Notes will not
recognize income, gain or loss for Federal income tax purposes as a result of
such deposit and defeasance and will be subject to Federal income tax on the
same amount, in the same manner and at the same times as would have been the
case if such deposit and defeasance had not occurred, (ii) no Default or Event
of Default shall have occurred or be continuing, and (iii) certain customary
conditions precedent are satisfied.
The Company may satisfy and discharge its Obligations under the Indenture
to holders of the Series C Notes and the New Notes by delivering to the Trustee
for cancellation all outstanding Series C Notes and the New Notes or by
depositing with the Trustee or the Paying Agent, if applicable, after the Series
C Notes and the New Notes have become due and payable, cash sufficient to pay at
the stated maturity of all of the outstanding Series C Notes and the New Notes
and paying all other sums payable under the Indenture by the Company. If the
Company has so deposited such cash, the Guarantors will be discharged from their
Obligations under their Guarantees of the Series C Notes and the New Notes and
the Indenture.
TRANSFER AND EXCHANGE
A holder may transfer or exchange Series C Notes or New Notes in accordance
with the Indenture. The Registrar and the Trustee may require a holder, among
other things, to furnish appropriate endorsements and transfer documents and the
Company may require a holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company is not required to transfer or exchange
any Note selected for
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redemption. Also, the Company is not required to transfer or exchange any Note
for a period of 15 days before a selection of Notes to be redeemed.
The registered holder of a Note will be treated as the owner of it for all
purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the two succeeding paragraphs, the Indenture, the New
Notes and the Series C Notes may be amended or supplemented with the consent of
the holders of at least a majority in principal amount of the New Notes and
Series C Notes then outstanding (including consents obtained in connection with
a tender offer or exchange offer for New Notes and Series C Notes) and any
existing Default or Event of Default or compliance with any provision of the
Indenture, the New Notes or Series C Notes may be waived with the consent of the
holders of a majority in principal amount of the then outstanding New Notes and
Series C Notes (including consents obtained in connection with a tender offer or
exchange offer for New Notes or Series C Notes).
Without the consent of each holder affected, an amendment or waiver may not
(with respect to any New Notes or Series C Notes held by a non-consenting holder
of New Notes or Series C Notes): (i) reduce the principal amount of New Notes or
Series C Notes whose holders must consent to an amendment, supplement or waiver,
(ii) reduce the principal of, or the premium on, or change the fixed maturity of
any New Note or Series C Note, alter the provisions with respect to the
redemption of the New Notes or Series C Notes in a manner adverse to the holders
of the New Notes or Series C Notes, or alter the price at which repurchases of
the New Notes or Series C Notes may be made pursuant to an Excess Proceeds Offer
or Change of Control Offer, (iii) reduce the rate of or change the time for
payment of interest on any New Note or Series C Note, (iv) waive a Default or
Event of Default in the payment of principal of or premium, if any, or interest
on the New Notes or Series C Notes, (v) make any New Note or Series C Note
payable in money other than that stated in the New Notes or Series C Notes, (vi)
make any change in the provisions of the Indenture relating to waivers of past
Defaults or the rights of holders of New Notes or Series C Notes to receive
payments of principal of or interest on the New Notes or Series C Notes, (vii)
waive a redemption payment with respect to any New Note or Series C Note, (viii)
adversely affect the contractual ranking of the New Notes or Series C Notes or
Guarantees of the New Notes or Series C Notes, or (ix) make any change in the
foregoing amendment and waiver provisions.
Notwithstanding the foregoing, without the consent of the holders of New
Notes and the Series C Notes, the Company, the Guarantors and the Trustee may
amend or supplement the Indenture, the New Notes or the Series C Notes to cure
any ambiguity, defect or inconsistency, to provide for uncertificated Notes in
addition to or in place of certificated Notes, to provide for the assumption of
the Company's obligations to holders of the New Notes and the Series C Notes or
any Guarantor's obligation under its Guarantee of the New Notes and the Series C
Notes in the case of a merger or consolidation, to make any change that would
provide any additional rights or benefits to the holders of the New Notes and
the Series C Notes or that does not adversely affect the legal rights under the
Indenture of any such holder, to release any Guarantee of the New Notes and the
Series C Notes permitted to be released under the terms of the Indenture, or to
comply with requirements of the Commission in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act.
CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such
claim as security or otherwise. The Trustee will be permitted to engage in other
transactions; provided, that if the Trustee acquires any conflicting interest it
must eliminate such conflict within 90 days, apply to the Commission for
permission to continue or resign.
The holders of a majority in principal amount of the then outstanding New
Notes and Series C Notes will have the right to direct the time, method and
place of conducting any proceeding for exercising any remedy available to the
Trustee, subject to certain exceptions. The Indenture provides that in case an
Event of Default
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occurs (and is not cured), the Trustee will be required, in the exercise of its
power, to use the degree of care of a prudent man in the conduct of his own
affairs. Subject to such provisions, the Trustee will be under no obligation to
exercise any of its rights or powers under the Indenture at the request of any
holder of New Notes or Series C Notes, unless such holder shall have offered to
the Trustee security and indemnity satisfactory to it against any loss,
liability or expense.
ADDITIONAL INFORMATION
Anyone who receives this Prospectus may obtain a copy of the Indenture
without charge by writing to the Company at 172 Trade Street, Lexington,
Kentucky 40511; Attention: Joseph F. Lingg.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full definition of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
"Acquired Debt" means Indebtedness of a Person existing at the time such
Person is merged with or into the Company or a Restricted Subsidiary or becomes
a Restricted Subsidiary, other than Indebtedness incurred in connection with, or
in contemplation of, such Person merging with or into the Company or a
Restricted Subsidiary or becoming a Restricted Subsidiary; provided, that
Indebtedness of such Person that is redeemed, defeased, retired or otherwise
repaid at the time, or immediately upon consummation, of the transaction by
which such Person is merged with or into the Company or a Restricted Subsidiary
or becomes a Restricted Subsidiary shall not be Acquired Debt.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, will mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise. Notwithstanding the
foregoing, neither Initial Purchaser nor any of their respective Affiliates will
be deemed to be Affiliates of the Company.
"Asset Sale" means any direct or indirect (i) sale, assignment, transfer,
lease, conveyance, or other disposition (including, without limitation, by way
of merger or consolidation) (collectively, a "transfer"), other than in the
ordinary course of business, of any assets of the Company or any Restricted
Subsidiary or (ii) issuance of any Capital Stock of any Restricted Subsidiary,
in each case to any Person (other than the Company or a Restricted Subsidiary
and other than directors' qualifying shares). For purposes of this definition,
(a) any series of transfers that are part of a common plan shall be deemed a
single Asset Sale and (b) the term "Asset Sale" shall not include any
disposition of all or substantially all of the assets of the Company that is
governed under and complies with the terms of the covenant described under
"-- Merger, Consolidation or Sale of Assets."
"Capital 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 (i) with respect to any Person that is a corporation,
any and all shares, interests, participations, rights or other equivalents
(however designated) of corporate stock, and (ii) with respect to any other
Person, any and all partnership or other equity interests of such Person.
"Cash Equivalent" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof), (ii) time deposits and
certificates of deposit and commercial paper issued by the parent corporation of
any domestic commercial bank of recognized standing having capital and surplus
in excess of $250,000,000 and commercial paper issued by others rated at least
A-2
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or the equivalent thereof by Standard & Poor's Corporation or at least P-2 or
the equivalent thereof by Moody's Investors Service, Inc. and in each case
maturing within one year after the date of acquisition and (iii) investments in
money market funds substantially all of whose assets comprise securities of the
types described in clauses (i) and (ii) above.
"CLARK Europe" means CLARK Material Handling GmbH, a Wholly Owned
Subsidiary.
"Consolidated EBITDA" means, with respect to any Person (the referent
Person) for any period, consolidated income (loss) from operations of such
Person and its subsidiaries for such period, determined in accordance with GAAP,
plus (to the extent such amounts are deducted in calculating such income (loss)
from operations of such Person for such period, and without duplication)
amortization, depreciation and other non-cash charges (including, without
limitation, amortization of goodwill, deferred financing fees and other
intangibles but excluding non-cash charges incurred after the date of the
Indenture that require an accrual of or a reserve for cash charges for any
future period); provided, that (i) the income from operations of any Person
(including, without limitation, any Unrestricted Subsidiary) that is not a
Wholly Owned Subsidiary or that is accounted for by the equity method of
accounting will be included only to the extent of the amount of dividends or
distributions paid during such period to the referent Person or a Wholly Owned
Subsidiary of the referent Person, and (ii) the income from operations of any
Restricted Subsidiary will not be included to the extent that declarations of
dividends or similar distributions by that Restricted Subsidiary are not at the
time permitted, directly or indirectly, by operation of the terms of its
organization documents or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Restricted
Subsidiary or its owners.
"Consolidated Interest Expense" means, with respect to any Person for any
period, the consolidated interest expense of such Person and its subsidiaries
for such period, whether paid or accrued (including amortization of original
issue discount, noncash interest payment, and the interest component of Capital
Lease Obligations), to the extent such expense was deducted in computing
Consolidated Net Income of such Person for such period.
"Consolidated Net Income" means, with respect to any Person (the referent
Person) for any period, the aggregate of the Net Income of such Person and its
subsidiaries for such period, determined on a consolidated basis in accordance
with GAAP; provided, that (i) the Net Income of any Person (including, without
limitation, any Unrestricted Subsidiary) that is not a Wholly Owned Subsidiary
or that is accounted for by the equity method of accounting will be included in
calculating the referent Person's Consolidated Net Income only to the extent of
the amount of dividends or distributions paid during such period to the referent
Person or a Wholly Owned Subsidiary of the referent Person, (ii) the Net Income
of any Person acquired in a pooling of interests transaction for any period
prior to the date of such acquisition will be excluded, and (iii) the Net Income
of any Subsidiary will be excluded to the extent that declarations of dividends
or similar distributions by that Subsidiary of such Net Income are not at the
time permitted, directly or indirectly, by operation of the terms of its
organization documents or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Subsidiary or its
owners.
"Consolidated Net Worth" means, with respect to any Person, the total
stockholders' equity of such Person determined on a consolidated basis in
accordance with GAAP, adjusted to exclude (to the extent included in calculating
such equity), (i) the amount of any such stockholders' equity attributable to
Disqualified Capital Stock of such Person and its consolidated subsidiaries, and
(ii) all upward revaluations and other write-ups in the book value of any asset
of such person or a consolidated subsidiary of such person subsequent to the
Issue Date, and (iii) all Investments in persons that are not consolidated
Restricted Subsidiaries.
"Default" means any event that is, or after notice or the passage of time
or both would be, an Event of Default.
"Disqualified Stock" means that portion of any Equity Interests that (i)
either by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable) is or upon the happening of an
event would be required to be redeemed or repurchased prior to the final stated
maturity of the Notes or is
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redeemable at the option of the holder thereof at any time prior to such final
stated maturity or (ii) is convertible into or exchangeable at the option of the
issuer thereof or any other Person for debt securities.
"Equity Interests" means Capital Stock or warrants, options or other rights
to acquire Capital Stock (but excluding any debt security that is convertible
into, or exchangeable for, Capital Stock).
"Floor Plan Guaranty" means (a) the Guarantee by the Company or a
Restricted Subsidiary of Indebtedness incurred by a franchise dealer or other
purchaser of Inventory manufactured or sold by the Company or a Restricted
Subsidiary, the proceeds of which Indebtedness is used solely to pay the
purchase price of such Inventory and any related fees and expenses (including
finance fees); provided, that (i) to the extent commercially practicable, the
Indebtedness so guaranteed is secured by a perfected first priority lien on such
inventory in favor of the holder of such Indebtedness and (ii) if the Company or
such Restricted Subsidiary is required to make payment with respect to such
Guarantee, the Company or such Restricted Subsidiary will have the right to
receive either (A) title to such Inventory, (B) a valid assignment of a first
priority perfected lien in such Inventory or (C) the net proceeds of any resale
of such Inventory and (b) obligations to repurchase equipment sold by the
Company or its Restricted Subsidiaries from a dealer upon termination of such
dealer or from customers who lease such equipment to third parties when the
equipment comes off lease.
"Foreign Subsidiary" means a Restricted Subsidiary not organized under the
laws of the United States or any political subdivision thereof and the
operations of which are located entirely outside the United States.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as approved by a significant segment of the accounting profession,
and in the rules and regulations of the Commission, that are in effect on the
date of the Original Indenture.
"German Subsidiary Facilities" means one or more revolving credit
facilities of CLARK Europe, as the same may be amended, modified, renewed,
refunded, replaced or refinanced from time to time including (i) any related
notes, letters of credit, guarantees, collateral documents, instruments and
agreements executed in connection therewith, and in each case amended, modified,
renewed, refunded, replaced or refinanced from time to time, and (ii) any notes,
guarantees, collateral documents, instruments and agreements executed in
connection with any such amendment, modification, renewal, refunding,
replacement or refinancing.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Indebtedness" of any Person means (without duplication) (1) all
liabilities and obligations, contingent or otherwise, of such Person (a) in
respect of borrowed money (whether or not the recourse of the lender is to the
whole of the assets of such Person or only to a portion thereof), (b) evidenced
by bonds, debentures, notes or other similar instruments, (c) representing the
deferred purchase price of property or services (other than (i) non interest
bearing obligations and (ii) liabilities incurred in the ordinary course of
business which are not more than 90 days past due), (d) created or arising under
any conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (e) as lessee under capitalized leases, (f) under
bankers' acceptance and letter of credit facilities, (g) to purchase, redeem,
retire, defease or otherwise acquire for value any Disqualified Stock, or (h) in
respect of Hedging Obligations, (2) all liabilities and obligations of others of
the type described in clause (1), above, that are Guaranteed by such Person, and
(3) all liabilities and obligations of others of the type described in clause
(1), above, that are secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property (including, without limitation, accounts and contract rights) owned by
such Person; provided, that the amount of such Indebtedness shall (to the extent
such Person has not assumed or become liable for the payment of such
Indebtedness in full) be the lesser of (x) the fair market value of such
property at the time of determination and (y) the amount of such
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Indebtedness. The amount of Indebtedness of any Person at any date shall be the
outstanding balance at such date of all unconditional obligations as described
above and the maximum liability, upon the occurrence of the contingency giving
rise to the obligation, of any contingent obligations at such date.
"Interest Coverage Ratio" means, for any period, the ratio of (i)
Consolidated EBITDA of the Company for such period, to (ii) Consolidated
Interest Expense of the Company for such period. In calculating the Interest
Coverage Ratio for any period, pro forma effect shall be given to: (a) the
incurrence, assumption, guarantee, repayment, repurchase, redemption or
retirement by the Company or any of its Subsidiaries of any Indebtedness (other
than under the Revolving Credit Facility) subsequent to the commencement of the
period for which the Interest Coverage Ratio is being calculated but on or prior
to the date on which the event for which the calculation is being made, as if
the same had occurred at the beginning of the applicable period; and (b) the
occurrence of any Asset Sale during such period by reducing Consolidated EBITDA
for such period by an amount equal to the Consolidated EBITDA (if positive)
directly attributable to the assets sold and by reducing Consolidated Interest
Expense by an amount equal to the Consolidated Interest Expense directly
attributable to any Indebtedness assumed by third parties or repaid with the
proceeds of such Asset Sale, in each case as if the same had occurred at the
beginning of the applicable period. For purposes of making the computation
referred to above, acquisitions that have been made by the Company or any of its
Restricted Subsidiaries, including mergers and consolidations, subsequent to the
commencement of such period but on or prior to the date on which the event for
which the calculation is being made shall be given effect on a pro forma basis,
assuming that all such acquisitions, mergers and consolidations had occurred on
the first day of such period. Without limiting the foregoing, the financial
information of the Company with respect to any portion of such four fiscal
quarters that falls before the Issue Date shall be adjusted to give pro forma
effect to the issuance of the Series C Notes and the New Notes and the
application of the proceeds therefrom as if they had occurred at the beginning
of such four fiscal quarters.
"Investments" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of loans,
Guarantees, advances or capital contributions (excluding (i) commission, travel
and similar advances to officers and employees of such Person made in the
ordinary course of business and (ii) bona fide accounts receivable arising from
the sale of goods or services in the ordinary course of business consistent with
past practice), purchases or other acquisitions for consideration of
Indebtedness, Equity Interests or other securities, and any other items that are
or would be classified as investments on a balance sheet prepared in accordance
with GAAP.
"Issue Date" means the date upon which the Series C Notes are first issued.
"Lien" means any mortgage, lien, pledge, charge, security interest or
encumbrance of any kind, whether or not filed, recorded or otherwise perfected
under applicable law (including any conditional sale or other title retention
agreement, any lease in the nature thereof, any option or other agreement to
sell or give a security interest in and any filing of or agreement to give any
financing statement under the Uniform Commercial Code (or equivalent statutes)
of any jurisdiction).
"Material Subsidiary" means any Subsidiary (a) that is a "Significant
Subsidiary" of the Company as defined in Rule 1-02 of Regulation S-X promulgated
by the Commission or (b) is otherwise material to the business of the Company.
"Net Income" means, with respect to any Person for any period, the net
income (loss) of such Person for such period, determined in accordance with
GAAP, excluding any gain or loss, together with any related provision for taxes
on such gain or loss, realized in connection with any Asset Sales and
dispositions pursuant to sale and leaseback transactions, and excluding any
extraordinary gain or loss, together with any related provision for taxes on
such gain or loss.
"Net Proceeds" means the aggregate proceeds received in the form of cash or
Cash Equivalents in respect of any Asset Sale (including payments in respect of
deferred payment obligations when received), net of (a) the reasonable and
customary direct out-of-pocket costs relating to such Asset Sale (including,
without limitation, legal, accounting and investment banking fees and sales
commissions), other than any such costs payable to an Affiliate of the Company,
(b) taxes actually payable directly as a result of such Asset Sale (after
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taking into account any available tax credits or deductions and any tax sharing
arrangements), (c) amounts required to be applied to the permanent repayment of
Indebtedness in connection with such Asset Sale, and (d) appropriate amounts
provided as a reserve by the Company or any Restricted Subsidiary, in accordance
with GAAP, against any liabilities associated with such Asset Sale and retained
by the Company or such 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 arising from such Asset Sale.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other obligations and liabilities
of the Company or any of the Guarantors under the Indenture, the New Notes, the
Series C Notes or the Guarantees of the Notes.
"Permitted Investments" means (a) Investments in the Company, any Guarantor
or any Wholly Owned Subsidiary (including without limitation, Guarantees of
Indebtedness of any such Person), (b) Investments in Cash Equivalents, (c)
Investments in a Person, if as a result of such Investment (i) such Person
becomes a Wholly Owned Subsidiary or (ii) such Person is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a Wholly Owned Subsidiary, (d)
Floor Plan Guarantees permitted to be incurred in compliance with the covenant
described under the caption "Limitation on Incurrence of Indebtedness," (e)
Hedging Obligations, (f) 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 and (g)
Investments as a result of consideration received in connection with an Asset
Sale made in compliance with the covenant described under the caption
"-- Limitation on Asset Sales."
"Permitted Liens" means (i) Liens in favor of the Company and/or its
Restricted Subsidiaries other than with respect to intercompany Indebtedness,
(ii) Liens on property of a Person existing at the time such Person is acquired
by, merged into or consolidated with the Company or any Restricted Subsidiary,
provided, that such Liens were not created in contemplation of such acquisition
and do not extend to assets other than those subject to such Liens immediately
prior to such acquisition, (iii) Liens on property existing at the time of
acquisition thereof by the Company or any Restricted Subsidiary, provided, that
such Liens were not created in contemplation of such acquisition and do not
extend to assets other than those subject to such Liens immediately prior to
such acquisition, (iv) Liens incurred in the ordinary course of business in
respect of Hedging Obligations and Floor Plan Guarantees, (v) Liens to secure
Indebtedness for borrowed money of a Subsidiary in favor of the Company or a
Wholly Owned Subsidiary, (vi) Liens incurred in the ordinary course of business
to secure the performance of statutory obligations, surety or appeal bonds,
performance bonds or other obligations (exclusive of obligations constituting
Indebtedness) of a like nature, (vii) Liens existing or created on the date of
the Indenture, (viii) Liens for taxes, assessments or governmental charges or
claims that are not yet delinquent or that are being contested or remedied in
good faith by appropriate proceedings promptly instituted and diligently
concluded, provided, that any reserve or other appropriate provision as may be
required in conformity with GAAP has been made therefor, (ix) Liens arising by
reason of any judgment, decree or order of any court with respect to which the
Company or any of its Restricted Subsidiaries is then in good faith prosecuting
an appeal or other proceedings for review, the existence of which judgment,
order or decree is not an Event of Default under the Indenture, (x) encumbrances
consisting of zoning restrictions, survey exceptions, utility easements,
licenses, rights of way, easements of ingress or egress over property of the
Company or any of its Restricted Subsidiaries, rights or restrictions of record
on the use of real property, minor defects in title, landlord's and lessor's
liens under leases on property located on the premises rented, mechanics' liens,
vendors' liens, and similar encumbrances, rights or restrictions on personal or
real property, in each case not interfering in any material respect with the
ordinary conduct of the business of the Company or any of its Restricted
Subsidiaries, (xi) Liens incidental to the conduct of business or the ownership
of properties incurred in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of social
security, or to secure the performance of tenders, bids, and government
contracts and leases and subleases, (xii) Liens for any interest or title of a
lessor under any Capitalized Lease Obligation permitted to be incurred under the
Indenture; provided, that such Liens do not extend to any property or asset that
is not leased property subject to such Capitalized Lease Obligation,
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(xiii) any extension, renewal, or replacement (or successive extensions,
renewals or replacements), in whole or in part, of Liens described in clauses
(i) through (xii) above and (xiv) Liens in addition to the foregoing, which in
the aggregate, are secured by assets with a fair market value not in excess of
$100,000 at any time.
"Permitted Transactions" means bona fide purchases and sales of Inventory
or of machining, assembly, testing and fabrication services, in any such case
made in the ordinary course of business; provided, that such transactions are
conducted in good faith and on terms that are no less favorable to the Company
or the relevant Restricted Subsidiary than those that would have been obtained
in a comparable transaction with an unrelated Person.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization, government
or any agency or political subdivision thereof, or any other entity.
"Public Equity Offering" means a bona fide underwritten public offering of
Qualified Capital Stock of 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
Holdings, Holdings contributes 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 second paragraph under the
caption "Redemption."
"Purchase Money Liens" means Liens to secure or securing Purchase Money
Obligations permitted to be incurred under the Indenture.
"Purchase Money Obligations" means Indebtedness representing, or incurred
to finance, the cost (i) of acquiring or improving any assets and (ii) of
construction or build-out of manufacturing, distribution or administrative
facilities (including Purchase Money Obligations of any other Person at the time
such other Person is merged with or into or is otherwise acquired by the
Company), provided, that (a) the principal amount of such Indebtedness does not
exceed 100% of such cost, including construction charges, (b) any Lien securing
such Indebtedness does not extend to or cover any other asset or property other
than the asset or property being so acquired or improved and (c) such
Indebtedness is incurred, and any Liens with respect thereto are granted, within
180 days of the acquisition or improvement of such property or asset.
"Qualified Capital Stock" means, with respect to any Person, Capital Stock
of such Person other than Disqualified Capital Stock.
"Restricted Investment" means any Investment other than a Permitted
Investment. The aggregate amount of each Investment constituting a Restricted
Payment since the date of the Original Indenture shall be reduced by the
aggregate after-tax amount of all payments made to the Company and its
Restricted Subsidiaries with respect to such Investments; provided, that (a) the
maximum amount of such payments so applied shall not exceed the original amount
of such Investment and (b) such payments shall be excluded from the calculations
contemplated by clauses (c)(1) through (4) under the caption "-- Limitation on
Restricted Payments."
"Restricted Subsidiary" means a Subsidiary other than an Unrestricted
Subsidiary.
"Revolving Credit Facility" means the Revolving Credit Facility, entered
into on November 27, 1996 between the Company and the lenders named therein as
the same may be amended, modified, renewed, refunded, replaced or refinanced
from time to time, including (i) any related notes, letters of credit,
guarantees, collateral documents, instruments and agreements executed in
connection therewith, and in each case as amended, modified, renewed, refunded,
replaced or refinanced from time to time, and (ii) any notes, guarantees,
collateral documents, instruments and agreements executed in connection with
such amendment, modification, renewal, refunding, replacement or refinancing.
"subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Voting Stock thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other subsidiaries
of that Person or a
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combination thereof and (ii) any partnership in which such Person or any of its
subsidiaries is a general partner.
"Subsidiary" means any subsidiary of the Company.
"Unrestricted Subsidiary" means any Subsidiary that has been designated by
the Company (by written notice to the Trustee as provided below) as an
Unrestricted Subsidiary; provided, that a Subsidiary may not be designated as an
"Unrestricted Subsidiary" unless (a) such Subsidiary does not own any Capital
Stock of, or own or hold any Lien on any property of, the Company or any
Restricted Subsidiary (other than such Subsidiary), (b) neither immediately
prior thereto nor after giving pro forma effect to such designation, would there
exist a Default or Event of Default, (c) immediately after giving effect to such
designation on a pro forma basis, the Company could incur at least $1.00 of
Indebtedness pursuant to the Interest Coverage Ratio test set forth in the
covenant described under "-- Limitation on Incurrence of Indebtedness" and (d)
the creditors of such Subsidiary have no direct or indirect recourse (including,
without limitation, recourse with respect to the payment of principal or
interest on Indebtedness of such Subsidiary) to the assets of the Company or of
a Restricted Subsidiary (other than such Subsidiary). The Board of Directors of
the Company may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary only if (i) no Default or Event of Default is existing or will occur
as a consequence thereof and (ii) immediately after giving effect to such
designation, on a pro forma basis, the Company could incur at least $1.00 of
Indebtedness pursuant to the Interest Coverage Ratio test set forth in the
covenant described under "-- Limitation on Incurrence of Indebtedness." Each
such designation shall be evidenced by filing with the Trustee a certified copy
of the Board Resolution giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
conditions. The Company shall be deemed to make an Investment in each Subsidiary
designated as an "Unrestricted Subsidiary" immediately following such
designation in an amount equal to the Investment in such Subsidiary and its
subsidiaries immediately prior to such designation; provided, that if such
Subsidiary is subsequently redesignated as a Restricted Subsidiary, the amount
of such Investment shall be deemed to be reduced (but not below zero) by the
fair market value of the net consolidated assets of such Subsidiary on the date
of such redesignation.
"Voting Stock" means, with respect to any Person, (i) one or more classes
of the Capital Stock of such Person having general voting power to elect at
least a majority of the board of directors, managers or trustees of such Person
(irrespective of whether or not at the time Capital Stock of any other class or
classes have or might have voting power by reason of the happening of any
contingency) and (ii) any Capital Stock of such Person convertible or
exchangeable without restriction at the option of the holder thereof into
Capital Stock of such Person described in clause (i) above.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years (rounded to the nearest one-twelfth) obtained
by dividing (i) the then outstanding principal amount of such Indebtedness into
(ii) the total of the products obtained by multiplying (x) the amount of each
then remaining installment, sinking fund, serial maturity or other required
payments of principal, including payment at final maturity, in respect thereof,
by (y) the number of years (calculated to the nearest one-twelfth) that will
elapse between such date and the making of such payment.
"Wholly Owned Subsidiary" means a Restricted Subsidiary all the Capital
Stock of which (other than directors' qualifying shares) is owned by the Company
or one or more Wholly Owned Subsidiaries.
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DESCRIPTION OF PREFERRED STOCK
The New Preferred Stock will be issued pursuant to, and entitled to the
benefits of the Certificate of Designation. The terms of the Certificate of
Designation apply to the Existing Preferred Stock and the New Preferred Stock
(all such Preferred Stock being referred to herein collectively as the "Senior
Preferred Stock"). The summary contained herein of certain provisions of the
Senior Preferred Stock does not purport to be complete and is qualified in its
entirety by reference to the provisions of the Certificate of Designation. The
definitions of certain terms used in the Certificate of Designation and in the
following summary are substantially the same as those used in the Indenture. See
"Description of Notes -- Certain Definitions."
GENERAL
Initially 20,000 shares of Senior Preferred Stock will be issued, each with
a liquidation preference of $1,000 per share. The New Senior Preferred Stock,
when issued and exchanged for by the holders of Existing Preferred Stock, will
be fully paid and non-assessable, and the holders thereof will not have any
subscription or preemptive rights related thereto. All issued and outstanding
shares of Senior Preferred Stock will be redeemed by the Company on July 15,
2007.
RANKING
The Senior Preferred Stock will, with respect to dividend distributions and
distributions upon the liquidation, winding-up or dissolution of the Company,
rank (i) senior to each class or series of capital stock (including Common
Stock) the terms of which do not expressly provide that such class or series
will rank senior to or on a parity with the Senior Preferred Stock as to
dividend distributions and distributions upon the liquidation, winding-up or
dissolution of the Company (collectively, "Junior Securities"); (ii) subject to
certain conditions, on a parity with any class or series of capital stock issued
by the Company established after the issue date of the Existing Preferred Stock
("Preferred Stock Issue Date"), the terms of which expressly provide that such
class or series will rank on a parity with the Senior Preferred Stock as to
dividend distributions and distributions upon the liquidation, winding-up or
dissolution of the Company (collectively, "Parity Securities"); and (iii)
subject to certain conditions, junior to each class or series of capital stock
issued by the Company established after the Preferred Stock Issue Date, the
terms of which expressly provide that such class or series will rank senior to
the Senior Preferred Stock as to dividend distributions and distributions upon
liquidation, winding-up or dissolution of the Company (collectively, "Senior
Securities").
The Senior Preferred Stock will be subject to the issuance of series of
Junior Securities, Parity Securities and Senior Securities, however, the Company
may not issue any new class of Parity Securities or Senior Securities without
the approval of the holders of at least 50% of the shares of Senior Preferred
Stock then outstanding, voting or consenting, as the case may be, together as
one class, except that without the approval of the holders of Senior Preferred
Stock, the Company may issue shares of Parity Securities in exchange for, or the
proceeds of which are used to redeem or repurchase, any or all of the shares of
Senior Preferred Stock or other Parity Securities.
Creditors and stockholders of each Subsidiary will have structural priority
over the Senior Preferred Stock with respect to claims on the assets of such
Subsidiary.
DIVIDENDS
Holders of Senior Preferred Stock will be entitled to receive, when, as and
if declared by the Board of Directors, out of funds legally available therefor,
dividends on the Senior Preferred Stock at a rate per annum equal to 13% of the
liquidation preference per share of Senior Preferred Stock. All dividends will
be cumulative, whether or not earned or declared, on a daily basis from the date
of issuance of the Existing Preferred Stock and will be payable on January 15,
April 15, July 15 and October 15 of each year, commencing on October 15, 1998.
Dividends on the Senior Preferred Stock will be computed on the basis of a
360-day year comprised of twelve 30-day months. On or before July 15, 2003, the
Company may, at its option, pay dividends in cash or in additional fully paid
and non-assessable shares of Senior Preferred Stock having an aggregate
liquidation preference equal to the amount of such dividends. After July 15,
2003, dividends may be
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paid only in cash. It is not expected that the Company will pay any dividends in
cash for any period ending on or prior to July 15, 2003. The terms of the
Company's debt instruments, including the Indenture and the Revolving Credit
Facility will restrict the payment of cash dividends by the Company, and future
agreements may also restrict such payments. See "Risk Factors -- Significant
Leverage," "Description of Certain Indebtedness" and "Description of
Notes -- Certain Covenants". If any dividend (or portion thereof) payable on any
dividend payment date after July 15, 2003 is not declared or paid in full in
cash on such dividend payment date, the amount of such dividend that is payable
and that is not paid in cash on such date will increase at a rate of 13% per
annum, compounded quarterly, from such dividend payment date until declared and
paid in full.
No full dividends may be declared or paid or funds set apart for the
payment of dividends on any Parity Securities for any period unless full
cumulative dividends shall have been or contemporaneously are declared and paid
in full or declared and, if payable in cash, a sum in cash set apart for such
payment on the Senior Preferred Stock. If full dividends are not so paid, the
Senior Preferred Stock will share dividends pro rata with the Parity Securities.
No dividends may be paid or set apart for such payment on Junior Securities
(except dividends on Junior Securities in additional shares of Junior
Securities) and no Junior Securities or Parity Securities may be repurchased,
redeemed or otherwise retired nor may funds be set apart for payment with
respect thereto, if full cumulative dividends have not been paid on the Senior
Preferred Stock.
REDEMPTION
Optional Redemption. The Senior Preferred Stock may be redeemed (subject
to contractual and other restrictions with respect thereto and to the legal
availability of funds therefor) at any time on or after July 15, 2003, in whole
or in part, at the option of the Company, at the redemption prices (expressed as
a percentage of the liquidation preference thereof) set forth below, plus an
amount in cash equal to all accumulated and unpaid dividends (including an
amount in cash equal to a prorated dividend for the period from the dividend
payment date immediately prior to the redemption date to the redemption date),
if redeemed during the 12-month period beginning July 15 of each of the years
set forth below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---- ----------
<S> <C>
2003...................................................... 106.500%
2004...................................................... 104.333
2005...................................................... 102.167
2006 and thereafter....................................... 100.000
</TABLE>
In addition, prior to July 15, 2003, the Company may redeem the Senior
Preferred Stock in whole, but not in part, at a redemption price equal to 115%
of the liquidation preference thereof, plus an amount in cash equal to all
accumulated and unpaid dividends (including an amount in cash equal to a
prorated dividend for the period from the dividend payment date immediately
prior to the redemption date to the redemption date), with the proceeds of a
Public Equity Offering, provided that such redemption shall occur within 60 days
of the date of the closing of such Public Equity Offering.
No optional redemption may be authorized or made (i) unless prior thereto
full unpaid cumulative dividends shall have been paid or a sum shall have been
set apart for such payment on the Senior Preferred Stock; or (ii) at less than
101% of the liquidation preference of the Senior Preferred Stock at any time
when the Company is making or purchasing shares of Senior Preferred Stock under
an Offer in accordance with the provisions of "Change of Control."
In the event of partial redemptions of Senior Preferred Stock, the shares
to be redeemed will be determined pro rata or by lot, as determined by the
Company. The terms of the Company's debt instruments, including the Indenture
and the Revolving Credit Facility, will restrict the ability of the Company to
redeem the Senior Preferred Stock, and future agreements may similarly restrict
redemptions of Senior Preferred Stock by the Company. See "Description of
Certain Indebtedness" and "Description of Notes -- Certain Covenants."
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Procedure for Redemption. On and after a redemption date, unless the
Company defaults in the payment of the applicable redemption price, dividends
will cease to accrue on shares of Senior Preferred Stock called for redemption
and all rights of holders of such shares will terminate except for the right to
receive the redemption price, without interest. The Company will send a written
notice of redemption by first class mail to each holder of record of shares of
Senior Preferred Stock, not fewer than 30 days nor more than 60 days prior to
the date fixed for such redemption. Shares of Senior Preferred Stock issued and
reacquired will, upon compliance with the applicable requirements of Delaware
law, have the status of authorized but unissued shares of Preferred Stock of the
Company undesignated as to series and may with any and all other authorized but
unissued shares of Preferred Stock of the Company be designated or redesignated
and issued or reissued, as the case may be, as part of any series of Preferred
Stock of the Company, except that any issuance or reissuance of shares of Senior
Preferred Stock must be in compliance with the Certificate of Designation.
CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each holder of Senior Preferred
Stock will have the right to require the Company to purchase all or any part of
such holder's Senior Preferred Stock pursuant to an offer (an "Offer") at a
purchase price equal to 101% of the liquidation preference thereof, plus an
amount in cash equal to all accumulated and unpaid dividends per share
(including an amount in cash equal to a prorated dividend for the period from
the dividend payment date immediately prior to the repurchase date to the
repurchase date). Notice of an Offer must be mailed within 30 days following a
Change of Control, must remain open for at least 30 and not more than 40 days
and must comply with the requirements of Rule l4e-l under the Exchange Act and
any other applicable securities laws and regulations.
If a Change of Control were to occur, the Company could be obligated to
offer to purchase all of the securities issued under the Indenture and the
Original Indenture and to repay all outstanding obligations, if any, under the
Revolving Credit Facility, and there can be no assurance that the Company would
have sufficient funds to pay the purchase price for all shares of Senior
Preferred Stock that the Company is required to purchase. In the event that the
Company were required to purchase outstanding shares of Senior Preferred Stock
pursuant to an Offer, the Company expects that it would need to 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. In addition, the Company's ability to purchase the
Senior Preferred Stock may be limited by other then-existing borrowing
agreements, including the Indenture, the Original Indenture and the Revolving
Credit Facility. See "Description of Notes -- Certain Covenants" and
"Description of Certain Indebtedness."
Except as described above, the Certificate of Designation does not contain
provisions that permit the holders of Senior Preferred Stock to require the
Company to purchase or redeem the Senior Preferred Stock in the event of a
takeover, recapitalization or similar restructuring, including an issuer
recapitalization or similar transaction with management. Consequently, the
Change of Control provisions will not afford any protection in a highly
leveraged transaction, including a transaction initiated by the Company,
management of the Company or an affiliate of the Company, if such transaction
does not result in a Change of Control. In addition, certain events that may
obligate the Company to offer to repurchase all of the securities issued under
the Indenture and the Original Indenture or to repay all outstanding
obligations, if any, under the Revolving Credit Facility may not constitute a
Change of Control under the Certificate of Designation.
The definition of Change of Control includes a phrase relating to the
transfer of "all or substantially all" of the Company's assets. Although there
is a developing body of case law interpreting the phrase "substantially all,"
there is no precise established definition of the phrase under applicable law.
Accordingly, the ability of a holder of Senior Preferred Stock to require the
Company to repurchase such Senior Preferred Stock as a result of a transfer of
less than all of the assets of the Company to another Person or group may be
uncertain.
The Change of Control provisions of the Certificate of Designation may not
be waived by the Board of Directors without the consent of the holders of at
least a majority of the outstanding Senior Preferred Stock. See "-- Voting
Rights."
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LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding-up of
the Company, holders of Senior Preferred Stock will be entitled to be paid, out
of the assets of the Company available for distribution, the liquidation
preference per share, plus an amount in cash equal to all accumulated and unpaid
dividends thereon to the date fixed for liquidation, dissolution or winding-up
(including an amount equal to a prorated dividend for the period from the last
dividend payment date to the date fixed for liquidation, dissolution or
winding-up), before any distribution is made on any Junior Securities. If, upon
any voluntary or involuntary liquidation, dissolution or winding-up of the
Company, the amounts payable with respect to the Senior Preferred Stock and all
other Parity Securities are not paid in full, the holders of the Senior
Preferred Stock and the Parity Securities will share equally and ratably in any
distribution of assets of the Company in proportion to the full liquidation
preference and accumulated and unpaid dividends to which each is entitled. After
payment of the full amount of the liquidation preferences and accumulated and
unpaid dividends to which they are entitled, the holders of shares of Senior
Preferred Stock will not be entitled to any further participation in any
distribution of assets of the Company. However, neither the sale, conveyance,
exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the property or assets of the
Company nor the consolidation or merger of the Company with or into one or more
corporations will be deemed to be a liquidation, dissolution or winding-up of
the Company.
The Certificate of Designation does not contain any provision requiring
funds to be set aside to protect the liquidation preference of the Senior
Preferred Stock.
VOTING RIGHTS
Holders of the Senior Preferred Stock will have no voting rights with
respect to general corporate matters except as provided by law or as set forth
in the Certificate of Designation. The Certificate of Designation provides that
(a) if (i) dividends on the Senior Preferred Stock are in arrears and unpaid
(and, in the case of dividends payable after July 15, 2003, are not paid in
cash) for four consecutive quarterly periods; (ii) the Company fails to
discharge any redemption obligation with respect to the Senior Preferred Stock
(whether or not the Company is permitted to do so by the terms of the Indenture,
the Revolving Credit Facility or any other obligation of the Company); (iii) the
Company fails to make an Offer to purchase all of the outstanding shares of
Senior Preferred Stock following a Change of Control (whether or not the Company
is permitted to do so by the terms of the Indenture, the Revolving Credit
Facility or any other obligation of the Company); (iv) a breach or violation of
the provisions described under the caption "-- Certain Covenants" occurs and the
breach or violation continues for a period of 30 days or more; or (v) a default
occurs on the obligation to pay principal of, interest on or any other payment
obligation when due (a "Payment Default") at final maturity on one or more
classes of Indebtedness of the Company or any Subsidiary of the Company, whether
such Indebtedness exists on the Preferred Stock Issue Date or is incurred
thereafter, having individually or in the aggregate an outstanding principal
amount of $10,000,000 or more, or any other Payment Default occurs on one or
more such classes of Indebtedness having individually or in the aggregate an
outstanding principal amount of $10,000,000 or more and such class or classes of
Indebtedness are declared due and payable prior to their respective maturities,
then the number of directors constituting the Board of Directors will be
adjusted to permit the holders of the majority of the then outstanding Senior
Preferred Stock, voting separately as a class, to elect two directors, and (b)
the approval of holders of a majority of the outstanding shares of Senior
Preferred Stock, voting as a separate class, will be required for (i) any
merger, consolidation or sale of assets of the Company, except as permitted
pursuant to the covenant described under "-- Certain Covenants -- Merger,
Consolidation or Sale of Assets;" and (ii) any modification of the Preferred
Stock Exchange Note Indenture (other than a modification contemplated under the
caption "Description of Preferred Stock Exchange Notes -- Certain Covenants").
Each such event described in clause (a) above is referred to herein as a "Voting
Rights Triggering Event." Voting rights arising as a result of a Voting Rights
Triggering Event will continue until such time as all dividends in arrears on
the Senior Preferred Stock are paid in full (and after July 15, 2003, paid in
cash) and any failure, breach or default referred to in clause (a) is remedied.
In addition, the Certificate of Designation provides that, except as stated
above under "-- Ranking," the Company will not authorize any class of Senior
Securities or Parity Securities without the affirmative vote or
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consent of holders of at least a majority of the shares of Senior Preferred
Stock then outstanding, voting or consenting as the case may be. The Certificate
of Designation also provides that the Company may not amend the Certificate of
Designation so as to affect adversely the specified rights, preferences,
privileges or voting rights of holders of shares of the Senior Preferred Stock,
or authorize the issuance of any additional shares of Senior Preferred Stock,
without the affirmative vote or consent of the holders of at least a majority of
the then outstanding shares of Senior Preferred Stock, voting or consenting, as
the case may be. The Certificate of Designation also provides that, except as
set forth above, (a) the creation, authorization or issuance of any shares of
Junior Securities, Parity Securities or Senior Securities or (b) the increase or
decrease in the amount of authorized capital stock of any class, including any
preferred stock, shall not require the consent of the holders of Senior
Preferred Stock and shall not be deemed to affect adversely the rights,
preferences, privileges or voting rights of holders of shares of Senior
Preferred Stock.
Under Delaware law, holders of Senior Preferred Stock will be entitled to
vote as a class upon a proposed amendment to the Certificate of Incorporation,
whether or not entitled to vote thereon by the Certificate of Incorporation, if
the amendment would increase or decrease the par value of the shares of such
class, or alter or change the powers, preferences or special rights of the
shares for such class so as to affect them adversely.
CERTAIN COVENANTS
Merger, Consolidation or Sale of Assets. The provisions of the Certificate
of Designation relating to mergers, consolidations and sales of assets is
substantially the same as the provisions of the Indenture relating to such
matters. See "Description of Notes -- Certain Covenants."
Junior Payments. The Certificate of Designation provides that the Company
will not, directly or indirectly, (i) declare or pay any dividend or make any
distribution on account of any Junior Securities (other than dividends or
distributions payable in Junior Securities (other than Disqualified Stock));
(ii) purchase, redeem or otherwise acquire or retire for value any Junior
Securities; or (iii) make any Restricted Investment (all such dividends,
distributions, purchases, redemptions, acquisitions, retirements and Restricted
Investments being collectively referred to as "Junior Payments"), if, at the
time of such Junior Payment:
(a) a Voting Rights Triggering Event shall have occurred and be
continuing or would occur as a consequence thereof; or
(b) all dividends on the Senior Preferred Stock payable on dividend
payment dates after July 15, 2003, have not been declared and paid in cash.
Notwithstanding the foregoing, the Certificate of Designation will permit
Junior Payments under circumstances substantially the same as the provisions of
the Indenture relating to Restricted Payments.
Transactions with Affiliates. The provisions of the Certificate of
Designation relating to transactions with Affiliates is substantially the same
as the provisions of the Indenture relating to such matters. See "Description of
Notes -- Certain Covenants."
Rule 144A Information Requirement. The provisions of the Certificate of
Designation relating to the information required to be delivered pursuant to
Rule 144A(d)(4) under the Securities Act is substantially the same as the
provisions of the Indenture relating to such matters.
Reports. The provisions of the Certificate of Designation relating to the
provision of reports and information by the Company is substantially the same as
the provisions of the Indenture relating to such matters. See "Description of
Notes -- Certain Covenants."
EXCHANGE
The Company may at its option exchange all, but not less than all, of the
then outstanding shares of Senior Preferred Stock into Preferred Stock Exchange
Notes on any dividend payment date, provided that on the date of such exchange:
(a) there are no contractual impediments to such exchange; (b) there are legally
available funds sufficient therefor; (c) a registration statement relating to
the Preferred Stock Exchange Notes shall have been declared effective under the
Securities Act prior to such exchange and shall continue to be in
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effect on the date of such exchange or the Company shall have obtained a written
opinion of counsel that an exemption from the registration requirements of the
Securities Act is available for such exchange, and that upon receipt of such
Preferred Stock Exchange Notes pursuant to such exchange made in accordance with
such exemption, the holders (assuming such holder is not an Affiliate of the
Company) thereof will not be subject to any restrictions imposed by the
Securities Act upon the resale thereof and such exemption is relied upon by the
Company for such exchange; (d) the Preferred Stock Exchange Note Indenture and
the trustee thereunder shall have been qualified under the Trust Indenture Act;
(e) immediately after giving effect to such exchange, no Default or Event of
Default (each as defined in the Preferred Stock Exchange Note Indenture) would
exist under the Preferred Stock Exchange Note Indenture; and (f) the Company
shall have delivered a written opinion of counsel, dated the date of exchange,
regarding the satisfaction of the conditions set forth in clauses (a), (b), (c)
and (d) and certain other matters. The Company shall send a written notice of
exchange by mail to each holder of record of shares of Senior Preferred Stock,
which notice shall state, among other things, (i) that the Company is exercising
its option to exchange the Senior Preferred Stock for Preferred Stock Exchange
Notes pursuant to the Certificate of Designation; and (ii) the date of exchange
(the "Preferred Stock Exchange Date"), which date shall not be less than 30 days
nor more than 60 days following the date on which such notice is mailed. On the
Preferred Stock Exchange Date, holders of outstanding shares of Senior Preferred
Stock will be entitled to receive a principal amount of Preferred Stock Exchange
Notes equal to the liquidation preference per share, plus an amount in cash
equal to all accrued and unpaid dividends (including an amount in cash equal to
a prorated dividend for the period from the dividend payment date immediately
prior to the Preferred Stock Exchange Date to the Preferred Stock Exchange
Date), as provided below.
The Preferred Stock Exchange Notes will be issued in registered form,
without coupons. Preferred Stock Exchange Notes issued in exchange for Senior
Preferred Stock will be issued in principal amounts of $1,000 and integral
multiples thereof to the extent possible, and will also be issued in principal
amounts less than $1,000 so that each holder of Senior Preferred Stock will
receive certificates representing the entire amount of Preferred Stock Exchange
Notes to which his shares of Senior Preferred Stock entitle him, provided, that
the Company may, at its option, pay cash in lieu of issuing Preferred Stock
Exchange Notes in a principal amount less than $1,000. On and after the
Preferred Stock Exchange Date, dividends will cease to accrue on the outstanding
shares of Senior Preferred Stock, and all rights of the holders of Senior
Preferred Stock (except the right to receive the Preferred Stock Exchange Notes,
an amount in cash equal to the accrued and unpaid dividends to the Preferred
Stock Exchange Date and if the Company so elects, cash in lieu of any Preferred
Stock Exchange Notes which is an amount that is not an integral multiple of
$1,000) will terminate. The person entitled to receive the Preferred Stock
Exchange Notes issuable upon such exchange will be treated for all purposes as
the registered holder of such Preferred Stock Exchange Notes.
The Revolving Credit Facility, the Original Indenture and the Indenture
contain limitations with respect to the Company's ability to issue the Preferred
Stock Exchange Notes, and any future credit agreements or other agreements
relating to indebtedness to which the Company becomes a party may contain
similar limitations. See "Description of Certain Indebtedness" and "Description
of Notes -- Certain Covenants."
The Company intends to comply with the provisions of Rule 13e-4 promulgated
pursuant to the Exchange Act in connection with any exchange, to the extent
applicable.
Registrar and Transfer Agent. American Stock Transfer & Trust Company is
the registrar and transfer agent for the Senior Preferred Stock (the "Transfer
Agent").
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DESCRIPTION OF PREFERRED STOCK EXCHANGE NOTES
The Preferred Stock Exchange Notes, if issued, will be issued under the
Preferred Stock Exchange Note Indenture between the Company and the trustee to
be named thereunder. The terms of the Preferred Stock Exchange Notes include
those stated in the Preferred Stock Exchange Note Indenture and those made part
of the Preferred Stock Exchange Note Indenture by reference to the Trust
Indenture Act. The Preferred Stock Exchange Notes will be subject to all such
terms, and prospective holders of the Preferred Stock Exchange Notes are
referred to the Preferred Stock Exchange Note Indenture and the Trust Indenture
Act for a statement of such terms. The following summary of certain provisions
of the Preferred Stock Exchange Note Indenture does not purport to be complete
and is subject to, and is qualified in its entirety by reference to, the Trust
Indenture Act and to all of the provisions of the Preferred Stock Exchange Note
Indenture, including the definitions of certain terms therein and those terms
made a part of the Preferred Stock Exchange Note Indenture by reference to the
Trust Indenture Act. The definitions of certain terms used in the Preferred
Stock Exchange Note Indenture and in the following summary are substantially the
same as those used in the Indenture. See "Description of Notes -- Certain
Definitions."
GENERAL
The Preferred Stock Exchange Notes, if issued, will be general unsecured
obligations of the Company, subordinated to all existing and future Senior
Indebtedness (which, for purposes of the Preferred Stock Exchange Notes will
include Senior Subordinated Indebtedness), including the Notes and Indebtedness
under the Revolving Credit Facility. The Preferred Stock Exchange Notes will be
issued in fully registered form only in denominations of $1,000 and integral
multiples thereof (other than as described in "Description of Preferred
Stock -- Exchange" or with respect to additional Preferred Stock Exchange Notes
issued in lieu of cash interest as described herein).
Principal of, and premium, if any, and interest on the Preferred Stock
Exchange Notes will be payable, and the Preferred Stock Exchange Notes may be
presented for registration of transfer or exchange, at the office of the Paying
Agent and Registrar in New York, New York. Holders of Preferred Stock Exchange
Notes must surrender their Preferred Stock Exchange Notes to the Paying Agent to
collect principal payments, and the Company may pay principal and interest by
check and may mail checks to a holder's registered address; provided that all
payments with respect to Preferred Stock Exchange Notes, the holders of which
have given wire transfer instructions to the Company, will be required to be
made by wire transfer of immediately available funds to the accounts specified
by the holders thereof. The Registrar may require payment of a sum sufficient to
cover any transfer tax or similar governmental charge payable in connection with
certain transfers or exchanges. See "-- Other Provisions of the Preferred Stock
Exchange Note Indenture" and "Book Entry, Delivery and Form." The Trustee will
initially act as Paying Agent and Registrar. The Company may change any Paying
Agent and Registrar without prior notice to holders of the Preferred Stock
Exchange Notes, and the Company or any of its Subsidiaries may act as Paying
Agent or Registrar.
The Preferred Stock Exchange Notes will mature on July 15, 2007. Each
Preferred Stock Exchange Note will bear interest at the rate of 13% per annum
from the Exchange Note Issue Date or from the most recent interest payment date
to which interest has been paid. Interest will be payable semi-annually in
arrears on January 15 and July 15 of each year, commencing with the first such
date after the Exchange Note Issue Date. Interest on the Preferred Stock
Exchange Notes will be computed on the basis of a 360-day year comprised of
twelve 30-day months. On or before July 15, 2003, the Company may, at its
option, pay interest in cash or in additional Preferred Stock Exchange Notes
having an aggregate principal amount equal to the amount of such interest. After
July 15, 2003, interest may be paid only in cash.
SUBORDINATION AND RANKING
The Preferred Stock Exchange Notes will be subordinated to the prior
payment when due of the principal of, and premium, if any, and interest on, all
existing and future Senior Indebtedness as defined in the Preferred Stock
Exchange Note Indenture, and will rank pari passu in right of payment to all
other Subordinated
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Indebtedness of the Company. The Preferred Stock Exchange Notes will also
effectively rank junior to all indebtedness of the Subsidiaries. At June 30,
1998, after giving effect to the Transactions and the application of the net
proceeds therefrom, the aggregate principal amount of Senior Indebtedness of the
Company and indebtedness of the Subsidiaries would have been approximately
$160.5 million. Under the terms of the Preferred Stock Exchange Note Indenture,
the Company's Subsidiaries may incur certain Indebtedness pursuant to agreements
that may restrict the ability of such Subsidiaries to make dividends or other
intercompany transfers to the Company necessary to service the Company's
obligations, including its obligations under the Preferred Stock Exchange Notes.
See "Risk Factors -- Secured Indebtedness; Subsidiary Operations," "Description
of Certain Indebtedness" and "-- Certain Covenants."
Upon (a) any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property; or
(b) an assignment for the benefit of creditors or any marshaling of the
Company's assets and liabilities, the holders of Senior Indebtedness will be
entitled to receive payment in full of all Obligations due in respect of such
Senior Indebtedness (including interest after the commencement of any such
proceeding at the rate specified in the applicable Senior Indebtedness) before
holders of the Preferred Stock Exchange Notes will be entitled to receive any
payment with respect to the Preferred Stock Exchange Notes. Until all
Obligations with respect to Senior Indebtedness are paid in full, any
distribution to which holders of the Preferred Stock Exchange Notes would be
entitled shall be made to holders of Senior Indebtedness. However, holders of
the Preferred Stock Exchange Notes may receive securities that are subordinated,
at least to the same extent as the Preferred Stock Exchange Notes are
subordinated to Senior Indebtedness and any securities issued in exchange for
Senior Indebtedness.
In addition, the Company may not make any payment upon or in respect of the
Preferred Stock Exchange Notes (except in such subordinated securities) if (a) a
default in the payment of any principal, premium if any, interest or other
Obligations with respect to any Designated Senior Debt occurs and is continuing
beyond any applicable grace period (whether upon maturity, as a result of
acceleration or otherwise); or (b) any other default occurs and is continuing
with respect to any Designated Senior Debt that permits holders of such
Designated Senior Debt to accelerate its maturity, and the Company and the
Trustee receive a notice of such default (a "Payment Blockage Notice") from the
holders, or from the trustee, agent or other representative of the holders, of
any such Designated Senior Debt. Payments on the Preferred Stock Exchange Notes
may and shall be resumed upon the earlier of (i) the date upon which the default
is cured or waived; or (ii) in the case of a default referred to in clause (b)
above, 179 days after the date on which the applicable Payment Blockage Notice
is received, unless the maturity of any Designated Senior Debt has been
accelerated. No new period of payment blockage may be commenced within 360 days
after the receipt by the Trustee of any prior Payment Blockage Notice. No
nonpayment default that existed or was continuing on the date of delivery of any
Payment Blockage Notice to the Trustee shall be, or be made, the basis for a
subsequent Payment Blockage Notice unless such default shall have been cured or
waived for a period of not less than 180 days.
The Preferred Stock Exchange Note Indenture will further require that the
Company promptly notify holders of Senior Indebtedness if payment on the
Preferred Stock Exchange Notes is accelerated because of an Event of Default.
As a result of the subordination provisions described above, in the event
of a liquidation or insolvency, holders of the Preferred Stock Exchange Notes
may recover less ratably than other creditors of the Company.
REDEMPTION
Optional Redemption. The Preferred Stock Exchange Notes may not be
redeemed at the option of the Company prior to July 15, 2003 other than out of
the net proceeds of one or more Public Equity Offerings, as and to the extent
described below. During the 12-month period beginning on July 15 of the years
indicated below, the Preferred Stock Exchange Notes will be redeemable, at the
option of the Company, in whole or in
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part, on at least 30 but not more than 60 days' notice to each holder of
Preferred Stock Exchange Notes to be redeemed, at the redemption prices
(expressed as percentages of the principal amount) set forth below, plus any
accrued and unpaid interest to the redemption date:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---- ----------
<S> <C>
2003.................................................... 106.500%
2004.................................................... 104.333
2005.................................................... 102.167
2006 and thereafter..................................... 100.000
</TABLE>
In addition, prior to July 15, 2003, the Company may redeem the Preferred
Stock Exchange Notes in whole, but not in part, at a redemption price equal to
115% of the principal amount thereof, plus accrued and unpaid interest thereon
to the applicable redemption date, with the proceeds of a Public Equity
Offering, provided that such redemption shall occur within 60 days of the date
of the closing of such Public Equity Offering.
Mandatory Redemption. Except as set forth under "-- Change of Control,"
the Company is not required to make any mandatory redemption, purchase or
sinking fund payments with respect to the Preferred Stock Exchange Notes.
CHANGE OF CONTROL
Upon the occurrence of a Change of Control, each holder of Preferred Stock
Exchange Notes will have the right to require the Company to purchase all or any
part (equal to $1,000 or an integral multiple thereof) of such holder's
Preferred Stock Exchange Notes pursuant to an offer (an "Offer") at a purchase
price in cash equal to 101% of the aggregate principal amount thereof, plus any
accrued and unpaid interest to the date of purchase. Notice of an Offer must be
mailed within 30 days following a Change of Control, must remain open for at
least 30 and not more than 40 days and must comply with the requirements of Rule
l4e-l under the Exchange Act and any other applicable securities laws and
regulations.
Except as described above, the Preferred Stock Exchange Note Indenture does
not contain provisions that permit the holders of Preferred Stock Exchange Notes
to require the Company to purchase or redeem the Preferred Stock Exchange Notes
in the event of a takeover, recapitalization or similar restructuring, including
an issuer recapitalization or similar transaction with management. Consequently,
the Change of Control provisions will not afford any protection in a highly
leveraged transaction, including a transaction initiated by the Company,
management of the Company or an affiliate of the Company, if such transaction
does not result in a Change of Control.
The Company expects that prepayment of the Preferred Stock Exchange Notes
following a Change of Control would, and the exercise by holders of Preferred
Stock Exchange Notes of the right to require the Company to purchase Preferred
Stock Exchange Notes may, constitute a default under the Revolving Credit
Facility or other Indebtedness of the Company. The Preferred Stock Exchange Note
Indenture will provide that, prior to the mailing of the Offer notice, but in
any event within 30 days following any Change of Control, the Company covenants
to (i) repay in full and terminate all commitments under Indebtedness under the
Revolving Credit Facility and all other Senior Indebtedness the terms of which
require repayment upon a Change of Control or offer to repay in full and
terminate all commitments under all Indebtedness under the Revolving Credit
Facility and all other such Senior Indebtedness and to repay the Indebtedness
owed to each lender which has accepted such offer; or (ii) obtain the requisite
consents under the Revolving Credit Facility and all such other Senior
Indebtedness to permit the purchase of the Preferred Stock Exchange Notes as
provided below.
In the event a Change of Control occurs, the Company will likely be
required to refinance the Indebtedness outstanding under the Revolving Credit
Facility, the Notes and the Preferred Stock Exchange Notes. There can be no
assurance that sufficient funds will be available at the time of any Change of
Control to make any required purchases of the Notes and the Preferred Stock
Exchange Notes given the Company's high leverage. The financing of the purchases
of Notes and Preferred Stock Exchange Notes could
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additionally result in a default under the Revolving Credit Facility, the Notes
or other indebtedness of the Company. The occurrence of a Change of Control may
also have an adverse impact on the ability of the Company to obtain additional
financing in the future.
The Company will comply with any tender offer rules under the Exchange Act
which may then be applicable, including Rule l4e-l, in connection with an Offer
required to be made by the Company. To the extent that the provisions of any
securities laws or regulations conflict with provisions of the Preferred Stock
Exchange Note Indenture, the Company shall comply with the applicable securities
laws and regulations and shall not be deemed to have breached its obligations
under the Preferred Stock Exchange Note Indenture by virtue thereof.
The Change of Control provisions may not be waived by the Board of
Directors of the Company or the Trustee without the consent of holders of at
least a majority in principal amount of the Preferred Stock Exchange Notes.
CERTAIN COVENANTS
Limitation on Restricted Payments. The Preferred Stock Exchange Note
Indenture will contain a covenant relating to Restricted Payments that will be
substantially the same as the covenant contained in the Indenture on the date of
issuance of the Preferred Stock Exchange Notes (or, if no New Notes or Series C
Notes are outstanding on such date, on the last interest payment date during
which any New Notes or Series C Notes were outstanding).
Limitation on Asset Sales. The Preferred Stock Exchange Note Indenture
will contain a covenant relating to Asset Sales that will be substantially the
same as the covenant contained in the Indenture on the date of issuance of the
Preferred Stock Exchange Notes (or, if no New Notes or Series C Notes are
outstanding on such date, on the last interest payment date during which any New
Notes or Series C Notes were outstanding).
Limitation on Restrictions on Subsidiary Dividends. The Preferred Stock
Exchange Note Indenture will contain a covenant relating to restrictions on
Subsidiary dividends that will be substantially the same as the covenant
contained in the Indenture on the date of issuance of the Preferred Stock
Exchange Notes (or, if no New Notes or Series C Notes are outstanding on such
date, on the last interest payment date during which any New Notes or Series C
Notes were outstanding).
Merger, Consolidation or Sale of Assets. The Preferred Stock Exchange Note
Indenture will contain a covenant relating to merger, consolidation or sale of
assets that will be substantially the same as the covenant contained in the
Indenture on the date of issuance of the Preferred Stock Exchange Notes (or, if
no New Notes or Series C Notes are outstanding on such date, on the last
interest payment date during which any New Notes or Series C Notes were
outstanding).
Limitation on Transactions with Affiliates. The Preferred Stock Exchange
Note Indenture will contain a covenant relating to transactions with Affiliates
that will be substantially the same as the covenant contained in the Indenture
on the date of issuance of the Preferred Stock Exchange Notes (or, if no New
Notes or Series C Notes are outstanding on such date, on the last interest
payment date during which any New Notes or Series C Notes were outstanding).
Restrictions on Sale and Issuance of Subsidiary Stock. The Preferred Stock
Exchange Note Indenture will contain a covenant relating to the sale and
issuance of Subsidiary stock that will be substantially the same as the covenant
contained in the Indenture on the date of issuance of the Preferred Stock
Exchange Notes (or, if no New Notes or Series C Notes are outstanding on such
date, on the last interest payment date during which any New Notes or Series C
Notes were outstanding).
Line of Business. The Preferred Stock Exchange Note Indenture will contain
a covenant relating to line of business that will be substantially the same as
the covenant contained in the Indenture on the date of issuance of the Preferred
Stock Exchange Notes (or, if no New Notes or Series C Notes are outstanding on
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such date, on the last interest payment date during which any New Notes or
Series C Notes were outstanding).
Rule 144A Information Requirement. The Preferred Stock Exchange Note
Indenture will contain a covenant relating to the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act that will be
substantially the same as the covenant contained in the Indenture on the date of
issuance of the Preferred Stock Exchange Notes (or, if no New Notes or Series C
Notes are outstanding on such date, on the last interest payment date during
which any New Notes or Series C Notes were outstanding).
Reports. The Preferred Stock Exchange Note Indenture will contain
provisions relating to the provision of reports and information by the Company
that will be substantially the same as the provisions of the Indenture relating
to such matters on the date of issuance of the Preferred Stock Exchange Notes
(or, if no New Notes or Series C Notes are outstanding on such date, on the last
interest payment date during which any New Notes or Series C Notes were
outstanding).
Because certain of the covenants contained in the Preferred Stock Exchange
Note Indenture may be amended to conform to covenants contained in the Indenture
prior to issuance of the Preferred Stock Exchange Notes, there can be no
assurance that the rights of holders of Preferred Stock Exchange Notes will not
be materially different from those described herein.
EVENTS OF DEFAULT AND REMEDIES
The Preferred Stock Exchange Note Indenture will contain provisions
relating to Events of Default that will be substantially the same as the
provisions of the Indenture relating to such matters. See "Description of
Notes -- Events of Default and Remedies."
OTHER PROVISIONS OF THE PREFERRED STOCK EXCHANGE NOTE INDENTURE
The Preferred Stock Exchange Note Indenture will include other provisions
that are substantially the same with respect to the Preferred Stock Exchange
Notes as those with respect to the Notes set forth under "Description of
Notes -- No Personal Liability of Directors, Officers, Employees and
Stockholders," "-- Defeasance and Discharge of the Indenture and the Notes,"
"-- Transfer and Exchange," "-- Amendment, Supplement and Waiver" and
"-- Concerning the Trustee."
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain Federal income tax consequences of
the purchase, ownership, and disposition of the New Notes and New Preferred
Stock acquired pursuant to the Exchange Offer and the ownership and disposition
of Preferred Stock Exchange Notes received in exchange for Senior Preferred
Stock. This summary is based upon existing Federal income tax law, which is
subject to change, possibly retroactively. This summary does not discuss all
aspects of Federal income taxation which may be important to particular holders
in light of their individual investment circumstances, such as New Notes, New
Preferred Stock or Preferred Stock Exchange Notes held by investors subject to
special tax rules (e.g., financial institutions, insurance companies,
broker-dealers, tax-exempt organizations, and foreign investors) or to persons
that will hold the New Notes, New Preferred Stock or Preferred Stock Exchange
Notes as a part of a straddle, hedge, conversion, or synthetic security
transaction for Federal income tax purposes or that have a functional currency
other than the United States dollar, all of whom may be subject to tax rules
that differ significantly from those summarized below. In addition, this summary
does not discuss any foreign, state, or local tax considerations. This summary
assumes that investors will hold their New Notes, New Preferred Stock, and
Preferred Stock Exchange Notes received in exchange for Senior Preferred Stock,
as "capital assets" (generally, property held for investment) under the Internal
Revenue Code of 1986, as amended (the "Code") and with respect to holders of New
Preferred Stock, such holders do not hold and will not acquire equity, other
than the New Preferred Stock, in the Company or in Holdings. Prospective
investors are urged to consult their tax advisors regarding the Federal, state,
local and foreign income and other tax considerations associated with the
purchase, ownership, and disposition of New Notes and New Preferred Stock and
the ownership and disposition of Preferred Stock Exchange Notes received in
exchange for Senior Preferred Stock.
NEW NOTES
Because the New Notes are treated as a continuation of the Existing Notes
for federal income tax purposes, the tax consequences of holding the New Notes
is the same as that applicable to the Existing Notes.
Issue Price
For Federal income tax purposes, the issue price of the Notes is equal to
the first price at which a substantial amount of Notes were initially sold
reduced by the amount of the purchase price for a Note that is allocated to
pre-issuance accrued interest on such Note. Accordingly, the receipt of stated
interest on November 15, 1998, equal to such amount of pre-issuance interest on
a Note will not be treated as a payment on the Note but rather will be a
tax-free return of pre-issuance interest.
Amortizable Bond Premium
The Notes were issued with amortizable bond premium for Federal income tax
purposes. The amount of amortizable bond premium attributable to each Note was
equal the excess of the issue price of the Note over its stated principal
amount. Pursuant to recently issued Treasury regulations that are generally
effective for bonds acquired on or after March 2, 1998 (the "1998 Treasury
Regulations"), the holder may elect to amortize such premium over the term of
the Note based on the holder's yield to maturity with respect to the Note as
determined under the bond premium rules. A holder may generally offset the
amortizable bond premium allocable to an accrual period against stated interest
on the Note that the holder is required to include in income with respect to
such accrual period under his regular method of tax accounting. An election to
amortize bond premium applies to all taxable debt obligations held by the holder
at the beginning of the first taxable year to which the election applies or
thereafter acquired and may be revoked only with the consent of the Internal
Revenue Service. Special rules apply if the holder has previously elected to
amortize bond premium prior to the effective date of the 1998 Treasury
Regulations. Holders are urged to consult their tax advisors regarding the
election to amortize bond premium.
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Disposition of Notes
A holder of a Note will recognize a capital gain or loss upon any sale,
exchange or retirement of a Note in an amount equal to the difference between
the amount realized (other than any amounts attributable to pre-issuance
interest and accrued, but unpaid interest) and the holder's adjusted tax basis
in such Note. In the case of a holder who purchased a Note pursuant to the
Offering, the adjusted tax basis of a Note is equal the purchase price of the
Note reduced by (i) the amount of the purchase price for a Note that is
allocated to pre-issuance accrued interest on such Note, (ii) any amortizable
bond premium used to offset stated interest or otherwise allowed as a deduction
under the 1998 Treasury Regulations and (iii) all payments of principal received
on such Note.
Under the recently enacted Internal Revenue Service Restructuring and
Reform Act of 1998, net capital gain (i.e., generally, capital gain in excess of
capital loss) recognized by an individual upon the sale of a capital asset that
has been held for (i) more than 12 months will generally be subject to tax at a
rate not to exceed 20%, and (ii) 12 months or less will be subject to tax at
ordinary income tax rates. Capital gain recognized by a corporate holder will be
subject to tax at the ordinary income tax rates applicable to corporations.
SENIOR PREFERRED STOCK AND PREFERRED STOCK EXCHANGE NOTES
Classification of Senior Preferred Stock and Preferred Stock Exchange Notes
Although the characterization of an instrument as debt or equity is a
factual determination that cannot be predicted with certainty, the Company
intends to treat the Senior Preferred Stock as "equity" and the Preferred Stock
Exchange Notes as "debt" for Federal income tax purposes, and the remainder of
this discussion assumes that such treatment will be respected by the Internal
Revenue Service.
Senior Preferred Stock
Dividends. Distributions on the Senior Preferred Stock will constitute
dividend income for Federal income tax purposes, subject to tax as ordinary
income, to the extent paid from current or accumulated earnings and profits of
the Company as specially determined for Federal income tax purposes. Dividends
"paid in kind" through the issuance of additional Senior Preferred Stock will be
treated as distributions in an amount equal to the fair market value of such
additional Senior Preferred Stock as of the date of distribution. Such amount
will also be the initial issue price and tax basis of the newly distributed
Senior Preferred Stock for Federal income tax purposes. In addition to the
amount of cash and stock received, a holder will be treated as having received
as a distribution, to the extent of current or accumulated earnings and profits
of the Company, an amount equal to the annual accrual of the difference between
the issue price of the Senior Preferred Stock and the mandatory redemption price
of such stock (the "Redemption Premium"), unless a statutorily-defined de
minimis exception applies. Such accrual will be determined under a constant
yield method that will result in increasing amounts of accruals of income over
the term of the Senior Preferred Stock.
Dividends Received Deduction. Under section 243 of the Code, corporate
holders generally will be able to claim as a deduction 70% of the amount of any
distribution qualifying as a dividend, subject to a minimum holding period and
other applicable requirements described below.
Section 246A of the Code reduces the dividends received deduction allowable
to a corporate holder that has incurred indebtedness "directly attributable" to
its investment in portfolio stock. Section 246(c) of the Code requires that, in
order to be eligible for the dividends received deduction, a corporate holder
must generally hold the shares of the Senior Preferred Stock for a minimum of 46
days (91 days in the case of certain preferred stock) during the 90 day period
beginning on the date which is 45 days before the date on which such shares
become ex-dividend with respect to such dividend (during the 180 day period
beginning 90 days before such date in the case of certain preferred stock). A
holder's holding period for these purposes is suspended during any period in
which it has certain options or contractual obligations with respect to
substantially identical stock or holds one or more other positions with respect
to substantially identical stock that diminishes the risk of loss from holding
the Senior Preferred Stock.
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Under section 1059 of the Code, a corporate holder is required to reduce
its adjusted tax basis (but not below zero) in the Senior Preferred Stock by the
nontaxed portion of any "extraordinary dividend" if such stock has not been held
for more than two years before the earliest of the date such dividend is
declared, announced, or agreed to. Generally, the nontaxed portion of an
extraordinary dividend is the amount excluded from income by operation of the
dividends received deduction provisions of section 243 of the Code. An
extraordinary dividend on the Senior Preferred Stock generally would be a
dividend that (i) equals or exceeds 5% of the corporate holder's adjusted tax
basis in the Senior Preferred Stock, treating all dividends having ex-dividend
dates within an 85 day period as one dividend or (ii) exceeds 20% of the
corporate holder's adjusted tax basis in the Senior Preferred Stock, treating
all dividends having ex-dividend dates within a 365 day period as one dividend.
In determining whether a dividend paid on the Senior Preferred Stock is an
extraordinary dividend, a corporate holder may elect to substitute the fair
market value of the stock for such holder's adjusted tax basis for purposes of
applying these tests, provided such fair market value is established to the
satisfaction of the Secretary of the Treasury as of the day before the
ex-dividend date. An extraordinary dividend also currently includes any amount
treated as a dividend in the case of a redemption that is either non-pro rata as
to all stockholders or in partial liquidation of the Company, regardless of the
holder's holding period and regardless of the size of the dividend. If any part
of the nontaxed portion of an extraordinary dividend is not applied to reduce
the holder's adjusted tax basis as a result of the limitation on reducing such
basis below zero, such part will be treated as capital gain and will be
recognized in the taxable year in which the extraordinary dividend is received.
Special rules exist with respect to extraordinary dividends for "qualified
preferred dividends," which are any fixed dividends payable with respect to any
share of stock which (i) provides for fixed preferred dividends payable not less
frequently than annually and (ii) is not in arrears as to dividends at the time
the holder acquires such stock. A qualified preferred dividend does not include
any dividend payable with respect to any share if the actual rate of return of
such stock for the period the stock has been held by the holder receiving the
dividend exceeds 15%.
Disposition of Senior Preferred Stock. A holder's adjusted tax basis in
the Senior Preferred Stock will, in general, be equal to the holder's initial
tax basis of such Senior Preferred Stock increased by the Redemption Premium
previously included in income by the holder. A corporate holder's adjusted tax
basis may be further adjusted by the extraordinary dividend provision discussed
above. Upon the sale or other disposition of Senior Preferred Stock (including
an exchange of Senior Preferred Stock for Preferred Stock Exchange Notes and a
complete redemption of all of the outstanding Senior Preferred Stock) a holder
will generally recognize capital gain or loss equal to the difference between
the amount realized upon the disposition and the adjusted tax basis of the
Senior Preferred Stock and any such capital gain may be subject to a reduced
rate of tax as described above under the heading "-- New Notes -- Disposition of
New Notes."
In the case of an exchange of Senior Preferred Stock for Preferred Stock
Exchange Notes, the amount realized in the exchange will be equal to the "issue
price" of the Preferred Stock Exchange Note plus any cash received in the
exchange. If either the Senior Preferred Stock or the Preferred Stock Exchange
Notes are traded on an established securities market, the issue price of a
Preferred Stock Exchange Note will be equal to its fair market value, determined
as of the exchange date, as reflected in the public trading in the Senior
Preferred Stock or Preferred Stock Exchange Notes. If neither the Senior
Preferred Stock nor the Preferred Stock Exchange Notes are so traded, the issue
price of the Preferred Stock Exchange Notes would be the stated principal amount
of the Preferred Stock Exchange Notes provided that the yield on the Preferred
Stock Exchange Notes is equal to or greater than the "applicable Federal rate"
in effect at the time the Preferred Stock Exchange Notes are issued. If the
yield on the Preferred Stock Exchange Notes is less than such applicable Federal
rate, the issue price of the notes would be equal to the present value as of the
issue date of all payments to be made on the Preferred Stock Exchange Notes,
discounted at the applicable Federal rate. It can not be determined at the
present time whether the Senior Preferred Stock or the Preferred Stock Exchange
Notes will be, at the relevant time, traded on an established securities market
or whether the yield on the Preferred Stock Exchange Notes will equal or exceed
the applicable Federal rate.
Depending upon a holder's particular circumstances, the tax consequences of
holding Preferred Stock Exchange Notes may be less advantageous than the tax
consequences of holding Senior Preferred Stock
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because, for example, payments of interest on the Preferred Stock Exchange Notes
will not be eligible for any dividends received deduction that may be available
to corporate holders and because, as discussed at "-- Preferred Stock Exchange
Notes -- Original Issue Discount," Preferred Stock Exchange Notes may be issued
with greater amounts of original issue discount than the Redemption Premium on
the Senior Preferred Stock.
Partial Redemption of Senior Preferred Stock. In the case of a partial
redemption of the Senior Preferred Stock by the Company, the partial redemption
would be treated, under section 302 of the Code, either as a sale or exchange
giving rise to capital gain or loss or as dividend income subject to tax as
ordinary income. If a partial redemption of the Senior Preferred Stock for cash
is treated as a dividend with respect to a particular exchanging holder under
section 302 of the Code, such holder (i) will not recognize any loss on the
exchange and (ii) will recognize dividend income (rather than capital gain) in
an amount equal to cash received in the redemption without regard to the
holder's adjusted tax basis in the shares of Senior Preferred Stock surrendered
in the redemption, to the extent of its proportionate share of the Company's
current or accumulated earnings and profits. Pursuant to section 302 of the
Code, such redemption will not be treated as a dividend, if after giving effect
to the constructive ownership rules of section 318 of the Code, such redemption
(i) represents a "complete termination" of the exchanging holder's stock
interest in the Company, (ii) is "substantially disproportionate" with respect
to the exchanging holder or (iii) is "not essentially equivalent to a dividend"
with respect to the exchanging holder, all within the meaning of section 302(b)
of the Code. An exchange will be "not essentially equivalent to a dividend" as
to a particular holder if it results in a "meaningful reduction" in such
holder's interest in the Company (after application of the constructive
ownership rules of section 318 of the Code). In general, there are no fixed
rules for determining whether a "meaningful reduction" has occurred. Each holder
should consult its tax advisor as to its ability in light of its particular
circumstances to satisfy any of the foregoing tests. Additionally, corporate
holders should consult their tax advisors concerning the availability of the
corporate dividends received deduction and the possible application of the
extraordinary dividend rules of section 1059 of the Code to an exchange by a
corporate holder for whom the distribution is taxable as a dividend.
Preferred Stock Exchange Notes
Original Issue Discount. If the exchange of Preferred Stock Exchange Notes
for Senior Preferred Stock is consummated on or prior to April 15, 2003, the
Preferred Stock Exchange Notes will be issued with original issue discount, for
Federal income tax purposes, in an amount equal to the excess of the "stated
redemption price at maturity" of the Preferred Stock Exchange Notes over the
"issue price" of such notes (as described above). For this purpose, the stated
redemption price at maturity of the Preferred Stock Exchange Notes will be
deemed to be equal to the sum of all scheduled amounts payable on the Preferred
Stock Exchange Notes (including the payment of stated interest). Alternatively,
if the exchange of Preferred Stock Exchange Notes for Senior Preferred Stock is
consummated after April 15, 2003, the Preferred Stock Exchange Notes will be
issued with original issue discount, for Federal income tax purposes, only if
the "stated redemption price at maturity" of the Preferred Stock Exchange Notes
exceeds the "issue price" of such notes by a statutorily-defined de minimis
amount. In this case, the stated redemption price at maturity will be equal to
the stated principal amount of such notes and the payment of stated interest
will be treated as interest income when received or accrued in accordance with a
holder's regular method of tax accounting.
If the Preferred Stock Exchange Notes are issued with original issue
discount, holders will be required to include original issue discount in
ordinary income over the period that they hold the Preferred Stock Exchange
Notes in advance of the receipt of the cash attributable thereto. The amount of
original issue discount to be included in income will be determined using a
constant yield method, which will result in a greater portion of such discount
being included in income in the later part of the term of the Preferred Stock
Exchange Notes. Any amount of discount included in income will increase a
holder's tax basis in the Preferred Stock Exchange Notes.
Disposition of Preferred Stock Exchange Notes. Upon the sale, exchange or
retirement of a Preferred Stock Exchange Note, a holder will recognize capital
gain or loss equal to the difference between the amount realized and the
holder's adjusted tax basis in such note and any such capital gain may be
subject to a reduced rate of tax as described above under the heading "-- New
Notes -- Disposition of New Notes."
100
<PAGE> 107
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Securities for its own account
pursuant to an Exchange Offer must acknowledge that it will deliver a prospectus
in connection with any resale of such New Securities. 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 Securities received in exchange for Existing
Securities where such Existing Securities were acquired as a result of
market-making activities or other trading activities. The Company has agreed
that, for a period of 180 days after the Expiration Date, they will make this
Prospectus, as amended or supplemented, available to any broker-dealer for use
in connection with any such resale. In addition, until , 1998 (90 days
after the date of this Prospectus), all dealers effecting transactions in the
New Securities may be required to deliver a prospectus.
The Company will not receive any proceeds from any sale of New Securities
by broker-dealers. New Securities received by broker-dealers for their own
account pursuant to the Exchange Offers 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 Securities or a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market price or negotiated prices. Any such resale
may be made directly to purchasers or to or through brokers or dealers who may
receive compensation in the form of commissions or concessions from any such
broker-dealer or the purchasers of any such New Securities. Any broker-dealer
that resells New Securities that were received by it for its own account
pursuant to an Exchange Offer and any broker or dealer that participates in a
distribution of such New Securities may be deemed to be an "underwriter" within
the meaning of the Securities Act and any profit on any such resale of New
Securities and any commissions or concessions received by any such persons may
be deemed to be underwriting compensation under the Securities Act. The Letters
of Transmittal state that, by acknowledging that it will deliver and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. For a period of 180
days after the Expiration Date, the Company will promptly send additional copies
of this Prospectus and any amendment or supplement to this Prospectus to any
broker-dealer that requests such documents in a Letter of Transmittal. The
Company has agreed to pay all expenses incident to the Exchange Offers
(including the expenses of one counsel for the holders of the Existing
Securities) other than commissions or concessions of any brokers or dealers and
will indemnify the holders of the Existing Securities (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
LEGAL MATTERS
The validity of the New Securities will be passed upon for the Company by
Dechert Price & Rhoads, Philadelphia, Pennsylvania.
INDEPENDENT ACCOUNTANTS
The financial statements of the Company as of December 31, 1996 and 1997
and for the year ended December 31, 1995, the eleven month period ended November
26, 1996, the one month period ended December 31, 1996 and the year ended
December 31, 1997 included in this Prospectus have been audited by
PricewaterhouseCoopers LLP, independent accountants.
The financial statements of Blue Giant USA Corporation and Blue Giant
Canada Limited as of December 31, 1996 and for the year then ended included in
this Prospectus have been audited by Raughton & Company and by KPMG,
respectively.
101
<PAGE> 108
CLARK MATERIAL HANDLING COMPANY
AND PREDECESSOR BUSINESSES
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
CLARK MATERIAL HANDLING COMPANY
Report of independent accountants........................... F-2
Consolidated balance sheet as of December 31, 1996 and
1997...................................................... F-3
Consolidated statement of operations for the year ended
December 31, 1995, the eleven-month period ended November
26, 1996, the one-month period ended December 31, 1996 and
the year ended December 31, 1997.......................... F-4
Consolidated statement of stockholder's equity as of
December 31, 1995, November 26, 1996, December 31, 1996
and December 31, 1997..................................... F-5
Consolidated statement of cash flows for the year ended
December 31, 1995, the eleven-month period ended November
26, 1996, the one-month period ended December 31, 1996,
and the year ended December 31, 1997...................... F-6
Notes to consolidated financial statements.................. F-7
Unaudited consolidated balance sheet as of December 31, 1997
and June 30, 1998......................................... F-21
Unaudited consolidated statement of operations for the six
months ended June 30, 1997 and 1998....................... F-22
Unaudited consolidated statement of cash flows for the six
months ended June 30, 1997 and 1998....................... F-23
Notes to unaudited consolidated financial statements........ F-24
BLUE GIANT USA CORPORATION
Independent auditors' report................................ F-26
Balance sheet as of December 31, 1996 and as of June 28,
1997 (unaudited).......................................... F-27
Statement of operations for the year ended December 31, 1996
and for the six months ended June 28, 1996 and June 28,
1997 (unaudited).......................................... F-28
Statement of changes in shareholders' equity for the year
ended December 31, 1996 and for the six months ended June
28, 1997 (unaudited)...................................... F-29
Statement of cash flows for the year ended December 31, 1996
and for the six months ended June 28, 1996 and June 28,
1997 (unaudited).......................................... F-30
Notes to financial statements............................... F-31
BLUE GIANT CANADA LIMITED
Auditors' report to the shareholders........................ F-36
Balance sheet as of December 31, 1996 and June 28, 1997
(unaudited)............................................... F-37
Statement of earnings and retained earnings for the year
ended December 31, 1996 for the six months ended June 29,
1996 and June 28, 1997 (unaudited)........................ F-38
Statement of changes in financial position for the year
ended December 31, 1996 and for the six months ended June
29, 1996 and June 28, 1997 (unaudited).................... F-39
Notes to financial statements............................... F-40
PRO FORMA COMBINED FINANCIAL INFORMATION
Unaudited pro forma combined financial information.......... P-1
Unaudited pro forma combined statement of operations for the
twelve months ended June 30, 1998......................... P-2
Notes to unaudited pro forma combined statement of
operations for the twelve months ended June 30, 1998...... P-3
Unaudited pro forma combined statement of operations for the
year ended December 31, 1997.............................. P-4
Notes to unaudited pro forma combined statement of
operations for the year ended December 31, 1997........... P-5
</TABLE>
F-1
<PAGE> 109
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Stockholder of CLARK Material
Handling Company
In our opinion, the consolidated balance sheet and the related consolidated
statements of operations, of stockholder's equity and of cash flows present
fairly, in all material respects, the consolidated financial position of CLARK
Material Handling Company and its predecessor businesses at December 31, 1997
and December 31, 1996 and the results of their operations and cash flows for the
year ended December 31, 1997, the one month period ended December 31, 1996, the
eleven month period ended November 26, 1996 and the year ended December 31,
1995, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of 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 audits 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.
PricewaterhouseCoopers LLP
Cincinnati, Ohio
February 24, 1998
F-2
<PAGE> 110
CLARK MATERIAL HANDLING COMPANY
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1996 1997
------------ ------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents................................. $ 16,554 $ 6,334
Cash securing letters of credit........................... 1,092 320
Trade receivables (less allowance of $2,215 at December
31, 1996 and $1,906 at December 31, 1997).............. 38,154 47,018
Net inventories........................................... 60,441 70,784
Other current assets...................................... 6,255 7,281
-------- --------
Total current assets.............................. 122,496 131,737
Long-term assets
Property, plant and equipment-net......................... 51,014 47,836
Goodwill, net of accumulated amortization of $231 at
December 31, 1996 and $3,081 at December 31, 1997...... 109,311 114,887
Other assets.............................................. 18,486 18,794
-------- --------
Total assets...................................... $301,307 $313,254
======== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities
Notes payable............................................. $ 3,246 $ 3,184
Current portion of capital lease obligations.............. 2,407 2,732
Trade accounts payable.................................... 53,562 62,002
Accrued compensation and benefits......................... 5,319 5,730
Accrued warranties and product liability.................. 23,383 20,774
Other current liabilities................................. 9,489 10,728
-------- --------
Total current liabilities......................... 97,406 105,150
Non-current liabilities
Senior notes payable...................................... 130,000 130,000
Capital lease obligations, less current portion........... 3,600 3,864
Accrued warranties and product liability.................. 30,826 38,497
Other non-current liabilities............................. 14,402 12,002
-------- --------
Total liabilities................................. 276,234 289,513
-------- --------
Commitments and contingencies (Note 11)..................... -- --
Stockholder's equity
Common stock, par value $1 per share, 1,000 shares
authorized, issued and outstanding..................... 1 1
Paid-in-capital........................................... 24,999 24,999
Retained earnings......................................... 535 8,406
Cumulative translation adjustment......................... (462) (9,665)
-------- --------
Total stockholder's equity........................ 25,073 23,741
-------- --------
Total liabilities and stockholder's equity........ $301,307 $313,254
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE> 111
CLARK MATERIAL HANDLING COMPANY
AND PREDECESSOR BUSINESSES
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
PREDECESSOR THE COMPANY
----------------------------- ----------------------------
ELEVEN MONTHS ONE MONTH
YEAR ENDED ENDED ENDED YEAR ENDED
DECEMBER 31, NOVEMBER 26, DECEMBER 31, DECEMBER 31,
1995 1996 1996 1997
------------ ------------- ------------ ------------
<S> <C> <C> <C> <C>
Net sales.............................. $528,759 $404,629 $46,763 $489,294
Cost of goods sold..................... 484,569 359,061 41,905 431,127
-------- -------- ------- --------
Gross profit......................... 44,190 45,568 4,858 58,167
Engineering, selling and administrative
expenses............................. 30,649 26,613 2,923 37,133
Parent company management fees......... 6,996 5,672 -- --
Severance and exit charges............. 3,478 -- -- --
-------- -------- ------- --------
Income from operations............... 3,067 13,283 1,935 21,034
Other income (expense):
Interest expense..................... (790) (370) (1,393) (15,086)
Allocated interest expense from
parent company.................... (16,145) (14,656) -- --
Interest income...................... 602 220 25 809
Amortization interest expense from
parent company.................... (530) (349) -- --
Property impairment charge........... (2,500) -- -- --
Other income (expense) -- net........ (975) (223) (32) 1,598
-------- -------- ------- --------
Income (loss) before income taxes and
extraordinary items............... (17,271) (2,095) 535 8,355
Provision (benefit) for income taxes... (148) -- -- 484
-------- -------- ------- --------
Income (loss) before extraordinary
items................................ (17,419) (2,095) 535 7,871
Extraordinary loss on retirement of
allocated debt....................... (1,347) -- -- --
-------- -------- ------- --------
Net income (loss)...................... $(18,766) $ (2,095) $ 535 $ 7,871
======== ======== ======= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE> 112
CLARK MATERIAL HANDLING COMPANY
AND PREDECESSOR BUSINESSES
CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOREIGN
RETAINED CURRENCY
COMMON PAID-IN EARNINGS TRANSLATION
STOCK CAPITAL (DEFICIT) ADJUSTMENTS
------ ------- --------- -----------
<S> <C> <C> <C> <C>
PREDECESSOR
Balance at December 31, 1994........................ $(76,107) $(3,915)
Net loss for the year ended December 31, 1995..... (18,766) --
Translation adjustment............................ -- 2,066
-------- -------
Balance at December 31, 1995........................ (94,873) (1,849)
Net loss for the eleven months ended
November 26, 1996.............................. (2,095) --
Translation adjustment............................ -- (2,546)
-------- -------
Balance at November 26, 1996........................ $(96,968) $(4,395)
======== =======
THE COMPANY
Issuance of common stock............................ $ 1 $24,999 $ -- $ --
Net income for the month ended December 31,
1996........................................... -- -- 535 --
Translation adjustment............................ -- -- -- (462)
--- ------- --------- -----------
Balance at December 31, 1996........................ 1 24,999 535 (462)
Net income for the year ended December 31,
1997........................................... -- -- 7,871 --
Translation adjustment............................ -- -- -- (9,203)
------ ------- --------- -----------
Balance at December 31, 1997........................ $ 1 $24,999 $ 8,406 $(9,665)
====== ======= ========= ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE> 113
CLARK MATERIAL HANDLING COMPANY
AND PREDECESSOR BUSINESSES
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
PREDECESSOR THE COMPANY
---------------------------- ---------------------------
ELEVEN MONTHS ONE MONTH
YEAR ENDED ENDED ENDED YEAR ENDED
DECEMBER 31, NOVEMBER 26, DECEMBER 31, DECEMBER 31,
1995 1996 1996 1997
------------ ------------- ------------ ------------
<S> <C> <C> <C> <C>
Operating activities:
Net income (loss)............................. $(18,766) $(2,095) $ 535 $ 7,871
Adjustments to reconcile net income (loss) to
cash provided by operating activities:
Depreciation................................ 11,534 9,312 778 8,900
Amortization................................ 1,310 1,099 322 3,350
Extraordinary loss on retirement of
allocated debt............................ 1,347 -- -- --
Loss on sale of property, plant and
equipment................................. 183 31 70 24
Property impairment charge.................. 2,500 -- -- --
Changes in operating assets and liabilities
excluding business combinations:
Restricted cash........................ (516) (220) (136) 638
Trade receivables...................... (240) (2,406) 2,800 (8,732)
Net inventories........................ (2,685) (2,696) 9,801 (7,015)
Trade accounts payable................. (2,084) 61 (11,265) 7,866
Accrued compensation and benefits...... (73) 409 (609) (156)
Accrued warranties and product
liability............................ 1,126 (2,248) 237 3,581
Due to parent company.................. 19,187 8,720 -- --
Other assets and liabilities, net...... (5,645) (5,876) 223 (5,218)
-------- ------- -------- --------
Net cash provided by operating
activities........................... 7,178 4,091 2,756 11,109
-------- ------- -------- --------
Investing activities:
Business combinations......................... -- -- -- (14,646)
Capital expenditures.......................... (5,290) (3,208) (317) (6,340)
Proceeds from sale of assets.................. 534 139 -- --
-------- ------- -------- --------
Net cash used in investing
activities........................... (4,756) (3,069) (317) (20,986)
-------- ------- -------- --------
Financing activities:
Issuance of current notes payable............. -- -- -- 1,182
Repayment of current notes payable............ -- -- -- (1,020)
Repayment of allocated debt................... (51,754) -- -- --
Proceeds from allocated debt.................. 51,220 105 -- --
Other, net.................................... (1,607) 1,376 293 147
-------- ------- -------- --------
Net cash provided by (used in)
financing activities................. (2,141) 1,481 293 309
-------- ------- -------- --------
Effect of exchange rate changes on cash and cash
equivalents................................... (976) (1,262) (306) (652)
-------- ------- -------- --------
Net increase (decrease) in cash and cash
equivalents................................... (695) 1,241 2,426 (10,220)
Cash and cash equivalents at beginning of
period........................................ 1,514 819 14,128 16,554
-------- ------- -------- --------
Cash and cash equivalents at end of period...... $ 819 $ 2,060 $ 16,554 $ 6,334
-------- ------- -------- --------
Supplemental disclosures
Cash paid for interest........................ $ 793 $ 337 $ 86 $ 14,465
Income taxes paid............................. $ 148 $ 17 $ -- $ --
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE> 114
CLARK MATERIAL HANDLING COMPANY
AND PREDECESSOR BUSINESSES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS)
(1) REPORTING ENTITY AND BASIS OF PRESENTATION
CLARK Material Handling Company (the "Company") is a wholly-owned
subsidiary of CMH Holdings Corporation ("Holdings"). Prior to November 27, 1996,
Holdings had no previous business operations and was formed for the purpose of
acquiring the Company and its subsidiaries from Terex Corporation (the
"Predecessor's Parent") in a purchase business combination. That acquisition was
consummated on November 27, 1996. See Note 3 for information regarding the
acquisition.
Prior to the acquisition, the Company's predecessor businesses
("Predecessor") operated as wholly-owned subsidiaries of the Predecessor's
Parent. Reference to the Company relates to the period subsequent to November
26, 1996, while reference to the Predecessor relates to operations on or prior
to November 26, 1996. The Predecessor's Parent acquired the Predecessor in 1992
in a purchase business combination and Predecessor's Parent's basis, including
its acquisition debt and goodwill associated with the 1992 acquisition, was
"pushed down" to the Predecessor's financial statements.
The Predecessor's financial statements include allocations of Predecessor's
Parent acquisition debt and related interest expense. Management fees, which
include corporate overhead costs (including legal, treasury and other shared
services), have been allocated to the Predecessor based generally on the
percentage of Predecessor revenues to the Predecessor's Parent's consolidated
revenues. Interest has been charged on the management fee allocated and the due
to Predecessor's Parent balance at a rate of 13% compounded monthly.
The Company and the Predecessor operate in one industry segment, that being
the design, manufacture, marketing and worldwide distribution and support of
internal combustion and electric lift trucks, electric walkies and related
components and replacement parts. Geographic segment information is shown in
Note 13.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation. The Company's financial statements include the
accounts of the Company and its subsidiaries, including CLARK Material Handling
GmbH, CLARK Forklift Korea, CLARK Material Handling of Brazil, HLT, Inc. ("HLT")
and Blue Giant Canada Limited and Blue Giant USA Corporation ("Blue Giant"). HLT
and Blue Giant were acquired in 1997 -- see Note 4. The Predecessor's financial
statements include the U.S., German, Brazilian and Korean material handling
operations of the Predecessor's Parent prior to their acquisition on November
27, 1996, on a combined basis. All material intercompany balances, transactions
and profits have been eliminated.
Cash and cash equivalents. Cash equivalents consist of highly liquid
investments with original maturities of three months or less. The carrying
amount of cash and cash equivalents approximates their fair value.
Cash securing letters of credit. The Company has certain cash and cash
equivalents that are not fully available for use in operations. Certain
international operations collateralize letters of credit and performance bonds
with cash deposits.
Inventories. Inventories are stated at the lower of cost or market value.
The Company determines cost on the first-in, first-out ("FIFO") method for all
inventories. The Predecessor determined cost using the last-in, first-out
("LIFO") method for U.S. inventories and by the FIFO method for inventories of
international operations.
Goodwill. Goodwill represents the difference between the total purchase
price and the fair value of assets and liabilities (tangible and intangible)
acquired at the date of acquisition. Goodwill related to the Company is being
amortized on the straight-line method over forty years. The Company reviews the
carrying value of goodwill for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable.
Measurement of any impairment would include a comparison of discounted
F-7
<PAGE> 115
CLARK MATERIAL HANDLING COMPANY
AND PREDECESSOR BUSINESSES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS) -- (CONTINUED)
estimated future operating cash flows anticipated to be generated during the
remaining amortization period of the goodwill to the net carrying value of
goodwill.
Debt issuance costs. Debt issuance costs of the Company have been
capitalized and are being amortized on the straight-line method over the term of
the related debt. Debt issuance costs are included in other assets and totaled
$5,599 and $6,625 at December 31, 1996 and 1997, respectively. Amortization of
these costs totaled $47 and $625 for the one month ended December 31, 1996 and
the year ended December 31, 1997, respectively.
Property, plant and equipment. Property, plant and equipment are stated at
cost. Expenditures for major renewals and improvements are capitalized while
expenditures for maintenance and repairs not expected to extend the life of an
asset beyond its normal useful life are charged to expense when incurred.
Depreciation is determined for financial reporting purposes using the
straight-line method over the estimated useful asset lives, generally 20 to 35
years for buildings, eight to twelve years for machinery and equipment and two
to eight years for other assets.
Revenue recognition. Revenue and costs are generally recorded when products
are shipped and invoiced to customers. Certain new units may be invoiced prior
to the time customers take physical possession. Revenue is recognized in such
cases only when the customer has a fixed commitment to purchase the units, the
units have been completed, tested and made available to the customer for pickup
or delivery, and the customer has requested that the units be held for pickup or
delivery at a time specified by the customer in the sales documents. In such
cases, the units are invoiced under the customary billing terms, title to the
units and risks of ownership pass to the customer upon invoicing, the units are
segregated from inventories and identified as belonging to the customer and
there are no further obligations under the order.
Accrued warranties and product liability. Accruals for potential warranty
and product liability claims are recorded based on past claims experience.
Warranty costs are accrued at the time revenue is recognized. Self-insurance
accruals are provided for estimated product liability experience on known claims
and for claims anticipated to have been incurred which have not yet been
reported. Product liability accruals are presented on a gross settlement basis.
Foreign currency translation. Assets and liabilities of international
operations are translated at year-end exchange rates. Income and expenses are
translated at average exchange rates prevailing during the year. Foreign
operations utilize the local currency as the functional currency; translation
adjustments are accumulated in the cumulative translation adjustment account in
equity. Gains or losses resulting from foreign currency transactions are
included in other income (expense) and totaled ($1,232) ($1,055), ($149) and
$1,536 for the year ended December 31, 1995, the eleven months ended November
26, 1996, the one month ended December 31, 1996 and for the year ended December
31, 1997, respectively.
Income taxes. Income taxes are provided using the asset and liability
method required by Statement of Financial Accounting Standards ("SFAS") No. 109.
Pursuant to a tax sharing agreement with Holdings, the Company is included in
the consolidated federal return of Holdings. The tax sharing arrangement does
not differ materially from that which would occur on a separate entity basis.
The Predecessor provided for income taxes on a separate entity basis.
Use of estimates. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from those estimates.
F-8
<PAGE> 116
CLARK MATERIAL HANDLING COMPANY
AND PREDECESSOR BUSINESSES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS) -- (CONTINUED)
Reclassifications. Certain reclassifications of prior year amounts have
been made to conform with the current year presentation.
(3) ACQUISITION
On November 27, 1996, Holdings acquired the Company and the Company's
subsidiaries in a business combination accounted for as a purchase. The
aggregate purchase price for the acquisition was $139,500, which was subject to
certain immaterial post-closing adjustments, and was financed through a $25,000
equity investment by Holdings in the common stock of the Company and the
issuance of $130,000 in Senior Notes due 2006 by the Company. The purchase price
was allocated to the estimated fair values of the Company's tangible and
intangible net assets with the remainder allocated to goodwill. The excess of
purchase price over the net assets acquired of $116,942 is being amortized on a
straight-line basis over forty years.
The operating results of the Company are included in the consolidated
results of operations since November 27, 1996. The following unaudited pro forma
summary presents the consolidated results of operations as though Holdings
completed the acquisition on January 1 of each period presented.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1995 1996
---------- ----------
<S> <C> <C>
Net sales...................................... $528,759 $451,392
======== ========
Income from operations......................... $ 5,894 $ 16,976
======== ========
Net income (loss).............................. $(12,452) $ 1,881
======== ========
</TABLE>
(4) BUSINESS COMBINATIONS
BLUE GIANT
On November 7, 1997, the Company closed its acquisitions of substantially
all of the assets and certain liabilities of Blue Giant USA Corporation ("BGU")
and Blue Giant Canada Limited ("BGC") (collectively, "Blue Giant") in two
separate purchase business combinations effective November 1, 1997. Although
separate legal entities, BGU and BGC were under the common control of
substantially the same stockholder group. The purchase price for the
acquisitions comprised $9,365 in cash (of which $200 was paid to a shareholder
of Blue Giant under a noncompete agreement), an obligation payable over three
years totaling $1,105 under a noncompete agreement with a shareholder of the
Blue Giant and related expenses of $333. The purchase price was allocated to the
estimated fair value of the tangible and intangible net assets acquired, with
the residual being allocated to goodwill. The goodwill of $1,026 is being
amortized on a straight-line basis over forty years.
The operating results of Blue Giant are included in the consolidated
results of operations since November 1, 1997. The following unaudited pro forma
summary presents the consolidated results of operations as though the
acquisition of the Company described in Note 3 had been completed and the
Company had completed the acquisition of Blue Giant on January 1 of each period
presented.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1996 1997
---------- ----------
<S> <C> <C>
Net sales...................................... $477,254 $509,187
======== ========
Income from operations......................... $ 17,293 $ 21,583
======== ========
Net income..................................... $ 1,415 $ 8,320
======== ========
</TABLE>
F-9
<PAGE> 117
CLARK MATERIAL HANDLING COMPANY
AND PREDECESSOR BUSINESSES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS) -- (CONTINUED)
HLT, INC.
On February 28, 1997, the Company purchased substantially all of the assets
of HLT, Inc., a supplier of upright material handling equipment, for $4,948.
Assets acquired included inventory, equipment and tooling. The purchase was
financed through a short-term note which matured in the second quarter of 1997.
The Company is leasing the former company's facility and is continuing
production of the equipment, primarily for its own use. The acquisition was not
significant and pro forma data is not presented.
(5) INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1996 1997
------- -------
<S> <C> <C>
Finished equipment............................... $12,797 $12,000
Replacement parts................................ 24,107 28,302
Work-in-progress................................. 1,402 5,356
Raw material and supplies........................ 22,135 25,126
------- -------
Net inventories.................................. $60,441 $70,784
======= =======
</TABLE>
(6) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1996 1997
------- -------
<S> <C> <C>
Property......................................... $ 7,364 $ 7,005
Plant............................................ 15,556 14,574
Equipment........................................ 28,779 33,854
------- -------
51,699 55,433
Less: Accumulated depreciation................... (685) (7,597)
------- -------
Net property, plant and equipment................ $51,014 $47,836
======= =======
</TABLE>
(7) BORROWINGS, LINES OF CREDIT AND INDEBTEDNESS
Long-term debt is summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1997
-------- --------
<S> <C> <C>
10.75% Senior Notes due 2006................... $130,000 $130,000
Capital lease obligations (Note 8)............. 6,007 6,596
-------- --------
Total long-term debt........................... 136,007 136,596
Less: current portion.......................... 2,407 2,732
-------- --------
Long-term debt, less current portion........... $133,600 $133,864
======== ========
</TABLE>
SENIOR NOTES DUE 2006
The Senior Notes due 2006 ("Senior Notes") were issued in connection with
the acquisition of the Company and are due on November 15, 2006. The Senior
Notes are not redeemable at the Company's option
F-10
<PAGE> 118
CLARK MATERIAL HANDLING COMPANY
AND PREDECESSOR BUSINESSES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS) -- (CONTINUED)
prior to November 15, 2001. Thereafter, the Senior Notes will be subject to
redemption at the option of the Company, in whole or in part, upon not less than
30 nor more than 60 days notice, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest thereon, if any, to the applicable date of redemption, if redeemed
during the 12 month period beginning on November 15 of the years indicated
below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---- ----------
<S> <C>
2001.............................................. 105.375%
2002.............................................. 102.688%
2003 and thereafter............................... 100.000%
</TABLE>
The Senior Notes also contain provision for early redemption upon the
occurrence of certain significant corporate events, including an offering of
equity securities or a change in control of the Company.
REVOLVING LINE OF CREDIT
The Company has entered into a $30,000 revolving credit facility (the
"Facility") with Congress Financial Corporation (the "Bank"). Borrowings under
the Facility are available for working capital and general corporate purposes,
including letters of credit. The Facility is secured by first priority liens on
all accounts receivable and inventory of the Company's domestic operations,
excluding HLT and Blue Giant.
The Facility expires in November 1999, unless extended. The interest rate
per annum applicable to the Facility is the prime rate, as announced
periodically, plus 0.50% or, at the Company's option, the adjusted Eurodollar
rate plus 2.50%. The Facility permits the Company to prepay loans and to
permanently reduce revolving credit commitments or letters of credit, in whole
or in part, at any time in certain minimum amounts. The Company is required to
pay certain fees in connection with the Facility, including a commitment fee of
0.25% on the undrawn portion of the revolving credit commitment.
The Facility contains customary representations and warranties, and events
of default and certain other covenants. Borrowings on the Facility are
classified in the consolidated balance sheet as notes payable and were $0 and
$799 at December 31, 1996 and 1997, respectively. The average interest rate on
borrowings during 1997 was 9%.
FAIR VALUE DISCLOSURES
The fair value of the Company's Senior Notes at December 31, 1997 is
approximately $137,800 based on quoted market prices. The fair value of the
Senior Notes approximated carrying value at December 31, 1996. The Company
believes that the carrying value of its other borrowings approximates fair
market value based on discounted future cash flows using rates currently
available for debt with similar terms and remaining maturities.
(8) LEASE COMMITMENTS
The Company leases certain facilities, machinery and equipment, and
vehicles with varying terms under operating leases. In most leasing
arrangements, the Company pays the property taxes, insurance, maintenance and
expenses related to the leased property.
Most of the Company's operating leases provide the Company with the option
to renew the leases for varying periods after the initial lease terms. These
renewal options enable the Company to renew the leases
F-11
<PAGE> 119
CLARK MATERIAL HANDLING COMPANY
AND PREDECESSOR BUSINESSES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS) -- (CONTINUED)
based upon the fair rental values at the date of expiration of the initial
lease. Total rental expense under operating leases was as follows:
<TABLE>
<S> <C>
Year ended December 31, 1995................................ $2,557
======
Eleven months ended November 26, 1996....................... $1,886
======
One month ended December 31, 1996........................... $ 191
======
Year ended December 31, 1997................................ $2,807
======
</TABLE>
The Company also routinely enters into sale-leaseback arrangements for
certain equipment, which is similarly sold to third-party customers under
sales-type lease agreements. The Company maintains a net investment in these
leases, represented by the present value of payments receivable under the
leases. The Company's net investment in sales-type leases was $7,517 and $7,901
at December 31, 1996 and 1997, respectively, and is included in other current
and non-current assets on the consolidated balance sheet.
In connection with the original sale-leaseback arrangements underlying the
customer lease program, the Company has an outstanding rental installment
obligation which is recorded based on the present value of minimum payments due
under the leases of $6,596 of which $2,732 is current at December 31, 1997.
Future minimum capital and noncancelable operating lease payments and the
related present value of capital lease payments at December 31, 1997 are as
follows:
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
------- ---------
<S> <C> <C>
1998..................................................... $2,446 $ 3,139
1999..................................................... 2,001 2,439
2000..................................................... 1,556 2,023
2001..................................................... 1,038 1,454
2002..................................................... 371 1,314
Thereafter............................................... -- 29
------ -------
Total minimum obligations...................... 7,412 $10,398
=======
Less amount representing interest........................ 816
------
Present value of net minimum obligations....... 6,596
Less current portion..................................... 2,732
------
Long-term obligations.......................... $3,864
======
</TABLE>
(9) INCOME TAXES
The components of income (loss) before income taxes and extraordinary items
are as follows:
<TABLE>
<CAPTION>
ELEVEN MONTHS ONE MONTH
YEAR ENDED ENDED ENDED YEAR ENDED
DECEMBER 31, NOVEMBER 26, DECEMBER 31, DECEMBER 31,
1995 1996 1996 1997
------------ ------------- ------------ ------------
<S> <C> <C> <C> <C>
United States.................. $(16,405) $ 2,541 $165 $4,080
Foreign........................ (866) (4,636) 370 4,275
-------- ------- ---- --------
Income (loss) before income
taxes and extraordinary
items........................ $(17,271) $(2,095) $535 $8,355
======== ======= ==== ========
</TABLE>
F-12
<PAGE> 120
CLARK MATERIAL HANDLING COMPANY
AND PREDECESSOR BUSINESSES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS) -- (CONTINUED)
As a result of the Predecessor's operating losses for book and tax
purposes, provision (benefit) for income taxes for the year ended December 31,
1995 and the eleven months ended November 26, 1996 were minimal, relating
primarily to state or foreign jurisdictions where taxable income occurred but
net operating loss ("NOL") carryforwards were limited.
Provisions for income taxes during the year ended December 31, 1997 and the
one month ended December 31, 1996 relate to state and local income taxes. The
Company did not provide for federal income taxes during the year ended December
31, 1997 and the one month period ended December 31, 1996 as the result of
incurring a taxable loss in the United States and utilizing NOL carryforwards to
offset taxable income in foreign jurisdictions.
The provision for income taxes is different from the amount which would be
provided by applying the statutory federal income tax rate to income (loss)
before income taxes and extraordinary items. The reasons for the difference are
summarized below:
<TABLE>
<CAPTION>
ELEVEN MONTHS ONE MONTH
YEAR ENDED ENDED ENDED YEAR ENDED
DECEMBER 31, NOVEMBER 26, DECEMBER 31, DECEMBER 31,
1995 1996 1996 1997
------------ ------------- ------------ ------------
<S> <C> <C> <C> <C>
Expected income tax at U.S. federal
rates............................... $(6,045) $ (712) $ 182 $ 2,841
NOL with no current benefit........... 5,651 1,575 -- --
Foreign NOL carryforward benefit...... -- -- (166) (1,987)
Benefit of domestic NOL............... -- (863) (56) (1,387)
Foreign tax differential on
income/losses of foreign
subsidiaries........................ 303 -- 40 533
State and local taxes................. -- -- -- 484
Other................................. 239 -- -- --
------- ------ ----- -------
Total provision for income
taxes..................... $ 148 $ -- $ -- $ 484
======= ====== ===== =======
</TABLE>
The tax effects of the basis differences and NOL carryforwards as of
December 31, 1997 and December 31, 1996 are summarized below:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1996 1997
-------- --------
<S> <C> <C>
Property, plant and equipment.......................... $ (81) $ (1,846)
Goodwill............................................... -- (942)
-------- --------
Total deferred tax liabilities......................... (81) (2,788)
-------- --------
Warranties and product liability....................... 19,602 21,478
Net inventories........................................ 2,586 975
Receivables............................................ 536 414
Other.................................................. 2,330 1,620
Benefit of net operating loss carryforwards............ 19,506 19,293
-------- --------
Total deferred tax assets.............................. 44,560 43,780
-------- --------
Deferred tax valuation allowance....................... (44,479) (40,992)
-------- --------
Net deferred taxes..................................... $ -- $ --
======== ========
</TABLE>
F-13
<PAGE> 121
CLARK MATERIAL HANDLING COMPANY
AND PREDECESSOR BUSINESSES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS) -- (CONTINUED)
Basis differences between the amounts assigned to net assets for financial
reporting purposes and the amounts assigned for tax purposes resulted in a net
deferred tax asset of $40,992. In light of the Company's and Predecessor's
operating history, management provided a valuation allowance in the same amount.
At December 31, 1997, the Company had U.S. federal NOL carryforwards of
$3,049 which begin to expire in 2011.
In addition, the Company's foreign subsidiaries have approximately $43,036
of loss carryforwards, $18,407 in corporate losses for Germany, $20,763 in
municipal losses for Germany and $3,866 in other countries, which are available
to offset future foreign taxable income. The loss carryforwards in Germany are
available without expiration. The loss carryforwards in other countries expire
in the years 1998 through 2001.
(10) RETIREMENT PLANS
Pension Plans
Certain of the Company's German employees are covered by noncontributory
defined benefit pension plans. The Company also maintains separate pension
benefit plans for German executive employees and for other staff. The executive
pension plans are based on final pay and service, and, in some cases, are
dependent on social security pensions while the other staff plans are based on
fixed amounts applied to the number of years of service rendered. The plans are
unfunded.
The components of pension expense relating to defined benefit plans for
each of the reporting periods covered by these financial statements are as
follows:
<TABLE>
<CAPTION>
ELEVEN MONTHS ONE MONTH
YEAR ENDED ENDED ENDED YEAR ENDED
DECEMBER 31, NOVEMBER 26, DECEMBER 31, DECEMBER 31,
1995 1996 1996 1997
------------ ------------- ------------ ------------
<S> <C> <C> <C> <C>
Current service cost.............. $ 57 $ 38 $ 2 $ 37
Interest cost..................... 886 840 52 837
Net amortization and deferrals.... (927) 107 7 --
----- ---- --- ----
$ 16 $985 $61 $874
===== ==== === ====
</TABLE>
The following table summarizes the funded status of the Company's defined
benefit pension plans to the amounts recognized in the financial statements:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1996 1997
------- -------
<S> <C> <C>
Projected benefit obligation.............................. $12,379 $11,073
------- -------
Accrued pension cost...................................... $12,379 $11,073
======= =======
</TABLE>
The accumulated benefit obligations do not differ materially from the
projected benefit obligations.
A discount rate of 7.5% was used in 1997 and 1996 to determine the
projected benefit obligations.
Savings Plans
The Company sponsors various tax deferred savings plans into which eligible
employees may elect to contribute a portion of their compensation. Generally,
the Company matches contributions up to a maximum of 3% of compensation. In
connection with the required match, the Company's contribution to the plan was
$283, $237, $30, and $512 for the year ended December 31, 1995, for the eleven
months ended November 26, 1996, for the one month ended December 31, 1996, and
for the year ended December 31, 1997, respectively.
F-14
<PAGE> 122
CLARK MATERIAL HANDLING COMPANY
AND PREDECESSOR BUSINESSES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS) -- (CONTINUED)
Other Postemployment Benefits
The Company does not have any benefit programs which provide retiree health
or life insurance benefits.
(11) LITIGATION, COMMITMENTS AND CONTINGENCIES
In the normal course of business, lawsuits have been filed alleging damages
for accidents relating to use of the Company's products. As part of the
acquisition of the Predecessor, the Company assumed both the outstanding and
future product liability exposures related to such operations. As of December
31, 1997, there were 76 lawsuits outstanding alleging damages for injuries or
deaths arising from accidents involving forklift products. Most of the foregoing
suits are in various stages of pretrial completion, and certain plaintiffs are
seeking punitive as well as compensatory damages. The Company is self-insured,
up to certain limits, for these product liability exposures, as well as for
certain exposures related to general, workers' compensation and automobile
liability. Insurance coverage is obtained for catastrophic losses as well as
those risks required to be insured by law or contract. The Company has recorded
and maintains an estimated liability, based in part upon actuarial
determinations, in the amount of management's estimate of the Company's
aggregate exposure for such self-insured risks.
The Company is involved in various other legal proceedings which have
arisen in the normal course of business. The Company has recorded provisions for
estimated losses in circumstances where a loss is probable and the amount or
range of possible amounts of the loss is estimable.
The Company is contingently liable as a guarantor for certain of its
dealers' financing arrangements with a financial institution. In certain
circumstances of dealer default, the Company is obligated to: a) repurchase new
equipment financed under dealer floor plan obligations and b) purchase dealers'
long-term rental equipment contracts with customers for which financing has been
provided by the financial institution to the dealer. The guarantees under these
financing arrangements aggregated approximately $25,000 and $110,000,
respectively, at December 31, 1997. When a dealer default does occur, a newly
selected dealer generally assumes the assets of the prior dealer and any related
financial obligations. Historically, the Company and the Predecessor have
incurred only minimal losses relating to these arrangements.
The Company is contingently liable for a portion of the residual value of
machines sold by the Company to an independent company which subsequently leases
those machines to third parties for terms generally ranging from three to five
years. Historically, the Company and the Predecessor have made a profit on the
subsequent resale of repurchased machines. At December 31, 1997, the maximum
contingent liability was approximately $6,273. At December 31, 1996 and December
31, 1997, there were $1,188 and $1,887, respectively, of repurchased machines
included in inventory.
The Company is contingently liable on guarantees given by the Predecessor
to financial institutions relating to loans and other dealer and customer
obligations arising in the ordinary conduct of its business. Such guarantees
approximated $2,272 at December 31, 1997. Estimated losses, if any, on such
guarantees are accrued as a component of the allowance for doubtful accounts.
Historically, the Company and the Predecessor have not incurred material losses
on these guarantees.
The Company's outstanding letters of credit totaled $1,084 at December 31,
1997. The letters of credit generally serve as collateral for certain
liabilities included in the balance sheet. Certain of the letters of credit
serve as collateral guaranteeing the Company's performance under contracts.
The Company is a wholly-owned subsidiary of Holdings. Other than its
investment in the Company, Holdings has no other substantive business activities
or operations. Holdings has financed its investment in the Company through the
issuance of $7,000 of Junior Subordinated Debentures, bearing interest at 12%
per annum and maturing 2007, $17,000 of preferred stock with an annual
cumulative dividend of 12% and $1,000
F-15
<PAGE> 123
CLARK MATERIAL HANDLING COMPANY
AND PREDECESSOR BUSINESSES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS) -- (CONTINUED)
of common stock. Although the Company has not guaranteed Holdings' debt or
preferred stock dividend obligations, or otherwise assumed such obligations,
Holdings will look to the Company's assets and cash flows to meet its interest,
debt and dividend obligations when and if they are paid.
(12) RELATED PARTY TRANSACTIONS
The following table summarizes related party transactions conducted with
the Predecessor's Parent:
<TABLE>
<CAPTION>
ELEVEN MONTHS ONE MONTH
YEAR ENDED ENDED ENDED YEAR ENDED
DECEMBER 31, NOVEMBER 26, DECEMBER 31, DECEMBER 31,
1995 1996 1996 1997
------------ ------------- ------------ ------------
<S> <C> <C> <C> <C>
Distribution and parts warehousing
expenses........................ $ 7,088 $ 6,100 $490 $5,580
Management fee allocation......... 6,996 5,672 -- --
Interest expense.................. 16,145 14,656 -- --
Interest income................... 480 150 -- --
</TABLE>
(13) GEOGRAPHIC SEGMENT INFORMATION
<TABLE>
<CAPTION>
ELEVEN MONTHS ONE MONTH
YEAR ENDED ENDED ENDED YEAR ENDED
DECEMBER 31, NOVEMBER 26, DECEMBER 31, DECEMBER 31,
1995 1996 1996 1997
------------ ------------- ------------ ------------
<S> <C> <C> <C> <C>
Sales
North America........................... $385,611 $286,992 $ 31,480 $388,185
Europe.................................. 162,396 126,045 15,787 134,437
All other............................... 116 85 231 3,829
Eliminations............................ (19,364) (8,493) (735) (37,157)
-------- -------- -------- --------
Total........................... $528,759 $404,629 $ 46,763 $489,294
======== ======== ======== ========
Income (loss) from operations
North America........................... $ (523) $ 10,307 $ 1,389 $ 17,164
Europe.................................. 3,973 3,664 571 4,741
All other............................... (379) (688) (25) (768)
Eliminations............................ (4) -- -- (103)
-------- -------- -------- --------
Total........................... $ 3,067 $ 13,283 $ 1,935 $ 21,034
======== ======== ======== ========
Identifiable assets
North America........................... $ 95,107 $ 98,553 $265,472 $305,184
Europe.................................. 101,054 96,595 89,861 79,249
All other............................... 9,650 10,353 10,161 6,839
Eliminations............................ (13,102) (12,794) (64,187) (78,018)
-------- -------- -------- --------
Total........................... $192,709 $192,707 $301,307 $313,254
======== ======== ======== ========
</TABLE>
Sales between geographic areas are generally priced to recover costs plus a
reasonable markup for profit. Operating income equals net sales less direct and
allocated operating expenses, excluding interest and other nonoperating items.
The Company is not dependent upon any single customer.
F-16
<PAGE> 124
CLARK MATERIAL HANDLING COMPANY
AND PREDECESSOR BUSINESSES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS) -- (CONTINUED)
(14) SEVERANCE ACTIONS
The Predecessor announced personnel reductions totaling approximately 134
employees in the North American operations during 1995 as a continuation of the
Predecessor's programs to increase manufacturing efficiency, reduce costs and
improve liquidity. The Predecessor recorded a combined charge of $3,478 in 1995
for severance costs associated with these actions and additional costs
associated with the closing of certain administrative and warehouse facilities.
Also during 1995, the Predecessor recorded a charge of $2,500 to recognize the
impairment in value of certain properties held for sale in South Korea.
(15) FINANCIAL INFORMATION FOR SUBSIDIARY GUARANTORS AND NON-GUARANTOR
SUBSIDIARIES
The Company conducts a portion of its business through subsidiaries. The
Senior Notes referred to in Note 7 are unconditionally guaranteed, jointly and
severally, by certain subsidiaries (the "Subsidiary Guarantors") which presently
constitute HLT and BGU operations. Certain of the Company's subsidiaries do not
guarantee the Senior Notes (the "Non-Guarantor Subsidiaries"), presently the
Company's foreign subsidiaries.
Presented below is condensed financial information for the Company, the
Subsidiary Guarantors and the Non-Guarantor Subsidiaries at December 31, 1997.
The equity method has been used by the Company with respect to investments
in subsidiaries. Separate financial statements for Subsidiary Guarantors are not
presented based on management's determination that they do not provide
additional information that is material to investors.
F-17
<PAGE> 125
CLARK MATERIAL HANDLING COMPANY
AND PREDECESSOR BUSINESSES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS) -- (CONTINUED)
CONSOLIDATING BALANCE SHEET
DECEMBER 31, 1997
<TABLE>
<CAPTION>
CLARK MATERIAL
HANDLING COMPANY NON-
(PARENT COMPANY SUBSIDIARY GUARANTOR
ONLY) GUARANTORS SUBSIDIARIES ELIMINATIONS CONSOLIDATED
---------------- ---------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Current assets
Cash and cash equivalents....... $ 70 $ 1 $ 6,263 $ -- $ 6,334
Cash securing letters of
credit........................ -- -- 320 -- 320
Trade receivables............... 24,224 3,081 19,713 -- 47,018
Affiliate accounts receivable... 4,900 11,982 189 (17,071) --
Net inventories................. 47,331 5,106 18,347 -- 70,784
Other current assets............ 1,614 552 5,115 -- 7,281
---------------- ---------- ------------ ------------ ------------
Total current assets..... 78,139 20,722 49,947 (17,071) 131,737
Long-term assets
Property, plant and equipment
-- net........................ 18,275 1,639 27,922 -- 47,836
Goodwill........................ 113,861 1,026 -- -- 114,887
Investment in affiliates........ 60,844 -- -- (60,844) --
Other assets.................... 9,638 1,178 7,978 -- 18,794
---------------- ---------- ------------ ------------ ------------
Total assets............. $ 280,757 $ 24,565 $ 85,847 $ (77,915) $ 313,254
================ ========== ============ ============ ============
Current liabilities
Notes payable................... $ 1,261 $ -- $ 1,923 $ -- $ 3,184
Current portion of capital lease
obligations................... -- -- 2,732 -- 2,732
Trade accounts payable.......... 44,437 3,664 13,901 -- 62,002
Affiliate accounts payable...... 12,043 1,680 2,707 (16,430) --
Accrued compensation and
benefits...................... 3,051 503 2,176 -- 5,730
Accrued warranties and product
liability..................... 19,345 196 1,233 -- 20,774
Other current liabilities....... 4,424 303 6,001 -- 10,728
---------------- ---------- ------------ ------------ ------------
Total current
liabilities............ 84,561 6,346 30,673 (16,430) 105,150
Non-current liabilities
Senior notes payable............ 130,000 -- -- -- 130,000
Capital lease obligations, less
current portion............... -- -- 3,864 -- 3,864
Accrued warranties and product
liability..................... 38,497 -- -- -- 38,497
Other non-current liabilities... 730 7,168 4,745 (641) 12,002
---------------- ---------- ------------ ------------ ------------
Total liabilities........ 253,788 13,514 39,282 (17,071) 289,513
---------------- ---------- ------------ ------------ ------------
Commitments and contingencies..... -- -- -- -- --
Stockholder's equity
Common stock.................... 1 -- -- -- 1
Paid-in-capital................. 24,999 -- -- -- 24,999
Retained earnings............... 1,969 1,741 4,696 -- 8,406
Subsidiary investment........... -- 9,310 51,534 (60,844) --
Cumulative translation
adjustment.................... -- -- (9,665) -- (9,665)
---------------- ---------- ------------ ------------ ------------
Total stockholder's
equity................. 26,969 11,051 46,565 (60,844) 23,741
---------------- ---------- ------------ ------------ ------------
Total liabilities and
stockholder's equity... $ 280,757 $ 24,565 $ 85,847 $ (77,915) $ 313,254
================ ========== ============ ============ ============
</TABLE>
F-18
<PAGE> 126
CLARK MATERIAL HANDLING COMPANY
AND PREDECESSOR BUSINESSES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS) -- (CONTINUED)
CONSOLIDATING STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
CLARK MATERIAL
HANDLING COMPANY NON-
(PARENT COMPANY SUBSIDIARY GUARANTOR
ONLY) GUARANTORS SUBSIDIARIES ELIMINATIONS CONSOLIDATED
---------------- ---------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales...................... $358,103 $27,849 $140,499 $(37,157) $489,294
Cost of goods sold............. 316,068 24,579 127,535 (37,055) 431,127
-------- ------- -------- -------- --------
Gross profit................. 42,035 3,270 12,964 (102) 58,167
Engineering, selling and
administrative expenses...... 26,918 1,399 8,816 -- 37,133
-------- ------- -------- -------- --------
Income from operations....... 15,117 1,871 4,148 (102) 21,034
Other income (expense):
Interest income................ 699 8 102 -- 809
Interest expense............... (14,480) (48) (558) -- (15,086)
Other income -- net............ 907 6 685 -- 1,598
-------- ------- -------- -------- --------
Income before income taxes... 2,243 1,837 4,377 (102) 8,355
Equity in earnings of
subsidiaries................. 5,952 -- -- (5,952) --
Provision for income taxes..... 324 105 55 -- 484
-------- ------- -------- -------- --------
Net income..................... $ 7,871 $ 1,732 $ 4,322 $ (6,054) $ 7,871
======== ======= ======== ======== ========
</TABLE>
F-19
<PAGE> 127
CLARK MATERIAL HANDLING COMPANY
AND PREDECESSOR BUSINESSES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS) -- (CONTINUED)
CONSOLIDATING STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
CLARK MATERIAL
HANDLING COMPANY NON-
(PARENT COMPANY SUBSIDIARY GUARANTOR
ONLY) GUARANTORS SUBSIDIARIES CONSOLIDATED
---------------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
Net cash provided by operating
activities............................ $ 3,347 $ 326 $ 7,436 $ 11,109
-------- ----- ------- --------
Investing activities:
Business combinations................... (14,646) -- -- (14,646)
Capital expenditures.................... (4,532) (325) (1,483) (6,340)
-------- ----- ------- --------
Net cash used in investing activities... (19,178) (325) (1,483) (20,986)
-------- ----- ------- --------
Financing activities:
Issuance of current notes payable....... 822 -- 360 1,182
Repayment of current notes payable...... -- -- (1,020) (1,020)
Other, net.............................. -- -- 147 147
-------- ----- ------- --------
Net cash provided by (used in)
financing activities............... 822 -- (513) 309
-------- ----- ------- --------
Effect of exchange rate changes on cash
and cash equivalents.................. -- -- (652) (652)
-------- ----- ------- --------
Net increase (decrease) in cash and cash
equivalents........................... (15,009) 1 4,788 (10,220)
Cash and cash equivalents at beginning
of period............................. 15,079 -- 1,475 16,554
-------- ----- ------- --------
Cash and cash equivalents at end of
period................................ $ 70 $ 1 $ 6,263 $ 6,334
======== ===== ======= ========
</TABLE>
(16) VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
<TABLE>
<CAPTION>
BALANCE AT BALANCE AT
BEGINNING OF (1) (2) END OF
PERIOD PROVISION OTHER DEDUCTIONS PERIOD
------------ --------- ----- ---------- ----------
<S> <C> <C> <C> <C> <C>
ALLOWANCE FOR DOUBTFUL ACCOUNTS
THE PREDECESSOR
Year ended December 31, 1995........... $3,600 $ -- $ 71 $(804) $2,867
Eleven months ended November 26,
1996................................. 2,867 59 (48) (740) 2,138
THE COMPANY
One month ended December 31, 1996...... 2,063 164 (12) -- 2,215
Year ended December 31, 1997........... 2,215 27 (123) (213) 1,906
</TABLE>
- ---------------
(1) Effect of exchange rate.
(2) Utilization of established reserves, net of recoveries.
F-20
<PAGE> 128
CLARK MATERIAL HANDLING COMPANY
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1997 1998
------------ --------
<S> <C> <C>
Current assets
Cash and cash equivalents................................. $ 6,334 $ 6,873
Cash securing letters of credit........................... 320 182
Net trade receivables..................................... 47,018 47,675
Net inventories (Note 2).................................. 70,784 76,705
Other current assets...................................... 7,281 6,829
-------- --------
Total current assets.............................. 131,737 138,264
Long-term assets
Property, plant and equipment-net......................... 47,836 49,390
Goodwill, net of accumulated amortization................. 114,887 114,062
Other assets.............................................. 18,794 19,942
-------- --------
Total assets...................................... $313,254 $321,658
======== ========
Current liabilities
Notes payable............................................. $ 3,184 $ 10,544
Current portion of capital lease obligations.............. 2,732 2,918
Trade accounts payable.................................... 62,002 60,562
Accrued compensation and benefits......................... 5,730 6,313
Accrued warranties and product liability.................. 20,774 18,936
Other current liabilities................................. 10,728 10,212
-------- --------
Total current liabilities......................... 105,150 109,485
-------- --------
Non-current liabilities
Senior notes payable...................................... 130,000 130,000
Capital lease obligations, less current portion........... 3,864 4,391
Accrued warranties and product liability.................. 38,497 39,377
Other non-current liabilities............................. 12,002 12,688
-------- --------
Total liabilities................................. 289,513 295,941
-------- --------
Commitments and contingencies (Note 3)...................... -- --
Stockholder's equity
Common stock, par value $1 per share, 1,000 shares
authorized, issued and outstanding..................... 1 1
Paid-in-capital........................................... 24,999 24,999
Retained earnings......................................... 8,406 9,920
Cumulative translation adjustment......................... (9,665) (9,203)
-------- --------
Total stockholder's equity........................ 23,741 25,717
-------- --------
Total liabilities and stockholder's equity........ $313,254 $321,658
======== ========
</TABLE>
See accompanying notes to unaudited financial statements.
F-21
<PAGE> 129
CLARK MATERIAL HANDLING COMPANY
CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
1997 1998
-------------- --------------
<S> <C> <C>
Net sales................................................... $229,924 $269,037
Cost of goods sold.......................................... 203,510 235,604
-------- --------
Gross profit.............................................. 26,414 33,433
Engineering, selling and administrative expenses............ 17,672 22,491
-------- --------
Income from operations.................................... 8,742 10,942
Other income (expense)
Interest income........................................... 509 128
Interest expense.......................................... (7,528) (7,590)
Foreign exchange gain (loss).............................. 182 (541)
Other (expense) income-net................................ (379) (864)
-------- --------
Income before income taxes.................................. 1,526 2,075
Provision for income taxes.................................. 224 561
-------- --------
Net income................................................ $ 1,302 $ 1,514
======== ========
</TABLE>
See accompanying notes to unaudited financial statements.
F-22
<PAGE> 130
CLARK MATERIAL HANDLING COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, JUNE 30,
1997 1998
---------- ----------
<S> <C> <C>
Operating activities:
Net income................................................ $ 1,302 $ 1,514
Adjustments to reconcile net income to cash provided by
operating activities:
Depreciation and amortization.......................... 6,456 6,892
Changes in operating assets and liabilities:
Restricted cash...................................... 802 136
Trade receivables.................................... (1,817) (186)
Net inventories...................................... 241 (5,891)
Trade accounts payable............................... 805 (1,380)
Accrued compensation and benefits.................... 78 591
Accrued warranties and product liability............. 1,435 (952)
Other assets and liabilities, net.................... (1,277) (2,539)
------- -------
Net cash provided by (used in) operating activities......... 8,025 (1,815)
------- -------
Investing activities -- capital expenditures................ (2,603) (5,639)
------- -------
Financing activities:
(Repayment) issuance of notes payable, net................ (5,129) 7,284
Issuance of other long term debt.......................... -- 842
------- -------
Net cash (used in) provided by financing activities......... (5,129) 8,126
------- -------
Effect of exchange rate changes on cash and cash
equivalents............................................... (695) (133)
------- -------
Net (decrease) increase in cash and cash equivalents........ (402) 539
Cash and cash equivalents at beginning of period............ 16,554 6,334
------- -------
Cash and cash equivalents at end of period.................. $16,152 $ 6,873
======= =======
</TABLE>
See accompanying notes to unaudited financial statements.
F-23
<PAGE> 131
CLARK MATERIAL HANDLING COMPANY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS)
(1) The accompanying unaudited interim consolidated financial statements have
been prepared in accordance with Rule 10-01 of SEC Regulation S-X.
Consequently, they do not include all the disclosures required under
generally accepted accounting principles for complete financial statements.
However, in the opinion of the management of CLARK Material Handling Company
(the "Company"), the consolidated financial statements presented herein
contain all adjustments (consisting only of normal recurring adjustments)
necessary to present fairly the financial position, results of operations
and cash flows of the Company and its consolidated subsidiaries.
(2) Inventories consist of the following:
<TABLE>
<CAPTION>
JUNE 30,
1998
---------
<S> <C>
Finished equipment........................................ $16,397
Replacement parts......................................... 28,272
Work-in-process........................................... 8,298
Raw materials and supplies................................ 23,738
--------
Net inventories................................. $76,705
========
</TABLE>
(3) There have been no material changes in the status of the Company's legal
proceedings or its other contingent obligations since December 31, 1997.
(4) On February 28, 1997, the Company purchased substantially all the assets of
HLT (Hydroelectric Lift Trucks) a supplier of upright material handling
equipment, for $4,948. Assets acquired included inventory, equipment and
tooling. The purchase was financed through a short-term note which matured
in the second quarter of 1997. The Company is leasing the former company's
facility and is continuing production, primarily for its own use. The
acquisition was not significant and pro forma data is not presented.
(5) On November 7, 1997 the Company closed its acquisition of substantially all
of the assets and certain liabilities of Blue Giant USA Corporation ("BGU")
and Blue Giant Canada Limited ("BGC"), (collectively, "Blue Giant") in two
separate purchase business combinations effective November 1, 1997. Although
separate legal entities, BGU and BGC were under the common control of
substantially the same stockholder group. The purchase price for the
acquisition comprised $9,365 in cash (of which $200 was paid to a
shareholder of Blue Giant under a noncompetition agreement), an obligation
payable over three years totaling $1,105 under a noncompetition and
consulting agreement with a shareholder of Blue Giant and related
out-of-pocket expenses of approximately $333. The purchase price was
allocated to the estimated fair value of the tangible and intangible net
assets acquired, with the residual being allocated to goodwill. The goodwill
is being amortized on a straight-line basis over forty years.
The following unaudited pro forma summary presents the consolidated results
of operations as though the acquisition of Blue Giant had been completed on
January 1 of 1997.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30,
1997
----------
<S> <C>
Net sales................................................. $243,980
Income from operations.................................... $ 9,165
Net income................................................ $ 1,665
</TABLE>
(6) The Company had total comprehensive (loss) income of ($4,599) and $1,976 for
the six months ended June 30, 1997 and 1998, respectively. The difference
between the Company's net income and total comprehensive (loss) income
relates to the cumulative translation adjustment of its foreign
subsidiaries.
F-24
<PAGE> 132
CLARK MATERIAL HANDLING COMPANY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(IN THOUSANDS)
(7) On July 15, 1998, the Company purchased substantially all the assets and
certain liabilities of Samsung Forklift for approximately $30,400 (subject
to certain post-closing adjustments). The Company estimates that it will
make approximately $5,000 of capital expenditures for upgrading and new
equipment in the manufacturing facilities. To finance this acquisition, the
Company sold $20,000 aggregate principle amounts of 10 3/4% Senior Notes due
2006 and $20,000 of aggregate liquidation preference of 13% Senior
Exchangeable Preferred Stock due 2007. The Company may, at its option, pay
dividends in additional fully paid and non-assessable shares of Senior
Exchangeable Preferred Stock until July 15, 2003. After July 15, 2003
dividends are to be paid in cash. The acquisition is not significant and pro
forma financial information is not provided.
(8) Certain reclassifications of prior year amounts have been made to conform
with the current year presentation.
F-25
<PAGE> 133
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Blue Giant USA Corporation
Pell City, Alabama
We have audited the accompanying balance sheet of Blue Giant USA Corporation as
of December 31, 1996 and the related statements of operation, retained earnings
and cash flows for the year then ended. 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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Blue Giant USA Corporation as
of December 31, 1996 and the results of its operations and its cash flows for
the year then ended in conformity with generally accepted accounting principles.
Raughton & Company
Certified Public Accountants
Pell City, Alabama
March 21, 1997
F-26
<PAGE> 134
BLUE GIANT USA CORPORATION
BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 28,
1996 1997
------------ -----------
(UNAUDITED)
<S> <C> <C>
Current Assets:
Cash...................................................... $ 4,736 $ 7,945
Accounts receivable, net of allowance for doubtful
accounts of $62,000 and $62,000........................ 2,289,631 2,552,076
Other receivables......................................... 18,203 --
Inventory (Note 2)........................................ 1,563,403 1,709,548
Prepaid expenses.......................................... 235,757 231,722
---------- ----------
Total current assets.............................. 4,111,730 4,501,291
Property, plant and equipment (Note 3)...................... 1,005,195 1,020,819
Other assets................................................ 114,417 110,449
---------- ----------
Total assets...................................... $5,231,342 $5,632,559
========== ==========
Current Liabilities:
Bank overdraft............................................ $ 15,240 $ 125,305
Line of credit borrowings (Note 7)........................ 842,154 773,298
Accounts payable.......................................... 1,338,799 1,391,450
Accrued payroll and related liabilities................... 19,498 26,688
Other accrued expenses.................................... 156,510 251,995
Current portion of long-term debt (Note 7)................ 171,540 127,781
---------- ----------
Total current liabilities......................... 2,543,741 2,696,517
Long-term debt (Note 7)..................................... 747,228 747,228
---------- ----------
Total liabilities................................. 3,290,969 3,443,745
---------- ----------
Shareholders' Equity:
Common stock, $1 par value, 1,025 shares authorized, 1,000
shares issued
and outstanding........................................ 1,000 1,000
Additional paid in capital................................ 39,500 39,500
Retained earnings......................................... 1,899,873 2,148,314
---------- ----------
Total shareholders' equity........................ 1,940,373 2,188,814
---------- ----------
Total liabilities and shareholders' equity........ $5,231,342 $5,632,559
========== ==========
</TABLE>
The accompany notes are an integral part of these financial statements.
F-27
<PAGE> 135
BLUE GIANT USA CORPORATION
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED JUNE 28, SIX MONTHS ENDED
DECEMBER 31, 1996 JUNE 28, 1997
1996 (UNAUDITED) (UNAUDITED)
------------ ---------------- ----------------
<S> <C> <C> <C>
Net sales..................................... $13,875,445 $6,314,971 $7,172,227
Cost of sales................................. 10,513,947 4,874,793 5,585,027
----------- ---------- ----------
3,361,498 1,440,178 1,587,200
----------- ---------- ----------
Operating expenses:
Selling, general and administrative......... 2,807,368 1,153,430 1,120,602
Research, development and engineering....... 158,371 76,285 65,630
----------- ---------- ----------
Total operating expenses............ 2,965,739 1,229,715 1,186,232
Income before interest and other income....... 395,759 210,463 400,968
Interest expense............................ (141,368) (69,194) (71,506)
Other income, net........................... 31,940 153,001 71,393
----------- ---------- ----------
Income before taxes........................... 286,331 294,270 400,855
Income tax expense............................ (106,232) (107,775) (152,414)
----------- ---------- ----------
Net income.................................... $ 180,099 $ 186,495 $ 248,441
=========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-28
<PAGE> 136
BLUE GIANT USA CORPORATION
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL RETAINED
---------------- PAID-IN EARNINGS
SHARES VALUE CAPITAL (DEFICIT)
------ ------ ---------- ----------
<S> <C> <C> <C> <C>
Balance at December 31, 1995...................... 1,000 $1,000 $39,500 $1,719,774
Net income for the period......................... -- -- -- 180,099
----- ------ ------- ----------
Balance at December 31, 1996...................... 1,000 1,000 39,500 1,899,873
Net income for the period (unaudited)............. -- -- -- 248,441
----- ------ ------- ----------
Balance at June 28, 1997 (unaudited).............. 1,000 $1,000 $39,500 $2,148,314
===== ====== ======= ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-29
<PAGE> 137
BLUE GIANT USA CORPORATION
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED SIX MONTHS ENDED
YEAR ENDED JUNE 28, JUNE 28,
DECEMBER 31, 1996 1997
1996 (UNAUDITED) (UNAUDITED)
------------ ---------------- ----------------
<S> <C> <C> <C>
Cash Flow From Operating Activities
Net Income................................. $ 180,099 $186,495 $248,441
Adjustment to reconcile net income to net
cash flows from operating activities:
Depreciation and amortization........... 157,914 64,758 72,306
Gain on sale of fixed assets............ (22,535) (16,535) (26)
Deferred income taxes................... 13,267 -- --
Changes in assets and liabilities:
Accounts receivable..................... (243,378) (589,347) (262,445)
Inventory............................... (220,945) (95,006) (146,145)
Prepaid expenses........................ (6,584) 78,338 26,206
Accounts payable........................ 144,976 138,160 52,651
Accrued payroll and related
liabilities........................... 2,119 (5,643) 7,190
Other accrued expenses.................. (260,887) (51,087) 205,550
------------ -------- --------
Net cash from operating
activities....................... (255,954) (289,867) 203,728
------------ -------- --------
Cash Flows From Investing Activities
Purchase of equipment...................... (204,674) (322,161) (93,501)
Proceeds from sale of fixed assets......... 35,250 125,526 5,600
------------ -------- --------
Net cash from investing
activities....................... (169,424) (196,635) (87,901)
------------ -------- --------
Cash Flows From Financing Activities
Line of credit borrowings.................. 14,261,692 618,321 389,610
Long-term borrowings....................... 164,341 91,400 46,814
Line of credit principal repayments........ (13,831,177) (132,799) (458,466)
Long-term debt principal repayment......... (170,436) (89,798) (90,576)
------------ -------- --------
Net cash from financing
activities....................... 424,420 487,124 (112,618)
------------ -------- --------
Net change in cash........................... (958) 622 3,209
Cash at beginning of period.................. 5,694 5,694 4,736
------------ -------- --------
Cash at end of period........................ $ 4,736 $ 6,316 $ 7,945
============ ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-30
<PAGE> 138
BLUE GIANT USA CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND JUNE 28, 1997
NOTE 1 -- NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS
Blue Giant USA Corporation is principally engaged in the manufacturing and
sales of materials handling equipment. The Company sells its products throughout
the United States and worldwide, primarily to wholesalers and to contractors.
The accounting policies followed by the Company and the methods of applying
those policies which affect the determination of financial position, results of
operations and cash flows are summarized below.
The unaudited financial statements as of June 28, 1997 and for the six
month periods ended June 28, 1997 and 1996 have been prepared in accordance with
Rule 10-01 of SEC Regulation S-X. Consequently, they do not include all the
disclosures required under generally accepted accounting principles for complete
financial statements. However, in the opinion of the management, the financial
statements presented herein contain all adjustments (consisting only of normal
recurring adjustments) necessary to present fairly the financial position,
results of operations and cash flows of the Company for the periods indicated.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions. These affect the reported amounts of assets and liabilities and
disclosure of 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 EQUIVALENTS
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents.
ALLOWANCE FOR DOUBTFUL ACCOUNTS
The allowance for doubtful accounts is maintained at a level believed by
management sufficient to absorb potential losses. Management's determination of
the adequacy of the allowance is based on past loss experience, current economic
conditions and other relevant factors. The allowance is increased by the
provision for losses charged to operations and is decreased by the actual net
charge-offs.
INVENTORIES
Inventories are valued at cost (first-in, first-out) or market, whichever
is lower, and consist of raw materials, and purchased finished goods.
Manufactured goods are valued using the average cost method and include raw
materials, labor and allocable overhead.
F-31
<PAGE> 139
BLUE GIANT USA CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost, less accumulated
depreciation. Depreciation is provided at rates intended to distribute the cost
of property, plant and equipment over their estimated service lives as follows:
<TABLE>
<CAPTION>
DESCRIPTION METHOD SERVICE LIFE
----------- ------ ------------
<S> <C> <C>
Buildings and improvements........... Straight-line 21-30 years
Factory equipment.................... Straight-line 3-10 years
Tools and dies....................... Straight-line and accelerated 3 years
Office furniture..................... Straight-line 5-7 years
Automotive........................... Straight-line 3-7 years
</TABLE>
INCOME TAXES
Annual provision for income taxes is based primarily on income before
income taxes adjusted to reflect adjustments to taxable income representing
permanent differences.
Where income and expenses are recognized in different periods for financial
reporting purposes and for purposes of computing income taxes currently payable,
deferred income taxes have been provided.
NOTE 2 -- INVENTORIES
Inventories consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 28, 1997
1996 (UNAUDITED)
------------ -------------
<S> <C> <C>
Raw materials and purchased parts.................. $ 819,261 $ 895,845
Work-in-process.................................... 308,493 337,331
Finished goods manufactured........................ 348,635 381,225
Finished goods purchased........................... 87,014 95,147
---------- ----------
Total.................................... $1,563,403 $1,709,548
========== ==========
</TABLE>
NOTE 3 -- PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
1996
------------
<S> <C>
Autos and trucks............................................ $ 239,653
Office equipment and furnishings............................ 250,340
Factory equipment........................................... 294,498
Tools and dies.............................................. 245,507
Buildings and improvements.................................. 1,074,425
Land........................................................ 11,000
----------
Total property, plant and equipment............... 2,115,423
Less: Accumulated depreciation.............................. 1,110,228
----------
Net property, plant and equipment................. $1,005,195
==========
</TABLE>
F-32
<PAGE> 140
BLUE GIANT USA CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 4 -- INCOME TAXES
The provision (benefit) for income taxes consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
1996
------------
<S> <C>
Current liability:
Federal.............................................. $ 82,367
State................................................ 10,598
--------
92,965
--------
Deferred liability:.................................... 13,267
--------
$106,232
========
</TABLE>
The deferred income tax assets and liabilities are as follows:
<TABLE>
<S> <C>
Deferred income tax assets:
Reserves and accruals not currently deductible.......... $21,080
=======
Deferred income tax liabilities:
Depreciation............................................ $17,112
=======
</TABLE>
NOTE 5 -- RELATED PARTY TRANSACTIONS
During the period ended December 31, 1996, the Company transacted business
with Blue Giant Canada, LTD ("B. G. Canada") and Blue Giant -- Europe, LTD as
follows:
<TABLE>
<S> <C>
Purchases from B. G. Canada............................ $4,138,145
Sales to B. G. Canada.................................. 388,886
Sales to B. G. Europe.................................. 5,963
</TABLE>
At December 31, 1996, $5,963 was included in trade accounts receivable as a
receivable from Blue Giant Europe.
At December 31, 1996, Blue Giant USA owed Blue Giant Canada $1,001,730 in
accounts payable. This amount is included in current liabilities on the balance
sheet.
All of the above transactions result form normal business activities. The
Company's common stock was formerly owned by B. G. Canada. A majority
shareholder of the Company is also a majority shareholder in B. G. Canada.
Blue Giant USA Corporation owns 25% of the stock of Blue Giant Europe, LTD,
but has no control over this company. During 1995, Blue Giant USA Corporation
made a $33,010 loan to Blue Giant Europe LTD. This note is expected to be
collected during 1998 and is included under other assets on the balance sheet.
F-33
<PAGE> 141
BLUE GIANT USA CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 6 -- NOTES PAYABLE AND LONG-TERM DEBT
The following is a detail of notes payable and long-term debt at December
31, 1996:
<TABLE>
<S> <C>
Note Payable -- Line of Credit:
Note payable to AmSouth Bank on demand with interest at
AmSouth Bank prime rate, secured by accounts receivable,
inventories, machinery, furniture, equipment and real
estate and guaranteed by the President of the Company.
Line-of-credit on this note is the lesser of $2,000,000 or
the sum of (1) 80% of accounts receivable not delinquent
and (2) 30% of the cost of inventories not past 90 days,
less international receivables that are not supported by
letters of credit......................................... $ 842,154
==========
Note Payable AmSouth (Term)
Note payable (term Loan) to AmSouth Bank due in monthly
installments of $8333.33 principal plus interest on the
unpaid amount at the AmSouth Bank floating prime rate. The
Company borrowed $1,000,000 under this loan which will
fully amortize in ten years. The note is secured by
accounts receivable, inventories, machinery, furniture,
equipment and real estate and is guaranteed by the
President of the Company.................................. $ 750,000
Note Payable to AmSouth Bank in monthly installments of
$476, including principal and interest at 8.25%, with
final payment due August, 1997; secured by automobile..... 3,810
Note Payable to AmSouth Bank in monthly installments of $604
principal, plus interest at 9.50%, with final payment due
June 1999; secured by an automobile....................... 18,125
Note Payable to AmSouth Bank in monthly installments of $417
principal, plus interest at 9.25%, with final payment due
November, 1998; secured by an automobile.................. 10,016
Note Payable to AmSouth Bank in monthly installments of
$1750 principal, plus interest at AmSouth prime rate,
8.25% at December 31, 1996, with final payment due April
15, 1999; secured by automobiles.......................... 47,250
Note Payable to AmSouth Bank in monthly installments of $789
principal, plus interest at 0.5% above AmSouth prime rate,
8.75% at December 31, 1996, with final payment due June
21, 1999; secured by equipment............................ 22,878
Note Payable to AmSouth Bank in monthly installments of $560
principal, plus interest at AmSouth prime rate, 8.25% at
December 31, 1996, with final payment due September 12,
1999; secured by an automobile............................ 17,913
Note Payable to AmSouth Bank in monthly installments of $835
principal, plus interest at AmSouth prime rate, 8.25% at
December 31, 1996, with final payment due September 12,
1999; secured by an automobile............................ 26,718
Note Payable to AmSouth Bank in monthly installments of
$689, plus interest at AmSouth Bank prime rate, 8.25% at
December 31, 1996, with final payment due September 12,
1999; secured by automobile............................... 22,058
----------
918,768
Less current portion...................................... 171,540
----------
Long-term debt....................................... $ 747,228
==========
</TABLE>
F-34
<PAGE> 142
BLUE GIANT USA CORPORATION
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Long-term debt matures as follows:
<TABLE>
<S> <C>
December 31,
1997................................................... $1,013,694
1998................................................... 167,734
1999................................................... 129,494
2000................................................... 100,000
2001................................................... 100,000
Thereafter............................................... 250,000
----------
Total.......................................... $1,760,922
==========
</TABLE>
NOTE 7 -- CONTINGENT LIABILITIES
The Company has been named as defendant or co-defendant in various actions
arising in the ordinary course of business. In the opinion of management, and
legal counsel, all such matters are adequately covered by insurance or involve
such amounts that an unfavorable disposition would not have a material effect on
the financial position of the Company.
NOTE 8 -- COMMITMENTS
During 1994, the Corporation entered into two three-year non-cancelable
leases for equipment. These are being accounted for as operating leases. Future
lease payments associated with these leases are as follows:
<TABLE>
<S> <C>
Year ending December 31, 1997.............................. $13,705
-------
Total...................................................... $13,705
=======
</TABLE>
The Corporation was required to make deposits on these leases totaling
$4,259. This amount is included in current assets on the balance sheet.
NOTE 9 -- EMPLOYEE BENEFIT PLAN
The Company has a deferred compensation plan pursuant to Section 401(k) of
the Internal Revenue Code for all employees who meet certain eligibility
requirements. The Plan calls for the Company to match one-half of participant
voluntary salary deferrals up to but not in excess of 2% of each participant's
compensation. $48,933 was expensed under the Plan for the period ended December
31, 1996.
NOTE 10 -- SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash was paid during the years ended December 31, 1996 for:
<TABLE>
<S> <C>
Interest.................................................. $140,332
Income taxes.............................................. $116,322
</TABLE>
NOTE 11 -- FAIR VALUES OF FINANCIAL INSTRUMENTS
The carrying value of cash, receivables and accounts payable approximates
fair value due to the short maturity of these instruments. The carrying value of
short and long-term debt approximates fair value based on current interest
rates. None of the financial instruments are held for trading purposes.
F-35
<PAGE> 143
AUDITORS' REPORT TO THE SHAREHOLDERS
We have audited the balance sheet of Blue Giant Canada Limited as at
December 31, 1996 and the statements of earnings and retained earnings and
changes in financial position for the year then ended. 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 audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the Company as at December 31, 1996 and the
results of its operations and the changes in its financial position for the year
then ended in accordance with generally accepted accounting principles in Canada
which, except as described in note 14 to the financial statements, conform in
all material respects with generally accepted accounting principles in the
United States.
KPMG
Chartered Accountants
Richmond Hill, Canada
February 20, 1997, except for note 15,
which is as of April 8, 1998
F-36
<PAGE> 144
BLUE GIANT CANADA LIMITED
BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 28,
1996 1997
------------ -----------
(UNAUDITED)
<S> <C> <C>
Assets
Current assets:
Accounts receivable (note 2).............................. $ 4,880,790 $ 4,911,147
Income taxes receivable................................... -- 31,461
Inventories............................................... 2,672,620 3,250,218
Prepaid expenses and deposits............................. 86,414 129,136
----------- -----------
7,639,824 8,321,962
Due from employee (note 3).................................. 45,000 --
Capital assets (note 4)..................................... 2,416,612 2,532,256
----------- -----------
$10,101,436 $10,854,218
=========== ===========
Liabilities and Shareholders' Equity
Current liabilities:
Bank indebtedness (note 5)................................ $ 1,435,553 $ 2,206,635
Accounts payable and accrued liabilities.................. 2,869,518 2,842,484
Income taxes payable...................................... 77,398 --
Long-term debt payable within one year (note 6)........... 120,000 120,000
----------- -----------
4,502,469 5,169,119
----------- -----------
Long-term debt (note 6)..................................... 1,620,565 1,562,999
Payable to shareholders (note 7)............................ 1,188,158 1,150,825
Deferred income taxes....................................... 27,496 23,496
Shareholders' equity:
Capital stock (note 8).................................... 100 100
Retained earnings......................................... 2,762,648 2,947,679
----------- -----------
2,762,748 2,947,779
----------- -----------
Commitments (note 10)
Contingencies (note 11)
----------- -----------
$10,101,436 $10,854,218
=========== ===========
</TABLE>
See accompanying notes to financial statements.
F-37
<PAGE> 145
BLUE GIANT CANADA LIMITED
STATEMENT OF EARNINGS AND RETAINED EARNINGS
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTH PERIOD SIX MONTH PERIOD
DECEMBER 31, ENDED JUNE 29, ENDED JUNE 28,
1996 1996 1997
------------ ---------------- ----------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Sales............................................ $17,097,231 $8,393,315 $9,897,352
Cost of sales.................................... 13,087,119 6,503,910 7,801,369
----------- ---------- ----------
4,010,112 1,889,405 2,095,983
----------- ---------- ----------
Expenses:
General and administrative..................... 881,678 441,284 541,230
Marketing...................................... 1,006,997 532,433 524,350
Manufacturing support.......................... 591,685 300,979 257,160
Service department............................. 492,012 246,324 283,880
Management bonuses............................. 197,968 64,576 81,200
Shipping and receiving......................... 122,111 65,934 53,825
Parts department............................... 130,409 65,577 69,331
----------- ---------- ----------
3,422,860 1,717,107 1,810,976
----------- ---------- ----------
Operating income before interest................. 587,252 172,298 285,007
----------- ---------- ----------
Interest:
On short-term debt............................. 93,885 57,655 42,600
On long-term debt and shareholder advances..... 153,048 44,694 98,934
----------- ---------- ----------
246,933 102,349 141,534
----------- ---------- ----------
Operating income................................. 340,319 69,949 143,473
Other income..................................... 262,269 143,786 133,558
----------- ---------- ----------
Earnings before income taxes..................... 602,588 213,735 277,031
Income taxes:
Current........................................ 188,500 72,000 96,000
Deferred (recovery)............................ (1,200) (3,000) (4,000)
----------- ---------- ----------
187,300 69,000 92,000
----------- ---------- ----------
Net earnings..................................... 415,288 144,735 185,031
Retained earnings, beginning of period........... 2,347,360 2,347,360 2,762,648
----------- ---------- ----------
Retained earnings, end of period................. $ 2,762,648 $2,492,095 $2,947,679
=========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
F-38
<PAGE> 146
BLUE GIANT CANADA LIMITED
STATEMENT OF CHANGES IN FINANCIAL POSITION
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTH PERIOD SIX MONTH PERIOD
DECEMBER 31, ENDED JUNE 29, ENDED JUNE 28,
1996 1996 1997
------------ ---------------- ----------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Cash provided by (used in):
Operations:
Net earnings................................... $ 415,288 $ 144,735 $ 185,031
Items not involving cash:
Depreciation and amortization............... 197,533 82,909 90,922
Gain on sale of capital assets.............. (59,228) (21,220) (18,135)
Deferred income tax recovery................ (1,200) (3,000) (4,000)
Changes in non-cash operating working
capital..................................... (54,991) (110,463) (786,570)
----------- ----------- ----------
497,402 92,961 (532,752)
----------- ----------- ----------
Financing:
Increase in long-term debt..................... 1,800,000 1,800,000 --
Principal payments on long-term debt........... (59,435) -- (57,566)
Repayment of capital lease obligation.......... (6,399) (6,399) --
Increase (decrease) in payable to
shareholders................................ 52,743 8,176 (37,333)
----------- ----------- ----------
1,786,909 1,801,777 (94,899)
----------- ----------- ----------
Investments:
Proceeds from sale of capital assets........... 121,635 44,994 39,649
Purchase of capital assets..................... (2,003,686) (1,924,563) (228,080)
Decrease in due from employee.................. 30,000 30,000 45,000
----------- ----------- ----------
(1,852,051) (1,849,569) (143,431)
----------- ----------- ----------
(Decrease) increase in bank indebtedness during
the period..................................... (432,260) (45,169) 771,082
Bank indebtedness, beginning of period........... 1,867,813 1,867,813 1,435,553
----------- ----------- ----------
Bank indebtedness, end of period................. $ 1,435,553 $ 1,822,644 $2,206,635
=========== =========== ==========
</TABLE>
See accompanying notes to financial statements.
F-39
<PAGE> 147
BLUE GIANT CANADA LIMITED
NOTES TO FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1996
Blue Giant Canada Limited is a private Company incorporated under the
Canada Business Corporations Act. The Company manufactures and sells materials
handling equipment.
1. SIGNIFICANT ACCOUNTING POLICIES:
(a) Basis of presentation:
These financial statements have been prepared in accordance with accounting
principles generally accepted in Canada which, except as described in note 14,
conform in all material respects with generally accepted accounting principles
in the United States.
(b) Inventories:
Raw materials are valued at the lower of cost and replacement cost.
Finished goods and manufactured parts are valued at the lower of cost and net
realizable value. Costs are determined on a first-in, first-out basis.
(c) Foreign currency transactions:
Transactions in foreign currencies are recorded in Canadian dollars at the
rates of exchange in effect at the dates of the transactions. At year end,
monetary assets and liabilities are translated into Canadian dollars at the
rates of exchange prevailing on that date. The resulting gains and losses are
included in net earnings.
(d) Capital assets:
Capital assets are recorded at cost. Depreciation and amortization are
provided using the following methods and annual rates:
<TABLE>
<CAPTION>
ASSET BASIS RATE
- ----- ----------------- ----
<S> <C> <C>
Building............................................. Declining balance 4%
Building improvements................................ Declining balance 4%
Equipment............................................ Declining balance 20%
Rental equipment..................................... Declining balance 20%
Automotive........................................... Declining balance 30%
Leasehold improvements............................... Straight-line 10%
Computer software.................................... Declining balance 50%
</TABLE>
(e) Revenue recognition:
The Company recognizes revenue upon shipment, except for custom orders,
where revenue is recognized when the manufacturing process is complete.
(f) Use of estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions which affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements and revenues and expenses for the period reported. Actual results
could differ from these estimates.
(g) Investment in Blue Giant Europe Ltd.:
The Company's 25% investment in Blue Giant Europe Ltd. ("Blue Giant
Europe") is accounted for in the accompanying financial statements by the equity
method under which such investments initially are recorded at cost. The carrying
value of the investment is increased (decreased) to recognize the Company's
proportionate share of the increases (decreases) in the underlying net book
equity of Blue Giant Europe subsequent to acquisition by the Company and the
Company's share of net earnings (loss) of Blue Giant
F-40
<PAGE> 148
BLUE GIANT CANADA LIMITED
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Europe is included in the determination of the net earnings of the Company. The
Company has recognized net decreases in the underlying net book equity of Blue
Giant Europe to the extent of their original investment as they are not required
to fund continuing operating losses of Blue Giant Europe.
2. ACCOUNTS RECEIVABLE:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 28,
1996 1997
------------ -----------
(UNAUDITED)
<S> <C> <C>
Trade (net of allowance for doubtful accounts).............. $3,120,473 $3,229,269
Receivable from related companies (note 12 (c))............. 1,742,700 1,658,862
Other....................................................... 17,617 23,016
---------- ----------
$4,880,790 $4,911,147
========== ==========
</TABLE>
3. DUE FROM EMPLOYEE:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 28,
1996 1997
------------ -----------
(UNAUDITED)
<S> <C> <C>
Non-interest bearing promissory note, maturing on March 31,
1998. The balance outstanding on the note shall become
due, prior to the maturity date, if the employee ceases to
be employed by the Company................................ $ 45,000 $ --
======== ==========
</TABLE>
4. CAPITAL ASSETS:
<TABLE>
<CAPTION>
DECEMBER 31, 1996
------------------------------------------
ACCUMULATED
DEPRECIATION AND NET BOOK
COST AMORTIZATION VALUE
---------- ---------------- ----------
<S> <C> <C> <C>
Land................................................... $ 906,000 $ -- $ 906,000
Building............................................... 1,134,885 209,564 925,321
Building improvements.................................. 58,446 1,169 57,277
Equipment.............................................. 1,499,771 1,132,831 366,940
Rental equipment....................................... 209,755 112,800 96,955
Automotive............................................. 189,341 125,222 64,119
Computer software...................................... 31,483 31,483 --
---------- ---------- ----------
$4,029,681 $1,613,069 $2,416,612
========== ========== ==========
</TABLE>
F-41
<PAGE> 149
BLUE GIANT CANADA LIMITED
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
JUNE 28, 1997
(UNAUDITED)
--------------------------------------------
ACCUMULATED
DEPRECIATION AND NET BOOK
COST AMORTIZATION VALUE
---------- ---------------- ----------
<S> <C> <C> <C>
Land................................................ $ 906,000 $ -- $ 906,000
Building............................................ 1,134,885 231,485 903,400
Building improvements............................... 79,645 2,471 77,174
Equipment........................................... 1,615,065 1,130,622 484,443
Rental equipment.................................... 196,495 112,980 83,515
Automotive.......................................... 207,007 133,449 73,558
Computer software................................... 35,803 31,637 4,166
---------- ---------- ----------
$4,174,900 $1,642,644 $2,532,256
========== ========== ==========
</TABLE>
5. BANK INDEBTEDNESS:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 28,
1996 1997
------------ -----------
(UNAUDITED)
<S> <C> <C>
Demand loan at prime plus 0.5% per annum.................... $1,375,000 $1,825,000
Bank overdraft.............................................. 60,553 381,635
---------- ----------
$1,435,553 $2,206,635
========== ==========
</TABLE>
As security for the bank indebtedness, the Company has pledged accounts
receivable, inventories, assigned proceeds of fire insurance and provided a
general security agreement covering all assets of the Company. The shareholders
have provided a postponement of the amounts payable to them.
6. LONG-TERM DEBT:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 28,
1996 1997
------------ -----------
(UNAUDITED)
<S> <C> <C>
Non-revolving demand loan bearing interest at 7.35% payable
in monthly blended installments of $10,662, secured by a
collateral mortgage providing a first fixed charge over
the land and building..................................... $1,335,565 $1,322,999
Non-revolving demand loan bearing interest at prime plus 1%
payable in monthly installments of $7,500 plus interest
due on June 27, 2001, secured under the same provision as
the bank indebtedness (note 5)............................ 405,000 360,000
---------- ----------
1,740,565 1,682,999
Less current portion........................................ 120,000 120,000
---------- ----------
$1,620,565 $1,562,999
========== ==========
</TABLE>
F-42
<PAGE> 150
BLUE GIANT CANADA LIMITED
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Principal repayments due on long-term debt in each of the next five years
and thereafter are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 28,
1996 1997
---------- ----------
(UNAUDITED)
<S> <C> <C>
1997....................................... $ 120,000 $ --
1998....................................... 124,796 120,000
1999....................................... 127,400 126,075
2000....................................... 130,200 128,775
2001....................................... 88,209 131,677
2002....................................... 46,444 44,797
Thereafter................................. 1,103,516 1,131,675
---------- ----------
$1,740,565 $1,682,999
========== ==========
</TABLE>
7. PAYABLE TO SHAREHOLDERS:
Amounts payable to shareholders bear interest at 8%, are not secured and
have no set terms of repayment. Interest expense totaled $89,135, $44,568
(unaudited) and $47,528 (unaudited) for the periods ended December 31, 1996,
June 29, 1996 and June 28, 1997 respectively.
8. CAPITAL STOCK:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 28,
1996 1997
------------ -----------
(UNAUDITED)
<S> <C> <C>
Authorized:
Unlimited number of common shares issued:
900 common shares........................ $100 $100
</TABLE>
9. FINANCIAL INSTRUMENTS:
The carrying values of accounts receivable, bank indebtedness, accounts
payable and accrued liabilities approximate their fair value due to the
relatively short periods to maturity of the instruments. The fair values of
other financial assets and liabilities included in the balance sheet are as
follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1996 JUNE 28, 1997
----------------------- -----------------------
CARRYING CARRYING
AMOUNT FAIR VALUE AMOUNT FAIR VALUE
---------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
Due from employee (note 3)................... $ 45,000 $ 43,135 $ -- $ --
Long-term debt (note 6)...................... 1,740,565 1,880,225 1,682,999 1,794,697
</TABLE>
The following methods and assumptions were used to estimate the fair value
of each class of financial instrument:
- Due from employee -- at the year-end prime rate.
- Long-term debt -- at the present value of contractual future payments of
principal and interest, discounted at the current market rates of
interest available to the Company for the same or similar debt
instruments.
The fair value of the payable to shareholder has not been presented due to
the undeterminable nature of the term of repayment of the loan.
F-43
<PAGE> 151
BLUE GIANT CANADA LIMITED
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The Company does not have a significant exposure to any individual customer
or counterparty.
10. COMMITMENTS:
The Company is committed under long-term leases for the rental of
automotive equipment with expiry dates to 1999 and with varying renewal options.
Minimum annual rentals exclusive of insurance and maintenance costs and for the
next five years obligations under these leases are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 28,
1996 1997
------------ -----------
(UNAUDITED)
<S> <C> <C>
1997......................................... $83,494 $46,654
1998......................................... 46,197 62,130
1999......................................... 7,102 23,486
2000......................................... -- 3,469
2001......................................... -- 1,518
</TABLE>
11. CONTINGENCIES:
The Company is contingently liable with respect to litigation and claims
which arise from time to time in the normal course of business. In the opinion
of management, any liability that may arise from such contingencies would not
have a significant adverse effect on the financial statements of the Company.
12. RELATED PARTY TRANSACTIONS AND ECONOMIC DEPENDENCE:
(a) A significant portion of the Company's sales are derived from Blue
Giant USA Corporation, which is related by virtue of common control. The Company
had entered into the following transactions with this company on normal terms
and prices.
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 29, JUNE 28,
1996 1996 1997
------------ ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Sales................................................... $5,515,482 $2,813,610 $2,976,792
Purchases............................................... 505,047 265,878 243,999
</TABLE>
(b) Effective October 1, 1993, the Company acquired 25% of the common
shares of Blue Giant Europe for $1. The Company has recorded sales to Blue Giant
Europe totaling $453,110, $279,052 (unaudited) and $165,114 (unaudited) for the
periods ended December 31, 1996, June 29, 1996 and June 28, 1997 respectively.
(c) Receivables from related companies are comprised of the following:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 28,
1996 1997
------------ -----------
(UNAUDITED)
<S> <C> <C>
Blue Giant USA Corporation.................. $1,457,724 $1,416,679
Blue Giant Europe........................... 284,976 242,183
---------- ----------
$1,742,700 $1,658,862
========== ==========
</TABLE>
F-44
<PAGE> 152
BLUE GIANT CANADA LIMITED
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
13. REFUNDABLE DIVIDEND TAX:
Under the Income Tax Act, certain taxes paid by the Company relating to
investment income are potentially refundable at the rate of $1 for each $3 of
taxable dividends paid. Since these taxes are considered advance distribution to
shareholders, they have been charged directly to retained earnings. As dividends
are paid, the applicable refundable tax is credited to retained earnings. The
cumulative amount of potential refundable taxes was $73,333 for each of the
periods reported on.
14. RECONCILIATION BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (GAAP):
The financial statements of the Company have been prepared in accordance
with generally accepted accounting principles (GAAP) in Canada. These principles
conform in all material respects to those in the United States except for the
following:
The application of U.S. GAAP would have the following effect on net income
as reported:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 29, JUNE 28,
1996 1996 1997
------------ ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Net earnings as shown in the financial
statements............................. $415,288 $144,735 $185,031
Description of items having an effect on
reported income:
Revenue recognition (a)................ (81,076) (36,600) 19,073
Deferred income taxes (b).............. 1,800 3,300 3,000
-------- -------- --------
Net income according to generally
accepted accounting principles in the
United States.......................... $336,012 $111,435 $207,104
======== ======== ========
</TABLE>
The application of U.S. GAAP would have the following effect on the balance
sheets as reported:
<TABLE>
<CAPTION>
INCREASE
AS REPORTED (DECREASE) U.S. GAAP
----------- ---------- ----------
<S> <C> <C> <C>
December 31, 1996:
Assets:
Accounts receivable (a)................ $4,880,790 $(420,209) $4,460,581
Inventory (a).......................... 2,672,620 272,274 2,944,894
---------
$(147,935)
=========
Liabilities:
Deferred income taxes (b).............. $ 27,496 $ (26,496) $ 1,000
Shareholders' equity:
Retained earnings...................... 2,762,648 (121,439) 2,641,209
---------
$(147,935)
=========
</TABLE>
F-45
<PAGE> 153
BLUE GIANT CANADA LIMITED
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
INCREASE
AS REPORTED (DECREASE) U.S. GAAP
----------- ----------- -----------
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
June 28, 1997:
Assets:
Accounts receivable (a)................................ $4,911,147 $(380,091) $4,531,056
Inventory (a).......................................... 3,250,218 262,229 3,512,447
---------
$(117,862)
=========
Liabilities:
Deferred income taxes (b).............................. $ 23,496 $ (18,496) $ 5,000
Shareholders' equity:
Retained earnings...................................... 2,947,679 (99,366) 2,848,313
---------
$(117,862)
=========
</TABLE>
(a) Revenue recognition:
Under U.S. GAAP, the Company would not record sales and cost of sales on
custom orders of equipment until the customer has received the goods. Such
amounts included in sales for Canadian GAAP amounted to $420,209, $227,028
(unaudited) and $380,091 (unaudited) and included in cost of sales of $272,274,
$148,569 (unaudited) and $262,229 (unaudited) for the periods ended December 31,
1996, June 29, 1996 and June 28, 1997 respectively. The decrease in net earnings
after the above adjustment is $81,076 and $36,600 (unaudited) for the periods
ended December 31, 1996 and June 29, 1996 respectively. The increase in net
earnings resulting from this adjustment for the period ended June 28, 1997 is
$19,073 (unaudited).
(b) Accounting for income taxes:
Financial Accounting Standards No. 109, "Accounting for Income Taxes" (FAS
109) requires the use of an asset and liability approach for financial
accounting and reporting for income taxes. Tax allocation is provided on
temporary differences existing at the end of a financial period. These are
differences between the tax basis of an asset or liability and the amount in the
financial statements. It is assumed that each item in the financial statements
will be recovered or settled at the amounts reported in the statements and that
the reversal of the temporary differences will result in taxable amounts or
deductions in the future years. The effect of the adoption of the statements
would be as follows:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 28,
1996 1997
------------ -----------
(UNAUDITED)
<S> <C> <C>
Deferred tax asset:
Accruals not currently deductible.................. $10,000 $ 10,000
Accounts receivable................................ 42,400 31,500
Deferred tax liabilities:
Capital assets..................................... (48,400) (44,000)
Prepaid expenses................................... (5,000) (2,500)
------- --------
$(1,000) $ (5,000)
======= ========
</TABLE>
F-46
<PAGE> 154
BLUE GIANT CANADA LIMITED
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
In assessing the realizability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax
assets will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible. Management considers the
scheduled reversal of deferred tax liabilities, projected future taxable income,
and tax planning strategies in making this statement. Based upon the level of
historical taxable income and projections for future taxable income over the
periods which the deferred tax assets are deductible, management believes it is
more likely than not the Company will realize the benefits of these deductible
differences at December 31, 1996.
(c) Statement of Cash Flows:
Under U.S. GAAP, the net change in bank indebtedness for the periods ended
is reflected as a financing activity and not included in the cash position in
the Statement of Cash Flows resulting in the following change:
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTH PERIOD SIX MONTH PERIOD
DECEMBER 31, ENDED JUNE 29, ENDED JUNE 28,
1996 1996 1997
------------ ---------------- ----------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Financing activities:
(Decrease) increase in bank
indebtedness................ $ (432,260) $ (45,169) $ 771,082
</TABLE>
The Statement of Cash Flows' major categories for the periods ended would
then be presented as follows:
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTH PERIOD SIX MONTH PERIOD
DECEMBER 31, ENDED JUNE 29, ENDED JUNE 28,
1996 1996 1997
------------ ---------------- ----------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Operating activities............. $ 497,402 $ 92,961 $ (532,752)
Financing activities............. 1,354,649 1,756,608 676,183
Investing activities............. (1,852,051) (1,849,569) (143,431)
----------- ----------- -----------
Change in cash position.......... -- -- --
Cash position, beginning of
period......................... -- -- --
----------- ----------- -----------
Cash position, end of period..... $ -- $ -- $ --
=========== =========== ===========
</TABLE>
15. SUBSEQUENT EVENTS:
In November, 1997, the Company agreed to sell for cash substantially all of
its assets and to cease operating. The sale resulted in the Company incurring a
loss before income taxes of approximately $1,600,000.
In December 1997, it was determined that the balance still owing at that
time from Blue Giant Europe was uncollectible and accordingly a write-off of
$120,000 was recorded.
In 1995, there was an industrial accident, as a consequence of which the
Ministry of Labour launched an action against the Company. In April 1998, this
action was settled, resulting in the Company having to pay an amount of $140,000
in excess of the amount accrued at June 28, 1997 and December 31, 1996.
F-47
<PAGE> 155
CLARK MATERIAL HANDLING COMPANY
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
(IN THOUSANDS)
The following unaudited pro forma combined financial information (the
"Unaudited Pro Forma Combined Financial Information") does not give effect to
the Offering or the Samsung Forklift Acquisition.
On November 7, 1997, CLARK closed its acquisitions of substantially all of
the assets and certain liabilities of Blue Giant USA Corporation ("BGU") and
Blue Giant Canada Limited ("BGC") (collectively, "Blue Giant") in two separate
purchase business combinations effective November 1, 1997. Although separate
legal entities, BGU and BGC were under the common control of substantially the
same stockholder group. The purchase price for the acquisitions comprised $9,365
in cash (of which $200 was paid to a shareholder of Blue Giant under a
noncompete agreement), an obligation payable over three years totaling $1,105
under a noncompete agreement and a consulting agreement with a shareholder of
Blue Giant and related expenses of $333. The purchase price was allocated to the
estimated fair value of the tangible and intangible net assets acquired, with
the residual being allocated to goodwill.
The Unaudited Pro Forma Combined Financial Information gives effect to the
acquisitions of BGU and BGC as if such events had occurred at the beginning of
each respective period. The Unaudited Pro Forma Combined Financial Information
has been derived from the application of pro forma adjustments to the historical
financial statements of the Company and Blue Giant. The Unaudited Pro Forma
Combined Financial Information reflects the effects of the purchase allocation
described above and the resultant amortization, along with other adjustments
directly attributable to the transaction. The pro forma adjustments are
described in the accompanying notes.
The Unaudited Pro Forma Combined Financial Information is presented for
informational purposes only and does not purport to represent what the Company's
results of operations would actually have been if the aforementioned events had
occurred on the dates specified or to project the Company's results of
operations for any future periods. The Unaudited Pro Forma Combined Financial
Information should be read in conjunction with the historical financial
statements of the Company, BGU and BGC, and notes thereto, included elsewhere
herein.
P-1
<PAGE> 156
CLARK MATERIAL HANDLING COMPANY
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
TWELVE MONTHS ENDED JUNE 30, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
TWELVE MONTHS FOUR MONTHS ENDED
ENDED OCTOBER 31, 1997(1)
JUNE 30, 1998 -------------------- PRO FORMA COMBINED
CLARK BGU BGC ADJUSTMENTS PRO FORMA
-------------- -------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Net sales.......................... $528,407 $5,418 $5,494 $(5,266)(2) $534,053
Cost of goods sold................. 463,221 4,308 5,044 (5,258)(2) 467,115
(250)(3)
35(4)
15(5)
-------- ------ ------ ------- --------
Gross profit....................... 65,186 1,110 450 192 66,938
Engineering, selling and
administrative expenses.......... 41,952 1,063 222 91(6) 43,328
-------- ------ ------ ------- --------
Income from operations............. 23,234 47 228 101 23,610
Other income (expense):
Interest income.................. 428 -- 14 (97)(7) 345
Interest expense................. (15,148) (42) (71) 113(8) (15,148)
Other income (expense) -- net.... 390 40 77 (250)(3) 257
-------- ------ ------ ------- --------
Income before income taxes......... 8,904 45 248 (133) 9,064
Provision for income taxes......... 821 14 74 (14)(9) 895
-------- ------ ------ ------- --------
Net income....................... $ 8,083 $ 31 $ 174 $ (119) $ 8,169
======== ====== ====== ======= ========
</TABLE>
P-2
<PAGE> 157
CLARK MATERIAL HANDLING COMPANY
NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
TWELVE MONTHS ENDED JUNE 30, 1998
(IN THOUSANDS)
(1) The acquisition of BGU and BGC was effective November 1, 1997 and their
results of operations have been included in the consolidated statement of
operations of CLARK from that date.
(2) Eliminates intercompany sales and cost of goods sold between BGU and BGC.
(3) Reclassifies purchase discounts from other income to cost of goods sold. As
the Company is achieving greater success at reducing its material costs
through a reduction in the number of suppliers and increased discounts, the
amount of discounts are increasing. Accordingly, the Company intends to
record purchase discounts as cost of goods sold in the future. Purchase
discounts were not material in prior periods.
(4) Eliminates depreciation expense relative to BGU's manufacturing facility
($15) and increases rental expense relative to that facility ($50). Pursuant
to the transaction, CLARK is not acquiring BGU's manufacturing facility but
rather is leasing it over a five year term at $150 per annum.
(5) Reflects amortization of goodwill over an expected useful life of 40 years.
(6) Reflects amortization of noncompete agreements entered into with certain of
the sellers' shareholders.
(7) Reflects a reduction in interest income arising from the Company's use of
$9,698 in cash to acquire BGU and BGC.
(8) Removes the interest expense of BGU and BGC (as part of the transaction,
their short and long-term debt was not assumed by the Company).
(9) Adjusts income taxes to reflect (a) a lack of tax benefit associated with
the pro forma adjustments and (b) the elimination of the tax provision
relating to BGU. The Company is in a net NOL position in the United States
(where no provision for taxes currently payable is required) and has not
recorded a deferred tax provision because of the uncertainty surrounding the
ultimate realizability of the Company's net deferred tax assets. The tax
provision for BGC has not been adjusted because BGC operates in a foreign
tax jurisdiction.
P-3
<PAGE> 158
CLARK MATERIAL HANDLING COMPANY
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED TEN MONTHS ENDED
DECEMBER 31, OCTOBER 31, 1997(1)
1997 -------------------- PRO FORMA COMBINED
CLARK BGU BGC ADJUSTMENTS PRO FORMA
------------ -------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Net sales.......................... $489,294 $12,590 $12,705 $ (5,402)(2) $509,187
Cost of goods sold................. 431,127 9,893 10,728 (5,402)(2) 446,454
87(3)
21(4)
-------- ------- ------- ---------- --------
Gross profit..................... 58,167 2,697 1,977 (108) 62,733
Engineering, selling and
administrative expenses.......... 37,133 2,249 1,541 227(5) 41,150
-------- ------- ------- ---------- --------
Income from operations........... 21,034 448 436 (335) 21,583
Other income (expense):
Interest income.................. 809 -- 14 (258)(6) 565
Interest expense................. (15,086) (114) (174) 288(7) (15,086)
Other income (expense)-net....... 1,598 111 174 -- 1,883
-------- ------- ------- ---------- --------
Income before income taxes....... 8,355 445 450 (305) 8,945
Provision for income taxes......... 484 166 141 (166)(8) 625
-------- ------- ------- ---------- --------
Net income....................... $ 7,871 $ 279 $ 309 $ (139) $ 8,320
======== ======= ======= ========== ========
</TABLE>
P-4
<PAGE> 159
CLARK MATERIAL HANDLING COMPANY
NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS)
(1) The acquisition of BGU and BGC was effective November 1, 1997, and their
results of operations have been included in the consolidated statement of
operations of CLARK from that date.
(2) Eliminates intercompany sales and cost of goods sold between BGU and BGC.
(3) Eliminates depreciation expense relative to BGU's manufacturing facility
($38) and increases rental expense relative to that facility ($125).
Pursuant to the transaction, CLARK did not acquire BGU's manufacturing
facility but rather is leasing it over a five year term at $150 per annum.
(4) Reflects amortization of goodwill over an expected useful life of 40 years.
(5) Reflects amortization of noncompete agreements entered into with certain of
the sellers' shareholders.
(6) Reflects a reduction in interest income arising from the Company's use of
$9,698 in cash to acquire BGU and BGC.
(7) Removes the interest expense of BGU and BGC (as part of the transaction,
their short and long-term debt was not assumed by the Company).
(8) Adjusts income taxes to reflect (a) a lack of tax benefit associated with
the pro forma adjustments and (b) the elimination of the tax provision
relating to BGU. The Company is in a net NOL position in the United States
(where no provision for taxes currently payable is required) and has not
recorded a deferred tax provision because of the uncertainty surrounding the
ultimate realizability of the Company's net deferred tax assets. The tax
provision for BGC has not been adjusted because BGC operates in a foreign
tax jurisdiction.
P-5
<PAGE> 160
- ------------------------------------------------------
- ------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THOSE TO WHICH IT
RELATES, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY 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
Disclosure Regarding Forward-Looking
Statements......................... ii
Summary.............................. 1
Risk Factors......................... 20
Use of Proceeds...................... 27
Capitalization....................... 28
Selected Historical Financial Data... 29
Management's Discussion and Analysis
of Financial Condition and Results
of Operations...................... 31
The Exchange Offers.................. 37
Certain Federal Income Tax
Considerations Relating to the
Exchange Offers.................... 47
Business............................. 48
The Samsung Forklift Acquisition..... 56
Management........................... 57
Ownership of the Company............. 60
Certain Relationships and Related
Transactions....................... 63
Description of Certain
Indebtedness....................... 65
Description of Notes................. 67
Description of Preferred Stock....... 86
Description of Preferred Stock
Exchange Notes..................... 92
Certain Federal Income Tax
Considerations..................... 97
Plan of Distribution................. 101
Legal Matters........................ 101
Independent Accountants.............. 101
Index to Financial Statements........ F-1
</TABLE>
UNTIL , 1998 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE NEW SECURITIES, WHETHER OR NOT
PARTICIPATING IN THE ORIGINAL DISTRIBUTION, MAY BE REQUIRED TO DELIVER A
PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
PROSPECTUS
[CLARK LOGO]
CLARK MATERIAL
HANDLING COMPANY
OFFER TO EXCHANGE
10 3/4% SERIES D SENIOR NOTES DUE 2006
FOR ALL OUTSTANDING
10 3/4% SERIES C SENIOR NOTES DUE 2006
AND
10 3/4% SERIES D SENIOR NOTES DUE 2006
FOR ALL OUTSTANDING
10 3/4% SERIES B SENIOR NOTES DUE 2006
AND
13% SENIOR EXCHANGEABLE SERIES B
PREFERRED STOCK DUE 2007
FOR ALL OUTSTANDING
13% SENIOR EXCHANGEABLE SERIES A
PREFERRED STOCK DUE 2007
, 1998
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 161
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law provides in relevant
part that a corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed 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 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
such person's conduct was unlawful.
In addition, Section 145 provides that a corporation may indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor 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) 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 and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the 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.
Section 145 further provides that nothing in the above-described provisions
shall be deemed exclusive of any other rights to indemnification or advancement
of expenses to which any person may be entitled under any bylaw, agreement, vote
of stockholders or disinterested directors or otherwise.
The By-laws of the Company provide for the indemnification of any person
who was or is 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 such person is or
was a director or officer of the Company or a constituent corporation absorbed
in a consolidation or merger, or is or was serving at the request of the Company
or a constituent corporation absorbed in a consolidation or merger, as a
director or officer of another corporation, partnership, joint venture, trust or
other enterprise, or is or was a director or officer of the Company serving at
its request as an administrator, trustee or other fiduciary of one or more of
the employee benefit plans of the Company or other enterprise, against expenses
(including attorneys' fees), liability and loss actually and reasonably incurred
or suffered by such person in connection with such proceedings, whether or not
the indemnified liability arises or arose from any threatened, pending or
completed proceeding by or in the right of the Company, except to the extent
that such indemnification is prohibited by applicable law. The By-laws of the
Company also provide that such indemnification shall not be deemed exclusive of
any other rights to which those indemnified may be entitled as a matter of law
or under any by-law, agreement, vote of stockholders or otherwise.
Section 102(b)(7) of the Delaware General Corporation Law provides that a
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
II-1
<PAGE> 162
which involve intentional misconduct or a knowing violation of law; under
Section 174 of the Delaware General Corporation Law (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 Certificate of
Incorporation of the Company contains a provision so limiting the personal
liability of directors of the Company.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
3.1 Certificate of Incorporation, as amended, of the Company
3.2 By-laws of the Company (incorporated by reference to Exhibit
3.2 to the Company's Registration Statement on Form S-4,
Registration No. 333-18957)
4.1 Indenture dated as of November 27, 1996 between the Company
and United States Trust Company of New York, as Trustee
(incorporated by reference to Exhibit 4.1 to the Company's
Registration Statement on Form S-4, Registration No.
333-18957)
4.2 Registration Rights Agreement dated as of November 27, 1996
among the Company, Jefferies & Company, Inc. and Bear,
Stearns & Co. Inc. (incorporated by reference to Exhibit 4.2
to the Company's Registration Statement on Form S-4,
Registration No. 333-18957)
4.3 Form of 10 3/4% Senior Notes due 2006 (included in Exhibit
4.1) (incorporated by reference to Exhibit 4.3 to the
Company's Registration Statement on Form S-4, Registration
No. 333-18957)
4.4 Indenture dated as of July 17, 1998 between the Company and
United States Trust Company of New York, as Trustee
4.5 Registration Rights Agreement dated as of July 17, 1998
among the Company, Jeffries & Company, Inc. and Bear,
Stearns & Co. Inc.
4.6 Registration Rights Agreement dated as of July 17, 1998
among the Company, Jeffries & Company, Inc. and Bear,
Stearns & Co. Inc.
4.7 Form of 10 3/4% Senior Notes due 2006 (included in Exhibit
4.4)
4.8 Indenture dated as of July 17, 1998 between the Company and
U.S. Trust Company of Texas, N.A.
4.9 First Supplemental Indenture dated as of August 18, 1998
between the Company and United States Trust Company of New
York, as Trustee
5.1 Opinion of Dechert Price & Rhoads*
10.1 Purchase Agreement dated November 22, 1996 among the
Company, Jefferies & Company, Inc. and Bear, Stearns & Co.
Inc. (incorporated by reference to Exhibit 10.1 to the
Company's Registration Statement on Form S-4, Registration
No. 333-18957)
10.2 Loan and Security Agreement dated November 27, 1996 by and
between Congress Financial Corporation and the Company
(incorporated by reference to Exhibit 10.2 to the Company's
Registration Statement on Form S-4, Registration No.
333-18957)
10.3 Stock and Asset Purchase and Sale Agreement, dated as of
November 9, 1996 among Terex Corporation, and certain of its
subsidiaries and the Company (incorporated by reference to
Exhibit 10.3 to the Company's Registration Statement on Form
S-4, Registration No. 333-18957)
10.4 Service Agreement dated as of November 27, 1996 between
Terex Corporation and the Company (incorporated by reference
to Exhibit 10.4 to the Company's Registration Statement on
Form S-4, Registration No. 333-18957).
10.5 Indemnity as to Letters of Credit, Performance Bonds, Appeal
Bonds, Guaranties, etc. dated November 27, 1996 by the
Company in favor of Terex Corporation, for itself and as
successor to CMH Acquisition Corp., CMH Acquisition
International Corp., Clark Material Handling Company and
Clark Material Handling International, Inc. (incorporated by
reference to Exhibit 10.5 to the Company's Registration
Statement on Form S-4, Registration No. 333-18957)
10.6 Employment Agreement dated as of November 27, 1996 between
Holdings and Dr. Martin M. Dorio (incorporated by reference
to Exhibit 10.6 to the Company's Registration Statement on
Form S-4, Registration No. 333-18957)
</TABLE>
II-2
<PAGE> 163
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
10.7 Tax Sharing Agreement made as of November 27, 1996 between
Holdings and the Company (incorporated by reference to
Exhibit 10.7 to the Company's Registration Statement on Form
S-4, Registration No. 333-18957)
10.8 Stock Purchase Agreement, dated as of May 27, 1992, by and
between Clark Equipment Company and Terex Corporation
(incorporated by reference to Exhibit 10.8 to the Company's
Registration Statement on Form S-4, Registration No.
333-18957)
10.9 First Amendment to the Stock Purchase Agreement, dated as of
July 31, 1992, by and between Clark Equipment Company and
Terex Corporation (incorporated by reference to Exhibit 10.9
to the Company's Registration Statement on Form S-4,
Registration No. 333-18957)
10.10 Trademark Assignment Agreement, dated as of July 31, 1992,
by and between Clark Equipment Company and Clark Material
Handling Company (incorporated by reference to Exhibit 10.10
to the Company's Registration Statement on Form S-4,
Registration No. 333-18957)
10.11 Second Amended and Restated General Operating Agreement,
dated November 29, 1990, by and between Clark Material
Handling Company and Chase Manhattan Leasing Company, Inc.
(incorporated by reference to Exhibit 10.11 to the Company's
Registration Statement on Form S-4, Registration No.
333-18957)
10.12 Second Amendment to the Second Amended and Restated General
Operating Agreement, dated April 15, 1994, by and among
Clark Material Handling Company, Drexel Industries, Inc. and
Clark Credit Corporation (incorporated by reference to
Exhibit 10.12 to the Company's Registration Statement on
Form S-4, Registration No. 333-18957)
10.14 Assignment of Second Amended and Restated General Operating
Agreement, dated March 22, 1995, by and between Clark
Material Handling Company, Clark Credit Corporation, f/k/a
Chase Manhattan Leasing Company, and Associates Commercial
Corporation (incorporated by reference to Exhibit 10.14 to
the Company's Registration Statement on Form S-4,
Registration No. 333-18957)
10.15 Master Software License and Service Agreement, dated May 17,
1996, between Clark Material Handling Company and SDRC
Operations (incorporated by reference to Exhibit 10.15 to
the Company's Registration Statement on Form S-4,
Registration No. 333-18957)
10.16 Letter Agreement, dated October 26, 1995, between Clark
Material Handling Company, Manufacturers Distribution
Services, Inc. and Maine Rubber International (incorporated
by reference to Exhibit 10.16 to the Company's Registration
Statement on Form S-4, Registration No. 333-18957)
10.17 MCI Services Agreement, effective as of July 1, 1995,
between MCI Telecommunications Corporation and Clark
Material Handling Company (incorporated by reference to
Exhibit 10.17 to the Company's Registration Statement on
Form S-4, Registration No. 333-18957)
10.18 Agreement for Systems Operations Services, dated as of March
2, 1992, between Clark Material Handling Company and
Integrated Systems Solutions Corporation, as amended by
Amendments #1 through #5 (incorporated by reference to
Exhibit 10.18 to the Company's Registration Statement on
Form S-4, Registration No. 333-18957)
10.19 Supply Agreement, dated December 14, 1994, between Clark
Material Handling Company and Funk Manufacturing Company
(incorporated by reference to Exhibit 10.19 to the Company's
Registration Statement on Form S-4, Registration No.
333-18957)
10.20 Supply Agreement, dated July 1, 1995, between Clark Material
Handling Company and Funk Manufacturing Company
(incorporated by reference to Exhibit 10.20 to the Company's
Registration Statement on Form S-4, Registration No.
333-18957)
10.21 Agreement, dated June 1, 1983, between Clark Equipment
Company and Mitsubishi Corporation, Mitsubishi Heavy
Industries, Ltd. and Mitsubishi Motors Corporation, as
amended (incorporated by reference to Exhibit 10.24 to the
Company's Registration Statement on Form S-4, Registration
No. 333-18957)
10.22 Master Contract for Purchase and Sale, dated July 17, 1995,
between Clark Material Handling Company and Custom Tool and
Manufacturing Company (incorporated by reference to Exhibit
10.25 to the Company's Registration Statement on Form S-4,
Registration No. 333-18957)
10.23 Supply Agreement, dated December 20, 1991, between Clark
Material Handling Company and Dixson, Inc. (incorporated by
reference to Exhibit 10.26 to the Company's Registration
Statement on Form S-4, Registration No. 333-18957)
</TABLE>
II-3
<PAGE> 164
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
10.24 Lease Agreement, dated as of April 15, 1987, between Vergil
D. Kelly and Kenny Angelucci and Clark Equipment Company
with respect to 172 Trade Street, Lexington, Kentucky, as
amended by Amendment #1 to Lease dated April 15, 1987
(incorporated by reference to Exhibit 10.27 to the Company's
Registration Statement on Form S-4, Registration No.
333-18957)
10.25 Standard Form Dealer Sales Agreements between Clark Material
Handling Company and domestic dealer entities (incorporated
by reference to Exhibit 10.28 to the Company's Registration
Statement on Form S-4, Registration No. 333-18957)
10.26 Agreement, dated as of September 12, 1995, by and between
Clark Material Handling Company and Nissan Forklift
Corporation, North America (incorporated by reference to
Exhibit 10.29 to the Company's Registration Statement on
Form S-4, Registration No. 333-18957)
10.27 License Agreement, dated as of November 27, 1996, between
Holdings and the Company (incorporated by reference to
Exhibit 10.30 to the Company's Registration Statement on
Form S-4, Registration No. 333-18957)
10.28 Asset Purchase Agreement, dated as of November 6, 1997,
between Clark Material Handling of Canada Ltd. and Blue
Giant Limited (incorporated by reference to Exhibit 10.28 to
the Company's Annual Report on Form 10-K for the year ended
December 31, 1997)
10.29 Asset Purchase Agreement, dated as of October 31, 1997,
between Blue Giant Corporation and Blue Giant USA
Corporation (incorporated by reference to Exhibit 10.29 to
the Company's Annual Report on Form 10-K for the year ended
December 31, 1997)
10.30 Asset Purchase Agreement, dated as of June 5, 1998, by and
between the Company and Samsung Heavy Industries Co., Ltd.
10.31 Purchase Agreement dated as of July 13, 1998 among the
Company, Jeffries & Company, Inc. and Bear, Stearns, & Co.
Inc.
12.1 Statement of Ratio of Earnings to Fixed Charges
21.1 Subsidiaries of the Company
23.1 Consent of Dechert Price & Rhoads (included in Exhibit 5.1)
23.2 Consent of PricewaterhouseCoopers LLP
23.3 Consent of Raughton & Company
23.4 Consent of KPMG
24 Power of Attorney (included on signature page)
25 Statement of Eligibility and Qualification, Form T-1, of
United States Trust Company of New York
99.1 Form of C Note Letter of Transmittal
99.2 Form of Notice of Guaranteed Delivery for the Series C Notes
99.3 Form of B Note Letter of Transmittal
99.4 Form of Notice of Guaranteed Delivery for the Series B Notes
99.5 Form of Preferred Stock Letter of Transmittal
99.6 Form of Notice of Guaranteed Delivery for the Preferred
Stock
</TABLE>
- ---------------
* To be supplied by amendment.
(b) Financial Statements Schedules:
Schedules not listed above are omitted because of the absence of the
conditions under which they are required or because the information required by
such omitted schedules is set forth in the financial statements or the notes
thereto.
II-4
<PAGE> 165
ITEM 22. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
(2) that, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof; and
(3) to remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
(c) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this Form, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the date
of responding to the request.
(d) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-5
<PAGE> 166
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 Lexington,
State of Kentucky, on the 3rd day of September, 1998.
CLARK MATERIAL HANDLING COMPANY
By: /s/ DR. MARTIN M. DORIO
------------------------------------
Dr. Martin M. Dorio
President and Chief Executive
Officer
POWER OF ATTORNEY
Each person whose signature appears below appoints Dr. Martin M. Dorio and
Michael A. Delaney, 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 thereof.
Pursuant to this 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 on August , 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ DR. MARTIN M. DORIO President, Chief Executive Officer and
- --------------------------------------------- Director (Principal Executive Officer)
Dr. Martin M. Dorio
/s/ JOSEPH F. LINGG Vice President, Finance, and Treasurer
- --------------------------------------------- (Principal Financial and Accounting
Joseph F. Lingg Officer)
/s/ THOMAS J. SNYDER Director
- ---------------------------------------------
Thomas J. Snyder
/s/ MICHAEL A. DELANEY Director
- ---------------------------------------------
Michael A. Delaney
/s/ JAMES A. URRY Director
- ---------------------------------------------
James A. Urry
</TABLE>
II-6
<PAGE> 1
Exhibit 3.1
CERTIFICATE OF INCORPORATION
OF
CMHC ACQUISITION CORPORATION
1. Name. The name of the Corporation is CMHC Acquisition
Corporation.
2. Registered Office and Agent. The address of the Corporation's
registered office in the State of Delaware is 1013 Centre Road, in the City of
Wilmington, County of New Castle. The name of the Corporation's registered agent
at such address is Corporation Service Company.
3. Purpose. The purposes for which the Corporation is formed are to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware and to possess and exercise all of
the powers and privileges granted by such law and any other law of Delaware.
4. Authorized Capital. The aggregate number of shares of stock which
the Corporation shall have authority to issue is one thousand (1,000) shares,
all of which are of one class and are designated as Common Stock and each of
which has a par value of one cent ($.01).
5. Incorporator. The name and mailing address of the incorporator
are Robin L. Foelster, 4000 Bell Atlantic Tower, 1717 Arch Street, Philadelphia,
Pennsylvania 19103-2793.
6. Bylaws. The board of directors of the Corporation is authorized
to adopt, amend or repeal the bylaws of the Corporation, except as otherwise
specifically provided therein.
7. Elections of Directors. Elections of directors need not be by
written ballot unless the bylaws of the Corporation shall so provide.
8. Right to Amend. The Corporation reserves the right to amend any
provision contained in this Certificate as the same may from time to time be in
effect in the manner now or hereafter prescribed by law, and all rights
conferred on stockholders or others hereunder are subject to such reservation.
<PAGE> 2
9. Limitation on Liability. The directors of the Corporation shall
be entitled to the benefits of all limitations on the liability of directors
generally that are now or hereafter become available under the General
Corporation Law of Delaware. Without limiting the generality of the foregoing,
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. Any repeal or
modification of this Section 9 shall be prospective only, and shall not affect,
to the detriment of any director, any limitation on the personal liability of a
director of the Corporation existing at the time of such repeal or modification.
Dated: November 8, 1996
/s/ Robin L. Foelster
-------------------------------
Robin L. Foelster
<PAGE> 3
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
CMHC ACQUISITION CORPORATION
-------------------------------------
CMHC Acquisition Corporation, a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware (the
"Company"), does hereby certify:
FIRST: That by written consent of the board of directors dated November
22, 1996, a resolution was duly adopted setting forth a proposed amendment
to the Certificate of Incorporation of the Company, declaring said
amendment to be advisable and calling for consideration of said proposed
amendment by the sole stockholder of the Company. The resolution setting
forth the amendment is as follows:
RESOLVED, that it is hereby proposed that Article 1 of the
Certificate of Incorporation of the Company be amended so that the
same as amended would read as follows:
10. Name. The name of the Corporation is CLARK Material
Handling Company.
SECOND: That thereafter, pursuant to the resolution of the board of
directors, the proposed amendment was approved by the sole stockholder of
the Company by written consent dated November 22, 1996.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 and 228 of the General Corporation Law of the
State of Delaware.
- 3 -
<PAGE> 4
IN WITNESS WHEREOF, the Company has caused this Certificate to be
executed by Michael J. Grossman, its Secretary, this 22nd day of November, 1996.
CMHC ACQUISITION CORPORATION
By: /s/ Michael J. Grossman
----------------------------
Michael J. Grossman
Secretary
- 4 -
<PAGE> 5
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
CLARK MATERIAL HANDLING COMPANY
CLARK Material Handling Company, a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware (the "Company"), does hereby certify:
FIRST: That by written consent of the board of directors dated July 13,
1998, a resolution was duly adopted setting forth a proposed amendment to
the Certificate of Incorporation of the Company, declaring said amendment
to be advisable and calling for consideration of said proposed amendment
by the stockholders of the Company. The resolution setting forth the
amendment is as follows:
RESOLVED, that it is hereby proposed that Article 4 of the
Certificate of Incorporation of the Company be amended so that the
same as amended would read as follows:
4. Authorized Capital. The aggregate number of shares of
stock which the Company shall have authority to issue is
41,000 shares, divided into two (2) classes consisting of
40,000 shares of Preferred Stock, par value $.01 per share
("Preferred Stock"), and 1,000 shares of Common Stock, par
value $.01 per share ("Common Stock").
The following is a statement of the designations,
preferences, qualifications, limitations, restrictions and the
special or relative rights granted to or imposed upon the
shares of each such class.
A. PREFERRED STOCK
1. Issue in Series. Preferred Stock may be issued
from time to time in one or more series, each such
series to have the terms stated herein and in the
resolution of the Board of Directors of the
Company providing for its issue. All shares of any
one series of Preferred Stock will be identical,
but shares of different series of Preferred Stock
need not be identical or rank equally except
insofar as provided by law or herein.
<PAGE> 6
2. Creation of Series. The Board of Directors will
have authority by resolution to cause to be
created one or more series of Preferred Stock, and
to determine and fix with respect to each series
prior to the issuance of any shares of the series
to which such resolution relates:
(a) the distinctive designation of the
series and the number of shares which will
constitute the series, which number may be
increased or decreased (but not below the
number of shares then outstanding) from time
to time by action of the Board of Directors;
(b) the dividend rate and the times of
payment of dividends on the shares of the
series, whether dividends will be
cumulative, and if so, from what date or
dates;
(c) the price or prices at which, and the
terms and conditions on which, the shares of
the series may be redeemed at the option of
the Company;
(d) whether or not the shares of the series
will be entitled to the benefit of a
retirement or sinking fund to be applied to
the purchase or redemption of such shares
and, if so entitled, the amount of such fund
and the terms and provisions relative to the
operation thereof;
(e) whether or not the shares of the series
will be convertible into, or exchangeable
for, any other shares of stock of the
Company or other securities, and if so
convertible or exchangeable, the conversion
price or prices, or the rates of exchange,
and any adjustments thereof, at which such
conversion or exchange may be made, and any
other terms and conditions of such
conversion or exchange;
(f) the rights of the shares of the series
in the event of voluntary or involuntary
liquidation, dissolution or winding up of
the Company;
- 2 -
<PAGE> 7
(g) whether or not the shares of the series
will have priority over or be on a parity
with or be junior to the shares of any other
series or class in any respect or will be
entitled to the benefit of limitations
restricting the issuance of shares of any
other series or class having priority over
or being on a parity with the shares of such
series in any respect, or restricting the
payment of dividends on or the making of
other distributions in respect of shares of
any other series or class ranking junior to
the shares of the series as to dividends or
assets, or restricting the purchase or
redemption of the shares of any such junior
series or class, and the terms of any such
restriction;
(h) whether the series will have voting
rights, in addition to any voting rights
provided by law, and, if so, the terms of
such voting rights; and
(i) any other preferences, qualifications,
privileges, options and other relative or
special rights and limitations of that
series.
3. Dividends. Holders of Preferred Stock shall be
entitled to receive, when and as declared by the
Board of Directors, out of funds legally available
for the payment thereof, dividends at the rates
fixed by the Board of Directors for the respective
series, and no more, before any dividends shall be
declared and paid, or set apart for payment, on
Common Stock with respect to the same dividend
period.
4. Preference on Liquidation. In the event of the
voluntary or involuntary liquidation, dissolution
or winding up of the Company, holders of each
series of Preferred Stock will be entitled to
receive the amount fixed for such series plus, in
the case of any series on which dividends will
have been determined by the Board of Directors to
be cumulative, an amount equal to all dividends
accumulated and unpaid thereon to the date of
final distribution whether or not earned or
declared before any distribution shall be paid, or
set aside for payment, to holders of Common Stock.
If the assets of the Company are not sufficient to
pay
- 3 -
<PAGE> 8
such amounts in full, holders of all shares of
Preferred Stock will participate in the
distribution of assets ratably in proportion to
the full amounts to which they are entitled or in
such order or priority, if any, as will have been
fixed in the resolution or resolutions providing
for the issue of the series of Preferred Stock.
Neither the merger nor consolidation of the
Company into or with any other corporation, nor a
sale, transfer or lease of all or part of its
assets, will be deemed a liquidation, dissolution
or winding up of the corporation within the
meaning of this paragraph except to the extent
specifically provided for herein.
5. Redemption. The Company, at the option of the
Board of Directors, may redeem all or part of the
shares of any series of Preferred Stock on the
terms and conditions fixed for such series.
6. Voting Rights. Except as otherwise required by
law, as otherwise provided herein or as otherwise
determined by the Board of Directors as to the
shares of any series of Preferred Stock prior to
the issuance of any such shares, the holders of
Preferred Stock shall have no voting rights and
shall not be entitled to any notice of meeting of
stockholders.
- 4 -
<PAGE> 9
B. COMMON STOCK
Except as otherwise provided herein, all shares of
Common Stock will be identical and will entitle the
holders thereof to the same rights and privileges.
1. Dividends. Holders of Common Stock will be
entitled to receive such dividends as may be
declared by the Board of Directors.
2. Distribution of Assets. In the event of the
voluntary or involuntary liquidation, dissolution
or winding up of the Company, holders of Common
Stock will be entitled to receive all of the
remaining assets of the Company available for
distribution to its stockholders after all amounts
to which the holders of Preferred Stock are
entitled have been paid or set aside in cash for
payment.
3. Voting Rights. The holders of Common Stock
shall have the general right to vote for all
purposes, including the election of directors, as
provided by law. Each holder of Common Stock shall
be entitled to one vote for each share thereof
held.
SECOND: That thereafter, pursuant to the resolution of the board of
directors, the proposed amendment was approved by the sole stockholder of
the Company by written consent dated July 13, 1998.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 and 228 of the General Corporation Law of the
State of Delaware.
- 5 -
<PAGE> 10
IN WITNESS WHEREOF, the Company has caused this Certificate to be
executed by Martin M. Dorio, its President, this 15th day of July, 1998.
CLARK Material Handling Company
By: /s/ Martin M. Dorio
----------------------------
Martin M. Dorio
President
- 6 -
<PAGE> 11
CLARK MATERIAL HANDLING COMPANY
CERTIFICATE OF DESIGNATION OF THE POWERS, PREFERENCES AND RELATIVE,
PARTICIPATING, OPTIONAL AND OTHER SPECIAL RIGHTS AND QUALIFICATIONS, LIMITATIONS
AND RESTRICTIONS OF
13% SENIOR EXCHANGEABLE PREFERRED STOCK
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
CLARK Material Handling Company (the "Company"), a corporation
organized and existing under the General Corporation Law of the State of
Delaware, does hereby certify that, pursuant to authority conferred upon the
board of directors of the Company (the "Board of Directors") by its Certificate
of Incorporation (the "Certificate of Incorporation"), and the provisions of
Section 151 of the General Corporation Law of the State of Delaware, said Board
of Directors, pursuant to a written consent dated July 13, 1998, duly approved
and adopted the following resolution (the "Resolution"):
RESOLVED, that, pursuant to the authority vested in the Board
of Directors by its Certificate of Incorporation, the Board of
Directors does hereby create, authorize and provide for the issue of
13% Senior Exchangeable Preferred Stock, par value $.01 per share, with
a liquidation preference of $1,000.00 per share, consisting of 40,000
shares, having the designations, preferences, relative, participating,
optional and other special rights and the qualifications, limitations
and restrictions thereof that are set forth in the Certificate of
Incorporation and in this Resolution as follows:
(a) Designation. There is hereby created out of the authorized
and unissued shares of preferred stock of the Company a class of preferred stock
consisting of two series of preferred stock, one designated as the "13% Series A
Senior Exchangeable Preferred Stock" (the "Series A Stock") and the other
designated as the "13% Series B Senior Exchangeable Preferred Stock" (the
"Series B Stock" and, together with the series A Stock, the "Senior Preferred
Stock"). The number of shares constituting such class shall not exceed 40,000 in
the aggregate, consisting of (i) an initial issuance of 20,000 shares of Series
A Stock plus any shares of Series A Stock that may be issued in lieu of cash
dividends thereon if the Company elects to pay dividends in additional shares
and (ii) shares of Series B Stock available
<PAGE> 12
for issuance in exchange for shares of Series A Stock upon consummation of the
Exchange Offer and for payment of dividends thereon in lieu of cash dividends.
The liquidation preference of the Senior Preferred Stock shall be $1,000.00 per
share. Certain defined terms used herein have the meaning given thereto in
paragraph (n).
(b) Rank. The Senior Preferred Stock shall, with respect to
dividend distributions and distributions upon the liquidation, winding-up or
dissolution of the Company, rank:
(i) senior to each class or series of capital stock
(including common stock) of the Company other than Parity Securities
and Senior Securities, (collectively, "Junior Securities");
(ii) pari passu with each class or series of capital
stock issued by the Company after the Issue Date, the authorization of
which has been approved by the Holders in accordance with paragraph
(f)(ii)(A) and the terms of which expressly provide that such class or
series shall rank on a parity with the Senior Preferred Stock as to
dividend distributions and distributions upon the liquidation,
winding-up or dissolution of the Company (collectively, "Parity
Securities"); and
(iii) junior to each class or series of capital stock
issued by the Company the authorization of which has been approved by
the Holders in accordance with paragraph (f)(ii)(A) and the terms of
which expressly provide that such class or series ranks senior to the
Senior Preferred Stock as to dividend distributions or distributions
upon the liquidation, winding-up or dissolution of the Company
(collectively, "Senior Securities").
(c) Dividends.
(i) Holders of the outstanding shares of Senior
Preferred Stock shall be entitled to receive, when, as and if declared
by the Board of Directors, out of funds legally available therefor,
dividends on each share of Senior Preferred Stock, at a rate per annum
equal to 13% of the liquidation preference per share of the Senior
Preferred Stock, computed on the basis of a 360-day year of twelve
30-day months. All dividends shall be cumulative, whether or not earned
or declared, on a daily basis from the Issue Date and shall be payable
on each Dividend Payment Date, commencing on January 15, 1999, provided
that if any dividend payable on any Dividend Payment Date on or before
July 15, 2003 is not declared and paid in full in cash on such
2
<PAGE> 13
Dividend Payment Date, the amount payable as dividends on such Dividend
Payment Date that is not paid in cash on such Dividend Payment Date
shall be paid by the Company in additional fully paid and
non-assessable shares (including fractional shares, if applicable) of
Senior Preferred Stock having an aggregate liquidation preference equal
to the amount of such dividends (rounded to the nearest whole cent).
After July 15, 2003, dividends shall be paid only in cash. Each
distribution in the form of a dividend (whether in cash or in
additional shares of Senior Preferred Stock) shall be payable to
Holders of record as they appear on the stock books of the Company on
such record dates, not less than 10 nor more than 60 days preceding the
related Dividend Payment Date, as shall be fixed by the Board of
Directors.
(ii) Dividends shall cease to accumulate in respect
of shares of Senior Preferred Stock on the Exchange Date or on the date
of their earlier redemption unless the Company shall have failed to
issue the appropriate aggregate principal amount of Exchange Notes in
respect of the Senior Preferred Stock on the Exchange Date or shall
have failed to pay the relevant redemption price on the date fixed for
redemption.
(iii) If any dividend (or portion thereof) payable on
any Dividend Payment Date is not declared or paid in full on such
Dividend Payment Date, the amount of such dividend that is payable and
that is not paid on such date shall increase at the rate of 13% per
annum, compounded quarterly, from such Dividend Payment Date until
declared and paid in full. Dividends on account of arrears for any past
Dividend Period and dividends in connection with any optional
redemption pursuant to paragraph (e) may be declared and paid at any
time, without reference to any regular Dividend Payment Date, to
Holders of record on such date, not less than 10 nor more than 45 days
prior to the payment thereof, as may be fixed by the Board of
Directors.
(iv) All dividends paid with respect to shares of
Senior Preferred Stock shall be paid pro rata to the Holders entitled
thereto. No full dividends shall be declared by the Board of Directors
or paid or funds set apart for the payment of dividends by the Company
on any Parity Securities for any period unless full cumulative
dividends shall have been (or contemporaneously are) declared and paid
in full, or declared and (in the case of dividends payable in cash) a
sum in cash set apart sufficient for such payment, on the Senior
Preferred Stock for all Dividend Periods terminating on or prior to the
date of payment of such full dividends on such Parity
3
<PAGE> 14
Securities. If any dividends are not paid in full upon the shares of
Senior Preferred Stock and any other Parity Securities, all dividends
declared upon shares of Senior Preferred Stock and any Parity
Securities shall be declared pro rata so that the amount of dividends
declared per share of Senior Preferred Stock and such Parity Securities
shall in all cases bear to each other the same ratio that accrued
dividends per share of Senior Preferred Stock and such Parity
Securities bear to each other.
(v) The Company shall not make any payment on account
of, or set apart for payment money for a sinking or other similar fund
for, the purchase, redemption or other retirement of, any of the Parity
Securities or any warrants, rights, calls or options exercisable for or
convertible into any of the Parity Securities, and shall not permit any
corporation or other entity directly or indirectly controlled by the
Company to purchase or redeem any of the Parity Securities or any such
warrants, rights, calls or options unless the dividends determined in
accordance herewith on the Senior Preferred Stock have been paid in
full.
(vi) Holders of shares of Senior Preferred Stock
shall be entitled to receive the dividends provided for in paragraph
(c)(i) hereof in preference to and in priority over dividends upon
Junior Securities. The Company shall not declare, pay or set apart for
payment any dividend on any Junior Securities or make any payment on
account of, or set apart for payment money for a sinking or other
similar fund for, the purchase, redemption or other retirement of, any
Junior Securities or any warrants, rights, calls or options exercisable
for or convertible into any Junior Securities, or make any distribution
in respect thereof, either directly or indirectly, and whether in cash,
obligations or shares of the Company or other property (other than
dividends on Junior Securities paid solely in additional shares of
Junior Securities), and shall not permit any corporation or other
entity directly or indirectly controlled by the Company to purchase or
redeem any of the Junior Securities or any such warrants, rights, calls
or options unless full cumulative dividends determined in accordance
herewith have been paid in full on the Senior Preferred Stock.
(d) Liquidation Preference
(i) Upon any voluntary or involuntary liquidation,
dissolution or winding-up of the Company, Holders of shares of Senior
Preferred Stock then outstanding shall be entitled to be paid, out of
the assets of the
4
<PAGE> 15
Company available for distribution to its stockholders, $1,000.00 per
share of Senior Preferred Stock, plus an amount in cash equal to all
accumulated and unpaid dividends thereon to the date fixed for
liquidation, dissolution or winding-up (including an amount equal to a
prorated dividend for the period from the last Dividend Payment Date to
the date fixed for liquidation, dissolution or winding-up), before any
payment shall be made or any assets distributed to the holders of any
Junior Securities. If the assets of the Company are not sufficient to
pay in full the liquidation preference payable to the Holders of the
outstanding shares of Senior Preferred Stock and all Parity Securities,
then the holders of all such shares shall share equally and ratably in
such distribution of assets of the Company in proportion to the full
liquidation preference and accumulated and unpaid dividends to which
each would be entitled if the Holders of outstanding shares of Senior
Preferred Stock and the holders of outstanding shares of all Parity
Securities were paid in full.
(ii) After payment of the full amount of the
liquidation preferences and all accumulated and unpaid dividends to
which they are entitled, the holders of shares of Senior Preferred
Stock shall not be entitled to any further participation in any
distribution of assets of the Company.
(iii) For the purposes of this paragraph (d), neither
the sale, conveyance, exchange or transfer (for cash, shares of stock,
securities or other consideration) of all or substantially all of the
property or assets of the Company nor the consolidation or merger of
the Company with or into one or more corporations shall be deemed to be
a liquidation, dissolution or winding-up of the affairs of the Company
(unless such sale, conveyance, exchange or transfer is in connection
with a dissolution or winding-up of the business of the Company).
(e) Redemption.
(i) Optional Redemption. The Company may (subject to
contractual and other restrictions with respect thereto), redeem at any
time on or after July 15, 2003, from any source of funds legally
available therefor, in whole or in part, in the manner provided below,
any or all of the shares of Senior Preferred Stock, at the redemption
prices (expressed as a percentage of the liquidation preference
thereof) set forth below plus an amount in cash equal to all
accumulated and unpaid dividends per share (including an amount in cash
equal to a prorated dividend for the period from the Dividend Payment
Date immediately prior to the Redemption Date to the Redemption Date),
if
5
<PAGE> 16
redeemed during the 12-month period beginning on July 15 of each of the
years indicated below:
Year Percentage
2003................................ 106.500%
2004................................ 104.333
2005................................ 102.167
2006 and thereafter................. 100.000
provided that no optional redemption shall be authorized or made (i)
unless prior thereto full unpaid cumulative dividends on the
outstanding shares of Senior Preferred Stock for all Dividend Periods
terminating on or prior to the Redemption Date and for an amount equal
to a prorated dividend for the period from the Dividend Payment Date
immediately prior to the Redemption Date to the Redemption Date shall
have been declared and paid in cash or declared and a sum set apart
sufficient for such cash payment on the Redemption Date, or (ii) at
less than 101% of the liquidation preference of the Senior Preferred
Stock at any time when the Company is making or required to make an
Offer (as defined below). In the event of a redemption of only a
portion of the then outstanding shares of Senior Preferred Stock, the
Company shall effect such redemption pro rata according to the number
of shares of Senior Preferred Stock held by each Holder or by lot, as
may be determined by the Company in its sole discretion.
(ii) Redemption Following a Public Equity Offering.
In addition, at any time prior to July 15, 2003, the Company may redeem, in the
manner provided below, the then outstanding shares of Senior Preferred Stock in
whole, but not in part, at a redemption price equal to 115% of the liquidation
preference thereof, plus an amount in cash equal to all accumulated and unpaid
dividends per share (including an amount in cash equal to a prorated dividend
for the period from the Dividend Payment Date immediately prior to the
Redemption Date to the Redemption Date), with the net cash proceeds of a Public
Equity Offering, provided that (i) such redemption occurs within 60 days after
consummation of such Public Equity Offering; and (ii) no optional redemption
pursuant to this paragraph shall be authorized or made unless prior thereto full
unpaid cumulative dividends on the outstanding shares of Senior Preferred Stock
for all Dividend Periods terminating on or prior to the Redemption Date and for
an amount equal to a prorated dividend for the period from the Dividend Payment
Date immediately prior to the Redemption Date to the
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<PAGE> 17
Redemption Date shall have been declared and paid in cash or declared and a sum
set apart sufficient for such cash payment on the Redemption Date.
(iii) Procedures for Redemption. At least 30 days and
not more than 60 days prior to the date fixed for any redemption of the
Senior Preferred Stock, written notice (the "Redemption Notice") shall
be given by first-class mail, postage prepaid, to each Holder of record
on the record date fixed for such redemption of the Senior Preferred
Stock at such Holder's address as the same appears on the stock
register of the Company, provided that no failure to give such notice
nor any deficiency therein shall affect the validity of the procedure
for the redemption of any shares of Senior Preferred Stock to be
redeemed except as to the Holder or Holders to whom the Company has
failed to give said notice or except as to the Holder or Holders whose
notice was defective. The Redemption Notice shall state:
(1) whether the redemption is pursuant to paragraph
(e)(i) or (e)(ii) hereof;
(2) the redemption price determined in accordance with
this paragraph (e) (the "Redemption Price");
(3) whether all or less than all the outstanding shares
of Senior Preferred Stock are to be redeemed and the
total number of shares of Senior Preferred Stock
being redeemed;
(4) the number of shares of Senior Preferred Stock held,
as of the appropriate record date, by the Holder that
the Company intends to redeem;
(5) the date fixed for redemption;
(6) that the Holder is to surrender to the Company, at
the place or places where certificates for shares of
Senior Preferred Stock are to be surrendered for
redemption, in the manner and at the price
designated, the certificate or certificates
representing the shares of Senior Preferred Stock to
be redeemed; and
(7) that dividends on the shares of Senior Preferred
Stock to be redeemed shall cease to accrue on such
Redemption Date
7
<PAGE> 18
unless the Company defaults in the payment of the
Redemption Price.
Each Holder of Senior Preferred Stock shall surrender
the certificate or certificates representing such shares of Senior
Preferred Stock to the Company, duly endorsed, in the manner and at the
place designated in the Redemption Notice, and on the Redemption Date
the full Redemption Price for such shares shall be payable in cash to
the Person whose name appears on such certificate or certificates as
the owner thereof, and each surrendered certificate shall be canceled
and retired. In the event that less than all of the shares represented
by any such certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares. Unless the Company defaults in the
payment in full of the applicable Redemption Price, dividends on the
Senior Preferred Stock called for redemption shall cease to accumulate
on the Redemption Date, and the Holders of such shares shall cease to
have any further rights with respect thereto on the Redemption Date,
other than the right to receive the Redemption Price, without interest.
(f) Voting Rights.
(i) Except as otherwise required under Delaware law
or as set forth in paragraphs (ii), (iii) and (iv) below and in
paragraph (m) hereof, Holders of shares of Senior Preferred Stock shall
not be entitled or permitted to vote on any matter required or
permitted to be voted upon by the stockholders of the Company.
(ii) So long as any shares of Senior Preferred Stock
are outstanding, without the affirmative vote or consent of Holders of
at least a majority of the outstanding shares of Senior Preferred
Stock, voting or consenting, as the case may be, as a separate class,
given in person or by proxy, either in writing or by resolution adopted
at an annual or special meeting, the Company shall not:
(A) authorize any class or series of Senior
Securities or Parity Securities (except that, without the approval of
the Holders of the Senior Preferred Stock, the Company may issue shares
of Parity Securities in exchange for, or the proceeds of which are used
to redeem or repurchase, any or all shares of Senior Preferred Stock or
other Parity Securities then outstanding; provided, that (1) the
aggregate liquidation preference of such Parity Securities shall not
exceed the aggregate liquidation preference of,
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<PAGE> 19
premium and accrued and unpaid dividends on, and expenses in connection
with the refinancing of, the Senior Preferred Stock or Parity
Securities so exchanged, redeemed or repurchased and (2) such Parity
Securities shall not be mandatorily redeemable prior to July 15, 2007);
(B) amend this Certificate of Designation so
as to affect adversely the specified rights, preferences, privileges or
voting rights of Holders of shares of Senior Preferred Stock or
authorize the issuance of any additional shares of Senior Preferred
Stock;
(C) amend or modify the indenture for the
Exchange Notes (the "Exchange Notes Indenture") in the form as executed
on the Issue Date; except that, without the approval of the Holders of
the Senior Preferred Stock, the Company may amend the Exchange Notes
Indenture immediately prior to the issuance of the Exchange Notes to
conform Sections 4.3, 4.7, 4.8, 4.10, 4.11, 4.17, 4.18 and 5.1 to the
corresponding sections of the indenture pursuant to which the Senior
Notes were issued (or, if no Senior Notes are the outstanding, to the
provisions of such indenture on the last interest payment date on which
any Senior Notes were outstanding);
(iii) Except as set forth in paragraph (f)(ii), (1)
the creation, authorization or issuance of any shares of any Junior
Securities, Parity Securities or Senior Securities, or (2) the increase
or decrease in the amount of authorized capital stock of any class,
including any preferred stock, shall not require the consent of Holders
of Senior Preferred Stock and shall not be deemed to affect adversely
the rights, preferences, privileges or voting rights of Holders of
shares of Senior Preferred Stock;
(iv) If a Voting Rights Triggering Event occurs, (A)
the number of directors constituting the Board of Directors shall be
adjusted to permit the Holders of the majority of the then outstanding
Senior Preferred Stock, voting as a separate class, to elect two
directors and (B) Holders of a majority of the outstanding shares of
Senior Preferred Stock, voting as a separate class, shall have the
exclusive right to elect two directors at a meeting therefor called
upon occurrence of such Voting Rights Triggering Event, and at every
subsequent meeting at which the terms of office of the directors so
elected expire, except as set forth below. The right of the Holders
voting as a separate class to elect members of the Board of Directors
shall continue (1) if such right arises due to a Dividend Default,
until such time as all accumulated dividends that are in arrears on the
Senior Preferred Stock are paid in full
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<PAGE> 20
(and, in the case of dividends payable after July 15, 2003, are paid in
cash); and (2) if such right arises due to any other Voting Rights
Triggering Event, until such time as the Company remedies any such
failure, breach or default, at which time the term of any directors
elected pursuant to this paragraph shall terminate, subject always to
the same provisions for the renewal and divestment of such special
voting rights in the case of any future Voting Rights Triggering Event.
Any vacancy occurring in the office of a director elected by the
Holders of shares of Senior Preferred Stock may be filled by the
remaining director elected by the Holders unless and until such vacancy
shall be filled by the Holders.
At any time after voting power to elect directors
shall have become vested in the Holders, or if such voting power to
elect directors is continuing and vacancies shall exist in the offices
of directors elected by the Holders, a proper officer of the Company
may, and upon the written request of the Holders of record of at least
20% of the shares of Senior Preferred Stock then outstanding addressed
to the Secretary of the Company shall, call a special meeting of the
Holders for the purpose of electing the directors which such Holders
are entitled to elect. If such meeting shall not be called within 20
days after personal service of said written request upon the Secretary
of the Company, or within 20 days after mailing the same within the
United States by certified mail, addressed to the Secretary of the
Company at its principal executive offices, then the Holders of record
of at least 20% of the outstanding shares of Senior Preferred Stock may
designate in writing one of their number to call such meeting at the
expense of the Company, and such meeting may be called by the Person so
designated upon the notice required for the annual meeting of
stockholders of the Company and shall be held at the place for holding
the annual meeting of stockholders or such other place in the United
States as shall be designated in such notice. Notwithstanding the
provisions of this paragraph, no such special meeting shall be called
if any such request is received fewer than 30 days before the date
fixed for the next ensuing annual or special meeting of stockholders of
the Company. Any Holder so designated shall have, and the Company shall
provide, access to the lists of Holders for purposes of calling a
meeting pursuant to the provisions of this paragraph.
At any meeting held for the purpose of electing
directors at which the Holders shall have the right, voting as a
separate class, to elect directors as aforesaid, the presence in person
or by proxy of the Holders of at least a majority of the outstanding
Senior Preferred Stock shall be required to
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<PAGE> 21
constitute a quorum of such Senior Preferred Stock. In any case in
which the Holders shall be entitled to vote pursuant to this paragraph
(f) or pursuant to Delaware law, each Holder shall be entitled to one
vote for each share of Senior Preferred Stock held.
(g) Exchange.
(i) At any time after consummation of the Exchange
Offer, the Company may at its option exchange all, but not less than
all, of the then outstanding shares of Senior Preferred Stock into the
Exchange Notes on any Dividend Payment Date, provided that on the date
of such exchange (the "Exchange Date"):
(1) there shall be no contractual impediments to such
exchange;
(2) there shall be legally available funds sufficient therefor
(including, without limitation, legally available funds sufficient
therefor under Sections 160 and 170 (or any successor provisions) of
the Delaware General Corporation Law);
(3) either (x) a registration statement relating to the
Exchange Notes shall have been declared effective under the Securities
Act of 1933, as amended (the "Securities Act"), prior to such exchange
and shall continue to be in effect on the date of such exchange or (y)
the Company shall have obtained a written opinion of counsel of
national prominence with regard to securities matters that an exemption
from the registration requirements of the Securities Act is available
for such exchange and that upon receipt of such Exchange Notes pursuant
to such exchange made in accordance with such exemption, each holder
(assuming such holder is not an Affiliate of the Company) thereof shall
not be subject to any restrictions imposed by the Securities Act upon
the resale thereof and such exemption is relied upon by the Company for
such exchange;
(4) the Exchange Notes Indenture and the trustee thereunder
shall have been qualified under the Trust Indenture Act of 1939, as
amended;
(5) immediately after giving effect to such exchange, no
Default or Event of Default (each as defined in the Exchange Notes
Indenture) would exist under the Exchange Notes Indenture; and
11
<PAGE> 22
(6) the Company shall have delivered to the trustee under the
Exchange Notes Indenture, for the benefit of the holders of the
Exchange Notes, a written opinion of counsel, dated the date of
exchange, regarding the satisfaction of the conditions set forth in
clauses (1), (2), (3) and (4) and to the effect that (i) the Company
has duly authorized, executed and delivered the Exchange Notes and the
Exchange Notes Indenture, and (ii) the Exchange Notes and the Exchange
Notes Indenture constitute legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with their
respective terms, subject to customary exceptions and qualifications.
(ii) To exercise its option contained in paragraph
(g)(i), the Company shall send a written notice (the "Exchange Notice")
of exchange by mail to each Holder, which notice shall state: (1) that
the Company is exercising its option to exchange the Senior Preferred
Stock for Exchange Notes pursuant to this Certificate of Designation;
(2) the Exchange Date, which shall not be less than 30 days nor more
than 60 days following the date on which the Exchange Notice is mailed;
(3) that the Holder is to surrender to the Company, at the place or
places where certificates for shares of Senior Preferred Stock are to
be surrendered for exchange, in the manner designated in the Exchange
Notice, the certificate or certificates representing the shares of
Senior Preferred Stock to be exchanged; (4) that dividends on the
shares of Senior Preferred Stock to be exchanged shall cease to accrue
on the Exchange Date whether or not certificates for shares of Senior
Preferred Stock are surrendered for exchange on the Exchange Date
unless the Company shall default in the delivery of Exchange Notes; and
(5) that interest on the Exchange Notes shall accrue from the Exchange
Date whether or not certificates for shares of Senior Preferred Stock
are surrendered for exchange on the Exchange Date. If the Company
delivers an Exchange Notice it shall use its best efforts to satisfy
the conditions set forth in paragraph (g)(i).
(iii) Upon any such exchange, Exchange Notes shall be
issued in exchange for Senior Preferred Stock, in registered form,
without coupons, in an amount equal to the liquidation preference
thereof, plus an amount in cash equal to all accumulated and unpaid
dividends (including an amount in cash equal to a prorated dividend for
the period from the immediately preceding Dividend Payment Date to the
Exchange Date). Exchange Notes will be issued in principal amounts of
$1,000 and integral multiples thereof to the extent possible, and will
also be issued in principal amounts less than $1,000 so that each
Holder of Senior Preferred Stock will
12
<PAGE> 23
receive certificates representing the entire amount of Exchange Notes
to which his shares of Senior Preferred Stock entitles him, provided
that the Company may, at its option, pay cash in lieu of issuing
Exchange Notes in a principal amount of less than $1,000. The Company
shall cause the Exchange Notes to be executed on the Exchange Date and,
upon surrender in accordance with the Exchange Notice of the
certificates for any shares of Senior Preferred Stock so exchanged
(properly endorsed or assigned for transfer, if the notice shall so
state), such shares shall be exchanged by the Company into Exchange
Notes. The Company shall pay interest on the Exchange Notes at the rate
and on the date or dates specified therein from the Exchange Date.
(iv) If the Exchange Notice has been mailed as
aforesaid, before the Exchange Date (1) the Company shall duly execute
and deliver the Exchange Notes Indenture and shall cause such indenture
to be duly executed and delivered by the trustee thereunder, and (2)
the Company shall duly execute all Exchange Notes necessary for such
exchange and deliver such Exchange Notes to the Trustee with
irrevocable instructions to authenticate the Exchange Notes necessary
for such exchange. If the Company has complied with its covenants in
this paragraph (g)(iv) and the conditions set forth in paragraph (g)(i)
are satisfied, then on the Exchange Date, dividends shall cease to
accrue on the outstanding shares of Senior Preferred Stock and all of
the rights of the Holders as stockholders of the Company shall cease
(except the right to receive Exchange Notes), and the Person or Persons
entitled to receive the Exchange Notes issuable upon exchange shall be
treated for all purposes as the registered holder or holders of such
Exchange Notes as of the Exchange Date.
(h) Change of Control.
(i) Subject to paragraph (h)(iv), upon the occurrence
of a Change of Control, each Holder of Senior Preferred Stock shall
have the right to require the Company to purchase all or any part of
such Holder's Senior Preferred Stock pursuant to an offer (an "Offer")
at a purchase price equal to 101% of the liquidation preference
thereof, plus an amount in cash equal to all accumulated and unpaid
dividends per share (including an amount in cash equal to a prorated
dividend for the period from the Dividend Payment Date immediately
prior to the Change of Control Payment Date to the Change of Control
Payment Date) (the "Change of Control Payment").
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<PAGE> 24
(ii) Within 30 days following any Change of Control,
the Company shall mail a notice to each Holder stating: (A) that an
Offer is being made pursuant to this Certificate of Designation and
that all shares of Senior Preferred Stock tendered shall be accepted
for payment; (B) the purchase price and the purchase date (the "Change
of Control Payment Date"), which shall be no earlier than 30 days nor
later than 40 days from the date such notice is mailed; (C) that any
shares of Senior Preferred Stock not tendered shall continue to accrue
dividends in accordance with the terms of this Certificate of
Designation; (D) that, unless the Company defaults in the payment of
the Change of Control Payment, all shares of Senior Preferred Stock
accepted for payment pursuant to the Offer shall cease to accrue
dividends after the Change of Control Payment Date; and (E) a
description of the procedures to be followed by such Holder in order to
have its shares of Senior Preferred Stock repurchased.
(iii) On the Change of Control Payment Date, (A) the
Company shall (1) accept for payment shares of Senior Preferred Stock
tendered pursuant to the Offer and (2) promptly mail to each Holder of
shares of Senior Preferred Stock so accepted payment in an amount equal
to the purchase price for such shares and (B) unless the Company
defaults in the payment for the shares of Senior Preferred Stock
tendered pursuant to the Offer, dividends shall cease to accrue with
respect to the shares of Senior Preferred Stock tendered and all rights
of Holders of such tendered shares shall terminate, except for the
right to receive payment therefor. The Company shall publicly announce
the results of the Offer on or as soon as practicable after the Change
of Control Payment Date.
(iv) The Company shall comply with Rule 14e-1 under
the Exchange Act and any securities laws and regulations, to the extent
such laws and regulations are applicable to the repurchase of shares of
Senior Preferred Stock in connection with a Change of Control.
(i) Conversion or Exchange. The Holders of shares of Senior
Preferred Stock shall not have any rights hereunder to convert such shares into
or exchange such shares for shares of any other class or classes or of any other
series of any class or classes of Capital Stock of the Company.
(j) Preemptive Rights. No shares of Senior Preferred Stock
shall have any rights of preemption whatsoever as to any securities of the
Company, or any warrants, rights or options issued or granted with respect
thereto, regardless of how
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<PAGE> 25
such securities or such warrants, rights or options may be designated, issued or
granted.
(k) Reissuance of Senior Preferred Stock. Shares of Senior
Preferred Stock that have been issued and reacquired in any manner, including
shares purchased or redeemed or exchanged, shall (upon compliance with any
applicable laws) have the status of authorized but unissued shares of Preferred
Stock of the Company undesignated as to series and may be designated or
redesignated and issued or reissued, as the case may be, as part of any series
of Preferred Stock of the Company, provided that any issuance of such shares as
Senior Preferred Stock must be in compliance with the terms hereof.
(l) Business Day. If any payment, redemption or exchange shall
be required by the terms hereof to be made on a day that is not a Business Day,
such payment, redemption or exchange shall be made on the immediately succeeding
Business Day.
(m) Certain Additional Provisions.
(i) Merger or Consolidation. The Company shall not
consolidate or merge with or into (whether or not the Company is the
surviving corporation), or sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of its properties or
assets (determined on a consolidated basis for the Company and its
Restricted Subsidiaries) in one or more related transactions to, any
other Person (any such consolidation, merger or sale being a
"Disposition") unless: (A) if other than the Company, the successor
corporation of such Disposition or the Person to which such Disposition
(the "Successor Corporation") shall have been made is a corporation
organized or existing under the laws of the United States, any state
thereof or the District of Columbia; (B) the Senior Preferred Stock
shall be converted into or exchanged for and shall become shares of
such Successor Corporation, having substantially the same powers,
preferences and relative, participating, optional or other special
rights, and the qualifications, limitations or restrictions thereon,
that the Senior Preferred Stock had immediately prior to such
Disposition; (C) immediately after such Disposition, no Voting Rights
Triggering Event shall have occurred and be continuing; (D) the
Successor Corporation (1) shall have Consolidated Net Worth
(immediately after the Disposition but prior to any purchase accounting
adjustments resulting from the Disposition) equal to or greater than
the Consolidated Net Worth of the Company immediately preceding the
Disposition, and (2) shall be permitted, at
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<PAGE> 26
the time of such Disposition and after giving pro forma effect thereto
as if such Disposition had occurred at the beginning of the applicable
four-quarter period, to incur at least $1.00 of additional Indebtedness
pursuant to Section 4.9(a) of the Indenture; and (E) prior to the
consummation of any proposed Disposition, the Company shall have
delivered to the transfer agent and registrar an officers' certificate
and an opinion of counsel to the effect that such Disposition complies
with the terms of this Certificate of Designation and that all
conditions precedent to such Disposition have been satisfied.
For purposes of the foregoing, the sale, lease,
conveyance, assignment, transfer or other disposition of all or
substantially all of the properties and assets of one or more
Subsidiaries of the Company, which properties and assets, if held by
the Company instead of such Subsidiaries, would constitute all or
substantially all of the properties and assets of the Company on a
consolidated basis, shall be deemed to be the transfer of all or
substantially all of the properties and assets of the Company.
(ii) Junior Payments. The Company shall not, directly
or indirectly, (A) declare or pay any dividend or make any distribution
on account of any Junior Securities (other than dividends or
distributions payable in Junior Securities(other than Disqualified
Stock), (B) purchase, redeem or otherwise acquire or retire for value
any Junior Securities or (C) make any Restricted Investment (all such
dividends, distributions, purchases, redemptions, acquisitions,
retirements and Restricted Investments being collectively referred to
as "Junior Payments"), if, at the time of such Junior Payment:
(A) a Voting Rights Triggering Event shall
have occurred and be continuing or would occur as a consequence
thereof; or
(B) any dividends on the Senior Preferred
Stock payable on Dividend Payment Dates after July 15, 2003, have not
been declared and paid in cash.
Notwithstanding the foregoing, this Certificate of
Designation shall not prohibit as Junior Payments any Restricted
Payment permitted under Section 4.7 of the Indenture.
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<PAGE> 27
(iii) Transactions with Affiliates. Neither the
Company nor any of its Restricted Subsidiaries shall engage in any
Affiliate Transaction prohibited by Section 4.11 of the Indenture.
(iv) Reports.
The Company shall deliver to the Holders at their addresses
appearing on the stock books of the Company within 15 days after the time of
filing with the Commission, copies of the reports, information and other
documents (or copies of such portions of any of the foregoing as the Commission
may by rules and regulations prescribe) that the Company is required to file
with the Commission pursuant to Section 13 or 15(d) of the Exchange Act. If the
Company is not subject to the requirements of Section 13 or 15(d) of the
Exchange Act, the Company shall file with the Commission and deliver to the
Holders all such reports, information and other documents as it would be
required to file if it were subject to the requirements of Section 13 or 15(d)
of the Exchange Act; provided, that the Company shall not be in default of the
provisions of this paragraph for any failure to file reports with the Commission
solely by refusal by the Commission to accept the same for filing.
So long as is required for an offer or sale of the Senior
Preferred Stock to qualify for an exemption under Rule 144A, the Company shall,
upon request, provide the information required by clause (d)(4) thereunder to
each Holder and to each prospective purchaser of Senior Preferred Stock
identified by any Holder.
(n) Definitions. Capitalized terms used but not otherwise
defined in this Certificate of Designation shall have the meaning given thereto
in the Indenture. As used in this Certificate of Designation, the following
terms shall have the following meanings (with terms defined in the singular
having comparable meanings when used in the plural and vice versa), unless the
context otherwise requires:
"Dividend Payment Date" means January 15, April 15, July 15
and October 15 of each year.
"Dividend Period" means the Initial Dividend Period and,
thereafter, each Quarterly Dividend Period.
"Exchange Date" means a date on which shares of Senior
Preferred Stock are exchanged by the Company for Exchange Notes.
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<PAGE> 28
"Exchange Notes" means the Company's 13% Subordinated Notes
due 2007 issued under the Exchange Notes Indenture pursuant to paragraph (g).
"Exchange Offer" shall have the meaning given to such term in
the Registration Rights Agreements, dated the Issue Date, relating to the
Preferred Stock.
"Holder" means a holder of shares of Senior Preferred Stock.
"Indenture" means the indenture, dated the Issue Date, between
the Company and United States Trust Company of New York, as trustee, as in
effect on the Issue Date.
"Initial Dividend Period" means the dividend period commencing
on the Issue Date and ending on the day before the first Dividend Payment Date
to occur thereafter.
"Issue Date" means the date on which the Senior Preferred
Stock is originally issued by the Company under this Certificate of Designation.
"Quarterly Dividend Period" shall mean the quarterly period
commencing on each Dividend Payment Date and ending on the day before the
following Dividend Payment Date.
"Redemption Date" with respect to any shares of Senior
Preferred Stock, means the date on which such shares of Senior Preferred Stock
are redeemed by the Company.
"Senior Notes" means the Company's 103/4% Senior Notes due
2006 issued under the Indenture.
"Voting Rights Triggering Event" shall be deemed to occur if
(1) dividends on the Senior Preferred Stock are in arrears and unpaid (and, in
the case of dividends payable after July 15, 2003, are not paid in cash) for
four consecutive Dividend Periods (a "Dividend Default"); (2) the Company fails
to discharge any redemption obligation with respect to the Senior Preferred
Stock when required, whether or not the Company is permitted to do so by the
terms of any obligation of the Company; (3) the Company fails to make an Offer
required to be made pursuant to paragraph (h), whether or not the Company is
permitted to do so by the terms of any obligation of the Company; (4) the
Company breaches or violates one of the provisions set forth in paragraph (m)
hereof and the breach or violation continues for
18
<PAGE> 29
a period of 30 days or more; or (5) a default occurs on the obligation to pay
principal of, interest on or any other payment obligation when due (a "Payment
Default") at final maturity on one or more classes of Indebtedness of the
Company or any Subsidiary, whether such Indebtedness exists on the Issue Date or
is incurred thereafter, having individually or in the aggregate an outstanding
principal amount of $10,000,000 or more, or any other Payment Default occurs on
one or more such classes of Indebtedness having individually or in the aggregate
an outstanding principal amount of $10,000,000 or more, and such class or
classes of Indebtedness are declared due and payable prior to their respective
maturities.
19
<PAGE> 30
IN WITNESS WHEREOF, CLARK Material Handling Company has caused
this Certificate of Designation to be signed by Dr. Martin M. Dorio, in his
capacity as President and Chief Executive Officer and attested to by Joseph F.
Lingg in his capacity as Assistant Secretary, on this 17th day of July 1998.
CLARK MATERIAL HANDLING COMPANY
By: /s/ Dr. Martin M. Dorio
--------------------------------
Name: Dr. Martin M. Dorio
Title: President and Chief
Executive Officer
Attest:
By: /s/ Joseph F. Lingg
-----------------------------
Name: Joseph F. Lingg
Title: Assistant Secretary
(Corporate Seal)
20
<PAGE> 31
CERTIFICATE OF CORRECTION FILED TO CORRECT A CERTAIN ERROR IN THE
CERTIFICATE OF DESIGNATION OF THE POWERS, PREFERENCES AND RELATIVE,
PARTICIPATING, OPTIONAL AND OTHER SPECIAL RIGHTS AND QUALIFICATIONS,
LIMITATIONS AND RESTRICTIONS OF 13% SENIOR EXCHANGEABLE PREFERRED STOCK OF
CLARK MATERIAL HANDLING COMPANY FILED IN THE OFFICE OF THE SECRETARY OF
STATE OF DELAWARE ON JULY 17, 1998
CLARK Material Handling Company, a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware (the
"Company"),
DOES HEREBY CERTIFY:
1. The name of the corporation is CLARK Material Handling Company.
2. That a Certificate of Designation of the Powers, Preferences and
Relative, Participating, Optional and Other Special Rights and Qualifications,
Limitations and Restrictions of 13% Senior Exchangeable Preferred Stock (the
"Certificate of Designation") was filed by the Secretary of State of Delaware on
July 17, 1998 and that said Certificate requires correction as permitted by
Section 103 of the General Corporation Law of the State of Delaware.
3. The inaccuracy or defect of said Certificate to be corrected is as
follows:
Paragraph (c)(i) of the Certificate of Designation incorrectly
states that dividends shall be payable commencing on January
15, 1999, instead of the correct date of October 15, 1998.
4. Paragraph (c)(i) of the Certificate of Designation is corrected to
read as follows:
(a) Dividends.
(i) Holders of the outstanding shares of Senior
Preferred Stock shall be entitled to receive, when, as and if
declared by the Board of Directors, out of funds legally
available therefor, dividends on each share of Senior
Preferred Stock, at a rate per annum equal to 13% of the
<PAGE> 32
liquidation preference per share of the Senior Preferred
Stock, computed on the basis of a 360-day year of twelve
30-day months. All dividends shall be cumulative, whether or
not earned or declared, on a daily basis from the Issue Date
and shall be payable on each Dividend Payment Date, commencing
on October 15, 1998, provided that if any dividend payable on
any Dividend Payment Date on or before July 15, 2003 is not
declared and paid in full in cash on such Dividend Payment
Date, the amount payable as dividends on such Dividend Payment
Date that is not paid in cash on such Dividend Payment Date
shall be paid by the Company in additional fully paid and
non-assessable shares (including fractional shares, if
applicable) of Senior Preferred Stock having an aggregate
liquidation preference equal to the amount of such dividends
(rounded to the nearest whole cent). After July 15, 2003,
dividends shall be paid only in cash. Each distribution in the
form of a dividend (whether in cash or in additional shares of
Senior Preferred Stock) shall be payable to Holders of record
as they appear on the stock books of the Company on such
record dates, not less than 10 nor more than 60 days preceding
the related Dividend Payment Date, as shall be fixed by the
Board of Directors.
IN WITNESS WHEREOF, said Company has caused this Certificate
to be signed by Joseph F. Lingg, its Vice President this 1st day of September,
1998.
CLARK MATERIAL HANDLING COMPANY
By: /s/ Joseph F. Lingg
-----------------------------------
Name: Joseph F. Lingg
Title: Vice President
<PAGE> 1
Exhibit 4.4
CLARK Material Handling Company
as obligor
$150,000,000
10 3/4% Senior Notes due 2006
Series C and Series D
INDENTURE
Dated as of July 17, 1998
UNITED STATES TRUST COMPANY OF NEW YORK,
Trustee
<PAGE> 2
INDENTURE, dated as of July 17, 1998, between CLARK Material
Handling Company, a Delaware corporation (the "Company"), and United States
Trust Company of New York, a New York corporation, as trustee (the "Trustee").
The Company and the Trustee agree as follows for the benefit
of each other and for the equal and ratable benefit of the Holders of the
Company's 103/4% Series C Senior Notes due 2006 and the Company's 10 3/4% Series
D Senior Notes due 2006.
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.1. Definitions.
"Accounts" shall mean, as to any Person, all of such Person's
now owned and hereafter acquired rights to payment (including intercompany
obligations) for the prior, concurrent or future sale, lease or other
disposition of Inventory or rendition of services, whether or not evidenced by
an instrument or chattel paper and whether or not earned by performance.
"Acquired Debt" means Indebtedness of a Person existing at the
time such Person is merged with or into the Company or a Restricted Subsidiary
or becomes a Restricted Subsidiary, other than Indebtedness incurred in
connection with, or in contemplation of, such Person merging with or into the
Company or a Restricted Subsidiary or becoming a Restricted Subsidiary;
provided, that Indebtedness of such Person that is redeemed, defeased, retired
or otherwise repaid at the time, or immediately upon consummation, of the
transaction by which such Person is merged with or into the Company or a
Restricted Subsidiary or becomes a Restricted Subsidiary shall not be Acquired
Debt.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of
<PAGE> 3
voting securities, by agreement or otherwise. Notwithstanding the foregoing,
neither Initial Purchaser nor any of their respective Affiliates will be deemed
to be Affiliates of the Company.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Asset Sale" means any direct or indirect (a) transfer (as
hereinafter defined), other than in the ordinary course of business, of any
assets of the Company or any Restricted Subsidiary or (b) issuance of any
Capital Stock of any Restricted Subsidiary, in each case to any Person (other
than the Company or a Restricted Subsidiary and other than directors' qualifying
shares). For purposes of this definition, (i) any series of transfers that are
part of a common plan shall be deemed a single Asset Sale and (ii) the term
"Asset Sale" shall not include any disposition of all or substantially all of
the assets of the Company that is governed under and complies with Article V of
this Indenture.
"Bankruptcy Law" means title 11, U.S. Code or any similar
Federal, state or foreign law for the relief of debtors.
"Board of Directors" means the board of directors or any duly
constituted committee of any corporation or of a corporate general partner of a
partnership and any similar body empowered to direct the affairs of any other
entity.
"Business Day" means any day other than a Legal Holiday.
"Capital 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 (i) with respect to any Person that is a
corporation, any and all shares, interests, participations, rights or other
equivalents (however designated) of corporate stock, and (ii) with respect to
any other Person, any and all partnership or other equity interests of such
Person.
"Cash Equivalent" means (i) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumen-
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<PAGE> 4
tality thereof (provided that the full faith and credit of the United States of
America is pledged in support thereof), (ii) time deposits and certificates of
deposit and commercial paper issued by the parent corporation of any domestic
commercial bank of recognized standing having capital and surplus in excess of
$250,000,000 and commercial paper issued by others rated at least A-2 or the
equivalent thereof by Standard & Poor's Corporation or at least P-2 or the
equivalent thereof by Moody's Investors Service, Inc. and in each case maturing
within one year after the date of acquisition and (iii) investments in money
market funds substantially all of whose assets comprise securities of the types
described in clauses (i) and (ii) above.
"Change of Control" means (i) the transfer (in one transaction
or a series of transactions) of all or substantially all of the Company's assets
to any Person or group (as such term is used in Section 13(d)(3) of the Exchange
Act) other than to one or more Existing Holders, (ii) the liquidation or
dissolution of the Company or the adoption of a plan by the stockholders of the
Company relating to the dissolution or liquidation of the Company, (iii) the
acquisition by any Person or group (as such term is used in Section 13(d)(3) of
the Exchange Act), except for one or more Existing Holders, of beneficial
ownership, directly or indirectly, of more than 50% of the voting power of the
total outstanding Voting Stock of Holdings, (iv) after the consummation of an
initial public offering of any class of common stock of the Company or Holdings,
during any period of two consecutive years, individuals who at the beginning of
such period constituted the Board of Directors of the Company or Holdings
(together with any new directors who have been appointed by CVC, Citicorp N.A.,
or any Affiliate of CVC or whose nomination for election by the stockholders of
the Company was approved by a vote of at least 66 2/3% of the directors 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 constitute a majority of the Board of Directors of the Company or
Holdings, as the case may be, then still in office or (v) the failure by
Holdings to own more than 50% of the voting power of the total outstanding
Voting Stock of the Company.
"Clark Europe" means Clark Material Handling GmbH, a Wholly
Owned Subsidiary.
"Closing Date" means the date upon which the Series C Notes
are first issued.
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<PAGE> 5
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Exchange Act, or if at any time
after the execution of this Indenture such Commission is not existing and
performing the duties now assigned to it under the TIA, then the body performing
such duties at such time.
"Company" means the party named as such above, until a
successor replaces such Person in accordance with the terms of this Indenture,
and thereafter means such successor.
"Company Order" means a written request or order signed in the
name of the Company by its Chairman of the Board, President or Vice President,
and by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant
Secretary and delivered to the Trustee.
"Consolidated EBITDA" means, with respect to any Person (the
referent Person) for any period, consolidated income (loss) from operations of
such Person and its subsidiaries for such period, determined in accordance with
GAAP, plus (to the extent such amounts are deducted in calculating such income
(loss) from operations of such Person for such period, and without duplication)
amortization, depreciation and other non-cash charges (including, without
limitation, amortization of goodwill, deferred financing fees and other
intangibles but excluding non-cash charges incurred after the date of this
Indenture that require an accrual of or a reserve for cash charges for any
future period); provided, that (i) the income from operations of any Person
(including, without limitation, any Unrestricted Subsidiary) that is not a
Wholly Owned Subsidiary or that is accounted for by the equity method of
accounting will be included only to the extent of the amount of dividends or
distributions paid during such period to the referent Person or a Wholly Owned
Subsidiary of the referent Person, and (ii) the income from operations of any
Restricted Subsidiary will not be included to the extent that declarations of
dividends or similar distributions by that Restricted Subsidiary are not at the
time permitted, directly or indirectly, by operation of the terms of its
organization documents or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Restricted
Subsidiary or its owners.
"Consolidated Interest Expense" means, with respect to any
Person for any period, the consolidated interest expense of such Person and its
subsidiaries for such period, whether paid or accrued (including amortization of
original issue
4
<PAGE> 6
discount, noncash interest payment, and the interest component of Capital Lease
Obligations), to the extent such expense was deducted in computing Consolidated
Net Income of such Person for such period.
"Consolidated Net Income" means, with respect to any Person
(the referent Person) for any period, the aggregate of the Net Income of such
Person and its subsidiaries for such period, determined on a consolidated basis
in accordance with GAAP; provided, that (i) the Net Income of any Person
(including, without limitation, any Unrestricted Subsidiary) that is not a
Wholly Owned Subsidiary or that is accounted for by the equity method of
accounting will be included in calculating the referent Person's Consolidated
Net Income only to the extent of the amount of dividends or distributions paid
during such period to the referent Person or a Wholly Owned Subsidiary of the
referent Person, (ii) the Net Income of any Person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition will
be excluded, and (iii) the Net Income of any Subsidiary will be excluded to the
extent that declarations of dividends or similar distributions by that
Subsidiary of such Net Income are not at the time permitted, directly or
indirectly, by operation of the terms of its organization documents or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Subsidiary or its owners.
"Consolidated Net Worth" means, with respect to any Person,
the total stockholders' equity of such Person determined on a consolidated basis
in accordance with GAAP, adjusted to exclude (to the extent included in
calculating such equity), (i) the amount of any such stockholders' equity
attributable to Disqualified Capital Stock of such Person and its consolidated
subsidiaries, and (ii) all upward revaluations and other write-ups in the book
value of any asset of such person or a consolidated subsidiary of such person
subsequent to the Closing Date, and (iii) all Investments in persons that are
not consolidated Restricted Subsidiaries.
"Corporate Trust Office" shall be at the address of the
Trustee specified in Section 11.2 or such other address as the Trustee may
specify by notice to the Company.
"Custodian" means any receiver, trustee, assignee, liquidator
or similar official under any Bankruptcy Law.
"CVC" means Citicorp Venture Capital Ltd.
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<PAGE> 7
"Default" means any event that is, or after notice or the
passage of time or both would be, an Event of Default.
"Definitive Notes" means Notes that are in the form of the
Notes attached hereto as Exhibit A, that do not include the information called
for by footnotes 1 and 2 thereof.
"Depository" means the Person specified in Section 2.3 hereof
as the Depository with respect to the Notes issuable in global form, until a
successor shall have been appointed and become such pursuant to the applicable
provision of this Indenture, and, thereafter, "Depository" shall mean or include
such successor.
"Disqualified Stock" means that portion of any Equity
Interests that (i) either by its terms (or by the terms of any security into
which it is convertible or for which it is exchangeable) is or upon the
happening of an event would be required to be redeemed or repurchased prior to
the final stated maturity of the Notes or is redeemable at the option of the
holder thereof at any time prior to such final stated maturity or (ii) is
convertible into or exchangeable at the option of the issuer thereof or any
other Person for debt securities.
"DTC" means The Depository Trust Company.
"Eligible Inventory" means all Inventory of the Company and
the Restricted Subsidiaries consisting of (i) finished goods held for resale in
the ordinary course of business of any such Person, (ii) work in process
relating to goods to be held for resale in the ordinary course of business of
any such Person, (iii) parts held for resale or to be incorporated into any such
finished goods, and (iv) raw materials for such finished goods.
"Eligible Receivables" means Accounts of the Company and the
Restricted Subsidiaries arising from the actual and bona fide sale and delivery
of goods or rendition of services by any such Person in the ordinary course of
its business that (i) are not unpaid more than ninety (90) days from the
original due date thereof or more than one hundred and eighty (180) days after
the date of the original invoice therefor, (ii) do not arise from sales on
consignment, guaranteed sale, sale and return, sale on approval, or other terms
under which payment by the account debtor may be conditional or contingent;
provided, that no Account where the debtor is a dealer of Inventory shall be
deemed ineligible solely because the Company or a Restricted Subsidiary has a
buy-back arrangement with such account
6
<PAGE> 8
debtor effective upon the termination of such account debtor as a dealer, but
upon such termination such dealer's Accounts shall become ineligible, (iii) the
account debtor with respect to such Accounts (x) has not asserted a
counterclaim, defense or dispute and (y) does not have, and does not engage in
transactions that may give rise to, any right of setoff against such Accounts
unless in the case of this clause (y) such account debtor has entered into a
written agreement, pursuant to which such account debtor agrees not to assert
any setoff against Accounts owed to the Company or any of its Subsidiaries, and
(iv) such account debtor is not the Company or any Subsidiary or Affiliate of
the Company.
"Equity Interests" means Capital Stock or warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Offer" means the offer that may be made by the
Company pursuant to the Registration Rights Agreement to exchange Series D Notes
for Series C Notes and Original Notes.
"Existing Holders" shall mean (i) CVC, (ii) Citicorp N.A. or
any other Affiliate of CVC, (iii) any officer, employee or director of CVC, (iv)
the Management Investors and (v) in the case of any natural Person specified in
the foregoing clauses, any spouse or lineal descendant (including by adoption)
of such Person; provided, that in no event shall the Persons specified in
clauses (iii) through (v) be deemed "Existing Holders" with respect to more than
30% of the voting power of the total outstanding Voting Stock of the Company or
Holdings.
"Floor Plan Guaranty" means (a) the Guarantee by the Company
or a Restricted Subsidiary of Indebtedness incurred by a franchise dealer or
other purchaser of Inventory manufactured or sold by the Company or a Restricted
Subsidiary, the proceeds of which Indebtedness is used solely to pay the
purchase price of such Inventory and any related fees and expenses (including
finance fees); provided, that (i) to the extent commercially practicable, the
Indebtedness so guaranteed is secured by a perfected first priority lien on such
Inventory in favor of the holder of such Indebtedness and (ii) if the Company or
such Restricted Subsidiary is required to make payment with respect to such
Guarantee, the Company or such Restricted Subsidiary will have the right to
receive either (A) title to such
7
<PAGE> 9
Inventory, (B) a valid assignment of a first priority perfected lien in such
Inventory or (C) the net proceeds of any resale of such Inventory; and (b)
obligations to repurchase equipment sold by the Company or its Restricted
Subsidiaries from a dealer upon termination of such dealer or from customers who
lease such equipment to third parties when the equipment comes off lease.
"Foreign Subsidiary" means a Restricted Subsidiary not
organized under the laws of the United States or any political subdivision
thereof and the operations of which are located entirely outside the United
States.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession, and in the rules and regulations of the Commission, that
are in effect on the date of this Indenture.
"German Subsidiary Facilities" means one or more revolving
credit facilities of Clark Europe, as the same may be amended, modified,
renewed, refunded, replaced or refinanced from time to time including (i) any
related notes, letters of credit, guarantees, collateral documents, instruments
and agreements executed in connection therewith, and in each case amended,
modified, renewed, refunded, replaced or refinanced from time to time, and (ii)
any notes, guarantees, collateral documents, instruments and agreements executed
in connection with any such amendment, modification, renewal, refunding,
replacement or refinancing.
"Global Note" means a Note that contains the paragraph
referred to in footnote 1 and the additional schedule referred to in footnote 2
in the form of the Note attached hereto as Exhibit A.
"Guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any Indebtedness.
"Guarantors" means all direct or indirect Restricted
Subsidiaries that are not Foreign Subsidiaries.
8
<PAGE> 10
"Holder" means a Person in whose name a Note is registered.
"Holdings" means CMH Holdings Corporation, the holder of all
of the outstanding shares of Capital Stock of the Company.
"Indebtedness" of any Person means (without duplication) (1)
all liabilities and obligations, contingent or otherwise, of such Person (a) in
respect of borrowed money (whether or not the recourse of the lender is to the
whole of the assets of such Person or only to a portion thereof), (b) evidenced
by bonds, debentures, notes or other similar instruments, (c) representing the
deferred purchase price of property or services (other than (i) non interest
bearing obligations and (ii) liabilities incurred in the ordinary course of
business which are not more than 90 days past due), (d) created or arising under
any conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (e) as lessee under capitalized leases, (f) under
bankers' acceptance and letter of credit facilities, (g) to purchase, redeem,
retire, defease or otherwise acquire for value any Disqualified Stock, or (h) in
respect of Hedging Obligations, (2) all liabilities and obligations of others of
the type described in clause (1), above, that are Guaranteed by such Person, and
(3) all liabilities and obligations of others of the type described in clause
(1), above, that are secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property (including, without limitation, accounts and contract rights) owned by
such Person; provided, that the amount of such Indebtedness shall (to the extent
such Person has not assumed or become liable for the payment of such
Indebtedness in full) be the lesser of (x) the fair market value of such
property at the time of determination and (y) the amount of such Indebtedness.
The amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above and the
maximum liability, upon the occurrence of the contingency giving rise to the
obligation, of any contingent obligations at such date.
"Indenture" means this Indenture as amended or supplemented
from time to time.
"Initial Purchasers" means Jefferies & Company, Inc. and Bear,
Stearns & Co. Inc.
9
<PAGE> 11
"Interest Coverage Ratio" means, for any period, the ratio of
(i) Consolidated EBITDA of the Company for such period, to (ii) Consolidated
Interest Expense of the Company for such period. In calculating the Interest
Coverage Ratio for any period, pro forma effect shall be given to: (a) the
incurrence, assumption, guarantee, repayment, repurchase, redemption or
retirement by the Company or any of its Subsidiaries of any Indebtedness (other
than under the Revolving Credit Facility) subsequent to the commencement of the
period for which the Interest Coverage Ratio is being calculated but on or prior
to the date on which the event for which the calculation is being made, as if
the same had occurred at the beginning of the applicable period; and (b) the
occurrence of any Asset Sale during such period by reducing Consolidated EBITDA
for such period by an amount equal to the Consolidated EBITDA (if positive)
directly attributable to the assets sold and by reducing Consolidated Interest
Expense by an amount equal to the Consolidated Interest Expense directly
attributable to any Indebtedness assumed by third parties or repaid with the
proceeds of such Asset Sale, in each case as if the same had occurred at the
beginning of the applicable period. For purposes of making the computation
referred to above, acquisitions that have been made by the Company or any of its
Restricted Subsidiaries, including mergers and consolidations, subsequent to the
commencement of such period but on or prior to the date on which the event for
which the calculation is being made shall be given effect on a pro forma basis,
assuming that all such acquisitions, mergers and consolidations had occurred on
the first day of such period. Without limiting the foregoing, the financial
information of the Company with respect to any portion of such four fiscal
quarters that falls before the Closing Date shall be adjusted to give pro forma
effect to the issuance of the Notes and the application of the proceeds
therefrom as if they had occurred at the beginning of such four fiscal quarters.
"Inventory" shall mean, as to any Person, all now owned and
hereafter acquired goods including, without limitation, parts and goods in the
possession of such Person or of a bailee or other Person for sale, storage,
transit, processing, use or otherwise, and supplies, finished goods, parts and
components, that are: (a) held for sale or lease, (b) furnished or to be
furnished under contracts of services, or (c) raw materials, work-in-process or
materials used or consumed in its business.
"Investments" means, with respect to any Person, all
investments by such Person in other Persons (including Affiliates) in the forms
of loans, Guarantees, advances or capital contributions (excluding (i)
commission, travel and similar advances to officers and employees of such Person
made in the ordinary
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<PAGE> 12
course of business and (ii) bona fide accounts receivable arising from the sale
of goods or services in the ordinary course of business consistent with past
practice), purchases or other acquisitions for consideration of Indebtedness,
Equity Interests or other securities, and any other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP.
"Legal Holiday" means a Saturday, a Sunday or a day on which
banking institutions in the City of New York or at a place of payment are
authorized by law, regulation or executive order to remain closed.
"Lien" means any mortgage, lien, pledge, charge, security
interest or encumbrance of any kind, whether or not filed, recorded or otherwise
perfected under applicable law (including any conditional sale or other title
retention agreement, any lease in the nature thereof, any option or other
agreement to sell or give a security interest in and any filing of or agreement
to give any financing statement under the Uniform Commercial Code (or equivalent
statutes) of any jurisdiction).
"Liquidated Damages" has the meaning set out in the
Registration Rights Agreement.
"Management Investors" means the individuals listed as of
[November 27, 1996] on Schedule I of the Amended and Restated Securities
Purchase and Holders Agreement, dated January 31, 1997, by and among Holdings,
CVC, Thomas Snyder and the Management Investors.
"Material Subsidiary" means any Subsidiary (a) that is a
"Significant Subsidiary" of the Company as defined in Rule 1-02 of Regulation
S-X promulgated by the Commission or (b) is otherwise material to the business
of the Company.
"Net Income" means, with respect to any Person for any period,
the net income (loss) of such Person for such period, determined in accordance
with GAAP, excluding any gain or loss, together with any related provision for
taxes on such gain or loss, realized in connection with any Asset Sales and
dispositions pursuant to sale and leaseback transactions, and excluding any
extraordinary gain or loss, together with any related provision for taxes on
such gain or loss.
"Net Proceeds" means the aggregate proceeds received in the
form of cash or Cash Equivalents in respect of any Asset Sale (including
payments in
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<PAGE> 13
respect of deferred payment obligations when received), net of (a) the
reasonable and customary direct out-of-pocket costs relating to such Asset Sale
(including, without limitation, legal, accounting and investment banking fees
and sales commissions), other than any such costs payable to an Affiliate of the
Company, (b) taxes actually payable directly as a result of such Asset Sale
(after taking into account any available tax credits or deductions and any tax
sharing arrangements), (c) amounts required to be applied to the permanent
repayment of Indebtedness in connection with such Asset Sale, and (d)
appropriate amounts provided as a reserve by the Company or any Restricted
Subsidiary, in accordance with GAAP, against any liabilities associated with
such Asset Sale and retained by the Company or such 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
arising from such Asset Sale.
"Notes" means, collectively, the Series C Notes and the Series
D Notes.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other obligations and liabilities
of the Company or any of the Guarantors under this Indenture, the Notes or the
Guarantees of the Notes.
"Officers" means the Chairman of the Board, the President, the
Chief Financial Officer, Chief Operating Officer, the Treasurer, any Assistant
Treasurer, Controller, Secretary, any Assistant Secretary or any Vice-President
of the Company.
"Officers' Certificate" means a certificate signed on behalf
of the Company by two Officers of the Company, one of whom must be the
President, Chief Financial Officer, Treasurer, Controller or a Vice President of
the Company.
"Opinion of Counsel" means an opinion from legal counsel who
is reasonably acceptable to the Trustee. Such counsel may be an employee of or
counsel to the Company, any Subsidiary of the Company or the Trustee.
"Original Indenture" means the Indenture dated November 27,
1996 between the Company and the Trustee providing for the issuance of the
Original
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<PAGE> 14
Notes in the aggregate principal amount of $130,000,000, as such may be amended
or supplemented from time to time.
"Original Notes" means the Company's 10 3/4% Senior Notes due
2006 issued pursuant to the Original Indenture, as such may be amended or
supplemented from time to time.
"Permitted Investments" means (a) Investments in the Company,
any Guarantor or any Wholly Owned Subsidiary (including without limitation,
Guarantees of Indebtedness of any such Person), (b) Investments in Cash
Equivalents, (c) Investments in a Person, if as a result of such Investment (i)
such Person becomes a Wholly Owned Subsidiary or (ii) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys substantially
all of its assets to, or is liquidated into, the Company or a Wholly Owned
Subsidiary, (d) Floor Plan Guarantees permitted to be incurred in compliance
with Section 4.9 of this Indenture, (e) Hedging Obligations, (f) 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 and (g) Investments as a result of consideration
received in connection with an Asset Sale made in compliance with Section 4.10
of this Indenture.
"Permitted Liens" means (i) Liens in favor of the Company
and/or its Restricted Subsidiaries other than with respect to intercompany
Indebtedness, (ii) Liens on property of a Person existing at the time such
Person is acquired by, merged into or consolidated with the Company or any
Restricted Subsidiary, provided, that such Liens were not created in
contemplation of such acquisition and do not extend to assets other than those
subject to such Liens immediately prior to such acquisition, (iii) Liens on
property existing at the time of acquisition thereof by the Company or any
Restricted Subsidiary, provided, that such Liens were not created in
contemplation of such acquisition and do not extend to assets other than those
subject to such Liens immediately prior to such acquisition, (iv) Liens incurred
in the ordinary course of business in respect of Hedging Obligations and Floor
Plan Guarantees, (v) Liens to secure Indebtedness for borrowed money of a
Subsidiary in favor of the Company or a Wholly Owned Subsidiary, (vi) Liens
incurred in the ordinary course of business to secure the performance of
statutory obligations, surety or appeal bonds, performance bonds or other
obligations (exclusive of obligations constituting Indebtedness) of a like
nature, (vii) Liens existing or created on the date of this Indenture, (viii)
Liens for taxes, assessments or governmental charges or claims that are not yet
delinquent or that are being
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contested or remedied in good faith by appropriate proceedings promptly
instituted and diligently concluded, provided, that any reserve or other
appropriate provision as may be required in conformity with GAAP has been made
therefor, (ix) Liens arising by reason of any judgment, decree or order of any
court with respect to which the Company or any of its Restricted Subsidiaries is
then in good faith prosecuting an appeal or other proceedings for review, the
existence of which judgment, order or decree is not an Event of Default under
this Indenture, (x) encumbrances consisting of zoning restrictions, survey
exceptions, utility easements, licenses, rights of way, easements of ingress or
egress over property of the Company or any of its Restricted Subsidiaries,
rights or restrictions of record on the use of real property, minor defects in
title, landlord's and lessor's liens under leases on property located on the
premises rented, mechanics' liens, vendors' liens, and similar encumbrances,
rights or restrictions on personal or real property, in each case not
interfering in any material respect with the ordinary conduct of the business of
the Company or any of its Restricted Subsidiaries, (xi) Liens incidental to the
conduct of business or the ownership of properties incurred in the ordinary
course of business in connection with workers' compensation, unemployment
insurance and other types of social security, or to secure the performance of
tenders, bids, and government contracts and leases and subleases, (xii) Liens
for any interest or title of a lessor under any Capitalized Lease Obligation
permitted to be incurred under this Indenture; provided, that such Liens do not
extend to any property or asset that is not leased property subject to such
Capitalized Lease Obligation, (xiii) any extension, renewal, or replacement (or
successive extensions, renewals or replacements), in whole or in part, of Liens
described in clauses (i) through (xii) above and (xiv) Liens in addition to the
foregoing, which in the aggregate, are secured by assets with a fair market
value not in excess of $100,000 at any time.
"Permitted Transactions" means bona fide purchases and sales
of Inventory or of machining, assembly, testing and fabrication services, in any
such case made in the ordinary course of business; provided, that such
transactions are conducted in good faith and on terms that are no less favorable
to the Company or the relevant Restricted Subsidiary than those that would have
been obtained in a comparable transaction with an unrelated Person.
"Person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof, or any other entity.
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"Public Equity Offering" means a bona fide underwritten public
offering of Qualified Capital Stock of 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 Holdings, Holdings contributes 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 Section 3.7(b) of
this Indenture.
"Purchase Money Liens" means Liens to secure or securing
Purchase Money Obligations permitted to be incurred under this Indenture.
"Purchase Money Obligations" means Indebtedness representing,
or incurred to finance, the cost (i) of acquiring or improving any assets and
(ii) of construction or build-out of manufacturing, distribution or
administrative facilities (including Purchase Money Obligations of any other
Person at the time such other Person is merged with or into or is otherwise
acquired by the Company), provided, that (a) the principal amount of such
Indebtedness does not exceed 100% of such cost, including construction charges,
(b) any Lien securing such Indebtedness does not extend to or cover any other
asset or property other than the asset or property being so acquired or improved
and (c) such Indebtedness is incurred, and any Liens with respect thereto are
granted, within 180 days of the acquisition or improvement of such property or
asset.
"QIB" shall mean "qualified institutional buyer" as defined in
Rule 144A.
"Qualified Capital Stock" means, with respect to any Person,
Capital Stock of such Person other than Disqualified Capital Stock.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the Closing Date, by and between the Company and the
Initial Purchasers, relating to the Series C Notes, as such agreement may be
amended, modified or supplemented from time to time.
"Responsible Officer" when used with respect to the Trustee,
means any officer within the corporate trust department of the Trustee located
at the Corporate Trust Office (or any successor group of the Trustee) or any
other officer
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of the Trustee customarily performing functions similar to those performed by
any of the designated officers, and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of his knowledge of and familiarity with the particular subject.
"Restricted Investment" means any Investment other than a
Permitted Investment. The aggregate amount of each Investment constituting a
Restricted Payment since the date of this Indenture shall be reduced by the
aggregate after-tax amount of all payments made to the Company and its
Restricted Subsidiaries with respect to such Investments; provided, that (a) the
maximum amount of such payments so applied shall not exceed the original amount
of such Investment and (b) such payments shall be excluded from the calculations
contemplated by clauses (w) through (z) under Section 4.7(a)(iv)(3) of this
Indenture.
"Restricted Securities" means Notes that bear or are required
to bear the legends set forth in Exhibit A hereto.
"Restricted Subsidiary" means a Subsidiary other than an
Unrestricted Subsidiary.
"Revolving Credit Facility" means the Loan and Security
Agreement, entered into on November 27, 1996 between the Company and the lenders
named therein as the same may be amended, modified, renewed, refunded, replaced
or refinanced from time to time, including (i) any related notes, letters of
credit, guarantees, collateral documents, instruments and agreements executed in
connection therewith, and in each case as amended, modified, renewed, refunded,
replaced or refinanced from time to time, and (ii) any notes, guarantees,
collateral documents, instruments and agreements executed in connection with
such amendment, modification, renewal, refunding, replacement or refinancing.
"Rule 144A" means Rule 144A under the Securities Act, as such
Rule may be amended from time to time, or under any similar rule or regulation
hereafter adopted by the Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Series C Notes" means the Company's 10 3/4% Series C Senior
Notes due 2006, as authenticated and issued under this Indenture.
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"Series D Notes" means the Company's 10 3/4% Series D Senior
Notes due 2006, as authenticated and issued under this Indenture pursuant to an
Exchange Offer.
"subsidiary" means, with respect to any Person, (i) any
corporation, association or other business entity of which more than 50% of the
total voting power of shares of Voting Stock thereof is at the time owned or
controlled, directly or indirectly, by such Person or one or more of the other
subsidiaries of that Person or a combination thereof and (ii) any partnership in
which such Person or any of its subsidiaries is a general partner.
"Subsidiary" means any subsidiary of the Company.
"Tax Sharing Agreement" means the Tax Sharing Agreement, dated
as of November 27, 1996 , by and between the Company and Holdings as in effect
on the date hereof.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb), as amended, as in effect on the date hereof 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.
"transfer" means any sale, assignment, transfer, lease,
conveyance, or other disposition (including, without limitation, by way of
merger or consolidation).
"Trustee" means the party named as such above until a
successor replaces it in accordance with the applicable provisions of this
Indenture and thereafter means the successor serving hereunder.
"Unrestricted Subsidiary" means any Subsidiary that has been
designated by the Company (by written notice to the Trustee as provided below)
as an Unrestricted Subsidiary; provided, that a Subsidiary may not be designated
as an "Unrestricted Subsidiary" unless (a) such Subsidiary does not own any
Capital Stock of, or own or hold any Lien on any property of, the Company or any
Restricted Subsidiary (other than such Subsidiary), (b) neither immediately
prior thereto nor after giving pro forma effect to such designation, would there
exist a Default or Event of Default, (c) immediately after giving effect to such
designation on a pro forma basis, the Company could incur at least $1.00 of
Indebtedness
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pursuant to Section 4.9(a) of this Indenture and (d) the creditors of such
Subsidiary have no direct or indirect recourse (including, without limitation,
recourse with respect to the payment of principal or interest on Indebtedness of
such Subsidiary) to the assets of the Company or of a Restricted Subsidiary
(other than such Subsidiary). The Board of Directors of the Company may
designate any Unrestricted Subsidiary to be a Restricted Subsidiary only if (i)
no Default or Event of Default is existing or will occur as a consequence
thereof and (ii) immediately after giving effect to such designation, on a pro
forma basis, the Company could incur at least $1.00 of Indebtedness pursuant to
Section 4.9(a) of this Indenture. Each such designation shall be evidenced by
filing with the Trustee a certified copy of the Board Resolution giving effect
to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing conditions. The Company shall be deemed
to make an Investment in each Subsidiary designated as an "Unrestricted
Subsidiary" immediately following such designation in an amount equal to the
Investment in such Subsidiary and its subsidiaries immediately prior to such
designation; provided, that if such Subsidiary is subsequently redesignated as a
Restricted Subsidiary, the amount of such Investment shall be deemed to be
reduced (but not below zero) by the fair market value of the net consolidated
assets of such Subsidiary on the date of such redesignation.
"U.S. Government Obligations" means direct obligations of the
United States of America, or any agency or instrumentality thereof for the
payment of which the full faith and credit of the United States of America is
pledged.
"Voting Stock" means, with respect to any Person, (i) one or
more classes of the Capital Stock of such Person having general voting power to
elect at least a majority of the board of directors, managers or trustees of
such Person (irrespective of whether or not at the time Capital Stock of any
other class or classes have or might have voting power by reason of the
happening of any contingency) and (ii) any Capital Stock of such Person
convertible or exchangeable without restriction at the option of the holder
thereof into Capital Stock of such Person described in clause (i) above.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years (rounded to the nearest
one-twelfth) obtained by dividing (i) the then outstanding principal amount of
such Indebtedness into (ii) the total of the products obtained by multiplying
(x) the amount of each then remaining installment, sinking fund, serial maturity
or other required payments of principal, including payment at final maturity, in
respect thereof, by (y)
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the number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment.
"Wholly Owned Subsidiary" means a Restricted Subsidiary all
the Capital Stock of which (other than directors' qualifying shares) is owned by
the Company or one or more Wholly Owned Subsidiaries.
Section 1.2. Other Definitions.
Defined in
Term Section
"Affiliate Transaction"........................................ 4.11
"Change of Control Offer"...................................... 4.14
"Change of Control Payment".................................... 4.14
"Change of Control Payment Date"............................... 4.14
"Definitive Notes"............................................. 2.1
"Event of Default"............................................. 6.1
"Excess Proceeds".............................................. 4.10
"Excess Proceeds Offer"........................................ 4.10
"Excess Proceeds Offer Period"................................. 4.10
"Excess Proceeds Payment Date"................................. 4.10
"Global Note".................................................. 2.1
"Guaranty"..................................................... 10.2
"Hedging Obligations".......................................... 4.9(b)
"Paying Agent"................................................. 2.3
"Purchase Amount".............................................. 4.10
"Purchase Money Indebtedness".................................. 4.9(b)
"Refinance".................................................... 4.9(b)
"Refinancing Indebtedness"..................................... 4.9(b)
"Registrar".................................................... 2.3
"Restricted Payments".......................................... 4.7
Section 1.3. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
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The following TIA terms used in this Indenture have the
following meanings:
"indenture securities" means the Notes;
"indenture security holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Notes means the Company, the Guarantors and any
successor obligor upon the Notes.
All other terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by Commission rule
under the TIA have the meanings so assigned to them.
Section 1.4. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular; and
(5) provisions apply to successive events and transactions.
ARTICLE 2
THE NOTES
Section 2.1. Form and Dating.
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The Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A attached hereto, the terms of
which are incorporated in and made a part of this Indenture. Each Note shall
include the Guaranty executed by each of the Guarantors, if any, in the form of
Exhibit C attached hereto, the terms of which are incorporated and made a part
of this Indenture. The Notes may have notations, legends or endorsements
required by law, stock exchange rule, agreements to which the Company is subject
or usage. Each Note shall be dated the date of its authentication. The Notes
shall be issued in denominations of $1,000 and integral multiples thereof.
The Notes will be issued (i) in global form (the "Global
Note"), substantially in the form of Exhibit A attached hereto (including the
text referred to in footnotes 1 and 2 thereto) and (ii) in definitive form (the
"Definitive Notes"), substantially in the form of Exhibit A attached hereto
(excluding the text referred to in footnotes 1 and 2 thereto). The Global Note
shall represent the aggregate amount of outstanding Notes from time to time
endorsed thereon; provided, that the aggregate amount of outstanding Notes
represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges and redemptions. Any endorsement of the Global
Note to reflect the amount of any increase or decrease in the amount of
outstanding Notes represented thereby shall be made by the Trustee, in
accordance with instructions given by the Holder thereof as required by Section
2.6 hereof.
Section 2.2. Execution and Authentication.
Two Officers shall sign the Notes for the Company by manual or
facsimile signature. If an Officer whose signature is on a Note no longer holds
that office at the time the Note is authenticated, the Note shall nevertheless
be valid.
A Note shall not be valid until authenticated by the manual
signature of the Trustee. The signature of the Trustee shall be conclusive
evidence that the Note has been authenticated under this Indenture. The form of
Trustee's certificate of authentication to be borne by the Notes shall be
substantially as set forth in Exhibit A attached hereto.
The Trustee shall, upon a Company Order, authenticate for
original issue (i) up to $20,000,000 aggregate principal amount of Series C
Notes, and (ii) up to $150,000,000 aggregate principal amount of Series D Notes
from time to
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time for issue only in exchange for a like principal amount of Series C Notes or
Original Notes. The aggregate principal amount of Notes outstanding at any time
may not exceed $150,000,000 except as provided in Section 2.7 hereof.
The Trustee may appoint an authenticating agent acceptable to
the Company to authenticate Notes. Unless limited by the terms of such
appointment, an authenticating agent may authenticate Notes whenever the Trustee
may do so. Each reference in this Indenture to authenticating by the Trustee
includes authenticating by such agent. An authenticating agent has the same
rights as an Agent to deal with the Company or an Affiliate of the Company.
The Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name any Note is registered as the owner
of such Note for the purpose of receiving payment of principal of and (subject
to the provisions of this Indenture and the Notes with respect to record dates)
interest on such Note and for all other purposes whatsoever, whether or not such
Note is overdue, and neither the Company, the Trustee nor any agent of the
Company or the Trustee shall be affected by notice to the contrary.
Section 2.3. Registrar, Paying Agent and Depository.
The Company shall maintain (i) an office or agency where Notes
may be presented for registration of transfer or for exchange ("Registrar") and
(ii) an office or agency where Notes may be presented for payment ("Paying
Agent"). The Company initially appoints the Trustee as Registrar and Paying
Agent. The Registrar shall keep a register of the Notes and of their transfer
and exchange. The Company may appoint one or more co-registrars and one or more
additional paying agents. The term "Registrar" includes any co-registrar and the
term "Paying Agent" includes any additional paying agent. The Company may change
any Paying Agent or Registrar without notice to any Holder. The Company shall
notify the Trustee of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any of
its Subsidiaries may act as Paying Agent or Registrar, except that for purposes
of Articles Three and Eight and Sections 4.1, 4.10 and 4.14 neither the Company
nor any of its Subsidiaries shall act as Paying Agent.
The Company shall enter into an appropriate agency agreement
with any Agent not a party to this Indenture, which shall incorporate the
provisions of
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the TIA. The agreement shall implement the provisions of this Indenture that
relate to such Agent.
The Company initially appoints DTC to act as Depository with
respect to the Global Notes. The Trustee shall act as custodian for the
Depository with respect to the Global Notes.
Section 2.4. Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent other than the
Trustee to agree in writing that the Paying Agent shall hold in trust for the
benefit of the Holders or the Trustee all money held by the Paying Agent for the
payment of principal, premium, if any, or interest on the Notes and shall notify
the Trustee of any default by the Company in making any such payment. While any
such default continues, the Trustee may require a Paying Agent to pay all money
held by it to the Trustee. The Company at any time may require a Paying Agent to
pay all money held by it to the Trustee. Upon payment over to the Trustee, the
Paying Agent (if other than the Company or a Subsidiary of the Company) shall
have no further liability for the money delivered to the Trustee. If the Company
or a Subsidiary of the Company acts as Paying Agent (subject to Section 2.3), it
shall segregate and hold in a separate trust fund for the benefit of the Holders
all money held by it as Paying Agent.
Section 2.5. Holder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of all Holders and shall otherwise comply with TIA Section 312(a). If
the Trustee is not the Registrar, the Company shall furnish to the Trustee at
least seven Business Days before each interest payment date and at such other
times as the Trustee may request in writing a list in such form and as of such
date as the Trustee may reasonably require of the names and addresses of the
Holders, including the aggregate principal amount thereof, and the Company shall
otherwise comply with TIA Section 312(a).
Section 2.6. Transfer and Exchange.
(a) Transfer and Exchange of Definitive Notes. When Definitive
Notes are presented by a Holder to the Registrar with a request (1) to register
the
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transfer of the Definitive Notes or (2) to exchange such Definitive Notes for an
equal principal amount of Definitive Notes of other authorized denominations,
the Registrar shall register the transfer or make the exchange as requested if
its requirements for such transactions are met; provided, that the Definitive
Notes so presented (A) have been duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the Registrar duly executed by
such Holder or by his attorney, duly authorized in writing; and (B) in the case
of a Restricted Security, such request shall be accompanied by the following
additional documents:
(i) if such Restricted Security is being delivered to the
Registrar by a Holder for registration in the name of such Holder,
without transfer, a certification to that effect (in substantially the
form of Exhibit B attached hereto); or
(ii) if such Restricted Security is being transferred to a QIB
in accordance with Rule 144A or pursuant to an effective registration
statement under the Securities Act, a certification to that effect (in
substantially the form of Exhibit B attached hereto); or
(iii) if such Restricted 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 B attached hereto) and an opinion of counsel reasonably
acceptable to the Company and the Registrar to the effect that such
transfer is in compliance with the Securities Act.
(b) Transfer of a Definitive Note for a Beneficial Interest in
a Global Note. A Definitive Note may be exchanged for a beneficial interest in a
Global Note only upon receipt by the Trustee of a Definitive Note, duly endorsed
or accompanied by appropriate instruments of transfer, in form satisfactory to
the Trustee, together with:
(i) written instructions directing the Trustee to make an
endorsement on the Global Note to reflect an increase in the aggregate
principal amount of the Notes represented by the Global Note, and
(ii) if such Definitive Note is a Restricted Security, a
certification (in substantially the form of Exhibit B attached hereto)
to the effect that
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such Definitive Note is being transferred to a QIB in accordance with
Rule 144A;
in which case the Trustee shall cancel such Definitive Note and cause the
aggregate principal amount of Notes represented by the Global Note to be
increased accordingly. If no Global Note is then outstanding, the Company shall
issue and the Trustee shall authenticate a new Global Note in the appropriate
principal amount.
(c) Transfer and Exchange of Global Notes. The transfer and
exchange of Global Notes or beneficial interests therein shall be effected
through the Depository in accordance with this Indenture and the procedures of
the Depository therefor, which shall include restrictions on transfer comparable
to those set forth herein to the extent required by the Securities Act.
(d) Transfer of a Beneficial Interest in a Global Note for a
Definitive Note. Upon receipt by the Trustee of written transfer 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 Note, the Trustee shall, in accordance with the standing
instructions and procedures existing between the Depository and the Trustee,
cause the aggregate principal amount of Global Notes to be reduced accordingly
and, following such reduction, the Company shall execute and the Trustee shall
authenticate and deliver to the transferee a Definitive Note in the appropriate
principal amount; provided, that in the case of a Restricted Security, such
instructions shall be accompanied by the following additional documents:
(i) if such beneficial interest is being transferred to the
Person designated by the Depository as being the beneficial owner, a
certification to that effect (in substantially the form of Exhibit B
attached hereto); or
(ii) if such beneficial interest is being transferred to a QIB
in accordance with Rule 144A or pursuant to an effective registration
statement under the Securities Act, a certification to that effect (in
substantially the form of Exhibit B attached hereto); or
(iii) 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 B attached hereto) and an opinion of counsel reasonably
acceptable to the Company
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and to the Registrar to the effect that such transfer is in compliance
with the Securities Act.
Definitive Notes issued in exchange for a beneficial interest
in a Global Note shall be registered in such names and in such authorized
denominations as the Depository shall instruct the Trustee.
(e) Transfer and Exchange of Global Notes. Notwithstanding any
other provision of this Indenture, the Global Note 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; provided, that if:
(i) the Depository notifies the Company that the Depository is
unwilling or unable to continue as Depository and a successor
Depository is not appointed by the Company within 90 days after
delivery of such notice; or
(ii) the Company, at its sole discretion, notifies the Trustee
in writing that it elects to cause the issuance of Definitive Notes
under this Indenture,
then the Company shall execute and the Trustee shall authenticate and deliver,
Definitive Notes in an aggregate principal amount equal to the aggregate
principal amount of the Global Note in exchange for such Global Note.
(f) Cancellation and/or Adjustment of Global Notes. At such
time as all beneficial interests in the Global Note have either been exchanged
for Definitive Notes, redeemed, repurchased or cancelled, the Global Note shall
be returned to or retained and cancelled by the Trustee. At any time prior to
such cancellation, if any beneficial interest in the Global Note is exchanged
for Definitive Notes, redeemed, repurchased or cancelled, the aggregate
principal amount of Notes represented by such Global Note shall be reduced
accordingly and an endorsement shall be made on such Global Note by the Trustee
to reflect such reduction.
(g) General Provisions Relating to Transfers and Exchanges. To
permit registrations of transfers and exchanges, the Company shall execute and
the
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Trustee shall authenticate Definitive Notes and Global Notes at the Registrar's
request. All Definitive Notes and Global Notes issued upon any registration of
transfer or exchange of Definitive Notes or Global Notes shall be legal, valid
and binding obligations of the Company, evidencing the same debt, and entitled
to the same benefits under this Indenture, as the Definitive Notes or Global
Notes surrendered upon such registration of transfer or exchange.
No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any transfer tax or similar governmental charge payable
in connection therewith (other than any such transfer taxes or similar
governmental charge payable upon exchange (without transfer to another person)
pursuant to Sections 2.10, 3.7, 4.10, 4.14 and 9.5 of this Indenture).
The Company shall not be required to (i) issue, register the
transfer of or exchange Notes during a period beginning at the opening of
business 15 days before the day of any selection of Notes for redemption under
Section 3.2 hereof and ending at the close of business on the day of selection;
or (ii) register the transfer of or exchange any Note so selected for redemption
in whole or in part, except the unredeemed portion of any Note being redeemed in
part; or (iii) register the transfer of or exchange a Note between a record date
and the next succeeding interest payment date.
Prior to due presentment for the registration of a transfer of
any Note, the Trustee, any Agent and the Company may deem and treat the Person
in whose name any Note is registered as the absolute owner of such Note for the
purpose of receiving payment of principal of, premium, if any, and interest on
such Notes, and neither the Trustee, any Agent nor the Company shall be affected
by notice to the contrary.
(h) Exchange of Series C Notes for Series D Notes. The Series
C Notes may be exchanged for Series D Notes pursuant to the terms of the
Exchange Offer. The Trustee and Registrar shall make the exchange as follows:
The Company shall present the Trustee with an Officers'
Certificate certifying the following:
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(A) upon issuance of the Series D Notes, the transactions
contemplated by the Exchange Offer have been
consummated; and
(B) the principal amount of Series C Notes properly
tendered in the Exchange Offer that are represented
by a Global Note and the principal amount of Series C
Notes properly tendered in the Exchange Offer that
are represented by Definitive Notes, the name of each
Holder of such Definitive Notes, the principal amount
at maturity properly tendered in the Exchange Offer
by each such Holder and the name and address to which
Definitive Notes for Series D Notes shall be
registered and sent for each such Holder.
The Trustee, upon receipt of (i) such Officers' Certificate,
(ii) an Opinion of Counsel (x) to the effect that the Series D Notes have been
registered under Section 5 of the Securities Act and this Indenture has been
qualified under the TIA and (y) with respect to the matters set forth in Section
6(p) of the Registration Rights Agreement and (iii) a Company Order, shall
authenticate (A) a Global Note for Series D Notes in aggregate principal amount
equal to the aggregate principal amount of Series C Notes represented by a
Global Note indicated in such Officers' Certificate as having been properly
tendered and (B) Definitive Notes representing Series D Notes registered in the
names of, and in the principal amounts indicated in such Officers' Certificate.
If the principal amount at maturity of the Global Note for the
Series D Notes is less than the principal amount at maturity of the Global Note
for the Series C Notes, the Trustee shall make an endorsement on such Global
Note for Series C Notes indicating a reduction in the principal amount at
maturity represented thereby.
The Trustee shall deliver such Definitive Notes for Series D
Notes to the Holders thereof as indicated in such Officers' Certificate.
Section 2.7. Replacement Notes.
If any mutilated Note is surrendered to the Trustee, or the
Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Note, the Company shall issue and the Trustee
shall authenticate a
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replacement Note if the Trustee's requirements for replacements of Notes are
met. If required by the Trustee or the Company, an indemnity bond must be
supplied by the Holder that is sufficient in the judgment of the Trustee and the
Company to protect the Company, the Trustee, any Agent or any authenticating
agent from any loss that any of them may suffer if a Note is replaced. The
Company or the Trustee may charge for its expenses in replacing a Note.
Every replacement Note is an obligation of the Company and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
Section 2.8. Outstanding Notes.
The Notes outstanding at any time are all the Notes
authenticated by the Trustee except for those cancelled by it, those delivered
to it for cancellation, those reductions in the interest in a Global Note
effected by the Trustee in accordance with the provisions hereof, and those
described in this Section as not outstanding.
If a Note is replaced pursuant to Section 2.7 hereof, the
replaced Note ceases to be outstanding unless the Trustee receives proof
satisfactory to it that the replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under
Section 4.1 hereof, it ceases to be outstanding and interest on it ceases to
accrue.
Subject to Section 2.9 hereof, a Note does not cease to be
outstanding because the Company or an Affiliate of the Company holds the Note.
Section 2.9. Treasury Notes.
In determining whether the Holders of the required principal
amount of Notes have concurred in any direction, waiver or consent, Notes owned
by the Company or any Affiliate of the Company shall be considered as though not
outstanding, except that for purposes of determining whether the Trustee shall
be protected in relying on any such direction, waiver or consent, only Notes
that a Trustee knows to be so owned shall be considered as not outstanding.
Section 2.10. Temporary Notes.
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Pending the preparation of Definitive Notes, the Company (and
the Guarantors, if any) may execute, and upon Company Order the Trustee shall
authenticate and deliver, temporary Notes that are printed, lithographed,
typewritten, mimeographed or otherwise reproduced, in any authorized
denomination, substantially of the tenor of the Definitive Notes in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Notes may
determine, as conclusively evidenced by their execution of such Notes.
If temporary Notes are issued, the Company (and the
Guarantors, if any) shall cause Definitive Notes to be prepared without
unreasonable delay. The Definitive Notes shall be printed, lithographed or
engraved, or provided by any combination thereof, or in any other manner
permitted by the rules and regulations of any principal national securities
exchange, if any, on which the Notes are listed, all as determined by the
Officers executing such Definitive Notes. After the preparation of Definitive
Notes, the temporary Notes shall be exchangeable for Definitive Notes upon
surrender of the temporary Notes at the office or agency maintained by the
Company for such purpose pursuant to Section 4.2 hereof, without charge to the
Holder. Upon surrender for cancellation of any one or more temporary Notes, the
Company (and the Guarantors, if any) shall execute, and the Trustee shall
authenticate and deliver, in exchange therefor the same aggregate principal
amount of Definitive Notes of authorized denominations. Until so exchanged, the
temporary Notes shall in all respects be entitled to the same benefits under
this Indenture as Definitive Notes.
Section 2.11. Cancellation.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall retain or
destroy cancelled Notes in accordance with its normal practices (subject to the
record retention requirement of the Exchange Act) unless the Company directs
them to be returned to it. The Company may not issue new Notes to replace Notes
that have been redeemed or paid or that have been delivered to the Trustee for
cancellation. All cancelled Notes held by the Trustee shall be destroyed and
certification of their destruction delivered to the Company unless by a written
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order, signed by one Officer of the Company, the Company shall direct that
cancelled Notes be returned to it.
Section 2.12. Defaulted Interest.
If the Company defaults in a payment of interest on the Notes,
it shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, which date shall be at the earliest
practicable date but in all events at least five Business Days prior to the
payment date, in each case at the rate provided in the Notes and in Section 4.1
hereof. The Company shall, with the consent of the Trustee, fix or cause to be
fixed each such special record date and payment date. At least 15 days before
the special record date, the Company (or the Trustee, in the name of and at the
expense of the Company) shall mail to the Holders a notice that states the
special record date, the related payment date and the amount of such interest to
be paid.
Section 2.13. Legends.
(a) Except as permitted by subsections (b) or (c) hereof, each
Note shall bear legends relating to restrictions on transfer pursuant to the
securities laws in substantially the form set forth on Exhibit A attached
hereto.
(b) Upon any sale or transfer of a Restricted Security
(including any Restricted Security represented by a Global Note) pursuant to
Rule 144 under the Securities Act or pursuant to an effective registration
statement under the Securities Act:
(i) in the case of any Restricted Security that is a
Definitive Note, the Registrar shall permit the Holder thereof to
exchange such Restricted Security for a Definitive Note that does not
bear the legends required by subsection (a) above; and
(ii) in the case of any Restricted Security represented by a
Global Note, such Restricted Security shall not be required to bear the
legends required by subsection (a) above, but shall continue to be
subject to the provisions of Section 2.6(c) hereof; provided, that with
respect to any request for an exchange of a Restricted Security that is
represented by a Global Note for a Definitive Note that does not bear
the legends required
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by subsection (a) above, which request is made in reliance upon Rule
144, the Holder thereof shall certify in writing to the Registrar that
such request is being made pursuant to Rule 144.
(c) The Company (and the Guarantors, if any) shall issue and
the Trustee shall authenticate Series D Notes in exchange for Series C Notes and
Original Notes accepted for exchange in the Exchange Offer. The Series D Notes
shall not bear the legends required by subsection (a) above; provided, that a
Series D Note issued in exchange for a Series C Note may continue to bear such
legend if the Holder thereof is either (A) a broker-dealer who purchased such
Series C Notes directly from the Company to resell pursuant to Rule 144A or any
other available exemption under the Securities Act, (B) a Person participating
in the distribution of the Series C Notes or (C) a Person who is an affiliate
(as defined in Rule 144A) of the Company.
ARTICLE 3
REDEMPTION
Section 3.1. Notices to Trustee.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.7 hereof, it shall furnish to the Trustee, at
least 45 days but not more than 60 days before a redemption date, an Officers'
Certificate setting forth (i) the clause of Section 3.7 pursuant to which the
redemption shall occur, (ii) the redemption date, (iii) the principal amount of
Notes to be redeemed and (iv) the redemption price.
Section 3.2. Selection of Notes to Be Redeemed.
If less than all the Notes are to be redeemed, the Trustee
shall select the Notes to be redeemed in compliance with the requirements of the
principal national securities exchange, if any, on which the Notes are listed,
or, if the Notes are not so listed, pro rata, by lot or by such method as the
Trustee deems to be fair and reasonable.
The Trustee shall promptly notify the Company in writing of
the Notes selected for redemption and, in the case of any Note selected for
partial redemption, the principal amount thereof to be redeemed. Notes and
portions of Notes selected shall be in amounts of $1,000 or whole multiples of
$1,000.
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Provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
Section 3.3. Notice of Redemption.
At least 30 days but not more than 60 days before a redemption
date, the Company shall mail a notice of redemption by first class mail to each
Holder whose Notes are to be redeemed at such Holder's registered address.
The notice shall identify the Notes to be redeemed and shall
state:
(1) the redemption date;
(2) the redemption price;
(3) if any Note is being redeemed in part only, the
portion of the principal amount of such Note to be redeemed and that,
after the redemption date, upon cancellation of the original Note, a
new Note or Notes in principal amount equal to the unredeemed portion
shall be issued;
(4) the name and address of the Paying Agent;
(5) that Notes called for redemption must be
surrendered to the Paying Agent to collect the redemption price;
(6) that, unless the Company defaults in making such
redemption payment, interest on Notes or portions of Notes called for
redemption ceases to accrue on and after the redemption date;
(7) the paragraph of the Notes and/or the section of
this Indenture pursuant to which the Notes called for redemption are
being redeemed; and
(8) the CUSIP number of the Notes to be redeemed.
At the Company's request, the Trustee shall give the notice of
redemption in the name of the Company and at its expense; provided that the
Company shall deliver to the Trustee, at least 45 days (unless a shorter period
is acceptable to the Trustee) prior to the redemption date, an Officers'
Certificate
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requesting that the Trustee give such notice and setting forth the information
to be stated in such notice as provided in the preceding paragraph.
Section 3.4. Effect of Notice of Redemption.
Once notice of redemption has been mailed to the Holders in
accordance with Section 3.3 herein, Notes called for redemption become due and
payable on the redemption date at the redemption price. At any time prior to the
mailing of a notice of redemption to the Holders pursuant to Section 3.3, the
Company may withdraw, revoke or rescind any notice of redemption delivered to
the Trustee without any continuing obligation to redeem the Notes as
contemplated by such notice of redemption.
Section 3.5. Deposit of Redemption Price.
On or before the redemption date, the Company shall deposit
with the Trustee (to the extent not already held by the Trustee) or with the
Paying Agent money in immediately available funds sufficient to pay the
redemption price of and accrued interest on all Notes to be redeemed on that
date. The Trustee or the Paying Agent shall return to the Company any money
deposited with the Trustee or the Paying Agent by the Company in excess of the
amounts necessary to pay the redemption price of, and accrued interest on, all
Notes to be redeemed.
Interest on the Notes to be redeemed shall cease to accrue on
the applicable redemption date, whether or not such Notes are presented for
payment, if the Company makes or deposits the redemption payment in accordance
with this Section 3.5. If any Note called for redemption shall not be paid upon
surrender for redemption because of the failure of the Company to comply with
the preceding paragraph, interest shall be paid on the unpaid principal, from
the redemption date until such principal is paid, and to the extent lawful on
any interest not paid on such unpaid principal, in each case at the rate
provided in the Notes.
Section 3.6. Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the Company
shall issue and the Trustee shall authenticate for the Holder at the expense of
the Company a new Note equal in principal amount to the unredeemed portion of
the Note surrendered.
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Section 3.7. Optional Redemption.
(a) Except as set forth in Section 3.7(b), the Notes are not
redeemable at the Company's option prior to November 15, 2001. Thereafter, the
Notes will be subject to redemption at the option of the Company, in whole or in
part, at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest thereon, if any, to the
applicable redemption date, if redeemed during the 12-month period beginning on
November 15 of the years indicated below:
Year Percentage
2001 105.375%
2002 102.688
2003 and thereafter 100.000
(b) At any time or from time to time prior to November 15,
1999, the Company may, at its option, redeem up to one-third of the aggregate
principal amount of the Notes issued on or after the Closing Date, at a
redemption price of 110.75 % of the principal amount thereof, plus accrued and
unpaid interest, if any, to the applicable redemption date, with the net cash
proceeds of one or more Public Equity Offerings; provided, that (a) such
redemption shall occur within 90 days of the date of closing of such public
offering and (b) at least two-thirds of the aggregate principal amount of the
Notes issued on or after the Closing Date remains outstanding immediately after
giving effect to each such redemption.
(c) The restrictions on optional redemptions set forth in this
Section 3.7 shall not limit the Company's right to make open market purchases of
the Notes from time to time; provided, that neither the Company nor any of its
Subsidiaries may use the proceeds of a Public Equity Offering made prior to
November 15, 1999 to make open market purchases of the Notes.
ARTICLE 4
COVENANTS
Section 4.1. Payment of Notes.
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The Company shall pay the principal and premium, if any, of,
and interest on, the Notes on the dates and in the manner provided in the Notes.
Principal, premium, if any, and interest shall be considered paid on the date
due if the Paying Agent, other than the Company or a Subsidiary of the Company,
holds on or before that date money deposited by the Company in immediately
available funds and designated for and sufficient to pay all principal, premium,
if any, and interest then due. Such Paying Agent shall return to the Company, no
later than three Business Days following the date of payment, any money that
exceeds such amount of principal, premium, if any, and interest then due and
payable on the Notes. The Company shall pay any and all amounts, including
without limitation Liquidated Damages, if any, on the dates and in the manner
required under the Registration Rights Agreement.
The Company shall pay interest (including post-petition
interest) on overdue principal at the rate equal to 1% per annum in excess of
the then applicable interest rate on the Notes to the extent lawful; it shall
pay interest (including post-petition interest) on overdue installments of
interest (without regard to any applicable grace period) at the same rate to the
extent lawful.
Section 4.2. Maintenance of Office or Agency.
The Company shall maintain an office or agency (which may be
an office of the Trustee, Registrar or co-registrar) in the Borough of
Manhattan, the City of New York where Notes may be surrendered for registration
of transfer or exchange and where notices and demands to or upon the Company in
respect of the Notes and this Indenture may be served. The Company shall give
prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more
other offices or agencies where the Notes may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations;
provided, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency for such purposes. The
Company shall give prompt written notice to the Trustee of any such designation
or rescission and of any change in the location of any such other office or
agency.
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The Company hereby designates the Corporate Trust Office of
the Trustee as one such office or agency of the Company in accordance with
Section 2.3.
Section 4.3. Reports.
(a) The Company shall file with the Trustee, within 15 days
after the time of filing with the Commission, copies of the reports, information
and other documents (or copies of such portions of any of the foregoing as the
Commission may by rules and regulations prescribe) that the Company is required
to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act.
If the Company is not subject to the requirements of Section 13 or 15(d) of the
Exchange Act, the Company shall file with the Commission and the Trustee all
such reports, information and other documents as it would be required to file if
it were subject to the requirements of Section 13 or 15(d) of the Exchange Act;
provided, that the Company shall not be in default of the provisions of this
Section 4.3 for any failure to file reports with the Commission solely by
refusal by the Commission to accept the same for filing. The Company shall
deliver (or cause the Trustee to deliver) copies of all reports, information and
documents required to be filed with the Trustee pursuant to this Section 4.3 to
the Holders at their addresses appearing in the register of Notes maintained by
the Registrar. The Company shall also comply with the provisions of TIA Section
314(a).
(b) If the Company is required to furnish annual, quarterly or
current reports to its stockholders pursuant to the Exchange Act, the Company
shall cause any annual, quarterly, current or other financial report furnished
by it generally to its stockholders to be filed with the Trustee and mailed to
the Holders at their addresses appearing in the register of Notes maintained by
the Registrar. If the Company is not required to furnish annual, quarterly or
current reports to its stockholders pursuant to the Exchange Act, the Company
shall cause the financial statements of the Company and its consolidated
Subsidiaries (and similar financial statements for all unconsolidated
Subsidiaries, if any), including any notes thereto (and, with respect to annual
reports, an auditors' report by an accounting firm of established national
reputation), and a "Management's Discussion and Analysis of Financial Condition
and Results of Operations," comparable to that which would have been required to
appear in annual or quarterly reports filed under Section 13 or 15(d) of the
Exchange Act to be so filed with the Trustee and mailed to the Holders promptly,
but in any event, within 90 days after the end of each of the
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fiscal years of the Company and within 45 days after the end of each of the
first three quarters of each such fiscal year.
(c) So long as is required for an offer or sale of the Notes
to qualify for an exemption under Rule 144A, the Company (and the Guarantors, if
any) shall, upon request, provide the information required by clause (d)(4)
thereunder to each Holder and to each prospective purchaser of Notes identified
by any Holder of Restricted Securities.
Section 4.4. Compliance Certificate.
(a) The Company shall deliver to the Trustee, within 120 days
after the end of each fiscal year, an Officers' Certificate (provided, however,
that one of the signatories to such Officers' Certificate shall be the Company's
principal executive officer, principal financial officer or principal accounting
officer) stating that a review of the activities of the Company and its
Subsidiaries during the preceding fiscal year has been made under the
supervision of the signing Officers with a view to determine whether each 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 each of the Company and its Subsidiaries has kept,
observed, performed and fulfilled each and every covenant contained in this
Indenture and is not in default in the performance or observance of any of the
terms, provisions and conditions hereof or thereof (or, if a Default or Event of
Default shall have occurred, describing all such Defaults or Events of Default
of which he may have knowledge and what action each is taking or proposes to
take with respect thereto).
(b) The year-end financial statements delivered pursuant to
Section 4.3 above shall be accompanied by a written statement of the independent
public accountants of the Company (which shall be a firm of established national
reputation reasonably satisfactory to the Trustee) that in making the
examination necessary for certification of such financial statements nothing has
come to their attention which would lead them to believe that either the Company
or any of its Subsidiaries has violated any provisions of this Indenture 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.
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(c) So long as any of the Notes are outstanding, the Company
shall deliver to the Trustee forthwith upon any Officer becoming aware of (i)
any Default or Event of Default or (ii) any event of default under any mortgage,
indenture or instrument referred to in Section 6.1(5) hereof, an Officers'
Certificate specifying such Default, Event of Default or other event of default
and what action the Company is taking or proposes to take with respect thereto.
Section 4.5. Taxes.
The Company shall, and shall cause its Subsidiaries to, file
all tax returns required to be filed and to pay prior to delinquency all
material taxes, assessments and governmental levies except as contested in good
faith and by appropriate proceedings and for which reserves have been
established in accordance with GAAP.
Section 4.6. Stay, Extension and Usury Laws.
The Company (and each Guarantor, if any) covenants (to the
extent that it may lawfully do so) that it shall not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay, extension or usury law wherever enacted, now or at any time hereafter
in force, which may affect the covenants or the performance of this Indenture;
and the Company and each Guarantor (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law and covenants
that it shall not, by resort to any such law, hinder, delay or impede the
execution of any power herein granted to the Trustee but shall suffer and permit
the execution of every such power as though no such law has been enacted.
Section 4.7. Limitation on Restricted Payments.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly:
(i) declare or pay any dividend or make any
distribution on account of any Equity Interests of the Company or any
of its Subsidiaries (other than (x) dividends or distributions payable
in Equity Interests (other than Disqualified Stock) of the Company or
(y) dividends or distributions payable to the Company or any Wholly
Owned Subsidiary),
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(ii) purchase, redeem or otherwise acquire or retire
for value any Equity Interest of the Company, any Subsidiary or any
other Affiliate of the Company (other than any such Equity Interest
owned by the Company or any Wholly Owned Subsidiary),
(iii) make any principal payment on, or purchase,
redeem, defease or otherwise acquire or retire for value any
Indebtedness of the Company or any Guarantor that is subordinated in
right of payment to the Notes or such Guarantor's Guarantee thereof, as
the case may be, prior to any scheduled principal payment, sinking fund
payment or other payment at the stated maturity thereof, or
(iv) make any Restricted Investment
(all such payments and other actions set forth in clauses (i) through
(iv) above being collectively referred to as "Restricted Payments")
unless, at the time of such Restricted Payment:
(1) no Default or Event of Default has occurred and
is continuing or would occur as a consequence thereof,
(2) immediately after giving effect thereto on a pro
forma basis, the Company could incur at least $1.00 of additional
Indebtedness under Section 4.9(a) hereof, and
(3) such Restricted Payment (the value of any such
payment, if other than cash, being determined in good faith by the
Board of Directors and evidenced by a resolution set forth in an
Officers' Certificate delivered to the Trustee), together with the
aggregate of all other Restricted Payments made after the date of this
Indenture (including Restricted Payments permitted by clauses (i) and
(ii) of Section 4.7(b) and excluding Restricted Payments permitted by
the other clauses therein), is less than the sum of (w) 50% of the
Consolidated Net Income of the Company for the period (taken as one
accounting period) from the beginning of the first quarter commencing
immediately after the date of this Indenture to the end of the
Company's most recently ended fiscal quarter for which internal
financial statements are available at the time of such Restricted
Payment (or, if such Consolidated Net Income for such period is a
deficit, 100% of such deficit), plus (x) 100% of the aggregate net cash
proceeds (or of the
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net cash proceeds received upon the conversion of non-cash proceeds
into cash) received by the Company from the issuance or sale, other
than to a Subsidiary, of Equity Interests of the Company (other than
Disqualified Stock) after the date of this Indenture and on or prior to
the time of such Restricted Payment, plus (y) 100% of the aggregate net
cash proceeds (or of the net cash proceeds received upon the conversion
of non-cash proceeds into cash) received by the Company from the
issuance or sale, other than to a Subsidiary, of any convertible or
exchangeable debt security of the Company that has been converted or
exchanged into Equity Interests of the Company (other than Disqualified
Stock) pursuant to the terms thereof after the date of this Indenture
and on or prior to the time of such Restricted Payment (including any
additional net cash proceeds received by the Company upon such
conversion or exchange) plus (z) 100% of the aggregate after-tax net
cash proceeds (or of the after-tax net cash proceeds received upon the
conversion of non-cash proceeds into cash) received by the Company or a
Restricted Subsidiary from the sale or other disposition of any
Investment constituting a Restricted Payment that was made after the
date of this Indenture; provided, that the gain on such sale or
disposition, if any, shall be excluded in determining Consolidated Net
Income for purpose of clause (w) above.
(b) The provisions of subsection (a) above shall not prohibit:
(i) the payment of any dividend within 60 days after
the date of declaration thereof, if at said date of declaration such
payment would not have been prohibited by the provisions of this
Indenture,
(ii) the redemption, purchase, retirement or other
acquisition of any Equity Interests of the Company in exchange for, or
out of the proceeds of the substantially concurrent sale (other than to
a Subsidiary) of, other Equity Interests of the Company (other than
Disqualified Stock),
(iii) the redemption, repurchase or payoff of any
Indebtedness (1) with proceeds of any Refinancing Indebtedness
permitted to be incurred pursuant to the provisions of Section
4.9(b)(xi) hereof or (2) solely in exchange for, or out of the proceeds
of the substantially concurrent sale (other than to a Subsidiary) of,
any Equity Interests of the Company (other than Disqualified Stock),
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(iv) Investments by the Company or any Restricted
Subsidiary, in an aggregate amount not to exceed $5.0 million, in an
Unrestricted Subsidiary formed primarily for the purpose of financing
purchases and leases of inventory manufactured by the Company or any of
its Restricted Subsidiaries,
(v) payments by the Company to Holdings pursuant to
the Tax Sharing Agreement,
(vi) distributions, loans or advances to Holdings in
an aggregate amount not to exceed $500,000 per fiscal year; provided,
that such amounts are used by Holdings to pay ordinary operating
expenses (including, without limitation, reasonable directors' fees and
expenses, indemnification obligations, professional fees and expenses
and management compensation expenses relating to employees of Holdings
and the Company),
(vii) (A) payments to, and promptly used by, Holdings
to repurchase Capital Stock or Indebtedness of Holdings from directors,
officers and employees of the Company and its Subsidiaries, including
Management Investors, who have died or whose employment has been
terminated, and (B) loans or advances to employees of the Company or
any of its Subsidiaries; provided that the aggregate amount of such
payments, loans and advances in any fiscal year shall not exceed the
lesser of (x) $500,000 plus any amount available for such payments
pursuant to this clause (x) since the date of this Indenture that have
not been used for such purpose and (y) $2.0 million,
(viii) Permitted Transactions or
(ix) other Restricted Payments in an aggregate amount
not to exceed $3.0 million;
provided, that with respect to clauses (iv), (vii) and (ix) above, no
Default or Event of Default shall have occurred and be continuing at
the time, or shall occur as a consequence thereof.
(c) In addition, so long as any of the Original Notes are
outstanding, the provisions of subsection (a) above shall not prohibit any
Restricted
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Payment to the extent such prohibition would violate or conflict with section
4.8 of the Original Indenture as in effect on the Closing Date.
(d) Not later than the date of making each Restricted Payment,
the Company shall deliver to the Trustee an Officers' Certificate stating that
such Restricted Payment was permitted, and setting forth the basis upon which
the calculations required by this Section 4.7 were computed, which calculations
may be based upon the Company's latest available financial statements.
Section 4.8. Limitation on Restrictions on Subsidiary Dividends.
The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary
(a) to (1) pay dividends or make any other distributions to
the Company or any of its Restricted Subsidiaries (A) on such Restricted
Subsidiary's Capital Stock or (B) with respect to any other interest or
participation in, or measured by, such Restricted Subsidiary's profits or (2)
pay any indebtedness owed to the Company or any of its Restricted Subsidiaries,
or
(b) to make loans or advances to the Company or any of its
Restricted Subsidiaries, or
(c) to transfer any of its assets to the Company or any of its
Restricted Subsidiaries,
except for such encumbrances or restrictions existing under or by reason of:
(i) the Revolving Credit Facility, as in effect on
the Closing Date, or any refinancing thereof containing restrictions
that are not materially more restrictive than those contained in the
Revolving Credit Facility on the Closing Date,
(ii) the Original Notes and the Original Indenture,
each as in effect on the Closing Date, or any refinancing thereof
containing restrictions that are not materially more restrictive than
those contained in the
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Original Notes and the Original Indenture, respectively, on the Closing
Date;
(iii) customary net worth restrictions on the actions
specified in clause (a)(1) above contained in the German Subsidiary
Facilities,
(iv) this Indenture and the Notes,
(v) applicable law,
(vi) restrictions with respect to a Subsidiary that
was not a Subsidiary on the Closing Date in existence at the time such
Person becomes a Subsidiary (but not created as a result of or in
anticipation of such Person becoming a Subsidiary); provided, that such
restrictions are not applicable to any other Person or the properties
or assets of any other Person,
(vii) customary non-assignment and net worth
provisions of any contract or lease entered into in the ordinary course
of business,
(viii) customary restrictions on the transfer of
assets subject to a Lien permitted under this Indenture imposed by the
holder of such Lien,
(ix) restrictions imposed by any agreement to sell
assets or Capital Stock to any Person pending the closing of such sale,
and
(x) permitted Refinancing Indebtedness (including
Indebtedness Refinancing Acquired Debt), provided, that such
restrictions contained in any agreement governing such Refinancing
Indebtedness are not materially more restrictive than those contained
in any agreements governing the Indebtedness being Refinanced.
Section 4.9. Limitation on Incurrence of Indebtedness.
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, (1) create, incur, issue,
assume, guaranty or otherwise become directly or indirectly liable, contingently
or otherwise (collectively, "incur"), with respect to any Indebtedness
(including Acquired Debt) or (2) issue any Disqualified Stock; provided, that
the Company may incur
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<PAGE> 46
Indebtedness (including Acquired Debt) or issue shares of Disqualified Stock and
any Restricted Subsidiary may incur Acquired Debt, in each case if (x) no
Default or Event of Default shall have occurred and be continuing at the time
of, or would occur after giving effect on a pro forma basis to such incurrence
or issuance, and (y) the Interest Coverage Ratio for the Company's most recently
ended four full fiscal quarters for which internal financial statements are
available immediately preceding the date on which such additional Indebtedness
is incurred or such Disqualified Stock is issued would have been at least equal
to the ratio set forth below opposite the period in which such incurrence or
issuance occurs, determined on a pro forma basis (including a pro forma
application of the net proceeds therefrom), as if the additional Indebtedness
had been incurred, or the Disqualified Stock had been issued, as the case may
be, at the beginning of such four-quarter period:
<TABLE>
<CAPTION>
PERIOD ENDING RATIO
<S> <C>
November 15, 1998 ............................... 2.00
thereafter ...................................... 2.50
</TABLE>
(b) The limitations of Section 4.9(a) shall not prohibit the
incurrence of:
(i) Indebtedness of the Company under the Revolving
Credit Facility and Indebtedness of Clark Europe and its subsidiaries
under the German Subsidiary Facilities, provided, that the aggregate
principal amount of Indebtedness so incurred on any date, together with
all other Indebtedness incurred pursuant to this clause (i) and
outstanding on such date, shall not exceed the greater of (x) $40.0
million, less any required permanent repayments (which are accompanied
by a corresponding permanent commitment reduction) thereunder, and (y)
the sum, on such date, of (i) 90% of Eligible Receivables of the
Company and the Restricted Subsidiaries, plus (ii) 65% of Eligible
Inventory of the Company and the Restricted Subsidiaries,
(ii) performance bonds, appeal bonds, surety bonds,
insurance obligations or bonds and other similar bonds or obligations
incurred in the ordinary course of business,
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<PAGE> 47
(iii) obligations incurred (1) to fix the interest
rate on any variable rate Indebtedness otherwise permitted by this
Indenture, (2) to hedge currency risk with respect to any receivable or
liability, the payment of which is determined by reference to a foreign
currency, or (3) to protect against fluctuations in the price of raw
materials used in the ordinary course of business of the Company and
its Restricted Subsidiaries (collectively, "Hedging Obligations"),
(iv) Indebtedness arising out of Capital Lease
Obligations or Purchase Money Obligations (collectively, "Purchase
Money Indebtedness") in an aggregate amount not to exceed $10.0 million
outstanding at any time,
(v) Indebtedness owed by (1) a Restricted Subsidiary
to the Company or to a Wholly Owned Subsidiary or (2) the Company to a
Wholly Owned Subsidiary,
(vi) Floor Plan Guarantees incurred in the ordinary
course of business,
(vii) Indebtedness outstanding on the date of this
Indenture, including the Notes,
(viii) Guarantees by the Company or any Guarantor of
Indebtedness otherwise permitted to be incurred hereunder,
(ix) 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, that
such Indebtedness is extinguished within three Business Days of
incurrence,
(x) Indebtedness of the Company or any Restricted
Subsidiary in addition to that described in clauses (i) through (ix)
above, so long as the aggregate principal amount of all such
Indebtedness incurred pursuant to this clause (x) does not exceed $10.0
million at any one time outstanding (which may be, but shall not be
required to be, incurred, in whole or in part, under the Revolving
Credit Facility or the Germany Subsidiary Facilities), and
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<PAGE> 48
(xi) Indebtedness issued in exchange for, or the
proceeds of which are contemporaneously used to extend, refinance,
renew, replace, or refund (collectively, "Refinance") Indebtedness
referred to in clause (vii) above or this clause (xi) or Indebtedness
incurred pursuant to Section 4.9(a) hereof ("Refinancing
Indebtedness"); provided, that (A) the principal amount of such
Refinancing Indebtedness does not exceed the principal amount of
Indebtedness so Refinanced (plus the premiums required to be paid, and
the out-of-pocket expenses (other than those payable to an Affiliate of
the Company) reasonably incurred, in connection therewith), (B) the
Refinancing Indebtedness has a final scheduled maturity that exceeds
the final stated maturity, and a Weighted Average Life to Maturity that
is equal to or greater than the Weighted Average Life to Maturity, of
the Indebtedness being Refinanced, and (C) the Refinancing Indebtedness
ranks, in right of payment, no less favorable to the Notes as the
Indebtedness being Refinanced.
Section 4.10. Limitation on Asset Sales.
The Company shall not, and shall not permit any Restricted
Subsidiary to, make any Asset Sale unless (i) the Company or such Restricted
Subsidiary receives consideration at the time of such Asset Sale at least equal
to the fair market value (as determined in good faith by the Board of Directors
as evidenced by a resolution of the Board of Directors set forth in an Officers'
Certificate delivered to the Trustee) of the assets subject to such Asset Sale,
(ii) at least 75% of the consideration for such Asset Sale is in the form of
cash, Cash Equivalents or liabilities of the Company or any Restricted
Subsidiary (other than liabilities that are by their terms subordinated to the
Notes or any Guarantee) that are assumed by the transferee of such assets
(provided, that there is no further recourse to the Company and its Restricted
Subsidiaries with respect to such liabilities), and (iii) within 12 months of
such Asset Sale, the Net Proceeds thereof are (a) invested in assets related to
the business of the Company or its Restricted Subsidiaries, (b) to the extent
not used as provided in clause (a), applied to make an offer to purchase the
Original Notes, if any are then outstanding, pursuant to Section 4.10 of the
Original Indenture, at a price equal to 100% of the principal amount of the
Original Notes, plus accrued and unpaid interest, if any, to the date of
purchase or (c) to the extent not used as provided in clauses (a) or (b),
applied to make an offer to purchase Notes as described below (an "Excess
Proceeds Offer"); provided, that if the amount of Net Proceeds from any Asset
Sale not used pursuant to clause (a)
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<PAGE> 49
and (b) above is less than $5.0 million, the Company shall not be required to
make an offer pursuant to clause (c). Pending the final application of any such
Net Proceeds, the Company or any Restricted Subsidiary may temporarily reduce
Indebtedness under the Revolving Credit Facility or the German Subsidiary
Facilities, or temporarily invest such Net Proceeds in Cash Equivalents.
The amount of Net Proceeds not used as set forth in the
preceding clause (a) and (b) constitutes "Excess Proceeds." If the Company
elects, or becomes obligated to make an Excess Proceeds Offer, the Company shall
offer to purchase Notes having an aggregate principal amount equal to the Excess
Proceeds (the "Purchase Amount"), at a purchase price equal to 100% of the
aggregate principal amount thereof, plus accrued and unpaid interest, if any, to
the purchase date. The Company must commence such Excess Proceeds Offer not
later than 30 days after the expiration of the 12-month period following the
Asset Sale that produced Excess Proceeds. If the aggregate purchase price for
the Notes tendered pursuant to the Excess Proceeds Offer is less than the Excess
Proceeds, the Company and its Restricted Subsidiaries may use the portion of the
Excess Proceeds remaining after payment of such purchase price for general
corporate purposes.
Each Excess Proceeds Offer shall remain open for a period of
20 Business Days and no longer, unless a longer period is required by law (the
"Excess Proceeds Offer Period"). Promptly after the termination of the Excess
Proceeds Offer Period (the "Excess Proceeds Payment Date"), the Company shall
purchase and mail or deliver payment for the Purchase Amount for the Notes or
portions thereof tendered, pro rata or by such other method as may be required
by law, or, if less than the Purchase Amount has been tendered, all Notes
tendered pursuant to the Excess Proceeds Offer. The principal amount of Notes to
be purchased pursuant to an Excess Proceeds Offer may be reduced by the
principal amount of Notes acquired by the Company through purchase or redemption
(other than pursuant to a Change of Control Offer) subsequent to the date of the
Asset Sale and surrendered to the Trustee for cancellation.
Each Excess Proceeds Offer shall be conducted in compliance
with all applicable laws, including without limitation, Regulation 14E of the
Exchange Act and the rules thereunder and all other applicable Federal and state
securities laws. To the extent that the provisions of any securities laws or
regulations conflict with the provisions of this Section 4.10, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have
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<PAGE> 50
breached its obligations under this Section 4.10 by virtue thereof. The Company
shall not, and shall not permit any of its Subsidiaries to, create or suffer to
exist or become effective any restriction that would impair the ability of the
Company to make an Excess Proceeds Offer upon an Asset Sale or, if such Excess
Proceeds Offer is made, to pay for the Notes tendered for purchase.
The Company shall, no later than 30 days following the
expiration of the 12-month period following the Asset Sale that produced Excess
Proceeds, commence the Excess Proceeds Offer by mailing to the Trustee and each
Holder, at such Holder's last registered address, a notice, which shall govern
the terms of the Excess Proceeds Offer, and shall state:
(1) that the Excess Proceeds Offer is being made
pursuant to this Section 4.10, the principal amount of Notes which
shall be accepted for payment and that all Notes validly tendered shall
be accepted for payment on a pro rata basis;
(2) the purchase price and the date of purchase;
(3) that any Notes not tendered or accepted for
payment pursuant to the Excess Proceeds Offer shall continue to accrue
interest;
(4) that, unless the Company defaults in the payment
of the purchase price with respect to any Notes tendered, Notes
accepted for payment pursuant to the Excess Proceeds Offer shall cease
to accrue interest after the Excess Proceeds Payment Date;
(5) that Holders electing to have Notes purchased
pursuant to an Excess Proceeds Offer shall be required to surrender
their Notes, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Note completed, to the Company prior to
the close of business on the third Business Day immediately preceding
the Excess Proceeds Payment Date;
(6) that Holders shall be entitled to withdraw their
election if the Company receives, not later than the close of business
on the second Business Day preceding the Excess Proceeds Payment Date,
a telegram, telex, facsimile transmission or letter setting forth the
name of the Holder, the principal amount of Notes the Holder delivered
for purchase
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<PAGE> 51
and a statement that such Holder is withdrawing his election to have
such Notes purchased;
(7) that Holders whose Notes are purchased only in
part shall be issued Notes representing the unpurchased portion of the
Notes surrendered; provided that each Note purchased and each new Note
issued shall be in principal amount of $1,000 or whole multiples
thereof; and
(8) the instructions that Holders must follow in
order to tender their Notes.
On or before the Excess Proceeds Payment Date, the Company
shall (i) accept for payment on a pro rata basis the Notes or portions thereof
tendered pursuant to the Excess Proceeds Offer, (ii) deposit with the Paying
Agent money sufficient to pay the purchase price of all Notes or portions
thereof so accepted and (iii) deliver to the Trustee the Notes so accepted,
together with an Officers' Certificate stating that the Notes or portions
thereof tendered to the Company are accepted for payment. The Paying Agent shall
promptly mail to each Holder of Notes so accepted payment in an amount equal to
the purchase price of such Notes, and the Trustee shall promptly authenticate
and mail to such Holders new Notes equal in principal amount to any unpurchased
portion of the Note surrendered.
The Company shall make a public announcement of the results of
the Excess Proceeds Offer as soon as practicable after the Excess Proceeds
Payment Date. For the purposes of this Section 4.10, the Trustee shall act as
the Paying Agent.
Section 4.11. Limitation on Transactions With Affiliates.
The Company shall not, and shall not permit any of the
Restricted Subsidiaries to, directly or indirectly, sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into any contract, agreement, understanding,
loan, advance or guarantee with, or for the benefit of, any Affiliate (each of
the foregoing, an "Affiliate Transaction"), except for (i) Affiliate
Transactions, which together with all Affiliate Transactions that are part of a
common plan, have an aggregate value of not more than $1.0 million; provided,
that such transactions are conducted in good faith and on terms that are no less
favorable to the Company or the relevant Restricted Subsidiary than those that
would have been obtained in a comparable transaction at such time on an
50
<PAGE> 52
arm's-length basis from a Person that is not an Affiliate of the Company or such
Restricted Subsidiary, (ii) Affiliate Transactions, which together with all
Affiliate Transactions that are part of a common plan, have an aggregate value
of not more than $5.0 million; provided, that a majority of the disinterested
members of the Board of Directors of the Company determine that such
transactions are conducted in good faith and on terms that are no less favorable
to the Company or the relevant Restricted Subsidiary than those that would have
been obtained in a comparable transaction at such time on an arm's-length basis
from a Person that is not an Affiliate of the Company or such Restricted
Subsidiary, and (iii) Affiliate Transactions for which the Company delivers to
the Trustee an opinion as to the fairness to the Company or such Restricted
Subsidiary from a financial point of view, issued by an investment banking firm
of national standing.
Notwithstanding the foregoing, the following will not be
deemed to be Affiliate Transactions: (i) employment agreements entered into by
the Company or any Restricted Subsidiary in the ordinary course of business with
the approval of a majority of the disinterested members of the Company's Board
of Directors, (ii) transactions between or among the Company and/or its Wholly
Owned Subsidiaries, (iii) Restricted Payments permitted by Section 4.7 of this
Indenture, and (iv) 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 a majority
of the disinterested directors of the Company's Board of Directors or, if none,
unanimously by the Board of Directors.
Section 4.12. Limitation on Liens.
The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, create, incur, assume or suffer to exist
any Lien on any asset (including, without limitation, all real, tangible or
intangible property) of the Company or any Restricted Subsidiary, whether now
owned or hereafter acquired, or on any income or profits therefrom, or assign or
convey any right to receive income therefrom, except (i) Liens on accounts
receivable and inventory and proceeds thereof (and contract rights and general
intangibles relating thereto) securing Indebtedness permitted to be incurred
under the Revolving Credit Facility, (ii) Liens on property, plant, equipment,
accounts receivable and inventory of Clark Europe and its subsidiaries, and
proceeds thereof (and contract rights and general intangibles relating thereto)
securing Indebtedness permitted to be incurred
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<PAGE> 53
under the German Subsidiary Facilities, (iii) Purchase Money Liens, and (iv)
Permitted Liens.
Section 4.13. Corporate Existence.
Subject to Article 5 of this Indenture, the Company shall do
or cause to be done all things necessary to preserve and keep in full force and
effect (i) its corporate existence, and the corporate, partnership or other
existence of each of its respective Subsidiaries, in accordance with their
respective organizational documents (as the same may be amended from time to
time) and (ii) its (and its Subsidiaries) rights (charter and statutory),
licenses and franchises; provided, that the Company shall not be required to
preserve any such right, license or franchise, or the corporate, partnership or
other existence of any Subsidiary, if the Board of Directors on behalf of the
Company shall determine in good faith that the preservation thereof is no longer
desirable in the conduct of the business of the Company and its Subsidiaries
taken as a whole and that the loss thereof is not adverse in any material
respect to the Holders.
Section 4.14. Repurchase Upon a Change of Control.
Upon the occurrence of a Change of Control, the Company shall
notify the Trustee in writing thereof and shall make an offer to purchase all of
the Notes then outstanding as described below (the "Change of Control Offer") at
a purchase price equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest, if any, to the date of repurchase (the "Change of
Control Payment").
The Change of Control Offer shall be made in compliance with
all applicable laws, including without limitation, Regulation 14E of the
Exchange Act and the rules thereunder and all other applicable Federal and state
securities laws. To the extent that the provisions of any securities laws or
regulations conflict with the provisions of this Section 4.14, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this Section 4.14 by virtue
thereof.
Within 30 days following any Change of Control, the Company
shall commence the Change of Control Offer by mailing to the Trustee and each
Holder a notice, which shall govern the terms of the Change of Control Offer,
and shall state that:
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<PAGE> 54
(i) the Change of Control Offer is being made
pursuant to this Section 4.14 and that all Notes tendered will be
accepted for payment,
(ii) the purchase price and the purchase date, which
shall be a Business Day no earlier than 30 days nor later than 60 days
from the date such notice is mailed (the "Change of Control Payment
Date"),
(iii) that any Note not tendered for payment
pursuant to the Change of Control Offer shall continue to
accrue interest,
(iv) that, unless the Company defaults in the payment
of the Change of Control Payment, all Notes accepted for payment
pursuant to the Change of Control Offer shall cease to accrue interest
on the Change of Control Payment Date,
(v) that any Holder electing to have Notes purchased
pursuant to a Change of Control Offer shall be required to surrender
such Notes, with the form entitled "Option of Holder to Elect Purchase"
on the reverse of the Notes completed, to the Paying Agent at the
address specified in the notice prior to the close of business on the
third Business Day preceding the Change of Control Payment Date,
(vi) that any Holder shall be entitled to withdraw
such election if the Paying Agent receives, not later than the close of
business on the second Business Day preceding the Change of Control
Payment Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of Notes
such Holder delivered for purchase, and a statement that such Holder is
withdrawing his election to have such Notes purchased,
(vii) that a Holder whose Notes are being purchased
only in part shall be issued new Notes equal in principal amount to the
unpurchased portion of the Notes surrendered, which unpurchased portion
must be equal to $1,000 in principal amount or an integral multiple
thereof,
(viii) the instructions that Holders must follow in
order to tender their Notes, and
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<PAGE> 55
(ix) the circumstances and relevant facts regarding
such Change of Control.
On the Change of Control Payment Date, the Company shall, to
the extent lawful, (i) accept for payment the Notes or portions thereof tendered
pursuant to the Change of Control Offer, (ii) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all Notes or
portions thereof so tendered and not withdrawn, and (iii) deliver or cause to be
delivered to the Trustee the Notes so accepted together with an Officers'
Certificate stating that the Notes or portions thereof tendered to the Company
are accepted for payment. The Paying Agent shall promptly mail to each Holder of
Notes so accepted payment in an amount equal to the purchase price for such
Notes, and the Trustee shall authenticate and mail to each Holder a new Note
equal in principal amount to any unpurchased portion of the Notes surrendered,
if any, provided, that each such new Note will be in principal amount of $1,000
or an integral multiple thereof.
The Company shall make a public announcement of the results of
the Change of Control Offer on or as soon as practicable after the Change of
Control Payment Date. For the purposes of this Section 4.14, the Trustee shall
act as the Paying Agent.
Section 4.15. Maintenance of Properties.
The Company shall, and shall cause each of its Subsidiaries
to, maintain their properties and assets in normal working order and condition
as on the date of this Indenture (reasonable wear and tear excepted) and make
all necessary repairs, renewals, replacements, additions, betterments and
improvements thereto, as shall be reasonably necessary for the proper conduct of
the business of the Company and its Subsidiaries taken as a whole; provided,
that nothing herein shall prevent the Company or any of its Subsidiaries from
discontinuing any maintenance of any such properties if such discontinuance is
desirable in the conduct of the business of the Company and its Subsidiaries
taken as a whole.
Section 4.16. Maintenance of Insurance.
The Company shall, and shall cause each of its Subsidiaries
to, maintain liability, casualty and other insurance (including self-insurance
consistent with prior practice) with responsible insurance companies in such
amounts and
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<PAGE> 56
against such risks as is in accordance with customary industry practice in the
general areas in which the Company and its Subsidiaries operate.
Section 4.17. Restrictions on Sale and Issuance of Subsidiary Stock.
The Company shall not sell, and shall not permit any of its
Restricted Subsidiaries to issue or sell, any shares of Capital Stock of any
Restricted Subsidiary (other than directors' qualifying shares) to any Person
other than the Company or a Wholly Owned Subsidiary; provided, that the Company
and its Restricted Subsidiaries may sell all of the Capital Stock of a
Restricted Subsidiary owned by the Company and its Restricted Subsidiaries if
the Net Proceeds from such Asset Sale are used in accordance with the provisions
of Section 4.10 of this Indenture.
Section 4.18. Line of Business.
The Company shall not, and shall not permit any Restricted
Subsidiary to, engage in any business other than (a) the business conducted or
proposed to be conducted by the Company and the Restricted Subsidiaries on the
Closing Date and (b) any business that in the reasonable, good faith judgment of
the Board of Directors of the Company is ancillary, complementary,
supplementary, or related to, or an extension of, any business described in
clause (a) above.
ARTICLE 5
SUCCESSORS
Section 5.1. When the Company May Merge, etc.
The Company shall not consolidate or merge with or into
(whether or not the Company is the surviving corporation), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets (determined on a consolidated basis for the Company and its
Restricted Subsidiaries) in one or more related transactions to, any other
Person unless:
(i) the Company is the surviving Person or the Person
formed by or surviving any such consolidation or merger (if other than
the Company) or to which such sale, assignment, transfer, lease,
conveyance or other disposition has been made is a corporation
organized and existing
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<PAGE> 57
under the laws of the United States, any state thereof or the District
of Columbia,
(ii) the Person formed by or surviving any such
consolidation or merger (if other than the Company) or the Person to
which such sale, assignment, transfer, lease, conveyance or other
disposition has been made assumes all the Obligations of the Company,
pursuant to a supplemental indenture in a form reasonably satisfactory
to the Trustee, under the Notes, this Indenture and the Registration
Rights Agreement,
(iii) immediately after such transaction, no Default
or Event of Default exists, and
(iv) the Company, or any Person formed by or
surviving any such consolidation or merger, or to which such sale,
assignment, transfer, lease, conveyance or other disposition has been
made, (A) has a Consolidated Net Worth (immediately after the
transaction but prior to any purchase accounting adjustments resulting
from the transaction) equal to or greater than the Consolidated Net
Worth of the Company immediately preceding the transaction and (B)
shall be permitted, at the time of such transaction and after giving
pro forma effect thereto as if such transaction had occurred at the
beginning of the applicable four-quarter period, to incur at least
$1.00 of additional Indebtedness pursuant to Section 4.9(a) hereof.
The Company shall deliver to the Trustee prior to the
consummation of any proposed transaction an Officers' Certificate to the
foregoing effect, an Opinion of Counsel, stating all conditions precedent to the
proposed transaction provided for in this Indenture have been complied with and
a written statement from a firm of independent public accountants of established
national reputation reasonably satisfactory to the Trustee stating that the
proposed transaction complies with clause (iv).
For purposes of this Section 5.1, the sale, lease, conveyance,
assignment, transfer or other disposition of all or substantially all of the
properties and assets of one or more Subsidiaries of the Company, which
properties and assets, if held by the Company instead of such Subsidiaries,
would constitute all or substantially all of the properties and assets of the
Company on a consolidated basis, shall be deemed to be the transfer of all or
substantially all of the properties and assets of the Company.
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<PAGE> 58
Section 5.2. Successor Substituted.
In the event of any transaction (other than a lease)
contemplated by Section 5.1 hereof in which the Company is not the surviving
Person, the successor formed by such consolidation or into or with which the
Company is merged or to which such sale, lease, conveyance, assignment, transfer
or other disposition is made, or formed by such reorganization, as the case may
be, shall succeed to, and be substituted for, and may exercise every right and
power of, the Company, and the Company shall be discharged from its Obligations
under this Indenture, the Notes and the Registration Rights Agreement with the
same effect as if such successor Person had been named as the Company herein or
therein.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.1. Events of Default.
An "Event of Default" occurs if:
(1) the Company defaults in the payment of interest
on any Note when the same becomes due and payable and the Default
continues for a period of 30 days;
(2) the Company defaults in the payment of the
principal (or premium, if any) on any Note when the same becomes due
and payable at maturity, upon redemption, by acceleration, in
connection with an Excess Proceeds Offer, a Change of Control Offer or
otherwise;
(3) the Company defaults in the performance of or
breaches the provisions of Article V hereof;
(4) the Company or any Guarantor fails to comply with
any of its other agreements or covenants in, or provisions of, the
Notes or this Indenture and the Default continues for 60 days after
written notice thereof has been given to the Company by the Trustee or
to the Company and the Trustee by the Holders of at least 25% in
aggregate principal
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<PAGE> 59
amount of the then outstanding Notes, such notice to state that it is a
"Notice of Default;"
(5) a default occurs under (after giving effect to
any applicable grace periods or any extension of any maturity date) any
mortgage, indenture or instrument under which there may be issued or by
which there may be secured or evidenced any Indebtedness for money
borrowed by the Company or any Restricted Subsidiary (or the payment of
which is guaranteed by the Company or any Restricted Subsidiary),
whether such Indebtedness or guarantee now exists or is created after
the date of this Indenture, if (a) either (i) such default results from
the failure to pay principal on such Indebtedness or (ii) as a result
of such default the maturity of such Indebtedness has been accelerated,
and (b) the principal amount of such Indebtedness, together with the
principal amount of any other such Indebtedness with respect to which
such a payment default (after the expiration of any applicable grace
period or any extension of the maturity date) has occurred, or the
maturity of which has been so accelerated, exceeds $5.0 million in the
aggregate;
(6) a final non-appealable judgment or judgments for
the payment of money (other than judgments as to which a reputable
insurance company has accepted full liability) is or are entered by a
court or courts of competent jurisdiction against the Company or any
Restricted Subsidiary and such judgment or judgments remain
undischarged, unbonded or unstayed for a period of 60 days after entry,
provided that the aggregate of all such judgments exceeds $2.5 million;
(7) written assertion by the Company or any of the
Guarantors, of the unenforceability of their obligations under the
Indenture, the Notes, or the Guarantees;
(8) the Company or any of its Restricted Subsidiaries
pursuant to or within the meaning of any Bankruptcy Law:
(a) commences a voluntary case,
(b) consents to the entry of an order
for relief against it in an
involuntary case,
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(c) consents to the appointment of a
Custodian of it or for all or
substantially all of its property,
(d) makes a general assignment for the
benefit of its creditors,
(e) admits in writing its inability to
pay debts as the same become due;
or
(9) a court of competent jurisdiction enters an order
or decree under any Bankruptcy Law that:
(a) is for relief against the Company
or any of its Restricted
Subsidiaries in an involuntary
case,
(b) appoints a Custodian of the Company
or any of its Restricted
Subsidiaries or for all or
substantially all of their
property,
(c) orders the liquidation of the
Company, or any of its Restricted
Subsidiaries, and the order or
decree remains unstayed and in
effect for 60 days.
The Company shall, upon becoming aware that a Default or Event
of Default has occurred, deliver to the Trustee a statement specifying such
Default or Event of Default and what action the Company is taking or proposes to
take with respect thereto.
Section 6.2. Acceleration.
If an Event of Default (other than an Event of Default
specified in clauses (8) and (9) of Section 6.1) occurs and is continuing, the
Trustee by written notice to the Company, or the Holders of at least 25% in
principal amount of the then outstanding Notes by written notice to the Company
and the Trustee, may declare the unpaid principal of and any accrued interest on
all the Notes to be due and payable. Upon such declaration the principal and
interest shall be due and payable immediately. If an Event of Default specified
in clause (8) or (9) of Section 6.1 with respect to the Company occurs, such an
amount shall ipso facto
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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, but before a judgment or decree for payment of the money due has
been obtained by the Trustee, the Holders of a majority in principal amount of
the Notes outstanding, by written notice to the Company and the Trustee, may
rescind and annul such declaration and its consequences if (a) the Company has
paid or deposited with the Trustee a sum sufficient to pay (i) all sums paid or
advanced by the Trustee and the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, (ii) all overdue interest
(including any interest accrued subsequent to an Event of Default specified in
clauses (8) and (9) of Section 6.1) on all Notes, (iii) the principal of and
premium, if any, on any Notes that have become due otherwise than by such
declaration or occurrence of acceleration and interest thereon at the rate borne
by the Notes, and (iv) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate borne by the Notes; (b) all Events of
Default, other than the non-payment of principal of and interest on the Notes
that have become due solely by such declaration or occurrence of acceleration,
have been cured or waived; and (c) the rescission would not conflict with any
judgment, order or decree of any court of competent jurisdiction.
Section 6.3. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy (under this Indenture or otherwise) to collect
the payment of principal or interest on the Notes to enforce the performance of
any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Notes or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Holder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
Section 6.4. Waiver of Past Defaults.
Holders of a majority of the aggregate principal amount of the
then outstanding Notes by written notice to the Company and the Trustee may on
behalf of the Holders of all of the Notes (a) waive any existing Default or
Event of
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Default and its consequences under this Indenture except a continuing Default or
Event of Default in the payment of the principal of, or interest on, any Note or
a Default or an Event of Default with respect to any covenant or provision which
cannot be modified or amended without the consent of the Holder of each
outstanding Note affected, and/or (b) rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree if
all existing Events of Default (except nonpayment of principal or interest that
has become due solely because of the acceleration) have been cured or waived.
Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon.
Section 6.5. Control by Majority.
The Holders of a majority in principal amount of the then
outstanding Notes 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. However, the Trustee may refuse to follow any direction
that conflicts with law or this Indenture, that the Trustee determines may be
unduly prejudicial to the rights of other Holders, or that may involve the
Trustee in personal liability.
Section 6.6. Limitation on Suits.
A Holder may pursue a remedy with respect to this Indenture or
the Notes only if:
(a) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the
then outstanding Notes make a written request to the Trustee to pursue
the remedy;
(c) such Holder or Holders offer and, if requested, provide to
the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;
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(d) the Trustee does not comply with the request within 60
days after receipt of the request and the offer and, if requested, the
provision of indemnity; and
(e) during such 60-day period the Holders of a majority in
principal amount of the then outstanding Notes do not give the Trustee
a direction inconsistent with the request.
A Holder may not use this Indenture to prejudice the rights of another Holder or
to obtain a preference or priority over another Holder.
Section 6.7. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Note to receive payment of principal and interest on
the Note, on or after the respective due dates expressed in the Note, 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.
Section 6.8. Collection Suit by Trustee.
If an Event of Default specified in Section 6.1(1) or (2)
occurs and is continuing, the Trustee is authorized to recover judgment in its
own name and as trustee of an express trust against the Company for the whole
amount of principal and interest remaining unpaid on the Notes and interest on
overdue principal (and premium, if any) and, to the extent lawful, interest and
such further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
Section 6.9. Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claim and
other papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel) and
the Holders allowed in any judicial proceedings relative to the Company (or any
other obligor under the Notes), their creditors or their property and shall be
entitled and empowered to collect, receive and distribute any money or other
property payable or
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deliverable on any such claims and any custodian in any such judicial proceeding
is hereby authorized by each Holder to make such payments to the Trustee, and in
the event that the Trustee shall consent to the making of such payments directly
to the Holders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.7 hereof. To
the extent that the payment of any such compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, and any other amounts due
the Trustee under Section 7.7 hereof out of the estate in any such proceeding,
shall be denied for any reason, payment of the same shall be secured by a Lien
on, and shall be paid out of, any and all distributions, dividends, money,
securities and other properties that the Holders of the Notes may be entitled to
receive in such proceeding whether in liquidation or under any plan of
reorganization or arrangement or otherwise. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article, it
shall pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts
due under Section 7.7, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
Second: to Holders for amounts due and unpaid on the Notes for
principal and interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Notes for principal and
interest, respectively;
Third: without duplication, to Holders for any other
Obligations owing to the Holders under the Notes or this Indenture; and
Fourth: to the Company or to such party as a court of
competent jurisdiction shall direct.
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The Trustee may fix a record date and payment date for any
payment to Holders.
Section 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as a Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section does not apply to a suit by the Trustee, a suit by a
Holder pursuant to Section 6.6, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
ARTICLE 7
TRUSTEE
Section 7.1. Duties of Trustee.
(1) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture and use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
(2) Except during the continuance of an Event of Default:
(a) The duties of the Trustee shall be determined
solely by the express provisions of this Indenture, and the Trustee
need perform only those duties that are specifically set forth in this
Indenture, and no others, and no implied covenants or obligations shall
be read into this Indenture against the Trustee.
(b) 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
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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.
(3) The Trustee may not be relieved from liabilities for its
own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(a) This paragraph does not limit the effect of
paragraph (2) of this Section.
(b) The Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it is
proved that the Trustee was negligent in ascertaining the pertinent
facts.
(c) 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 6.5.
(4) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee is subject to
paragraphs (1), (2) and (3) of this Section.
(5) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or incur any liability. The Trustee may refuse
to perform any duty or exercise any right or power unless it receives indemnity
satisfactory to it against any loss, liability or expense.
(6) 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 7.2. Rights of Trustee.
(1) The Trustee may conclusively rely upon any document
believed by it to be genuine and to have been signed or presented by the proper
Person. The Trustee need not investigate any fact or matter stated in the
document.
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(2) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel or both. The Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may
consult with counsel and the advice of such counsel or any Opinion of Counsel
shall be full and complete authorization and protection from liability in
respect of any action taken, suffered or omitted by it hereunder in good faith
and in reliance thereon.
(3) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(4) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers conferred upon it by this Indenture.
(5) Unless otherwise specifically provided in this Indenture,
any demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company, on behalf of the Company.
(6) Except with respect to Section 4.1, the Trustee shall have
no duty to inquire as to the performance of the Company's covenants in Article 4
hereof. In addition, the Trustee shall not be deemed to have knowledge of any
Default or Event of Default except (i) any Event of Default occurring pursuant
to Sections 6.1(1), 6.1(2) and 4.1, or (ii) any Default or Event of Default of
which the Trustee shall have received written notification or obtained actual
knowledge.
Section 7.3. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may
become the owner or pledgee of Notes and may otherwise deal with the Company or
an Affiliate of the Company with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights. However, the Trustee is
subject to Sections 7.10 and 7.11.
Section 7.4. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture or the Notes, it
shall not be ac-
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countable for the Company's use of the proceeds from the Notes or any money paid
to the Company or upon the Company's direction under any provision hereof, it
shall not be responsible for the use or application of any money received by any
Paying Agent other than the Trustee and it shall not be responsible for any
statement or recital herein or any statement in the Notes or any other document
in connection with the sale of the Notes or pursuant to this Indenture other
than its certificate of authentication.
Section 7.5. Notice of Defaults.
If a Default or Event of Default occurs and is continuing and
if the Trustee has knowledge thereof (within the meaning of Section 7.2(b)), the
Trustee shall mail to the Holders a notice of the Default or Event of Default
within 30 days after it occurs.
Section 7.6. Reports by Trustee to Holders.
Within 60 days after each May 15 beginning with the May 15
following the date of this Indenture, the Trustee shall mail to the Holders a
brief report dated as of such reporting date that complies with TIA Section
313(a) (but if no event described in TIA Section 313(a) has occurred within the
twelve months preceding the reporting date, no report need be transmitted). The
Trustee also shall comply with TIA Section 313(b). The Trustee shall also
transmit by mail all reports as required by TIA Section 313(c).
Commencing at the time this Indenture is qualified under the
TIA, a copy of each report at the time of its mailing to the Holders shall be
filed with the Commission and each stock exchange on which the Notes are listed.
The Company shall promptly notify the Trustee when the Notes are listed on any
stock exchange.
Section 7.7. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time
reasonable compensation for its acceptance of this Indenture and services
hereunder. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Company shall reimburse the
Trustee promptly upon request for all reasonable disbursements, advances and
expenses incurred or made by it in addition to the compensation for its
services. Such expenses shall
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include the reasonable compensation, disbursements and expenses of the Trustee's
agents and counsel, except such disbursements, advances and expenses as may be
attributable to its negligence or bad faith.
The Company shall indemnify the Trustee against any and all
losses, liabilities or expenses incurred by it without negligence or bad faith
on its part arising out of or in connection with the acceptance or
administration of its duties under this Indenture, except as set forth below.
The Trustee shall notify the Company promptly of any claim for which it may seek
indemnity. Failure by the Trustee to so notify the Company shall not relieve the
Company of its obligations hereunder. The Company shall defend the claim and the
Trustee shall cooperate in the defense. In the event that a conflict of interest
or conflicting defenses would arise in connection with the representation of the
Company and the Trustee by the same counsel, the Trustee may have separate
counsel and the Company shall pay the reasonable fees and expenses of such
counsel. The Company need not pay for any settlement made without its consent,
which consent shall not be unreasonably withheld.
The obligations of the Company under this Section 7.7 shall
survive the satisfaction and discharge of this Indenture.
The Company need not reimburse any expense or indemnify
against any loss or liability incurred by the Trustee through its own negligence
or bad faith.
To secure the Company's payment obligations in this Section,
the Trustee shall have a Lien prior to the Notes on all money or property held
or collected by the Trustee, except that held in trust to pay principal of (and
premium, if any) and interest on particular Notes. Such Lien shall survive the
satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.1(8) or (9) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
Section 7.8. Replacement of Trustee.
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A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section.
The Trustee may resign at any time and be discharged from the
trust hereby created by so notifying the Company. The Holders of a majority in
principal amount of the then outstanding Notes may remove the Trustee by so
notifying the Trustee and the Company. The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged a bankrupt or an insolvent or an
order for relief is entered with respect to the Trustee under any
Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee
or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office, the
Holders of a majority in principal amount of the then outstanding Notes may
appoint a successor Trustee to replace the successor Trustee appointed by the
Company.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company or the Holders of at least 10% in principal amount of the then
outstanding Notes may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee after written request by any Holder who has
been a Holder for at least six months fails to comply with Section 7.10, such
Holder may petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee
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shall have all the rights, powers and duties of the Trustee under this
Indenture. The successor Trustee shall mail a notice of its succession to the
Holders. The retiring Trustee shall promptly transfer all property held by it as
Trustee to the successor Trustee, provided that all sums owing to the Trustee
hereunder have been paid and subject to the Lien provided for in Section 7.7.
Notwithstanding replacement of the Trustee pursuant to this Section 7.8, the
Company's obligations under Section 7.7 hereof 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 7.7 upon such replacement or removal.
Section 7.9. Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
Section 7.10. Eligibility; Disqualification.
There shall at all times be a Trustee hereunder that shall (a)
be a corporation organized and doing business under the laws of the United
States of America or of any state thereof or of the District of Columbia
authorized under such laws to exercise corporate trustee power, (b) be subject
to supervision or examination by Federal or state or the District of Columbia
authority, and (c) have a combined capital and surplus of at least $100,000,000
as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Sections 310(a)(1), 310(a)(2) and 310(a)(5). The
Trustee is subject to TIA Section 310(b); provided, however, that there shall be
excluded from the operations 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 is subject to TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated
therein. The provisions of TIA Section 311 shall apply to the Company, as
obligor on the Notes.
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ARTICLE 8
DISCHARGE OF INDENTURE
Section 8.1. Termination of Company's Obligations.
This Indenture shall cease to be of further effect (except
that Section 7.7, 8.3 and 8.4 shall survive) when all outstanding Notes
theretofore authenticated and issued have been delivered (other than (i)
destroyed, lost or stolen Notes that have been replaced or paid and (ii) Notes
for whose payment money has theretofore been deposited in trust and thereafter
repaid to the Company pursuant to Section 8.3(b) hereof) to the Trustee for
cancellation and all sums payable by the Company hereunder have been paid. In
addition, the Company may (A) if applicable, be discharged from any and all
Obligations in respect of the Notes, other than the obligation to duly and
punctually pay the principal of, and premium, if any, and interest on the Notes,
in accordance herewith, or (B) if applicable, omit to comply with restrictive
covenants, and such omission will not be deemed to be an Event of Default if:
(1) with respect to clauses (A) and (B), the Company
irrevocably deposits in trust with the Trustee or at the option of the
Trustee, with a trustee reasonably satisfactory to the Trustee and the
Company under the terms of an irrevocable trust agreement in form and
substance satisfactory to the Trustee, money or U.S. Government
Obligations sufficient (as certified by a nationally recognized
accounting firm designated by the Company) to pay principal and
interest and premium, if any, on the Notes to maturity or redemption
and each installment of interest, if any, on the due dates thereof on
the Notes, as the case may be, and to pay all other sums payable by it
hereunder, and with respect to clause (B) the Obligations under this
Indenture other than with respect to such covenants and Events of
Default which will remain in full force and effect, provided that (i)
the trustee of the irrevocable trust shall have been irrevocably
instructed to pay such money or the proceeds of such U.S. Government
Obligations to the Trustee and (ii) the Trustee shall have been
irrevocably instructed to apply such money or the proceeds of such U.S.
Government Obligations to the payment of said principal, premium, if
any, and interest with respect to the Notes;
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(2) with respect to clause (A), the Company has received from,
or there has been published by, the U.S. Internal Revenue Service a
ruling or there has been a change in laws which in the opinion of
independent counsel, which the Company shall deliver to the Trustee,
provides that holders of the Notes will not recognize income, gain or
loss for Federal income tax purposes as a result of such deposit,
defeasance and discharge and will be subject to Federal income tax on
the same amount, in the same manner and at the same times as would have
been the case if such deposit, defeasance and discharge had not
occurred and the Notes were otherwise paid or redeemed in accordance
with the provisions of this Indenture;
(3) with respect to clause (B), the Company has delivered to
the Trustee an opinion of independent counsel to the effect that the
holders of the Notes will not recognize income, gain or loss for
Federal income tax purposes as a result of such deposit and defeasance
and will be subject to Federal income tax on the same amount, in the
same manner and at the same times as would have been the case if such
deposit and defeasance had not occurred and the Notes were redeemed
pursuant to Article 3 hereof without exercising the option of the
Company pursuant to this Section 8.1; and
(4) the Company delivers to the Trustee an Officers'
Certificate stating that all conditions precedent to satisfaction and
discharge of this Indenture have been complied with, and an Opinion of
Counsel to the same effect.
Then, this Indenture shall cease to be of further effect (except as provided in
this paragraph), and the Trustee, on demand of the Company, shall execute proper
instruments acknowledging confirmation of and discharge under this Indenture.
However, the Company's Obligations in Sections 2.3, 2.4, 2.5, 2.6, 2.7, 4.1,
4.6, 7.7, 7.8, 8.3 and 8.4, the Guarantors' Obligations, and the Trustee's and
Paying Agent's obligations in Section 8.3 shall survive until the Notes are no
longer outstanding. Thereafter, only the Company's obligations in Section 7.7
and 8.4 and the Company's, Trustee's and Paying Agent's obligations in Section
8.3 shall survive.
After such irrevocable deposit has been made pursuant to this
Section 8.1 and satisfaction of the other conditions set forth herein, the
Trustee
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upon request shall acknowledge in writing the discharge of the Company's
obligations under this Indenture except for those surviving obligations
specified above.
In order to have money available on a payment date to pay
principal, premium, if any, or interest on the Notes, the U.S. Government
Obligations shall be payable as to principal, premium, if any, or interest at
least one Business Day before such payment date in such amounts as shall provide
the necessary money. U.S. Government Obligations shall not be callable at the
issuer's option.
Section 8.2. Application of Trust Money.
The Trustee, or a trustee satisfactory to the Trustee and the
Company, shall hold in trust, money or U.S. Government Obligations deposited
with it pursuant to Section 8.1. It shall apply the deposited money and the
money from U.S. Government Obligations through the Paying Agent and in
accordance with this Indenture to the payment of principal, premium, if any, and
interest on the Notes.
Section 8.3. Repayment to the Company.
(a) The Trustee and the Paying Agent shall promptly pay to the
Company upon written request any excess money or securities (as certified by an
independent public accountant reasonably acceptable to the Trustee) held by them
at any time.
(b) The Trustee and the Paying Agent shall pay to the Company
upon written request any money held by them for the payment of principal,
premium, if any, or interest that remains unclaimed for two years after the date
upon which such payment shall have become due; provided that the Company shall
have either caused notice of such payment to be mailed to each Holder entitled
thereto no less than 30 days prior to such repayment or within such period shall
have published such notice in a financial newspaper of widespread circulation
published in the City of New York, including, without limitation, The Wall
Street Journal. After payment to the Company, Holders entitled to the money must
look to the Company for payment as general creditor unless an applicable
abandoned property law designates another Person, and all liability of the
Trustee and such Paying Agent with respect to such money shall cease.
Section 8.4. Reinstatement.
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If the Trustee or Paying Agent is unable to apply any money or
U.S. Government Obligations in accordance with Section 8.2 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, the Obligations of the Company and the Guarantors under this
Indenture and the Notes shall be revived and reinstated as though no deposit had
occurred pursuant to Section 8.1 until such time as the Trustee or Paying Agent
is permitted to apply all such money or U.S. Government Obligations in
accordance with Section 8.2; provided that if the Company has made any payment
of interest on or principal of any Notes because of the reinstatement of its
Obligations, the Company shall be subrogated to the rights of the Holders of
such Notes to receive such payment from the money or U.S. Government Obligations
held by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENTS
Section 9.1. Without Consent of Holders.
The Company and the Trustee may amend this Indenture and the
Notes without the consent of any Holder:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated Notes in addition
to or in place of certificated Notes;
(3) to comply with Article 5 and Section 10.1 hereof;
(4) to make any change that would provide any
additional rights or benefits to the Holders of the Notes or that does
not adversely affect the legal rights hereunder or thereunder of any
Holder;
(5) to comply with requirements of the Commission in
order to effect or maintain the qualification of this Indenture under
the TIA; or
(6) to release any Guarantee of the Notes permitted
to be released under Section 10.7 hereof.
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Upon the request of the Company, accompanied by a resolution
of the Board of Directors of the Company authorizing the execution of any such
supplemental indenture or amendment, and upon receipt by the Trustee of the
documents described in Section 9.6 hereof required or requested by the Trustee,
the Trustee shall join with the Company in the execution of any supplemental
indenture or amendment authorized or permitted by the terms of this Indenture
and shall make any further appropriate agreements and stipulations which may be
therein contained, but the Trustee shall not be obligated to enter into such
supplemental indenture or amendment that affects its own rights, duties or
immunities under this Indenture or otherwise.
Section 9.2. With Consent of Holders.
Subject to Sections 6.4 and 6.7 hereof, the Company and the
Trustee, as applicable, may amend, or waive any provision of, this Indenture or
the Notes with the written consent of the Holders of at least a majority of the
principal amount of the then outstanding Notes.
Upon the request of the Company, accompanied by a resolution
of the Board of Directors of the Company authorizing the execution of any such
supplemental indenture or amendment, and upon filing with the Trustee of
evidence satisfactory to the Trustee of the consent of the Holders as aforesaid,
and upon receipt by the Trustee of the documents described in Section 9.6
hereof, the Trustee shall join with the Company in the execution of such
supplemental indenture or amendment unless such supplemental indenture or
amendment affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise, in which case the Trustee may in its discretion, but
shall not be obligated to, enter into such supplemental indenture.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed supplemental
indenture or amendment, but it shall be sufficient if such consent approves the
substance thereof.
After a supplemental indenture or amendment under this Section
becomes effective, the Company shall mail to the Holders of each Note affected
thereby a notice briefly describing the amendment or waiver. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
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way impair or affect the validity of any such supplemental indenture, amendment
or waiver.
Notwithstanding any other provision hereof, without the
consent of each Holder affected, an amendment or waiver under this Section may
not (with respect to any Notes held by a non-consenting Holder):
(1) reduce the principal amount of Notes whose
Holders must consent to an amendment, supplement or waiver;
(2) reduce the rate of or change the time for payment
of interest, including default interest, on any Note;
(3) reduce the principal of, or the premium on, or
change the fixed maturity of any Note or alter Article III hereof or
numbered paragraphs 5 or 6 of Exhibit A to this Indenture or the price
at which the Company shall offer to purchase such Notes pursuant to
Sections 4.10 or 4.14 hereof;
(4) waive a Default or Event of Default in the
payment of principal of or premium, if any, or interest on, or
redemption payment with respect to, any Note (other than a Default in
the payment of an amount due as a result of an acceleration if the
Holder rescinds such acceleration pursuant to Section 6.2);
(5) make any Note payable in money other than that
stated in the Notes;
(6) make any change in Section 6.4 or 6.7 hereof or
in this Section 9.2; or
(7) make any change adversely affecting the
contractual ranking of the Obligations.
Section 9.3. Compliance with Trust Indenture Act.
If, at the time of an amendment to this Indenture or the
Notes, this Indenture shall be qualified under the TIA, every amendment to this
Indenture or the Notes shall be set forth in a supplemental indenture that
complies with the TIA as then in effect.
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Section 9.4. Revocation and Effect of Consents.
Until a supplemental indenture, an amendment or waiver becomes
effective, a consent to it by a Holder of a Note is a continuing consent by the
Holder and every subsequent Holder of a Note or portion of a Note that evidences
the same debt as the consenting Holder's Note, even if notation of the consent
is not made on any Note. A supplemental indenture, amendment or waiver becomes
effective in accordance with its terms and thereafter binds every Holder.
The Company may fix a record date for determining which
Holders must consent to such supplemental indenture, amendment or waiver. If the
Company fixes a record date, the record date shall be fixed at (i) the later of
30 days prior to the first solicitation of such consent or the date of the most
recent list of Holders furnished to the Trustee prior to such solicitation
pursuant to Section 2.5, or (ii) such other date as the Company shall designate.
Section 9.5. Notation on or Exchange of Notes.
The Trustee may place an appropriate notation about a
supplemental indenture, amendment or waiver on any Note thereafter
authenticated. The Company in exchange for all Notes may issue and the Trustee
shall authenticate new Notes that reflect the amendment or waiver.
Failure to make the appropriate notation or issue a new Note
shall not affect the validity and effect of such amendment or waiver.
Section 9.6. Trustee to Sign Amendments, etc.
The Trustee shall sign any amendment or supplemental indenture
authorized pursuant to this Article 9 if the amendment does not adversely affect
the rights, duties, liabilities or immunities of the Trustee. If it does, the
Trustee may, but need not, sign it. In signing or refusing to sign such
amendment or supplemental indenture, the Trustee shall be entitled to receive,
if requested, an indemnity reasonably satisfactory to it and to receive and,
subject to Section 7.1, shall be fully protected in relying upon, an Officers'
Certificate and an Opinion of Counsel as conclusive evidence that such amendment
or supplemental indenture is authorized or permitted by this Indenture, that it
is not inconsistent herewith, and that it shall be valid and binding upon the
Company in accordance with its terms. The
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Company may not sign an amendment or supplemental indenture until the Board of
Directors of the Company approves it.
ARTICLE 10
GUARANTY
Section 10.1. Guarantors.
The Company shall:
(a) cause each Restricted Subsidiary that is not a Foreign
Subsidiary to become a Guarantor hereunder and execute and deliver to the
Trustee a Guaranty in the form of Exhibit C attached hereto and 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 as set forth in Section 10.2 of this Indenture; and
(b) cause such Restricted Subsidiary to deliver to the Trustee
an Opinion of Counsel, in form reasonably satisfactory to the Trustee, that (i)
such supplemental indenture and such Guaranty have been duly authorized,
executed and delivered by such Restricted Subsidiary and (ii) this Indenture and
such Guaranty constitute a legal, valid, binding and enforceable obligation of
such Restricted Subsidiary, subject to customary exceptions for bankruptcy,
fraudulent transfer and equitable principles.
Each Note issued after the date of execution by any Guarantor
of a Guaranty shall be endorsed with a form of Guaranty that has been executed
by such Guarantor. However, the failure of any Note to have endorsed thereon a
Guaranty executed by such Guarantor shall not affect the validity or
enforceability of such Guaranty against such Guarantor.
Section 10.2. Guaranty.
For good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, subject to Section 10.4 hereof,
each Guarantor, jointly and severally, hereby unconditionally guarantees (such
guarantees granted from time to time pursuant to Section 10.6, being the
"Guaranty") to each Holder and the Trustee, irrespective of the validity or
enforceability of this Indenture, the
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Notes or the Obligations hereunder or thereunder: (i) the due and punctual
payment of the principal and premium, if any, of, and interest on, the Notes
(including, without limitation, interest after the filing of a petition
initiating any proceedings referred to in clause (8) or (9) of Section 6.1
hereof), whether at maturity or on an interest payment date, by acceleration,
call for redemption or otherwise; (ii) the due and punctual payment of interest
on the overdue principal and premium, if any, of, and interest on, the Notes, if
lawful; (iii) the due and punctual payment and performance of all other
Obligations, all in accordance with the terms set forth herein and in the Notes;
and (iv) in case of any extension of time of payment or renewal of any Notes or
any of such other Obligations, the due and punctual payment or performance
thereof in accordance with the terms of the extension or renewal, whether at
stated maturity, by acceleration or otherwise. Failing payment when due by the
Company of any amount so guaranteed for whatever reason, the Guarantors shall be
jointly and severally obligated to pay the same immediately.
Each Guarantor hereby agrees that (i) its obligations
hereunder shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes, this Indenture or the Obligations hereunder or
thereunder, the absence of any action to enforce the same, any waiver or consent
by any Holder with respect to any provisions hereof or thereof, any amendment of
this Indenture or the Notes, the recovery of any judgment against the Company or
any of its Subsidiaries, any action to enforce the same, or any other
circumstance that might otherwise constitute a legal or equitable discharge or
defense of a guarantor and (ii) this Guaranty will not be discharged except by
complete performance of the Obligations.
Each Guarantor hereby agrees that it shall not be entitled to
and irrevocably waives (i) diligence, presentment, demand of payment, filing of
claim with a court in the event of insolvency or bankruptcy of the Company, any
Guarantor, any other Subsidiary of the Company or any other obligor under the
Notes, any right to require a proceeding first against the Company, any
Guarantor, any other Subsidiary of the Company or any other obligor under this
Indenture or the Notes, protest, notice and all demands whatsoever, (ii) any
right of subrogation, reimbursement, exoneration, contribution or
indemnification in respect of any Obligations guaranteed hereby and (iii) any
claim or other rights that it may now or hereafter acquire against the Company
or any of its Subsidiaries that arise from the existence or performance of its
Obligations under this Guaranty, including, without limitation, any right to
participate in any claim or remedy of a Holder against the Company or any of its
Subsidiaries, whether or not such claim, remedy or right arises in equity or
under contract, statute or common law, by any
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payment made hereunder or otherwise, and including, without limitation, the
right to take or receive from the Company or any of its Subsidiaries, directly
or indirectly, in cash or other property, by setoff or in any other manner,
payment or security on account of such claim or other rights.
If any Holder or the Trustee is required by any court or
otherwise to return to the Company, any Guarantor, any other Subsidiary of the
Company or any other obligor under this Indenture or the Notes, trustee,
liquidator, or other similar official, any amount paid by the Company, any
Guarantor, any other Subsidiary of the Company or any other obligor under this
Indenture or the Notes to the Trustee or such Holder, this Guaranty, to the
extent theretofore discharged, shall be reinstated in full force and effect.
Each Guarantor hereby agrees that, as between the Guarantors,
on the one hand, and the Holders and the Trustee, on the other hand, (i) the
maturity of the Obligations guaranteed hereby may be accelerated as provided in
Section 6.2 for the purposes of this Guaranty, notwithstanding any stay,
injunction or other prohibition preventing such acceleration as to the Company
of the Obligations guaranteed hereby, and (ii) in the event of any declaration
of acceleration of those Obligations as provided in Section 6.2, those
Obligations (whether or not due and payable) will forthwith become due and
payable by each of the Guarantors for the purpose of this Guaranty.
Section 10.3. Execution and Delivery of Guaranty.
To evidence the Guaranty set forth in Section 10.2, the
Company and each Guarantor hereby agrees that (a) a notation of such Guaranty
substantially as set forth on Exhibit C attached hereto shall be endorsed on
each Note authenticated and delivered by the Trustee such endorsement shall be
executed on behalf of each Guarantor by its Chairman of the Board, President,
Chief Financial Officer, Chief Operating Officer, Treasurer, Secretary or any
Vice-President and (b) a counterpart signature page to this Indenture shall be
executed on behalf of each Guarantor by its Chairman of the Board, President or
one of its Vice Presidents and attested to by another officer acknowledging such
Guarantor's agreement to be bound by the provisions hereof and thereof.
Each Guarantor hereby agrees that its Guaranty set forth in
Section 10.7 shall remain in full force and effect notwithstanding any failure
to endorse on each Note a notation of such Guaranty.
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If an officer whose signature is on this Indenture no longer
holds that office at the time the Trustee authenticates the Notes on which a
Guaranty is endorsed, the Guaranty shall nevertheless be valid.
The delivery of any Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the Guaranty
set forth in this Indenture on behalf of the Guarantor.
Section 10.4. Limitation on Guarantor's Liability.
Each 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 pursuant to its Guaranty not constitute a fraudulent transfer or
conveyance for purposes of any Federal or state law. To effectuate the foregoing
intention, the Holders and any Guarantors hereby irrevocably agree that the
obligations of each Guarantor under its Guaranty shall be limited to the maximum
amount as will, after giving effect to all other contingent and fixed
liabilities of such Guarantor and after giving effect to any collections from or
payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under its Guaranty, result in the
Obligations of such Guarantor under the Guaranty not constituting a fraudulent
conveyance or fraudulent transfer under Federal or state law.
Section 10.5. Rights under the Guaranty.
(a) No payment by any Guarantor pursuant to the provisions
hereof shall give rise to any claim of the Guarantors against the Trustee or any
Holder.
(b) Each Guarantor waives notice of the issuance, sale and
purchase of the Notes and notice from the Trustee or the Holders from time to
time of any of the Notes of their acceptance and reliance on this Guaranty.
(c) No set-off, counterclaim, reduction or diminution of any
obligation or any defense of any kind or nature (other than performance by the
Guarantors of their obligations hereunder) that any Guarantor may have or assert
against the Trustee or any Holder shall be available hereunder to such
Guarantor.
(d) Each Guarantor shall pay all costs, expenses and fees,
including all reasonable attorneys' fees, that may be incurred by the Trustee in
enforcing or
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attempting to enforce the Guaranty or protecting the rights of the Trustee or
the Holder, if any, in accordance with this Indenture.
Section 10.6. Primary Obligations.
The Obligations of each Guarantor hereunder shall constitute a
guaranty of payment and not of collection. Each Guarantor hereby agrees that it
is directly liable to each Holder hereunder, that the Obligations of each
Guarantor hereunder are independent of the Obligations of the Company or any
other Guarantor, and that a separate action may be brought against each
Guarantor, whether such action is brought against the Company or any other
Guarantor or whether the Company or any other Guarantor is joined in such
action. Each Guarantor will agree that its liability hereunder shall be
immediate and shall not be contingent upon the exercise or enforcement by the
Trustee or the Holders of whatever remedies they may have against the Company or
any other Guarantor, or the enforcement of any lien or realization upon any
security Trustee may at any time possess. Each Guarantor hereby agrees that any
release that may be given by the Trustee or the Holders to the Company or any
other Guarantor shall not release such Guarantor.
Section 10.7. Release of Guarantors.
If all of the Capital Stock of any Guarantor is sold to a
Person (other than the Company or any of its Restricted Subsidiaries) and the
Net Proceeds from such Asset Sale are used in accordance with Section 4.10, then
such Guarantor will be released and discharged from all of its obligations under
its Guarantee of the Notes and this Indenture.
ARTICLE 11
MISCELLANEOUS
Section 11.1. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by TIA Section 318(c), the imposed duties
shall control.
Section 11.2. Notices.
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Any notice or communication by the Company or the Trustee to
the others is duly given if in writing and delivered in Person or mailed by
first-class mail (registered or certified, return receipt requested), telex,
telecopier or overnight air courier guaranteeing next day delivery, to the
others' addresses:
If to the Company:
CLARK Material Handling Company
172 Trade Street
Lexington, Kentucky 40511
Attention: Chief Executive Officer
Telecopier No.: (606) 288-1813
If to the Trustee:
United States Trust Company of New York
114 West 47th Street
New York, New York 10036
Attention: Corporate Trust Division
Telecopier No.: (212) 852-1625
The Company or the Trustee by notice to the others may
designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to
Holders) shall be deemed to have been duly given: at the time delivered by hand,
if personally delivered; upon receipt, if deposited in the mail, postage
prepaid; when answered back, if telexed; when receipt acknowledged, if
telecopied; and the next Business Day after timely delivery to the courier, if
sent by overnight air courier guaranteeing next day delivery. All notices and
communications to the Trustee shall be deemed to have been duly given only if
actually received by the Trustee.
Any notice or communication to a Holder shall be mailed by
first-class mail, certified or registered, return receipt requested, to his
address shown on the register kept by the Registrar. Failure to mail a notice or
communication to a Holder or any defect in it shall not affect its sufficiency
with respect to other Holders.
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If a notice communication is mailed in the manner provided
above within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it
shall mail a copy to the Trustee and each Agent at the same time.
Section 11.3. Communication by Holders with Other Holders.
Holders may communicate pursuant to TIA Section 312(b) with
other Holders with respect to their rights under this Indenture or the Notes.
The Company, the Trustee, the Registrar and any other person shall have the
protection of TIA Section 312(c).
Section 11.4. 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:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set
forth in Section 11.5) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set
forth in Section 11.5) stating that, in the opinion of such counsel,
all such conditions precedent and covenants have been complied with.
Section 11.5. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA Section 314(a)(4)) shall include:
(a) a statement that the Person making such certificate or
opinion has read such covenant or condition;
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(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he 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
(d) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been complied with,
provided that with respect to matters of fact, an Opinion of Counsel may rely
upon an Officers' Certificate or a certificate of a public official.
Section 11.6. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a
meeting of Holders. The Registrar or Paying Agent may make reasonable rules and
set reasonable requirements for its functions.
Section 11.7. Legal Holidays.
If a payment date is a Legal Holiday at a place of payment,
payment may be made at that place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period.
Section 11.8. No Recourse Against Others.
No director, officer, employee, incorporator, stockholder or
controlling person of the Company or any Guarantor, as such, shall have any
liability for any obligations of the Company under the Notes, this Indenture or
the Registration Rights Agreement or for any claim based on, in respect of, or
by reason of such obligations or their creation. Each Holder by accepting a Note
waives and releases all such liability. The waiver and release shall be part of
the consideration for the issuance of the Notes and the Guarantees.
Notwithstanding the foregoing, nothing in this provision shall be construed as a
waiver or release of any claims under the Federal securities laws.
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Section 11.9. Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED, INTERPRETED AND THE RIGHTS
OF THE PARTIES DETERMINED 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. THE COMPANY HEREBY IRREVOCABLY SUBMITS
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 IRREVOCABLY ACCEPTS FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF
THE AFORESAID COURTS. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT
MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION THAT
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION
OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION
OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. THE COMPANY IRREVOCABLY CONSENTS, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO UNDER APPLICABLE LAW, TO THE SERVICE OF PROCESS 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 COMPANY AT ITS
ADDRESS SET FORTH HEREIN, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH
MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY PURCHASER TO SERVE PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST THE COMPANY IN ANY OTHER JURISDICTION.
Section 11.10. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture,
loan or debt agreement of the Company or any of its Subsidiaries. Any such
indenture, loan or debt agreement may not be used to interpret this Indenture.
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Section 11.11. Successors.
All agreements of the Company and any Guarantors in this
Indenture and the Notes shall bind their respective successors. All agreements
of the Trustee in this Indenture shall bind its successor.
Section 11.12. Severability.
In case any provision in this Indenture or in the Notes shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
Section 11.13. Counterpart Originals.
The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together represent the
same agreement.
Section 11.14. Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and Headings of
the Articles and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions hereof.
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SIGNATURES
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Indenture as of the date first written above.
CLARK MATERIAL HANDLING
COMPANY
Attest: /s/ Joseph F. Lingg By: /s/ Martin M. Dorio
Name: Martin M. Dorio
Title: President
Name: Joseph F. Lingg
Title: Vice President
GUARANTORS
BLUE GIANT CORPORATION
By: /s/ Martin M. Dorio
Name: Martin M. Dorio
Title: President
HYDROLECTRIC LIFT TRUCKS, INC.
By: /s/ Martin M. Dorio
Name: Martin M. Dorio
Title: President
UNITED STATES TRUST COMPANY
OF NEW YORK, as Trustee
Attest: /s/ Louis P. Young
By: /s/ John Guiliano
Name: John Guiliano
Title: Vice President
Name: Louis P. Young
Title: Vice President
S-1
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EXHIBIT A
(Face of Security)
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TRUST
COMPANY (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. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY, TO THE COMPANY OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN
THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO.
OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY
OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST HEREIN.(1)
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS. NEITHER THIS NOTE NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION
OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS NOTE BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER SUCH NOTE, PRIOR TO THE DATE WHICH IS THREE YEARS (OR SUCH
SHORTER PERIOD THAT MAY HEREAFTER BE PROVIDED UNDER RULE 144(K) AS PERMITTING
RESALES BY NON-AFFILIATES OF RESTRICTED SECURITIES WITHOUT RESTRICTION) AFTER
THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE
COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS NOTE (OR ANY
PREDECESSOR OF SUCH NOTE) ONLY (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A,
TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO
OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN
THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(A)(1), (2), (3) OR (7)
UNDER THE SECURITIES ACT THAT IS PURCHASING THE NOTE FOR ITS OWN ACCOUNT, OR FOR
THE ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (F) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE
OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH
OF THEM, AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE
FORM APPEARING ON THIS NOTE IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE
TRUSTEE.
- ------------------
(1) This paragraph should be included only if the Note is issued in global
form.
A-1
<PAGE> 91
CLARK MATERIAL HANDLING COMPANY
10 3/4% [SERIES C] [SERIES D] SENIOR NOTE
DUE 2006
NO. $___________
CUSIP NO.
CLARK Material Handling Company, a Delaware corporation
(the "Company"), as obligor, for value received promises to pay to _____________
or registered assigns, the principal sum of [ ] Dollars on
November 15, 2006. Interest Payment Dates: May 15 and November 15 and on the
maturity date. Record Dates: May 1 and November 1 (whether or not a Business
Day).
Reference is hereby made to the further provisions of this
Note set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Note to be
signed manually or by facsimile by its duly authorized officers.
Dated:
CLARK Material Handling Company
By:_____________________________
Name:
Title:
By:_____________________________
Name:
Title:
Trustee's Certificate of Authentication:
This is one of the Notes referred to
in the within-mentioned Indenture:
UNITED STATES TRUST COMPANY OF
NEW YORK, as Trustee
By:______________________________
Authorized Signature
A-2
<PAGE> 92
(Back of Security)
10 3/4% [SERIES C] [SERIES D] SENIOR NOTE
DUE NOVEMBER 15, 2006
1. Interest. CLARK Material Handling Company, a Delaware
corporation (the "Company"), as obligor, promises to pay interest on the
principal amount of this Note at the rate and in the manner specified below.
The Company shall pay, in cash, interest on the principal
amount of this Note, at the rate of 103/4% per annum. The Company shall pay
interest semi-annually on May 15 and November 15 of each year, and on the
maturity date, commencing on November 15, 1998, or if any such day is not a
Business Day, on the next succeeding Business Day (each an "Interest Payment
Date").
Interest shall be computed on the basis of a 360-day year
consisting of twelve 30-day months. Interest shall accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from May
15, 1998. To the extent lawful, the Company shall pay interest on overdue
principal at the rate of 1% per annum in excess of the then applicable interest
rate on the Notes; the Company shall pay interest on overdue installments of
interest (without regard to any applicable grace periods) at the same rate to
the extent lawful.
2. Method of Payment. The Company shall pay interest on the
Notes (except defaulted interest) to the Persons who are registered Holders of
Notes at the close of business on the record date next preceding the Interest
Payment Date, even if such Notes are cancelled after such record date and on or
before such Interest Payment Date. The Holder must surrender this Note 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. The Company, however, may pay
principal and interest by check to a Holder's registered address.
3. Paying Agent and Registrar. Initially, the Trustee shall
act as Paying Agent and Registrar. The Company may change any Paying Agent,
Registrar or co-registrar without notice to any Holder. Subject to certain
exceptions, the Company or any of its Subsidiaries may act in any such capacity.
4. Indenture. The Company issued the Notes under an Indenture
dated as of July 17, 1998 (the "Indenture") between the Company and the Trustee.
The terms of the Notes include those stated in the Indenture and those made part
of the Indenture by reference to the Trust Indenture Act of 1939 (the "TIA") (15
U.S. Code Sections 77aaa-77bbbb) 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 the Indenture is so qualified. The Notes are subject to all
such terms, and Holders are referred to the Indenture and such act for a
statement of such terms. The terms of the Indenture shall govern any
inconsistencies between the Indenture and the Notes. Terms not otherwise defined
herein shall have the meanings assigned in the Indenture. The Notes are limited
to $150,000,000 in aggregate principal amount.
5. Optional Redemption. The Notes are not redeemable at the
Company's option prior to November 15, 2001. Thereafter, the Notes will be
subject to redemption at the option of the Company, in whole or in part, at the
redemption prices (expressed as percentages of principal amount) set forth below
plus accrued and unpaid interest thereon, if any, to the applicable redemption
date, if redeemed during the 12-month period beginning on November 15 of the
years indicated below:
A-3
<PAGE> 93
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2001 ................................... 105.375%
2002 ................................... 102.688
2003 and thereafter .................... 100.000
</TABLE>
Notwithstanding the foregoing, at any time or from time to
time prior to November 15, 1999, the Company may, at its option, redeem up to
one-third of the original principal amount of the Notes issued on or after the
Closing Date, at a redemption price of 110.75 % of the principal amount thereof,
plus accrued and unpaid interest, if any, to the applicable redemption date,
with the net cash proceeds of one or more Public Equity Offerings; provided,
that (a) such redemption shall occur within 90 days of the date of closing of
such public offering and (b) at least two-thirds of the aggregate principal
amount of the Notes issued on or after the Closing Date remains outstanding
immediately after giving effect to each such redemption.
6. Mandatory Redemption. There shall be no mandatory
redemption of the Notes.
7. Denominations, Transfer, Exchange. The Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Notes may be registered and Notes may be
exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and the Company may require a Holder to pay any taxes and
fees required by law or permitted by the Indenture. The Registrar and the
Company need not exchange or register the transfer (i) of any Note or portion of
a Note selected for redemption or (ii) of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a record
date and the corresponding Interest Payment Date.
8. Persons Deemed Owners. The registered Holder of a Note may
be treated as its owner for all purposes, subject to the provisions of the
Indenture with respect to the record dates for the payment of interest.
9. Amendments and Waivers. Subject to certain exceptions, the
Indenture or the Notes may be amended with the written consent of the Holders of
at least a majority in principal amount of the then outstanding Notes (including
consents obtained in connection with a tender offer or exchange offer for
Notes), and any existing Default or Event of Default (except a payment default)
may be waived with the consent of the Holders of a majority in principal amount
of the then outstanding Notes (including consents obtained in connection with a
tender offer or exchange offer for Notes). Without the consent of any Holders,
the Indenture and the Notes may be amended or supplemented to cure any
ambiguity, defect or inconsistency, to provide for assumption of the Company's
obligations to the Holders in the case of a merger or consolidation, to provide
for uncertificated Notes in addition to or in place of certificated Notes, to
make any change that would provide any additional rights or benefits to the
Holders of the Notes, or that does not adversely affect the legal rights of any
Holder, or to comply with requirements of the Commission in order to effect or
maintain the qualification of the Indenture under the TIA.
10. Defaults and Remedies. If an Event of Default occurs and
is continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Notes may declare all the Notes to be due and payable
immediately, except that in the case of an Event of Default arising from certain
events of bankruptcy or insolvency, all outstanding Notes become due and payable
immediately without further action or notice. Holders may not enforce the
Indenture or the Notes except as provided in the Indenture. The Trustee may
require indemnity satisfactory to it before it enforces the Indenture or the
Notes. Subject to certain limitations, Holders of a majority in principal
A-4
<PAGE> 94
amount of the then outstanding Notes may direct the Trustee in its exercise of
any trust or power. The Company must furnish an annual compliance certificate to
the Trustee.
11. Trustee Dealings with Company. The Trustee under the
Indenture, in its individual or any other capacity, may make loans to, accept
deposits from, and perform services for the Company or its Affiliates, and may
otherwise deal with the Company or its Affiliates, as if it were not Trustee.
12. No Recourse Against Others. No director, officer,
employee, incorporator, stockholder or controlling person of the Company or
Guarantor, as such, shall have any liability for any obligations of the Company
under the Notes, the Indenture or the Registration Rights Agreement or for any
claim based on, in respect of, or by reason of such obligations or their
creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes and the Guarantees. Notwithstanding the foregoing, nothing in this
provision shall be construed as a waiver or release of any claims under the
Federal securities laws.
13. Authentication. This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
14. Abbreviations. Customary abbreviations may be used in the
name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT
(= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).
15. 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 Notes and have directed the Trustee to
use CUSIP numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption and reliance may be placed
only on the other identification numbers placed thereon.
16. Holders' Compliance with Registration Rights Agreement.
Each Holder of a Note, by his acceptance thereof, acknowledges and agrees to the
provisions of the Registration Rights Agreement, dated as of July 17, 1998,
among the Company and the parties named on the signature page thereof (the
"Registration Rights Agreement"), including but not limited to the obligations
of the Holders with respect to a registration and the indemnification of the
Company and the Purchasers (as defined therein) to the extent provided therein.
The Company shall furnish to any Holder upon written request
and without charge a copy of the Indenture. Requests may be made to: CLARK
Material Handling Company, 172 Trade Street, Lexington, Kentucky 40508,
Attention: Chief Executive Officer.
A-5
<PAGE> 95
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint______________________________
agent to transfer this Note on the books of the Company. The agent may
substitute another to act for him.
Date:____________________
Your Signature:________________________________
(Sign exactly as your name appears
on the face of this Note)
Signature Guarantee*
________________
* NOTICE: The signature must be guaranteed by an institution which is a
member of one of the following recognized signature guarantee
programs:
(1) The Securities Transfer Agent Medallian Program
(STAMP);
(2) The New York Stock Exchange Medallian Program (MSP);
(3) The Stock Exchange Medallian Program (SEMP).
A-6
<PAGE> 96
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have all or any part of this Note purchased by
the Company pursuant to Section 4.10 or Section 4.14 of the Indenture, as the
case may be, state the amount you elect to have purchased (if all, write "ALL"):
$______________
Date:__________________________
Your Signature:_________________________
(Sign exactly as your name appears
on the face of this Note)
Signature Guarantee*
______________
* NOTICE: The signature must be guaranteed by an institution which is a
member of one of the following recognized signature guarantee
programs:
(1) The Securities Transfer Agent Medallian Program
(STAMP);
(2) The New York Stock Exchange Medallian Program (MSP);
(3) The Stock Exchange Medallian Program (SEMP).
A-7
<PAGE> 97
SCHEDULE OF EXCHANGES OF DEFINITIVE NOTES(2)
The following exchanges of a part of this Global Note for
Definitive Notes have been made:
<TABLE>
<CAPTION>
Principal Amount of this
Amount of decrease in Amount of increase in Global Note following
Principal Amount of this Principal Amount of this such decrease (or Signature of autho-
Date of Exchange Global Note Global Note increase) rized officer of Trustee
<S> <C> <C> <C> <C>
</TABLE>
- ------------------
(2) This should be included only if the Note is issued in global form.
A-8
<PAGE> 98
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF NOTES
Re: [Series C] [Series D] 10 3/4% Senior Notes due November 15, 2006 (the
"Notes") of CLARK Material Handling Company
This Certificate relates to $______ principal amount of Notes held in *
/ / book-entry or * / / definitive form by _______________________ (the
"Transferor").
The Transferor, by written order, has requested the Trustee:
/ / to deliver in exchange for its beneficial interest in the Global Note
held by the depository, a Note or Notes in definitive, registered form
of authorized denominations and an aggregate principal amount equal to
its beneficial interest in such Global Note (or the portion thereof
indicated above); or
/ / to exchange or register the transfer of a Note or Notes. In connection
with such request and in respect of each such Note, the Transferor does
hereby certify that Transferor is familiar with the Indenture relating
to the above captioned Notes and, the transfer of this Note does not
require registration under the Securities Act of 1933, as amended (the
"Securities Act") because such Note:
/ / is being acquired for the Transferor's own account, without transfer;
/ / is being transferred pursuant to an effective registration statement;
/ / is being transferred to a "qualified institutional buyer" (as defined
in Rule 144A under the Securities Act), in reliance on such Rule 144A;
/ / is being transferred pursuant to an exemption from registration in
accordance with Rule 904 under the Securities Act;**
/ / is being transferred pursuant to Rule 144 under the Securities Act;**
or
/ / is being transferred pursuant to another exemption from the
registration requirements of the Securities Act (explain:________
_________________________________________________________________
_________________________________________________________________).**
[INSERT NAME OF TRANSFEROR]
By:_______________________________
Date:_____________________
* Check applicable box.
** If this box is checked, this certificate must be accompanied
by an opinion of counsel to the effect that such transfer is
in compliance with the Securities Act.
B-2
<PAGE> 99
EXHIBIT C
[FORM OF GUARANTY]
GUARANTY
For good and valuable consideration received from the Company by the
undersigned (hereinafter referred to as the "Guarantor," which term includes any
successor or additional Guarantor), the receipt and sufficiency of which is
hereby acknowledged, subject to Section 10.4 of the Indenture, each Guarantor,
jointly and severally, hereby unconditionally guarantees, irrespective of the
validity or enforceability of the Indenture, the Notes or the Obligations, (a)
the due and punctual payment of the principal and premium, if any, of and
interest on the Notes (including, without limitation, interest after the filing
of a petition initiating any proceedings referred to in Sections 6.1(8) or (9)
of the Indenture), whether at maturity or on an interest payment date, by
acceleration, call for redemption or otherwise, (b) the due and punctual payment
of interest on the overdue principal and premium, if any, of and interest, if
any, on the Notes, if lawful, (c) the due and punctual payment and performance
of all other Obligations, all in accordance with the terms set forth in the
Indenture and the Notes, and (d) in case of any extension of time of payment or
renewal of any Notes or any of such other Obligations, the due and punctual
payment or performance thereof in accordance with the terms of the extension or
renewal, whether at stated maturity, by acceleration or otherwise.
No director, officer, employee, incorporator, stockholder or
controlling person of the Guarantor, as such, shall have any liability under
this Guaranty for any obligations of the Guarantor under the Notes, the
Indenture or the Registration Rights Agreement or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder of
the Notes by accepting a Note waives and releases all such liability.
[SUBSIDIARY]
By:_________________
Its:_________________
C-1
<PAGE> 100
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Trust Indenture
Act Section Indenture Section
<S> <C>
310(a)(1) .................................... 7.10
(a)(2) .................................. 7.10
(a)(3) .................................. N.A.
(a)(4) .................................. N.A.
(a)(5) .................................. 7.10
(b) ..................................... 7.8; 7.10
(c) ..................................... N.A.
311(a) ....................................... 7.11
(b) ..................................... 7.11
(c) ..................................... N.A.
312(a) ....................................... 2.5
(b) ..................................... 11.3
(c) ..................................... 11.3
313(a) ....................................... 7.6
(b)(1) .................................. 7.6
(b)(2) .................................. 7.6
(c) ..................................... 7.6
(d) ..................................... 7.6
314(a) ....................................... 4.3; 4.4
(b) ..................................... N.A
(c)(1) .................................. 11.4
(c)(2) .................................. 11.4
(c)(3) .................................. N.A.
(d) ..................................... N.A.
(e) ..................................... 11.5
(f) ..................................... N.A.
315(a) ....................................... 7.1(2)
(b) ..................................... 7.5
(c) ..................................... 7.1(1)
(d) ..................................... 7.1(3)
(e) ..................................... 6.11
316(a)(last sentence) ........................ 2.9
(a)(1)(A) ............................... 6.5
(a)(1)(B) ............................... 6.4
(a)(2) .................................. N.A.
(b) ..................................... 9.2
(c) ..................................... 9.4
317(a)(1) .................................... 6.8
(a)(2) .................................. 6.9
(b) ..................................... 2.4
318(a) ....................................... 11.1
(b) ..................................... N.A.
(c) ..................................... 11.1
N.A. means not applicable.
</TABLE>
<PAGE> 101
*This Cross-Reference Table is not part of the Indenture.
C-3
<PAGE> 102
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE 1
Section 1.1. Definitions 1
Section 1.2. Other Definitions. 19
Section 1.3. Incorporation by Reference of Trust Indenture Ac 19
Section 1.4. Rules of Construction. 20
ARTICLE 2 THE NOTES 20
Section 2.1. Form and Dating 20
Section 2.2. Execution and Authentication 21
Section 2.3. Registrar, Paying Agent 22
Section 2.4. Paying Agent to Hold Money in Trust 23
Section 2.5. Holder Lists 23
Section 2.6. Transfer and Exchange 23
Section 2.7. Replacement Notes 28
Section 2.8. Outstanding Notes 29
Section 2.9. Treasury Notes 29
Section 2.10. Temporary Notes 29
Section 2.11. Cancellation 30
Section 2.12. Defaulted Interest 31
Section 2.13. Legends 31
ARTICLE 3 REDEMPTION 32
Section 3.1. Notices to Trustee 32
Section 3.2. Selection of Notes to Be Redeemed 32
Section 3.3. Notice of Redemption 33
Section 3.4. Effect of Notice of Redemption. 34
Section 3.5. Deposit of Redemption Price. 34
Section 3.6. Notes Redeemed in Part. 34
Section 3.7. Optional Redemption. 35
ARTICLE 4 COVENANTS 35
Section 4.1. Payment of Notes. 35
Section 4.2. Maintenance of Office or Agency. 36
Section 4.3. Reports. 37
Section 4.4. Compliance Certificate 38
Section 4.5. Taxes. 39
Section 4.6. Stay, Extension and Usury Laws. 39
Section 4.7. Limitation on Restricted Payments. 39
Section 4.8. Limitation on Restrictions on Subsidiary Dividends. 43
Section 4.9. Limitation on Incurrence of Indebtedness 44
Section 4.10. Limitation on Asset Sales. 47
Section 4.11. Limitation on Transactions With Affiliates 50
i
<PAGE> 103
Section 4.12. Limitation on Liens. 51
Section 4.13. Corporate Existence. 52
Section 4.14. Repurchase Upon a Change of Control. 52
Section 4.15. Maintenance of Properties. 54
Section 4.16. Maintenance of Insurance. 54
Section 4.17. Restrictions on Sale and Issuance of Subsidiary Stock 55
Section 4.18. Line of Business 55
ARTICLE 5 SUCCESSORS 55
Section 5.1. When the Company May Merge, etc. 55
Section 5.2. Successor Substituted. 57
ARTICLE 6 DEFAULTS AND REMEDIES 57
Section 6.1. Events of Default. 57
Section 6.2. Acceleration 59
Section 6.3. Other Remedies 60
Section 6.4. Waiver of Past Defaults 60
Section 6.5. Control by Majority 61
Section 6.6. Limitation on Suits 61
Section 6.7. Rights of Holders to Receive Payment 62
Section 6.8. Collection Suit by Trustee 62
Section 6.9. Trustee May File Proofs of Claim 62
Section 6.10. Priorities 63
Section 6.11. Undertaking for Costs 64
ARTICLE 7 TRUSTEE 64
Section 7.1. Duties of Trustee 64
Section 7.2. Rights of Trustee 65
Section 7.3. Individual Rights of Trustee 66
Section 7.4. Trustee's Disclaimer 66
Section 7.5. Notice of Defaults 67
Section 7.6. Reports by Trustee to Holders 67
Section 7.7. Compensation and Indemnity 67
Section 7.8. Replacement of Trustee 68
Section 7.9. Successor Trustee by Merger, etc. 70
Section 7.10. Eligibility; Disqualification 70
Section 7.11. Preferential Collection of Claims Against Company 70
ARTICLE 8 DISCHARGE OF INDENTURE 71
Section 8.1. Termination of Company's Obligations 71
Section 8.2. Application of Trust Money. 73
Section 8.3. Repayment to the Company 73
Section 8.4. Reinstatement 73
ARTICLE 9 AMENDMENTS 74
Section 9.1. Without Consent of Holders 74
Section 9.2. With Consent of Holders 75
ii
<PAGE> 104
Section 9.3. Compliance with Trust Indenture Act 76
Section 9.4. Revocation and Effect of Consents 77
Section 9.5. Notation on or Exchange of Notes 77
Section 9.6. Trustee to Sign Amendments, etc. 77
ARTICLE 10 GUARANTY 78
Section 10.1. Guarantors 78
Section 10.2. Guaranty 78
Section 10.3. Execution and Delivery of Guaranty 80
Section 10.4. Limitation on Guarantor's Liability 81
Section 10.5. Rights under the Guaranty 81
Section 10.6. Primary Obligations 82
Section 10.7. Release of Guarantors 82
ARTICLE 11 MISCELLANEOUS 82
Section 11.1. Trust Indenture Act Controls 82
Section 11.2. Notices 82
Section 11.3. Communication by Holders with Other Holders 84
Section 11.4. Certificate and Opinion as to Conditions Precedent 84
Section 11.5. Statements Required in Certificate or Opinion 84
Section 11.6. Rules by Trustee and Agents 85
Section 11.7. Legal Holidays 85
Section 11.8. No Recourse Against Others 85
Section 11.9. Governing Law 86
Section 11.10. No Adverse Interpretation of Other Agreements 86
Section 11.11. Successors 87
Section 11.12. Severability 87
Section 11.13. Counterpart Originals 87
Section 11.14. Table of Contents, Headings, etc. 87
iii
<PAGE> 105
Page
SIGNATURES
EXHIBIT A - FORM OF NOTE ......................................... A-1
EXHIBIT B - CERTIFICATE OF TRANSFEROR ............................ B-1
EXHIBIT C - FORM OF GUARANTY ..................................... C-1
iv
<PAGE> 1
Exhibit 4.5
CLARK MATERIAL HANDLING COMPANY
$20,000,000 10-3/4% Senior Notes due 2006
REGISTRATION RIGHTS AGREEMENT
July 17, 1998
JEFFERIES & COMPANY, INC.
11100 Santa Monica Boulevard
10th Floor
Los Angeles, California 90025
BEAR, STEARNS & CO. INC.
245 Park Avenue
New York, New York 10167
Ladies and Gentlemen:
CLARK Material Handling Company, a Delaware corporation (the
"Company"), is issuing and selling to Jefferies & Company, Inc. and Bear,
Stearns & Co. Inc. (collectively, the "Purchasers"), upon the terms set forth in
a purchase agreement, dated as of July 13, 1998 (the "Purchase Agreement"),
$20,000,000 aggregate principal amount of the Company's 10-3/4% Series C Senior
Notes due 2006 (the "Notes"). As an inducement to the Purchasers to enter into
the Purchase Agreement, the Company agrees with the Purchasers, for the benefit
of the holders of the Securities (defined below) (including, without limitation,
the Purchasers), as follows:
1. Definitions
Capitalized terms used herein without definition shall have
their respective meanings set forth in the Purchase Agreement. As used in this
Agreement, the following terms shall have the following meanings:
<PAGE> 2
Advice: See Section 6.
Agreement: This Registration Rights Agreement.
Applicable Period: See Section 2(f).
Business Days: Any day other than (i) Saturday or Sunday, or
(ii) a day on which banking institutions in the State of New York are authorized
or obligated by law, governmental regulation or executive order to be closed.
Closing Date: July [17], 1998.
Effectiveness Date: November 16, 1998.
Effectiveness Period: See Section 3(a).
Exchange Act: The Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated thereunder.
Exchange Offer: See Section 2(a).
Exchange Offer Registration Statement: See Section 2(a).
Exchange Securities: 10-3/4% Senior Notes due 2006 of the
Company that are identical in all material respects to the Notes, except for
references to series and restrictive legends.
Filing Date: September 15, 1998.
Guarantors: Blue Giant USA Corporation, Hydroelectric Lift
Trucks, Inc. and any future Guarantors appointed in accordance with the terms of
the Indenture.
Holder: Each registered holder of Registrable Securities.
Indenture: The Indenture, dated the date hereof, between the
Company and United States Trust Company of New York, as trustee, pursuant to
which the Notes are being issued, as amended or supplemented from time to time,
in accordance with the terms thereof.
2
<PAGE> 3
Initial Shelf Registration: See Section 3(a).
Losses: See Section 8(a).
Maximum Contribution Amount: See Section 8(d).
NASD: The National Association of Securities Dealers, Inc.
Original Indenture: The Indenture, dated November 27, 1996,
between the Company and United States Trust Company of New York, as trustee,
pursuant to which the Original Notes were issued, as amended or supplemented
from time to time, in accordance with the terms thereof.
Original Notes: The 10-3/4% Senior Notes due 2006 of the
Company outstanding under the Original Indenture.
Participating Broker-Dealer: See Section 2(f).
Person: An individual, trustee, corporation, partnership,
joint stock company, joint venture, trust, unincorporated organization or
government or any agency or political subdivision thereof, union, business
association, firm or other entity.
Private Exchange: See Section 2(g).
Private Exchange Securities: See Section 2(g).
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 under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Securities covered by
such Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
Registration Default: See Section 4(a).
3
<PAGE> 4
Registrable Securities: (a) Notes, (b) Private Exchange
Securities and (c) Exchange Securities received by a Holder in the Exchange
Offer that may not be sold without restriction under state and federal
securities laws (other than due solely to the status of such Holder as an
affiliate of the Company within the meaning of the Securities Act), in each case
until (i) a Registration Statement covering such Notes, Private Exchange
Securities or Exchange Securities has been declared effective by the SEC and
such Notes, Private Exchange Securities or Exchange Securities, as the case may
be, have been disposed of in accordance with the effective Registration
Statement, (ii) such Notes have been exchanged pursuant to the Exchange Offer
for Exchange Securities that may be resold without restriction under state or
federal securities laws, or (iii) such Notes, Private Exchange Securities or
Exchange Security, as the case may be, cease to be outstanding for purposes of
the Indenture.
Registration Statement: Any registration statement of the
Company that covers any of the Registrable Securities pursuant to the provisions
of this Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits, and
all material incorporated by reference or deemed to be incorporated by reference
in such registration statement.
Review: See Section 6(a).
Rule 144: Rule 144 under the Securities Act, as such Rule may
be amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the SEC.
Rule 144A: Rule 144A under the Securities Act, as such Rule
may be amended from time to time, or any similar rule (other than Rule 144) or
regulation hereafter adopted by the SEC.
Rule 415: Rule 415 under the Securities Act, as such Rule may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.
SEC: The Securities and Exchange Commission.
Securities: The Notes, the Private Exchange Securities and the
Exchange Securities, collectively.
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Securities Act: The Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.
Shelf Notice: See Section 2(i).
Shelf Registration: The Initial Shelf Registration and any
Subsequent Shelf Registration.
Special Counsel: Counsel chosen by the Holders of a majority
in aggregate principal amount of Securities.
Subsequent Shelf Registration: See Section 3(b).
TIA: The Trust Indenture Act of 1939, as amended.
Trustee: The trustee under the Indenture and, if any, the
trustee under any indenture governing the Exchange Securities or the Private
Exchange Securities.
Underwritten Registration or Underwritten Offering: A
registration in which securities of the Company are sold to an underwriter for
reoffering to the public.
Weekly Liquidated Damages Amount: See Section 4(a).
2. Exchange Offer
(a) The Company shall (i) prepare and file with the SEC
promptly after the date hereof, but in no event later than the Filing Date, a
registration statement (the "Exchange Offer Registration Statement") on an
appropriate form under the Securities Act with respect to a proposed offer (the
"Exchange Offer") to the Holders to issue and deliver to such Holders, in
exchange for the Notes, a like aggregate principal amount of Exchange
Securities, (ii) use its best efforts to cause the Exchange Offer Registration
Statement to become effective as promptly as practicable after the filing
thereof, but in no event later than the Effectiveness Date, (iii) keep the
Exchange Offer Registration Statement effective until the consummation of the
Exchange Offer pursuant to its terms, and (iv) unless the Exchange Offer would
not be permitted by a policy of the SEC, commence the
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<PAGE> 6
Exchange Offer and use its best efforts to issue, on or prior to 30 business
days after the date on which the Exchange Offer Registration Statement is
declared effective, Exchange Securities in exchange for all Notes tendered prior
thereto in the Exchange Offer.
The Exchange Offer shall not be subject to any conditions,
other than that (i) the Exchange Offer does not violate applicable law or any
applicable interpretation of the Staff of the SEC, (ii) no action or proceeding
shall have been instituted or threatened in any court or by any governmental
agency that could reasonably be expected to materially impair the ability of the
Company to proceed with the Exchange Offer, and no material adverse development
shall have occurred in any such existing action or proceeding with respect to
the Company, and (iii) all governmental approvals necessary for the consummation
of the Exchange Offer shall have been obtained.
(b) The Exchange Securities shall be issued under, and
entitled to the benefits of, the Original Indenture or the Indenture (with such
changes to the Indenture that are necessary to comply with any requirements of
the SEC to effect or maintain the qualification thereof under the TIA). If the
Exchange Securities are issued under the Original Indenture, prior to
consummating the Exchange Offer, the Company shall obtain the requisite consents
from the holders of the Original Notes to permit the issuance of the Exchange
Securities in the Exchange Offer. If the Exchange Securities are issued under
the Indenture, the Exchange Offer shall include an offer to the holders of the
Original Notes to issue and deliver to such holders, in exchange for the
Original Notes, a like aggregate principal amount of Exchange Securities.
(c) In connection with the Exchange Offer, the Company shall:
(i) mail to each Holder a copy of the Prospectus
forming part of the Exchange Offer Registration Statement, together with an
appropriate letter of transmittal that is an exhibit thereto and related
documents;
(ii) keep the Exchange Offer open for not less than
20 Business Days after the date notice thereof is mailed to the Holders (or
longer if required by applicable law);
(iii) utilize the services of a depository for the
Exchange Offer with an address in the Borough of Manhattan, The City of New
York;
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<PAGE> 7
(iv) permit Holders to withdraw tendered Notes at any
time prior to the close of business, New York time, on the last Business Day on
which the Exchange Offer shall remain open; and
(v) otherwise comply in all material respects with
all laws applicable to the Exchange Offer.
(d) As soon as practicable after the close of the Exchange
Offer, the Company shall:
(i) accept for exchange all Notes validly tendered
and not validly withdrawn pursuant to the Exchange Offer;
(ii) deliver to the Trustee for cancellation all
Notes so accepted for exchange; and
(iii) cause the Trustee promptly to authenticate and
deliver to each Holder of Notes, Exchange Securities equal in aggregate
principal amount to the Notes of such Holder so accepted for exchange.
(e) Interest on each Exchange Security and Private Exchange
Security 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 May 15, 1998.
(f) The Company shall include within the Prospectus contained
in the Exchange Offer Registration Statement a section entitled "Plan of
Distribution," containing a summary statement of the positions taken or policies
made by the Staff of the SEC with respect to the potential "underwriter" status
of any broker-dealer that is the beneficial owner (as defined in Rule 13d-3
under the Exchange Act) of Exchange Securities received by such broker-dealer in
the Exchange Offer (a "Participating Broker-Dealer"). Such "Plan of
Distribution" section shall also allow the use of the Prospectus by
Participating Brokers-Dealers, and include a statement describing the means by
which Participating Broker-Dealers may resell the Exchange Securities.
If any Holder participating in the Exchange Offer makes the
representations contemplated by Section 2(h)(iv) hereof, the Company shall use
its
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<PAGE> 8
best efforts to keep the Exchange Offer Registration Statement effective and
to amend and supplement the Prospectus to be lawfully delivered by all Persons
subject to the prospectus delivery requirement of the Securities Act for a
period of 180 days from the consummation of the Exchange Offer (as such period
may be extended pursuant to the last paragraph of Section 6 hereof) (the
"Applicable Period") or such earlier date as the Company shall be notified in
writing that such requesting Participating Broker-Dealer has resold all Exchange
Securities acquired in the Exchange Offer.
(g) If, prior to consummation of the Exchange Offer, any
Purchaser holds any Notes acquired by it and having the status as an unsold
allotment in the initial distribution, the Company shall, upon the request of
such Purchaser, simultaneously with the delivery of the Exchange Securities in
the Exchange Offer, issue (pursuant to the same indenture as the Exchange
Securities) and deliver to such Purchaser, in exchange (the "Private Exchange")
for the Notes held by such Purchaser, a like principal amount of debt securities
of the Company that are identical to the Exchange Securities (the "Private
Exchange Securities"). The Private Exchange Securities shall bear the same CUSIP
number as the Exchange Securities.
(h) Each Holder participating in the Exchange Offer will be
required to represent to the Company in writing that (i) any Exchange Securities
received by such Holder in the Exchange Offer will be acquired in the ordinary
course of its business, (ii) at the time of the consummation of the Exchange
Offer such Holder will have no arrangement or understanding with any Person to
participate in the distribution of the Exchange Securities within the meaning of
the Securities Act or resale of the Exchange Securities in violation of the
Securities Act, (iii) if such Holder is not a broker-dealer, that it is not
engaged in and does not intend to engage in, the distribution of the Exchange
Securities, (iv) if such Holder is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Notes that were acquired as a
result of market-making or other trading activities, that it will deliver a
prospectus, as required by law, in connection with any resale of such Exchange
Securities, and (v) such Holder is not an "affiliate" of the Company within the
meaning of the Securities Act or, if such Holder is an affiliate, that it will
comply with the registration and prospectus delivery requirements of the
Securities Act applicable to it.
(i) If (i) prior to the consummation of the Exchange Offer,
the Company in its reasonable judgment determines that a majority in aggregate
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<PAGE> 9
principal amount of the Exchange Securities would not, upon receipt, be
tradeable by the Holders thereof without restriction under the Securities Act
and the Exchange Act and without material restrictions under applicable Blue Sky
or state securities laws, (ii) applicable interpretations of the Staff of the
SEC would not permit the consummation of the Exchange Offer prior to the
Effectiveness Date, (iii) subsequent to the consummation of the Private Exchange
but within one year of the Closing Date, the Purchasers so request, (iv) the
Exchange Offer is not consummated within 240 days of the Closing Date for any
reason, or (v) in the case of any Holder not permitted to participate in the
Exchange Offer or of any Holder participating in the Exchange Offer that
receives Exchange Securities that may not be sold without restriction under
state and federal securities laws (other than due solely to the status of such
Holder as an affiliate of the Company within the meaning of the Securities Act)
and, in either case contemplated by this clause (v), such Holder notifies the
Company within six months of consummation of the Exchange, then the Company
shall promptly deliver to the Holders (or in the case of any occurrence of the
event described in clause (iii) or (v) hereof, to the Purchasers or any such
Holder, as applicable) and the Trustee (in the case of clauses (i), (ii), (iii)
and (iv)) notice thereof (the "Shelf Notice") and shall as promptly as possible
thereafter file an Initial Shelf Registration pursuant to Section 3 hereof.
3. Shelf Registration
If a Shelf Notice is required to be delivered pursuant to
Section 2(i) (i), (ii), or (iv), then this Section 3 shall apply to all
Registrable Securities. If a Shelf Notice is required to be delivered pursuant
to Section 2(i)(iii), then this Section 3 shall apply solely to Private Exchange
Securities. If a Shelf Notice is required to be delivered pursuant to Section
2(i)(v), then this Section 3 shall apply solely to (i) Notes held by any Holder
thereof not permitted to participate in the Exchange Offer and (ii) Exchange
Securities that are not freely tradeable as contemplated by Section 2(i)(v)
hereof.
(a) Initial Shelf Registration. The Company shall prepare and
file with the SEC a Registration Statement for an offering to be made on a
continuous basis pursuant to Rule 415 covering all of the Registrable Securities
(the "Initial Shelf Registration"). The Initial Shelf Registration shall be on
an appropriate form permitting registration of such Registrable Securities for
resale by such Holders in the manner or manners designated by them (including,
without limitation, one or more underwritten offerings). The Company shall (i)
not permit any
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<PAGE> 10
securities other than the Registrable Securities to be included in any Shelf
Registration, and (ii) use its best efforts to cause the Initial Shelf
Registration to be declared effective under the Securities Act as promptly as
practicable after the filing thereof, and to keep the Initial Shelf Registration
continuously effective under the Securities Act until the third year anniversary
of the Closing Date (the "Effectiveness Period"), or such shorter period ending
when (i) all Registrable Securities covered by the Initial Shelf Registration
have been sold pursuant to the Shelf Registration or (ii) a Subsequent Shelf
Registration covering all of the Registrable Securities covered by and not sold
under the Initial Shelf Registration or an earlier Subsequent Shelf Registration
has been declared effective under the Securities Act; provided, that the Company
may suspend the effectiveness of a Shelf Registration for a period not to exceed
45 days in any calendar year (a "Shelf Blackout Period"), and the three year
period specified above shall be extended by the number of days in the Shelf
Blackout Period, if (i) an event occurs and is continuing as a result of which
the Shelf Registration 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) (A) 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 and its subsidiaries, taken as a whole, or (B) the disclosure otherwise
relates to a pending material business transaction that has not yet been
publicly disclosed.
(b) Subsequent Shelf Registrations. If any Shelf Registration
ceases to be effective for any reason at any time during the Effectiveness
Period (other than because of the sale of all of the securities registered
thereunder), the Company shall use its best efforts to obtain the prompt
withdrawal of any order suspending the effectiveness thereof, as soon as
practicable after such cessation of effectiveness, to amend the Shelf
Registration in a manner reasonably expected to obtain the withdrawal of the
order suspending the effectiveness thereof, or to file an additional "shelf"
Registration Statement pursuant to Rule 415 covering all of the Registrable
Securities covered by and not sold under the Initial Shelf Registration or an
earlier Subsequent Shelf Registration (a "Subsequent Shelf Registration"). If a
Subsequent Shelf Registration is filed, the Company shall use its best efforts
to cause the Subsequent Shelf Registration to be declared effective as soon as
practicable after such filing and to keep such Subsequent Shelf Registration
continuously effective for a period equal to the number of days in the
Effectiveness Period less the aggregate number of days during which the Initial
Shelf Registration, and any Subsequent Shelf Registration, was previously
continuously effective.
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4. Liquidated Damages.
(a) The Company acknowledges and agrees that the Holders of
Registrable Securities will suffer damages, and that it would not be feasible to
ascertain the extent of such damages with precision, if the Company fails to
fulfill its obligations hereunder. Accordingly, in the event of such failure by
the Company to fulfill such obligations, the Company hereby agrees to pay
liquidated damages to each Holder of Registrable Securities under the
circumstances and to the extent set forth below:
(i) if neither the Exchange Offer Registration
Statement nor the Initial Shelf Registration has been filed with the
SEC on or prior to the Filing Date; or
(ii) if neither the Exchange Offer Registration
Statement nor the Initial Shelf Registration is declared effective by
the SEC on or prior to the Effectiveness Date; or
(iii) if the Company has not exchanged Exchange
Securities for all Notes validly tendered in accordance with the terms
of the Exchange Offer within 30 days after the date on which an
Exchange Offer Registration Statement is declared effective by the SEC;
or
(iv) the Initial Shelf Registration is filed and
declared effective by the SEC but thereafter ceases to be effective
without being succeeded within 30 days by a Subsequent Shelf
Registration filed and declared effective;
(each of the foregoing, a "Registration Default").
Accordingly, upon the occurrence of a Registration Default,
the Company shall pay, or cause to be paid, as liquidated damages, and not as a
penalty, to each Holder of a Registrable Security, an additional amount (the
"Weekly Liquidated Damages Amount") equal to (A) for each weekly period
beginning on the date such Registration Default occurs for the first 90-day
period immediately following such date, $.05 per week per $1,000 principal
amount of Registrable Securities held by such Holder, and (B) for each weekly
period beginning with the first full week after the 90-day period set forth in
the foregoing
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<PAGE> 12
clause (A), $.10 per week per $1,000 principal amount of Registrable Securities
held by such Holder; provided, that such liquidated damages will, in each case,
cease to accrue (subject to the occurrence of another Registration Default) on
the date on which all Registration Defaults have been cured. A Registration
Default under clause (i) above shall be cured on the date that either the
Exchange Offer Registration Statement or the Initial Shelf Registration is filed
with the SEC; a Registration Default under clause (ii) above shall be cured on
the date that either the Exchange Offer Registration Statement or the Initial
Shelf Registration is declared effective by the SEC; a Registration Default
under clause (iii) above shall be cured on the earlier of the date (A) the
Exchange Offer is consummated with respect to all Notes validly tendered or (B)
the Company delivers a Shelf Notice to the Holders of Registrable Securities;
and a Registration Default under clause (iv) above shall be cured on the earlier
of (A) the date on which the applicable Shelf Registration is no longer subject
to an order suspending the effectiveness thereof or proceedings relating thereto
or (B) a new Subsequent Shelf Registration is declared effective.
(b) The Company shall notify the Trustee within five Business
Days after each Registration Default. The Company shall pay the liquidated
damages due on the Registrable Securities by depositing with the Trustee, in
trust, for the benefit of the Holders thereof, by 12:00 noon, New York City
time, on the applicable payment dates specified in the Indenture (or other
indenture relating to the Registrable Securities), immediately available funds
in sums sufficient to pay the liquidated damages then due. The liquidated
damages amount due shall be payable semi-annually on each such interest payment
date to the record Holder of Registrable Securities entitled to receive the
interest payment to be made on such date as set forth in the Indenture,
commencing with the first payment date occurring after any Registration Default.
5. [Intentionally Left Blank]
6. Registration Procedures
In connection with the registration of any Securities pursuant
to Sections 2 or 3 hereof, the Company shall effect such registrations to permit
the sale of such Securities in accordance with the intended method or methods of
disposition thereof, and pursuant thereto the Company shall:
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(a) Prepare and file with the SEC, on or prior to the Filing
Date, a Registration Statement or Registration Statements as prescribed by
Section 2 or 3, and use its best efforts to cause each such Registration
Statement to become effective and remain effective as provided herein; provided,
that, if (i) such filing is pursuant to Section 3 or (ii) a Prospectus contained
in an Exchange Offer Registration Statement filed pursuant to Section 2 is
required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Securities during the Applicable Period
relating thereto, before filing any Registration Statement or Prospectus or any
amendments or supplements thereto, the Company shall, if requested, furnish to
and afford the Holders of the Registrable Securities covered by such
Registration Statement, their Special Counsel, each Participating Broker-Dealer,
the managing underwriters, if any, and their counsel a reasonable opportunity to
review copies of all such documents (including copies of any documents to be
incorporated by reference therein and all exhibits thereto) proposed to be
filed, such financial and other information and books and records of the
Company, and cause the officers, directors and employees of the Company, Company
counsel and the independent certified public accountants of the Company to
respond to such inquiries (such actions are hereinafter collectively referred to
as the "Review"), as shall be reasonably necessary, in the opinion of respective
counsel to such Holders, Participating Broker-Dealers and underwriters, to
conduct a reasonable investigation within the meaning of the Securities Act. The
Company may require each Holder to agree to keep confidential any non-public
information relating to the Company received by such Holders and not disclose
such information (other than to an Affiliate or prospective purchaser who agrees
to respect the confidentiality provisions of this Section 6(a)) until such
information has been made generally available to the public unless the release
of such information is required by law or necessary to respond to inquiries of
regulatory authorities (including the National Association of Insurance
Commissioners, or similar organizations or their successors). The Company shall
not file any Registration Statement or Prospectus or any amendments or
supplements thereto in respect of which the Holders must be afforded an
opportunity to Review prior to the filing of such document, if the Holders of a
majority in aggregate principal amount of the Registrable Securities covered by
such Registration Statement, their Special Counsel, any Participating
Broker-Dealer or the managing underwriters, if any, or their counsel shall
reasonably object to the Company if such objection states that the person or
persons making such objection believe that such Registration Statement,
Prospectus or amendment does not comply in any material respect with any
applicable law.
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(b) Provide an indenture trustee for the Registrable
Securities or the Exchange Securities, as the case may be, and cause the
Indenture (or Original Indenture) to be qualified under the TIA not later than
the effective date of the first Registration Statement; and in connection
therewith, use its best efforts to effect such changes to such indenture as may
be required for such indenture to be so qualified in accordance with the terms
of the TIA; and execute, and use its best efforts to cause such trustee to
execute, all documents as may be required to effect such changes, and all other
forms and documents required to be filed with the SEC to enable such indenture
to be so qualified in a timely manner.
(c) Prepare and file with the SEC such amendments and
post-effective amendments to the Registration Statement as may be necessary to
keep such Registration Statement continuously effective for the time periods
required hereby; cause the related Prospectus to be supplemented by any
Prospectus supplement required by Applicable Law, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provisions then in force) under the
Securities Act; and comply in all material respects with the provisions of the
Securities Act and the Exchange Act applicable thereto with respect to the
disposition of all securities covered by such Registration Statement, as so
amended, or in such Prospectus, as so supplemented, in accordance with the
intended methods of distribution set forth in such Registration Statement or
Prospectus as so amended.
(d) Furnish to such selling Holders and Participating
Broker-Dealers who so request (i) upon the Company's receipt, a copy of the
order of the SEC declaring such Registration Statement and any post-effective
amendment thereto effective and (ii) such reasonable number of copies of such
Registration Statement and of each amendment and supplement thereto (in each
case including any documents incorporated therein by reference and all
exhibits), (iii) such reasonable number of copies of the Prospectus included in
such Registration Statement (including each preliminary Prospectus), and such
reasonable number of copies of the final Prospectus as filed by the Company
pursuant to Rule 424(b) under the Securities Act, in conformity with the
requirements of the Securities Act, and (iv) such other documents (including any
amendments required to be filed pursuant to clause (c) of this Section), as any
such Person may reasonably request. The Company hereby consents to the use of
the Prospectus by each of the selling Holders of Registrable Securities or each
such Participating Broker-Dealer, as the case may be, and the underwriters or
agents, if any, and dealers (if any), in connection with the offering and sale
of the Registrable Securities covered by, or
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<PAGE> 15
the sale by Participating Broker-Dealers of the Exchange Securities pursuant to,
such Prospectus and any amendment thereto.
(e) If (A) a Shelf Registration is filed pursuant to Section 3
or (B) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, notify the selling Holders of Registrable Securities, their
Special Counsel, each Participating Broker-Dealer and the managing underwriters,
if any, as promptly as possible, and confirm such notice in writing, (i) when a
Prospectus has been filed, and, with respect to a Registration Statement or any
post-effective amendment, when the same has become effective under the
Securities Act, (ii) of the issuance by the SEC of any stop order suspending the
effectiveness of a Registration Statement or of any order preventing or
suspending the use of any Prospectus or the initiation of any proceedings for
that purpose, (iii) if, at any time when a Prospectus is required by the
Securities Act to be delivered in connection with sales of Registrable
Securities, the representations and warranties of the Company contained in any
agreement (including any underwriting agreement) contemplated by Section 6(n)
below cease to be true and correct in any material respect, (iv) of the receipt
by the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of a Registration Statement or any
of the Registrable Securities or the Exchange Securities to be sold by any
Participating Broker-Dealer for offer or sale in any jurisdiction, or the
contemplation, initiation or threatening of any proceeding for such purpose, (v)
of the happening of any event that makes any statement made in such 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, in light of the circumstances under which they were
made, not misleading, and (vi) of the Company's reasonable determination that a
post-effective amendment to a Registration Statement would be appropriate.
(f) Prior to any public offering of Registrable Securities or
any delivery of a Prospectus contained in the Exchange Offer Registration
Statement by any Participating Broker-Dealer who seeks to sell Exchange
Securities during the Applicable Period, use its best efforts to register or
qualify, and, if applicable, to cooperate with the selling Holders of
Registrable Securities, the underwriters, if any, and their respective counsel
in connection with the registration or qualification
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<PAGE> 16
(or exemption from such registration or qualification) of, such Registrable
Securities to be included in a Registration Statement for offer and sale under
the securities or Blue Sky laws of such jurisdictions in the United States as
any selling Holder, Participating Broker-Dealer or the managing underwriters, if
any, reasonably request in writing; and, if Securities are offered other than
through an Underwritten Offering, the Company shall cause its counsel to perform
Blue Sky investigations and file registrations and qualifications required to be
filed pursuant to this Section 6(f) at the expense of the Company; keep each
such registration or qualification (or exemption therefrom) effective during the
period such Registration Statement is required to be kept effective and do any
and all other acts or things reasonably necessary or advisable to enable the
disposition in such jurisdictions of the Securities covered by the applicable
Registration Statement; provided, that the Company shall not be required in
connection therewith to file any general consent to service of process or to
qualify as a foreign corporation or as a dealer in securities in any
jurisdiction where it is not now so qualified or to subject itself to taxation
in respect of doing business in any jurisdiction in which it is not otherwise so
subject.
(g) If (A) a Shelf Registration is filed pursuant to Section 3
or (B) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, use its best efforts to prevent the issuance of any order
suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of a Prospectus or suspending the qualification
(or exemption from qualification) of any of the Registrable Securities for sale
in any jurisdiction, and, if any such order is issued, to use its best efforts
to obtain the withdrawal of any such order at the earliest practicable time.
(h) If (A) a Shelf Registration is filed pursuant to Section 3
or (B) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, and if requested by the managing underwriters, if any, or the
Holders of a majority in aggregate principal amount of the Registrable
Securities, (i) promptly incorporate in a Prospectus or post-effective amendment
such information as the managing underwriters, if any, or such Holders
reasonably request to be included therein required to comply with any applicable
law and (ii) make all required filings of such Prospectus or such post-effective
amendment as soon as
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practicable after the Company has received notification of such matters required
by applicable law to be incorporated in such Prospectus or post-effective
amendment; provided, that the Company shall not be required to take any action
under this clause (h) that would, in the opinion of counsel to the Company,
violate applicable law.
(i) If (A) a Shelf Registration is filed pursuant to Section 3
or (B) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, cooperate with the selling Holders and the managing
underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing Registrable Securities 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 ("DTC"); and enable such Registrable
Securities to be in such denominations and registered in such names as the
managing underwriters, if any, or Holders may request at least two Business Days
prior to any sale of Registrable Securities.
(j) If (A) a Shelf Registration is filed pursuant to Section 3
or (B) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, upon the occurrence of any event contemplated by paragraph
6(e)(v) or 6(e)(vi) above, as promptly as practicable prepare a supplement or
post-effective amendment to the Registration Statement or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities being sold thereunder
or to the purchasers of the Exchange Securities to whom such Prospectus will be
delivered by a Participating Broker-Dealer, 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) Use its best efforts to cause the Securities covered by a
Registration Statement to be rated with the appropriate rating agencies, if
appropriate, if so requested by the Holders of a majority in aggregate principal
amount of
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Securities covered by such Registration Statement or the managing underwriters,
if any.
(l) Prior to the effective date of the first Registration
Statement relating to the Registrable Securities, (i) provide the Trustee with
certificates for the Registrable Securities in a form eligible for deposit with
DTC and (ii) provide a CUSIP number for the Registrable Securities.
(m) [Intentionally Left Blank]
(n) If a Shelf Registration is filed pursuant to Section 3,
enter into such agreements (including an underwriting agreement in form, scope
and substance as is customary in Underwritten Offerings) and take all such other
actions in connection therewith (including those reasonably requested by the
managing underwriters, if any, or the Holders of a majority of the Registrable
Securities being sold) in order to expedite or facilitate the registration or
the disposition of such Registrable Securities, and in such connection, whether
or not an underwriting agreement is entered into and whether or not the
registration is an Underwritten Registration, (i) make such representations and
warranties to the Holders and the underwriters, if any, with respect to the
business of the Company and its subsidiaries, and the 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 of debt securities
similar to the Notes, and confirm the same if and when reasonably requested;
(ii) use its best efforts to obtain opinions of counsel to the Company and
updates thereof (which counsel and opinions (in form, scope and substance) shall
be reasonably satisfactory to the managing underwriters, if any, and the Holders
of a majority in principal amount of the Registrable Securities being sold),
addressed to each selling Holder of Registrable Securities and each of the
underwriters, if any, covering the matters customarily covered in opinions
requested in Underwritten Offerings; (iii) use its best efforts to obtain "cold
comfort" letters and updates thereof (which letters and updates (in form, scope
and substance) shall be reasonably satisfactory to the managing underwriters)
from the independent certified public accountants of the Company (and, if
necessary, any other independent certified public accountants of any subsidiary
of the Company or of any business acquired by the Company for which financial
statements and financial data are, or are required to be, included in the
Registration Statement), addressed to each of the underwriters and each selling
Holder of Registrable Securities, such letters to be in customary form and
covering
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matters of the type customarily covered in "cold comfort" letters in connection
with Underwritten Offerings; and (iv) use its best efforts to deliver such
documents and certificates as may be reasonably requested by the Holders of a
majority in principal amount of the Registrable Securities being sold and the
managing underwriters, if any, to evidence the continued validity of the
representations and warranties of the Company and its subsidiaries made pursuant
to clause (i) above and to evidence compliance with any conditions contained in
the underwriting agreement or other similar agreement entered into by the
Company.
(o) Comply in all material respects with all applicable rules
and regulations of the SEC and make generally available to its security holders
earnings statements satisfying the provisions of Section 11(a) of the Securities
Act and Rule 158 thereunder (or any similar rule promulgated under the
Securities Act) 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 on the first day of the fiscal quarter following each fiscal
quarter in which Registrable Securities are sold to underwriters in a firm
commitment or best efforts underwritten offering and (ii) if not sold to
underwriters in such an offering, commencing on the first day of the first
fiscal quarter of the Company after the effective date of a Registration
Statement, which statements shall cover said 12-month periods.
(p) Upon consummation of an Exchange Offer or Private
Exchange, obtain an opinion of counsel to the Company (in form, scope and
substance customary for underwritten transactions), addressed to the Trustee for
the benefit of all Holders participating in the Exchange Offer or Private
Exchange, as the case may be, to the effect that (i) the Company has duly
authorized, executed and delivered the Exchange Securities or the Private
Exchange Securities, as the case may be, and the Indenture, and (ii) the
Exchange Securities or the Private Exchange Securities, as the case may be, and
the Indenture constitute legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective terms,
subject to customary exceptions and qualifications.
(q) If an Exchange Offer or Private Exchange is to be
consummated, upon delivery of the Registrable Securities by such Holders to the
Company (or to such other Person as directed by the Company) in exchange for the
Exchange Securities or the Private Exchange Securities, as the case may be, the
Company shall mark, or caused to be marked, on such Registrable Securities that
such Registrable Securities are being cancelled in exchange for the Exchange
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<PAGE> 20
Securities or the Private Exchange Securities, as the case may be; in no event
shall such Registrable Securities be marked as paid or otherwise satisfied.
(r) Cooperate with each seller of Registrable Securities
covered by any Registration Statement and each underwriter, if any,
participating in the disposition of such Registrable Securities and their
respective counsel in connection with any filings required to be made with the
NASD.
(s) Use its best efforts to take all other steps necessary to
effect the registration of the Registrable Securities covered by a Registration
Statement contemplated hereby.
The Company may require each seller of Registrable Securities
or Participating Broker-Dealer as to which any registration is being effected to
furnish to the Company such information regarding such seller or Participating
Broker-Dealer and the distribution of such Registrable Securities or Exchange
Securities as the Company may, from time to time, reasonably request and to
provide comments with respect to the Registration Statement to be used in
connection with any Shelf Registration. The Company may exclude from such
registration the Registrable Securities or Exchange Securities of any Seller so
long as such seller fails to furnish such information.
Each Holder of Registrable Securities and each Participating
Broker-Dealer agrees by acquisition of such Registrable Securities or Exchange
Securities of any Participating Broker-Dealer that, upon receipt of written
notice from the Company of the happening of any event of the kind described in
Section 6(e)(ii), 6(e)(iv), 6(e)(v) or 6(e)(vi), such Holder will forthwith
discontinue disposition (in the jurisdictions specified in a notice of a
6(e)(iv) event, and elsewhere in a notice of a 6(e)(ii), 6(e)(v) or 6(e)(vi)
event) of such Registrable Securities covered by such Registration Statement or
Prospectus to be sold by such Holder until such Holder's receipt of the copies
of the supplemented or amended Prospectus contemplated by Section 6(j), or until
it is advised in writing (the "Advice") by the Company that offers or sales in a
particular jurisdiction may be resumed or that the use of the applicable
Prospectus may be resumed, as the case may be, and has received copies of any
amendments or supplements thereto. If the Company shall give such notice, each
of the Effectiveness Period and the Applicable Period shall be extended by the
number of days during such periods from and including the date of the giving of
such notice to and including the date when each seller of such Registrable
Securities covered by such Registration Statement shall have received
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<PAGE> 21
(x) the copies of the supplemented or amended Prospectus contemplated by Section
6(j) or (y) the Advice.
7 Registration Expenses
(a) All fees and expenses incident to the Company's
performance of or compliance with this Agreement shall be borne by the Company
whether or not the Exchange Offer or a Shelf Registration is filed or becomes
effective, including, without limitation:
(i) all registration and filing fees
(including, without limitation, (A) fees with respect to filings required to be
made with the NASD by the Purchasers or in connection with an underwritten
offering and (B) fees and expenses of compliance with state securities or Blue
Sky laws (including, without limitation, reasonable fees and disbursements of
counsel in connection with Blue Sky qualifications of the Registrable Securities
or Exchange Securities and determination of the eligibility of the Registrable
Securities or Exchange Securities for investment under the laws of such
jurisdictions (x) where the Holders of Registrable Securities are located, in
the case of the Exchange Securities, or (y) as provided in Section 6(f), in the
case of Registrable Securities or Exchange Securities to be sold by a
Participating Broker-Dealer during the Applicable Period);
(ii) printing expenses (including, without
limitation, expenses of printing certificates for Registrable Securities or
Exchange Securities in a form eligible for deposit with DTC and of printing
prospectuses if the printing of prospectuses is requested by the managing
underwriters, if any, or, in respect of Registrable Securities or Exchange
Securities to be sold by a Participating Broker-Dealer during the Applicable
Period, by the Holders of a majority in aggregate principal amount of the
Registrable Securities included in any Registration Statement or of such
Exchange Securities, as the case may be);
(iii) messenger, telephone, duplication,
word processing and delivery expenses incurred by the Company in the performance
of its obligations hereunder;
(iv) fees and disbursements of counsel for
the Company;
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(v) fees and disbursements of all
independent certified public accountants for the Company referred to in
Section 6(n)(iii) (including, without limitation, the expenses of any
special audit and "cold comfort" letters required by or incident to
such performance);
(vi) fees and expenses of any "qualified
independent underwriter" or other independent appraiser participating
in an offering pursuant to Section 3 of Schedule E to the By-laws of
the NASD, but only where the need for such a "qualified independent
underwriter" arises due to a relationship with the Company;
(vii) Securities Act liability insurance, if
the Company so desires such insurance;
(viii) fees and expenses of all other
Persons retained by the Company; internal expenses of the Company
(including, without limitation, all salaries and expenses of officers
and employees of the Company performing legal or accounting duties);
and the expense of any annual audit; and
(ix) rating agency fees and the fees and
expenses incurred in connection with the listing of the Securities to
be registered on any securities exchange.
(b) The Company shall reimburse the Holders for the reasonable
fees and disbursements of not more than one counsel chosen by the Holders of a
majority in aggregate principal amount of the Registrable Securities to be
included in any Registration Statement. Notwithstanding the foregoing, each
Holder shall pay all underwriting discounts and commissions of any underwriters
with respect to any Registrable Securities sold by or on its behalf.
8 Indemnification
(a) Indemnification by the Company. The Company shall, without
limitation as to time, indemnify and hold harmless each Holder, each
Participating Broker-Dealer selling Exchange Securities, each Person who
controls each such Holder or such Participating Broker-Dealer (within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act) and the officers, directors, partners, employees, representatives and
agents of each such
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<PAGE> 23
Holder, Participating Broker-Dealer and controlling person, to the fullest
extent lawful, from and against any and all losses, claims, damages,
liabilities, costs (including, without limitation, costs of preparation and
reasonable attorneys' fees) and expenses (including, without limitation,
reasonable costs and expenses incurred in connection with investigating,
preparing, pursuing or defending against any of the foregoing) (collectively,
"Losses"), as incurred, directly or indirectly caused by, related to, based
upon, arising out of or in connection with any untrue or alleged untrue
statement of a material fact contained in any Registration Statement, Prospectus
or form of prospectus, or in any amendment or supplement thereto, or in any
preliminary prospectus, or 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 light of the circumstances under which they were made, not
misleading except insofar as such Losses arise out of or are based upon
information relating to such Holder or Participating Broker-Dealer and furnished
in writing to the Company by, and relating to, such Holder or Participating
Broker-Dealer expressly for use therein. The Company shall also indemnify
underwriters, selling brokers, dealer managers and similar securities industry
professionals participating in the distribution, their officers, directors,
agents and employees and each Person who controls such Persons (within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act) to the same extent as provided above with respect to the indemnification of
the Holders or the Participating Broker-Dealers except insofar as such Losses
are based solely upon (i) information furnished by such party to the Company
expressly for use therein or (ii) such underwriter's gross negligence or willful
misconduct. 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 purchased 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 action or
inaction of such indemnified person.
(b) Indemnification by Holder of Registrable Securities. In
connection with any Registration Statement, Prospectus or form of prospectus,
any amendment or supplement thereto, or any preliminary prospectus in which a
Holder is participating, such Holder shall furnish to the Company in writing
such information as the Company reasonably requests for use in connection with
any Registration Statement, Prospectus or form of prospectus, any amendment or
supplement thereto, or any preliminary prospectus and shall, without limitation
as to time, indemnify and hold harmless the Company, its directors, officers,
agents
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<PAGE> 24
and employees, each Person, if any, who controls the Company (within the
meaning of Section 15 of the Securities Act and Section 20(a) of the Exchange
Act), and the directors, officers, representatives, agents or employees of such
controlling persons, to the fullest extent lawful, from and against all Losses
arising out of or based upon any untrue or alleged untrue statement of a
material fact contained in any Registration Statement, Prospectus or form of
prospectus or in any amendment or supplement thereto or in any preliminary
prospectus, or 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 light of the circumstances under which they were made, not misleading to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement of a material fact or omission or alleged omission of a material fact
is contained in any information so furnished in writing by such Holder to the
Company expressly for use therein.
(c) Conduct of Indemnification Proceedings. If any Proceedings
shall be brought or asserted against any Person entitled to indemnity hereunder
(an "indemnified party"), such indemnified party shall promptly notify the party
or parties from which such indemnity is sought (the "indemnifying parties") in
writing; provided, however, that the failure to so notify the indemnifying
parties shall not relieve the indemnifying parties from any obligation or
liability except to the extent (but only to the extent) that it shall be finally
determined by a court of competent jurisdiction (which determination is not
subject to appeal) that the indemnifying parties have been prejudiced materially
by such failure.
The indemnifying party shall have the right, exercisable by
giving written notice to an indemnified party, within 20 business days after
receipt of written notice from such indemnified party of such Proceeding, to
assume, solely at its expense, the defense of any such Proceeding; provided,
however, that an indemnified party shall have the right to employ separate
counsel in any such Proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
indemnified party or parties unless: (1) the indemnifying party has agreed to
pay such fees and expenses; or (2) the indemnifying party shall have failed
promptly to assume the defense of such Proceeding or shall have failed to employ
counsel reasonably satisfactory to such indemnified party; or (3) the named
parties to any such Proceeding (including any impleaded parties) include both
such indemnified party and the indemnifying party or any of its affiliates or
controlling persons, and such indemnified party shall have been advised by
counsel that there may be one or more defenses available to such indemnified
party that are in addition to, or in conflict with, those defenses
24
<PAGE> 25
available to the indemnifying party or such affiliate or controlling person (in
which case, if such indemnified party notifies the indemnifying parties in
writing that it elects to employ separate counsel at the expense of the
indemnifying parties, the indemnifying parties shall not have the right to
assume the defense thereof and the reasonable fees and expenses of such counsel
shall be at the expense of the indemnifying party; it being understood, however,
that, the indemnifying party shall not, in connection with any one such
Proceeding or separate but substantially similar or related Proceedings in the
same jurisdiction, arising out of the same general allegations or circumstances,
be liable for the fees and expenses of more than one separate firm of attorneys
(together with appropriate local counsel) at any time for such indemnified
party).
No indemnifying party shall be liable for any settlement of
any such Proceeding effected without its written consent, which consent shall
not be unreasonably withheld, but if settled with its written consent, or if
there be a final judgment for the plaintiff in any such Proceeding, each
indemnifying party jointly and severally agrees, subject to the exceptions and
limitations set forth above, to indemnify and hold harmless each indemnified
party from and against any and all Losses by reason of such settlement or
judgment. The indemnifying party shall not consent to the entry of any judgment
or enter into any settlement that does not include as an unconditional term
thereof the giving by the claimant or plaintiff to each indemnified party of a
release, in form and substance reasonably satisfactory to the indemnified party,
from all liability in respect of such Proceeding for which such indemnified
party would be entitled to indemnification hereunder (whether or not any
indemnified party is a party thereto).
(d) Contribution. If the indemnification provided for in this
Section 8 is unavailable to an indemnified party or is insufficient to hold such
indemnified party harmless for any Losses in respect of which this Section 8
would otherwise apply by its terms (other than by reason of exceptions provided
in this Section 8), then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall have a joint and several obligation
to contribute to the amount paid or payable by such indemnified party as a
result of such Losses, (i) in such proportion as is appropriate to reflect the
relative benefits received by the indemnifying party, on the one hand, and such
indemnified party, on the other hand, from the offering of the Notes, 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 the indemnifying
party, on the one hand, and such indemnified
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<PAGE> 26
party, on the other hand in connection with the actions, statements or omissions
that resulted in such Losses as well as any other relevant equitable
considerations. The relative fault of such indemnifying party, on the one hand,
and indemnified party, on the other hand, shall be determined by reference to,
among other things, whether any untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied by such indemnifying party or indemnified party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent any such statement or omission. The amount paid or payable by
an indemnified party as a result of any Losses shall be deemed to include any
reasonable legal or other fees or expenses actually incurred by such party in
connection with any Proceeding, to the extent such party would have been
indemnified for such fees or expenses if the indemnification provided for in
Section 8(a) or 8(b) was available to such party.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 8(d) were determined by pro
rata allocation or by any other method of allocation that does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 8(d), an indemnifying
party that is a selling Holder of Registrable Securities shall not be required
to contribute, in the aggregate, any amount in excess of such Holder's Maximum
Contribution Amount. A selling Holder's "Maximum Contribution Amount" shall
equal the excess of (i) the aggregate proceeds received by such Holder pursuant
to the sale of such Registrable Securities over (ii) the aggregate amount of
damages that such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement of a material fact or omission or alleged
omission of a material fact. 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 indemnity and contribution agreements contained in this
Section 8 are in addition to any liability that the indemnifying parties may
have to the indemnified parties; provided, that any excess payment made by the
Company shall be refunded to the Company by the indemnified party receiving such
excess payment.
9 Rule 144 and Rule 144A
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The Company covenants that it shall (a) file the reports
required to be filed by it (if so required) under the Securities Act and the
Exchange Act in a timely manner and, if at any time the Company is not required
to file such reports, it will, upon the request of any Holder make available
other information necessary to permit sales pursuant to Rule 144 and Rule 144A
and (b) take such further action as any Holder may reasonably request, all to
the extent required from time to time to enable such Holder to sell Registrable
Securities without registration under the Securities Act pursuant to the
exemptions provided by Rule 144 and Rule 144A. Nothing in this Section 9 shall
be deemed to require the Company to register any of its securities pursuant to
the Exchange Act.
10 Underwritten Registrations
If any of the Registrable Securities 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 manage the offering will
be selected by the Holders of a majority in aggregate principal amount of such
Registrable Securities included in such offering with the written consent of the
Company, which consent will not be unreasonably withheld.
No Holder of Registrable Securities may participate in any
Underwritten Registration hereunder unless such Holder (a) agrees to sell such
Holder's Registrable Securities on the basis provided in any underwriting
arrangements approved by the Persons entitled hereunder to approve such
arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
11 Miscellaneous
(a) Guarantors. The Company hereby agrees to cause each
Guarantor to be bound by the terms hereof as if it was the Company hereunder and
the guaranty was the Registrable Security.
(b) Remedies. In the event of a breach by the Company of any
of its obligations under this Agreement, each Holder, in addition to being
entitled to exercise all rights provided herein, or granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Agreement. The Company agrees that monetary damages would not be
adequate
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compensation for any loss incurred by reason of a breach by it of any of the
provisions of this Agreement and 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.
(c) No Inconsistent Agreements. The Company has not entered
into, as of the date hereof, and shall not enter into, after the date of this
Agreement, any agreement with respect to any of its securities that is
inconsistent with the rights granted to the Holders of Registrable Securities in
this Agreement or otherwise conflicts with the provisions hereof.
(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, unless the Company has obtained the written consent of Holders
of at least a majority of the then outstanding aggregate principal amount of
Registrable Securities; provided, however, that Section 8 shall not be amended,
modified or supplemented, and waivers or consents to departures from this
proviso may not be given, unless the Company has obtained the written consent of
each Holder. 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 whose Registrable Securities are being sold pursuant to a
Registration Statement and that does not directly or indirectly affect the
rights of other Holders may be given by Holders of at least a majority in
aggregate principal amount of the Registrable Securities being sold by such
Holders pursuant to such Registration Statement; provided, that the provisions
of this sentence may not be amended, modified or supplemented except in
accordance with the provisions of the immediately preceding sentence.
(e) Notices. All notices and other communications (including,
without limitation, any notices or other communications to the Trustee) provided
for or permitted hereunder shall be made in writing by hand-delivery, certified
first-class mail, return receipt requested, next-day air courier or facsimile:
(i) if to a Holder, at the most current
address given by such Holder to the Company in accordance with the
provisions of this Section 11(e), which address initially is, with
respect to each Holder, the address of such Holder maintained by the
Registrar under the Indenture, with a copy to Skadden, Arps, Slate,
Meagher & Flom LLP, 300 South
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<PAGE> 29
Grand Avenue, Los Angeles, California 90071, telecopy number (213)
687-5600, Attention: Michael A. Woronoff, Esq.; and
(ii) if to the Company, 172 Trade Street,
Lexington, Kentucky 40508, Attention: Chief Executive Officer, and
thereafter at such other address, notice of which is given in
accordance with the provisions of this Section 11(e), with a copy to
Dechert Price & Rhoads, 4000 Bell Atlantic Tower, 1717 Arch Street,
Philadelphia, Pennsylvania 19103-2793, Attn: Christopher G. Karras.
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; one business
day after being timely delivered to a next-day air courier; and when receipt is
acknowledged by the addressee, if telecopied.
Copies of all such notices, demands or other communications
shall be concurrently delivered by the Person giving the same to the Trustee
under the Indenture at the address specified in such Indenture.
(f) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including, without limitation and without the need for an express
assignment, subsequent Holders.
(g) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AS APPLIED TO
CONTRACTS MADE AND PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW. THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY NEW
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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 IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY,
GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. THE COMPANY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER
APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT
IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT
IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. THE COMPANY
IRREVOCABLY CONSENTS, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER
APPLICABLE LAW, TO THE SERVICE OF PROCESS 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 COMPANY AT ITS SAID ADDRESS, SUCH
SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL
AFFECT THE RIGHT OF ANY HOLDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY IN
ANY OTHER JURISDICTION.
(j) Severability. 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 best 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.
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(k) Entire Agreement. 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
Company in respect of securities sold pursuant to the Purchase Agreement. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to such subject matter.
(l) Attorneys' Fees. In any action or Proceeding brought to
enforce any provision of this Agreement, or where any provision hereof is
validly asserted as a defense, the prevailing party, as determined by the
courts, shall be entitled to recover reasonable attorneys' fees in addition to
its costs and expenses and any other available remedy.
(m) Securities Held by the Company or its Affiliates. Whenever
the consent or approval of Holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by the Company or
its affiliates (as such term is defined in Rule 405 under the Securities Act)
(other than the Holders that are deemed to be such affiliates solely by reason
of their holdings of such Registrable Securities) shall not be counted in
determining whether such consent or approval was given by the Holders of such
required percentage.
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REGISTRATION RIGHTS AGREEMENT
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
CLARK MATERIAL HANDLING COMPANY
By: /s/ Martin M. Dorio
-------------------------------
Name: Martin M. Dorio, Jr.
Title: President and CEO
ACCEPTED AND AGREED TO:
JEFFERIES & COMPANY, INC.
By: /x/ Nauman Toor
---------------------------
Name: Nauman Toor
Title: Vice President
BEAR, STEARNS & CO. INC.
By: /s/ James B. Nish
---------------------------
Name: James B. Nish
Title: Senior Managing Director
S-1
<PAGE> 1
EXHIBIT 4.6
CLARK MATERIAL HANDLING COMPANY
$20,000,000 13% Senior Exchangeable Preferred Stock due 2007
REGISTRATION RIGHTS AGREEMENT
July 17, 1998
JEFFERIES & COMPANY, INC.
11100 Santa Monica Boulevard
10th Floor
Los Angeles, California 90025
BEAR, STEARNS & CO. INC.
245 Park Avenue
New York, New York 10167
Ladies and Gentlemen:
CLARK Material Handling Company, a Delaware corporation (the
"Company"), is issuing and selling to Jefferies & Company, Inc. and Bear,
Stearns & Co. Inc. (collectively, the "Purchasers"), upon the terms set forth in
a purchase agreement, dated as of July 13, 1998 (the "Purchase Agreement"),
$20,000,000 aggregate liquidation preference of the Company's 13% Series A
Senior Exchangeable Preferred Stock due 2007 (the "Preferred Stock"). As an
inducement to the Purchasers to enter into the Purchase Agreement, the Company
agrees with the Purchasers, for the benefit of the holders of the Securities
(defined below) (including, without limitation, the Purchasers), as follows:
1. Definitions
Capitalized terms used herein without definition shall have their
respective meanings set forth in the Purchase Agreement. As used in this
Agreement, the following terms shall have the following meanings:
<PAGE> 2
Advice: See Section 6.
Agreement: This Registration Rights Agreement.
Applicable Period: See Section 2(f).
Business Days: Any day other than (i) Saturday or Sunday, or (ii) a
day on which banking institutions in the State of New York are authorized or
obligated by law, governmental regulation or executive order to be closed.
Certificate of Designation: The Certificate of Designation of the
Powers, Preferences and Relative, Participating, Optional and other Special
Rights of the Preferred Stock and Qualification, Limitations and Restrictions
thereof filed by the Company with the Secretary of State of the State of
Delaware on July __, 1998.
Closing Date: July 17, 1998.
Effectiveness Date: November 16, 1998.
Effectiveness Period: See Section 3(a).
Exchange Act: The Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.
Exchange Offer: See Section 2(a).
Exchange Offer Registration Statement: See Section 2(a).
Exchange Securities: 13% Senior Exchangeable Preferred Stock due
2007 of the Company identical in all material respects to the Preferred Stock,
except for references to series and restrictive legends.
Filing Date: September 15, 1998.
Holder: Each registered holder of Registrable Securities.
Initial Shelf Registration: See Section 3(a).
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<PAGE> 3
Losses: See Section 8(a).
Maximum Contribution Amount: See Section 8(d).
NASD: The National Association of Securities Dealers, Inc.
Participating Broker-Dealer: See Section 2(f).
Person: An individual, trustee, corporation, partnership, joint
stock company, joint venture, trust, unincorporated organization or government
or any agency or political subdivision thereof, union, business association,
firm or other entity.
Private Exchange: See Section 2(g).
Private Exchange Securities: See Section 2(g).
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 under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Securities covered by such Registration
Statement, and all other amendments and supplements to the Prospectus, including
post-effective amendments, and all material incorporated by reference or deemed
to be incorporated by reference in such Prospectus.
Registration Default: See Section 4(a).
Registrable Securities: The (a) Preferred Stock, (b) Private
Exchange Securities and (c) Exchange Securities received by a Holder in the
Exchange Offer that may not be sold without restriction under state and federal
securities laws (other than due solely to the status of such Holder as an
affiliate of the Company within the meaning of the Securities Act), in each case
until (i) a Registration Statement covering such Securities has been declared
effective by the SEC and such Securities have been disposed of in accordance
with the effective Registration Statement, (ii) such shares of Preferred Stock
have been exchanged pursuant to the Exchange Offer for Exchange Securities that
may be resold without
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<PAGE> 4
restriction under state or federal securities laws, or (iii) such Securities
cease to be outstanding.
Registrar and Transfer Agent: The Registrar and Transfer Agent with
respect to the Preferred Stock, which initially shall be United States Trust
Company of New York.
Registration Statement: Any registration statement of the Company
that covers any of the Registrable Securities pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits, and
all material incorporated by reference or deemed to be incorporated by reference
in such registration statement.
Review: See Section 6(a).
Rule 144: Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the SEC.
Rule 144A: Rule 144A under the Securities Act, as such Rule may be
amended from time to time, or any similar rule (other than Rule 144) or
regulation hereafter adopted by the SEC.
Rule 415: Rule 415 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC.
SEC: The Securities and Exchange Commission.
Securities: The Preferred Stock, the Private Exchange Securities and
the Exchange Securities, collectively.
Securities Act: The Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
Shelf Notice: See Section 2(i).
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<PAGE> 5
Shelf Registration: The Initial Shelf Registration and any
Subsequent Shelf Registration.
Special Counsel: Counsel chosen by the Holders of a majority in
aggregate liquidation preference of Securities.
Subsequent Shelf Registration: See Section 3(b).
Underwritten Registration or Underwritten Offering: A registration
in which securities of the Company are sold to an underwriter for reoffering to
the public.
Weekly Liquidated Damages Amount: See Section 4(a).
2. Exchange Offer
(a) The Company shall (i) prepare and file with the SEC promptly
after the date hereof, but in no event later than the Filing Date, a
registration statement (the "Exchange Offer Registration Statement") on an
appropriate form under the Securities Act with respect to a proposed offer (the
"Exchange Offer") to the Holders to issue and deliver to such Holders, in
exchange for the shares of Preferred Stock, a like aggregate liquidation
preference of Exchange Securities, (ii) use its best efforts to cause the
Exchange Offer Registration Statement to become effective as promptly as
practicable after the filing thereof, but in no event later than the
Effectiveness Date, (iii) keep the Exchange Offer Registration Statement
effective until the consummation of the Exchange Offer pursuant to its terms,
and (iv) unless the Exchange Offer would not be permitted by a policy of the
SEC, commence the Exchange Offer and use its best efforts to issue, on or prior
to 30 business days after the date on which the Exchange Offer Registration
Statement is declared effective, Exchange Securities in exchange for all shares
of Preferred Stock tendered prior thereto in the Exchange Offer.
The Exchange Offer shall not be subject to any conditions, other
than that (i) the Exchange Offer does not violate applicable law or any
applicable interpretation of the Staff of the SEC, (ii) no action or proceeding
shall have been instituted or threatened in any court or by any governmental
agency that could reasonably be expected to materially impair the ability of the
Company to proceed with the Exchange Offer, and no material adverse development
shall have occurred
5
<PAGE> 6
in any such existing action or proceeding with respect to the Company, and (iii)
all governmental approvals necessary for the consummation of the Exchange Offer
shall have been obtained.
(b) The Exchange Securities shall be issued under, and entitled to
the benefits of, the Certificate of Designation.
(c) In connection with the Exchange Offer, the Company shall:
(i) mail to each Holder a copy of the Prospectus forming part
of the Exchange Offer Registration Statement, together with an appropriate
letter of transmittal that is an exhibit thereto and related documents;
(ii) keep the Exchange Offer open for not less than 20
Business Days after the date notice thereof is mailed to the Holders (or longer
if required by applicable law);
(iii) utilize the services of a depository for the Exchange
Offer with an address in the Borough of Manhattan, The City of New York;
(iv) permit Holders to withdraw tendered shares of Preferred
Stock at any time prior to the close of business, New York time, on the last
Business Day on which the Exchange Offer shall remain open; and
(v) otherwise comply in all material respects with all laws
applicable to the Exchange Offer.
(d) As soon as practicable after the close of the Exchange Offer,
the Company shall:
(i) accept for exchange all shares of Preferred Stock validly
tendered and not validly withdrawn pursuant to the Exchange Offer;
(ii) deliver to the Registrar and Transfer Agent for
cancellation all shares of Preferred Stock so accepted for exchange; and
(iii) use its best efforts to cause the Registrar and Transfer
Agent promptly to countersign and deliver to each Holder of shares of Preferred
6
<PAGE> 7
Stock, Exchange Securities equal in aggregate liquidation preference to the
shares of Preferred Stock of such Holder so accepted for exchange.
(e) Dividends on each Exchange Security and Private Exchange
Security will accrue from the last dividend payment date on which dividends were
paid on the shares of Preferred Stock surrendered in exchange therefor or, if no
dividends have been paid on the shares of Preferred Stock, from the date of
original issue of the shares of Preferred Stock. Each Exchange Security and
Private Exchange Security shall accrue dividends at the rate set forth thereon;
provided, that dividends with respect to the period prior to the issuance
thereof shall accrue at the rate or rates borne by the shares of Preferred Stock
from time to time during such period.
(f) The Company shall include within the Prospectus contained in the
Exchange Offer Registration Statement a section entitled "Plan of Distribution,"
containing a summary statement of the positions taken or policies made by the
Staff of the SEC with respect to the potential "underwriter" status of any
broker-dealer that is the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act) of Exchange Securities received by such broker-dealer in the
Exchange Offer (a "Participating Broker-Dealer"). Such "Plan of Distribution"
section shall also allow the use of the Prospectus by Participating
Brokers-Dealers, and include a statement describing the means by which
Participating Broker-Dealers may resell the Exchange Securities.
If any Holder participating in the Exchange Offer makes the
representations contemplated by Section 2(h) (iv) hereof, the Company shall use
its best efforts to keep the Exchange Offer Registration Statement effective and
to amend and supplement the Prospectus to be lawfully delivered by all Persons
subject to the prospectus delivery requirement of the Securities Act for a
period of 180 days from the consummation of the Exchange Offer (as such period
may be extended pursuant to the last paragraph of Section 6 hereof) (the
"Applicable Period") or such earlier date as the Company shall be notified in
writing that such requesting Participating Broker-Dealer has resold all Exchange
Securities acquired in the Exchange Offer.
(g) If, prior to consummation of the Exchange Offer, any Purchaser
holds any Securities acquired by it and having the status as an unsold allotment
in the initial distribution, the Company shall, upon the request of such
Purchaser, simultaneously with the delivery of the Exchange Securities in the
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<PAGE> 8
Exchange Offer, issue (pursuant to the same Certificate of Designation as the
Exchange Securities) and deliver to such Purchaser, in exchange (the "Private
Exchange") for the Securities held by such Purchaser, a like liquidation
preference of preferred securities of the Company that are identical to the
Exchange Securities (the "Private Exchange Securities"). The Private Exchange
Securities shall bear the same CUSIP number as the Exchange Securities.
(h) Each Holder participating in the Exchange Offer will be required
to represent to the Company in writing that (i) any Exchange Securities received
by such Holder in the Exchange Offer will be acquired in the ordinary course of
its business, (ii) at the time of the consummation of the Exchange Offer such
Holder will have no arrangement or understanding with any Person to participate
in the distribution of the Exchange Securities within the meaning of the
Securities Act or resale of the Exchange Securities in violation of the
Securities Act, (iii) if such Holder is not a broker-dealer, that it is not
engaged in and does not intend to engage in, the distribution of the Exchange
Securities, (iv) if such Holder is a broker-dealer that will receive Exchange
Securities for its own account in exchange for shares of Preferred Stock that
were acquired as a result of market-making or other trading activities, that it
will deliver a prospectus, as required by law, in connection with any resale of
such Exchange Securities, and (v) such Holder is not an "affiliate" of the
Company within the meaning of the Securities Act or, if such Holder is an
affiliate, that it will comply with the registration and prospectus delivery
requirements of the Securities Act applicable to it.
(i) If (i) prior to the consummation of the Exchange Offer, the
Company in its reasonable judgment determines that a majority in aggregate
liquidation preference of the Exchange Securities would not, upon receipt, be
tradeable by the Holders thereof without restriction under the Securities Act
and the Exchange Act and without material restrictions under applicable Blue Sky
or state securities laws, (ii) applicable interpretations of the Staff of the
SEC would not permit the consummation of the Exchange Offer prior to the
Effectiveness Date, (iii) subsequent to the consummation of the Private Exchange
but within one year of the Closing Date, the Purchasers so request, (iv) the
Exchange Offer is not consummated within 240 days of the Closing Date for any
reason or (v) in the case of any Holder not permitted to participate in the
Exchange Offer or of any Holder participating in the Exchange Offer that
receives Exchange Securities that may not be sold without restriction under
state and federal securities laws (other than due solely to the status of such
Holder as an affiliate of the Company within the meaning of the Securities Act)
and, in either case contemplated by this clause (v),
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<PAGE> 9
such Holder notifies the Company within six months of consummation of the
Exchange, then the Company shall promptly deliver to the Holders (or in the case
of any occurrence of the event described in clause (iii) or (v) hereof, to the
Purchasers or any such Holder, as applicable) and the Registrar and Transfer
Agent (in the case of clauses (i), (ii), (iii) and (iv)) notice thereof (the
"Shelf Notice") and shall as promptly as possible thereafter file an Initial
Shelf Registration pursuant to Section 3 hereof.
3. Shelf Registration
If a Shelf Notice is required to be delivered pursuant to Section
2(i) (i), (ii), or (iv), then this Section 3 shall apply to all Registrable
Securities. If a Shelf Notice is required to be delivered pursuant to Section
2(i)(iii), then this Section 3 shall apply solely to Private Exchange
Securities. If a Shelf Notice is required to be delivered pursuant to Section
2(i)(v), then this Section 3 shall apply solely to (i) shares of Preferred Stock
held by any Holder thereof not permitted to participate in the Exchange Offer
and (ii) Exchange Securities that are not freely tradeable as contemplated by
Section 2(i)(v) hereof.
(a) Initial Shelf Registration. The Company shall prepare and file
with the SEC a Registration Statement for an offering to be made on a continuous
basis pursuant to Rule 415 covering all of the Registrable Securities (the
"Initial Shelf Registration"). The Initial Shelf Registration shall be on an
appropriate form permitting registration of such Registrable Securities for
resale by such Holders in the manner or manners designated by them (including,
without limitation, one or more underwritten offerings). The Company shall (i)
not permit any securities other than the Registrable Securities to be included
in any Shelf Registration, and (ii) use its best efforts to cause the Initial
Shelf Registration to be declared effective under the Securities Act as promptly
as practicable after the filing thereof, and to keep the Initial Shelf
Registration continuously effective under the Securities Act until the third
year anniversary of the Closing Date (the "Effectiveness Period"), or such
shorter period ending when (i) all Registrable Securities covered by the Initial
Shelf Registration have been sold pursuant to the Shelf Registration or (ii) a
Subsequent Shelf Registration covering all of the Registrable Securities covered
by and not sold under the Initial Shelf Registration or an earlier Subsequent
Shelf Registration has been declared effective under the Securities Act;
provided, that the Company may suspend the effectiveness of a Shelf Registration
for a period not to exceed 45 days in any calendar year (a "Shelf Blackout
Period"), and the three year period specified above shall be extended by
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<PAGE> 10
the number of days in the Shelf Blackout Period, if (i) an event occurs and is
continuing as a result of which the Shelf Registration 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) (A) 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 and its subsidiaries, taken as a whole,
or (B) the disclosure otherwise relates to a pending material business
transaction that has not yet been publicly disclosed.
(b) Subsequent Shelf Registrations. If any Shelf Registration ceases
to be effective for any reason at any time during the Effectiveness Period
(other than because of the sale of all of the securities registered thereunder),
the Company shall use its best efforts to obtain the prompt withdrawal of any
order suspending the effectiveness thereof, as soon as practicable after such
cessation of effectiveness, to amend the Shelf Registration in a manner
reasonably expected to obtain the withdrawal of the order suspending the
effectiveness thereof, or to file an additional "shelf" Registration Statement
pursuant to Rule 415 covering all of the Registrable Securities covered by and
not sold under the Initial Shelf Registration or an earlier Subsequent Shelf
Registration (a "Subsequent Shelf Registration"). If a Subsequent Shelf
Registration is filed, the Company shall use its best efforts to cause the
Subsequent Shelf Registration to be declared effective as soon as practicable
after such filing and to keep such Subsequent Shelf Registration continuously
effective for a period equal to the number of days in the Effectiveness Period
less the aggregate number of days during which the Initial Shelf Registration,
and any Subsequent Shelf Registration, was previously continuously effective.
4. Liquidated Damages.
(a) The Company acknowledges and agrees that the Holders of
Registrable Securities will suffer damages, and that it would not be feasible to
ascertain the extent of such damages with precision, if the Company fails to
fulfill its obligations hereunder. Accordingly, in the event of such failure by
the Company to fulfill such obligations, the Company hereby agrees to pay
liquidated damages to each Holder of Registrable Securities under the
circumstances and to the extent set forth below:
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(i) if neither the Exchange Offer Registration Statement nor
the Initial Shelf Registration has been filed with the SEC on or prior to
the Filing Date; or
(ii) if neither the Exchange Offer Registration Statement nor
the Initial Shelf Registration is declared effective by the SEC on or
prior to the Effectiveness Date; or
(iii) if the Company has not exchanged Exchange Securities for
all shares of Preferred Stock validly tendered in accordance with the
terms of the Exchange Offer within 30 days after the date on which an
Exchange Offer Registration Statement is declared effective by the SEC; or
(iv) the Initial Shelf Registration is filed and declared
effective by the SEC but thereafter ceases to be effective without being
succeeded within 30 days by a Subsequent Shelf Registration filed and
declared effective;
(each of the foregoing, a "Registration Default").
Accordingly, upon the occurrence of a Registration Default, the
Company shall pay, or cause to be paid, as liquidated damages, and not as a
penalty, to each Holder of a Registrable Security, an additional amount (the
"Weekly Liquidated Damages Amount") equal to (A) for each weekly period
beginning on the date such Registration Default occurs for the first 90-day
period immediately following such date, $.05 per week per $1,000 liquidation
preference of Registrable Securities held by such Holder, and (B) for each
weekly period beginning with the first full week after the 90-day period set
forth in the foregoing clause (A), $.10 per week per $1,000 liquidation
preference of Registrable Securities held by such Holder; provided, that such
liquidated damages will, in each case, cease to accrue (subject to the
occurrence of another Registration Default) on the date on which all
Registration Defaults have been cured. A Registration Default under clause (i)
above shall be cured on the date that either the Exchange Offer Registration
Statement or the Initial Shelf Registration is filed with the SEC; a
Registration Default under clause (ii) above shall be cured on the date that
either the Exchange Offer Registration Statement or the Initial Shelf
Registration is declared effective by the SEC; a Registration Default under
clause (iii) above shall be cured on the earlier of the date (A) the Exchange
Offer is consummated with respect to all shares of Preferred Stock validly
tendered or (B) the
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Company delivers a Shelf Notice to the Holders of Registrable Securities; and a
Registration Default under clause (iv) above shall be cured on the earlier of
(A) the date on which the applicable Shelf Registration is no longer subject to
an order suspending the effectiveness thereof or proceedings relating thereto or
(B) a new Subsequent Shelf Registration is declared effective.
(b) The Company shall notify the Registrar and Transfer Agent within
five Business Days after each Registration Default. The Company shall pay the
liquidated damages due on the Registrable Securities by depositing with the
Registrar and Transfer Agent, in trust, for the benefit of the Holders thereof,
by 12:00 noon, New York City time, on the applicable payment dates specified in
the Certificate of Designation, immediately available funds in sums sufficient
to pay the liquidated damages then due (or, if such dividend is being paid in
additional shares of Senior Preferred Stock, additional fully paid and
non-assessable shares (including fractional shares, if applicable) of Senior
Preferred Stock having an aggregate liquidation preference equal to the amount
of such liquidated damages (rounded to the nearest whole cent)). The liquidated
damages amount due shall be payable on each dividend payment date to the record
Holder of Registrable Securities entitled to receive the dividend payment to be
made on such date as set forth in the Certificate of Designation, commencing
with the first payment date occurring after any Registration Default.
5. [Intentionally Left Blank]
6. Registration Procedures
In connection with the registration of any Securities pursuant to
Sections 2 or 3 hereof, the Company shall effect such registrations to permit
the sale of such Securities in accordance with the intended method or methods of
disposition thereof, and pursuant thereto the Company shall:
(a) Prepare and file with the SEC, on or prior to the Filing Date, a
Registration Statement or Registration Statements as prescribed by Section 2 or
3, and use its best efforts to cause each such Registration Statement to become
effective and remain effective as provided herein; provided, that, if (i) such
filing is pursuant to Section 3 or (ii) a Prospectus contained in an Exchange
Offer Registration Statement filed pursuant to Section 2 is required to be
delivered under the Securities Act by any Participating Broker-Dealer who seeks
to sell Exchange Securities during the Applicable Period relating thereto,
before filing any Registra-
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tion Statement or Prospectus or any amendments or supplements thereto, the
Company shall, if requested, furnish to and afford the Holders of the
Registrable Securities covered by such Registration Statement, their Special
Counsel, each Participating Broker-Dealers, the managing underwriters, if any,
and their counsel a reasonable opportunity to review copies of all such
documents (including copies of any documents to be incorporated by reference
therein and all exhibits thereto) proposed to be filed, such financial and other
information and books and records of the Company, and cause the officers,
directors and employees of the Company, Company counsel and the independent
certified public accountants of the Company to respond to such inquiries (such
actions are hereinafter collectively referred to as the "Review"), as shall be
reasonably necessary, in the opinion of respective counsel to such Holders,
Participating Broker-Dealers and underwriters, to conduct a reasonable
investigation within the meaning of the Securities Act. The Company may require
each Holder to agree to keep confidential any non-public information relating to
the Company received by such Holders and not disclose such information (other
than to an Affiliate or prospective purchaser who agrees to respect the
confidentiality provisions of this Section 6(a)) until such information has been
made generally available to the public unless the release of such information is
required by law or necessary to respond to inquiries of regulatory authorities
(including the National Association of Insurance Commissioners, or similar
organizations or their successors). The Company shall not file any Registration
Statement or Prospectus or any amendments or supplements thereto in respect of
which the Holders must be afforded an opportunity to Review prior to the filing
of such document, if the Holders of a majority in aggregate liquidation
preference of the Registrable Securities covered by such Registration Statement,
their Special Counsel, any Participating Broker-Dealer or the managing
underwriters, if any, or their counsel shall reasonably object to the Company if
such objection states that the person or persons making such objection believe
that such Registration Statement, Prospectus or amendment does not comply in any
material respect with any applicable law.
(b) Provide a registrar and transfer agent for the Registrable
Securities or the Exchange Securities, as the case may be.
(c) Prepare and file with the SEC such amendments and post-effective
amendments to the Registration Statement as may be necessary to keep such
Registration Statement continuously effective for the time periods required
hereby; cause the related Prospectus to be supplemented by any Prospectus
supplement required by Applicable Law, and as so supplemented to be filed
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pursuant to Rule 424 (or any similar provisions then in force) under the
Securities Act; and comply in all material respects with the provisions of the
Securities Act and the Exchange Act applicable thereto with respect to the
disposition of all securities covered by such Registration Statement, as so
amended, or in such Prospectus, as so supplemented, in accordance with the
intended methods of distribution set forth in such Registration Statement or
Prospectus as so amended.
(d) Furnish to such selling Holders and Participating Broker-Dealers
who so request (i) upon the Company's receipt, a copy of the order of the SEC
declaring such Registration Statement and any post-effective amendment thereto
effective and (ii) such reasonable number of copies of such Registration
Statement and of each amendment and supplement thereto (in each case including
any documents incorporated therein by reference and all exhibits), (iii) such
reasonable number of copies of the Prospectus included in such Registration
Statement (including each preliminary Prospectus), and such reasonable number of
copies of the final Prospectus as filed by the Company pursuant to Rule 424(b)
under the Securities Act, in conformity with the requirements of the Securities
Act, and (iv) such other documents (including any amendments required to be
filed pursuant to clause (c) of this Section), as any such Person may reasonably
request. The Company hereby consents to the use of the Prospectus by each of the
selling Holders of Registrable Securities or each such Participating
Broker-Dealer, as the case may be, and the underwriters or agents, if any, and
dealers (if any), in connection with the offering and sale of the Registrable
Securities covered by, or the sale by Participating Broker-Dealers of the
Exchange Securities pursuant to, such Prospectus and any amendment thereto.
(e) If (A) a Shelf Registration is filed pursuant to Section 3 or
(B) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, notify the selling Holders of Registrable Securities, their
Special Counsel, each Participating Broker-Dealer and the managing underwriters,
if any, as promptly as possible, and confirm such notice in writing, (i) when a
Prospectus has been filed, and, with respect to a Registration Statement or any
post-effective amendment, when the same has become effective under the
Securities Act, (ii) of the issuance by the SEC of any stop order suspending the
effectiveness of a Registration Statement or of any order preventing or
suspending the use of any Prospectus or the initiation of any proceedings for
that purpose, (iii) if, at any time when a Prospectus is required by the
Securities Act to be delivered in
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connection with sales of Registrable Securities, the representations and
warranties of the Company contained in any agreement (including any underwriting
agreement) contemplated by Section 6(n) below cease to be true and correct in
any material respect, (iv) of the receipt by the Company of any notification
with respect to the suspension of the qualification or exemption from
qualification of a Registration Statement or any of the Registrable Securities
or the Exchange Securities to be sold by any Participating Broker-Dealer for
offer or sale in any jurisdiction, or the contemplation, initiation or
threatening of any proceeding for such purpose, (v) of the happening of any
event that makes any statement made in such 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, in light of the circumstances under which they were made, not
misleading, and (vi) of the Company's reasonable determination that a
post-effective amendment to a Registration Statement would be appropriate.
(f) Prior to any public offering of Registrable Securities or any
delivery of a Prospectus contained in the Exchange Offer Registration Statement
by any Participating Broker-Dealer who seeks to sell Exchange Securities during
the Applicable Period, use its best efforts to register or qualify, and, if
applicable, to cooperate with the selling Holders of Registrable Securities, the
underwriters, if any, and their respective counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of, such Registrable Securities to be included in a Registration
Statement for offer and sale under the securities or Blue Sky laws of such
jurisdictions in the United States as any selling Holder, Participating
Broker-Dealer or the managing underwriters, if any, reasonably request in
writing; and, if Securities are offered other than through an Underwritten
Offering, the Company shall cause its counsel to perform Blue Sky investigations
and file registrations and qualifications required to be filed pursuant to this
Section 6(f) at the expense of the Company; keep each such registration or
qualification (or exemption therefrom) effective during the period such
Registration Statement is required to be kept effective and do any and all other
acts or things reasonably necessary or advisable to enable the disposition in
such jurisdictions of the Securities covered by the applicable Registration
Statement; provided, that the Company shall not be required in connection
therewith to file any general consent to service of process or to qualify as a
foreign corporation or as a dealer in securities in any jurisdiction where it is
not now so qualified or to subject itself to
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taxation in respect of doing business in any jurisdiction in which it is not
otherwise so subject.
(g) If (A) a Shelf Registration is filed pursuant to Section 3 or
(B) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, use its best efforts to prevent the issuance of any order
suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of a Prospectus or suspending the qualification
(or exemption from qualification) of any of the Registrable Securities for sale
in any jurisdiction, and, if any such order is issued, to use its best efforts
to obtain the withdrawal of any such order at the earliest practicable time.
(h) If (A) a Shelf Registration is filed pursuant to Section 3 or
(B) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, and if requested by the managing underwriters, if any, or the
Holders of a majority in aggregate liquidation preference of the Registrable
Securities, (i) promptly incorporate in a Prospectus or post-effective amendment
such information as the managing underwriters, if any, or such Holders
reasonably request to be included therein required to comply with any applicable
law and (ii) make all required filings of such Prospectus or such post-effective
amendment as soon as practicable after the Company has received notification of
such matters required by applicable law to be incorporated in such Prospectus or
post-effective amendment; provided, that the Company shall not be required to
take any action under this clause (h) that would, in the opinion of counsel to
the Company, violate applicable law.
(i) If (A) a Shelf Registration is filed pursuant to Section 3 or
(B) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, cooperate with the selling Holders and the managing
underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing Registrable Securities 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 ("DTC"); and enable such Registrable
Securities to be in such denomina-
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<PAGE> 17
tions and registered in such names as the managing underwriters, if any, or
Holders may request at least two Business Days prior to any sale of Registrable
Securities.
(j) If (A) a Shelf Registration is filed pursuant to Section 3 or
(B) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, upon the occurrence of any event contemplated by paragraph
6(e)(v) or 6(e)(vi) above, as promptly as practicable prepare a supplement or
post-effective amendment to the Registration Statement or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities being sold thereunder
or to the purchasers of the Exchange Securities to whom such Prospectus will be
delivered by a Participating Broker-Dealer, 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) Use its best efforts to cause the Securities covered by a
Registration Statement to be rated with the appropriate rating agencies, if
appropriate, if so requested by the Holders of a majority in aggregate
liquidation preference of Securities covered by such Registration Statement or
the managing underwriters, if any.
(l) Prior to the effective date of the first Registration Statement
relating to the Registrable Securities, (i) provide the applicable registrar and
transfer agent with certificates for the Registrable Securities in a form
eligible for deposit with DTC and (ii) provide a CUSIP number for the
Registrable Securities.
(m) [Intentionally Left Blank]
(n) If a Shelf Registration is filed pursuant to Section 3, enter
into such agreements (including an underwriting agreement in form, scope and
substance as is customary in Underwritten Offerings) and take all such other
actions in connection therewith (including those reasonably requested by the
managing underwriters, if any, or the Holders of a majority of the Registrable
Securities being sold) in order to expedite or facilitate the registration or
the
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<PAGE> 18
disposition of such Registrable Securities, and in such connection, whether or
not an underwriting agreement is entered into and whether or not the
registration is an Underwritten Registration, (i) make such representations and
warranties to the Holders and the underwriters, if any, with respect to the
business of the Company and its subsidiaries, and the 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 reasonably requested; (ii) use its best efforts to obtain opinions
of counsel to the Company and updates thereof (which counsel and opinions (in
form, scope and substance) shall be reasonably satisfactory to the managing
underwriters, if any, and the Holders of a majority in principal amount of the
Registrable Securities being sold), addressed to each selling Holder of
Registrable Securities and each of the underwriters, if any, covering the
matters customarily covered in opinions requested in Underwritten Offerings;
(iii) use its best efforts to obtain "cold comfort" letters and updates thereof
(which letters and updates (in form, scope and substance) shall be reasonably
satisfactory to the managing underwriters) from the independent certified public
accountants of the Company (and, if necessary, any other independent certified
public accountants of any subsidiary of the Company or of any business acquired
by the Company for which financial statements and financial data are, or are
required to be, included in the Registration Statement), addressed to each of
the underwriters and each selling Holder of Registrable Securities, such letters
to be in customary form and covering matters of the type customarily covered in
"cold comfort" letters in connection with Underwritten Offerings; and (iv) use
its best efforts to deliver such documents and certificates as may be reasonably
requested by the Holders of a majority in principal amount of the Registrable
Securities being sold and the managing underwriters, if any, to evidence the
continued validity of the representations and warranties of the Company and its
subsidiaries made pursuant to clause (i) above and to evidence compliance with
any conditions contained in the underwriting agreement or other similar
agreement entered into by the Company.
(o) Comply in all material respects with all applicable rules and
regulations of the SEC and make generally available to its security holders
earnings statements satisfying the provisions of Section 11(a) of the Securities
Act and Rule 158 thereunder (or any similar rule promulgated under the
Securities Act) 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 on the first day of the fiscal quarter following each fiscal
quarter in which Registrable Securities are
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<PAGE> 19
sold to underwriters in a firm commitment or best efforts underwritten offering
and (ii) if not sold to underwriters in such an offering, commencing on the
first day of the first fiscal quarter of the Company after the effective date of
a Registration Statement, which statements shall cover said 12-month periods.
(p) Upon consummation of an Exchange Offer or Private Exchange,
obtain an opinion of counsel to the Company (in form, scope and substance
customary for underwritten transactions), addressed to all Holders participating
in the Exchange Offer or Private Exchange, as the case may be, to the effect
that (i) the issuance and exchange of the Exchange Securities or the Private
Exchange Securities, as the case may be, is duly authorized by the Company's
charter documents and has been duly authorized by the Company, (ii) the Exchange
Securities or the Private Exchange Securities, as the case may be, will be duly
and validly issued, fully paid and nonassessable; and, to the knowledge of such
counsel, there are no preemptive or similar rights with respect to the issuance
of such Shares and (iii) the rights, preferences and privileges of the Exchange
Securities or the Private Exchange Securities, as the case may be, are as stated
in the Certificate of Designation.
(q) If an Exchange Offer or Private Exchange is to be consummated,
upon delivery of the Registrable Securities by such Holders to the Company (or
to such other Person as directed by the Company) in exchange for the Exchange
Securities or the Private Exchange Securities, as the case may be, the Company
shall mark, or caused to be marked, on such Registrable Securities that such
Registrable Securities are being cancelled in exchange for the Exchange
Securities or the Private Exchange Securities, as the case may be; in no event
shall such Registrable Securities be marked as paid or otherwise satisfied.
(r) Cooperate with each seller of Registrable Securities covered by
any Registration Statement and each underwriter, if any, participating in the
disposition of such Registrable Securities and their respective counsel in
connection with any filings required to be made with the NASD.
(s) Use its best efforts to take all other steps necessary to effect
the registration of the Registrable Securities covered by a Registration
Statement contemplated hereby.
The Company may require each seller of Registrable Securities or
Participating Broker-Dealer as to which any registration is being effected to
furnish
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<PAGE> 20
to the Company such information regarding such seller or Participating
Broker-Dealer and the distribution of such Registrable Securities or Exchange
Securities as the Company may, from time to time, reasonably request and to
provide comments with respect to the Registration Statement to be used in
connection with any Shelf Registration. The Company may exclude from such
registration the Registrable Securities or Exchange Securities of any Seller so
long as such seller fails to furnish such information.
Each Holder of Registrable Securities and each Participating
Broker-Dealer agrees by acquisition of such Registrable Securities or Exchange
Securities of any Participating Broker-Dealer that, upon receipt of written
notice from the Company of the happening of any event of the kind described in
Section 6(e)(ii), 6(e)(iv), 6(e)(v) or 6(e)(vi), such Holder will forthwith
discontinue disposition (in the jurisdictions specified in a notice of a
6(e)(iv) event, and elsewhere in a notice of a 6(e)(ii), 6(e)(v) or 6(e)(vi)
event) of such Registrable Securities covered by such Registration Statement or
Prospectus to be sold by such Holder until such Holder's receipt of the copies
of the supplemented or amended Prospectus contemplated by Section 6(j), or until
it is advised in writing (the "Advice") by the Company that offers or sales in a
particular jurisdiction may be resumed or that the use of the applicable
Prospectus may be resumed, as the case may be, and has received copies of any
amendments or supplements thereto. If the Company shall give such notice, each
of the Effectiveness Period and the Applicable Period shall be extended by the
number of days during such periods from and including the date of the giving of
such notice to and including the date when each seller of such Registrable
Securities covered by such Registration Statement shall have received (x) the
copies of the supplemented or amended Prospectus contemplated by Section 6(j) or
(y) the Advice.
7 Registration Expenses
(a) All fees and expenses incident to the Company's performance of
or compliance with this Agreement shall be borne by the Company whether or not
the Exchange Offer or a Shelf Registration is filed or becomes effective,
including, without limitation:
(i) all registration and filing fees (including, without
limitation, (A) fees with respect to filings required to be made with the
NASD by the Purchasers or in connection with an underwritten offering and
(B) fees and expenses of compliance with state securities or Blue Sky
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<PAGE> 21
laws (including, without limitation, reasonable fees and disbursements of
counsel in connection with Blue Sky qualifications of the Registrable
Securities or Exchange Securities and determination of the eligibility of
the Registrable Securities or Exchange Securities for investment under the
laws of such jurisdictions (x) where the Holders of Registrable Securities
are located, in the case of the Exchange Securities, or (y) as provided in
Section 6(f), in the case of Registrable Securities or Exchange Securities
to be sold by a Participating Broker-Dealer during the Applicable Period);
(ii) printing expenses (including, without limitation,
expenses of printing certificates for Registrable Securities or Exchange
Securities in a form eligible for deposit with DTC and of printing
prospectuses if the printing of prospectuses is requested by the managing
underwriters, if any, or, in respect of Registrable Securities or Exchange
Securities to be sold by a Participating Broker-Dealer during the
Applicable Period, by the Holders of a majority in aggregate liquidation
preference of the Registrable Securities included in any Registration
Statement or of such Exchange Securities, as the case may be);
(iii) messenger, telephone, duplication, word processing
and delivery expenses incurred by the Company in the performance of its
obligations hereunder;
(iv) fees and disbursements of counsel for the Company;
(v) fees and disbursements of all independent certified
public accountants for the Company referred to in Section 6(n)(iii)
(including, without limitation, the expenses of any special audit and
"cold comfort" letters required by or incident to such performance);
(vi) fees and expenses of any "qualified independent
underwriter" or other independent appraiser participating in an offering
pursuant to Section 3 of Schedule E to the By-laws of the NASD, but only
where the need for such a "qualified independent underwriter" arises due
to a relationship with the Company;
(vii) Securities Act liability insurance, if the Company
so desires such insurance;
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<PAGE> 22
(viii) fees and expenses of all other Persons retained
by the Company; internal expenses of the Company (including, without
limitation, all salaries and expenses of officers and employees of the
Company performing legal or accounting duties); and the expense of any
annual audit; and
(ix) rating agency fees and the fees and expenses
incurred in connection with the listing of the Securities to be registered
on any securities exchange.
(b) The Company shall reimburse the Holders for the reasonable fees
and disbursements of not more than one counsel chosen by the holders of a
majority in aggregate principal amount of the Registrable Securities to be
included in any Registration Statement. Notwithstanding the foregoing, each
Holder shall pay all underwriting discounts and commissions of any underwriters
with respect to any Registrable Securities sold by or on its behalf.
8 Indemnification
(a) Indemnification by the Company. The Company shall, without
limitation as to time, indemnify and hold harmless each Holder, each
Participating Broker-Dealer selling Exchange Securities, each Person who
controls each such Holder or such Participating Broker-Dealer (within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act) and the officers, directors, partners, employees, representatives and
agents of each such Holder, Participating Broker-Dealer and controlling person,
to the fullest extent lawful, from and against any and all losses, claims,
damages, liabilities, costs (including, without limitation, costs of preparation
and reasonable attorneys' fees) and expenses (including, without limitation,
reasonable costs and expenses incurred in connection with investigating,
preparing, pursuing or defending against any of the foregoing) (collectively,
"Losses"), as incurred, directly or indirectly caused by, related to, based
upon, arising out of or in connection with any untrue or alleged untrue
statement of a material fact contained in any Registration Statement, Prospectus
or form of prospectus, or in any amendment or supplement thereto, or in any
preliminary prospectus, or 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 light of the circumstances under which they were made, not
misleading except insofar as such Losses arise out of or are based upon
information relating to such Holder or Participating Broker-Dealer and furnished
in writing to
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<PAGE> 23
the Company by, and relating to, such Holder or Participating Broker-Dealer
expressly for use therein. The Company shall also indemnify underwriters,
selling brokers, dealer managers and similar securities industry professionals
participating in the distribution, their officers, directors, agents and
employees and each Person who controls such Persons (within the meaning of
Section 15 of the Securities Act or Section 20(a) of the Exchange Act) to the
same extent as provided above with respect to the indemnification of the Holders
or the Participating Broker-Dealers except insofar as such Losses are based
solely upon (i) information furnished by such party to the Company expressly for
use therein or (ii) such underwriter's gross negligence or willful misconduct.
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 purchased 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 action or inaction of
such indemnified person.
(b) Indemnification by Holder of Registrable Securities. In
connection with any Registration Statement, Prospectus or form of prospectus,
any amendment or supplement thereto, or any preliminary prospectus in which a
Holder is participating, such Holder shall furnish to the Company in writing
such information as the Company reasonably requests for use in connection with
any Registration Statement, Prospectus or form of prospectus, any amendment or
supplement thereto, or any preliminary prospectus and shall, without limitation
as to time, indemnify and hold harmless the Company, its directors, officers,
agents and employees, each Person, if any, who controls the Company (within the
meaning of Section 15 of the Securities Act and Section 20(a) of the Exchange
Act), and the directors, officers, representatives, agents or employees of such
controlling persons, to the fullest extent lawful, from and against all Losses
arising out of or based upon any untrue or alleged untrue statement of a
material fact contained in any Registration Statement, Prospectus or form of
prospectus or in any amendment or supplement thereto or in any preliminary
prospectus, or 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 light of the circumstances under which they were made, not misleading to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement of a material fact or omission or alleged omission of a material fact
is contained in any information so furnished in writing by such Holder to the
Company expressly for use therein.
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<PAGE> 24
(c) Conduct of Indemnification Proceedings. If any Proceedings shall
be brought or asserted against any Person entitled to indemnity hereunder (an
"indemnified party"), such indemnified party shall promptly notify the party or
parties from which such indemnity is sought (the "indemnifying parties") in
writing; provided, however, that the failure to so notify the indemnifying
parties shall not relieve the indemnifying parties from any obligation or
liability except to the extent (but only to the extent) that it shall be finally
determined by a court of competent jurisdiction (which determination is not
subject to appeal) that the indemnifying parties have been prejudiced materially
by such failure.
The indemnifying party shall have the right, exercisable by giving
written notice to an indemnified party, within 20 business days after receipt of
written notice from such indemnified party of such Proceeding, to assume, solely
at its expense, the defense of any such Proceeding, provided, however, that an
indemnified party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such indemnified party or parties
unless: (1) the indemnifying party has agreed to pay such fees and expenses; or
(2) the indemnifying party shall have failed promptly to assume the defense of
such Proceeding or shall have failed to employ counsel reasonably satisfactory
to such indemnified party; or (3) the named parties to any such Proceeding
(including any impleaded parties) include both such indemnified party and the
indemnifying party or any of its affiliates or controlling persons, and such
indemnified party shall have been advised by counsel that there may be one or
more defenses available to such indemnified party that are in addition to, or in
conflict with, those defenses available to the indemnifying party or such
affiliate or controlling person (in which case, if such indemnified party
notifies the indemnifying parties in writing that it elects to employ separate
counsel at the expense of the indemnifying parties, the indemnifying parties
shall not have the right to assume the defense thereof and the reasonable fees
and expenses of such counsel shall be at the expense of the indemnifying party;
it being understood, however, that, the indemnifying party shall not, in
connection with any one such Proceeding or separate but substantially similar or
related Proceedings in the same jurisdiction, arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys (together with appropriate local counsel) at any
time for such indemnified party).
No indemnifying party shall be liable for any settlement of any such
Proceeding effected without its written consent, which consent shall not be
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unreasonably withheld, but if settled with its written consent, or if there be a
final judgment for the plaintiff in any such Proceeding, each indemnifying party
jointly and severally agrees, subject to the exceptions and limitations set
forth above, to indemnify and hold harmless each indemnified party from and
against any and all Losses by reason of such settlement or judgment. The
indemnifying party shall not consent to the entry of any judgment or enter into
any settlement that does not include as an unconditional term thereof the giving
by the claimant or plaintiff to each indemnified party of a release, in form and
substance reasonably satisfactory to the indemnified party, from all liability
in respect of such Proceeding for which such indemnified party would be entitled
to indemnification hereunder (whether or not any indemnified party is a party
thereto).
(d) Contribution. If the indemnification provided for in this
Section 8 is unavailable to an indemnified party or is insufficient to hold such
indemnified party harmless for any Losses in respect of which this Section 8
would otherwise apply by its terms (other than by reason of exceptions provided
in this Section 8), then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall have a joint and several obligation
to contribute to the amount paid or payable by such indemnified party as a
result of such Losses, (i) in such proportion as is appropriate to reflect the
relative benefits received by the indemnifying party, on the one hand, and such
indemnified party, on the other hand, from the offering of the shares of
Preferred Stock, 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 the indemnifying party, on the one hand, and such indemnified party, on
the other hand in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such indemnifying party, on the one hand, and indemnified
party, on the other hand, shall be determined by reference to, among other
things, whether any untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by such indemnifying party or indemnified party, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent any such statement or omission. The amount paid or payable by an
indemnified party as a result of any Losses shall be deemed to include any
reasonable legal or other fees or expenses actually incurred by such party in
connection with any Proceeding, to the extent such party would have been
indemnified for such fees or expenses if the indemnification provided for in
Section 8(a) or 8(b) was available to such party.
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<PAGE> 26
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 8(d) were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 8(d), an indemnifying party that
is a selling Holder of Registrable Securities shall not be required to
contribute, in the aggregate, any amount in excess of such Holder's Maximum
Contribution Amount. A selling Holder's "Maximum Contribution Amount" shall
equal the excess of (i) the aggregate proceeds received by such Holder pursuant
to the sale of such Registrable Securities over (ii) the aggregate amount of
damages that such Holder has otherwise been required to pay by reason of such
untrue or alleged untrue statement of a material fact or omission or alleged
omission of a material fact. 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 indemnity and contribution agreements contained in this Section
8 are in addition to any liability that the indemnifying parties may have to the
indemnified parties, provided, that any excess payment made by the Company shall
be refunded to the Company by the indemnified party receiving such excess
payment.
9 Rule 144 and Rule 144A
The Company covenants that it shall (a) file the reports required to
be filed by it (if so required) under the Securities Act and the Exchange Act in
a timely manner and, if at any time the Company is not required to file such
reports, it will, upon the request of any Holder make available other
information necessary to permit sales pursuant to Rule 144 and Rule 144A and (b)
take such further action as any Holder may reasonably request, all to the extent
required from time to time to enable such Holder to sell Registrable Securities
without registration under the Securities Act pursuant to the exemptions
provided by Rule 144 and Rule 144A. Nothing in this Section 9 shall be deemed to
require the Company to register any of its securities pursuant to the Exchange
Act.
10 Underwritten Registrations
If any of the Registrable Securities covered by any Shelf
Registration are to be sold in an Underwritten Offering, the investment banker
or invest-
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<PAGE> 27
ment bankers and manager or managers that will manage the offering will be
selected by the Holders of a majority in aggregate liquidation preference of
such Registrable Securities included in such offering with the written consent
of the Company, which consent will not be unreasonably withheld.
No Holder of Registrable Securities may participate in any
Underwritten Registration hereunder unless such Holder (a) agrees to sell such
Holder's Registrable Securities on the basis provided in any underwriting
arrangements approved by the Persons entitled hereunder to approve such
arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
11 Miscellaneous
(a) Remedies. In the event of a breach by the Company of any of its
obligations under this Agreement, each Holder, in addition to being entitled to
exercise all rights provided herein, or granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of any of the
provisions of this Agreement and 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 Company has not entered into, as
of the date hereof, and shall not enter into, after the date of this Agreement,
any agreement with respect to any of its securities that is inconsistent with
the rights granted to the Holders of Registrable Securities in this Agreement or
otherwise conflicts with the provisions hereof.
(c) 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, unless the Company has obtained the written consent of Holders
of at least a majority of the then outstanding aggregate liquidation preference
of Registrable Securities; provided, however, that Section 8 shall not be
amended, modified or supplemented, and waivers or consents to departures from
this proviso may not be given, unless the Company has obtained the written
consent of each
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<PAGE> 28
Holder. 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 whose Registrable Securities are being sold pursuant to a
Registration Statement and that does not directly or indirectly affect the
rights of other Holders may be given by Holders of at least a majority in
aggregate liquidation preference of the Registrable Securities being sold by
such Holders pursuant to such Registration Statement, provided, that the
provisions of this sentence may not be amended, modified or supplemented except
in accordance with the provisions of the immediately preceding sentence.
(d) Notices. All notices and other communications (including,
without limitation, any notices or other communications to the Registrar and
Transfer Agent) provided for or permitted hereunder shall be made in writing by
hand-delivery, certified first-class mail, return receipt requested, next-day
air courier or facsimile:
(i) if to a Holder, at the most current address given by
such Holder to the Company in accordance with the provisions of this
Section 11(d), which address initially is, with respect to each Holder,
the address of such Holder maintained by the Registrar and Transfer Agent,
with a copy to Skadden, Arps, Slate, Meagher & Flom LLP, 300 South Grand
Avenue, Los Angeles, California 90071, telecopy number (213) 687-5600,
Attention: Michael A. Woronoff, Esq.; and
(ii) if to the Company, 172 Trade Street, Lexington,
Kentucky 40511, Attention: Chief Executive Officer, and thereafter at such
other address, notice of which is given in accordance with the provisions
of this Section 11(d), with a copy to Dechert Price & Rhoads, 4000 Bell
Atlantic Tower, 1717 Arch Street, Philadelphia, Pennsylvania 19103-2793,
Attention: Christopher G. Karras.
All such notices and communications shall be deemed to have been
duly given: when delivered by hand, if personally delivered; five business days
after being deposited in the mail, postage prepaid, if mailed; one business day
after being timely delivered to a next-day air courier; and when receipt is
acknowledged by the addressee, if telecopied.
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Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Registrar and
Transfer Agent at the following address: _______________, Attention: ______.
(e) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including, without limitation and without the need for an express
assignment, subsequent Holders.
(f) 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.
(g) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(h) Governing Law. 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 WHOLLY WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. THE COMPANY HEREBY IRREVOCABLY SUBMITS 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 IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT
OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID
COURTS. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY
DO SO UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. THE COMPANY
IRREVOCABLY CONSENTS, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER
APPLICABLE LAW, TO THE SERVICE OF PRO-
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<PAGE> 30
CESS 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 COMPANY AT ITS SAID ADDRESS, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER
SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY HOLDER TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST THE COMPANY IN ANY OTHER JURISDICTION.
(i) Severability. 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 best 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) Entire Agreement. 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 Company in
respect of securities sold pursuant to the Purchase Agreement. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
(k) Attorneys' Fees. In any action or Proceeding brought to enforce
any provision of this Agreement, or where any provision hereof is validly
asserted as a defense, the prevailing party, as determined by the courts, shall
be entitled to recover reasonable attorneys' fees in addition to its costs and
expenses and any other available remedy.
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(l) Securities Held by the Company or its Affiliates. Whenever the
consent or approval of Holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by the Company or
its affiliates (as such term is defined in Rule 405 under the Securities Act)
(other than the Holders that are deemed to be such affiliates solely by reason
of their holdings of such Registrable Securities) shall not be counted in
determining whether such consent or approval was given by the Holders of such
required percentage.
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<PAGE> 32
REGISTRATION RIGHTS AGREEMENT
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
CLARK MATERIAL HANDLING COMPANY
By: /s/ Martin M. Dorio
______________________________________
Name: Martin M. Dorio, Jr.
Title: President and CEO
ACCEPTED AND AGREED TO:
JEFFERIES & COMPANY, INC.
By: /s/ Nauman Toor
_____________________________
Name: Nauman Toor
Title: Vice President
BEAR, STEARNS & CO. INC.
By: /s/ James B. Nish
____________________________
Name: James B. Nish
Title: President and CEO
S-1
<PAGE> 1
EXHIBIT 4.8
CLARK Material Handling Company
as obligor
$40,000,000
Subordinated Notes due 2007
INDENTURE
Dated as of July 17, 1998
U.S. TRUST COMPANY OF TEXAS, N.A.,
Trustee
<PAGE> 2
INDENTURE, dated as of July 17, 1998, between CLARK
Material Handling Company, a Delaware corporation (the
"Company"), and U.S. Trust Company of Texas, N.A., as trustee (the "Trustee").
The Company and the Trustee agree as follows for the
benefit of each other and for the equal and ratable benefit of the Holders of
the Company's Subordinated Notes due 2007.
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.1. Definitions
"Accounts" shall mean, as to any Person, all of such
Person's now owned and hereafter acquired rights to payment (including
intercompany obligations) for the prior, concurrent or future sale, lease or
other disposition of Inventory or rendition of services, whether or not
evidenced by an instrument or chattel paper and whether or not earned by
performance.
"Acquired Debt" means Indebtedness of a Person existing
at the time such Person is merged with or into the Company or a Restricted
Subsidiary or becomes a Restricted Subsidiary, other than Indebtedness incurred
in connection with, or in contemplation of, such Person merging with or into the
Company or a Restricted Subsidiary or becoming a Restricted Subsidiary;
provided, that Indebtedness of such Person that is redeemed, defeased, retired
or otherwise repaid at the time, or immediately upon consummation, of the
transaction by which such Person is merged with or into the Company or a
Restricted Subsidiary or becomes a Restricted Subsidiary shall not be Acquired
Debt.
"Affiliate" of any specified Person means any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with"), as used with
respect to any Person, shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of such
Person, whether through the ownership of voting securities, by agreement or
otherwise. Notwithstanding the foregoing,
<PAGE> 3
neither Initial Purchaser nor any of their respective Affiliates will be deemed
to be Affiliates of the Company.
"Agent" means any Registrar, Paying Agent or
co-registrar.
"Asset Sale" means any direct or indirect (a) transfer
(as hereinafter defined), other than in the ordinary course of business, of any
assets of the Company or any Restricted Subsidiary or (b) issuance of any
Capital Stock of any Restricted Subsidiary, in each case to any Person (other
than the Company or a Restricted Subsidiary and other than directors' qualifying
shares). For purposes of this definition, (i) any series of transfers that are
part of a common plan shall be deemed a single Asset Sale and (ii) the term
"Asset Sale" shall not include any disposition of all or substantially all of
the assets of the Company that is governed under and complies with Article V of
this Indenture.
"Bankruptcy Law" means title 11, U.S. Code or any
similar Federal, state or foreign law for the relief of debtors.
"Board of Directors" means the board of directors or any
duly constituted committee of any corporation or of a corporate general partner
of a partnership and any similar body empowered to direct the affairs of any
other entity.
"Business Day" means any day other than a Legal Holiday.
"Capital 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 (i) with respect to any Person
that is a corporation, any and all shares, interests, participations, rights or
other equivalents (however designated) of corporate stock, and (ii) with respect
to any other Person, any and all partnership or other equity interests of such
Person.
"Cash Equivalent" means (i) securities issued or
directly and fully guaranteed or insured by the United States of America or any
agency or instrumentality thereof (provided that the full faith and credit of
the United States of America
2
<PAGE> 4
is pledged in support thereof), (ii) time deposits and certificates of deposit
and commercial paper issued by the parent corporation of any domestic commercial
bank of recognized standing having capital and surplus in excess of $250,000,000
and commercial paper issued by others rated at least A-2 or the equivalent
thereof by Standard & Poor's Corporation or at least P-2 or the equivalent
thereof by Moody's Investors Service, Inc. and in each case maturing within one
year after the date of acquisition and (iii) investments in money market funds
substantially all of whose assets comprise securities of the types described in
clauses (i) and (ii) above.
"Certificate of Designation" means the certificate of
designation of the powers, preferences and relative, participating, optional and
other special rights and qualifications, limitations and restrictions thereof
filed by the Company with the Secretary of State of the State of Delaware on
July 16, 1998.
"Change of Control" means (i) the transfer (in one
transaction or a series of transactions) of all or substantially all of the
Company's assets to any Person or group (as such term is used in Section
13(d)(3) of the Exchange Act) other than to one or more Existing Holders, (ii)
the liquidation or dissolution of the Company or the adoption of a plan by the
stockholders of the Company relating to the dissolution or liquidation of the
Company, (iii) the acquisition by any Person or group (as such term is used in
Section 13(d)(3) of the Exchange Act), except for one or more Existing Holders,
of beneficial ownership, directly or indirectly, of more than 50% of the voting
power of the total outstanding Voting Stock of Holdings, (iv) after the
consummation of an initial public offering of any class of common stock of the
Company or Holdings, during any period of two consecutive years, individuals who
at the beginning of such period constituted the Board of Directors of the
Company or Holdings (together with any new directors who have been appointed by
CVC, Citicorp N.A., or any Affiliate of CVC or whose nomination for election by
the stockholders of the Company was approved by a vote of at least 66 2/3% of
the directors 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 constitute a majority of the Board of
Directors of the Company or Holdings, as the case may be, then still in office
or (v) the failure by Holdings to own more than 50% of the voting power of the
total outstanding Voting Stock of the Company.
"Clark Europe" means Clark Material Handling GmbH, a
Wholly Owned Subsidiary.
3
<PAGE> 5
"Closing Date" means July 17, 1998.
"Commission" means the Securities and Exchange
Commission, as from time to time constituted, created under the Exchange Act, or
if at any time after the execution of this Indenture such Commission is not
existing and performing the duties now assigned to it under the TIA, then the
body performing such duties at such time.
"Company" means the party named as such above, until a
successor replaces such Person in accordance with the terms of this Indenture,
and thereafter means such successor.
"Company Order" means a written request or order signed
in the name of the Company by its Chairman of the Board, President or Vice
President, and by its Treasurer, an Assistant Treasurer, its Secretary or an
Assistant Secretary and delivered to the Trustee.
"Consolidated Net Income" means, with respect to any
Person (the referent Person) for any period, the aggregate of the Net Income of
such Person and its subsidiaries for such period, determined on a consolidated
basis in accordance with GAAP; provided, that (i) the Net Income of any Person
(including, without limitation, any Unrestricted Subsidiary) that is not a
Wholly Owned Subsidiary or that is accounted for by the equity method of
accounting will be included in calculating the referent Person's Consolidated
Net Income only to the extent of the amount of dividends or distributions paid
during such period to the referent Person or a Wholly Owned Subsidiary of the
referent Person, (ii) the Net Income of any Person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition will
be excluded, and (iii) the Net Income of any Subsidiary will be excluded to the
extent that declarations of dividends or similar distributions by that
Subsidiary of such Net Income are not at the time permitted, directly or
indirectly, by operation of the terms of its organization documents or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Subsidiary or its owners.
"Consolidated Net Worth" means, with respect to any
Person, the total stockholders' equity of such Person determined on a
consolidated basis in accordance with GAAP, adjusted to exclude (to the extent
included in calculating such equity), (i) the amount of any such stockholders'
equity attributable to Disqualified Capital Stock of such Person and its
consolidated subsidiaries, and (ii)
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<PAGE> 6
all upward revaluations and other write-ups in the book value of any asset of
such person or a consolidated subsidiary of such person subsequent to the
Closing Date, and (iii) all Investments in persons that are not consolidated
Restricted Subsidiaries.
"Corporate Trust Office" shall be at the address of the
Trustee specified in Section 11.2 or such other address as the Trustee may
specify by notice to the Company.
"Custodian" means any receiver, trustee, assignee,
liquidator or similar official under any Bankruptcy Law.
"CVC" means Citicorp Venture Capital Ltd.
"Default" means any event that is, or after notice or
the passage of time or both would be, an Event of Default.
"Designated Senior Indebtedness" means (i) Indebtedness
evidenced by (A) the Senior Notes and (B) the Revolving Credit Facility if such
Indebtedness constitutes Senior Indebtedness, irrespective of amount, and (ii)
any other Senior Indebtedness issued under a credit agreement or other credit
facility (x) in an aggregate outstanding principal amount of at least
$50,000,000 (or, in the case of any revolving credit agreement or other
committed credit facility, having an aggregate commitment of at least
$50,000,000) and (y) that is specifically designated by the Company in the
instrument creating or evidencing such Senior Indebtedness as "Designated Senior
Indebtedness."
"Disqualified Stock" means that portion of any Equity
Interests that (i) either by its terms (or by the terms of any security into
which it is convertible or for which it is exchangeable) is or upon the
happening of an event would be required to be redeemed or repurchased prior to
the final stated maturity of the Notes or is redeemable at the option of the
holder thereof at any time prior to such final stated maturity or (ii) is
convertible into or exchangeable at the option of the issuer thereof or any
other Person for debt securities.
"DTC" means The Depository Trust Company.
5
<PAGE> 7
"Equity Interests" means Capital Stock or warrants,
options or other rights to acquire Capital Stock (but excluding any debt
security that is convertible into, or exchangeable for, Capital Stock).
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Existing Holders" shall mean (i) CVC, (ii) Citicorp
N.A. or any other Affiliate of CVC, (iii) any officer, employee or director of
CVC, (iv) the Management Investors and (v) in the case of any natural Person
specified in the foregoing clauses, any spouse or lineal descendant (including
by adoption) of such Person; provided, that in no event shall the Persons
specified in clauses (iii) through (v) be deemed "Existing Holders" with respect
to more than 30% of the voting power of the total outstanding Voting Stock of
the Company or Holdings.
"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 approved by a significant segment of the
accounting profession, and in the rules and regulations of the Commission, that
are in effect on the date of this Indenture.
"German Subsidiary Facilities" means one or more
revolving credit facilities of Clark Europe, as the same may be amended,
modified, renewed, refunded, replaced or refinanced from time to time including
(i) any related notes, letters of credit, guarantees, collateral documents,
instruments and agreements executed in connection therewith, and in each case
amended, modified, renewed, refunded, replaced or refinanced from time to time,
and (ii) any notes, guarantees, collateral documents, instruments and agreements
executed in connection with any such amendment, modification, renewal,
refunding, replacement or refinancing.
"Holder" means a Person in whose name a Note is
registered.
"Holdings" means CMH Holdings Corporation, the holder of
all of the outstanding shares of Capital Stock of the Company.
"Indebtedness" of any Person means (without duplication)
(1) all liabilities and obligations, contingent or otherwise, of such Person (a)
in respect of
6
<PAGE> 8
borrowed money (whether or not the recourse of the lender is to the whole of the
assets of such Person or only to a portion thereof), (b) evidenced by bonds,
debentures, notes or other similar instruments, (c) representing the deferred
purchase price of property or services (other than (i) non interest bearing
obligations and (ii) liabilities incurred in the ordinary course of business
which are not more than 90 days past due), (d) created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (e) as lessee under capitalized leases, (f) under
bankers' acceptance and letter of credit facilities, (g) to purchase, redeem,
retire, defease or otherwise acquire for value any Disqualified Stock, or (h) in
respect of Hedging Obligations, (2) all liabilities and obligations of others of
the type described in clause (1), above, that are Guaranteed by such Person, and
(3) all liabilities and obligations of others of the type described in clause
(1), above, that are secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien on
property (including, without limitation, accounts and contract rights) owned by
such Person; provided, that the amount of such Indebtedness shall (to the extent
such Person has not assumed or become liable for the payment of such
Indebtedness in full) be the lesser of (x) the fair market value of such
property at the time of determination and (y) the amount of such Indebtedness.
The amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above and the
maximum liability, upon the occurrence of the contingency giving rise to the
obligation, of any contingent obligations at such date.
"Indenture" means this Indenture as amended or
supplemented from time to time.
"Initial Purchasers" means Jefferies & Company, Inc. and
Bear, Stearns & Co. Inc.
"Inventory" shall mean, as to any Person, all now owned
and hereafter acquired goods including, without limitation, parts and goods in
the possession of such Person or of a bailee or other Person for sale, storage,
transit, processing, use or otherwise, and supplies, finished goods, parts and
components, that are: (a) held for sale or lease, (b) furnished or to be
furnished under contracts of services, or (c) raw materials, work-in-process or
materials used or consumed in its business.
7
<PAGE> 9
"Investments" means, with respect to any Person, all
investments by such Person in other Persons (including Affiliates) in the forms
of loans, Guarantees, advances or capital contributions (excluding (i)
commission, travel and similar advances to officers and employees of such Person
made in the ordinary course of business and (ii) bona fide accounts receivable
arising from the sale of goods or services in the ordinary course of business
consistent with past practice), purchases or other acquisitions for
consideration of Indebtedness, Equity Interests or other securities, and any
other items that are or would be classified as investments on a balance sheet
prepared in accordance with GAAP.
"Legal Holiday" means a Saturday, a Sunday or a day on
which banking institutions in the City of New York or at a place of payment are
authorized by law, regulation or executive order to remain closed.
"Lien" means any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind, whether or not filed, recorded or
otherwise perfected under applicable law (including any conditional sale or
other title retention agreement, any lease in the nature thereof, any option or
other agreement to sell or give a security interest in and any filing of or
agreement to give any financing statement under the Uniform Commercial Code (or
equivalent statutes) of any jurisdiction).
"Liquidated Damages" has the meaning set out in the
Registration Rights Agreement.
"Management Investors" means the individuals listed as
of [November 27, 1996] on Schedule I of the Amended and Restated Securities
Purchase and Holders Agreement, dated January 31, 1997, by and among Holdings,
CVC, Thomas Snyder and the Management Investors.
"Material Subsidiary" means any Subsidiary (a) that is a
"Significant Subsidiary" of the Company as defined in Rule 1-02 of Regulation
S-X promulgated by the Commission or (b) is otherwise material to the business
of the Company.
"Net Income" means, with respect to any Person for any
period, the net income (loss) of such Person for such period, determined in
accordance with GAAP, excluding any gain or loss, together with any related
provision for taxes on such gain or loss, realized in connection with any Asset
Sales and dispositions
8
<PAGE> 10
pursuant to sale and leaseback transactions, and excluding any extraordinary
gain or loss, together with any related provision for taxes on such gain or
loss.
"Net Proceeds" means the aggregate proceeds received in
the form of cash or Cash Equivalents in respect of any Asset Sale (including
payments in respect of deferred payment obligations when received), net of (a)
the reasonable and customary direct out-of-pocket costs relating to such Asset
Sale (including, without limitation, legal, accounting and investment banking
fees and sales commissions), other than any such costs payable to an Affiliate
of the Company, (b) taxes actually payable directly as a result of such Asset
Sale (after taking into account any available tax credits or deductions and any
tax sharing arrangements), (c) amounts required to be applied to the permanent
repayment of Indebtedness in connection with such Asset Sale, and (d)
appropriate amounts provided as a reserve by the Company or any Restricted
Subsidiary, in accordance with GAAP, against any liabilities associated with
such Asset Sale and retained by the Company or such 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
arising from such Asset Sale.
"Notes" means the Company's Subordinated Notes due 2007,
as authenticated and issued under this Indenture.
"Obligations" means, with respect to any Indebtedness,
any principal, interest, penalties, fees, indemnifications, reimbursements,
damages and other obligations and liabilities of the Company under such
Indebtedness.
"Officers" means the Chairman of the Board, the
President, the Chief Financial Officer, Chief Operating Officer, the Treasurer,
any Assistant Treasurer, Controller, Secretary, any Assistant Secretary or any
Vice-President of the Company.
"Officers' Certificate" means a certificate signed on
behalf of the Company by two Officers of the Company, one of whom must be the
President, Chief Financial Officer, Treasurer, Controller or a Vice President of
the Company.
"Opinion of Counsel" means an opinion from legal counsel
who is reasonably acceptable to the Trustee. Such counsel may be an employee of
or counsel to the Company, any Subsidiary of the Company or the Trustee.
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<PAGE> 11
"Permitted Investments" means (a) Investments in the
Company or any Wholly Owned Subsidiary (including without limitation, Guarantees
of Indebtedness of any such Person), (b) Investments in Cash Equivalents, (c)
Investments in a Person, if as a result of such Investment (i) such Person
becomes a Wholly Owned Subsidiary or (ii) such Person is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a Wholly Owned Subsidiary, (d)
Floor Plan Guarantees permitted to be incurred in compliance with Section 4.9 of
this Indenture, (e) Hedging Obligations, (f) 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 and (g) Investments as a result of consideration received in
connection with an Asset Sale made in compliance with Section 4.10 of this
Indenture.
"Permitted Liens" means (i) Liens in favor of the
Company and/or its Restricted Subsidiaries other than with respect to
intercompany Indebtedness, (ii) Liens on property of a Person existing at the
time such Person is acquired by, merged into or consolidated with the Company or
any Restricted Subsidiary, provided, that such Liens were not created in
contemplation of such acquisition and do not extend to assets other than those
subject to such Liens immediately prior to such acquisition, (iii) Liens on
property existing at the time of acquisition thereof by the Company or any
Restricted Subsidiary, provided, that such Liens were not created in
contemplation of such acquisition and do not extend to assets other than those
subject to such Liens immediately prior to such acquisition, (iv) Liens incurred
in the ordinary course of business in respect of Hedging Obligations and Floor
Plan Guarantees, (v) Liens to secure Indebtedness for borrowed money of a
Subsidiary in favor of the Company or a Wholly Owned Subsidiary, (vi) Liens
incurred in the ordinary course of business to secure the performance of
statutory obligations, surety or appeal bonds, performance bonds or other
obligations (exclusive of obligations constituting Indebtedness) of a like
nature, (vii) Liens existing or created on the date of this Indenture, (viii)
Liens for taxes, assessments or governmental charges or claims that are not yet
delinquent or that are being contested or remedied in good faith by appropriate
proceedings promptly instituted and diligently concluded, provided, that any
reserve or other appropriate provision as may be required in conformity with
GAAP has been made therefor, (ix) Liens arising by reason of any judgment,
decree or order of any court with respect to which the Company or any of its
Restricted Subsidiaries is then in good faith prosecuting an appeal or other
proceedings for review, the existence of which
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<PAGE> 12
judgment, order or decree is not an Event of Default under this Indenture, (x)
encumbrances consisting of zoning restrictions, survey exceptions, utility
easements, licenses, rights of way, easements of ingress or egress over property
of the Company or any of its Restricted Subsidiaries, rights or restrictions of
record on the use of real property, minor defects in title, landlord's and
lessor's liens under leases on property located on the premises rented,
mechanics' liens, vendors' liens, and similar encumbrances, rights or
restrictions on personal or real property, in each case not interfering in any
material respect with the ordinary conduct of the business of the Company or any
of its Restricted Subsidiaries, (xi) Liens incidental to the conduct of business
or the ownership of properties incurred in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other types of
social security, or to secure the performance of tenders, bids, and government
contracts and leases and subleases, (xii) Liens for any interest or title of a
lessor under any Capitalized Lease Obligation permitted to be incurred under
this Indenture; provided, that such Liens do not extend to any property or asset
that is not leased property subject to such Capitalized Lease Obligation, (xiii)
any extension, renewal, or replacement (or successive extensions, renewals or
replacements), in whole or in part, of Liens described in clauses (i) through
(xii) above and (xiv) Liens in addition to the foregoing, which in the
aggregate, are secured by assets with a fair market value not in excess of
$100,000 at any time.
"Permitted Transactions" means bona fide purchases and
sales of Inventory or of machining, assembly, testing and fabrication services,
in any such case made in the ordinary course of business; provided, that such
transactions are conducted in good faith and on terms that are no less favorable
to the Company or the relevant Restricted Subsidiary than those that would have
been obtained in a comparable transaction with an unrelated Person.
"Person" means any individual, corporation, partnership,
joint venture, association, joint stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof, or any
other entity.
"Public Equity Offering" means a bona fide underwritten
public offering of Qualified Capital Stock of 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 Holdings, Holdings contributes to the capital of the Company
the portion of the net cash proceeds of such Public Equity Offering necessary to
pay
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<PAGE> 13
the aggregate redemption price, plus accrued and unpaid interest, if any, to
the redemption date of the Notes to be redeemed pursuant to Section 3.7(b) of
this Indenture.
"Purchase Money Liens" means Liens to secure or securing
Purchase Money Obligations permitted to be incurred under this Indenture.
"Purchase Money Obligations" means Indebtedness
representing, or incurred to finance, the cost (i) of acquiring or improving any
assets and (ii) of construction or build-out of manufacturing, distribution or
administrative facilities (including Purchase Money Obligations of any other
Person at the time such other Person is merged with or into or is otherwise
acquired by the Company), provided, that (a) the principal amount of such
Indebtedness does not exceed 100% of such cost, including construction charges,
(b) any Lien securing such Indebtedness does not extend to or cover any other
asset or property other than the asset or property being so acquired or improved
and (c) such Indebtedness is incurred, and any Liens with respect thereto are
granted, within 180 days of the acquisition or improvement of such property or
asset.
"Qualified Capital Stock" means, with respect to any
Person, Capital Stock of such Person other than Disqualified Capital Stock.
"Responsible Officer" when used with respect to the
Trustee, means any officer within the corporate trust department of the Trustee
located at the Corporate Trust Office (or any successor group of the Trustee) or
any other officer of the Trustee customarily performing functions similar to
those performed by any of the designated officers, and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.
"Restricted Investment" means any Investment other than
a Permitted Investment. The aggregate amount of each Investment constituting a
Restricted Payment since the date of this Indenture shall be reduced by the
aggregate after-tax amount of all payments made to the Company and its
Restricted Subsidiaries with respect to such Investments; provided, that (a) the
maximum amount of such payments so applied shall not exceed the original amount
of such Investment and (b) such payments shall be excluded from the calculations
contemplated by clauses (w) through (z) under Section 4.7(a)(iv)(3) of this
Indenture.
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<PAGE> 14
"Restricted Subsidiary" means a Subsidiary other than an
Unrestricted Subsidiary.
"Revolving Credit Facility" means the Loan and Security
Agreement, entered into on November 27, 1996 between the Company and the lenders
named therein as the same may be amended, modified, renewed, refunded, replaced
or refinanced from time to time, including (i) any related notes, letters of
credit, guarantees, collateral documents, instruments and agreements executed in
connection therewith, and in each case as amended, modified, renewed, refunded,
replaced or refinanced from time to time, and (ii) any notes, guarantees,
collateral documents, instruments and agreements executed in connection with
such amendment, modification, renewal, refunding, replacement or refinancing.
"Rule 144A" means Rule 144A under the Securities Act, as
such Rule may be amended from time to time, or under any similar rule or
regulation hereafter adopted by the Commission.
"Securities Act" means the Securities Act of 1933, as
amended.
"Senior Indebtedness" means all Obligations (including
any interest accruing subsequent to the filing of a petition of bankruptcy at
the rate provided for in the documentation with respect thereto, whether or not
such interest is allowed claim under applicable law) on any Indebtedness of the
Company, whether outstanding on the date of issuance of the Senior Notes or
thereafter created, incurred or assumed, (a) in respect of borrowed money or (b)
evidenced by notes, debentures, bonds or other similar instruments, in each case
unless, in the instrument creating or evidencing the same or pursuant to which
the same is outstanding, it is expressly provided that such Obligations are pari
passu, subordinated or junior in right of payment to the Notes; provided,
however, that Senior Indebtedness shall not be deemed to include: (1) any
Obligation of the Company to any Affiliate of the Company, (2) any liability for
federal, state, local or other taxes owed or owing by the Company, (3) any
accounts payable or other liability to trade creditors arising in the ordinary
course of business (including guarantees thereof or instruments evidencing such
liabilities), (4) any Indebtedness, guarantee or Obligation of the Company that
is contractually subordinated or junior in any respect to any other
Indebtedness, guarantee or Obligation of the Company, or (5) any Indebtedness to
the extent the same is incurred in violation of this Indenture.
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<PAGE> 15
"Senior Notes" means the $150,000,000 aggregate
principal amount of 10 3/4% Senior Notes due 2006 (Series A, B and C) of the
Company outstanding on the Closing Date and indebtedness issued in exchange
therefor.
"Senior Notes Indenture" means the indenture, dated July
17, 1998, among the Company, the Guarantors named therein and United States
Trust Company of New York, as in effect on the Closing Date..
"Senior Preferred Stock" means the Series A and Series B
Senior Exchangeable Preferred Stock due 2007 of the Company.
"subsidiary" means, with respect to any Person, (i) any
corporation, association or other business entity of which more than 50% of the
total voting power of shares of Voting Stock thereof is at the time owned or
controlled, directly or indirectly, by such Person or one or more of the other
subsidiaries of that Person or a combination thereof and (ii) any partnership in
which such Person or any of its subsidiaries is a general partner.
"Subsidiary" means any subsidiary of the Company.
"Tax Sharing Agreement" means the Tax Sharing Agreement,
dated as of November 27, 1996 , by and between the Company and Holdings as in
effect on the date hereof.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb), as amended, as in effect on the date hereof 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.
"transfer" means any sale, assignment, transfer, lease,
conveyance, or other disposition (including, without limitation, by way of
merger or consolidation).
"Trustee" means the party named as such above until a
successor replaces it in accordance with the applicable provisions of this
Indenture and thereafter means the successor serving hereunder.
"Unrestricted Subsidiary" means any Subsidiary that has
been designated by the Company (by written notice to the Trustee as provided
below) as an Unrestricted Subsidiary; provided, that a Subsidiary may not be
designated as
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<PAGE> 16
an "Unrestricted Subsidiary" unless (a) such Subsidiary does not own any Capital
Stock of, or own or hold any Lien on any property of, the Company or any
Restricted Subsidiary (other than such Subsidiary), (b) neither immediately
prior thereto nor after giving pro forma effect to such designation, would there
exist a Default or Event of Default, (c) immediately after giving effect to such
designation on a pro forma basis, the Company could incur at least $1.00 of
Indebtedness pursuant to Section 4.9(a) of this Indenture and (d) the creditors
of such Subsidiary have no direct or indirect recourse (including, without
limitation, recourse with respect to the payment of principal or interest on
Indebtedness of such Subsidiary) to the assets of the Company or of a Restricted
Subsidiary (other than such Subsidiary). The Board of Directors of the Company
may designate any Unrestricted Subsidiary to be a Restricted Subsidiary only if
(i) no Default or Event of Default is existing or will occur as a consequence
thereof and (ii) immediately after giving effect to such designation, on a pro
forma basis, the Company could incur at least $1.00 of Indebtedness pursuant to
Section 4.9(a) of this Indenture. Each such designation shall be evidenced by
filing with the Trustee a certified copy of the Board Resolution giving effect
to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing conditions. The Company shall be deemed
to make an Investment in each Subsidiary designated as an "Unrestricted
Subsidiary" immediately following such designation in an amount equal to the
Investment in such Subsidiary and its subsidiaries immediately prior to such
designation; provided, that if such Subsidiary is subsequently redesignated as a
Restricted Subsidiary, the amount of such Investment shall be deemed to be
reduced (but not below zero) by the fair market value of the net consolidated
assets of such Subsidiary on the date of such redesignation.
"U.S. Government Obligations" means direct obligations
of the United States of America, or any agency or instrumentality thereof for
the payment of which the full faith and credit of the United States of America
is pledged.
"Voting Stock" means, with respect to any Person, (i)
one or more classes of the Capital Stock of such Person having general voting
power to elect at least a majority of the board of directors, managers or
trustees of such Person (irrespective of whether or not at the time Capital
Stock of any other class or classes have or might have voting power by reason of
the happening of any contingency) and (ii) any Capital Stock of such Person
convertible or exchangeable without restriction at the option of the holder
thereof into Capital Stock of such Person described in clause (i) above.
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<PAGE> 17
"Wholly Owned Subsidiary" means a Restricted Subsidiary
all the Capital Stock of which (other than directors' qualifying shares) is
owned by the Company or one or more Wholly Owned Subsidiaries.
Section 1.2. Other Definitions
<TABLE>
<CAPTION>
Defined in
Term Section
---- -------
<S> <C>
"Affiliate Transaction"............................................................... 4.11
"Change of Control Offer"............................................................. 4.14
"Change of Control Payment"........................................................... 4.14
"Change of Control Payment Date"...................................................... 4.14
"Definitive Notes".................................................................... 2.1
"Event of Default".................................................................... 6.1
"Excess Proceeds"..................................................................... 4.10
"Excess Proceeds Offer"............................................................... 4.10
"Excess Proceeds Offer Period"........................................................ 4.10
"Excess Proceeds Payment Date"........................................................ 4.10
"Global Note"......................................................................... 2.1
"Hedging Obligations"................................................................. 4.9(b)
"Paying Agent"........................................................................ 2.3
"Payment Default"..................................................................... 10.2(a)
"Payment Notice"...................................................................... 10.2(b)
"Purchase Amount"..................................................................... 4.10
"Purchase Money Indebtedness"......................................................... 4.9(b)
"Refinance"........................................................................... 4.9(b)
"Refinancing Indebtedness"............................................................ 4.9(b)
"Registrar"........................................................................... 2.3
"Restricted Payments"................................................................. 4.7
</TABLE>
Section 1.3. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the
TIA, the provision is incorporated by reference in and made a part of this
Indenture.
The following TIA terms used in this Indenture have the
following meanings:
16
<PAGE> 18
"indenture securities" means the Notes;
"indenture security holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee;
"obligor" on the Notes means the Company and any successor obligor
upon the Notes.
All other terms used in this Indenture that are defined
by the TIA, defined by TIA reference to another statute or defined by Commission
rule under the TIA have the meanings so assigned to them.
Section 1.4. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the
plural include the singular; and
(5) provisions apply to successive events and transactions.
ARTICLE 2
THE NOTES
Section 2.1. Form and Dating
The Notes and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A attached hereto,
the terms of which are
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<PAGE> 19
incorporated in and made a part of this Indenture. The Notes may have notations,
legends or endorsements required by law, stock exchange rule, agreements to
which the Company is subject or usage. Each Note shall be dated the date of its
authentication. The Notes, other than Notes issued as payment pursuant to
Section 4.1(b), shall be issued in denominations of $1,000 and integral
multiples thereof.
Section 2.2. Execution and Authentication
Two Officers shall sign the Notes for the Company by
manual or facsimile signature. If an Officer whose signature is on a Note no
longer holds that office at the time the Note is authenticated, the Note shall
nevertheless be valid.
A Note shall not be valid until authenticated by the
manual signature of the Trustee. The signature of the
Trustee shall be conclusive evidence that the Note has been authenticated under
this Indenture. The form of Trustee's certificate of authentication to be borne
by the Notes shall be substantially as set forth in Exhibit A attached hereto.
The Trustee shall, upon a Company Order, authenticate
for original issue up to $20,000,000 aggregate principal amount of the Notes.
The aggregate principal amount of Notes outstanding at any time may not exceed
$40,000,000 except as provided in Section 2.7 hereof.
The Trustee may appoint an authenticating agent
acceptable to the Company to authenticate Notes. Unless limited by the terms of
such appointment, an authenticating agent may authenticate Notes whenever the
Trustee may do so. Each reference in this Indenture to authenticating by the
Trustee includes authenticating by such agent. An authenticating agent has the
same rights as an Agent to deal with the Company or an Affiliate of the Company.
The Company, the Trustee and any agent of the Company or
the Trustee may treat the Person in whose name any Note is registered as the
owner of such Note for the purpose of receiving payment of principal of and
(subject to the provisions of this Indenture and the Notes with respect to
record dates) interest on such Note and for all other purposes whatsoever,
whether or not such Note is overdue, and neither the Company, the Trustee nor
any agent of the Company or the Trustee shall be affected by notice to the
contrary.
Section 2.3. Registrar, Paying Agent and Depository
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<PAGE> 20
The Company shall maintain (i) an office or agency where
Notes may be presented for registration of transfer or for exchange
("Registrar") and (ii) an office or agency where Notes may be presented for
payment ("Paying Agent"). The Company initially appoints the Trustee as
Registrar and Paying Agent. The Registrar shall keep a register of the Notes and
of their transfer and exchange. The Company may appoint one or more
co-registrars and one or more additional paying agents. The term "Registrar"
includes any co-registrar and the term "Paying Agent" includes any additional
paying agent. The Company may change any Paying Agent or Registrar without
notice to any Holder. The Company shall notify the Trustee of the name and
address of any Agent not a party to this Indenture. If the Company fails to
appoint or maintain another entity as Registrar or Paying Agent, the Trustee
shall act as such. The Company or any of its Subsidiaries may act as Paying
Agent or Registrar, except that for purposes of Articles Three and Eight and
Sections 4.1, 4.10 and 4.14 neither the Company nor any of its Subsidiaries
shall act as Paying Agent.
The Company shall enter into an appropriate agency
agreement with any Agent not a party to this Indenture, which
shall incorporate the provisions of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such Agent.
Section 2.4. Paying Agent to Hold Money in Trust
The Company shall require each Paying Agent other than
the Trustee to agree in writing that the Paying Agent shall hold in trust for
the benefit of the Holders or the Trustee all money held by the Paying Agent for
the payment of principal, premium, if any, or interest on the Notes and shall
notify the Trustee of any default by the Company in making any such payment.
While any such default continues, the Trustee may require a Paying Agent to pay
all money held by it to the Trustee. The Company at any time may require a
Paying Agent to pay all money held by it to the Trustee. Upon payment over to
the Trustee, the Paying Agent (if other than the Company or a Subsidiary of the
Company) shall have no further liability for the money delivered to the Trustee.
If the Company or a Subsidiary of the Company acts as Paying Agent (subject to
Section 2.3), it shall segregate and hold in a separate trust fund for the
benefit of the Holders all money held by it as Paying Agent.
Section 2.5. Holder Lists
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<PAGE> 21
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it
of the names and addresses of all Holders and shall otherwise comply with TIA
Section 312(a). If the Trustee is not the Registrar, the Company shall furnish
to the Trustee at least seven Business Days before each interest payment date
and at such other times as the Trustee may request in writing a list in such
form and as of such date as the Trustee may reasonably require of the names and
addresses of the Holders, including the aggregate principal amount thereof, and
the Company shall otherwise comply with TIA Section 312(a).
Section 2.6. Transfer and Exchange
When Notes are presented to the Registrar with a request
to register the transfer of such Notes or to exchange such Notes for an equal
principal amount of Notes of other denominations, the Registrar shall register
the transfer or make the exchange as requested if its requirements for such
transaction are met; provided, however, that the Notes surrendered for transfer
or exchange shall be duly endorsed or accompanied by a written instrument of
transfer in form satisfactory to the Company and 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 Notes at the Registrar's 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 similar governmental charge payable upon exchange or transfer
(without transfer to another person) pursuant to Sections 2.10, 3.7, 4.10, 4.14
or 9.5). The Registrar shall not be required to register the transfer or
exchange of any Note (i) during a period beginning at the opening of business 15
days before the mailing of a notice of redemption of Notes 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 3, except the unredeemed portion of any
Note being redeemed in part.
Section 2.7. Replacement Notes
If any mutilated Note is surrendered to the Trustee, or
the Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Note, the Company shall issue and the Trustee
shall authenticate a replace-
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<PAGE> 22
ment Note if the Trustee's requirements for replacements of Notes are met. If
required by the Trustee or the Company, an indemnity bond must be supplied by
the Holder that is sufficient in the judgment of the Trustee and the Company to
protect the Company, the Trustee, any Agent or any authenticating agent from any
loss that any of them may suffer if a Note is replaced. The Company or the
Trustee may charge for its expenses in replacing a Note.
Every replacement Note is an obligation of the Company
and shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
Section 2.8. Outstanding Notes
The Notes outstanding at any time are all the Notes
authenticated by the Trustee except for those cancelled by it, those delivered
to it for cancellation, and those described in this Section as not outstanding.
If a Note is replaced pursuant to Section 2.7 hereof,
the replaced Note ceases to be outstanding unless the
Trustee receives proof satisfactory to it that the replaced Note is held by a
bona fide purchaser.
If the principal amount of any Note is considered paid
under Section 4.1 hereof, it ceases to be outstanding and
interest on it ceases to accrue.
Subject to Section 2.9 hereof, a Note does not cease to
be outstanding because the Company or an Affiliate of the Company holds the
Note.
Section 2.9. Treasury Notes
In determining whether the Holders of the required
principal amount of Notes have concurred in any direction, waiver or consent,
Notes owned by the Company or any Affiliate of the Company shall be considered
as though not outstanding, except that for purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes that a Trustee knows to be so owned shall be considered as not
outstanding.
Section 2.10. Temporary Notes.
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<PAGE> 23
Pending the preparation of definitive Notes, the Company
may execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Notes that are printed, lithographed, typewritten, mimeographed or
otherwise reproduced, in any authorized denomination, substantially of the tenor
of the definitive Notes in lieu of which they are issued and with such
appropriate insertions, omissions, substitutions and other variations as the
officers executing such Notes may determine, as conclusively evidenced by their
execution of such Notes.
If temporary Notes are issued, the Company shall cause
Definitive Notes to be prepared without unreasonable delay. The definitive Notes
shall be printed, lithographed or engraved, or provided by any combination
thereof, or in any other manner permitted by the rules and regulations of any
principal national securities exchange, if any, on which the Notes are listed,
all as determined by the Officers executing such definitive Notes. After the
preparation of definitive Notes, the temporary Notes shall be exchangeable for
definitive Notes upon surrender of the temporary Notes at the office or agency
maintained by the Company for such purpose pursuant to Section 4.2 hereof,
without charge to the Holder. Upon surrender for cancellation of any one or more
temporary Notes, the Company shall execute, and the Trustee shall authenticate
and deliver, in exchange therefor the same aggregate principal amount of
definitive Notes of authorized denominations. Until so exchanged, the temporary
Notes shall in all respects be entitled to the same benefits under this
Indenture as definitive Notes.
Section 2.11. Cancellation
The Company at any time may deliver Notes to the Trustee
for cancellation. The Registrar and Paying Agent shall forward to the Trustee
any Notes surrendered to them for registration of transfer, exchange or payment.
The Trustee and no one else shall cancel all Notes surrendered for registration
of transfer, exchange, payment, replacement or cancellation and shall retain or
destroy cancelled Notes in accordance with its normal practices (subject to the
record retention requirement of the Exchange Act) unless the Company directs
them to be returned to it. The Company may not issue new Notes to replace Notes
that have been redeemed or paid or that have been delivered to the Trustee for
cancellation. All cancelled Notes held by the Trustee shall be destroyed and
certification of their destruction delivered to the Company unless by a written
order, signed by one Officer of the Company, the Company shall direct that
cancelled Notes be returned to it.
22
<PAGE> 24
Section 2.12. Defaulted Interest
If the Company defaults in a payment of interest on the
Notes, it shall pay the defaulted interest in any lawful manner plus, to the
extent lawful, interest payable on the defaulted interest, to the Persons who
are Holders on a subsequent special record date, which date shall be at the
earliest practicable date but in all events at least five Business Days prior to
the payment date, in each case at the rate provided in the Notes and in Section
4.1 hereof. The Company shall, with the consent of the Trustee, fix or cause to
be fixed each such special record date and payment date. At least 15 days before
the special record date, the Company (or the Trustee, in the name of and at the
expense of the Company) shall mail to the Holders a notice that states the
special record date, the related payment date and the amount of such interest to
be paid.
ARTICLE 3
REDEMPTION
Section 3.1. Notices to Trustee
If the Company elects to redeem Notes pursuant to the
optional redemption provisions of Section 3.7 hereof, it
shall furnish to the Trustee, at least 45 days but not more than 60 days before
a redemption date, an Officers' Certificate setting forth (i) the clause of
Section 3.7 pursuant to which the redemption shall occur, (ii) the redemption
date, (iii) the principal amount of Notes to be redeemed and (iv) the redemption
price.
Section 3.2. Selection of Notes to Be Redeemed.
If less than all the Notes are to be redeemed, the
Trustee shall select the Notes to be redeemed in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed, or, if the Notes are not so listed, pro rata, by lot or by
such method as the Trustee deems to be fair and reasonable.
The Trustee shall promptly notify the Company in writing
of the Notes selected for redemption and, in the case of any Note selected for
partial redemption, the principal amount thereof to be redeemed. Notes and
portions of
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<PAGE> 25
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000.
Provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
Section 3.3. Notice of Redemption
At least 30 days but not more than 60 days before a
redemption date, the Company shall mail a notice of
redemption by first class mail to each Holder whose Notes are to be redeemed at
such Holder's registered address.
The notice shall identify the Notes to be redeemed and
shall state:
(1) the redemption date;
(2) the redemption price;
(3) if any Note is being redeemed in part only, the
portion of the principal amount of such Note to be redeemed
and that, after the redemption date, upon cancellation of the original Note, a
new Note or Notes in principal amount equal to the unredeemed portion shall be
issued;
(4) the name and address of the Paying Agent;
(5) that Notes called for redemption must be surrendered
to the Paying Agent to collect the redemption price;
(6) that, unless the Company defaults in making such
redemption payment, interest on Notes or portions of Notes
called for redemption ceases to accrue on and after the redemption date;
(7) the paragraph of the Notes and/or the section of
this Indenture pursuant to which the Notes called for redemption are being
redeemed; and
(8) the CUSIP number of the Notes to be redeemed.
At the Company's request, the Trustee shall give the
notice of redemption in the name of the Company and at its expense; provided
that the Company shall deliver to the Trustee, at least 45 days (unless a
shorter period is acceptable to the Trustee) prior to the redemption date, an
Officers' Certificate
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<PAGE> 26
requesting that the Trustee give such notice and setting forth the information
to be stated in such notice as provided in the preceding paragraph.
Section 3.4. Effect of Notice of Redemption
Once notice of redemption has been mailed to the Holders
in accordance with Section 3.3 herein, Notes called for
redemption become due and payable on the redemption date at the redemption
price. At any time prior to the mailing of a notice of redemption to the Holders
pursuant to Section 3.3, the Company may withdraw, revoke or rescind any notice
of redemption delivered to the Trustee without any continuing obligation to
redeem the Notes as contemplated by such notice of redemption.
Section 3.5. Deposit of Redemption Price
On or before the redemption date, the Company shall
deposit with the Trustee (to the extent not already held by
the Trustee) or with the Paying Agent money in immediately available funds
sufficient to pay the redemption price of and accrued interest on all Notes to
be redeemed on that date. The Trustee or the Paying Agent shall return to the
Company any money deposited with the Trustee or the Paying Agent by the Company
in excess of the amounts necessary to pay the redemption price of, and accrued
interest on, all Notes to be redeemed.
Interest on the Notes to be redeemed shall cease to
accrue on the applicable redemption date, whether or not such Notes are
presented for payment, if the Company makes or deposits the redemption payment
in accordance with this Section 3.5. If any Note called for redemption shall not
be paid upon surrender for redemption because of the failure of the Company to
comply with the preceding paragraph, interest shall be paid on the unpaid
principal, from the redemption date until such principal is paid, and to the
extent lawful on any interest not paid on such unpaid principal, in each case at
the rate provided in the Notes.
Section 3.6. Notes Redeemed in Part
Upon surrender of a Note that is redeemed in part, the
Company shall issue and the Trustee shall authenticate for
the Holder at the expense of the Company a new Note equal in principal amount to
the unredeemed portion of the Note surrendered.
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<PAGE> 27
Section 3.7. Optional Redemption
(a) Except as set forth in Section 3.7(b), the Notes are not
redeemable at the Company's option prior to July 15, 2003. Thereafter, the Notes
will be subject to redemption at the option of the Company, in whole or in part,
at the redemption prices (expressed as percentages of principal amount) set
forth below plus accrued and unpaid interest thereon, if any, to the applicable
redemption date, if redeemed during the 12-month period beginning on July 15 of
the years indicated below:
<TABLE>
<CAPTION>
Year .................................... Percentage
---- ----------
<S> <C>
2003 .................................... 106.500%
2004 .................................... 104.333
2005 .................................... 102.167
2006 and thereafter............................. 100.000
</TABLE>
(b) At any time or from time to time prior to July 15, 2003, the
Company may, at its option, redeem up to one-third of the aggregate principal
amount of the Notes issued on or after the Closing Date, at a redemption price
of 115% of the principal amount thereof, plus accrued and unpaid interest, if
any, to the applicable redemption date, with the net cash proceeds of one or
more Public Equity Offerings; provided, that (a) such redemption shall occur
within 90 days of the date of closing of such public offering and (b) at least
two-thirds of the aggregate principal amount of the Notes issued on or after the
Closing Date remains outstanding immediately after giving effect to each such
redemption.
(c) The restrictions on optional redemptions set forth in this
Section 3.7 shall not limit the Company's right to make open market purchases of
the Notes from time to time; provided, that neither the Company nor any of its
Subsidiaries may use the proceeds of a Public Equity Offering made prior to July
15, 2003 to make open market purchases of the Notes.
ARTICLE 4
COVENANTS
Section 4.1. Payment of Notes
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<PAGE> 28
(a) The Company shall pay the principal and premium, if any, of, and
interest on, the Notes on the dates and in the manner provided in the Notes.
Subject to Section 4.1(b), principal, premium, if any, and interest shall be
considered paid on the date due if the Paying Agent, other than the Company or a
Subsidiary of the Company, holds on or before that date money deposited by the
Company in immediately available funds and designated for and sufficient to pay
all principal, premium, if any, and interest then due. Such Paying Agent shall
return to the Company, no later than three Business Days following the date of
payment, any money that exceeds such amount of principal, premium, if any, and
interest then due and payable on the Notes.
The Company shall pay interest (including post-petition
interest) on overdue principal at the rate equal to 1% per annum in excess of
the then applicable interest rate on the Notes to the extent lawful; it shall
pay interest (including post-petition interest) on overdue installments of
interest (without regard to any applicable grace period) at the same rate to the
extent lawful.
(b) On or before July 15, 2003, the Company may, at its option, pay
interest in additional Notes having an aggregate principal amount equal to the
amount of such interest. The Company shall notify the Trustee on or prior to the
Record Date of its election to so pay such interest in additional Notes. If the
Company elects to pay interest in additional Notes, it shall pay such in
additional Notes to the Holders on a pro rata basis. Additional Notes to be
issued pursuant to this section may be issued in principal amounts of less than
$1,000. All Notes owned by any one Holder will be aggregated for the purpose of
determining the amount of additional Notes to be issued pursuant to this
section. Any additional Notes so issued in payment of interest shall be dated as
of the applicable interest payment date, and are additional obligations of the
Company and entitled to the benefits of this Indenture.
Section 4.2. Maintenance of Office or Agency
The Company shall maintain an office or agency (which
may be an office of the Trustee, Registrar or co-registrar) in the Borough of
Manhattan, the City of New York where Notes may be surrendered for registration
of transfer or exchange and where notices and demands to or upon the Company in
respect of the Notes and this Indenture may be served. The Company shall give
prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain any such required
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<PAGE> 29
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or
more other offices or agencies where the Notes may be presented or surrendered
for any or all such purposes and may from time to time rescind such
designations; provided, that no such designation or rescission shall in any
manner relieve the Company of its obligation to maintain an office or agency for
such purposes. The Company shall give prompt written notice to the Trustee of
any such designation or rescission and of any change in the location of any such
other office or agency.
The Company hereby designates the Corporate Trust Office
of the Trustee as one such office or agency of the Company in accordance with
Section 2.3.
Section 4.3. Reports
(a) The Company shall file with the Trustee, within 15 days after
the time of filing with the Commission, copies of the reports, information and
other documents (or copies of such portions of any of the foregoing as the
Commission may by rules and regulations prescribe) that the Company is required
to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act.
If the Company is not subject to the requirements of Section 13 or 15(d) of the
Exchange Act, the Company shall file with the Commission and the Trustee all
such reports, information and other documents as it would be required to file if
it were subject to the requirements of Section 13 or 15(d) of the Exchange Act;
provided, that the Company shall not be in default of the provisions of this
Section 4.3 for any failure to file reports with the Commission solely by
refusal by the Commission to accept the same for filing. The Company shall
deliver (or cause the Trustee to deliver) copies of all reports, information and
documents required to be filed with the Trustee pursuant to this Section 4.3 to
the Holders at their addresses appearing in the register of Notes maintained by
the Registrar. The Company shall also comply with the provisions of TIA Section
314(a).
(b) If the Company is required to furnish annual, quarterly or
current reports to its stockholders pursuant to the Exchange Act, the Company
shall cause any annual, quarterly, current or other financial report furnished
by it generally to its stockholders to be filed with the Trustee and mailed to
the Holders at their addresses appearing in the register of Notes maintained by
the Registrar. If the
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Company is not required to furnish annual, quarterly or current reports to its
stockholders pursuant to the Exchange Act, the Company shall cause the financial
statements of the Company and its consolidated Subsidiaries (and similar
financial statements for all unconsolidated Subsidiaries, if any), including any
notes thereto (and, with respect to annual reports, an auditors' report by an
accounting firm of established national reputation), and a "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
comparable to that which would have been required to appear in annual or
quarterly reports filed under Section 13 or 15(d) of the Exchange Act to be so
filed with the Trustee and mailed to the Holders promptly, but in any event,
within 90 days after the end of each of the fiscal years of the Company and
within 45 days after the end of each of the first three quarters of each such
fiscal year.
(c) So long as is required for an offer or sale of the Notes to
qualify for an exemption under Rule 144A, the Company shall, upon request,
provide the information required by clause (d)(4) thereunder to each Holder and
to each prospective purchaser of Notes identified by any Holder of Restricted
Securities.
Section 4.4. Compliance Certificate
(a) The Company shall deliver to the Trustee, within 120 days after
the end of each fiscal year, an Officers' Certificate (provided, however, that
one of the signatories to such Officers' Certificate shall be the Company's
principal executive officer, principal financial officer or principal accounting
officer) stating that a review of the activities of the Company and its
Subsidiaries during the preceding fiscal year has been made under the
supervision of the signing Officers with a view to determine whether each 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 each of the Company and its Subsidiaries has kept,
observed, performed and fulfilled each and every covenant contained in this
Indenture and is not in default in the performance or observance of any of the
terms, provisions and conditions hereof or thereof (or, if a Default or Event of
Default shall have occurred, describing all such Defaults or Events of Default
of which he may have knowledge and what action each is taking or proposes to
take with respect thereto).
(b) The year-end financial statements delivered pursuant to Section
4.3 above shall be accompanied by a written statement of the independent public
accountants of the Company (which shall be a firm of established national
reputa-
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<PAGE> 31
tion reasonably satisfactory to the Trustee) that in making the examination
necessary for certification of such financial statements nothing has come to
their attention which would lead them to believe that either the Company or any
of its Subsidiaries has violated any provisions of this Indenture or, if any
such violation has occurred, specifying the nature and period of existence
thereof, it being understood that such accountants shall not be liable directly
or indirectly to any Person for any failure to obtain knowledge of any such
violation.
(c) So long as any of the Notes are outstanding, the Company shall
deliver to the Trustee forthwith upon any Officer becoming aware of (i) any
Default or Event of Default or (ii) any event of default under any mortgage,
indenture or instrument referred to in Section 6.1(5) hereof, an Officers'
Certificate specifying such Default, Event of Default or other event of default
and what action the Company is taking or proposes to take with respect thereto.
Section 4.5. Taxes
The Company shall, and shall cause its Subsidiaries to,
file all tax returns required to be filed and to pay prior to delinquency all
material taxes, assessments and governmental levies except as contested in good
faith and by appropriate proceedings and for which reserves have been
established in accordance with GAAP.
Section 4.6. Stay, Extension and Usury Laws
The Company covenants (to the extent that it may
lawfully do so) that it shall not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay, extension
or usury law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of this Indenture; and the Company (to
the extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law and covenants that it shall not, by resort to any such
law, hinder, delay or impede the execution of any power herein granted to the
Trustee but shall suffer and permit the execution of every such power as though
no such law has been enacted.
Section 4.7. Limitation on Restricted Payments
(a) The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly:
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(i) declare or pay any dividend or make any distribution
on account of any Equity Interests of the Company or any of its
Subsidiaries (other than (x) dividends or distributions payable in
Equity Interests (other than Disqualified Stock) of the Company or
(y) dividends or distributions payable to the Company or any Wholly
Owned Subsidiary),
(ii) purchase, redeem or otherwise acquire or retire for
value any Equity Interest of the Company, any Subsidiary or any
other Affiliate of the Company (other than any such Equity Interest
owned by the Company or any Wholly Owned Subsidiary),
(iii) make any principal payment on, or purchase,
redeem, defease or otherwise acquire or retire for value any
Indebtedness of the Company that is subordinated in right of payment
to the Notes, as the case may be, prior to any scheduled principal
payment, sinking fund payment or other payment at the stated
maturity thereof, or
(iv) make any Restricted Investment (all such payments
and other actions set forth in clauses (i) through (iv) above being
collectively referred to as "Restricted Payments") unless, at the
time of such Restricted Payment:
(1) no Default or Event of Default has occurred and is continuing or
would occur as a consequence thereof,
(2) immediately after giving effect thereto on a pro forma basis,
the Company could incur at least $1.00 of additional Indebtedness under
Section 4.9(a) of the Senior Notes Indenture, and
(3) such Restricted Payment (the value of any such payment, if other
than cash, being determined in good faith by the Board of Directors and
evidenced by a resolution set forth in an Officers' Certificate delivered
to the Trustee), together with the aggregate of all other Restricted
Payments made after the date of this Indenture (including Restricted
Payments permitted by clauses (i) and (ii) of Section 4.7(b) and excluding
Restricted Payments permitted by the other clauses therein), is less than
the sum of (w) 50% of the Consolidated Net Income of the Company for the
period (taken as one accounting period) from the beginning of the first
quarter commencing immediately after the date of this Indenture to the end
of the Company's most recently ended fiscal quarter for which internal
financial
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statements are available at the time of such Restricted Payment (or, if such
Consolidated Net Income for such period is a deficit, 100% of such deficit),
plus (x) 100% of the aggregate net cash proceeds (or of the net cash proceeds
received upon the conversion of non-cash proceeds into cash) received by the
Company from the issuance or sale, other than to a Subsidiary, of Equity
Interests of the Company (other than Disqualified Stock) after the date of this
Indenture and on or prior to the time of such Restricted Payment, plus (y) 100%
of the aggregate net cash proceeds (or of the net cash proceeds received upon
the conversion of non-cash proceeds into cash) received by the Company from the
issuance or sale, other than to a Subsidiary, of any convertible or exchangeable
debt security of the Company that has been converted or exchanged into Equity
Interests of the Company (other than Disqualified Stock) pursuant to the terms
thereof after the date of this Indenture and on or prior to the time of such
Restricted Payment (including any additional net cash proceeds received by the
Company upon such conversion or exchange) plus (z) 100% of the aggregate
after-tax net cash proceeds (or of the after-tax net cash proceeds received upon
the conversion of non-cash proceeds into cash) received by the Company or a
Restricted Subsidiary from the sale or other disposition of any Investment
constituting a Restricted Payment that was made after the date of this
Indenture; provided, that the gain on such sale or disposition, if any, shall be
excluded in determining Consolidated Net Income for purpose of clause (w) above.
(b) The provisions of subsection (a) above shall not prohibit:
(i) the payment of any dividend within 60 days after the
date of declaration thereof, if at said date of declaration such
payment would not have been prohibited by the provisions of this
Indenture,
(ii) the redemption, purchase, retirement or other
acquisition of any Equity Interests of the Company in exchange for,
or out of the proceeds of the substantially concurrent sale (other
than to a Subsidiary) of, other Equity Interests of the Company
(other than Disqualified Stock),
(iii) the redemption, repurchase or payoff of any
Indebtedness (1) with proceeds of any Refinancing Indebtedness
permitted to be incurred pursuant to the provisions of Section
4.9(b)(xi) of the Senior Notes Indenture or (2) solely in exchange
for, or out of the proceeds of the substantially concurrent sale
(other than to a Subsidiary) of, any Equity Interests of the Company
(other than Disqualified Stock),
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(iv) Investments by the Company or any Restricted
Subsidiary, in an aggregate amount not to exceed $5.0 million, in an
Unrestricted Subsidiary formed primarily for the purpose of
financing purchases and leases of inventory manufactured by the
Company or any of its Restricted Subsidiaries,
(v) payments by the Company to Holdings pursuant to the
Tax Sharing Agreement,
(vi) distributions, loans or advances to Holdings in an
aggregate amount not to exceed $500,000 per fiscal year; provided,
that such amounts are used by Holdings to pay ordinary operating
expenses (including, without limitation, reasonable directors' fees
and expenses, indemnification obligations, professional fees and
expenses and management compensation expenses relating to employees
of Holdings and the Company),
(vii) (A) payments to, and promptly used by, Holdings to
repurchase Capital Stock or Indebtedness of Holdings from directors,
officers and employees of the Company and its Subsidiaries,
including Management Investors, who have died or whose employment
has been terminated, and (B) loans or advances to employees of the
Company or any of its Subsidiaries; provided that the aggregate
amount of such payments, loans and advances in any fiscal year shall
not exceed the lesser of (x) $500,000 plus any amount available for
such payments pursuant to this clause (x) since the date of this
Indenture that have not been used for such purpose and (y) $2.0
million,
(viii) Permitted Transactions or
(ix) other Restricted Payments in an aggregate amount
not to exceed $3.0 million; provided, that with respect to clauses
(iv), (vii) and (ix) above, no Default or Event of Default shall
have occurred and be continuing at the time, or shall occur as a
consequence thereof.
(c) Not later than the date of making each Restricted Payment, the
Company shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment was permitted, and setting forth the basis upon which the
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calculations required by this Section 4.7 were computed, which calculations may
be based upon the Company's latest available financial statements.
Section 4.8. Limitation on Restrictions on Subsidiary Dividends
The Company shall not, and shall not permit any
Restricted Subsidiary to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary
(a) to (1) pay dividends or make any other distributions to the
Company or any of its Restricted Subsidiaries (A) on such Restricted
Subsidiary's Capital Stock or (B) with respect to any other interest or
participation in, or measured by, such Restricted Subsidiary's profits or (2)
pay any indebtedness owed to the Company or any of its Restricted Subsidiaries,
or
(b) to make loans or advances to the Company or any of its
Restricted Subsidiaries, or
(c) to transfer any of its assets to the Company or any of its
Restricted Subsidiaries,
except for such encumbrances or restrictions existing under or by reason of:
(i) the Revolving Credit Facility, as in effect on the
Closing Date, or any refinancing thereof containing restrictions
that are not materially more restrictive than those contained in the
Revolving Credit Facility on the Closing Date,
(ii) the Senior Notes and the indentures under which the
Senior Notes are issued, each as in effect on the Closing Date, or
any refinancing thereof containing restrictions that are not
materially more restrictive than those contained in the Senior Notes
and such indentures on the Closing Date;
(iii) customary net worth restrictions on the actions
specified in clause (a)(1) above contained in the German Subsidiary
Facilities,
(iv) this Indenture and the Notes,
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<PAGE> 36
(v) applicable law,
(vi) restrictions with respect to a Subsidiary that was
not a Subsidiary on the Closing Date in existence at the time such
Person becomes a Subsidiary (but not created as a result of or in
anticipation of such Person becoming a Subsidiary); provided, that
such restrictions are not applicable to any other Person or the
properties or assets of any other Person,
(vii) customary non-assignment and net worth provisions
of any contract or lease entered into in the ordinary course of
business,
(viii) customary restrictions on the transfer of assets
subject to a Lien permitted under this Indenture imposed by the
holder of such Lien,
(ix) restrictions imposed by any agreement to sell
assets or Capital Stock to any Person pending the closing of such
sale, and
(x) permitted Refinancing Indebtedness (including
Indebtedness Refinancing Acquired Debt), provided, that such
restrictions contained in any agreement governing such Refinancing
Indebtedness are not materially more restrictive than those
contained in any agreements governing the Indebtedness being
Refinanced.
Section 4.9. [Intentionally Left Blank]
Section 4.10. Limitation on Asset Sales
The Company shall not, and shall not permit any
Restricted Subsidiary to, make any Asset Sale unless (i) the
Company or such Restricted Subsidiary receives consideration at the time of such
Asset Sale at least equal to the fair market value (as determined in good faith
by the Board of Directors as evidenced by a resolution of the Board of Directors
set forth in an Officers' Certificate delivered to the Trustee) of the assets
subject to such Asset Sale, (ii) at least 75% of the consideration for such
Asset Sale is in the form of cash, Cash Equivalents or liabilities of the
Company or any Restricted Subsidiary (other than liabilities that are by their
terms subordinated to the Notes) that are assumed by the transferee of such
assets (provided, that there is no further recourse to the Company and its
Restricted Subsidiaries with respect to such liabilities), and (iii) within 12
months of such Asset Sale, the Net Proceeds thereof are (a) invested in assets
related to the
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<PAGE> 37
business of the Company or its Restricted Subsidiaries, (b) applied to make an
offer to purchase the Senior Notes, if any are then outstanding, at a price
equal to 100% of the principal amount of the Senior Notes, plus accrued and
unpaid interest, if any, to the date of purchase, or (c) to the extent not used
as provided in clauses (a) or (b), applied to make an offer to purchase Notes as
described below (an "Excess Proceeds Offer"); provided, that if the amount of
Net Proceeds from any Asset Sale not used pursuant to clauses (a) and (b) above
is less than $5.0 million, the Company shall not be required to make an offer
pursuant to clause (c). Pending the final application of any such Net Proceeds,
the Company or any Restricted Subsidiary may temporarily reduce Indebtedness
under the Revolving Credit Facility or the German Subsidiary Facilities, or
temporarily invest such Net Proceeds in Cash Equivalents.
The amount of Net Proceeds not used as set forth in the
preceding clauses (a) and (b) constitutes "Excess Proceeds." If the Company
elects, or becomes obligated to make an Excess Proceeds Offer, the Company shall
offer to purchase Notes having an aggregate principal amount equal to the Excess
Proceeds (the "Purchase Amount"), at a purchase price equal to 100% of the
aggregate principal amount thereof, plus accrued and unpaid interest, if any, to
the purchase date. The Company must commence such Excess Proceeds Offer not
later than 30 days after the expiration of the 12-month period following the
Asset Sale that produced Excess Proceeds. If the aggregate purchase price for
the Notes tendered pursuant to the Excess Proceeds Offer is less than the Excess
Proceeds, the Company and its Restricted Subsidiaries may use the portion of the
Excess Proceeds remaining after payment of such purchase price for general
corporate purposes.
Each Excess Proceeds Offer shall remain open for a
period of 20 Business Days and no longer, unless a longer period is required by
law (the "Excess Proceeds Offer Period"). Promptly after the termination of the
Excess Proceeds Offer Period (the "Excess Proceeds Payment Date"), the Company
shall purchase and mail or deliver payment for the Purchase Amount for the Notes
or portions thereof tendered, pro rata or by such other method as may be
required by law, or, if less than the Purchase Amount has been tendered, all
Notes tendered pursuant to the Excess Proceeds Offer. The principal amount of
Notes to be purchased pursuant to an Excess Proceeds Offer may be reduced by the
principal amount of Notes acquired by the Company through purchase or redemption
(other than pursuant to a Change of Control Offer) subsequent to the date of the
Asset Sale and surrendered to the Trustee for cancellation.
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<PAGE> 38
Each Excess Proceeds Offer shall be conducted in
compliance with all applicable laws, including without limitation, Regulation
14E of the Exchange Act and the rules thereunder and all other applicable
Federal and state securities laws. To the extent that the provisions of any
securities laws or regulations conflict with the provisions of this Section
4.10, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under this
Section 4.10 by virtue thereof. The Company shall not, and shall not permit any
of its Subsidiaries to, create or suffer to exist or become effective any
restriction that would impair the ability of the Company to make an Excess
Proceeds Offer upon an Asset Sale or, if such Excess Proceeds Offer is made, to
pay for the Notes tendered for purchase.
The Company shall, no later than 30 days following the
expiration of the 12-month period following the Asset Sale that produced Excess
Proceeds, commence the Excess Proceeds Offer by mailing to the Trustee and each
Holder, at such Holder's last registered address, a notice, which shall govern
the terms of the Excess Proceeds Offer, and shall state:
(1) that the Excess Proceeds Offer is being made pursuant to this
Section 4.10, the principal amount of Notes which shall be accepted
for payment and that all Notes validly tendered shall be accepted
for payment on a pro rata basis;
(2) the purchase price and the date of purchase;
(3) that any Notes not tendered or accepted for payment pursuant to
the Excess Proceeds Offer shall continue to accrue interest;
(4) that, unless the Company defaults in the payment of the purchase
price with respect to any Notes tendered, Notes accepted for payment
pursuant to the Excess Proceeds Offer shall cease to accrue interest
after the Excess Proceeds Payment Date;
(5) that Holders electing to have Notes purchased pursuant to an
Excess Proceeds Offer shall be required to surrender their Notes,
with the form entitled "Option of Holder to Elect Purchase" on the
reverse of the Note completed, to the Company prior to the close of
business on the third Business Day immediately preceding the Excess
Proceeds Payment Date;
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(6) that Holders shall be entitled to withdraw their election if the
Company receives, not later than the close of business on the second
Business Day preceding the Excess Proceeds Payment Date, a telegram,
telex, facsimile transmission or letter setting forth the name of
the Holder, the principal amount of Notes the Holder delivered for
purchase and a statement that such Holder is withdrawing his
election to have such Notes purchased;
(7) that Holders whose Notes are purchased only in part shall be
issued Notes representing the unpurchased portion of the Notes
surrendered; provided that each Note purchased and each new Note
issued shall be in principal amount of $1,000 or whole multiples
thereof, other than as required to effect the purchase of Notes
issued as payment pursuant to Section 4.1(b); and
(8) the instructions that Holders must follow in order to tender
their Notes.
On or before the Excess Proceeds Payment Date, the
Company shall (i) accept for payment on a pro rata basis the Notes or portions
thereof tendered pursuant to the Excess Proceeds Offer, (ii) deposit with the
Paying Agent money sufficient to pay the purchase price of all Notes or portions
thereof so accepted and (iii) deliver to the Trustee the Notes so accepted,
together with an Officers' Certificate stating that the Notes or portions
thereof tendered to the Company are accepted for payment. The Paying Agent shall
promptly mail to each Holder of Notes so accepted payment in an amount equal to
the purchase price of such Notes, and the Trustee shall promptly authenticate
and mail to such Holders new Notes equal in principal amount to any unpurchased
portion of the Note surrendered.
The Company shall make a public announcement of the
results of the Excess Proceeds Offer as soon as practicable after the Excess
Proceeds Payment Date. For the purposes of this Section 4.10, the Trustee shall
act as the Paying Agent.
Section 4.11. Limitation on Transactions With Affiliates
The Company shall not, and shall not permit any of the
Restricted Subsidiaries to, directly or indirectly, sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into any contract, agreement, understanding,
loan, advance or guarantee with, or
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for the benefit of, any Affiliate (each of the foregoing, an "Affiliate
Transaction"), except for (i) Affiliate Transactions, which together with all
Affiliate Transactions that are part of a common plan, have an aggregate value
of not more than $1.0 million; provided, that such transactions are conducted in
good faith and on terms that are no less favorable to the Company or the
relevant Restricted Subsidiary than those that would have been obtained in a
comparable transaction at such time on an arm's-length basis from a Person that
is not an Affiliate of the Company or such Restricted Subsidiary, (ii) Affiliate
Transactions, which together with all Affiliate Transactions that are part of a
common plan, have an aggregate value of not more than $5.0 million; provided,
that a majority of the disinterested members of the Board of Directors of the
Company determine that such transactions are conducted in good faith and on
terms that are no less favorable to the Company or the relevant Restricted
Subsidiary than those that would have been obtained in a comparable transaction
at such time on an arm's-length basis from a Person that is not an Affiliate of
the Company or such Restricted Subsidiary, and (iii) Affiliate Transactions for
which the Company delivers to the Trustee an opinion as to the fairness to the
Company or such Restricted Subsidiary from a financial point of view, issued by
an investment banking firm of national standing.
Notwithstanding the foregoing, the following will not be
deemed to be Affiliate Transactions: (i) employment agreements entered into by
the Company or any Restricted Subsidiary in the ordinary course of business with
the approval of a majority of the disinterested members of the Company's Board
of Directors, (ii) transactions between or among the Company and/or its Wholly
Owned Subsidiaries, (iii) Restricted Payments permitted by Section 4.7 of this
Indenture, and (iv) 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 a majority
of the disinterested directors of the Company's Board of Directors or, if none,
unanimously by the Board of Directors.
Section 4.12. [Intentionally Left Blank]
Section 4.13. Corporate Existence
Subject to Article 5 of this Indenture, the Company
shall do or cause to be done all things necessary to preserve and keep in full
force and effect (i) its corporate existence, and the corporate, partnership or
other existence of each of its respective Subsidiaries, in accordance with their
respective organizational documents (as the same may be amended from time to
time) and (ii) its (and its Subsi-
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diaries) rights (charter and statutory), licenses and franchises; provided, that
the Company shall not be required to preserve any such right, license or
franchise, or the corporate, partnership or other existence of any Subsidiary,
if the Board of Directors on behalf of the Company shall determine in good faith
that the preservation thereof is no longer desirable in the conduct of the
business of the Company and its Subsidiaries taken as a whole and that the loss
thereof is not adverse in any material respect to the Holders.
Section 4.14. Repurchase Upon a Change of Control
Upon the occurrence of a Change of Control, the Company
shall notify the Trustee in writing thereof and shall make an offer to purchase
all of the Notes then outstanding as described below (the "Change of Control
Offer") at a purchase price equal to 101% of the aggregate principal amount
thereof plus accrued and unpaid interest, if any, to the date of repurchase (the
"Change of Control Payment").
The Change of Control Offer shall be made in compliance
with all applicable laws, including without limitation, Regulation 14E of the
Exchange Act and the rules thereunder and all other applicable Federal and state
securities laws. To the extent that the provisions of any securities laws or
regulations conflict with the provisions of this Section 4.14, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this Section 4.14 by virtue
thereof.
Within 30 days following any Change of Control, the
Company shall commence the Change of Control Offer by mailing to the Trustee and
each Holder a notice, which shall govern the terms of the Change of Control
Offer, and shall state that:
(i) the Change of Control Offer is being made pursuant
to this Section 4.14 and that all Notes tendered will be accepted
for payment,
(ii) the purchase price and the purchase date, which
shall be a Business Day no earlier than 30 days nor later than 60
days from the date such notice is mailed (the "Change of Control
Payment Date"),
(iii) that any Note not tendered for payment pursuant to
the Change of Control Offer shall continue to accrue interest,
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(iv) that, unless the Company defaults in the payment of
the Change of Control Payment, all Notes accepted for payment
pursuant to the Change of Control Offer shall cease to accrue
interest on the Change of Control Payment Date,
(v) that any Holder electing to have Notes purchased
pursuant to a Change of Control Offer shall be required to surrender
such Notes, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Notes completed, to the Paying Agent
at the address specified in the notice prior to the close of
business on the third Business Day preceding the Change of Control
Payment Date,
(vi) that any Holder shall be entitled to withdraw such
election if the Paying Agent receives, not later than the close of
business on the second Business Day preceding the Change of Control
Payment Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of Notes
such Holder delivered for purchase, and a statement that such Holder
is withdrawing his election to have such Notes purchased,
(vii) that a Holder whose Notes are being purchased only
in part shall be issued new Notes equal in principal amount to the
unpurchased portion of the Notes surrendered, which unpurchased
portion must be equal to $1,000 in principal amount or an integral
multiple thereof,
(viii) the instructions that Holders must follow in
order to tender their Notes, and
(ix) the circumstances and relevant facts regarding such
Change of Control.
On the Change of Control Payment Date, the Company
shall, to the extent lawful, (i) accept for payment the Notes
or portions thereof tendered pursuant to the Change of Control Offer, (ii)
deposit with the Paying Agent an amount equal to the Change of Control Payment
in respect of all Notes or portions thereof so tendered and not withdrawn, and
(iii) deliver or cause to be delivered to the Trustee the Notes so accepted
together with an Officers' Certificate stating that the Notes or portions
thereof tendered to the Company are accepted for payment. The
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Paying Agent shall promptly mail to each Holder of Notes so accepted payment in
an amount equal to the purchase price for such Notes, and the Trustee shall
authenticate and mail to each Holder a new Note equal in principal amount to any
unpurchased portion of the Notes surrendered, if any, provided, that each such
new Note will be in principal amount of $1,000 or an integral multiple thereof.
The Company shall make a public announcement of the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Payment Date. For the purposes of this Section 4.14, the
Trustee shall act as the Paying Agent.
Section 4.15. Maintenance of Properties
The Company shall, and shall cause each of its
Subsidiaries to, maintain their properties and assets in normal working order
and condition as on the date of this Indenture (reasonable wear and tear
excepted) and make all necessary repairs, renewals, replacements, additions,
betterments and improvements thereto, as shall be reasonably necessary for the
proper conduct of the business of the Company and its Subsidiaries taken as a
whole; provided, that nothing herein shall prevent the Company or any of its
Subsidiaries from discontinuing any maintenance of any such properties if such
discontinuance is desirable in the conduct of the business of the Company and
its Subsidiaries taken as a whole.
Section 4.16. Maintenance of Insurance
The Company shall, and shall cause each of its
Subsidiaries to, maintain liability, casualty and other insurance (including
self-insurance consistent with prior practice) with responsible insurance
companies in such amounts and against such risks as is in accordance with
customary industry practice in the general areas in which the Company and its
Subsidiaries operate.
Section 4.17. Restrictions on Sale and Issuance of Subsidiary Stock
The Company shall not sell, and shall not permit any of
its Restricted Subsidiaries to issue or sell, any shares of Capital Stock of any
Restricted Subsidiary (other than directors' qualifying shares) to any Person
other than the Company or a Wholly Owned Subsidiary; provided, that the Company
and its Restricted Subsidiaries may sell all of the Capital Stock of a
Restricted Subsidiary owned by
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the Company and its Restricted Subsidiaries if the Net Proceeds from such Asset
Sale are used in accordance with the provisions of Section 4.10 of this
Indenture.
Section 4.18. Line of Business
The Company shall not, and shall not permit any
Restricted Subsidiary to, engage in any business other than (a) the business
conducted or proposed to be conducted by the Company and the Restricted
Subsidiaries on the Closing Date and (b) any business that in the reasonable,
good faith judgment of the Board of Directors of the Company is ancillary,
complementary, supplementary, or related to, or an extension of, any business
described in clause (a) above.
ARTICLE 5
SUCCESSORS
Section 5.1. When the Company May Merge, etc.
The Company shall not consolidate or merge with or into
(whether or not the Company is the surviving corporation), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets (determined on a consolidated basis for the Company and its
Restricted Subsidiaries) in one or more related transactions to, any other
Person unless:
(i) the Company is the surviving Person or
the Person formed by or surviving any such consolidation or merger
(if other than the Company) or to which such sale, assignment,
transfer, lease, conveyance or other disposition has been made is a
corporation organized and existing under the laws of the United
States, any state thereof or the District of Columbia,
(ii) the Person formed by or surviving any
such consolidation or merger (if other than the Company) or the
Person to which such sale, assignment, transfer, lease, conveyance
or other disposition has been made assumes all the Obligations of
the Company, pursuant to a supplemental indenture in a form
reasonably satisfactory to the Trustee, under the Notes and this
Indenture,
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(iii) immediately after such transaction, no
Default or Event of Default exists, and
(iv) the Company, or any Person formed by or
surviving any such consolidation or merger, or to which such sale,
assignment, transfer, lease, conveyance or other disposition has
been made, (A) has a Consolidated Net Worth (immediately after the
transaction but prior to any purchase accounting adjustments
resulting from the transaction) equal to or greater than the
Consolidated Net Worth of the Company immediately preceding the
transaction and (B) shall be permitted, at the time of such
transaction and after giving pro forma effect thereto as if such
transaction had occurred at the beginning of the applicable
four-quarter period, to incur at least $1.00 of additional
Indebtedness pursuant to Section 4.9(a) of the Senior Notes
Indenture.
The Company shall deliver to the Trustee prior to the
consummation of any proposed transaction an Officers' Certificate to the
foregoing effect, an Opinion of Counsel, stating all conditions precedent to the
proposed transaction provided for in this Indenture have been complied with and
a written statement from a firm of independent public accountants of established
national reputation reasonably satisfactory to the Trustee stating that the
proposed transaction complies with clause (iv).
For purposes of this Section 5.1, the sale, lease,
conveyance, assignment, transfer or other disposition of all or substantially
all of the properties and assets of one or more Subsidiaries of the Company,
which properties and assets, if held by the Company instead of such
Subsidiaries, would constitute all or substantially all of the properties and
assets of the Company on a consolidated basis, shall be deemed to be the
transfer of all or substantially all of the properties and assets of the
Company.
Section 5.2. Successor Substituted
In the event of any transaction (other than a lease)
contemplated by Section 5.1 hereof in which the Company is not the surviving
Person, the successor formed by such consolidation or into or with which the
Company is merged or to which such sale, lease, conveyance, assignment, transfer
or other disposition is made, or formed by such reorganization, as the case may
be, shall succeed to, and be substituted for, and may exercise every right and
power of, the Company, and
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the Company shall be discharged from its Obligations under this Indenture, the
Notes and the Registration Rights Agreement with the same effect as if such
successor Person had been named as the Company herein or therein.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.1. Events of Default
An "Event of Default" occurs if:
(1) the Company defaults in the payment of
interest on any Note when the same becomes due and payable and the
Default continues for a period of 30 days;
(2) the Company defaults in the payment of
the principal (or premium, if any) on any Note when the same becomes
due and payable at maturity, upon redemption, by acceleration, in
connection with an Excess Proceeds Offer, a Change of Control Offer
or otherwise;
(3) the Company defaults in the performance
of or breaches the provisions of Article V hereof;
(4) the Company fails to comply with any of
its other agreements or covenants in, or provisions of, the Notes or
this Indenture and the Default continues for 60 days after written
notice thereof has been given to the Company by the Trustee or to
the Company and the Trustee by the Holders of at least 25% in
aggregate principal amount of the then outstanding Notes, such
notice to state that it is a "Notice of Default;"
(5) a default occurs under (after giving
effect to any applicable grace periods or any extension of any
maturity date) any mortgage, indenture or instrument under which
there may be issued or by which there may be secured or evidenced
any Indebtedness for money borrowed by the Company or any Restricted
Subsidiary (or the payment of which is guaranteed by the Company or
any Restricted Subsidiary), whether such Indebtedness or guarantee
now exists or is created after the date of this Indenture, if (a)
either (i) such default results from the failure to pay princi-
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pal on such Indebtedness or (ii) as a result of such default the
maturity of such Indebtedness has been accelerated, and (b) the
principal amount of such Indebtedness, together with the principal
amount of any other such Indebtedness with respect to which such a
payment default (after the expiration of any applicable grace period
or any extension of the maturity date) has occurred, or the maturity
of which has been so accelerated, exceeds $5.0 million in the
aggregate;
(6) a final non-appealable judgment or
judgments for the payment of money (other than judgments as to which
a reputable insurance company has accepted full liability) is or are
entered by a court or courts of competent jurisdiction against the
Company or any Restricted Subsidiary and such judgment or judgments
remain undischarged, unbonded or unstayed for a period of 60 days
after entry, provided that the aggregate of all such judgments
exceeds $2.5 million;
(7) written assertion by the Company, of the
unenforceability of their obligations under the Indenture or the
Notes;
(8) the Company or any of its Restricted
Subsidiaries pursuant to or within the meaning of any Bankruptcy
Law:
(a) commences a voluntary case,
(b) consents to the entry of an order
for relief against it in an
involuntary case,
(c) consents to the appointment of a
Custodian of it or for all or
substantially all of its property,
(d) makes a general assignment for the
benefit of its creditors,
(e) admits in writing its inability to
pay debts as the same become due; or
(9) a court of competent jurisdiction enters
an order or decree under any Bankruptcy Law that:
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(a) is for relief against the Company or
any of its Restricted Subsidiaries
in an involuntary case,
(b) appoints a Custodian of the Company
or any of its Restricted
Subsidiaries or for all or
substantially all of their property,
(c) orders the liquidation of the
Company, or any of its Restricted
Subsidiaries, and the order or
decree remains unstayed and in
effect for 60 days.
The Company shall, upon becoming aware that a Default or
Event of Default has occurred, deliver to the Trustee a
statement specifying such Default or Event of Default and what action the
Company is taking or proposes to take with respect thereto.
Section 6.2. Acceleration
If an Event of Default (other than an Event of Default
specified in clauses (8) and (9) of Section 6.1) occurs and is continuing, the
Trustee by written notice to the Company, or the Holders of at least 25% in
principal amount of the then outstanding Notes by written notice to the Company
and the Trustee, may declare the unpaid principal of and any accrued interest on
all the Notes to be due and payable. Upon such declaration the principal and
interest shall be due and payable immediately. If an Event of Default specified
in clause (8) or (9) of Section 6.1 with respect to the Company occurs, such an
amount 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. At any time
after a declaration of acceleration, but before a judgment or decree for payment
of the money due has been obtained by the Trustee, the Holders of a majority in
principal amount of the Notes outstanding, by written notice to the Company and
the Trustee, may rescind and annul such declaration and its consequences if (a)
the Company has paid or deposited with the Trustee a sum sufficient to pay (i)
all sums paid or advanced by the Trustee and the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel,
(ii) all overdue interest (including any interest accrued subsequent to an Event
of Default specified in clauses (8) and (9) of Section 6.1) on all Notes, (iii)
the principal of and premium, if any, on any Notes that have become due
otherwise than by such declaration or occurrence of
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acceleration and interest thereon at the rate borne by the Notes, and (iv) to
the extent that payment of such interest is lawful, interest upon overdue
interest at the rate borne by the Notes; (b) all Events of Default, other than
the non-payment of principal of and interest on the Notes that have become due
solely by such declaration or occurrence of acceleration, have been cured or
waived; and (c) the rescission would not conflict with any judgment, order or
decree of any court of competent jurisdiction.
Section 6.3. Other Remedies
If an Event of Default occurs and is continuing, the
Trustee may pursue any available remedy (under this Indenture or otherwise) to
collect the payment of principal or interest on the Notes to enforce the
performance of any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does
not possess any of the Notes or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Holder in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies are
cumulative to the extent permitted by law.
Section 6.4. Waiver of Past Defaults
Holders of a majority of the aggregate principal amount
of the then outstanding Notes by written notice to the Company and the Trustee
may on behalf of the Holders of all of the Notes (a) waive any existing Default
or Event of Default and its consequences under this Indenture except a
continuing Default or Event of Default in the payment of the principal of, or
interest on, any Note or a Default or an Event of Default with respect to any
covenant or provision which cannot be modified or amended without the consent of
the Holder of each outstanding Note affected, and/or (b) rescind an acceleration
and its consequences if the rescission would not conflict with any judgment or
decree if all existing Events of Default (except nonpayment of principal or
interest that has become due solely because of the acceleration) have been cured
or waived. Upon any such waiver, such Default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereon.
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Section 6.5. Control by Majority
The Holders of a majority in principal amount of the
then outstanding Notes 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. However, the Trustee may refuse
to follow any direction that conflicts with law or this Indenture, that the
Trustee determines may be unduly prejudicial to the rights of other Holders, or
that may involve the Trustee in personal liability.
Section 6.6. Limitation on Suits
A Holder may pursue a remedy with respect to this
Indenture or the Notes only if:
(a) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount of
the then outstanding Notes make a written request to the Trustee to
pursue the remedy;
(c) such Holder or Holders offer and, if requested,
provide to the Trustee indemnity satisfactory to the Trustee against
any loss, liability or expense;
(d) the Trustee does not comply with the request within
60 days after receipt of the request and the offer and, if
requested, the provision of indemnity; and
(e) during such 60-day period the Holders of a majority
in principal amount of the then outstanding Notes do not give the
Trustee a direction inconsistent with the request.
A Holder may not use this Indenture to prejudice the rights of another Holder or
to obtain a preference or priority over another Holder.
Section 6.7. Rights of Holders to Receive Payment
Notwithstanding any other provision of this Indenture,
the right of any Holder of a Note to receive payment of principal and interest
on the Note, on
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or after the respective due dates expressed in the Note, 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.
Section 6.8. Collection Suit by Trustee
If an Event of Default specified in Section 6.1(1) or
(2) occurs and is continuing, the Trustee is authorized to recover judgment in
its own name and as trustee of an express trust against the Company for the
whole amount of principal and interest remaining unpaid on the Notes and
interest on overdue principal (and premium, if any) and, to the extent lawful,
interest and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
Section 6.9. Trustee May File Proofs of Claim
The Trustee is authorized to file such proofs of claim
and other papers or documents as may be necessary or advisable in order to have
the claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel) and
the Holders allowed in any judicial proceedings relative to the Company (or any
other obligor under the Notes), their creditors or their property and shall be
entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.7 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.7 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders of the Notes
may be entitled to receive in such proceeding whether in liquidation or under
any plan of reorganization or arrangement or otherwise. Nothing herein contained
shall be deemed to authorize the Trustee to authorize or consent to or accept or
adopt on behalf of any Holder any plan of reorganization,
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arrangement, adjustment or composition affecting the Notes or the rights of any
Holder thereof, or to authorize the Trustee to vote in respect of the claim of
any Holder in any such proceeding.
Section 6.10. Priorities
If the Trustee collects any money pursuant to this
Article, it shall pay out the money in the following order:
First: to the Trustee, its agents and attorneys for
amounts due under Section 7.7, including payment of all compensation, expense
and liabilities incurred, and all advances made, by the Trustee and the costs
and expenses of collection;
Second: to Holders for amounts due and unpaid on the
Notes for principal and interest, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Notes for principal and
interest, respectively;
Third: without duplication, to Holders for any other
Obligations owing to the Holders under the Notes or this Indenture; and
Fourth: to the Company or to such party as a court of
competent jurisdiction shall direct.
The Trustee may fix a record date and payment date for
any payment to Holders.
Section 6.11. Undertaking for Costs
In any suit for the enforcement of any right or remedy
under this Indenture or in any suit against the Trustee for any action taken or
omitted by it as a Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This Section does not apply to a suit by the Trustee, a suit by a
Holder pursuant to Section 6.6, or a suit by Holders of more than 10% in
principal amount of the then outstanding Notes.
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ARTICLE 7
TRUSTEE
Section 7.1. Duties of Trustee
(1) If an Event of Default has occurred and
is continuing, the Trustee shall exercise such of the rights and
powers vested in it by this Indenture and use the same degree of
care and skill in their exercise as a prudent person would exercise
or use under the circumstances in the conduct of his or her own
affairs.
(2) Except during the continuance of an
Event of Default:
(a) The duties of the Trustee shall be
determined solely by the express provisions of this Indenture, and
the Trustee need perform only those duties that are specifically set
forth in this Indenture, and no others, and no implied covenants or
obligations shall be read into this Indenture against the Trustee.
(b) In the absence of bad faith on its
part, the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein,
upon certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture. However, the
Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.
(3) The Trustee may not be relieved from liabilities for
its own negligent action, its own negligent failure to act, or its
own willful misconduct, except that:
(a) This paragraph does not limit the effect
of paragraph (2) of this Section.
(b) The Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer,
unless it is proved that the Trustee was negligent in ascertaining
the pertinent facts.
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(c) 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 6.5.
(4) Whether or not therein expressly so
provided, every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (1), (2) and (3) of this Section.
(5) No provision of this Indenture shall
require the Trustee to expend or risk its own funds or incur any liability. The
Trustee may refuse to perform any duty or exercise any right or power unless it
receives indemnity satisfactory to it against any loss, liability or expense.
(6) 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 7.2. Rights of Trustee
(1) The Trustee may conclusively rely upon
any document believed by it to be genuine and to have been signed or presented
by the proper Person. The Trustee need not investigate any fact or matter stated
in the document.
(2) Before the Trustee acts or refrains from
acting, it may require an Officers' Certificate or an Opinion of Counsel or
both. The Trustee shall not be liable for any action it takes or omits to take
in good faith in reliance on such Officers' Certificate or Opinion of Counsel.
The Trustee may consult with counsel and the advice of such counsel or any
Opinion of Counsel shall be full and complete authorization and protection from
liability in respect of any action taken, suffered or omitted by it hereunder in
good faith and in reliance thereon.
(3) The Trustee may act through agents and
shall not be responsible for the misconduct or negligence of any agent appointed
with due care.
(4) The Trustee shall not be liable for any
action it takes or omits to take in good faith which it believes to be
authorized or within its rights or powers conferred upon it by this Indenture.
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(5) Unless otherwise specifically provided
in this Indenture, any demand, request, direction or notice from the Company
shall be sufficient if signed by an Officer of the Company, on behalf of the
Company.
(6) Except with respect to Section 4.1, the
Trustee shall have no duty to inquire as to the performance of the Company's
covenants in Article 4 hereof. In addition, the Trustee shall not be deemed to
have knowledge of any Default or Event of Default except (i) any Event of
Default occurring pursuant to Sections 6.1(1), 6.1(2) and 4.1, or (ii) any
Default or Event of Default of which the Trustee shall have received written
notification or obtained actual knowledge.
Section 7.3. Individual Rights of Trustee
The Trustee in its individual or any other capacity may
become the owner or pledgee of Notes and may otherwise deal with the Company or
an Affiliate of the Company with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights. However, the Trustee is
subject to Sections 7.10 and 7.11.
Section 7.4. Trustee's Disclaimer
The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture or the Notes, it
shall not be accountable for the Company's use of the proceeds from the Notes or
any money paid to the Company or upon the Company's direction under any
provision hereof, it shall not be responsible for the use or application of any
money received by any Paying Agent other than the Trustee and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
Section 7.5. Notice of Defaults
If a Default or Event of Default occurs and is
continuing and if the Trustee has knowledge thereof (within the meaning of
Section 7.2(b)), the Trustee shall mail to the Holders a notice of the Default
or Event of Default within 30 days after it occurs.
Section 7.6. Reports by Trustee to Holders
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Within 60 days after each May 15 beginning with the May
15 following the date of this Indenture, the Trustee shall mail to the Holders a
brief report dated as of such reporting date that complies with TIA Section
313(a) (but if no event described in TIA Section 313(a) has occurred within the
twelve months preceding the reporting date, no report need be transmitted). The
Trustee also shall comply with TIA Section 313(b). The Trustee shall also
transmit by mail all reports as required by TIA Section 313(c).
Commencing at the time this Indenture is qualified under
the TIA, a copy of each report at the time of its mailing to the Holders shall
be filed with the Commission and each stock exchange on which the Notes are
listed. The Company shall promptly notify the Trustee when the Notes are listed
on any stock exchange.
Section 7.7. Compensation and Indemnity
The Company shall pay to the Trustee from time to time
reasonable compensation for its acceptance of this Indenture and services
hereunder. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Company shall reimburse the
Trustee promptly upon request for all reasonable disbursements, advances and
expenses incurred or made by it in addition to the compensation for its
services. Such expenses shall include the reasonable compensation, disbursements
and expenses of the Trustee's agents and counsel, except such disbursements,
advances and expenses as may be attributable to its negligence or bad faith.
The Company shall indemnify the Trustee against any and
all losses, liabilities or expenses incurred by it without negligence or bad
faith on its part arising out of or in connection with the acceptance or
administration of its duties under this Indenture, except as set forth below.
The Trustee shall notify the Company promptly of any claim for which it may seek
indemnity. Failure by the Trustee to so notify the Company shall not relieve the
Company of its obligations hereunder. The Company shall defend the claim and the
Trustee shall cooperate in the defense. In the event that a conflict of interest
or conflicting defenses would arise in connection with the representation of the
Company and the Trustee by the same counsel, the Trustee may have separate
counsel and the Company shall pay the reasonable fees and expenses of such
counsel. The Company need not pay for any settlement made without its consent,
which consent shall not be unreasonably withheld.
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The obligations of the Company under this Section 7.7
shall survive the satisfaction and discharge of this Indenture.
The Company need not reimburse any expense or indemnify
against any loss or liability incurred by the Trustee through its own negligence
or bad faith.
To secure the Company's payment obligations in this
Section, the Trustee shall have a Lien prior to the Notes on
all money or property held or collected by the Trustee, except that held in
trust to pay principal of (and premium, if any) and interest on particular
Notes. Such Lien shall survive the satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services
after an Event of Default specified in Section 6.1(8) or (9) occurs, the
expenses and the compensation for the services are intended to constitute
expenses of administration under any Bankruptcy Law.
Section 7.8. Replacement of Trustee
A resignation or removal of the Trustee and appointment
of a successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section.
The Trustee may resign at any time and be discharged
from the trust hereby created by so notifying the Company. The Holders of a
majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company. The Company may remove the
Trustee if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged a bankrupt or an insolvent
or an order for relief is entered with respect to the Trustee under any
Bankruptcy Law;
(c) a Custodian or public officer takes charge of the
Trustee or its property; or
(d) the Trustee becomes incapable of acting.
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If the Trustee resigns or is removed or if a vacancy
exists in the office of Trustee for any reason, the Company shall promptly
appoint a successor Trustee. Within one year after the successor Trustee takes
office, the Holders of a majority in principal amount of the then outstanding
Notes may appoint a successor Trustee to replace the successor Trustee appointed
by the Company.
If a successor Trustee does not take office within 60
days after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company or the Holders of at least 10% in principal amount of the then
outstanding Notes may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If the Trustee after written request by any Holder who
has been a Holder for at least six months fails to comply with Section 7.10,
such Holder may petition any court of competent jurisdiction for the removal of
the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance
of its appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to the Holders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, provided that all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for in Section 7.7. Notwithstanding replacement of the Trustee pursuant to this
Section 7.8, the Company's obligations under Section 7.7 hereof 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 7.7 upon such
replacement or removal.
Section 7.9. Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
Section 7.10. Eligibility; Disqualification
There shall at all times be a Trustee hereunder that
shall (a) be a corporation organized and doing business under the laws of the
United States of
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America or of any state thereof or of the District of Columbia authorized under
such laws to exercise corporate trustee power, (b) be subject to supervision or
examination by Federal or state or the District of Columbia authority, and (c)
have a combined capital and surplus of at least $100,000,000 as set forth in its
most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies
the requirements of TIA Sections 310(a)(1), 310(a)(2) and 310(a)(5). The
Trustee is subject to TIA Section 310(b); provided, however, that there shall be
excluded from the operations 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 is subject to TIA Section 311(a), excluding
any creditor relationship listed in TIA Section 311(b). A Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated therein. The provisions of TIA Section 311 shall apply to the Company,
as obligor on the Notes.
ARTICLE 8
DISCHARGE OF INDENTURE
Section 8.1. Termination of Company's Obligations.
This Indenture shall cease to be of further effect
(except that Section 7.7, 8.3 and 8.4 shall survive) when all outstanding Notes
theretofore authenticated and issued have been delivered (other than (i)
destroyed, lost or stolen Notes that have been replaced or paid and (ii) Notes
for whose payment money has theretofore been deposited in trust and thereafter
repaid to the Company pursuant to Section 8.3(b) hereof) to the Trustee for
cancellation and all sums payable by the Company hereunder have been paid. In
addition, the Company may (A) if applicable, be discharged from any and all
Obligations in respect of the Notes, other than the obligation to duly and
punctually pay the principal of, and premium, if any, and interest on the Notes,
in accordance herewith, or (B) if applicable, omit to comply with restrictive
covenants, and such omission will not be deemed to be an Event of Default if:
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(1) with respect to clauses (A) and (B), the Company
irrevocably deposits in trust with the Trustee or at the option of
the Trustee, with a trustee reasonably satisfactory to the Trustee
and the Company under the terms of an irrevocable trust agreement in
form and substance satisfactory to the Trustee, money or U.S.
Government Obligations sufficient (as certified by a nationally
recognized accounting firm designated by the Company) to pay
principal and interest and premium, if any, on the Notes to maturity
or redemption and each installment of interest, if any, on the due
dates thereof on the Notes, as the case may be, and to pay all other
sums payable by it hereunder, and with respect to clause (B) the
Obligations under this Indenture other than with respect to such
covenants and Events of Default which will remain in full force and
effect, provided that (i) the trustee of the irrevocable trust shall
have been irrevocably instructed to pay such money or the proceeds
of such U.S. Government Obligations to the Trustee and (ii) the
Trustee shall have been irrevocably instructed to apply such money
or the proceeds of such U.S. Government Obligations to the payment
of said principal, premium, if any, and interest with respect to the
Notes;
(2) with respect to clause (A), the Company has received
from, or there has been published by, the U.S. Internal Revenue
Service a ruling or there has been a change in laws which in the
opinion of independent counsel, which the Company shall deliver to
the Trustee, provides that holders of the Notes will not recognize
income, gain or loss for Federal income tax purposes as a result of
such deposit, defeasance and discharge and will be subject to
Federal income tax on the same amount, in the same manner and at the
same times as would have been the case if such deposit, defeasance
and discharge had not occurred and the Notes were otherwise paid or
redeemed in accordance with the provisions of this Indenture;
(3) with respect to clause (B), the Company has
delivered to the Trustee an opinion of independent counsel to the
effect that the holders of the Notes will not recognize income, gain
or loss for Federal income tax purposes as a result of such deposit
and defeasance and will be subject to Federal income tax on the same
amount, in the same manner and at the same times as would have been
the case if such deposit and defeasance had not occurred and the
Notes were redeemed pursuant to Article 3 hereof without exercising
the option of the Company pursuant to this Section 8.1; and
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(4) the Company delivers to the Trustee an Officers'
Certificate stating that all conditions precedent to satisfaction
and discharge of this Indenture have been complied with, and an
Opinion of Counsel to the same effect.
Then, this Indenture shall cease to be of further effect (except as provided in
this paragraph), and the Trustee, on demand of the Company, shall execute proper
instruments acknowledging confirmation of and discharge under this Indenture.
However, the Company's Obligations in Sections 2.3, 2.4, 2.5, 2.6, 2.7, 4.1,
4.6, 7.7, 7.8, 8.3 and 8.4, and the Trustee's and Paying Agent's obligations in
Section 8.3 shall survive until the Notes are no longer outstanding. Thereafter,
only the Company's obligations in Section 7.7 and 8.4 and the Company's,
Trustee's and Paying Agent's obligations in Section 8.3 shall survive.
After such irrevocable deposit has been made pursuant to
this Section 8.1 and satisfaction of the other conditions set forth herein, the
Trustee upon request shall acknowledge in writing the discharge of the Company's
obligations under this Indenture except for those surviving obligations
specified above.
In order to have money available on a payment date to
pay principal, premium, if any, or interest on the Notes, the U.S. Government
Obligations shall be payable as to principal, premium, if any, or interest at
least one Business Day before such payment date in such amounts as shall provide
the necessary money. U.S. Government Obligations shall not be callable at the
issuer's option.
Section 8.2. Application of Trust Money.
The Trustee, or a trustee satisfactory to the Trustee
and the Company, shall hold in trust, money or U.S. Government Obligations
deposited with it pursuant to Section 8.1. It shall apply the deposited money
and the money from U.S. Government Obligations through the Paying Agent and in
accordance with this Indenture to the payment of principal, premium, if any, and
interest on the Notes.
Section 8.3. Repayment to the Company.
(a) The Trustee and the Paying Agent shall promptly pay
to the Company upon written request any excess money or securities (as certified
by an independent public accountant reasonably acceptable to the Trustee) held
by them at any time.
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(b) The Trustee and the Paying Agent shall pay to the
Company upon written request any money held by them for the payment of
principal, premium, if any, or interest that remains unclaimed for two years
after the date upon which such payment shall have become due; provided that the
Company shall have either caused notice of such payment to be mailed to each
Holder entitled thereto no less than 30 days prior to such repayment or within
such period shall have published such notice in a financial newspaper of
widespread circulation published in the City of New York, including, without
limitation, The Wall Street Journal. After payment to the Company, Holders
entitled to the money must look to the Company for payment as general creditor
unless an applicable abandoned property law designates another Person, and all
liability of the Trustee and such Paying Agent with respect to such money shall
cease.
Section 8.4. Reinstatement.
If the Trustee or Paying Agent is unable to apply any
money or U.S. Government Obligations in accordance with Section 8.2 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, the Obligations of the Company under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.1 until such time as the Trustee or Paying Agent is permitted to apply
all such money or U.S. Government Obligations in accordance with Section 8.2;
provided that if the Company has made any payment of interest on or principal of
any Notes because of the reinstatement of its Obligations, the Company shall be
subrogated to the rights of the Holders of such Notes to receive such payment
from the money or U.S. Government Obligations held by the Trustee or Paying
Agent.
ARTICLE 9
AMENDMENTS
Section 9.1. Without Consent of Holders
The Company and the Trustee may amend this Indenture and
the Notes without the consent of any Holder:
(1) to cure any ambiguity, defect or
inconsistency;
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(2) to provide for uncertificated Notes in
addition to or in place of certificated Notes;
(3) to comply with Article 5 and Section
10.1 hereof;
(4) to make any change that would provide
any additional rights or benefits to the Holders of the Notes or
that does not adversely affect the legal rights hereunder or
thereunder of any Holder;
(5) to comply with requirements of the
Commission in order to effect or maintain the qualification of this
Indenture under the TIA; or
(6) prior to the original issuance of Notes
in exchange for Senior Preferred Stock, to amend the provisions of
Article 4 hereof in accordance with paragraph (f)(ii)(C) of the
Certificate of Designation.
Upon the request of the Company, accompanied by a
resolution of the Board of Directors of the Company authorizing the execution of
any such supplemental indenture or amendment, and upon receipt by the Trustee of
the documents described in Section 9.6 hereof required or requested by the
Trustee, the Trustee shall join with the Company in the execution of any
supplemental indenture or amendment authorized or permitted by the terms of this
Indenture and shall make any further appropriate agreements and stipulations
which may be therein contained, but the Trustee shall not be obligated to enter
into such supplemental indenture or amendment that affects its own rights,
duties or immunities under this Indenture or otherwise.
Section 9.2. With Consent of Holders
Subject to Sections 6.4 and 6.7 hereof, the Company and
the Trustee, as applicable, may amend, or waive any provision of, this Indenture
or the Notes with the written consent of the Holders of at least a majority of
the principal amount of the then outstanding Notes.
Upon the request of the Company, accompanied by a
resolution of the Board of Directors of the Company authorizing the execution of
any such supplemental indenture or amendment, and upon filing with the Trustee
of evidence satisfactory to the Trustee of the consent of the Holders as
aforesaid, and upon
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receipt by the Trustee of the documents described in Section 9.6 hereof, the
Trustee shall join with the Company in the execution of such supplemental
indenture or amendment unless such supplemental indenture or amendment affects
the Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion, but shall not be
obligated to, enter into such supplemental indenture.
It shall not be necessary for the consent of the Holders
under this Section to approve the particular form of any proposed supplemental
indenture or amendment, but it shall be sufficient if such consent approves the
substance thereof.
After a supplemental indenture or amendment under this
Section becomes effective, the Company shall mail to the Holders of each Note
affected thereby a notice briefly describing the amendment 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, amendment or waiver.
Notwithstanding any other provision hereof, without the
consent of each Holder affected, an amendment or waiver under this Section may
not (with respect to any Notes held by a non-consenting Holder):
(1) reduce the principal amount of Notes
whose Holders must consent to an amendment, supplement or waiver;
(2) reduce the rate of or change the time
for payment of interest, including default interest, on any Note;
(3) reduce the principal of, or the premium
on, or change the fixed maturity of any Note or alter Article III
hereof or numbered paragraphs 5 or 6 of Exhibit A to this Indenture
or the price at which the Company shall offer to purchase such Notes
pursuant to Sections 4.10 or 4.14 hereof;
(4) waive a Default or Event of Default in
the payment of principal of or premium, if any, or interest on, or
redemption payment with respect to, any Note (other than a Default
in the payment of an amount due as a result of an acceleration if
the Holder rescinds such acceleration pursuant to Section 6.2);
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(5) make any Note payable in money other
than that stated in the Notes;
(6) make any change in Section 6.4 or 6.7
hereof or in this Section 9.2; or
(7) make any change adversely affecting the
contractual ranking of the Obligations.
Section 9.3. Compliance with Trust Indenture Act
If, at the time of an amendment to this Indenture or the
Notes, this Indenture shall be qualified under the TIA, every amendment to this
Indenture or the Notes shall be set forth in a supplemental indenture that
complies with the TIA as then in effect.
Section 9.4. Revocation and Effect of Consents
Until a supplemental indenture, an amendment or waiver
becomes effective, a consent to it by a Holder of a Note is a continuing consent
by the Holder and every subsequent Holder of a Note or portion of a Note that
evidences the same debt as the consenting Holder's Note, even if notation of the
consent is not made on any Note. A supplemental indenture, amendment or waiver
becomes effective in accordance with its terms and thereafter binds every
Holder.
The Company may fix a record date for determining which
Holders must consent to such supplemental indenture, amendment or waiver. If the
Company fixes a record date, the record date shall be fixed at (i) the later of
30 days prior to the first solicitation of such consent or the date of the most
recent list of Holders furnished to the Trustee prior to such solicitation
pursuant to Section 2.5, or (ii) such other date as the Company shall designate.
Section 9.5. Notation on or Exchange of Notes
The Trustee may place an appropriate notation about a
supplemental indenture, amendment or waiver on any Note thereafter
authenticated. The Company in exchange for all Notes may issue and the Trustee
shall authenticate new Notes that reflect the amendment or waiver.
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Failure to make the appropriate notation or issue a new
Note shall not affect the validity and effect of such amendment or waiver.
Section 9.6. Trustee to Sign Amendments, etc.
The Trustee shall sign any amendment or supplemental
indenture authorized pursuant to this Article 9 if the amendment does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may, but need not, sign it. In signing or refusing to
sign such amendment or supplemental indenture, the Trustee shall be entitled to
receive, if requested, an indemnity reasonably satisfactory to it and to receive
and, subject to Section 7.1, shall be fully protected in relying upon, an
Officers' Certificate and an Opinion of Counsel as conclusive evidence that such
amendment or supplemental indenture is authorized or permitted by this
Indenture, that it is not inconsistent herewith, and that it shall be valid and
binding upon the Company in accordance with its terms. The Company may not sign
an amendment or supplemental indenture until the Board of Directors of the
Company approves it.
Section 9.7. Amendments and Supplements Requiring Consent Of Holders
Of Senior Indebtedness
No amendment or modification to Article 10, this Section
9.7 or Section 11.6 may be made to this Indenture without the consent of holders
of at least a majority of the outstanding principal amount of each class of
Designated Senior Indebtedness that would be adversely affected by such
amendment or modification; provided, however, that if some but not all classes
of Designated Senior Indebtedness consent to any such amendment or modification,
such amendment or modification shall be effective with respect to each
consenting class.
ARTICLE 10
SUBORDINATION
SECTION 10.1. Notes Subordinated to Senior
Indebtedness.
Anything herein to the contrary notwithstanding, the
Company, for itself and its successors, and each Holder, by such Holder's
acceptance of Notes, agrees, that the payment of the principal of and interest
on the Notes is subordinated,
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to the extent and in the manner provided in this Article 10, to the prior
payment in full of all Senior Indebtedness.
This Article 10 shall constitute a continuing offer to
all persons who, in reliance upon such provisions, become holders of, or
continue to hold, Senior Indebtedness, and such provisions are made for the
benefit of the holders of Senior Indebtedness, and such holders are made
obligees hereunder and any one or more of them may enforce such provisions.
SECTION 10.2. No Payment on Notes in Certain Circumstances.
(a) No payment shall be made by the Company on account
of principal of or interest on the Notes (other than (x) interest payable in
additional Notes, as provided in the Notes, and (y) interest or principal paid
with Capital Stock of the Company or any debt security of the Company containing
subordination and default provisions no less favorable to the holders of Senior
Indebtedness than the provisions hereof) or to acquire or repurchase any of the
Notes or on account of the redemption provisions of the Notes (i) upon the
maturity of any Senior Indebtedness by lapse of time, acceleration or otherwise,
unless and until all principal thereof and interest thereon shall first be paid
in full in cash or Cash Equivalents, or such payment duly provided for or (ii)
upon the happening of any default in payment of any principal of or interest on
any Senior Indebtedness when the same becomes due and payable (a "Payment
Default"), unless and until such default shall have been cured or waived or
shall have ceased to exist.
(b) Without limiting the effect of Section 10.2(a)
hereof, upon the happening of a default or event of default (other than a
Payment Default) (including any event which, with the giving of notice or lapse
of time, or both, would become an event of default and including any default or
event of default that would result upon any payment with respect to the Notes)
with respect to any Senior Indebtedness, as such default or event of default is
defined therein or in the instrument or agreement under which it is outstanding,
and upon written notice thereof given to the Company and the Trustee by any
holders of such Senior Indebtedness or their representative ("Payment Notice"),
then, unless and until such default or event of default shall have been cured or
waived or shall have ceased to exist, no payment shall be made by the Company on
account of principal of or interest on the Notes (other than (x) interest
payable in additional Notes, as provided in the Notes, and (y) interest or
principal paid with Capital Stock of the Company or-any debt security of the
Company containing subordination and default provisions no less favorable to the
holders of Senior Indebtedness than the provisions hereof) or to acquire or
repurchase any of the Notes
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or on account of the redemption provisions of the Notes; provided, however, that
this paragraph (b) shall not prevent the making of any payment for more than 89
days after the Payment Notice shall have been given. Notwithstanding the
foregoing, (i) not more than one Payment Notice shall be given within a period
of 185 consecutive days, (ii) no event of default that existed or was continuing
on the date of any Payment Notice (whether or not such event of default is on
the same issue of Senior Indebtedness) shall be made the basis for the giving of
a subsequent Payment Notice, (iii) if the Company or the Trustee receives any
Payment Notice, a similar notice relating to or arising out of the same default
or facts giving rise to such default (whether or not such default is on the same
issue of Senior Indebtedness) shall not be effective for purposes of this
Section 10.2, and (iv) a Payment Notice may only be given by a holder or holders
(or the representative of holders) of Designated Senior Indebtedness.
(c) In furtherance of the provisions of Section 10.1,
if, notwithstanding the foregoing provisions of this Section 10.2, any payment
on account of principal of or interest on the Notes (other than (x) interest
payable in additional Notes, as provided in the Notes, and (y) interest or
principal paid with Capital Stock of the Company or any debt security of the
Company containing subordination and default provisions no less favorable to the
holders of Senior Indebtedness than the provisions hereof) or to acquire or
repurchase any of the Notes or on account of the redemption provisions of the
Notes shall be made by or on behalf of the Company and received by the Trustee,
by any Holder or by any Paying Agent (or, if the Company is acting as its own
Paying Agent, money for any such payment shall be segregated and held in trust),
at a time when such payment was prohibited by the provisions of this Section
10.2, then, unless and until such payment is no longer prohibited by this
Section 10.2, such payment (subject to the provisions of Sections 10.6 and 10.7)
shall be received and held in trust by the Trustee or such Holder or Paying
Agent, as the case may be, for the benefit of, and shall be immediately paid
over to, the holders of Senior Indebtedness or their representative, ratably
according to the respective amounts of Senior Indebtedness held or represented
by each, to the extent necessary to make payment in full in cash or Cash
Equivalents (except as such payment otherwise shall have been provided for), of
all Senior Indebtedness remaining unpaid, after giving effect to all concurrent
payments and distributions and all provisions therefor to or for the holders of
Senior Indebtedness. The Company shall give prompt notice to the Trustee of any
default or event of default or any acceleration under any Senior Indebtedness or
under any agreement pursuant to which Senior Indebtedness may have been issued.
Failure to give such notice shall not affect the subordination of the Notes to
Senior Indebtedness provided in this Article 10.
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SECTION 10.3. Notes Subordinated to Prior Payment
of All Senior Indebtedness on Dissolution,
Liquidation or Reorganization of Company.
Upon any distribution of assets of the Company upon any
dissolution, winding up, liquidation or reorganization of the Company
(including, without limitation, in bankruptcy, insolvency or. receivership
proceedings or upon any assignment for the benefit of creditors or any other
marshalling of assets and liabilities of the Company):
(a) the holders of all Senior Indebtedness shall first
be entitled to receive payments in full in cash or Cash Equivalents (or to have
such payment duly provided for) of the principal and interest due thereon before
the Holders are entitled to receive any payment on account of the principal of
or interest (other than (x) interest payable in additional Notes, as provided in
the Notes and (y) interest or principal paid with Capital Stock of the Company
or any debt security of the Company containing subordination and default
provisions no less favorable to the holders of Senior Indebtedness than the
provisions hereof) on the Notes;
(b) any payment or distribution of assets of the Company
of any kind or character, whether in cash, property or securities, to which the
Holders or the Trustee on behalf of the Holders would be entitled except for the
provisions of this Article 10, including any such payment or distribution that
is payable or deliverable by reason of the payment of any other Indebtedness of
the Company being subordinated to the payment of the Notes, shall be paid by the
liquidating trustee or agent or other person making such a payment or
distribution, directly to the holders of Senior Indebtedness or their
representative, ratably according to the respective amounts of Senior
Indebtedness held or represented by each, until all Senior Indebtedness
remaining unpaid shall have been paid in full in cash or Cash Equivalents
(except as such payment otherwise shall have been provided for), after giving
effect to all concurrent payments and distributions and all provisions therefor
to or for the holders of such Senior Indebtedness; and
(c) in the event that, notwithstanding the foregoing,
any payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, shall be received by the Trustee or the
Holders or any Paying Agent (or, if the Company is acting as its own Paying
Agent, money for any such payment or distribution shall be segregated or held in
trust) on account of principal of or interest on the Notes (other than (x)
interest payable in additional Notes, as provided in the Notes and (y) interest
or principal paid with Capital Stock of the
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Company or any debt security of the Company containing subordination provisions
no less favorable to the holders of Senior Indebtedness than the provisions
hereof) before all Senior Indebtedness is paid in full in cash or Cash
Equivalents, or provision made for such payment, such payment or distribution
(subject to the provisions of Sections 10.6 and 10.7) shall be received and held
in trust by the Trustee or such Holder or Paying Agent for the benefit of, and
shall immediately be paid over to, the holders of Senior Indebtedness or their
representative, ratably according to the respective amounts of Senior
Indebtedness held or represented by each, until all Senior Indebtedness
remaining unpaid shall have been paid in full in cash or Cash Equivalents
(except as such payment otherwise shall have been provided for), after giving
effect to all concurrent payments and distributions and all provisions therefor
to or for the holders of Senior Indebtedness.
The Company shall give prompt notice to the Trustee
prior to any dissolution, winding up, liquidation or reorganization of the
Company or assignment for the benefit of creditors by the Company.
SECTION 10.4. Holders to Be Subrogated to Rights
of Holders of Senior Indebtedness.
Subject to the payment in full in cash or Cash
Equivalents of all Senior Indebtedness, the Holders shall be subrogated to the
rights of the holders of Senior Indebtedness to receive payments or
distributions of assets of the Company applicable to the Senior Indebtedness
until all amounts owing on the Notes shall be paid in full in cash or Cash
Equivalents, and for the purpose of such subrogation no such payments or
distributions to the holders of Senior Indebtedness by or on behalf of the
Company, or by or on behalf of the Holders by virtue of this Article 10, which
otherwise would have been made to the Holders, shall, as between the Company and
the Holders, be deemed to be payment by the Company to or on account of the
Senior Indebtedness, it being understood that the provisions of this Article 10
are and are intended solely for the purpose of defining the relative rights of
the Holders, on the one hand, and the holders of Senior Indebtedness, on the
other hand.
If any payment or distribution to which the Holders
would otherwise have been entitled but for the provisions of this Article 10
shall have been applied, pursuant to the provisions of this Article 10, to the
payment of all amounts payable under the Senior Indebtedness, then the Holders
shall be entitled to receive from the holders of such Senior Indebtedness any
payments or distributions received by such holders of Senior Indebtedness in
excess of the amount sufficient to pay all amounts
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payable under or in respect of the Senior Indebtedness in full in cash or Cash
Equivalents.
SECTION 10.5. Obligations of the Company Unconditional.
Nothing contained in this Article 10 or elsewhere in
this Indenture or in the Notes is intended to or shall impair, as between the
Company and the Holders, the Obligation of the Company, which is absolute and
unconditional, to pay to the Holders the principal of and interest on the Notes
as and when the same shall become due and payable in accordance with their
terms, or is intended to or shall affect the relative rights of the Holders and
creditors of the Company other than the holders of the Senior Indebtedness, nor
shall anything herein or therein prevent the Trustee or any Holder from
exercising all remedies otherwise permitted by applicable law upon Default under
this Indenture, subject to the rights, if any, under this Article 10, of the
holders of Senior Indebtedness in respect of cash, property or securities of the
Company received upon the exercise of any such remedy. Upon any distribution of
assets of the Company referred to in this Article 10, the Trustee, subject to
the provisions of Sections 7.1 and 7.2, and the Holders shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction in
which such dissolution, winding up, liquidation or reorganization proceedings
are pending, or a certificate of the liquidating trustee or agent or other
person making any distribution to the Trustee or to the Holders for the purpose
of ascertaining the persons entitled to participate in such distribution, the
holders of Senior Indebtedness and other Indebtedness of the Company, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article 10.
SECTION 10.6. Trustee Entitled to Assume Payments Not Prohibited
in Absence of Notice.
The Trustee shall not at any time be charged with
knowledge of the existence of any facts that would prohibit the making of any
payment to or by the Trustee unless and until the Trustee or any Paying Agent
shall have received notice thereof from the Company or from one or more holders
of Senior Indebtedness or from any representative therefor and, prior to the
receipt of any such notice, the Trustee, subject to the provisions of Sections
7.1 and 7.2, shall be entitled in all respects conclusively to assume that no
such fact exists.
SECTION 10.7. Application by Trustee of Assets Deposited with It.
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U.S. Government Obligations deposited in trust with the
Trustee pursuant to and in accordance with Section 8.1 (including, without
limitation, clause (4) thereof) shall be for the sole benefit of Holders and, to
the extent allocated for the payment of Notes, shall not be subject to the
subordination provisions of this Article 10. Otherwise, any deposit of assets by
the Company with the Trustee or any Paying Agent (whether or not in trust) for
the payment of principal of or interest on any Notes shall be subject to the
provisions of Sections 10.1, 10.2, 10.3 and 10.4; provided, that, if prior to
the second Business Day preceding the date on which by the terms of this
Indenture any such assets may become distributable for any purpose (including,
without limitation, the payment of either principal of or interest on any Note)
the Trustee or such Paying Agent shall not have received with respect to such
assets the notice provided for in Section 10.6, then the Trustee or such Paying
Agent shall have full power and authority to receive such assets and to apply
the same to the purpose for which they were received, and shall not be affected
by any notice to the contrary received by it on or after such date.
SECTION 10.8. Subordination Rights Not Impaired by Acts or
Omissions of Company or Holders of Senior Indebtedness.
No right of any present or future holders of any Senior
Indebtedness to enforce the subordination provisions contained in this Article
10 shall at any time in any way be prejudiced or impaired by any act or failure
to act on the part of the Company or by any act or failure to act, in good
faith, by any such holder, or by any noncompliance by the Company with the terms
of this Indenture, regardless of any knowledge thereof that any such holder may
have or be otherwise charged with. The holders of Senior Indebtedness may
extend, renew, restate, supplement, modify or amend the terms of the Senior
Indebtedness or any security therefor and release, sell or exchange such
security and otherwise deal freely with the Company and its Subsidiaries all
without affecting the liabilities and obligations of the parties to the
Indenture or the Holders.
SECTION 10.9. Holders Authorize Trustee to Effectuate
Subordination of Notes.
Each Holder of the Notes by his acceptance thereof
authorizes and expressly directs the Trustee on his behalf to take such action
as may be necessary or appropriate to effect the subordination provisions
contained in this Article 10, and appoints the Trustee his attorney-in-fact for
such purpose, including, in the event of any dissolution, winding up,
liquidation or reorganization of the Company (whether in bankruptcy, insolvency
or receivership proceedings or upon an assignment for the
71
<PAGE> 73
benefit of creditors or any other marshalling of assets and liabilities of the
Company) tending towards liquidation of the business and assets of the Company,
the immediate filing of a claim for the unpaid balance of its or his Notes in
the form required in said proceedings and cause said claim to be approved. If
the Trustee does not file a proper claim or proof of debt in the form required
in such proceeding prior to 30 days before the expiration of the time to file
such claim or claims, then the holders of the Senior Indebtedness or their
representative is hereby authorized to file an appropriate claim for and on
behalf of the Holders of said Notes. Nothing herein contained shall be deemed to
authorize the Trustee or the holders of Senior Indebtedness or their
representative to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof, or to authorize the
Trustee or the holders of Senior Indebtedness or their representative to vote in
respect of the claim of any Holder in any such proceeding.
SECTION 10.10. Right of Trustee to Hold Senior Indebtedness.
The Trustee shall be entitled to all of the rights set
forth in this Article 10 in respect of any Senior Indebtedness at any time held
by it to the same extent as any other holder of Senior Indebtedness, and nothing
in this Indenture shall be construed to deprive the Trustee of any of its rights
as such holder.
SECTION 10.11. Article 10 Not to Prevent Events of Default.
The failure to make a payment on account of principal of
or interest on the Notes by reason of any provision of this Article 10 shall not
be construed as preventing the occurrence of a Default or an Event of Default
under Section 6.1.
SECTION 10.12. No Fiduciary Duty of Trustee to Holders of Senior
Indebtedness.
The Trustee shall not be deemed to owe any fiduciary
duty to the holders of Senior Indebtedness, and shall not be liable to any such
holders (other than for its wilful misconduct or gross negligence) if it shall
in good faith mistakenly pay over or deliver to the Holders of Notes or the
Company or any other person, money or assets to which any holders of Senior
Indebtedness shall be entitled by virtue of this Article 10 or otherwise.
Nothing in this Section 10.12 shall affect the obligation of any other such
person to hold such payment for the benefit of, and to pay such payment over to,
the holders of Senior Indebtedness or their representative.
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<PAGE> 74
ARTICLE 11
MISCELLANEOUS
Section 11.1. Trust Indenture Act Controls
If any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by TIA Section 318(c),
the imposed duties shall control.
Section 11.2. Notices
Any notice or communication by the Company or the
Trustee to the others is duly given if in writing and delivered in Person or
mailed by first-class mail (registered or certified, return receipt requested),
telex, telecopier or overnight air courier guaranteeing next day delivery, to
the others' addresses:
If to the Company:
CLARK Material Handling Company
172 Trade Street
Lexington, Kentucky 40511
Attention: Chief Executive Officer
Telecopier No.: (606) 288-1813
If to the Trustee:
United States Trust Company of New York
114 West 47th Street
New York, New York 10036
Attention: Corporate Trust Division
Telecopier No.: (212) 852-1625
The Company or the Trustee by notice to the others may
designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to
Holders) shall be deemed to have been duly given: at the time delivered by hand,
if personally delivered; upon receipt, if deposited in the mail, postage
prepaid; when answered back, if telexed; when receipt acknowledged, if
telecopied; and the next
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<PAGE> 75
Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery. All notices and communications to the
Trustee shall be deemed to have been duly given only if actually received by the
Trustee.
Any notice or communication to a Holder shall be mailed
by first-class mail, certified or registered, return receipt requested, to his
address shown on the register kept by the Registrar. Failure to mail a notice or
communication to a Holder or any defect in it shall not affect its sufficiency
with respect to other Holders.
If a notice communication is mailed in the manner
provided above within the time prescribed, it is duly given, whether or not the
addressee receives it.
If the Company mails a notice or communication to
Holders, it shall mail a copy to the Trustee and each Agent at the same time.
Section 11.3. Communication by Holders with Other Holders
Holders may communicate pursuant to TIA Section 312(b)
with other Holders with respect to their rights under this Indenture or the
Notes. The Company, the Trustee, the Registrar and any other person shall have
the protection of TIA Section 312(c).
Section 11.4. 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:
(a) an Officers' Certificate in form and substance
reasonably satisfactory to the Trustee (which shall include the
statements set forth in Section 11.5) stating that, in the opinion
of the signers, all conditions precedent and covenants, if any,
provided for in this Indenture relating to the proposed action have
been complied with; and
(b) an Opinion of Counsel in form and substance
reasonably satisfactory to the Trustee (which shall include the
statements set forth in Section 11.5) stating that, in the opinion
of such counsel, all such conditions precedent and covenants have
been complied with.
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<PAGE> 76
Section 11.5. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance
with a condition or covenant provided for in this Indenture (other than a
certificate provided pursuant to TIA Section 314(a)(4)) shall include:
(a) a statement that the Person making such certificate
or opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he
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
(d) a statement as to whether or not, in the opinion of
such Person, such condition or covenant has been complied with,
provided that with respect to matters of fact, an Opinion of Counsel may rely
upon an Officers' Certificate or a certificate of a public official.
Section 11.6. Rules by Trustee and Agents
The Trustee may make reasonable rules for action by or
at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules
and set reasonable requirements for its functions.
Section 11.7. Legal Holidays
If a payment date is a Legal Holiday at a place of
payment, payment may be made at that place on the next succeeding day that is
not a Legal Holiday, and no interest shall accrue for the intervening period.
Section 11.8. No Recourse Against Others
No director, officer, employee, incorporator,
stockholder or controlling person of the Company, as such, shall have any
liability for any obligations of
75
<PAGE> 77
the Company under the Notes, this Indenture or the Registration Rights Agreement
or for any claim based on, in respect of, or by reason of such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release shall be part of the consideration for the
issuance of the Notes. Notwithstanding the foregoing, nothing in this provision
shall be construed as a waiver or release of any claims under the Federal
securities laws.
Section 11.9. Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED, INTERPRETED AND THE
RIGHTS OF THE PARTIES DETERMINED 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. THE COMPANY HEREBY IRREVOCABLY
SUBMITS 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 IRREVOCABLY ACCEPTS
FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY,
JURISDICTION OF THE AFORESAID COURTS. THE COMPANY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, TRIAL BY JURY AND
ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF
ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT
ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM. THE COMPANY IRREVOCABLY CONSENTS, TO THE FULLEST
EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, TO THE SERVICE OF PROCESS
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 COMPANY AT ITS ADDRESS SET FORTH HEREIN, SUCH SERVICE TO BECOME EFFECTIVE 30
DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY PURCHASER
TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
76
<PAGE> 78
PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY IN ANY OTHER JURISDICTION.
Section 11.10. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another
indenture, loan or debt agreement of the Company or any of its Subsidiaries. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
Section 11.11. Successors
All agreements of the Company in this Indenture and the
Notes shall bind their respective successors. All agreements of the Trustee in
this Indenture shall bind its successor.
Section 11.12. Severability
In case any provision in this Indenture or in the Notes
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
Section 11.13. Counterpart Originals
The parties may sign any number of copies of this
Indenture. Each signed copy shall be an original, but all of them together
represent the same agreement.
Section 11.14. Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and
Headings of the Articles and Sections of this Indenture have been inserted for
convenience of reference only, are not to be considered a part hereof and shall
in no way modify or restrict any of the terms or provisions hereof.
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<PAGE> 79
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Indenture as of the date first written
above.
CLARK MATERIAL HANDLING
COMPANY
Attest: By: /s/ Martin M. Dorio
_________________________
Name: Martin M. Dorio
Title: President and CEO
___________________________
Name:
Title:
U.S. TRUST COMPANY OF
TEXAS, N.A.,
as Trustee
Attest:
By: /s/ John Guiliano
________________________
Name: John Guiliano
Title: Vice President
/s/ Louis P. Young
___________________________
Name: Louis P. Young
Title: Vice President
S-1
<PAGE> 80
EXHIBIT A
CLARK MATERIAL HANDLING COMPANY
13% SUBORDINATED NOTE
DUE 2007
NO. $___________
CUSIP NO.
CLARK Material Handling Company, a Delaware corporation
(the "Company"), as obligor, for value received promises to pay to
______________ or registered assigns, the principal sum of [ ] Dollars on July
15, 2007. Interest Payment Dates: January 15 and July 15 and on the maturity
date. Record Dates: January 1 and July 1 (whether or not a Business Day).
Reference is hereby made to the further provisions of
this Note set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused this Note to
be signed manually or by facsimile by its duly authorized officers.
Dated:
CLARK Material Handling Company
By:_____________________________________
Name:
Title:
By:_____________________________________
Name:
Title:
Trustee's Certificate of Authentication:
This is one of the Notes referred to
in the within-mentioned Indenture:
U.S. TRUST COMPANY OF
TEXAS, N.A., as Trustee
By:______________________________
Authorized Signature
A-1
<PAGE> 81
(Back of Security)
13% SUBORDINATED NOTE
DUE JULY 15, 2007
1. Interest. CLARK Material Handling Company, a Delaware
corporation (the "Company"), as obligor, promises to pay interest on the
principal amount of this Note at the rate and in the manner specified below.
The Company shall pay, in cash, interest on the
principal amount of this Note, at the rate of 13% per annum. The Company shall
pay interest semi-annually on January 15 and July 15 of each year, and on the
maturity date, commencing on [____________] or if any such day is not a Business
Day, on the next succeeding Business Day (each an "Interest Payment Date"). On
or before July 15, 2003, the Company may, at its option, pay interest in cash or
in additional Notes having an aggregate principal amount equal to the amount of
such interest. After July 15, 2003, interest may be paid in cash only.
Interest shall be computed on the basis of a 360-day
year consisting of twelve 30-day months. Interest shall accrue from the most
recent date to which interest has been paid or, if no interest has been paid,
from [_______________]. To the extent lawful, the Company shall pay interest on
overdue principal at the rate of 1% per annum in excess of the then applicable
interest rate on the Notes; the Company shall pay interest on overdue
installments of interest (without regard to any applicable grace periods) at the
same rate to the extent lawful.
2. Method of Payment. The Company shall pay interest on
the Notes (except defaulted interest) to the Persons who are registered Holders
of Notes at the close of business on the record date next preceding the Interest
Payment Date, even if such Notes are cancelled after such record date and on or
before such Interest Payment Date. The Holder must surrender this Note 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. The Company, however, may pay
principal and interest by check to a Holder's registered address.
3. Paying Agent and Registrar. Initially, the Trustee
shall act as Paying Agent and Registrar. The Company may change any Paying
Agent, Registrar or co-registrar without notice to any Holder. Subject to
certain exceptions, the Company or any of its Subsidiaries may act in any such
capacity.
4. Indenture. The Company issued the Notes under an
Indenture dated as of July 17, 1998 (the "Indenture") between the Company and
the Trustee. The terms of the Notes include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act of 1939
(the "TIA") (15 U.S. Code Sections 77aaa-77bbbb) 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 the Indenture is so qualified. The Notes are
subject to all such terms, and Holders are referred to the Indenture and such
act for a statement of such terms. The terms of the Indenture shall govern any
inconsistencies between the Indenture and the Notes. Terms not otherwise defined
herein shall have the meanings assigned in the Indenture. The Notes are limited
to $40,000,000 in aggregate principal amount.
5. Optional Redemption. The Notes are not redeemable at
the Company's option prior to July 15, 2003. Thereafter, the Notes will be
subject to redemption at the option of the Company, in whole or in part, at the
redemption prices (expressed as percentages of principal amount) set forth below
plus accrued and unpaid interest thereon, if any, to the applicable redemption
date, if redeemed during the 12-month period beginning on July 15 of the years
indicated below:
A-2
<PAGE> 82
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2003................................ 106.500%
2004................................ 104.333
2005................................ 102.167
2006 and thereafter................. 100.000
</TABLE>
Notwithstanding the foregoing, at any time or from time
to time prior to July 15, 2003, the Company may, at its option, redeem the Notes
in whole, but not in part, at a redemption price of 115% of the principal amount
thereof, plus accrued and unpaid interest, if any, to the applicable redemption
date, with the net cash proceeds of one or more Public Equity Offerings;
provided that such redemption shall occur within 60 days of the date of closing
of such Public Equity Offering.
6. Mandatory Redemption. There shall be no mandatory
redemption of the Notes.
7. Denominations, Transfer, Exchange. The Notes, other
than Notes issued as payment pursuant to Section 1, are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and Notes may be exchanged as provided in
the Indenture. The Registrar and the Trustee may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Registrar and the Company need not exchange or
register the transfer (i) of any Note or portion of a Note selected for
redemption or (ii) of any Notes for a period of 15 days before a selection of
Notes to be redeemed or during the period between a record date and the
corresponding Interest Payment Date.
8. Persons Deemed Owners. The registered Holder of a
Note may be treated as its owner for all purposes, subject to the provisions of
the Indenture with respect to the record dates for the payment of interest.
9. Amendments and Waivers. Subject to certain
exceptions, the Indenture or the Notes may be amended with the written consent
of the Holders of at least a majority in principal amount of the then
outstanding Notes (including consents obtained in connection with a tender offer
or exchange offer for Notes), and any existing Default or Event of Default
(except a payment default) may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes (including consents
obtained in connection with a tender offer or exchange offer for Notes). Without
the consent of any Holders, the Indenture and the Notes may be amended or
supplemented to cure any ambiguity, defect or inconsistency, to provide for
assumption of the Company's obligations to the Holders in the case of a merger
or consolidation, to provide for uncertificated Notes in addition to or in place
of certificated Notes, to make any change that would provide any additional
rights or benefits to the Holders of the Notes, or that does not adversely
affect the legal rights of any Holder, or to comply with requirements of the
Commission in order to effect or maintain the qualification of the Indenture
under the TIA.
10. Defaults and Remedies. If an Event of Default occurs
and is continuing, the Trustee or the Holders of at least 25% in principal
amount of the then outstanding Notes may declare all the Notes to be due and
payable immediately, except that in the case of an Event of Default arising from
certain events of bankruptcy or insolvency, all outstanding Notes become due and
payable immediately without further action or notice. Holders may not enforce
the Indenture or the Notes except as provided in the Indenture. The Trustee may
require indemnity satisfactory to it before it enforces the Indenture or the
Notes. Subject to certain limitations, Holders of a majority in principal amount
of the then outstanding Notes may direct the Trustee in its exercise of any
trust or power. The Company must furnish an annual compliance certificate to the
Trustee.
A-3
<PAGE> 83
11. Ranking. Payment of principal and interest on the
Notes by the Company is subordinated, in the manner and to the extent set forth
in the Indenture, to the prior payment of all Senior Indebtedness.
12. Trustee Dealings with Company. The Trustee under the
Indenture, in its individual or any other capacity, may make loans to, accept
deposits from, and perform services for the Company or its Affiliates, and may
otherwise deal with the Company or its Affiliates, as if it were not Trustee.
13. No Recourse Against Others. No director, officer,
employee, incorporator, stockholder or controlling person of the Company, as
such, shall have any liability for any obligations of the Company under the
Notes, the Indenture or the Registration Rights Agreement or for any claim based
on, in respect of, or by reason of such obligations or their creation. Each
Holder by accepting a Note waives and releases all such liability. The waiver
and release are part of the consideration for the issuance of the Notes.
Notwithstanding the foregoing, nothing in this provision shall be construed as a
waiver or release of any claims under the Federal securities laws.
14. Authentication. This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
15. Abbreviations. Customary abbreviations may be used
in the name of a Holder or an assignee, such as: TEN COM (= tenants in common),
TENENT (= 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).
16. 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 Notes and have directed
the Trustee to use CUSIP numbers in notices of redemption as a convenience to
Holders. No representation is made as to the accuracy of such numbers either as
printed on the Notes or as contained in any notice of redemption and reliance
may be placed only on the other identification numbers placed thereon.
The Company shall furnish to any Holder upon written
request and without charge a copy of the Indenture. Requests may be made to:
CLARK Material Handling Company, 172 Trade Street, Lexington, Kentucky 40508,
Attention: Chief Executive Officer.
A-4
<PAGE> 84
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint______________________________ agent to transfer this
Note on the books of the Company. The agent may substitute another to act for
him.
Date:____________________
Your Signature:____________________
(Sign exactly as your name appears
on the face of this Note)
Signature Guarantee*
________________
* NOTICE: The signature must be guaranteed by an institution which
is a member of one of the following recognized signature
guarantee programs:
(1) The Securities Transfer Agent Medallian
Program (STAMP);
(2) The New York Stock Exchange Medallian
Program (MSP);
(3) The Stock Exchange Medallian Program
(SEMP).
A-5
<PAGE> 85
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have all or any part of this Note purchased
by the Company pursuant to Section 4.10 or Section 4.14 of the Indenture, as the
case may be, state the amount you elect to have purchased (if all, write "ALL"):
$______________
Date:__________________________
Your Signature:_________________________
(Sign exactly as your name appears
on the face of this Note)
Signature Guarantee*
______________
* NOTICE: The signature must be guaranteed by an institution which
is a member of one of the following recognized signature
guarantee programs:
(1) The Securities Transfer Agent Medallian
Program (STAMP);
(2) The New York Stock Exchange Medallian
Program (MSP);
(3) The Stock Exchange Medallian Program
(SEMP).
A-6
<PAGE> 86
<TABLE>
<CAPTION>
CROSS-REFERENCE TABLE*
Trust Indenture
Act Section Indenture Section
----------- -----------------
<S> <C>
310(a)(1)................................................................................................................7.10
(a)(2)................................................................................................................7.10
(a)(3).................................................................................................................N.A.
(a)(4).................................................................................................................N.A.
(a)(5)................................................................................................................7.10
(b)...................................................................................................................7.8; 7.10
(c)...................................................................................................................N.A.
311(a)...................................................................................................................7.11
(b)...................................................................................................................7.11
(c)....................................................................................................................N.A.
312(a)....................................................................................................................2.5
(b)...................................................................................................................11.3
(c)...................................................................................................................11.3
313(a)...................................................................................................................7.6
(b)(1)................................................................................................................7.6
(b)(2)................................................................................................................7.6
(c)...................................................................................................................7.6
(d)...................................................................................................................7.6
314(a)....................................................................................................................4.3; 4.4
(b)....................................................................................................................N.A
(c)(1)................................................................................................................11.4
(c)(2)................................................................................................................11.4
(c)(3).................................................................................................................N.A.
(d)....................................................................................................................N.A.
(e)...................................................................................................................11.5
(f)....................................................................................................................N.A.
315(a)...................................................................................................................7.1(2)
(b)...................................................................................................................7.5
(c)...................................................................................................................7.1(1)
(d)...................................................................................................................7.1(3)
(e)...................................................................................................................6.11
316(a)(last sentence)....................................................................................................2.9
(a)(1)(A).............................................................................................................6.5
(a)(1)(B).............................................................................................................6.4
(a)(2).................................................................................................................N.A.
(b)...................................................................................................................9.2
(c)...................................................................................................................9.4
317(a)(1)................................................................................................................6.8
(a)(2)................................................................................................................6.9
(b)...................................................................................................................2.4
318(a)...................................................................................................................11.1
(b)...................................................................................................................N.A.
(c)...................................................................................................................11.1
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
</TABLE>
<PAGE> 87
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE 1
Section 1.1. Definitions 1
Section 1.2. Other Definitions 16
Section 1.3. Incorporation by Reference of Trust Indenture Act 16
Section 1.4. Rules of Construction. 17
ARTICLE 2 THE NOTES 17
Section 2.1. Form and Dating 17
Section 2.2. Execution and Authentication 18
Depository 18
Section 2.4. Paying Agent to Hold Money in Trust 19
Section 2.5. Holder Lists 19
Section 2.6. Transfer and Exchange 20
Section 2.7. Replacement Notes 20
Section 2.8. Outstanding Notes 21
Section 2.9. Treasury Notes 21
Section 2.10. Temporary Notes. 21
Section 2.11. Cancellation 22
Section 2.12. Defaulted Interest 23
ARTICLE 3 REDEMPTION 23
Section 3.1. Notices to Trustee 23
Section 3.2. Selection of Notes to Be Redeemed. 23
Section 3.3. Notice of Redemption 24
Section 3.4. Effect of Notice of Redemption 25
Section 3.5. Deposit of Redemption Price 25
Section 3.6. Notes Redeemed in Part 25
Section 3.7. Optional Redemption 26
COVENANTS 26
Section 4.1. Payment of Notes 26
Section 4.2. Maintenance of Office or Agency 27
Section 4.3. Reports 28
Section 4.4. Compliance Certificate 29
Section 4.5. Taxes 30
Section 4.6. Stay, Extension and Usury Laws 30
Section 4.7. Limitation on Restricted Payments 30
Section 4.8. Limitation on Restrictions on Subsidiary Dividends 34
Section 4.9. [Intentionally Left Blank] 35
Section 4.10. Limitation on Asset Sales 35
Section 4.11. Limitation on Transactions With Affiliates 38
Section 4.12. [Intentionally Left Blank] 39
Section 4.13. Corporate Existence 39
i
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Section 4.14. Repurchase Upon a Change of Control 40
Section 4.15. Maintenance of Properties 42
Section 4.16. Maintenance of Insurance 42
Section 4.17. Restrictions on Sale and
Issuance of Subsidiary Stock 42
Section 4.18. Line of Business 43
ARTICLE 5 SUCCESSORS 43
Section 5.1. When the Company May Merge, etc. 43
Section 5.2. Successor Substituted 44
ARTICLE 6 DEFAULTS AND REMEDIES 45
Section 6.1. Events of Default 45
Section 6.2. Acceleration 47
Section 6.3. Other Remedies 48
Section 6.4. Waiver of Past Defaults 48
Section 6.5. Control by Majority 49
Section 6.6. Limitation on Suits 49
Section 6.7. Rights of Holders to Receive Payment 49
Section 6.8. Collection Suit by Trustee 50
Section 6.9. Trustee May File Proofs of Claim 50
Section 6.10. Priorities 51
Section 6.11. Undertaking for Costs 51
ARTICLE 7 TRUSTEE 52
Section 7.1. Duties of Trustee 52
Section 7.2. Rights of Trustee 53
Section 7.3. Individual Rights of Trustee 54
Section 7.4. Trustee's Disclaimer 54
Section 7.5. Notice of Defaults 54
Section 7.6. Reports by Trustee to Holders 54
Section 7.7. Compensation and Indemnity 55
Section 7.8. Replacement of Trustee 56
Section 7.9. Successor Trustee by Merger, etc. 57
Section 7.10. Eligibility; Disqualification 57
Section 7.11. Preferential Collection of Claims Against Company 58
ARTICLE 8 DISCHARGE OF INDENTURE 58
Section 8.2. Application of Trust Money. 60
ARTICLE 9 AMENDMENTS 61
Section 9.1. Without Consent of Holders 61
Section 9.2. With Consent of Holders 62
Section 9.3. Compliance with Trust Indenture Act 64
Section 9.4. Revocation and Effect of Consents 64
Section 9.5. Notation on or Exchange of Notes 64
Section 9.6. Trustee to Sign Amendments, etc. 65
Section 9.7. Amendments and Supplements Requiring Consent Of
Holders Of Senior Indebtedness 65
ii
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<TABLE>
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ARTICLE 10 SUBORDINATION 65
ARTICLE 11 MISCELLANEOUS 73
Section 11.1. Trust Indenture Act Controls 73
Section 11.2. Notices 73
Section 11.3. Communication by Holders with Other Holders 74
Section 11.4. Certificate and Opinion as to Conditions Precedent 74
Section 11.6. Rules by Trustee and Agents 75
Section 11.7. Legal Holidays 75
Section 11.8. No Recourse Against Others 75
Section 11.9. Governing Law 76
Section 11.11. Successors 77
Section 11.12. Severability 77
Section 11.13. Counterpart Originals 77
Section 11.14. Table of Contents, Headings, etc. 77
iii
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<PAGE> 90
Page
iv
<PAGE> 91
Page
v
<PAGE> 92
Page
vi
<PAGE> 93
Page
SIGNATURES
EXHIBIT A - FORM OF NOTE....................................... A-1
EXHIBIT B - CERTIFICATE OF TRANSFEROR.......................... B-1
vii
<PAGE> 1
EXHIBIT 4.9
FIRST SUPPLEMENTAL INDENTURE
FIRST SUPPLEMENTAL INDENTURE, dated as of August 18, 1998, between
CLARK Material Handling Company, a Delaware corporation (the "Company"), and
United States Trust Company of New York, a New York corporation, as trustee (the
"Trustee").
WHEREAS, the Company has duly issued 10-3/4% Series C Senior Notes due
2006, in the aggregate principal amount of $20,000,000 pursuant to an Indenture
between the Company and the Trustee, dated July 17, 1998 (the "Indenture");
WHEREAS, Section 9.1 of the Indenture provides that the Company and the
Trustee may amend any provision of the Indenture without the consent of any
Holder and execute a supplemental indenture to cure any defect in the Indenture;
and
WHEREAS, it is provided in Section 9.4 of the Indenture that a
supplemental indenture becomes effective in accordance with its terms and
thereafter binds every Holder;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. DEFINITIONS
Capitalized terms not defined herein shall have the meanings given to
such terms in the Indenture.
SECTION 2. AMENDMENTS TO THE INDENTURE
Section 2.1 Amendments to Definitions
Section 1.1 of the Indenture is hereby amended by inserting the phrase
"date of the Original Indenture" in replacement of the phrase "date of this
Indenture" in the definitions of "GAAP" and "Restricted Investment".
Section 2.2 Amendment to "Limitation Restricted Payment" Provision.
Section 4.7 of the Indenture is hereby amended by inserting the phrase
"date of the Original Indenture" in replacement of the phrase "date of this
Indenture" wherever the phrase "date of this Indenture" appears in said section.
<PAGE> 2
SECTION 3. MISCELLANEOUS
Section 3.1. Governing Law.
THIS FIRST SUPPLEMENTAL INDENTURE SHALL BE CONSTRUED INTERPRETED AND
THE RIGHTS OF THE PARTIES DETERMINED 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. THE COMPANY HEREBY
IRREVOCABLY SUBMITS 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 ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND IRREVOCABLY ACCEPTS FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF
THE AFORESAID COURTS. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT
MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, TRIAL BY JURY AND ANY OBJECTION THAT
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION
OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION
OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. THE COMPANY IRREVOCABLY CONSENTS, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO UNDER APPLICABLE LAW, TO THE SERVICE OF PROCESS 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 COMPANY AT ITS
ADDRESS SET FORTH HEREIN, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH
MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY PURCHASER TO SERVE PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST THE COMPANY IN ANY OTHER JURISDICTION.
Section 3.2 Continuing Agreement
Except as herein amended, all terms, provisions and conditions of the
Indenture and all Exhibits thereto shall continue in full force and effect and
shall remain enforceable and binding in accordance with their terms.
<PAGE> 3
Section 3.3 Conflicts
In the event of a conflict between the terms and conditions of the
Indenture and the terms and conditions of this First Supplemental Indenture,
then the terms and conditions of this First Supplemental Indenture shall
prevail.
Section 3.4 Counterpart Originals
The parties may sign any number of copies of this First Supplemental
Indenture. Each signed copy shall be an original, but all of them together
represent the same agreement.
Section 3.5 Headings, etc.
The Headings of the Sections of this First Supplemental Indenture have
been inserted for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions
hereof.
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Supplemental Indenture as of the date first written above.
CLARK MATERIAL
HANDLING COMPANY
Attest: By: /s/ Martin M. Dorio
_______________________________
Dr. Martin M. Dorio, President
and Chief Executive Officer
/s/ Joseph F. Lingg
____________________
Name Joseph F. Lingg
Title Vice President
GUARANTORS
BLUE GIANT CORPORATION
By: /s/ Martin M. Dorio
_____________________________
Dr. Martin M. Dorio
President
HYDROLECTRIC LIFT TRUCKS, INC.
By: /s/ Martin M. Dorio
______________________________
Dr. Martin Dorio
President
THE UNITED STATES TRUST COMPANY
OF NEW YORK, as Trustee
Attest: By: /s/ Gerard F. Ganey
_________________________________
Gerard F. Ganey
Senior Vice President
/s/ Sieosni Dindial
____________________
Sieosni Dindial
Assistant Secretary
<PAGE> 1
EXHIBIT 10.30
ASSET PURCHASE AGREEMENT
BY and BETWEEN
CLARK MATERIAL HANDLING COMPANY
as Buyer
AND
SAMSUNG HEAVY INDUSTRIES CO., LTD.
as Seller
Dated as of June 5, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C> <C> <C>
ASSET PURCHASE AGREEMENT................................................ 1
Background.............................................................. 1
Terms................................................................... 1
ARTICLE I THE TRANSACTION.............................................. 1
1.1. Sale and Purchase of Assets........................... 1
1.2. Excluded Assets....................................... 3
1.3. Purchase Price........................................ 4
1.4. Payment of Purchase Price............................. 5
1.5. Allocation of Purchase Price.......................... 6
1.6. Adjustments to Purchase Price......................... 7
1.7. Assumption of Liabilities............................. 8
1.8. Conditions to Each Party's Obligations................ 11
1.9. Conditions to Seller's Obligations.................... 12
1.10. Conditions to Buyer's Obligations..................... 12
1.11. Closing............................................... 13
1.12. Deliveries and Proceedings at Closing................. 14
1.13. Covenants of Seller................................... 15
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER..................... 16
2.1. Organization.......................................... 16
2.2. Authorization and Enforceability...................... 16
2.3. No Violation of Laws or Agreements.................... 16
2.4. Financial Statements.................................. 17
2.5. Undisclosed Liabilities............................... 17
2.6. No Changes............................................ 17
2.7. Taxes................................................. 20
2.8. Inventory............................................. 21
2.9. No Pending Litigation or Proceedings.................. 21
2.10. Contracts; Compliance................................. 21
2.11. Compliance with Laws.................................. 23
2.12. Environmental Matters................................. 23
2.13. Consents.............................................. 27
2.14. Personal Property..................................... 27
2.15. Real Estate........................................... 27
2.16. Transactions with Affiliates.......................... 29
2.17. Condition of Assets................................... 30
2.18. Compensation Arrangements; Officers and Directors..... 30
2.19. Labor Relations....................................... 30
2.20. Products Liability.................................... 31
2.21. Insurance............................................. 31
2.22. Patents and Intellectual Property Rights.............. 32
2.23. Brokerage............................................. 33
2.24. Disclosure............................................ 33
2.25. Mitigation............................................ 33
</TABLE>
<PAGE> 3
ARTICLE III REPRESENTATIONS AND WARRANTIES OF BUYER........................ 34
3.1. Organization and Good Standing ................................ 34
3.2. Corporate Power and Authority ................................. 34
3.3. Due Authorization.............................................. 34
3.4. Brokerage...................................................... 34
3.5. No Breaches.................................................... 34
3.6. Disclosure..................................................... 34
3.7. Litigation..................................................... 35
3.8. Mitigation..................................................... 35
ARTICLE IV CERTAIN ADDITIONAL COVENANTS.................................... 35
4.1. Costs, Expenses and Taxes...................................... 35
4.2. Employees of the Business...................................... 35
4.3. Settlement of Boundary Dispute................................. 37
4.4. Indemnification................................................ 37
4.5. Confidentiality and Non-Competition............................ 41
4.6. Access to Information.......................................... 42
4.7. Cooperation.................................................... 43
4.8. Use of Samsung Name............................................ 43
4.9. Transition Services............................................ 43
4.10. Change of Factory Site and Removal of Asbestos................. 44
4.11. Purchase of Forklifts by Seller................................ 45
4.12. Property Taxes................................................. 45
ARTICLE VII MISCELLANEOUS.................................................. 45
5.1. Further Assurances; Cooperation................................ 45
5.2. Nature and Survival of Representations......................... 46
5.3. Notices........................................................ 46
5.4. Successors and Assigns......................................... 46
5.5. Governing Law.................................................. 47
5.6. Headings....................................................... 47
5.7. Amendment and Waiver........................................... 47
5.8. Entire Agreement............................................... 47
5.9. Counterparts................................................... 47
5.10. Governing Language............................................. 47
5.11. Arbitration.................................................... 48
5.12. Termination.................................................... 48
5.13. Willful Failure to Close....................................... 49
5.14. Enforcement and Damages........................................ 49
5.15. Severability................................................... 49
5.16. Construction................................................... 49
LIST OF SCHEDULES AND EXHIBITS............................................. 51
ANNEX A DEFINITIONS........................................................ 53
<PAGE> 4
ASSET PURCHASE AGREEMENT
This is an ASSET PURCHASE AGREEMENT (the "Agreement"), dated June 5, 1998
by and between CLARK Material Handling Company, a corporation organized under
the laws of the State of Delaware of the United States, ("Buyer") and Samsung
Heavy Industries Co., Ltd., a corporation organized under the laws of the
Republic of Korea ("Seller"). Buyer and Seller shall sometimes each be referred
to as a Party and collectively as the Parties.
Background
Seller is engaged in the worldwide business of developing, manufacturing,
distributing, marketing and selling forklifts and components and parts related
thereto, including without limitation uprights, axles and transaxles, and
transmissions (the "Business"). The real property and a large portion of the
tangible assets currently used by the Business are located at 1, Guehyun-dong,
Changwon City, Kyongnam Province (the "Old Factory"). Seller desires to sell and
transfer to Buyer and Buyer desires to purchase from Seller substantially all
the assets of Seller used or associated with the Business with the exception of
the real estate of the Old Factory which will not be transferred to Buyer. Buyer
will, however, purchase from Seller the factory located at 40-1 Ungnam-dong,
Changwon, Kyongnam Province (the "New Factory"). The transactions described
herein shall take place upon the terms and subject to the conditions set forth
in this Agreement.
Terms
In consideration of the mutual covenants contained herein and with the
intention to be legally bound hereby, the Parties agree as follows:
ARTICLE I
THE TRANSACTION
1.1. Sale and Purchase of Assets. Subject to the terms and conditions
hereof, at the Closing referred to in Section 1.8 below, Seller will sell,
transfer, convey and assign to Buyer, free and clear of all Liens of every kind,
nature and description, except for the Excluded Assets (as defined in Section
1.2) or as otherwise disclosed and agreed in this Agreement, and Buyer will
purchase from Seller, all of the assets as listed on Schedule 1.1 (the "Asset
List") and any other assets that are being used for or are substantially related
to the
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<PAGE> 5
Business including, without limitation, Seller's properties and business as a
going concern and good will and assets existing on the date of Closing,
wherever such assets are located and whether real, personal or mixed, tangible
or intangible, and whether or not any of such assets have any value for
accounting purposes or are carried or reflected on or specifically referred to
in its books or financial statements and Buyer shall also purchase from Seller
the New Factory (collectively, the "Purchased Assets"). The Purchased Assets
shall include, without limitation, all of Seller's right, title and interest in
and to the following, as the same may exist on the Closing Date:
(a) subject to Section 1.2(a), all the real property of the New Factory,
together with the buildings, fixtures, structures and other improvements erected
thereon, and together with all easements, rights and privileges appurtenant
thereto, as more particularly described on the Asset List;
(b) all of Seller's machinery, equipment, tooling, dies, jigs, vehicles,
spare parts and supplies being used for or substantially related to the
Business, including without limitation the items listed on the Asset List;
(c) all of Seller's raw materials, work in progress, parts,
subassemblies, finished goods and other inventories being used for or
substantially related to the Business, wherever located and whether or not
obsolete or carried on Seller's books of account;
(d) all of Seller's other tangible assets being used for or
substantially related to the Business, including office furniture, office
equipment and supplies, computer hardware and software and vehicles;
(e) all of the intellectual property being used for or substantially
related to the Business including, without limitation, trade secrets, patents,
know-how, copyrights and other proprietary processes and all licenses,
sublicenses and other rights relating thereto and all of the trademarks that are
being used for or substantially related to the Business as listed on Schedule
1.1(e);
(f) all of Seller's trade and other notes and accounts receivable of
the Business;
(g) all of Seller's CAD workstations and related software and software
licenses being used for or substantially related to the Business including,
without limitation, CATIA, CADAM and Pro-Engineer, and all of Seller's software
application systems that are being used for or are substantially related to
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<PAGE> 6
the Business and all of Seller's software currently shared between Seller's
construction equipment business and the Business;
(h) all of Seller's books, records, manuals, documents, books of account,
correspondence, sales and credit reports, customer lists, literature,
brochures, advertising material and the like that are used for or are
substantially related to the Business;
(i) all of Seller's rights under leases for personal property used for or
substantially related to the Business, and all of the Seller's rights under
all other contracts, agreements and purchase and sale orders (the "Assigned
Contracts"), as described in Schedule 1.1 hereto;
(j) all of Seller's claims, choses in action, causes of action and
judgments that arose from or are substantially related to the Business;
(k) all transferable or assignable registrations, licenses, permits,
approvals, certificates of occupancy and operating rights held in connection
with the Purchased Assets.
1.2. Excluded Assets. Notwithstanding any other provision of this
Agreement, Seller shall retain all property of any nature, kind and description
other than the Purchased Assets and for the avoidance of doubt the Purchased
Assets shall not include the following assets of the Business (collectively, the
"Excluded Assets"):
(a) all of the Seller's cash, cash in banks, certificates of deposit, cash
equivalents, bank and mutual fund accounts, deposits, securities and bonds and
other similar investments, deferred charges, and other cash equivalents on hand
or on deposit in any financial institution on the Closing Date;
(b) all consideration received by and the rights of the Seller under or
pursuant to this Agreement or any agreement, instrument or document ancillary
hereto;
(c) all notes and receivables owing to Seller on the Closing Date (i) from
any Affiliate of Seller and (ii) that are not of or substantially related to the
Business.
(d) the corporate records of the Seller including, without limitation, its
minute books, articles of incorporation, bylaws, minutes of proceedings, stock
transfer ledger and corporate seal;
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<PAGE> 7
(e) all of Seller's privileged communications;
(f) payments from insurance companies pertaining to claims filed by
Seller prior to the Closing Date and only to the extent relating to any
liability or obligation included within the Excluded Liabilities (as defined in
Section 1.7(b)); and
(g) all assets, properties and rights described in Schedule 1.2(g)
hereto.
1.3. Purchase Price.
(a) The total aggregate purchase price for the Purchased Assets
exclusive of VAT shall be 43.86 billion won (the "Purchase Price") plus the
Assumed Liabilities as set forth in Section 1.7 of this Agreement. The Purchase
Price shall be subject to adjustment as provided in Sections 1.3(b) and (c)
below and in Section 1.6.
(b) If the value of the Korean Won as compared to the US Dollar
varies more than five percent (5%) from the rate of 1601 Korean Won to the US
dollar (the "Base Rate") on the Closing Date, then an adjustment shall be made
to the Purchase Price at Closing so that any exchange fluctuation is shared
equally between the Parties. To determine whether such variance exists, the
Base Rate shall be compared to the average of the basic exchange rate published
by the Korean Financial Telecommunications and Clearing Institute for the three
business days prior to the Closing Date (the "Average Pre-Closing Rate").
(c) Prior to the Closing Date, the Purchase Price shall be adjusted
such that:
(i) any assets on Schedule 1.1 that Clark chooses not to
purchase or is unable to purchase, including but not limited to certain tooling
and fixtures related to the TA40 transaxle line, shall be deducted from the
purchase price except for (1) the 17 forklifts that have already been sold by
Seller which shall not be deducted from the Purchase Price either prior to or
after the Closing and (2) the building (that formerly contained a boiler) that
has been removed from the New Factory Site and which Seller at its own expense
shall rebuild or restore to its original condition to Buyer's reasonable
satisfaction prior to the Closing Date, provided that, if Seller fails to
rebuild or restore such building to Buyer's reasonable satisfaction, Buyer shall
deduct from the Purchase Price the sum of 140 million won, or if Seller has
commenced, but not completed to Buyer's reasonable satisfaction, the rebuilding
or restoration of such building, the portion of the 140 million that in Buyer's
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<PAGE> 8
reasonable judgment is necessary to rebuild or restore such building to its
original condition;
(ii) any assets that are not substantially related to the
forklift business that Buyer does purchase are added to the Purchase Price; and
(iii) one half of the book value of the CAD and CATIA hardware
and software systems shall be added to the Purchase Price.
(d) One day prior to the last day that Seller is obligated to remit
the VAT related to the Purchase Price to the relevant tax authorities, Buyer
shall pay to Seller an amount of money necessary to cover Seller's obligation
to pay the VAT (the "VAT Price"), provided however, that if the tax authorities
deny Buyer's ability to obtain a refund or credit of the VAT Price due to a
characterization of the transactions contemplated herein which is different
then the Parties' characterization, then Seller shall reimburse Buyer the full
amount of the VAT Price within fifteen (15) days of receiving from Buyer a
written confirmation issued by the tax authorities indicating or showing that
the refund or credit of the VAT Price has been denied due to the reasons
described in this sentence (the "VAT Notice"), provided however, that Buyer
shall deliver the VAT Notice to Seller within the statutory period in which
Seller may appeal to the tax office for a refund of the VAT and so as not to
jeopardize Seller's ability to obtain a refund of the VAT. If the refund or
credit of the VAT Price is not granted to Buyer within the statutorily
prescribed period for any reason other than that described in the previous
sentence, Seller shall not be obligated to reimburse Buyer for the VAT Price.
1.4. Payment of Purchase Price. The Purchase Price shall be paid by Buyer
to Seller as follows:
(a) By Buyer's delivery of 43.86 billion won minus the Withheld
Amount (as defined below) in cash by wire transfer or bank check at Closing
made immediately available and in accordance with the instructions of Seller;
(b) By Buyer's assumption at Closing of Seller's liabilities as
required by Section 1.7.
(c) Buyer shall withhold the amount of 10 billion won, subject to
adjustment under Section 1.6(b)(ii), (the "Withheld Amount"), by placing
such amount in a bank account in Buyer's name at Citibank in Korea or another
bank in Korea as mutually agreed upon by the Parties ("the Withhold Account").
The interest, after deduction of taxes and banking charges, earned on
- 5 -
<PAGE> 9
the Withheld Amount shall be shared equally by the Parties, and Buyer shall pay
or cause to be paid Seller's portion of the interest to Seller on a monthly
basis, and may withdraw or otherwise use its own portion of the interest at any
time and in any manner it sees fit. Buyer shall retain for its own account or
pay the Withheld Amount to Seller in accordance with the following principles:
(i) On the date when Buyer has collected the total amount of
outstanding receivables as of the Closing Date (the "Pre-Closing Receivables")
less the Withheld Amount or beginning on the date 12 months from the Closing
Date, whichever is earlier, (the "Initial Collection Period"), Buyer shall
continue to collect the Pre-Closing Receivables for an additional six (6) month
period (the "Additional Collection Period").
(ii) At the conclusion of the Additional Collection Period,
Buyer shall retain for its own account an amount of the Withheld Amount equal to
the then remaining Pre-Closing Receivables (although in no case greater than the
amount in the Withhold Account) and Buyer shall pay the remainder of the
Withheld Amount to Seller. At this time, Buyer shall also transfer to Seller all
of the remaining Pre-Closing Receivables (including any of the Pre-Closing
Receivables then in litigation) along with any related security interests to
Seller.
(iii) Buyer agrees that Seller may dispatch two (2) of its
employees to assist Buyer's activities in collecting the Pre-Closing Receivables
during the Initial Collection Period and the Additional Collection Period.
(iv) In the event that Buyer withdraws the principal from the
Withheld Amount prior to the conclusion of the Additional Collection Period and
without Seller's prior written consent, Buyer shall be liable to Seller for
liquidated damages in the amount of ten-percent (10%) of the amount of the
principal withdrawn in addition to any other damages that it might be liable for
under applicable law.
(d) Any amounts owing to Buyer or Seller pursuant to Section 1.6 as a
result of an adjustment to the Purchase Price shall be paid by Seller or Buyer
to the other in cash or by bank check within 10 days after the amount is finally
determined pursuant to Section 1.6.
1.5. Allocation of Purchase Price. Buyer and Seller agree that the Purchase
Price shall be allocated among the Purchased Assets in accordance with the
principles of allocation set forth in Schedule 1.5 hereto. Buyer and Seller
shall jointly prepare a definitive allocation of the Purchase Price within 90
days
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<PAGE> 10
following the Closing Date. Buyer and Seller agree that each will report all tax
consequences of the purchase and sale contemplated hereby in a manner consistent
with such allocation.
1.6. Adjustments to Purchase Price.
(a) Post-Closing Balance Sheet Adjustment.
(i) Within 90 days of the Closing Date, Buyer shall prepare
the list of assets and liabilities relating to the Business and shall, at its
expense, prepare and deliver to Seller a statement of the Net Asset Value of the
Business, as of the Closing Date (the "Closing Statement"), as calculated by
independent certified public accountants chosen by Buyer. The Closing Statement
shall be prepared according to Korean Generally Accepted Accounting Principles
("Korean GAAP"), subject to the principles and restrictions of item "2" of
Schedule 1.6.
(ii) Seller shall fully cooperate with Buyer in Buyer's
preparation of the list of assets and liabilities as mentioned in Section
1.6(a)(i) above, and each Party shall fully cooperate with the other Party in
the other Party's preparation of its tax returns for the relevant tax year or
years.
(iii) In the event that Seller disagrees with the Closing
Statement, Seller shall hire an independent certified public accountant at its
own expense, which shall prepare Seller's proposed adjustments to the Closing
Statement within 45 days of Seller's receipt of the Closing Statement using
Korean GAAP. Any dispute (and only those items in dispute) concerning the
Closing Statement which cannot be resolved by the Parties and their respective
independent certified public accountants within 30 days of Buyer's receipt of
Seller's proposed adjustments to the Closing Statement will be submitted no
later than 45 days after such receipt to [ ], or such other
independent accounting firm mutually selected by Buyer and Seller, and the
determination of such firm shall be final and binding on the Parties. All
Parties hereto represent that they have not had a business relationship with
[ ] during the five year period preceding the date of this
Agreement and that they shall not establish such a business relationship between
the date of this Agreement and the final determination of the Closing Statement
pursuant to this Section 1.6(a). The fees and expenses of such third independent
accounting firm shall be borne equally by the Parties.
(b) Adjustment Formula.
(i) If the Net Asset Value (as hereinafter defined) at Closing
as reflected on the Closing Statement is more
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than 58,712 million won (the Net Asset Value as of December 31, 1997 as shown
in Item "1" of Schedule 1.6), then the Purchase Price shall be increased by the
amount of such excess and Buyer shall pay Seller such amount by certified or
bank check. If such Net Asset Value is less than 58,712 million won at Closing,
the Purchase Price shall be reduced by the amount of such deficiency and Seller
shall pay Buyer such amount by certified or bank check. Buyer or Seller, as the
case may be, shall make any payment required as a result of an adjustment to
the Purchase Price pursuant to this Section within 10 days after the amount of
such payment has been finally determined in accordance with Section 1.6(a). As
used herein, "Net Asset Value" shall mean the value of the Purchased Assets
less the Assumed Liabilities where the value of the Purchased Assets and
Assumed Liabilities are calculated in accordance with Korean GAAP, subject to
the principles and restrictions of item "2" of Schedule 1.6.
(ii) With respect to the Withheld Amount, if the amount of
Pre-Closing Receivables is greater than 31,968 million won, then an amount equal
to thirty-two percent (32%) of the increase from 31,968 million won shall be
paid by Seller into the Withhold Account within ten (10) days after the amount
of such increase shall have been determined, provided that, in no case shall
Seller pay more than three (3) billion won into the Withhold Account as a result
of the adjustments contemplated herein. If the amount of Pre-Closing Receivables
is less than 31,968 million won, then an amount equal to thirty-two percent
(32%) of the decrease from 31,968 million won shall be removed from the Withhold
Account by Buyer and paid to Seller within ten (10) days after the amount of
such decrease shall have been determined, provided that, in no case shall Buyer
remove from the Withhold Account and pay to Seller more than three (3) billion
won from the Withheld Amount as a result of the adjustments contemplated herein.
1.7 Assumption of Liabilities.
(a) Assumed Obligations. At the Closing, Buyer shall assume
and agree to perform, pay or discharge, when due, to the extent not theretofore
performed, paid or discharged, and Seller shall be released from all
obligations related to all of (i) Seller's obligations and liabilities under
the Assigned Contracts arising on or after the Closing Date; (ii) all
liabilities and obligations of Seller (including the obligations to make
payments) first arising after the Closing Date under all licenses, permits,
approvals, certificates of occupancy and operating rights held in connection
with the Purchased Assets to the extent such licenses, permits, approvals,
certificates of occupancy and operating rights are included in the Purchased
Assets; (iii) any claims relating to the condition or operation
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of any work in process or other inventories that are a part of the Purchased
Assets; (iv) unfilled sales orders for products or services sold or committed,
but not delivered by Seller as of the Closing Date, to the extent that such
unfilled sales orders are included within the Purchased Assets; (v) liabilities
for materials which have been ordered but have not been delivered to and paid
for by Seller as of the Closing Date, to the extent that such materials have
been ordered in the ordinary course of business and are of a type that would be
included in the Purchased Assets had they been delivered to Seller prior to the
Closing Date; and (vi) the liabilities listed on Schedule 1.7(a). The
obligations and liabilities to be assumed by Buyer pursuant to this Section are
hereinafter sometimes referred to as the "Assumed Liabilities." Except with
respect to the Assumed Liabilities, Buyer does not hereby and shall not assume
or in any way undertake to pay, perform, satisfy or discharge any liabilities
or obligations of Seller, and Seller agrees to pay and satisfy when due any
such liabilities and obligations not assumed by Buyer including the Excluded
Liabilities (as hereinafter defined).
(b) Excluded Liabilities. Except as expressly provided in
Section 1.7(a), Seller shall retain and Buyer shall not assume or be liable for
any liabilities and obligations of Seller, including without limitation the
following; (the "Excluded Liabilities"):
(i) any liabilities or obligations of Seller,
contingent or otherwise, for any indebtedness of Seller;
(ii) the liabilities or obligations of Seller to its
stockholders respecting dividends, distributions to its stockholders in
liquidation, redemptions of stock, or otherwise;
(iii) liabilities or obligations of Seller arising
out of any transactions occurring, or obligations incurred, after the Closing;
(iv) any obligations of Seller for expenses, taxes
or fees but only to the extent levied to Seller or deemed to be borne by Seller
under relevant laws and regulations incident to or arising out of the
negotiation, preparation, approval or authorization of this Agreement or the
consummation of the transactions contemplated hereby, including, without
limitation, all attorneys' and accountants' fees and all brokers' or finder's
fees or commissions payable by Seller;
(v) any obligation of Seller under or arising out
of this Agreement;
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(vi) liabilities to the extent that the Seller is
insured or otherwise indemnified or which would have been covered by insurance
(or indemnification) but for a claim by the insurer (or the indemnitor) that
the insured (or the indemnitees) had breached its obligations under the policy
of insurance (or the contract of indemnity) or had committed fraud in the
insurance application;
(vii) any liability or obligation of Seller to any
Affiliate unless otherwise provided for in this Agreement;
(viii) subject to the terms and conditions provided in
this Agreement, any liabilities or obligations, the existence of which
constitute a breach of the representations, warranties or covenants of Seller
contained in this Agreement;
(ix) subject to the terms and conditions provided in
this Agreement, any obligations or liabilities of Seller to indemnify its
officers, directors employees or agents;
(x) any liability or obligation in respect of the
Excluded Assets;
(xi) all taxes imposed on Seller, including (i) any
tax of any other corporation which tax is assessed against Seller by virtue of
its status, prior to the Closing Date, as a member of any consolidated group of
which such other corporation was also a member and (ii) any taxes imposed as a
result of the consummation of the transaction under this Agreement;
(xii) subject to the terms and conditions provided in
this Agreement, any Environmental Liabilities;
(xiii) except for the Assumed Liabilities, any
obligation or liability arising under any contract, instrument or agreement (1)
that is not transferred to Buyer as part of the Purchased Assets, or (2) that
is not transferred to Buyer because of Seller's failure or inability to obtain
any third party consent required for the transfer or assignment of such
contract or agreement to Buyer, or (3) that relates to any breach or default
(or an event which might, with the passing of time or the giving of notice, or
both, constitute a default) under any contract, instrument or agreement or to
any services to be provided by Seller under any such contract, instrument or
agreement arising out of or relating to periods on or prior to the Closing
Date, or (4) for which Seller received payment prior to the Closing;
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(xiv) any existing or future liabilities to financial
institutions, such as banks, installment financing companies and leasing
companies including but not limited to any existing or future liabilities to
Yonhap Machinery Installment Financing Company and Jeil-Citi Leasing Company,
relating to the sale of Seller's forklifts and/or related parts and components
before the Closing, including but not limited to obligations to reimburse the
amount financed by Seller's customer from the financial institutions,
obligations to provide assistance in relation to collection by the financial
institutions and obligations to pay rent, installment payments or purchase
prices to the relevant financial institution on behalf of the customer in
default; and
(xv) any other liability or obligation of Seller or
its Affiliates including any liability or obligation directly or indirectly
arising out of or relating to the operation of the Business or ownership of the
Purchased Assets on or prior to the Closing Date, whether contingent or
otherwise, fixed or absolute, known or unknown, matured or unmatured, present,
future or otherwise, except for the Assumed Liabilities.
1.8. Conditions to Each Party's Obligations. The obligations of both
Buyer and Seller to consummate the transactions contemplated hereby are subject
to the fulfillment of each of the following conditions on or before the Closing
Date.
(a) No provisions of any applicable law or regulation, and
no judgment, injunction, order or decree shall (i) prohibit the consummation of
the Closing or (ii) restrain, prohibit or otherwise interfere with the
effective operation or enjoyment by Buyer of all or any material portion of the
Purchased Assets or the Business.
(b) Buyer and Seller shall have each received all material
consents, authorizations or approvals from their boards of directors,
governmental agencies and third parties that are a pre-requisite to the Closing
as a matter of law, in form and substance satisfactory to the other Party, and
no such consent, authorization or approval shall have been revoked.
Buyer and Seller agree that in the event that the conditions set forth
in Sections 1.8(a) and (b) herein are not satisfied on or before the Closing
Date, the conditions may be satisfied on or before December 31, 1998, or a
later date mutually agreed in writing between the Parties, in which case the
Parties must comply with their respective obligations to consummate the
transactions as provided in this Agreement.
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1.9 Conditions to Seller's Obligations. The obligations of Seller
to consummate the transaction contemplated hereby are subject to fulfillment of
all of the following conditions on or prior to the Closing Date.
(a) Each and every material representation and warranty
made by Buyer contained in this Agreement shall have been true in all material
respects as of the date when made and shall be true in all material respects at
and as of the Closing Date as if originally made on and as of the Closing Date.
(b) All obligations of Buyer to be performed on or before
the Closing Date shall have been performed in all material respects.
(c) No action shall be threatened or pending before any
court or governmental agency the probable outcome of which would result in the
restraint or prohibition of the consummation of the transactions contemplated
hereby.
1.10 Conditions to Buyer's Obligations. The obligations of Buyer to
consummate the transactions contemplated hereby are subject to the fulfillment
of all of the following conditions on or prior to the Closing Date.
(a) Each and every representation and warranty made by
Seller contained in this Agreement and in any certificate or other writing
delivered by Seller pursuant hereto shall be true in all material respects as
of the date when made and shall be true in all material respects at and as of
the Closing Date as if originally made on and as of the Closing Date.
(b) Seller shall use its best efforts to effectively assign
or if necessary to enter into new contracts and to effectively assign such new
contracts to Buyer (including using its best efforts to obtain all necessary
consents) all of the raw materials vendor contracts (both domestic and
foreign), supply contracts (including all domestic and foreign contracts with
dealers and agents) and technology license contracts, technology assistance
contracts and all similar agreements as listed on Schedule 1.10, provided,
however, that if, in spite of its best efforts, Seller is unable to effectively
assign one or more of the contracts listed on Schedule 1.10 prior to the
Closing, Buyer may waive, at its sole discretion, the assignment of that or
those contracts as a Closing condition. For each contract assigned under this
provision, Seller shall deliver to Buyer at the Closing an assignment agreement
in the form attached herein as Exhibit 1.10. In order to provide Buyer the full
realization and value of every contract listed on Schedule 1.10, Seller agrees
that on and before the Closing, it will, at the
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request and under the direction of Buyer, in the name of Seller or otherwise as
Buyer shall specify take all reasonable action (including without limitation
the appointment of Buyer as attorney-in-fact for Seller) and do or cause to be
done all such things as shall in the reasonable opinion of Buyer be necessary
or proper (a) to assure that the rights of Seller under such contracts,
agreements, permits, franchises, and claims shall be preserved for the benefit
of Buyer and (b) to facilitate receipt of the consideration to be received by
Seller in and under every such contract, agreement, permit, franchise, and
claim, which consideration shall be held for the benefit of, and shall be
delivered to, Buyer. Nothing in this Section shall in any way diminish Seller's
obligations hereunder to use its best efforts to obtain all consents and
approvals and to take all such other actions prior to or at Closing as are
necessary to enable Seller to convey or assign valid title to all the Purchased
Assets to Buyer. The foregoing shall not mean, in any case, that Seller shall
bear any unreasonable out of pocket expenses or costs for such reasonable
action provided for above except such expenses for employment of personnel
currently in charge of such matters.
(c) All obligations of Seller to be performed hereunder on
or before the Closing Date shall have been performed in all material respects.
(d) No action shall be threatened or pending before any
court or governmental agency the probable outcome of which would result in (i)
the restraint or prohibition of the consummation of the transactions
contemplated hereby or (ii) the restraint or prohibition of, or interference
with, the effective operation of enjoyment by Buyer of all or any material
portion of the Assets or the Business.
(e) Between the date hereof and the Closing Date, there
shall have been no material adverse change in the Business or the Purchased
Assets.
(f) The transactions contemplated hereby shall have been
approved by the Board of Directors of Seller and the Board of Directors of
Buyer.
1.11 Closing. The closing under this Agreement will take place at
10:00 A.M., Seoul time, on June 30, 1998, or within seven (7) days after the
receipt of all government approvals necessary to implement this transaction,
whichever is later (the "Closing"), at the Shilla Hotel, Seoul, Korea, or at
such other time, date or place as the Parties shall mutually agree. The date on
which Closing occurs is sometimes referred to herein as the "Closing Date."
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1.12. Deliveries and Proceedings at Closing. At the Closing:
(a) Deliveries by Seller. Seller will deliver or cause to be
delivered to Buyer:
(i) assignments of all transferable or assignable
licenses, permits and warranties relating to the Purchased Assets or the
Business and of any trademarks, trade names, patents, know-how, patent
applications and the like, duly executed and in recordable form, subject to
Section 1.10 hereof;
(ii) title certificates to the real property and any
motor vehicles included in the Purchased Assets duly executed by the Seller
(together with any other transfer forms or other documents necessary to
effectively transfer any of the tangible Purchased Assets to Buyer including
the real property and the vehicles);
(iii) executed Assignment Agreements in the form of
Exhibit 1.10 for all of the contracts listed on Schedule 1.10, unless with
respect to any individual contract, Buyer has waived such condition;
(iv) powers of attorney to Buyer to endorse all checks
and notes made payable to Seller relating to the trade and other notes and
accounts receivable of Seller that are included in the Purchased Assets;
(v) all the books of account, ledgers, payroll
records, inventory and asset records and other books and documents which are
used for or are substantially related to the Business (other than minute books
relating to directors' and shareholders' meetings and statutory books) in
whatever form and upon whatever media they may be recorded;
(vi) copies of the employment contracts for all of the
Transferred Employees;
(vii) a certified copy of a resolution of the Seller's
board of directors approving the sale of the Purchased Assets and the Business
on the terms of this Agreement and authorizing any one its officers to execute
this Agreement for and on behalf of the Seller; and
(viii) such other instruments of conveyance as shall be
necessary to vest in Buyer good, valid and marketable title to the Purchased
Assets.
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(b) Deliveries by Buyer. At the Closing, Buyer will deliver to
Seller:
(i) the Purchase Price; and
(ii) a certified copy of a resolution of Buyer's board
of directors approving the purchase of the Purchased Assets and Business on the
terms of this Agreement and authorizing any one of its directors or officers to
execute this Agreement for and on behalf of the Seller.
(c) Other Deliveries. Any other documents required to be
delivered pursuant to this Agreement will be exchanged.
1.13. Covenants of Seller. From and after the date hereof and
until the Closing Date, Sellers hereby covenant and agree that:
(a) Business in Ordinary Course. Seller will carry on the
Business in the ordinary and normal course in substantially the same manner as
heretofore, except as otherwise expressly provided herein, and shall notify
Buyer immediately in writing of any changes or deviations from the ordinary and
normal course of business.
(b) Maintain Properties. Seller will maintain and keep the
plant and equipment of or related to the Business and the Old Factory and the
New Factory in as good repair, working order and condition as at present,
except for depreciation due to ordinary wear and tear and damage due to
casualty.
(c) Insurance. Seller will keep in full force and effect
insurance and bonds comparable in amount and scope of coverage to what is now
covering the Business and all assets related thereto.
(d) Perform Contracts. Seller will perform in all material
respects the obligations to be performed under all the contracts and documents
of or relating to the Business.
(e) Maintain Organization. Seller will maintain and preserve
the relationships of or related to the Business with suppliers and customers
and maintain the goodwill of the Business.
(f) Approvals and Consents. As soon as practicable after the
execution of this Agreement, Seller shall take all reasonable action required
to obtain all waivers,
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consents, approvals and agreements and promptly to give all notices, effect all
registrations pursuant to and make all other filings with or submissions to,
any third parties, including governmental authorities, necessary or advisable
to authorize, approve or permit the transactions contemplated hereby. The
foregoing shall not mean, in any case, that Seller shall bear any unreasonable
out of pocket expenses or costs for such reasonable action provided for above
except such expenses for employment of personnel currently in charge of such
matters.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents, warrants and covenants to and with Buyer as
follows:
2.1. Organization. Seller is a corporation duly incorporated,
validly existing and in good standing under the laws of the Republic of Korea.
Seller has all requisite corporate power and authority to own or lease its
properties and assets as now owned or leased, to carry on its businesses as and
where now being conducted and to enter into this Agreement, and perform its
obligations hereunder. The copies of Seller's articles of incorporation and
bylaws, as amended to date, which have been delivered to Buyer, are correct and
complete and are in full force and effect.
2.2. Authorization and Enforceability. The execution, delivery and
performance of this Agreement has been, and such other agreements necessary to
vest in Buyer good, valid and marketable title to the Purchased Assets (the
"Ancillary Agreements") shall have duly authorized by all necessary corporate
action on the part of Seller, including board of directors approval. This
Agreement has been, and at the Closing all the Ancillary Agreements shall have
been duly executed and delivered by Seller, and this Agreement constitutes, and
at Closing the Ancillary Agreements will constitute, the legal, valid and
binding obligations of Seller, enforceable in accordance with their respective
terms.
2.3. No Violation of Laws or Agreements. The execution and delivery
of this Agreement do not, and the consummation of the transactions contemplated
by this Agreement and the compliance with the terms, conditions and provisions
of this Agreement by Seller, will not (a) contravene any provision of Seller's
articles of incorporation or bylaws; (b) conflict with or result in a breach of
or constitute a default (or an event which might, with the passage of time or
the giving of notice or both, constitute a default) under any of the terms,
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conditions or provisions of any indenture, mortgage, loan or credit agreement
or any other agreement or instrument to which Seller is a party or by which it
or any of its assets may be bound or affected except as set forth on Schedule
2.10, or any judgment or order of any court or governmental department,
commission, board, agency or instrumentality, domestic or foreign, or any
applicable law, rule or regulation, (c) result in the creation or imposition of
any lien, charge or encumbrance of any nature whatsoever upon Seller's assets
or give to others any interests or rights therein, (d) result in the maturation
or acceleration of any liability or obligation of Seller that will not be paid
in full by Seller at Closing (or give others the right to cause such a
maturation or acceleration), or (e) result in the termination of or loss of any
right (or give others the right to cause such a termination or loss) under any
of the Assigned Contracts except as set forth on Schedule 2.10.
2.4. Financial Statements. The books of account and related records
of Seller fairly reflect in a reasonable detail the assets, liabilities and
transactions related to the Business and are in adequate condition for the
preparation of the Financial Statement (as defined below and which shall be
limited only to a balance sheet and a statement of profits and losses) of the
Business in accordance with Korean GAAP applied on a consistent basis. Seller
has delivered to Buyer the unaudited financial statements of the Business as of
12/31/97 (the "Financial Statement") and a balance sheet of the Business at
such date. The Financial Statement of the Business: (i) fairly presents the
financial condition, assets and liabilities of the Business as of December 31,
1997; and (ii) has been prepared in accordance with Korean GAAP consistently
applied. All references in this Agreement to the "Balance Sheet" shall mean the
balance sheet of the Business as of December 31, 1997 included in the Financial
Statement and all references to the "Balance Sheet Date" shall mean December
31, 1997.
2.5. Undisclosed Liabilities. The Business has no liability or
obligation of any nature, whether due or to become due, absolute, contingent or
otherwise, including liabilities for or in respect of national, local or
foreign taxes, customs duties and any interest or penalties related hereto,
except for liabilities that are (a) fully reflected on the Balance Sheet or (b)
incurred in the ordinary course of business since the Balance Sheet Date and
fully reflected as liabilities on the Business's books of account, none of
which individually or in the aggregate has been materially adverse.
2.6. No Changes. Except as disclosed on Schedule 2.6, since the
Balance Sheet Date and until the Closing, the Seller has conducted the Business
only in the ordinary course.
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Without limiting the generality of the foregoing sentence, except as
specifically communicated to Buyer in writing and except for such changes
causing immaterial payment, expense or loss, not in excess of twenty-five
million (25,000,000) won since the Balance Sheet Date, or as otherwise disclosed
on Schedule 2.6 there has not been:
(a) any change in the financial condition, assets, liabilities, net worth
of the Business, except changes in the ordinary course of business, none of
which, individually or in the aggregate has been or will be materially adverse
to the Business;
(b) any damage, destruction or loss, whether or not covered by insurance,
materially adversely affecting the properties, business or prospects of the
Business, or any material deterioration in the operating condition of the assets
of the Business;
(c) any mortgage, pledge or subjection to lien, charge or encumbrance of
any kind of the assets, tangible or intangible of the Business;
(d) any strike, walkout, labor trouble or any other new or continued
event, development or condition of any character which has or could materially
adversely affect the business, properties or prospects of the Business;
(e) any increase in the salaries or other compensation (excluding
increases in the ordinary course of business and consistent with past practice)
payable or to become payable to, or any advance (excluding advances for ordinary
business expenses) or loan to, any officer, director or employee of the
Business, or any increase in, or any addition to, other benefits (including
without limitation any bonus, profit-sharing, pension or other plan) to which
any of its officers, directors or employees may be entitled, or any payments to
any pension, retirement, profit-sharing, bonus or similar plan except payments
in the ordinary course of business and consistent with past practice made
pursuant to any employee benefit plan, or any other payment of any kind to (or
on behalf of) any such officer, director or employee other than payment of base
compensation and reimbursement for reasonable business expenses in the ordinary
course of business;
(f) any making or authorization of any capital expenditures;
(g) any cancellation or waiver of any right material to the operation of
the Business or any
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cancellation or waiver of any debts or claims of substantial value or any
cancellation or waiver of any debts or claims against any Affiliate;
(h) any sale, transfer or other disposition of any assets of the
Business, except sales of assets in the ordinary course of business;
(i) any payment, discharge or satisfaction of any liability or obligation
(whether accrued, absolute, contingent or otherwise) by Seller related to or
affecting the Business, other than the payment, discharge or satisfaction, in
the ordinary course of business, of liabilities or obligations shown or
reflected on the Balance Sheet or incurred in the ordinary course of business
since the Balance Sheet Date;
(j) any adverse change or any threat of any adverse change in Seller's
relations with, or any loss or threat of loss of, Seller's suppliers, clients
or customers, which change or loss would have a material adverse affect on the
Business;
(k) any write-offs as uncollectible of any notes or accounts receivable
of the Business or write-downs of the value of any assets or inventory by
Seller related to the Business other than in immaterial amounts or in the
ordinary course of business consistent with past practice and at a rate no
greater than during the twelve months ended on the Balance Sheet Date;
(l) any change by Seller in any method of accounting or keeping its books
of account or accounting practices related to or affecting the Business;
(m) any creation, incurrence, assumption or guarantee by the Business of
any obligations or liabilities (whether absolute, accrued, contingent or
otherwise and whether due or to become due), except in the ordinary course of
business, or any creation, incurrence, assumption or guarantee by the Business
of any indebtedness for money borrowed;
(n) any payment, loan or advance of any amount to or in respect of, or
the sale, transfer or lease of any properties or assets (whether real, personal
or mixed, tangible or intangible) to, or entering into of any agreement,
arrangement or transaction with, any Affiliate, except for (i) compensation to
the officers and employees of the Business at rates not exceeding the rates of
compensation disclosed on Schedule 2.17 hereto and (ii) reimbursements of or
advances for expenses
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incurred for business-related purposes not exceeding 25 million Won outstanding
in the aggregate at any given time.
(o) any disposition of or failure to keep in effect any rights in, to
or for the use of any patent, trademark, service mark, trade name or copyright
included in the Purchased Assets, or, to Seller's Knowledge, any disclosure to
any person not an employee or other disposal of any trade secret, process or
know-how relating to the Business; or
(p) any transaction, agreement or event to which Seller is a party or
a participant relating to the Business outside the ordinary course of the
Business or inconsistent with past practice.
2.7. Taxes. Seller has (a) timely filed all national or local, payroll,
withholding, VAT, excise, sales, use, customs duties, personal property, use
and occupancy, business and occupation, mercantile, real estate, capital stock
and franchise or other tax returns of any kind whatsoever relating to the
Business (all the foregoing taxes, including interest and penalties thereon and
including estimated taxes, being hereinafter collectively called "Taxes" and
individually a "Tax"), (b) has paid all Taxes which are shown to have become due
pursuant to such returns and (c) paid all other Taxes for which a notice of
assessment or demand for payment has been received. All such returns have been
prepared in accordance with all applicable laws and requirements and accurately
reflect the taxable income (or other measure of Tax) of the Party filing the
same. The accruals for Taxes contained in the Balance Sheet are adequate to
cover all liabilities for Taxes relating to the Business for all periods ending
on or before the Balance Sheet Date and nothing has occurred subsequent to that
date to make any of such accruals inadequate as of the Balance Sheet Date. All
Taxes for periods beginning after the Balance Sheet Date have been paid or are
adequately reserved against on the books of Seller. Seller has timely filed all
information returns or reports which are required to be filed and has accurately
reported all information required to be included on such returns or reports. To
Seller's Knowledge, there are no proposed assessments of Tax against Seller or
proposed adjustments to any tax returns filed, pending against Seller. Except as
disclosed on Schedule 2.7, Seller has not received notice that any Tax return is
under examination by any taxing authority. Except as disclosed on Schedule 2.7
hereto, Seller has not executed a waiver or consent extending any statute of
limitation for any tax liability which remains outstanding. Except as disclosed
on Schedule 2.7 hereto, since January 1, 1998, Seller has not (a) joined in or
been required to join in filing a consolidated
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income tax return, or (b) entered into a closing agreement with any taxing
authority.
2.8. Inventory. All of the inventories of the Business, including that
reflected in the Balance Sheet, are valued at cost being determined on a
first-in, first-out basis, except as disclosed in the Financial Statements.
Except for the obsolete inventory identified and included in the Purchased
Assets, all of the inventories of the Business reflected in the Balance Sheet
and all such inventories acquired since the Balance Sheet Date consist of items
of a quality and quantity usable and saleable in the ordinary course of business
within a reasonable period of time and at normal profit margins (other than
normal trade discounts regularly offered by the Business for prompt payment or
quantity purchase), and all of the raw materials and work in process inventory
of the Business reflected in the Balance Sheet and all such inventories acquired
since the Balance Sheet Date can reasonably be expected to be consumed in the
ordinary course of business within a reasonable period of time. A physical
inventory shall be taken during the week prior to the Closing Date. Attached
hereto is Schedule 2.8 which sets forth the value of the Business's inventory of
finished goods, work in process and raw materials as of December 31, 1997
according to the internal accounting records of the Seller as of said date.
2.9. No Pending Litigation or Proceedings. Except as set forth on Schedule
2.9 hereto, there are no actions, suits, investigations, proceedings or claims
pending or, to Seller's Knowledge, threatened against or affecting the Business
of Seller or Seller's agents or their assets of or related to the Business, by
or before any court or governmental department, agency or instrumentality, and
to Seller's Knowledge, there is no basis for any such action, suit,
investigation, proceeding or claim. There are presently no outstanding
judgments, decrees or orders of any court or any governmental or administrative
agency, against or, to Seller's Knowledge, affecting the Business.
2.10. Contracts; Compliance. Except as listed on Schedule 2.10 hereto,
Seller is not a party to or bound by any contract or commitment, oral or
written, formal or informal related to or affecting the Business, of the
following types:
(a) mortgages, indentures, security agreements or other agreements
and instruments relating to the borrowing of money, the extension of credit or
the granting of liens or encumbrances;
(b) employment and consulting agreements (forms for each type of such
agreement have been attached to Schedule 2.19);
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(c) union or other collective bargaining agreements;
(d) powers of attorney;
(e) sales agency, manufacturers representative and
distributorship agreements or other distribution or commission arrangements;
(f) licenses of patent, trade secrets, know-how, trademark,
copyrights and other intellectual property rights;
(g) agreements, orders or commitments for the purchase of
services, raw materials, supplies or finished products from any one supplier
for an amount in excess of 10 million Won.
(h) agreements, orders or commitments for the sale of
products or services for more than 10 million Won to any single purchaser;
(i) contracts or options relating to the sale by Seller of
any asset of the Business, other than sales of inventory in the ordinary course
of business;
(j) bonus, profit-sharing, compensation, stock option,
pension, retirement, deferred compensation, accrued vacation pay, group
insurance, welfare agreements or other plans, agreements, trusts or
arrangements for the benefit of employees;
(k) agreements or commitments for capital expenditures in
excess of 10 million won for any single project;
(l) joint venture agreements;
(m) agreements requiring the consent of any party thereto
to the consummation of the transactions contemplated hereby;
(n) agreements with any Affiliate;
(o) lease agreements under which it is either lessor or
lessee;
(p) agreements, contracts or commitments for any charitable
or political contribution; or
(q) other agreements, contracts and commitments which are
material to the Business, or which involve
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payments or receipts of more than 100 million won in any single year, or which
were entered into other than in the ordinary and usual course of business.
All such contracts and other commitments are in full force and effect;
all parties to such contracts and other commitments have complied with the
provisions thereof; no such party is in default under any of the terms thereof;
and no event has occurred that with the passage of time or the giving of notice
or both would constitute a default by any party under any provision thereof.
Set forth on Schedule 2.10 hereto is a summary of unfilled firm purchase orders
of the Business as of the date hereof other than any unfilled firm purchase
order which has a value of less than 20 million won.
2.11. Compliance with Laws. Schedule 2.11 hereto sets forth a list of
all material permits, certificates, licenses, orders, registrations,
franchises, authorizations and other approvals from all national, local and
foreign governmental and regulatory bodies held by Seller that relate to or
effect the Business or the New Factory. The Seller holds and is in compliance
with all material permits, certificates, licenses, orders, approvals,
registrations, franchises and authorizations required under all laws, rules and
regulations in connection with the Business and the New Factory, and, to
Seller's Knowledge, all of such permits, certificates, licenses, orders,
approvals, registrations, franchises and authorizations are in full force and
effect. The Seller has complied with all applicable statutes, rules,
regulations and orders, national and local, which, if not complied with, would
have a material adverse effect on the Business or the New Factory. No notice,
citation, summons or order has been issued, no complaint has been filed, no
penalty has been assessed and, to Seller's Knowledge, no investigation or
review is pending or threatened by any governmental or other entity (a) with
respect to any alleged violation by Seller of any law, ordinance, rule,
regulation or order of any governmental entity relating to or affecting the
Business or the New Factory (b) with respect to any alleged failure by Seller
to have any permit, certificate, license, approval, registration or
authorization required in connection with the Business or the New Factory.
2.12. Environmental Matters.
(a) Except as disclosed on Schedule 2.12 hereto or in the
site assessments of the Owned Real Properties performed by or on behalf of
Buyer (true and complete copies of which Buyer has delivered to Seller):
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(i) The Business and the New Factory are in compliance with and are not in
violation of any national or local statutory or regulation, rule, order,
ordinance, guideline, direction, or notice, relating to the environment, public
health and safety, and employee health and safety, including those relating to
Hazardous Substances ("Environmental Laws").
(ii) Seller holds and is in compliance with all necessary or required
environmental permits, certificates, consent or other settlement agreements,
licenses, approvals, registrations and authorizations required under all
Environmental Laws that relate to or affect the Business ("Environmental
Permits") or the New Factory as being used as of the date of this Agreement, and
all of such Environmental Permits are valid and in full force and effect. All
such Environmental Permits held by Seller are listed on Schedule 2.12 hereto and
any that are not transferable are so designated. Seller has made or will make
before the Closing timely application for renewals of all such Environmental
Permits for which Environmental Laws require that applications must be filed on
or before the Closing to maintain the Environmental Permits in full force and
effect after the Closing Date. Buyer shall bear any fees, cost or other expenses
incurred in making such filings or applications to the extent to which Buyer
receives a benefit from the Environmental Permit obtained as a result of such
filing or application.
(iii) No consent, approval or authorization of, or registration or filing
with any Person, including any environmental governmental Authority or
regulatory agency, is required in connection with the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby.
Seller (with Buyer's reasonable assistance) has or will prepare and file all
applications for the transfer of all Environmental Permits, at Buyer's expense,
that must be transferred as a result of the consummation of the transactions
contemplated by this Agreement.
(iv) No notice, citation, summons or order has been issued or served upon,
no complaint has been filed, no penalty has been assessed and, to Seller's
Knowledge, no investigation or review is pending or threatened by any Authority
or Person: (a) with respect to any alleged violation by Seller of any
Environmental Law relating to or affecting the Business or the New Factory; or
(b) with respect to any alleged failure by Seller to have any Environmental
Permit relating to or affecting the Business or the New Factory; or (c) with
respect to any use, possession, generation, treatment, storage, recycling,
transportation or disposal (collectively "Management") of any Hazardous
Substances by or on behalf of Seller or, to Seller's
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knowledge, its predecessors relating to or affecting the Business or the New
Factory.
(v) Seller has not received any request for information, notice of claim,
demand, order or notification for which it or any of its predecessors are or
may be potentially responsible with respect to any investigation or clean-up of
any threatened or actual Release of any Hazardous Substance relating to or
affecting the Business or the New Factory.
(vi) Except for Hazardous Substances stored or used in the ordinary course
of their manufacturing processes, in quantities and in a manner (1) not in
violation of any applicable law, or (2) which has not or is not reasonably
likely to create a condition which requires investigation, remediation or other
responsive action or responsibility or liability under Environmental laws, to
Seller's knowledge neither the Seller nor any Affiliate of Seller has used,
generated, treated, stored for more than 90 days, recycled or disposed of any
Hazardous Substances on the New Factory or on any property now owned, operated
or leased by Seller or any Affiliate of Seller or on any formerly owned,
operated or leased property that is related in any way to the Business, nor has
anyone else during the period that such property or the New Factory has been
owned, operated or leased by Seller or, to Seller's Knowledge, during any other
period, treated, stored for more than 90 days, recycled or disposed of any
Hazardous Substances on any property now owned, operated or leased by Seller or
any Affiliate of Seller or on any formerly owned, operated or leased property.
Notwithstanding the provisions of this Section 2.12(a)(vi), Seller acknowledges
that asbestos has been used in one or more buildings of the Old Factory and has
or may have been used in one or more buildings of the New Factory and agrees to
be liable for damages relating to such asbestos as specified in Section 4.10(b)
of this Agreement.
(vii) To Seller's Knowledge, no polychlorinated biphenyls are or have been
present at the New Factory or at any property now owned, operated or leased by
Seller or any Affiliate of Seller during the period that such property was
owned, operated or leased by Seller that is in any way related to the Business,
nor are there any underground storage tanks, active or abandoned, at such
property or at the New Factory.
(viii) To Seller's Knowledge, no Hazardous Substance generated by Seller
or any Affiliate of Seller that is any way related to the Business or the New
Factory has been recycled, treated, stored, disposed of or transported by any
entity in violation of any Environmental Law or in a manner which has created
or is reasonably likely to create any liability or responsibility under any
Environmental Law.
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(ix) No Hazardous Substance has been Released at, on, about or under
by Seller or, to Seller's Knowledge is present in the New Factory or in any
property now owned, operated or leased by Seller or any Affiliate of Seller that
is in any way related to the Business which requires investigation, remediation
or other response action. Notwithstanding the provisions of this Section
2.12(a)(ix), Seller acknowledges that asbestos has been used in one or more
buildings of the Old Factory and has or may have been used in one or more
buildings of the New Factory and agrees to be liable for damages relating to
such asbestos as specified in Section 4.10(b) of this Agreement.
(x) There are no environmental Liens on the New Factory or on any
properties owned or leased by Seller or any Affiliate of Seller which would
materially impair Buyer's ability to lawfully operate the Business as such
Business was operated prior to the Closing Date and, to Seller's knowledge, no
government actions have been taken or are in process or pending which could
subject any of such properties to such Liens.
(xi) No deed or other instrument of conveyance of real property to
Seller or any Affiliate of Seller with respect to real property presently owned,
operated or leased by Seller contains a restriction relating to the actual or
suspected presence of Hazardous Substances, which restriction would materially
impair Buyer's ability to lawfully operate the Business as such Business was
operated prior to the Closing Date.
(xii) To Seller's Knowledge, there are no facts or circumstances
(other than the possible presence of asbestos in one or more buildings of the
Old Factory and the New Factory) related to environmental matters concerning
real property owned, operated or leased by Seller that could reasonably be
expected to lead to any further environmental claims against Seller, or Buyer
under current law.
(xiii) There have been no environmental inspections, investigations,
studies, audits, tests, reviews or other analyses conducted by or at the
direction of Seller or, in the possession of Seller indicating the presence of
any Hazardous Substance at the New Factory (other than asbestos) in or on any
property or business now or previously owned, operated, or leased by Seller or
any Affiliate of Seller in any way related to the Business in material violation
of any Environmental Law or which has created a condition which requires
investigation, remediation or other response action under Environmental Law
which have not been provided to Buyer prior to the date hereof.
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2.13. Consents. Except for the contracts listed on Schedule 1.10 and
except as set forth on Schedule 2.13 (the implementation schedule), no consent,
approval or authorization of, or registration or filing with, any Person, is
required in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
2.14. Personal Property. The Seller owns all of its tangible personal
property and assets relating to or affecting the Business, including the
properties and assets reflected in the Balance Sheet (except those disposed of
in the ordinary course of business since the Balance Sheet Date); and at the
Closing none of such properties or assets will be subject to any mortgage,
pledge, lien, restriction, encumbrance, claim, security interest, charge or any
other matter affecting title, except, (a) minor imperfections of title, none of
which, individually or in the aggregate, materially detracts from the value of
or impairs the use of the affected properties or impairs any operations of the
Seller, (b) liens for current taxes not yet due and payable, or (c) as
disclosed on Schedule 2.14 hereto (the "Personal Property Permitted
Encumbrances"). All tangible personal property, assets, equipment or other
personal property consigned or leased to Seller, whether used exclusively in
the operation of the Business or shared by the Business with Seller's
construction equipment business, are listed on Schedule 2.14.
2.15. Real Estate.
(a) Schedule 2.15 hereto contains a true, correct and complete
list of all real properties included in the Purchased Assets (collectively, the
"Real Properties") separately indicating the nature of Seller's interest
therein. Except as set forth on Schedule 2.15 hereto, no other Person has any
oral or written right, agreement or option to acquire, lease, sublease or
otherwise occupy all or any portion of such Real Properties. Seller has not
received any written or oral notice for assessment for public improvements
against any of the Real Properties which remains unpaid and, to Seller's
Knowledge, no such assessment has been proposed. There is no pending
condemnation, expropriation, eminent domain or similar proceeding affecting all
or any portion of any of the Real Properties and, to Seller's Knowledge, no
such proceeding is contemplated.
(b) Except as disclosed on Schedule 2.15 hereto:
(i) Seller has good and marketable title to the Real
Properties owned by Seller (the "Owned Real Properties" or "Owned Real
Property"). The Owned Real Property is free and clear of any and all Liens,
exceptions, items,
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encumbrances, easements, restrictions and other matters either of record or not
of record which either individually or in the aggregate, could prohibit or
adversely interfere with Buyer's use of such property except (a) matters set
forth on Schedule 2.15 and referred to as the "Exceptions that will not exist at
Closing" (the "Exceptions That Will Not Exist at Closing"), (b) matters set
forth on Schedule 2.15, none of which is material in amount and none of which,
individually or in the aggregate, impairs, or grants or evidences rights which
if exercised would impair, the use of the affected property in the manner such
property is currently being used, or impairs the current operations of the
Business, (c) defects of title, conditions, easements, encroachments, covenants
or restrictions, if any, none of which is material in amount and none of which,
individually or in the aggregate, materially impairs, or grants or evidences
rights which if exercised would materially impair, the use of the affected
property in the manner such property is currently being used, or impairs the
current operations of the Business, and (d) zoning or land use ordinances, none
of which, to Seller's knowledge, individually or in the aggregate, impairs the
use of the affected property in the manner such property is currently being used
or impairs the current operations of the Business (collectively, the "Permitted
Real Property Encumbrances"). No material default or breach exists under any of
the covenants, conditions, restrictions, rights-of-way or easements, if any,
affecting all or any portion of the Owner Real Properties.
(ii) The current zoning of each of the Owned Real Properties
permits the operator of such property to use such property for the Buyer's
intended use thereof, provided that such use is similar to Seller's use thereof
or otherwise disclosed to Seller. Seller has not made any application for a
rezoning of any of the Owned Real Properties. To Seller's Knowledge, there are
no proposed or pending change to any zoning affecting any of the Owned Real
Properties.
(iii) All utilities, including without limitation, potable
water, sewer, gas, electric, telephone, and other public utilities and all storm
water drainage required by law or necessary for the operation of the Owned Real
Properties, (1) either enter the Owned Real Properties through open public
streets adjoining the Owned Real Properties, or, if they pass through adjoining
private land, do so in accordance with valid public or private easements or
rights of way which will inure to the benefit of Buyer, (2) are installed,
connected, operating and adequate for the operation of the Business as it has
been previously conducted by Seller, with all installation and connection
charges paid in full, including, without limitation, connection and the right to
discharge sanitary waste into the collector system of the appropriate sewer
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utility, and (3) are adequate (in both quality and quantity) to service the
Owned Real Properties for their respective use in the business as presently
conducted thereon.
(iv) Each of the Owned Real Properties is located
along one or more dedicated public streets or has access thereto. All curb-cut
and street-opening permits or licenses required for vehicular access to and from
the Real Properties to any adjoining public street or to any parking spaces
utilized in connection with the Owned Real Property have been obtained and paid
for, are in full force and effect and shall inure to the benefit of Buyer.
(v) The improvements located on the Owned Real
Properties, including the roof, structure, soil, elevators, walls, heating,
ventilation, air conditioning, plumbing, electrical, drainage, fire alarm,
communications, security and exhaust systems and their component parts, or other
improvements on or forming a part of the Owned Real Properties, are adequate for
the operation of the Business as it has been previously conducted by Seller.
Seller has not received any notification of and there are no outstanding or
incomplete work orders in respect of any of the buildings, improvements or other
structures constructed on the Owned Real Properties or of any current
non-compliance with applicable statutes and regulations or building and zoning
by-laws and regulations.
(c) Except as set forth on Schedule 2.15 hereto, there
are no deeds of trust or mortgages which are a Lien upon the Owned Real
Properties.
2.16 Transactions with Affiliates. Except as disclosed on Schedule
2.16, no Affiliate has:
(a) borrowed money or loaned money to the Seller in
connection with the Business or the New Factory which remains outstanding;
(b) any contractual or other claims, express or
implied, of any kind whatsoever against Seller in connection with the Business
or the New Factory;
(c) any interest in any property or assets used by
Seller in connection with the Business or the New Factory; or
(d) is engaged in any other transaction with Seller
relating to or affecting the Business or the New Factory (other than employment
relationships at the salaries disclosed in Schedule 2.16 hereto).
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2.17. Condition of Assets. The buildings at the New Factory and
the buildings, machinery, equipment, tools, furniture, improvements and other
fixed assets of the Seller used in or related to or affecting the Business,
including those reflected in the Balance Sheet, are adequate for the operation
of the Business as it has been previously conducted by the Seller.
2.18. Compensation Arrangements; Officers and Directors. Schedule
2.18 hereto sets forth the following information:
(a) The names and current annual salary, including any
bonus, if applicable, of all present directors, officers and employees of
Seller at the rank of kwajang or higher who work in connection with the
Business together with a statement of the full amount of all remuneration paid
by Seller to each such person during the 12 month period preceding the date
hereof.
(b) the names and titles of each trustee, fiduciary or plan
administrator of each employee benefit plan of the Seller.
2.19. Labor Relations.
(a) Schedule 2.19 hereto contains a true and complete list
of all current employees of Seller that Seller asserts are necessary to the
operation of the Business ("Employees"), together with their respective job
titles and current annual compensation and bonuses or bonus eligibility (if
any), as of the date hereof. Schedule 2.19 shall have been updated as of the
Closing, if necessary. Except for those individuals identified on Schedule
2.19, there are no employees hired by and currently working for Seller
necessary to the operation of the Business.
(b) Schedule 2.19 contains a list of all written employment
policies, practices, manuals, handbooks, procedures, and terms and conditions
of employment of Seller that are applicable to Employees. Except as listed on
Schedule 2.19, there are no employment policies, practices, manuals, handbooks,
procedures or terms or conditions of employment that are applicable to
Employees.
(c) Schedule 2.19 contains a list of all current, or if
expired and not renewed, the most recent, employment, labor or collective
bargaining agreements with any of the Employees. Except as listed on Schedule
2.19, there are no employment, labor or collective bargaining agreement, or
governmental or administrative charges, affecting or concerning
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the Employees, pending or to Seller's knowledge threatened against Seller.
(d) Except as set forth on Schedule 2.19, there are no
consulting, contracting or independent contracting agreements with any person
retained or employed in connection with the Assets or the Business.
(e) The overall relations of Seller with its employees are
good. There are no unfair labor practice complaints against Seller pending or,
to Seller's Knowledge, threatened. There is no labor strike, dispute, slow down
or stoppage actually pending or, to Seller's Knowledge, threatened against or
involving Seller. No employee grievance which might to Seller's Knowledge have
an adverse effect on Seller or the conduct of the Business is pending. No
private agreement restricts Seller from relocating, closing or terminating any
of its operations or facilities. Except as disclosed in Schedule 2.19, Seller
has not in the past twelve (12) months experienced any work stoppage or slow
down or, to the best of Seller's Knowledge committed any unfair labor practice.
2.20. Products Liability. Except for lawsuits, claims, damages
and expenses adequately covered by the Seller's insurance, there are no (a)
liabilities of Seller, fixed or contingent, asserted or, to Seller's Knowledge,
unasserted, with respect to any product liability or any similar claim that
relates to any product manufactured and sold by Seller to others in connection
with the Business, or (b) liabilities of Seller, fixed or contingent, asserted
or, to Seller's Knowledge, unasserted, with respect to any claim for the breach
of any express or implied product warranty or any other similar claim with
respect to any product manufactured and sold by Seller to others other than
standard warranty obligations (to replace, repair or refund) made by the Seller
in the ordinary course of business to purchasers of its products in connection
with the Business.
2.21. Insurance. Attached hereto as Schedule 2.21 is a
complete and correct list of all policies of insurance relating to the Business
or the New Factory of which Seller is the owner, insured or beneficiary, or
covering any of the property of the Business, true, correct and complete copies
of which have been delivered to Buyer, indicating for each policy the carrier,
the insured, type of coverage, the amounts of coverage, deductible, premium
rate, cash value if any, expiration date and any pending claims thereunder. All
such policies are in full force and effect. The coverages provided by such
policies are reasonable, in both scope and mount, in light of the risks
attendant to the Business and the New Factory. Seller has paid-in-full all
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premiums due on such policies as of the Closing Date. To Seller's Knowledge,
there is no default with respect to any provision contained in any such policy,
nor has there been any failure to give any notice or present any claim under any
such policy in a timely fashion or in the manner or detail required by the
policy. Except as set forth on Schedule 2.21, there are no outstanding unpaid
premiums or claims under such policies. No notice of cancellation or non-renewal
with respect to, or disallowance of any claim under, any such policy has been
received by Seller. Except as set forth on Schedule 2.21, Seller has not been
refused any insurance, nor has its coverage been limited by any insurance
carrier to which it has applied for insurance or with which it has carried
insurance during the last five years. Except as set forth on Schedule 2.21, all
products liability and general liability policies maintained by or for the
benefit of the Seller during the last five (5) years have been "occurrence"
policies and not "claims made" policies. All product liability and general
liability policies relating to the manufacture and sale of forklifts and related
parts and components manufactured and sold by Seller prior to the Closing Date
shall remain in place for at least five (5) years from the Closing Date,
provided that, if Seller does not maintain such insurance then any claim or
lawsuit including attachments and injunctions made or sought against Buyer or
its assets relating to the manufacture and sale of forklifts and related parts
and components by the Seller prior to the Closing may be tendered by Buyer to
Seller within 20 days of Buyer being notified of such claim or lawsuit and
Seller shall defend such claim or lawsuit as if it had been originally brought
against Seller and shall hold Buyer harmless from any liability, suits, losses
or damages including attorneys' fees resulting from such claim or lawsuit.
2.22. Patents and Intellectual Property Rights. Attached hereto as
Schedule 2.22 is a correct list of all patents, patent applications, trademarks,
service marks and trade names, copyrights, intellectual property licenses, logos
and the like, held, owned or used by the Seller in connection with the Business
(all the above collectively referred to as the "IP Rights"), and as to all such
IP Rights that are registered, all of such registrations, and as to all such IP
Rights for which registration has been applied, such applications are valid and
in good standing. To Seller's Knowledge, none of the IP Rights infringes upon
(nor has any claim been made that any of them infringes) the patents, trademarks
or other rights of others. Except as set forth on Schedule 2.22, to Seller's
Knowledge, the manufacture, sale or use of any products now or heretofore
manufactured or sold by Seller did not and does not infringe (nor has any claim
been made that any such action infringes) the patents or intellectual property
rights of others. The Seller owns or possesses adequate licenses or other rights
(at
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reasonable market costs) to use all patent, patent applications, copyrights,
trademarks, service marks and tradenames necessary to conduct the Business as
now conducted. Except as set forth on Schedule 2.22, there is no agreement to
which Seller is a party or to which Seller is legally bound and no restriction
or Liens, materially and adversely affecting the use by Seller and, after the
Closing, the use by Buyer, of any of the IP Rights. There is no pending
litigation or other legal action with respect to any of the IP Rights, and no
order, holding, decision or judgment has been rendered by any Authority, and no
agreement, consent or stipulation exists to which, in any such event, Seller is
a party or of which Seller has knowledge, which would prevent Seller, or after
the Closing, Buyer, from using any of the IP Rights.
2.23 Brokerage. Seller has not made any agreement or taken any other
action which might cause anyone to become entitled to a broker's fee or
commission as a result of the transaction contemplated hereunder.
2.24 Disclosure. No representation or warranty by Seller in this
Agreement, and no exhibit, certificate or schedule furnished or to be furnished
to Buyer pursuant hereto, or in connection with the transactions contemplated
hereby, contains or will contain any untrue statement of a material fact, or
omits or will omit to state a material fact necessary to make the statements or
facts contained herein or therein not misleading or necessary to provide Buyer
with proper information as to the Seller and the Purchased Assets. Seller shall
disclose to Buyer at Closing any information then in the possession of Seller
that indicates that Buyer is in breach of this Agreement or which may provide
the basis for a claim by Seller that Buyer has breached this Agreement.
2.25 Mitigation. The Parties acknowledge that the representations
and warranties set forth above shall, in any case not be interpreted as
limiting or restricting Buyer's general obligation at law, if any, to prevent
and/or mitigate any loss or damages which it may incur after the Closing in
connection with or involving the Business or the Purchased Assets to be
transferred under this Agreement.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
3.1. Organization and Good Standing. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware, U.S.A.
3.2. Corporate Power and Authority. Buyer has all requisite
corporate power and authority to make, execute, deliver and perform this
Agreement and all other agreements, documents and instruments to which it is a
party or is otherwise obligated which are executed, delivered or performed
pursuant to this Agreement.
3.3. Due Authorization. The execution, delivery and performance of
this Agreement and all other agreements, documents and instruments to which
Buyer is a party or is otherwise obligated which are to be executed, delivered
or performed pursuant to this Agreement have been duly authorized by all
necessary corporate action on the part of Buyer, and this Agreement constitutes
and any other instruments to be delivered by Buyer at Closing, when executed
and delivered at Closing, will constitute, the legal, valid and binding
obligations of Buyer, enforceable against it in accordance with their
respective terms.
3.4. Brokerage. Buyer has not made any agreement or taken any other
action which might cause anyone to become entitled to a broker's fee or
commission as a result of the transactions contemplated hereunder.
3.5. No Breaches; Etc. The execution, delivery and performance of
this Agreement and the other agreements contemplated by this Agreement and the
consummation of the transactions contemplated by this Agreement do not and will
not result in any breach or acceleration of any of the terms or conditions of
its articles of incorporation or bylaws, or of any mortgage, bond, indenture,
contract, agreement, license or other instrument or obligation to which Buyer
is a party. The execution, delivery and performance of this Agreement or the
other agreements contemplated by this Agreement will not result in the material
violation of any statute, regulation, judgment, writ, injunction or decree of
any court, threatened or entered in a proceeding or action in which Buyer is,
was or may be bound.
3.6. Disclosure. No representation or warranty by Buyer in this
Agreement, and no exhibit, certificate or schedule furnished or to be furnished
to Seller pursuant hereto, or in
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connection with the transactions contemplated hereby, contains or will contain
any untrue statement of a material fact, or omits or will omit to state a
material fact necessary to make the statements or facts contained herein or
therein not misleading or necessary to provide Seller with proper information
as to the Buyer and the Purchase Assets. Buyer shall disclose to Seller at
Closing any information then in the possession of Buyer that indicates that
Seller is in breach of this Agreement or which may provide the basis for a
claim by Buyer that Seller has breached this Agreement.
3.7. Litigation. There is no action, suit, proceeding or
investigation pending, or, to Buyer's knowledge, threatened, against or related
to Buyer or its respective properties or business which would be reasonably
likely to adversely affect or restrict Buyer's ability to consummate the
transactions contemplated by this Agreement, and there is no reasonable basis
known to Buyer for any such action that may result in such effect and is
probable of assertion.
3.8. Mitigation. The Parties acknowledge that the representations and
warranties set forth above shall, in any case not be interpreted as limiting or
restricting Seller's general obligation at law, if any, to prevent and/or
mitigate any loss or damages which it may incur after the Closing in connection
with the transfer of the Business or the Purchased Assets to Buyer under this
Agreement.
ARTICLE IV
CERTAIN ADDITIONAL COVENANTS
4.1. Costs, Expenses and Taxes. Unless otherwise provided for
herein, Buyer and Seller will each pay all their own expenses incurred in
connection with this Agreement and the transactions contemplated hereby,
including (a) all costs, expenses and Taxes to the extent levied to each Party,
and (b) all accounting, legal and appraisal fees and settlement charges.
4.2. Employees of the Business. Not later than one week prior to the
Closing, the Parties shall finalize a list of employees to be transferred from
Seller to Buyer and such list shall include no more than 180 of Seller's
permanent employees (the "Transferred Employees"). The transfer from Seller to
Buyer of the Transferred Employees shall be subject to the following basic
principles:
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(a) All of the Transferred Employees shall have the right to
elect to be (i) formally terminated as employees of Seller or (ii) transferred
to Buyer as a continuation of their current employment.
(b) With respect to the Transferred Employees who elect to
terminate their employment with Seller, Seller shall pay, in a timely manner in
accordance with the requirements of the Labor Standards Act and current company
practices, all salary, bonuses, allowances, severance, unused leave (including
the pro rata portion of accrued but unused leave attributable to the portion of
the 1998 calendar year prior to closing) and any other monetary obligations or
claims relating to the Transferred Employees' employment with Seller or its
Affiliates that may have accrued to those personnel prior to their separation.
Seller represents and warrants that the amount paid by it to such personnel
will be adequate to fully satisfy all of their claims relating to each of their
terms of employment at Seller or any Affiliate of Seller. For the portion of
the 1998 calendar year after the Closing Date, each of the Transferred
Employees who have elected to terminate shall receive the pro rata portion of
paid leave days that are attributable to this portion of the 1998 Calendar
Year. For subsequent years, each of the Transferred Employees who have elected
to terminate shall receive the same number of paid leave days that they would
have received had they continued to be employees of Buyer, provided that
Buyer's agreement to this provision shall in no way be interpreted as
obligating Buyer to pay any severance to the Transferred Employees relating to
their years of service at any company other than Buyer.
(c) With respect to the Transferred Employees who elect to
carry over their employment into Buyer, Seller shall, as part of the purchase
price adjustment under Section 1.6 of this Agreement, pay to Buyer, in each
case, the value of all unpaid wages, accrued severance, unused leave and other
rights that have accrued to such personnel prior to commencement of their
employment with buyer, whether or not under any existing employment, labor or
collective bargaining agreement or under any such agreements entered into after
the Closing Date but with retroactive application extending to before the
Closing Date. Buyer shall be responsible for the full amount of severance and
other benefits of such employees from the commencement of their employment with
Buyer. Seller represents and warrants that the amount paid to Buyer from Seller
under this Section 4.2(c) will be adequate to fully satisfy all claims of these
employees relating to each of their terms of employment at Seller or any
Affiliates of Seller.
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(d) Prior to the Closing, Seller shall deliver to Buyer a list
indicating the election of each Transferred Employee as described in Section
4.2(a) above.
(e) Buyer agrees that it will treat the Transferred Employees
fairly, and except as permitted or authorized by the laws of Korea, Buyer
agrees that it will not terminate any of the Transferred Employees. In the
event that Buyer transfers the Business to a third party within three years of
the Closing Date, Buyer shall ensure that the third party be bound by this
Section 4.2(e) until the date three years from the Closing Date has passed.
(f) Buyer agrees that for a period of three (3) years from the
Closing Date, buyer will notify and discuss with Seller in advance any transfer
of the Business to a third party other than an Affiliate, provided that, in no
event shall Seller have any right to in any way prevent or hinder such transfer.
4.3. Settlement of Boundary Dispute. Seller shall use its best
efforts to settle to Buyer's satisfaction the boundary dispute concerning the
1.3 meter strip of land at the New Factory that is adjacent to the property of
Kang Lim and Sam Hwan prior to the Closing Date and Seller shall be obligated
to settle the dispute to Buyer's satisfaction by no later than 90 days from the
Closing Date. Seller further agrees to fully (i) defend Buyer against any
lawsuits, claims, attachments or injunctions and (ii) indemnify Buyer for any
claims, damages or losses resulting to Buyer that may at any time arise from or
related to this boundary dispute.
4.4. Indemnification.
(a) General Indemnification Obligations
(i) Indemnification by Seller. Seller hereby agrees to
indemnify and hold harmless Buyer from and against:
(1) any and all Damages arising out of or
resulting from any misrepresentation, breach of warranty or nonfulfillment of
any agreement on the part of Seller contained in this Agreement or in any
certificate, instrument, agreement or other document furnished or to be
furnished to Buyer pursuant hereto or in connection with the transactions
contemplated hereby;
(2) any and all Damages arising out of or
resulting from any liabilities of Seller of any nature, whether due or to
become due, whether accrued, absolute,
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contingent or otherwise existing on the Closing Date or arising out of any
transactions entered into, or any state of facts existing, prior to such date,
except the Assumed Liabilities;
(3) any Damages arising out of or resulting from any claim asserted
against Buyer with respect to Excluded Liabilities;
(4) any and all Damages arising from claims brought by Transferred
Employees who have elected to terminate their employment with Seller in
relation to these employees' terms of employment with Seller or and Affiliate
of Seller, including but not limited to claims for severance pay resulting from
the increase in any employee's wage during his or her period of employment with
Buyer; and
(5) Damages arising from the presence at or removal of asbestos from
one or more buildings of the Old Factory or the New Factory as set forth in
Section 4.10 of this Agreement;
(6) any secondary tax liability of the Buyer under the National Tax
Basic Law and the Local Tax Law for the taxes of Seller that have accrued prior
to the Closing Date; and
(7) any and all Damages arising out of the failure of Seller to
obtain a shareholders' resolution approving this Agreement and the transactions
described herein and with respect to this Section 4.4(a)(i)(7) Seller agrees to
fully defend Buyer against any lawsuits, claims, attachments or injunctions.
(ii) Indemnification by Buyer. Buyer hereby agrees to indemnify and hold
harmless Seller from and against:
(1) any Damages arising out of or resulting from any
misrepresentation, breach of warranty or nonfulfillment of any agreement
on the part of Buyer contained in this Agreement or in any certificate,
instrument, agreement or other document furnished or to be furnished to Seller
in connection with the transactions contemplated hereby;
(2) any Damages resulting from or arising out of the failure by
Buyer to pay or discharge, or cause to be paid or discharged, any of the
Assumed Liabilities; and
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(3) any Damages arising out of or resulting from any claim asserted
against Seller with respect to Assumed Liabilities.
(iii) For purposes of this Agreement, "Damages" means the aggregate
amount of all damages, claims, losses, obligations, liabilities (including any
governmental penalty, fines or punitive damages), deficiencies, interest, costs
and expenses arising out of or relating to a matter and any actions, judgments,
costs and expenses (including reasonable attorneys' fees and all other expenses
incurred in investigating, preparing or defending any litigation or proceeding,
commenced or threatened) incident to such matter or to the enforcement of this
Agreement, including, but not limited to, reasonable fees incurred by the Party
entitled to indemnification under this Agreement.
(b) Indemnification Cap. The maximum aggregate liability of Seller or
Buyer in respect of all claims shall not exceed the Purchase Price.
(c) General Indemnification Procedures.
(i) Buyer and Seller shall cooperate in the defense or prosecution of any
claim, action, suit or proceeding asserted against either of them by a party
other than a Party hereto or an Affiliate of any Party hereto in respect of
which indemnity may be sought hereunder (a "Third Party Claim") and shall
furnish such records, information and testimony, and attend such conferences,
discovery proceedings, hearings, trials and appeals, as may be reasonably
requested in connection therewith.
(ii) Except as otherwise provided in this Agreement, no action or claim
for Damages resulting from breaches of the representations and warranties of
Seller or Buyer shall be brought or made after 24 months following the Closing,
except that such time limitation shall not apply to (i) claims for
misrepresentations or breaches of warranty relating to Section 2.7 (relating to
Taxes) which may be asserted until 60 days after the running of the applicable
statute of limitations with respect to the taxable period to which the
particular claim relates, (ii) claims relating to asbestos under Sections 2.12,
4.3(a)(5) and 4.10 of this Agreement that have been brought against Buyer by
third parties within five years following the Closing Date, (iii) any claims
arising from Section 4.4(a)(i)(7) above which shall have no time limit and
(iv) any claims which have been the subject of a written notice from Buyer to
Seller prior to the expiration of the applicable period under this Section
4.4(c)(ii), which notice specifies in reasonable detail the nature of the
claim.
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(iii) Notwithstanding anything to the contrary in this Section 4.4, no
limitation or condition of liability provided in this Section shall apply to
the breach of any of the representations and warranties contained herein if
such representation or warranty was made with actual knowledge that it
contained an untrue statement of a material fact or omitted to state a material
fact necessary to make the statements or facts contained therein not
misleading.
(iv) If there shall be a judicial determination that any Party (the
"Indemnified Party") seeking indemnification from another Party (the
"Indemnifying Party") under this Agreement is not entitled to such
indemnification in the amount originally claimed by a third party, then the
Indemnifying Party shall be entitled to reimbursement from the Indemnified
Party for its costs and expenses, including reasonable attorneys' fees,
incurred in the defense of the claim for such indemnity pro rata, to the
extent that the amount awarded is less than the amount originally claimed.
(v) Following the receipt by either Party of a complaint initiating a
lawsuit in respect of a Third Party Claim in respect of which indemnity may be
sought from either Party hereunder, within a reasonable time after such receipt,
the receiving Party shall give the other Party notice of such Third Party
Claim.
(vi) Buyer shall notify Seller and Seller shall notify Buyer of any claim
for Damages. Such notice shall describe, to the extent reasonably available,
the nature of the claim, the proposed remedy and the cost to remedy or to
satisfy the claim. Buyer and Seller shall, in good faith, consult with the
other Party and give the other Party a reasonable opportunity to propose an
alternative method to remedy or satisfy the claim. Provided, however, that if
the nature of the claim is such that, in Buyer and Seller's judgment, the above
notice and opportunity provisions could reasonably be expected to cause further
Damages or would otherwise not be appropriate under the circumstances, then the
prior notice and opportunity shall not be required. Neither Buyer nor Seller
shall be required in any event to adopt the method proposed by the other Party.
Buyer and Seller's failure to give the other Party the prior notice and
opportunity or to adopt the method proposed, shall not bar in any event either
Party from asserting an indemnification claim against the other under and
subject to the terms and conditions described in this Section 4.4, but, in any
such claim, the failure of either Party to give prior notice and opportunity,
or to adopt the method proposed shall be admissable evidence if either Party
shall contest the reasonableness of the amount of the Damages that it may
recover from the other Party.
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4.5 Confidentiality and Non-Competition
(a) Confidentiality. From and after the Closing, Seller shall,
and shall cause its Affiliates and representatives to, keep confidential and not
disclose to any other Person or use for his or its own benefit or the benefit
of any other Person any trade secrets or other confidential proprietary
information in its possession or control regarding Seller or their respective
businesses and operations. The obligations of the Seller under this Section
4.5(a) shall not apply to information which (i) is or becomes generally
available to the public without breach of the commitment provided for in this
Section; or (ii) is required to be disclosed by law, order or regulation of a
court or tribunal or governmental authority; provided, however, that, in any
such case, Seller shall notify Buyer as early as reasonably practicable prior to
disclosure to allow Buyer to take appropriate measures to preserve the
confidentiality of such information.
(b) Non-competition. For a period of eight (8) years or longer
(the "Non-Competition Term") from and after the Closing, Seller shall not,
directly or indirectly, (i) own, manage, operate, join, control or participate
in the ownership, management, operation or control of, or be connected as an
officer, director, employee, stockholder, partner or otherwise with, (1) an
entity engaged in the Business or the forklift industry, or (2) any entity using
the name "Clark" (collectively, the "Competing Businesses" or each such business
a "Competing Business"), or (ii) solicit, employ, retain as a consultant,
interfere with or attempt to entice away from Buyer, its Affiliates, or any
successor to any of the foregoing, any individual who is, has agreed to be or
within one year of such solicitation, employment, retention, interference or
enticement has been, employed or retained by Buyer, its Affiliates or any
successor to any of the foregoing in a senior executive capacity or as a general
manager or sales, manufacturing, or technical employee. Ownership of not more
than five percent (5%) of the outstanding stock of any publicly traded company
engaging in a Competing Business shall not, in and of itself, be a violation of
this Section 4.5(b). The restrictive covenant contained in this Section 4.5(b)
is a covenant independent of any other provision of this Agreement, and the
existence of any claim which Seller may allege against Buyer, whether based on
this Agreement or otherwise, shall not prevent the enforcement of this covenant.
Seller agrees that a breach by Seller of this Section 4.5(b) shall cause
irreparable harm to Buyer, and its Affiliates, that Buyer's remedies at law for
any breach or threat of breach by Seller of the provisions of this Section
4.5(b) shall be inadequate, and that Buyer shall be entitled to an injunction or
injunctions to prevent breaches of this Section 4.5(b) and to
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enforce specifically the terms and provisions hereof, in addition to any other
remedy to which Buyer may be entitled at law or in equity. The Non-Competition
Term shall be tolled with respect to Seller during any period of violation of
this covenant not to compete by Seller. At the end of the eighth year at
Seller's written request, Buyer and Seller shall enter into good faith
negotiations to terminate Seller's obligations under this Section 4.5(b),
provided that if no mutual agreement is reached to terminate Seller's
obligations under this Section 4.5(b), then Seller's obligation shall
continue for an additional two years from the expiration of the eighth year.
In the event that this covenant not to compete shall be determined by any court
of competent jurisdiction to be unenforceable by reason of its extending for too
long a period of time or over too large a geographical area or by reason of its
being too extensive in any other respect, it shall be interpreted to extend only
over the longer period of time for which it may be enforceable, and/or over the
largest geographical area as to which it may be enforceable and/or to the
maximum extent in all other aspects as to which it may be enforceable, all as
determined by such court in such action.
4.6 Access to Information. Seller and Buyer shall reasonably
cooperate with each other after the Closing so that (subject to any limitations
that are reasonably required to preserve any applicable attorney-client
privilege) each Party has access without causing excessive hardship to normal
operations to the business records, contracts and other information existing at
the Closing Date and relating to Seller (whether in the possession of Seller or
Buyer) (including copies thereof) as is reasonably necessary for the (a)
preparation for or the prosecution or defense of any suit, action, litigation or
administrative, arbitration or other proceeding or investigation (other than one
by or on behalf of a Party to this Agreement) by or against Buyer or Seller (b)
preparation and filing of any Tax Return or election relating to Seller and any
audit by any taxing authority of any returns of Buyer or Seller relating
thereto, (c) preparation and filing of any other documents required by
governmental or regulatory bodies and (d) transfer of data to Buyer relating to
the Seller. The Party requesting such information and assistance shall reimburse
the other Party for all out-of-pocket costs and expenses incurred by such Party
in providing such information and in rendering such assistance. The access to
files, books and records contemplated by this Section 4.6 shall be during normal
business hours and upon not less than two (2) business days prior written
request, and shall identify the scope of the information to be reviewed and
shall be subject to such further reasonable limitations as the Party having
custody or control thereof may impose to preserve the confidentiality of
information contained therein, and shall not
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extend to material subject to a claim of privilege unless expressly waived by
the Party entitled to claim the same.
4.7 Cooperation
(a) With respect to the Excluded Liabilities, Buyer agrees to
reasonably cooperate with Seller, at no cost to Buyer, in connection with
Sellers' defense of any claims or lawsuit relating thereto, including, without
limitation, making available to Seller for inspection and copying business
records of the Buyer pertaining to such claims or lawsuits and making employees
of the Buyer available as needed from time to time for interviews, trial
testimony and similar appearances; provided, however, that Buyer is reimbursed
by Seller for any costs or expenses including any salary, wages or other
compensation paid by Buyer to its employees during the period such employees are
made available to Seller pursuant to this section, and that such cooperation
does not unreasonably interfere with Buyer's operation of its business.
(b) Seller agrees to cooperate with Buyer in Buyer's efforts to
obtain certain tax exemptions available to foreign invested companies or
purchasers of the Business or New Factory, provided that Seller shall not be
obligated to bear any costs in relation to such cooperation.
4.8 Use of Samsung Name
(a) For a period of three (3) years from the date commencement
of normal commercial production at the New Factory and during the Transition
Period (as defined below), Buyer may use, in relation to the Business and its
products, the Samsung name and all other trademarks, tradenames or logos that
are currently used in the Business as well as any updated versions of such
trademarks, tradenames and logos. The terms and conditions of such usage shall
be as set forth in Exhibit 4.8(a).
(b) Unless prohibited by applicable law, for a period of six (6)
months from the Closing Date, Buyer may brand forklifts manufactured in the
United States for sale in Asia and Europe on the terms and conditions as set
forth in Exhibit 4.8(b).
4.9 Transition Services
(a) Seller shall ensure that Buyer may use the Old Factory for a
period of not less than six (6) months from the Closing Date (the "Transition
Period"), subject to the consent of any third party who comes to own the Old
Factory (i.e., Volvo).
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(b) During the Transition Period, Seller shall use its best
efforts to ensure that the Business is continued to be provided with all of the
services and parts and components currently provided to the Business by Seller
or any Person affiliated with Seller on the same terms and conditions as such
services and parts and components are now being provided to the Business,
provided however, that Seller shall bear no unreasonable costs to secure such
services.
(c) During the Transition Period, Seller shall use its best
efforts to ensure that all Services currently made available to the employees of
the Business at the Old Factory including, without limitation, cafeteria, clinic
and human welfare services continue to be provided to those employees on the
same terms and conditions as such services are now being provided to them,
provided however, that Seller shall not be obligated to bear any costs to secure
such services.
(d) Seller shall use its best efforts to ensure that Samsung
Data Systems enters into an agreement with Buyer to provide MIS services to
Buyer.
4.10 Change of Factory Site and Removal of Asbestos
(a) The tangible assets, as designated by Buyer, other than the
real property of the Old Factory shall be moved to the New Factory. All
expenses associated with this transfer shall be borne by Seller including,
without limitation, expenses involved in detaching the assets from the Old Site
and delivering the assets to the new site, provided however, that expenses for
cleaning and painting the equipment, tooling, dies and jigs to be moved to the
New Factory shall be shared equally by the Parties. Seller shall also be
responsible for tearing down the portions of the New Factory currently dedicated
to offices as prescribed by buyer on schedule 4.10 including paying all expenses
associated with such process. Buyer shall be responsible for expenses associated
with installing the assets at the New Site.
(b) Asbestos
(i) Seller shall bear all costs and liabilities in
connection with the presence of asbestos in the Old Factory and the removal of
asbestos from the Old Factory. With respect to the New Factory, Seller agrees
that in the process of tearing down the portions of the New Factory as
prescribed by the buyer on Schedule 4.10, Seller will remove any and all
asbestos contained in and around the torn down portions or released as a result
of the tear down at Sellers sole expense and to Buyer's reasonable satisfaction
and Seller shall be liable for
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any claim arising from the presence of or removal of asbestos from those torn
down portions or releases resulting from such tear down. Buyer agrees that it
will be liable for any claim from third parties arising from the presence or
removal of asbestos from those portions of the New Factory that Seller is not
obligated, pursuant to this Article 4.10, to tear down.
(ii) If, within two and one-half (2-1/2) years from the
Closing Date, a law or regulation passes in Korea requiring that all asbestos be
removed from the New Factory, then Seller shall at its sole expense remove all
asbestos from the New Factory and be liable for any claim resulting from the
presence of such asbestos and from its removal. If Seller fails to remove such
asbestos within 30 days of Buyer's request, Buyer shall have the right to remove
such asbestos at Seller's expense.
4.11 Purchase of Forklifts by Seller. Seller shall use its best
efforts to ensure that Seller and all of its Affiliates of Seller purchase from
Buyer all of the forklifts that they purchase for a period of not less than
three (3) years from the Closing Date. During this time period, Buyer shall
charge Seller and its Affiliates the best price Buyer offers to other companies.
4.12 Property Taxes. Any and all taxes, charges, public imposts,
fees, and the like (collectively "Property Taxes") which are assessed on or
are required to be paid by Buyer for the first time after the Closing but prior
to the end of the calendar year in which the Closing occurs, in relation to, or
as a result of, ownership of the real properties (including land and buildings)
acquired from Seller or the operation of business at the place(s) acquired
from Seller shall be shared by Seller and Buyer on the basis of the number of
days of their respective holding of the real properties or operation of business
during the calendar year in which Property Taxes are assessed. Property Taxes
shall include, but not be limited to, property tax on buildings, global land tax
on land, business place tax, and any and all surtaxes on these taxes.
ARTICLE V
MISCELLANEOUS
5.1 Further Assurances; Cooperation. At and after the Closing,
Seller will execute and deliver such further instruments of conveyance and
transfer as Buyer may reasonably request to convey and transfer effectively to
Buyer the Purchased Assets or to put Buyer in actual possession and control of
the business of the Seller.
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5.2. Nature and Survival of Representations. The representations,
warranties, covenants and agreements of Buyer and Seller contained in this
Agreement, and all statements contained in this Agreement or any Exhibit or
Schedule hereto or any certificate delivered pursuant to this Agreement or in
connection with the transactions contemplated hereby, shall be deemed to
constitute representations, warranties, covenants and agreements of the
respective Party delivering the same. All such representations, warranties,
covenants and agreements shall survive the Closing hereunder subject to Section
4.4 hereof. Except for the representation and warranties expressly contained in
this Agreement, the Parties make no other representations or warranties and no
additional representations and warranties may be implied.
5.3. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if personally delivered or, if mailed, by certified or registered
mail, postage prepaid, to the other Party at the following addresses (or at such
other address as shall be given in writing to any Party to the other):
If to Buyer, to:
General Counsel
Clark Material Handling Company
749 West Short Street
Lexington, Kentucky 40508
United States of America
With a required copy to:
Representative Director
Clark Material Handling Asia
40-1 Ungnam-dong
Changwon, Kyongnam Province
Republic of Korea
If to Seller to:
President
Samsung Heavy Industries Co., Ltd.
Dongnam Tower
890-25 Daechi-Dong, Kangnam-Ku
Seoul, Republic of Korea
5.4. Successors and Assigns. This Agreement, and all rights and
powers granted hereby, will bind and inure to the benefit of the Parties hereto
and their respective successors and assigns. Without limiting the foregoing,
prior to the Closing.
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Buyer may assign all of its rights and obligations under this Agreement to a
Korean affiliate of Buyer without further consent of Seller. Following such
assignment, all references to the Buyer in this Agreement shall be considered
references to the assignee under this Section 5.4 as if the assignee had
originally executed this Agreement and Buyer shall be relieved of any and all
liability under this Agreement.
5.5. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Republic of Korea, without regard
to its conflict of law provisions.
5.6. Headings. The headings preceding the text of the sections and
subsections hereof are inserted solely for convenience of reference, and shall
not constitute part of this Agreement, nor shall they affect its meaning,
construction or effect.
5.7. Amendment and Waiver. The Parties may by mutual agreement amend
this Agreement in any respect, and any Party, as to such Party, may (a) extend
the time for the performance of any of the obligations of any other Party, (b)
waive any inaccuracies in representations by any other Party, (c) waive
compliance by any other Party with any of the agreements contained herein and
performance of any obligations by such other Party, and (d) waive the
fulfillment of any condition that is precedent to the performance by such Party
of any of its obligations under this Agreement. To be effective, any such
amendment or waiver must be in writing and be signed by the Party against whom
enforcement of the same is sought.
5.8. Entire Agreement. This Agreement and the Schedules hereto,
each of which is hereby incorporated herein, set forth all of the promises,
covenants, agreements, conditions and undertakings between the Parties hereto
with respect to the subject matter hereof, and supersede all prior and
contemporaneous agreements and understandings, inducements or conditions,
express or implied, oral or written.
5.9 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same instrument.
5.10 Governing Language. The English language text of the Agreement
shall prevail over any translation thereof.
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5.11 Arbitration
(a) Any dispute arising under this Agreement which is not
settled after good faith attempts by the Parties to amicably resolve such
dispute shall be resolved by final and binding arbitration. The arbitration
shall be held in Seoul, Korea if the arbitration is brought by Buyer and
Lexington, Kentucky U.S.A. if the arbitration is brought by Seller in
accordance with the Rules of Conciliation and Arbitration of the International
Chamber of Commerce ("ICC Rules") as then existing and shall be heard and
determined by an arbital tribunal composed of three (3) arbitrators. Each of the
Parties shall appoint one arbitrator each, and both of such arbitrators shall
appoint a third arbitrator who shall serve as the Chairman of such arbitral
tribunal, provided that such third arbitrator is not a citizen of the U.S.A. or
Korea. If either Party fails or decides against appointing an arbitrator within
a period of thirty (30) days of the appointment of the first arbitrator, or if
the arbitrators designated by the Parties fail or otherwise are unable to
appoint the third arbitrator within thirty (30) days of the appointment of the
second arbitrator, then the remaining arbitrator(s) shall be selected by the
President of the International Chamber of Commerce, Seoul, Korea, which shall
act as the appointing authority.
(b) All arbitration proceedings shall be conducted in the
English language and the arbitral award (the "Award") shall be rendered no later
than six (6) months from the commencement of the arbitration or as otherwise
provided by the ICC Rules, unless otherwise extended by the arbitral tribunal
for no more than an additional six (6) months for reasons that are just and
equitable.
(c) The Parties expressly understand and agree that the Award
shall be the sole, exclusive, final and binding remedy between them regarding
any and all Disputes presented to the arbitral tribunal. Each Party hereby
expressly waives any and all rights that such Party may have with respect to a
judicial review of the Award in the courts of any country. Application shall be
made to any court having jurisdiction over the Party (or its assets) against
whom the Award is rendered for a judicial acceptance of the Award and an order
of enforcement.
(d) Notwithstanding any other provision of this Agreement, either
Party shall be entitled to seek preliminary injunctive relief from any court of
competent jurisdiction pending the final decision or award of the arbitrators.
5.12 Termination. This Agreement may be terminated upon the
occurrence of any of the following events:
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(a) the mutual agreement of all the Parties to terminate the
Agreement;
(b) if the Closing does not take place prior to October 31,
1998, provided that the right of any Party to terminate this
Agreement under this Clause (b) shall not be available to
any Party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure
of the Closing Date to occur on or before such date; or
(c) by any Party if any court of competent jurisdiction shall
have issued an order, decree or ruling or taken any other
action enjoining or otherwise prohibiting the transactions
contemplated under this Agreement and such order, decree or
ruling or other action has become final and nonappealable.
5.13 Willful Failure to Close. If the Closing does not occur due to
the fact that either Seller or Buyer has willfully or intentionally breached
their obligations under this Agreement then the breaching Party shall pay the
non-breaching Party liquidated damages in the amount of five percent (5%) of the
Purchase Price.
5.14 Enforcement and Damages. Buyer and Seller agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms of were
otherwise breached. It is accordingly agreed that each of Buyer and Seller shall
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions of this
Agreement, this being in addition to any other remedy, including without
limitation damages, to which it is entitled at law or in equity.
5.15 Severability. If at any time subsequent to the date hereof, any
terms or provisions of this Agreement shall be determined by any court of
competent jurisdiction to be partially or wholly illegal, void or unenforceable,
such provision shall be of no force and effect to the extent so determined, but
the illegality or unenforceability of such term or provision shall have no
effect upon and shall not impair the legality or enforceability of any other
term or provision of this Agreement.
5.16 Construction. The Parties acknowledge that each Party and its
counsel have reviewed and revised this Agreement
-49-
<PAGE> 53
and that any rule of construction to the effect that any ambiguities are to be
resolved against the drafting Party shall not be employed in the interpretation
of this Agreement or any amendments, schedules or exhibits hereto.
IN WITNESS WHEREOF, the Parties hereto have executed this
Agreement on the day and year first above written.
CLARK Material Handling Company
/s/ KEVIN M. REARDON
-----------------------
By: Kevin M. Reardon
Title: Vice President
Samsung Heavy Industries Co., Ltd.
/s/ B.H. AHN
-----------------------------
By: B.H. Ahn
Title: CEO and Vice President
-50-
<PAGE> 54
LIST OF SCHEDULES AND EXHIBITS
Schedule 1.1 Asset List & Description of Real Estate of New Factory
Schedule 1.1(e) Trademarks being Used in the Business
Schedule 1.2(g) Other excluded Assets
Schedule 1.5 Allocation of Purchase Price
Schedule 1.6 Restrictions on Adjustment
Schedule 1.7(a) List of Assumed Liabilities
Schedule 1.10 Contracts to be Assigned
Exhibit 1.10 Assignment Agreement for Certain Contracts Listed on
Schedule 1.10
Schedule 2.6 Changes Since Balance Sheet Date
Schedule 2.7 Taxes
Schedule 2.8 Inventory
Schedule 2.9 Pending Litigation
Schedule 2.10 Contracts; Unfilled Firm Purchase Orders
Schedule 2.11 Permits
Schedule 2.12 Environmental Matters
Schedule 2.13 Consents (the Implementation Schedule)
Schedule 2.14 Personal Property Permitted Encumbrances
Schedule 2.15 Real Estate
Schedule 2.16 Transactions With Affiliates
Schedule 2.18 Compensation Arrangements; Officers and Directors
Schedule 2.19 Employees
Schedule 2.21 Insurance
Schedule 2.22 Patents, Trademarks, Etc.
-51-
<PAGE> 55
Exhibit 4.8(a) Trademark License Agreement
Exhibit 4.8(b) Trademark License Agreement for U.S. Production
Exhibit 4.10 Portions of New Factory to be Torn Down by Seller
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<PAGE> 56
ANNEX A
DEFINITIONS
"Additional Collection Period" has the meaning as described in
Section 1.4(c).
"Affiliate" or "Affiliates" means any Person(s) directly or indirectly
controlling, controlled by or under common control with such Person, and
includes any Person who is an officer, director or employee of such Person. As
used in this definition, "controlling" (including, with its correlative
meanings, "controlled by" and "under common control with") means possession,
directly or indirectly, of power to direct or cause the direction of management
or policies, whether through ownership of securities, partnership or other
ownership interests, by contract or otherwise.
"Ancillary Agreements" has the meaning as described in Section 2.2.
"Asset List" has the meaning as described in Section 1.1.
"Authority" means any national or local or foreign governmental or
regulatory entity, or any department, agency, authority or political
subdivision thereof.
"Average Pre-Closing Rate" has the meaning as described in Section
1.3.
"Business" has the meaning as described in Background Section.
"Closing" has the meaning as described in Section 1.11.
"Closing Statement" has the meaning as described in Section 1.6.
"Competing Businesses" or "Competing Business" have the meanings as
described in Section 4.4(b).
"Damages" has the meaning as described in Section 4.3(a)(iii).
"Employees" has the meaning as described in Section 2.19.
"Environmental Law" has the meaning as described in Section
2.12(a)(ii).
-53-
<PAGE> 57
"Environmental Liabilities" means any liabilities (including costs of
remediation) known or unknown, foreseen or unforeseen, whether contingent or
otherwise, fixed or absolute, present or future, asserted against or incurred by
Buyer or the Business arising out of or relating to (1) environmental conditions
first occurring or existing prior to the Closing (whether disclosed or
undisclosed) including, without limitation, the presence, Release, threat of
Release, Management or exposure of or to Hazardous Materials (each as defined
herein) at, on, in or under any property now or previously owned, operated or
leased by Seller, the Business or any of its Affiliates or predecessors (whether
into the air, soil, ground or surface waters on-site or off-site); (2) the
off-site transportation, storage, treatment, recycling or disposal of Hazardous
Materials Managed, Released or generated prior to the Closing by Seller or the
Business or any of its Affiliates or predecessors or generated in connection
with any of their operations; or (3) any violation of any Environmental Law
first occurring or existing prior to the Closing (including, without limitation,
costs and expenses for pollution control equipment required to bring the
Business into compliance with Environmental Laws and fines, penalties and
defense costs incurred for such reasonable time after the Closing as it takes
Buyer to come into compliance).
"Excluded Assets" has the meaning as described in Section 1.2.
"Excluded Liabilities" has the meaning as described in Section 1.7(b).
"Financial Statement" has the meaning as described in Section 2.4.
"Hazardous Substances" means any hazardous, toxic or polluting
materials, substances, wastes, pollutants or contaminants (including, without
limitation, petroleum and petroleum products, PCBs, radioactive materials,
asbestos or asbestos-containing materials).
"Indemnified Party" and "Indemnifying Party" have the meanings as
described in Section 4.3(b)(iv).
"Initial Collection Period" has the meaning as described in Section
1.4(c).
"Leases" has the meaning as described in Section 2.15(b).
"Lien" or "Liens" means any lien, charge, claim, pledge, security
interest, conditional sale agreement or other
-54-
<PAGE> 58
title retention agreement, lease, tenancy, ground rent, license, mortgage,
security agreement, covenant, condition, restriction, right-of-way, easement,
encroachment, option, judgment or of other encumbrance of matter of title.
"Management" has the meaning as described in Section 2.14(a)(iv).
"Managed" has a similar meaning appropriate for the context.
"MIS Services" has the meaning as described in Exhibit 4.9.
"New Factory" has the meaning as described in the Background Section.
"Non-Competition Term" has the meaning as described in Section 4.4(b).
"Old Factory" has the meaning as described in the Background Section.
"Owned Real Properties" has the meaning as described in Section
2.15(c).
"PCBs" means polychlorinated biphenyls.
"Permitted Real Property Encumbrances" has the meaning as described
in Section 2.15(c).
"Person" means any individual, a corporation, a partnership, an
association, a trust or other entity or organization, including an Authority.
"Personal Property Permitted Encumbrances" has the meaning as
described in Section 2.14.
"Pre-Closing Receivables" has the meaning as described in Section
1.4(b).
"Purchased Assets" has the meaning as described in Section 1.1.
"Purchase Price" has the meaning as described in Section 1.3.
"Real Properties" has the meaning as described in Section 2.15(a).
"Released" means released, spilled, leaked, pumped, poured, emitted,
emptied, discharged, injected, escaped, leached,
-55-
<PAGE> 59
disposed, or dumped and other similar terms. "Release" when used as a verb has
the same meaning, but in the present tense, and when used as a noun has a
similar meaning appropriate for the context.
"Seller's Knowledge" means the knowledge of Seller, after due inquiry
(unless otherwise provided).
"Taxes" and "Tax" have the meanings as described in Section 2.7.
"Transferred Employees" has the meaning as described in Section 4.2.
"Transition Period" has the meaning as described in Section 4.8.
"VAT Price" has the meaning as described in Section 1.3(b).
"Withheld Amount" has the meaning as described in Section 1.4(c).
"Withhold Account" has the meaning as described in Section 1.4(c).
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<PAGE> 60
TRADEMARK LICENSE AGREEMENT
THIS TRADEMARK LICENSE AGREEMENT ("Agreement") is made as of the ______ day of
__________, 1998 between Samsung Heavy Industries, Co., Ltd., a Korean Company
(hereinafter "Licensor") and Clark Material Handling Asia, Inc., a Korean
Company (hereinafter "Licensee") (the Licensor and Licensee are hereinafter
collectively referred to as the "Parties").
WHEREAS:
1. Pursuant to the Asset Purchase Agreement entered into between Licensor and
Clark Material Handling Company on June 5, 1998 (the "Asset Purchase
Agreement") and subsequent assignment of the Asset Purchase Agreement to
Licensee, the Licensor agreed to license to the Licensee the trademarks
attached as Schedule I (the "Trademarks"); and
2. All capitalized terms and expressions, not otherwise defined herein,
shall have the respective meanings assigned thereto in the Asset
Purchase Agreement;
NOW THEREFORE, in consideration of the mutual promises stated herein, the
Parties agree as follows:
Article 1 Grant of License
1.1 By Closing, Licensor shall (i) obtain an exclusive trademark license from
Samsung Electronics Co., Ltd. and (ii) grant to Licensee a non-exclusive
sublicense thereof.
1.2 Licensee shall use the Trademarks in the form and in the manner consistent
with this Agreement and the Samsung CI Manual attached hereto. Licensee
shall use the Trademarks in any new form and manner and with new legends
as may be adopted by Licensor from time to time.
1.3 Licensor shall record Licensee with the Korean Industrial Property Office
as a non-exclusive licensee of the Trademarks. Licensee shall bear any
costs and all costs associated with the registration of the rights granted
herein.
Article 2 Consideration
2.1 The consideration for Licensee's use of the Trademarks shall be three
(3) percent of the total sum of all of Licensee's or its affiliates'
gross sales of forklifts bearing the
<PAGE> 61
Trademarks based on the ex-factory price which shall in no case include:
(a) Sales, turnover and other taxes, including without limitation,
VAT on sale invoices;
(b) Packaging and transportation on shipments to customers; and
(c) Credits allowed for goods sold and returned.
2.2 Licensee shall pay the consideration on a quarterly basis and at such
time Licensee shall provide Seller with a certified report showing the
basis for such quarterly payment.
Article 3 Ownership of Trademark
Licensee recognizes Licensor's ownership of and title to the Trademarks, and
shall not claim adversely to Licensor's right, title, or interest in and to the
Trademarks.
Article 4 Term
The term of this Agreement shall commence as of its signing and shall last for
a period of three (3) years from the date of normal commercial production at
the New Factory and during the Transition Period. Upon the conclusion of the
term of this Agreement, Licensee shall discontinue any and all use of the
Trademarks unless otherwise agreed to by the parties. Licensee shall at no time
after the expiration of the term attempt to register or to use, or to aid any
third party in attempting to register or to use, any trademark(s) or service
mark(s) in any country which may be confusingly similar to the Trademarks. This
covenant shall survive the expiration of the term. Following expiration of the
term, Licensee shall also cooperate with Licensor in order to cancel any
existing Korean recordation or registration of Licensee as a licensed user of
the Trademarks.
Article 5 Termination
This Agreement and the sub-license granted hereby may be terminated immediately
by either Party upon any material breach of the terms herein, provided that,
the non-breaching Party shall provide notice of the breach to the breaching
Party, and the breaching Party shall have 30 days following the receipt of such
notice to cure such breach.
<PAGE> 62
Article 6 Dispute Resolution and Governing Law
This Agreement shall be governed by the choice of law and choice of forum
provisions as specified in the Asset Purchase Agreement.
IN WITNESS WHEREOF the Parties hereto have caused this Agreement to be executed
by their authorized representatives as of the day and year first written above.
Samsung Heavy Industries, Co., Ltd. Clark Material Handling Asia, Inc.
By:_______________________________ By:______________________________
Title:____________________________ Title:___________________________
<PAGE> 63
Exhibit I
Licensed Trademarks
Samsung Mark & Logo
<PAGE> 64
[KOREAN LANGUAGE]
[KOREAN LANGUAGE]
[SAMSUNG LOGO]
[PANTONE 286C]
[KOREAN LANGUAGE]
[SAMSUNG LOGO]
[PROCESS (C100)]
[PROCESS (M50)]
<PAGE> 65
[KOREAN LANGUAGE]
[KOREAN LANGUAGE (PANTONE 286C)]
[SAMSUNG LOGO]
[KOREAN LANGUAGE (PANTONE 677C)]
[SAMSUNG LOGO]
[KOREAN LANGUAGE (40%)]
[SAMSUNG LOGO]
[KOREAN LANGUAGE (100%)]
[SAMSUNG LOGO]
<PAGE> 66
[KOREAN LANGUAGE]
[SAMSUNG LOGO]
[SAMSUNG LOGO]
<PAGE> 67
FX 25B [KOREAN LANGUAGE]
[FX 25B ILLUSTRATION]
[FORKLIFT ILLUSTRATION]
<PAGE> 68
FX10BR [KOREAN LANGUAGE]
[ILLUSTRATION WITH SAMSUNG LOGO]
[ILLUSTRATION OF DEVICE]
<PAGE> 69
TRADEMARK LICENSE AGREEMENT FOR
UNITED STATES PRODUCTION
THIS TRADEMARK LICENSE AGREEMENT ("Agreement") is made as of the ____ day of
_______, 1998 between Samsung Heavy Industries, Co., Ltd., a Korean Company
(hereinafter "Licensor") and Clark Material Handling Company, a Delaware Company
(hereinafter "Licensee") (the Licensor and Licensee are hereinafter collectively
referred to as the "Parties").
WHEREAS:
1. Pursuant to the Asset Purchase Agreement entered into between Licensor and
Clark Material Handling Company on June 5, 1998 (the "Asset Purchase
Agreement") the Licensor agreed to license to the Licensee the trademarks
attached as Schedule I (the "Trademarks"); and
2. All capitalized terms and expressions, not otherwise defined herein, shall
have the respective meanings assigned thereto in the Asset Purchase
Agreement;
NOW THEREFORE, in consideration of the mutual promises stated herein, the
Parties agree as follows.
Article 1 Grant of License
1.1 By Closing, Licensor shall (i) obtain an exclusive trademark license from
Samsung Electronics Co., Ltd. and (ii) grant to Licensee a non-exclusive
sublicense thereof.
1.2 Licensee shall use the Trademarks in the form and in the manner consistent
with this Agreement and the Samsung CI Manual attached hereto. Licensee
shall use the Trademarks in any new form and manner and with new legends as
may be adopted by Licensor from time to time.
1.3 Licensor shall record Licensee with the relevant intellectual or industrial
property office as a non-exclusive licensee of the Trademarks. Licensee
shall bear any costs and all costs associated with the registration of the
rights granted herein.
Article 2 Consideration
2.1 The consideration for Licensee's use of the Trademarks shall be three (3)
percent of the total sum of all of Licensee's or its affiliates' gross
sales of forklifts bearing the
<PAGE> 70
Trademarks based on the ex-factory price which shall in no case include:
(a) Sales, turnover and other taxes, including without limitation,
VAT on sale invoices;
(b) Packaging and transportation on shipments to customers; and
(c) Credits allowed for goods sold and returned.
2.2 Licensee shall pay the consideration on a quarterly basis and at such time
Licensee shall provide Seller with a certified report showing the basis for
such quarterly payment.
Article 3 Ownership of Trademark
Licensee recognizes Licensor's ownership of and title to the Trademarks, and
shall not claim adversely to Licensor's right, title, or interest in and to the
Trademarks.
Article 4 Term
The term of this Agreement shall commence as of its signing and shall last for
a period of six (6) months from the Closing Date. Upon the conclusion of the
term of this Agreement, Licensee shall discontinue any and all use of the
Trademarks unless otherwise agreed to by the parties. Licensee shall at no time
after the expiration of the term attempt to register or to use, or to aid any
third party in attempting to register or to use, any trademark(s) or service
mark(s) in any country which may be confusingly similar to the Trademarks. This
covenant shall survive the expiration of the term. Following expiration of the
term, Licensee shall also cooperate with Licensor in order to cancel any
existing Korean recordation or registration of Licensee as a licensed user of
the Trademarks.
Article 5 Termination
This Agreement and the sub-license granted hereby may be terminated immediately
by either Party upon any material breach of the terms herein, provided that,
the non-breaching Party shall provide notice of the breach to the breaching
Party, and the breaching Party shall have 30 days following the receipt of such
notice to cure such breach.
<PAGE> 71
Article 6 Dispute Resolution and Governing Law
This Agreement shall be governed by the choice of law and choice of forum
provisions as specified in the Asset Purchase Agreement.
IN WITNESS WHEREOF the Parties hereto have caused this Agreement to be
executed by their authorized representatives as of the day and year first
written above.
Samsung Heavy Industries, Co., Ltd. Clark Material Handling Company
By: /s/ B.H. Ahn By: /s/ Kevin M. Reardon
------------------------ ------------------------
Title: /s/ CEO Title: /s/ Vice President
--------------------- ---------------------
<PAGE> 72
Exhibit I
Licensed Trademarks
Samsung Mark & Logo
<PAGE> 73
[KOREAN LANGUAGE]
[KOREAN LANGUAGE]
[SAMSUNG LOGO]
[PANTONE 286C]
[KOREAN LANGUAGE]
[SAMSUNG LOGO]
[PROCESS (C100)]
[PROCESS (M50)]
<PAGE> 74
[KOREAN LANGUAGE]
[KOREAN LANGUAGE (PANTONE 286C)]
[SAMSUNG LOGO]
[KOREAN LANGUAGE (PANTONE 677C)]
[SAMSUNG LOGO]
[KOREAN LANGUAGE (40%)]
[SAMSUNG LOGO]
[KOREAN LANGUAGE (100%)]
[SAMSUNG LOGO]
<PAGE> 75
[KOREAN LANGUAGE]
[SAMSUNG LOGO]
[SAMSUNG LOGO]
<PAGE> 76
FX 25B [KOREAN LANGUAGE]
[FX 25B ILLUSTRATION]
[FORKLIFT ILLUSTRATION]
<PAGE> 77
FX10BR [KOREAN LANGUAGE]
[ILLUSTRATION WITH SAMSUNG LOGO]
[ILLUSTRATION OF DEVICE]
<PAGE> 1
Exhibit 10.31
CLARK MATERIAL HANDLING COMPANY
$20,000,000 10-3/4% Senior Notes due 2006
$20,000,000 13% Senior Exchangeable Preferred Stock due 2007
PURCHASE AGREEMENT
July 13, 1998
JEFFERIES & COMPANY, INC.
11100 Santa Monica Boulevard
10th Floor
Los Angeles, California 90025
BEAR, STEARNS & CO., INC.
245 Park Avenue
New York, New York 10167
Ladies and Gentlemen:
CLARK Material Handling Company, a Delaware corporation (the
"ISSUER"), hereby agrees with each of you as follows:
1. ISSUANCE OF SECURITIES. The Issuer proposes to issue and
sell to the purchasers listed on Schedule A hereto (the "PURCHASERS") (each such
Purchaser in the amount set forth opposite its name on Schedule A hereto)
$20,000,000 aggregate principal amount of its 10-3/4% Series C Senior Notes due
2006 (the "NOTES") and $20,000,000 aggregate liquidation preference of its 13%
Senior Exchangeable Preferred Stock due 2007 (the "SENIOR PREFERRED STOCK" and,
together with the Notes, the "OFFERED SECURITIES"). The Notes will be issued
pursuant to an indenture (the "INDENTURE") to be dated as of July 17, 1998,
between the Issuer and United States Trust Company of New York, as trustee (the
"TRUSTEE"). The shares of Senior Preferred Stock will be issued pursuant to a
certificate of designation of the powers, preferences and relative,
participating, optional and other special rights and qualifications, limitations
and restrictions thereof (the "CERTIFICATE OF DESIGNATION")
The Offered Securities will be offered and sold to the
Purchasers pursuant to an exemption from the registration requirements under the
Securities Act of 1933, as amended
<PAGE> 2
(the"ACT"). The Issuer has prepared an offering circular, dated July 14, 1998
(the "OFFERING CIRCULAR"), relating to the offer and sale of the Offered
Securities (the "OFFERING").
The Offered Securities are being sold in connection with the
acquisition of the forklift division ("SAMSUNG FORKLIFT") of Samsung Heavy
Industries Co., Ltd. ("SAMSUNG") (the "ACQUISITION") pursuant to an Asset
Purchase Agreement, dated as of June 5, 1998, by and between Samsung and the
Issuer (the "ASSET PURCHASE AGREEMENT").
Upon original issuance thereof, and until such time as the
same is no longer required under the applicable requirements of the Act, the
Offered Securities shall bear the following legend:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE
DATE THAT IS THREE YEARS (OR SUCH SHORTER PERIOD THAT MAY
HEREAFTER BE PROVIDED UNDER RULE 144(K) AS PERMITTING RESALES
BY NON-AFFILIATES OF RESTRICTED SECURITIES WITHOUT
RESTRICTION) AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF
AND THE LAST DATE ON WHICH CLARK MATERIAL HANDLING COMPANY
(THE "COMPANY") OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER
OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY) ONLY
(A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT,
(C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A) THAT PURCHASES FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF
2
<PAGE> 3
A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT
THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D)
PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR IN
OFFSHORE TRANSACTIONS AND WITHOUT DIRECTED SELLING EFFORTS
WITHIN THE MEANINGS OF SUCH TERMS AS DEFINED IN REGULATION S
UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF RULE 501(A)(1), (2), (3) OR
(7) UNDER THE SECURITIES ACT THAT IS PURCHASING THE SECURITY
FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES
AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION
WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR
(F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO
THE COMPANY'S AND THE TRUSTEE'S/TRANSFER AGENT'S RIGHT PRIOR
TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D),
(E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO EACH
OF THEM, AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE OF
TRANSFER IN THE FORM APPEARING ON THIS SECURITY IS COMPLETED
AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE/TRANSFER AGENT.
2. AGREEMENTS TO SELL AND PURCHASE. On the basis of the
representations, warranties and agreements contained herein, and subject to the
terms and conditions hereof, the Issuer agrees to sell to each of the
Purchasers, and each of the Purchasers agrees, severally and not jointly, to
purchase from the Issuer, (i) the aggregate principal amount of Notes set forth
opposite such Purchaser's name on Schedule A hereto and (ii) the aggregate
liquidation preference of Senior Preferred Stock set forth opposite such
Purchaser's name on Schedule A hereto. The purchase price for the Notes shall be
100% of the principal amount thereof, plus accrued interest, if any, from May
15, 1998. The purchase price for the Senior Preferred Stock shall be $960 per
share, plus accrued dividends, if any, from the date of issuance.
3. TERMS OF OFFERING. The Purchasers have advised the Issuer
that the Purchasers will make offers to sell (the "EXEMPT RESALES") some or all
of the Offered Securities purchased by the Purchasers hereunder on the terms set
forth in the Offering
3
<PAGE> 4
Circular, as amended or supplemented, solely to (i) persons whom the Purchasers
reasonably believe to be "qualified institutional buyers" as defined in Rule
144A under the Act ("QIBs") and (ii) a limited number of institutional
"accredited investors," as defined in Rule 501(a)(1), (2), (3) or (7) under the
Act ("ACCREDITED INVESTORS") (such persons specified in clauses (i) and (ii)
being referred to herein as the "ELIGIBLE PURCHASERS").
Holders of the Notes (including subsequent transferees) will
have the registration rights set forth in the registration rights agreement (the
"NOTES REGISTRATION RIGHTS AGREEMENT") to be executed on and dated as of the
Closing Date (defined below). Holders of the Senior Preferred Stock (including
subsequent transferees) will have the registration rights set forth in the
registration rights agreement (the "PREFERRED STOCK REGISTRATION RIGHTS
AGREEMENT" and, together with the Notes Registration Rights Agreement, the
"REGISTRATION RIGHTS AGREEMENTS"), to be executed on and dated as of the Closing
Date. Pursuant to the Registration Rights Agreements, the Issuer will agree,
among other things, to file with the Securities and Exchange Commission (the
"COMMISSION") (i) a registration statement under the Act (the "EXCHANGE OFFER
REGISTRATION STATEMENT") relating to, among other things, the 10-3/4% Series D
Senior Notes due 2006 of the Issuer (the "EXCHANGE SENIOR NOTES"), and the 13%
Series B Senior Exchangeable Preferred Stock Due 2007 of the Issuer (the
"EXCHANGE SENIOR PREFERRED STOCK" and, together with the Exchange Senior Notes,
the "EXCHANGE SECURITIES") identical in all material respects to the Notes and
the Senior Preferred Stock (except that the Exchange Securities shall have been
registered pursuant to such registration statement) to be offered in exchange
for the Notes and the Senior Preferred Stock (such offer to exchange being
referred to as the "REGISTERED EXCHANGE Offer") and/or (ii) under certain
circumstances, a shelf registration statement pursuant to Rule 415 under the Act
(the "SHELF REGISTRATION STATEMENT") relating to the resale by certain holders
of the Notes and the Senior Preferred Stock. Collectively, the Offered
Securities and the Exchange Securities shall be referred to as the "SECURITIES."
This Agreement, the Indenture, the Certificate of Designation,
the Registration Rights Agreements, the Notes, the Senior Preferred Stock, the
Asset Purchase Agreement and all other documents or instruments executed by the
Issuer or any of its Subsidiaries in connection with the transactions
contemplated hereby and thereby are referred to herein as the "DOCUMENTS." The
transactions contemplated by the Documents, including, without limitation, (a)
the Offering and the use of the proceeds therefrom as described in the Offering
Circular and (b) the Acquisition, are collectively referred to herein as the
"TRANSACTIONS."
4. DELIVERY AND PAYMENT. Delivery to the Purchasers of and
payment for the Offered Securities shall be made at a Closing (the "CLOSING") to
be held at 9:00 a.m., New York time, on July 17, 1998 (the "CLOSING DATE") at
the offices of Dechert Price & Rhoads,
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30 Rockefeller Plaza, New York, New York 10112. The Closing Date and the
location of delivery of and the form of payment for the Offered Securities may
be varied by agreement between the Purchasers and the Issuer.
The Issuer shall deliver to the Purchasers (i) one or more
certificates representing the Notes and the Senior Preferred Stock
(collectively, the "GLOBAL SECURITIES"), each in definitive form, registered in
the name of Cede & Co., as nominee of The Depository Trust Company ("DTC"), or
such other names as the Purchasers may request upon at least two business day's
notice to the Issuer, in an amount corresponding to the aggregate principal
amount or liquidation preference, as applicable, of the Notes and the Senior
Preferred Stock sold pursuant to Exempt Resales to QIBs and (ii) one or more
certificates representing the Notes and the Senior Preferred Stock
(collectively, the "INDIVIDUAL SECURITIES"), each in definitive form, registered
in such names and denominations as the Purchasers may so request, in an
aggregate amount corresponding to the aggregate principal amount or liquidation
preference, as applicable, of the Notes and the Senior Preferred Stock sold
pursuant to Exempt Resales to Accredited Investors, in each case against payment
by the Purchasers of the purchase price therefor by immediately available
Federal funds bank wire transfer to such bank account as the Issuer shall
designate at least two business days prior to the Closing. In compensation of
delivery of payment by the Purchasers in same day funds, the Company hereby
acknowledges that the Purchasers will deduct from the purchase price an amount
equal to Jefferies and Company, Inc.'s one-day cost of funds with respect
thereto.
The Global Securities and the Individual Securities in
definitive form shall be made available to the Purchasers for inspection at the
New York offices of Dechert Price & Rhoads (or such other place as shall be
acceptable to the Purchasers) not later than 9:30 a.m. on the business day
immediately preceding the Closing Date. For purposes of this Section 4,
"business day" means each day other than Saturday or Sunday which is not a day
on which banking institutions in New York are generally authorized or obligated
by law to close.
5. AGREEMENTS OF THE ISSUER. The Issuer hereby agrees with
each of the Purchasers as follows:
(a) The Issuer shall (i) advise the Purchasers
promptly after obtaining knowledge (and, if requested by the
Purchasers, confirm such advice in writing) of (A) the issuance by any
state securities commission of any stop order suspending the
qualification or exemption from qualification of any of the Securities
for offering or sale in any jurisdiction, or the initiation of any
proceeding for such purpose by any state securities commission or other
regulatory authority, or (B) the happening of any event that makes any
statement of a material fact made in the Offering Circular untrue or
that requires the making of any additions to or changes in the Offering
Circular in
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<PAGE> 6
order to make the statements therein, in the light of the circumstances
under which they are made, not misleading; (ii) use its best efforts to
prevent the issuance of any stop order or order suspending the
qualification or exemption from qualification of any of the Securities
under any state securities or Blue Sky laws; and (iii) if at any time
any state securities commission or other regulatory authority shall
issue an order suspending the qualification or exemption from
qualification of any of the Securities under any such laws, use its
best efforts to obtain the withdrawal or lifting of such order at the
earliest possible time.
(b) The Issuer shall (i) furnish the Purchasers,
without charge, as many copies of the Offering Circular, and any
amendments or supplements thereto, as the Purchasers may request and
(ii) promptly prepare, upon the Purchasers' request, any amendment or
supplement to the Offering Circular that the Purchasers deem may be
reasonably necessary in connection with Exempt Resales. The Issuer
hereby consents to the use of the Offering Circular, and any amendments
and supplements thereto, by the Purchasers in connection with Exempt
Resales.
(c) The Issuer shall not amend or supplement the
Offering Circular prior to the Closing Date unless the Purchasers shall
previously have been advised thereof and shall not have reasonably
objected thereto within two business days after being furnished a copy
thereof.
(d) So long as either of the Purchasers shall hold
any Securities, (i) if any event shall occur as a result of which, in
the reasonable judgment of the Issuer or the Purchasers, it becomes
necessary or advisable to amend or supplement the Offering Circular in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it is necessary to
amend or supplement the Offering Circular to comply with applicable
law, the Issuer shall forthwith prepare an appropriate amendment or
supplement to the Offering Circular (in form and substance reasonably
satisfactory to the Purchasers) so that (A) as so amended or
supplemented the Offering Circular will not include an untrue statement
of material fact or omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading, and (B) the Offering Circular
will comply with applicable law; and (ii) if it becomes necessary or
advisable to amend or supplement the Offering Circular so that the
Offering Circular will contain all of the information specified in, and
meet the requirements of, Rule 144(A)(d)(4) of the Act, the Issuer
shall forthwith prepare an appropriate amendment or supplement to the
Offering Circular (in form and substance reasonably satisfactory to the
Purchasers)
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so that the Offering Circular, as so amended or supplemented, will
contain the information specified in, and meet the requirements of,
such Rule.
(e) The Issuer shall cooperate with the Purchasers
and the Purchasers' counsel in connection with the qualification of the
Securities under the securities or Blue Sky laws of such jurisdictions
as the Purchasers may reasonably request and continue such
qualification in effect so long as reasonably required for Exempt
Resales; provided, however, that the Issuer shall not be required in
connection therewith to file any general consent to service of process
or to qualify as a foreign corporation or as a dealer in securities in
any jurisdiction where it is not now so qualified or to subject itself
to taxation in respect of doing business in any jurisdiction in which
it is not otherwise so subject.
(f) Whether or not any of the Transactions are
consummated or this Agreement is terminated, the Issuer shall pay (i)
all costs, expenses and fees incident to and in connection with: (A)
the preparation, printing and distribution of the Offering Circular, in
each case including all amendments and supplements thereto (including,
without limitation, financial statements and exhibits), and all
preliminary and final Blue Sky memoranda and all other agreements,
memoranda, correspondence and other documents prepared and delivered in
connection herewith, (B) the printing, processing and distribution
(including, without limitation, word processing and duplication costs)
and delivery of, each of the Documents, (C) the issuance and delivery
of the Securities, including the fees of the Trustee and the Registrar
and Transfer Agent and the cost of their respective personnel, (D) the
qualification of the Securities for offer and sale under the securities
or Blue Sky laws of the several states (including, without limitation,
the reasonable fees and disbursements of the Purchasers' counsel
relating to such registration or qualification), (E) furnishing such
copies of the Offering Circular and all amendments and supplements
thereto as may reasonably have been or be requested for use by the
Purchasers, and (F) the preparation of certificates representing the
Securities (including, without limitation, printing and engraving
thereof); (ii) all fees and expenses of the counsel and accountants of
the Issuer; (iii) all expenses and listing fees in connection with the
application for quotation of the Offered Securities in the National
Association of Securities Dealers, Inc. ("NASD") Automated Quotation
System - PORTAL ("PORTAL"); (iv) all fees and expenses (including fees
and expenses of counsel) of the Issuer in connection with approval of
the Offered Securities by DTC for "book-entry" transfer; and (v) all
fees charged by rating agencies in connection with the rating of the
Securities.
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<PAGE> 8
(g) The Issuer shall use the proceeds from the sale
of the Offered Securities in the manner described in the Offering
Circular under the caption "Use of Proceeds."
(h) To the extent it may lawfully do so, the Issuer
shall not insist upon, plead, or in any manner whatsoever claim or take
the benefit or advantage of, any stay, extension, usury or other law,
wherever enacted, now or at any time hereafter in force, that would
prohibit or forgive the payment of all or any portion of the principal
or liquidation preference of or interest or dividends on the
Securities, or that may affect the covenants or the performance of the
Indenture or the Certificate of Designation. To the extent that it may
lawfully do so, the Issuer hereby expressly waives all benefit or
advantage of any such law, and covenants that it shall not, by resort
to any such law, hinder, delay or impede the execution of any power
granted to the Trustee in the Indenture or the Registrar and Transfer
Agent pursuant to the Certificate of Designation but shall suffer and
permit the execution of every such power as though no such law had been
enacted.
(i) The Issuer shall do and perform all things
required to be done and performed by it under the Documents prior to
and after the Closing Date.
(j) The Issuer shall not, and shall ensure that no
affiliate (as defined in Rule 501(b) of the Act) of the Issuer will,
sell, offer for sale or solicit offers to buy or otherwise negotiate in
respect of any "security" (as defined in the Act) that would be
integrated with the sale of the Offered Securities in a manner that
would require the registration under the Act of the sale to the
Purchasers or to the Eligible Purchasers of the Offered Securities.
(k) For so long as any of the Securities remain
outstanding and are "restricted securities" within the meaning of Rule
144(a)(3) under the Act, during any period in which the Issuer is not
subject to Section 13 or 15(d) of the Securities Exchange Act of 1934,
as amended (the "EXCHANGE Act"), it shall make available, upon request,
to any owner of the Securities in connection with any sale thereof and
any prospective Eligible Purchaser of such Securities from such owner,
the information required by Rule 144A(d)(4) under the Act.
(l) The Issuer shall comply with all of its
agreements set forth in the representation letter of the Issuer to DTC
relating to the approval of the Securities by DTC for "book-entry"
transfer.
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<PAGE> 9
(m) The Issuer shall use its best efforts to effect
the inclusion of the Offered Securities in PORTAL.
(n) The Issuer shall, so long as the Securities are
outstanding, and whether or not it is required to do so by the rules
and regulations of the Commission, furnish to the Trustee and deliver
or cause to be delivered to the holders of the Securities and each
Purchaser (i) all quarterly and annual financial information that would
be required to be contained in a filing with the Commission on Forms
10-Q and 10-K if the Issuer were required to file such Forms, including
for each a "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and, with respect to the annual information
only, a report thereon by the Issuer's independent certified public
accountants and (ii) all reports that would be required to be filed
with the Commission on Form 8-K if the Issuer were required to file
such reports. From and after the time the Exchange Offer Registration
Statement or the Shelf Registration Statement, as the case may be, is
declared effective by the Commission, the Issuer will file such
information with the Commission; provided, that the Commission will
accept such filing.
(o) Except in connection with the Registered Exchange
Offer or the filing of the Shelf Registration Statement, as the case
may be, the Issuer shall not, and shall not authorize or knowingly
permit any person acting on its behalf to (i) distribute any offering
material in connection with the offering and sale of the Securities
other than the Offering Circular and any amendments and supplements to
the Offering Circular prepared in compliance with Section 5(c) hereof
or (ii) solicit any offer to buy or offer to sell the Securities by
means of any form of general solicitation or general advertising
(including, without limitation, as such terms are used in Regulation D
under the Act) or in any manner involving a public offering within the
meaning of Section 4(2) of the Act.
(p) The Issuer shall not, directly or indirectly,
without the prior consent of the Purchasers, offer, sell, grant any
option to purchase, or otherwise dispose (or announce any offer, sale,
grant of any option to purchase or other disposition) of any debt
securities of the Issuer (other than any private loan, credit or
financing agreement with a bank or similar institution) for a period of
180 days after the date of the Offering Circular, except as
contemplated by the Registration Rights Agreements.
(q) For so long as either of the Purchasers shall
hold any Securities, the Issuer shall promptly notify each Purchaser in
writing if the Issuer or any of its Affiliates becomes a party in
interest or a disqualified person with respect to any
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<PAGE> 10
funded employee benefit plan. The terms "ERISA," "Affiliates," "party
in interest," "disqualified person" and "employee benefit plan" shall
have the meanings as set forth in Section 6(v) hereof. Upon the request
of the Issuer, each Purchaser shall promptly notify the Issuer when
such Purchaser no longer owns any Securities.
6. REPRESENTATIONS AND WARRANTIES OF THE ISSUER. The Issuer
represents and warrants to each of the Purchasers that:
(a) The Offering Circular as of its date did not and
as of the Closing Date will not, and each supplement or amendment to
the Offering Circular as of its date will not, contain any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
that the representation and warranty set forth in this sentence does
not apply to statements contained in the Offering Circular made in
reliance upon and in conformity with information relating to the
Purchasers furnished in writing by or on behalf of the Purchasers
expressly for use therein. No injunction or order has been issued that
would prevent or suspend the issuance or sale of the Securities or the
use of the Offering Circular or any amendment or supplement thereto in
any jurisdiction. The Offering Circular, as of its date contained, and
as of the Closing Date will contain, all of the information specified
in, and meet the requirements of, Rule 144A(d)(4) under the Act. Except
as adequately disclosed in the Offering Circular, to the knowledge of
the Issuer after due inquiry, there are no related party transactions
that would be required to be disclosed in the Offering Circular if the
Offering Circular were a prospectus included in a registration
statement on Form S-1 filed under the Act.
(b) There are no securities of the Issuer registered
under the Exchange Act or listed on a national securities exchange
registered under Section 6 of the Exchange Act or quoted in a United
States automated inter-dealer quotation system.
(c) Each of the Issuer and each Subsidiary (as
defined below) has been duly organized, is validly existing and, in the
case of the Issuer, is in good standing under the laws of its
jurisdiction of organization, and the Issuer and each Subsidiary has
all requisite power and authority to carry on the businesses to be
conducted by it upon consummation of the Acquisition as described in
the Offering Circular and to own, lease and operate the properties and
assets being acquired in the Acquisition. The Issuer and, to the
Issuer's knowledge after due inquiry, each Subsidiary is duly qualified
or licensed to do business and is in good standing as a foreign
corporation authorized to do business in each jurisdiction in which the
nature of such businesses or
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the ownership or leasing of such properties requires such
qualification, except where the failure to be so qualified could not,
singly or in the aggregate, have a material adverse effect on (i) the
properties, business, prospects, operations, or condition (financial or
otherwise) of the Issuer and the Subsidiaries, taken as a whole or (ii)
the ability of the Issuer to perform its obligations under any of the
Documents (a "MATERIAL ADVERSE EFFECT").
(d) Immediately following the Closing, (i) the only
direct or indirect subsidiaries of the Issuer (collectively, the
"SUBSIDIARIES") will be the corporations identified on Schedule 6(d),
each of which is a Guarantor or Foreign Subsidiary (as defined in the
Indenture), and (ii) except as set forth in Schedule 6(d), the Issuer
will directly or indirectly beneficially own 100% of the outstanding
shares of capital stock of each Subsidiary, free and clear of any Lien
(as defined in the Indenture), except for Liens permitted under the
Indenture, and all of such shares of capital stock will be duly
authorized and validly issued, fully paid and nonassessable and not
issued in violation of, or subject to, any preemptive or similar
rights. There are no outstanding (x) securities convertible into or
exchangeable for any capital stock of the Issuer or any of the
Subsidiaries, (y) options, warrants or other rights to purchase or
subscribe for capital stock of the Issuer or any of the Subsidiaries or
securities convertible into or exchangeable for capital stock of the
Issuer or any of the Subsidiaries, or (z) contracts, commitments,
agreements, understandings, arrangements, calls or claims of any kind
relating to the issuance of any capital stock of the Issuer or any of
the Subsidiaries, any such convertible or exchangeable securities or
any such options, warrants or rights, except for the Registration
Rights Agreements. Except as set forth on Schedule 6(d), immediately
following the Closing, the Issuer will not directly or indirectly own
any capital stock or other equity interest in any other person.
(e) All of the outstanding shares of capital stock of
the Issuer, other than the Senior Preferred Stock (which consists
solely of Common Stock), have been duly authorized and validly issued,
are owned beneficially and of record by CMH Holdings Corporation free
and clear of Liens, are fully paid and nonassessable, and were not
issued in violation of, and are not subject to, any preemptive or
similar rights. The table under the caption "Capitalization" in the
Offering Circular (including the footnotes thereto) adequately
discloses, as of its date, the capitalization of the Issuer and its
Subsidiaries on a consolidated basis, after giving effect to the
Transactions, as defined in the Offering Circular. Except as set forth
in such table, immediately following the Closing, neither the Issuer
nor any of the Subsidiaries shall have any liabilities, absolute,
accrued, contingent or otherwise, other than any such liabilities that
either (x) are reflected in the Historical Financial Statements
(defined below), or
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(y) were incurred subsequent to the date thereof in the ordinary course
of business and could not, singly or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(f) Except for this Agreement and the Registration
Rights Agreements, neither the Issuer nor any of the Subsidiaries has
entered into any agreement (i) to register its securities under the Act
or (ii) to purchase or offer to purchase any securities of the Issuer,
any of the Subsidiaries or any of their respective affiliates.
(g) The Issuer has all requisite power and authority
to enter into, deliver and perform its obligations under the Documents
and to consummate the transactions contemplated hereby and thereby. The
Documents (other than the Securities) have been duly and validly
authorized by the Issuer, and this Agreement is, and when executed and
delivered on the Closing Date each Document (other than the Securities)
will be, a legal, valid and binding obligation of the Issuer,
enforceable against the Issuer in accordance with its terms, except
that (i) the enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer, fraudulent conveyance or other similar laws relating to or
affecting creditors' rights generally, (ii) the availability of
equitable remedies may be limited by equitable principles of general
applicability (regardless of whether in a proceeding in equity or at
law), and (iii) in the case of the Registration Rights Agreements,
rights to indemnity may be limited by state or Federal laws relating to
securities or by policies underlying such laws. On the Closing Date,
the Indenture, the Certificate of Designation, the Offered Securities,
the Registration Rights Agreements and the Asset Purchase Agreement
will conform in all material respects to the description thereof in the
Offering Circular. On the Closing Date, the Indenture will conform in
all material respects to the requirements of the Trust Indenture Act of
1939, as amended (the "TIA"), applicable to an indenture that is
required to be qualified under the TIA.
(h) The Notes have been duly and validly authorized
by the Issuer for issuance and sale to the Purchasers pursuant to this
Agreement and, when executed and authenticated in accordance with the
terms of the Indenture and delivered to and paid for by the Purchasers
in accordance with the terms hereof, will be legal, valid and binding
obligations of the Issuer, enforceable against the Issuer in accordance
with their terms, except that (i) the enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer, fraudulent conveyance or other similar
laws relating to or affecting creditors' rights generally and (ii) the
availability of equitable remedies may be limited by equitable
principles of general applicability (regardless of whether in a
proceeding in equity or at law).
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(i) The Exchange Senior Notes have been duly and
validly authorized by the Issuer and, when executed, authenticated and
delivered in accordance with the terms of the Indenture and the
Registration Rights Agreements, will be legal, valid and binding
obligations of the Issuer, enforceable against the Issuer in accordance
with their terms, except that (i) the enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer, fraudulent conveyance or other similar
laws relating to or affecting creditors' rights generally and (ii) the
availability of equitable remedies may be limited by equitable
principles of general applicability (regardless of whether in a
proceeding in equity or at law). The Certificate of Designation has
been duly authorized by the Issuer and will be, on or prior to the
Closing Date, filed with the Secretary of State of the State of
Delaware. The issuance and sale of the shares of Senior Preferred Stock
will be, on or prior to the Closing Date, duly authorized by the
Issuer's charter documents and have been duly authorized by the Issuer
and, when issued by the Issuer and paid for by the Purchasers in
accordance with the terms hereof, such shares will be duly and validly
issued, fully paid and nonassessable and free of any preemptive or
similar rights. The certificate of incorporation of the Issuer, by
virtue of the Certificate of Designation, will, as of the Closing Date,
set forth the rights, preferences and provisions of the Senior
Preferred Stock, and the holders thereof will be entitled to the
benefits of the provisions set forth in the Certificate of Designation
as provided therein. The issuance of the shares of Exchange Senior
Preferred Stock will be, on or prior to the Closing Date, duly
authorized by the Issuer's charter documents and have been duly
authorized by the Issuer and, when issued by the Issuer in accordance
with the terms of the Registration Rights Agreements, such shares will
be duly and validly issued, fully paid and nonassessable and free of
any preemptive or similar rights. The certificate of incorporation of
the Issuer, by virtue of the Certificate of Designation, will, as of
the Closing Date, set forth the rights, preferences and provisions of
the Exchange Senior Preferred Stock, and the holders thereof will be
entitled to the benefits of the provisions set forth in the Certificate
of Designation as provided therein. United States Trust Company of New
York has agreed to be the registrar and transfer agent for the Senior
Preferred Stock (the "REGISTRAR AND TRANSFER AGENT").
(j) The 13% Subordinated Notes due 2007 of the Issuer
(the "PREFERRED STOCK EXCHANGE NOTES"), on the date of issuance
thereof, will be duly and validly authorized by the Issuer for issuance
to the holders of shares of Preferred Stock in exchange for such shares
of Preferred Stock pursuant to the Certificate of Designation and, when
executed and authenticated in accordance
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with the terms of the indenture relating to the Preferred Stock
Exchange Notes, and delivered in accordance with the terms of the
Certificate of Designation, will be legal, valid and binding
obligations of the Issuer, enforceable against the Issuer in accordance
with their terms, except that (i) the enforceability thereof may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer, fraudulent conveyance or other similar
laws relating to or affecting creditors' rights generally and (ii) the
availability of equitable remedies may be limited by equitable
principles of general applicability (regardless of whether in a
proceeding in equity or at law).
(k) Neither the Issuer nor any of the Subsidiaries is
(i) in violation of its respective charter or by-laws (collectively,
"CHARTER DOCUMENTS"), other than violations with respect to Charter
Documents of Subsidiaries that could not, singly or in the aggregate,
reasonably be expected to result in a Material Adverse Effect, (ii)
other than violations that could not, singly or in the aggregate,
reasonably be expected to result in a Material Adverse Effect, in
violation of any Federal, state, local or foreign statute, law
(including, without limitation, common law) or ordinance, or any
judgment, decree, rule, regulation or order (collectively, "APPLICABLE
LAW") of any government, governmental or regulatory agency or body,
court or arbitrator, domestic or foreign (each, a "GOVERNMENTAL
AUTHORITY"), or (iii) other than breaches or defaults that could not,
singly or in the aggregate, reasonably be expected to result in a
Material Adverse Effect, in breach of or default under (with the
passage of time or otherwise) any bond, debenture, note or other
evidence of indebtedness, indenture, mortgage, deed of trust, lease or
any other agreement or instrument to which any such person is a party
or by which any of them or their respective property is bound
(collectively, "APPLICABLE AGREEMENTS").
(l) Neither the execution, delivery or performance of
the Documents by the Issuer, nor the consummation of the Transactions
shall conflict with, violate, constitute a breach of or a default (with
the passage of time or otherwise) under, or result in the imposition of
a Lien on any assets of the Issuer or any of the Subsidiaries (except
pursuant to the Indenture), or result in an acceleration of
indebtedness of the Issuer or any of the Subsidiaries pursuant to (i)
the Charter Documents of the Issuer or any of the Subsidiaries, (ii)
any Applicable Agreement, other than such breaches, violations or
defaults that could not, singly or in the aggregate, result in a
Material Adverse Effect, or (iii) any material Applicable Law.
Immediately after giving effect to the Transactions, no Default or
Event of Default (as defined in the Indenture) will exist.
(m) No permit, authorization, approval, consent,
license or order of, or filing, registration or qualification with, any
Governmental Authority (collectively,
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"PERMITS") and no approval or consent of any other person, is required
in connection with, or as a condition to, the execution, delivery or
performance of any of the Documents by the Issuer or the consummation
of any of the Transactions, other than such Permits, approvals and
consents (i) as have been made or obtained on or prior to the Closing
Date, (ii) as are not required to be made or obtained on or prior to
the Closing Date that will be made or obtained when required, (iii) as
may be required under the rules of the NASD by reason of the action of
the Purchasers, or (iv) those the failure of which to make or obtain
could not, singly or in the aggregate, reasonably be expected to result
in a Material Adverse Effect.
(n) Except as adequately disclosed in the Offering
Circular, there is no action, claim, suit or proceeding (including,
without limitation, an investigation or partial proceeding, such as a
deposition), domestic or foreign (collectively, "PROCEEDINGS"), pending
or, to the knowledge of the Issuer after due inquiry, threatened
against the Issuer, any Subsidiary or, to the knowledge of the Issuer
after due inquiry, any other person, that either (i) seeks to restrain,
enjoin, prevent the consummation of, or otherwise challenge any of the
Documents or any of the Transactions, or (ii) could, singly or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
Neither the Issuer nor any of the Subsidiaries is subject to any
judgment, order, decree, rule or regulation of any Governmental
Authority that could, singly or in the aggregate, have a Material
Adverse Effect (other than any such judgments, orders, decrees, rules
and regulations applicable to the industry generally).
(o) Immediately following the Closing, the Issuer and
each of the Subsidiaries will have such Permits as are necessary to
own, lease and operate the properties and to conduct the businesses
described in the Offering Circular other than those the failure of
which to have could not, singly or in the aggregate, reasonably be
expected to result in a Material Adverse Effect. All such Permits are
in full force and effect. No event has occurred which allows, or after
notice or lapse of time would allow, the imposition of any material
penalty, or the revocation or termination by the issuer thereof, or
that results or will result in any material impairment of the rights of
the holder of any such Permits. To the knowledge of the Issuer after
due inquiry, no issuer is considering limiting, suspending or revoking
any such Permit.
(p) Immediately following the Closing, the Issuer and
the Subsidiaries (i) will have good and marketable title, free and
clear of all Liens (except for Liens permitted under the Indenture), to
all property and assets described in the Offering Circular as being
owned by them and (ii) will enjoy, in all material respects, peaceful
and undisturbed possession under all real property leases to which it
is a party as
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lessee. Immediately following the Closing, all Applicable Agreements
will be in full force and effect and legal, valid and binding
obligations of the Issuer, the Subsidiaries and to the knowledge of the
Issuer after due inquiry, all other parties thereto, and no default by
the Issuer, any of the Subsidiaries, or to the knowledge of the Issuer
after due inquiry, any other person, will have occurred or be
continuing thereunder, other than such defaults that could not, singly
or in the aggregate, have a Material Adverse Effect. Immediately
following the Closing, the Issuer and the Subsidiaries will have
insurance (including self-insurance consistent with prior practice as
adequately disclosed in the Offering Circular) covering their
properties, operations, personnel and businesses against such losses
and risks as they reasonably deem adequate in accordance with customary
industry practice.
(q) All tax returns required to be filed by the
Issuer and the Subsidiaries in any jurisdiction (including foreign
jurisdictions) have been filed and when filed by the Issuer or its
Subsidiaries, as the case may be, were accurate in all material
respects. All taxes, assessments, fees and other charges (including,
without limitation, withholding taxes, penalties and interest) due or
claimed to be due from such entities have been paid, other than those
being contested in good faith by appropriate proceedings, or those that
are currently payable without penalty or interest and, in each case,
for which an adequate reserve or accrual has been established on the
books and records of the Issuer in accordance with generally accepted
accounting principles of the United States, consistently applied
("GAAP") or in respect of which the Issuer has the right to be
indemnified. There is no actual or proposed additional tax assessments
for any fiscal period against the Issuer or any of the Subsidiaries
that could, singly or in the aggregate, have a Material Adverse Effect.
The charges, accruals and reserves on the books of each of the Issuer
and the Subsidiaries in respect of any income and tax liability for any
years not finally determined are adequate to meet any assessments or
re-assessments for additional income tax for any years not finally
determined.
(r) Immediately following the Closing, the Issuer and
each of the Subsidiaries will own, or be licensed under, and have the
right to use, all patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks and trade names (collectively,
"INTELLECTUAL PROPERTY") currently used in the conduct of the business
as set forth in the Offering Circular. No claims have been asserted in
writing or to the knowledge of the Issuer after due inquiry, otherwise
by any person challenging the use of any such Intellectual Property by
the Issuer or any of the Subsidiaries or questioning the validity or
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<PAGE> 17
effectiveness of any license or agreement related thereto, there is
no valid basis for any such claim (other than any claims that would
not, singly or in the aggregate, reasonably be expected to have a
Material Adverse Effect), and the use of such Intellectual Property by
the Issuer and the Subsidiaries will not infringe on the Intellectual
Property rights of any other person.
(s) The financial statements and related notes
contained in the Offering Circular (the "HISTORICAL FINANCIAL
STATEMENTS") present fairly in all material respects the combined
financial position, results of operations and cash flows of the
entities named therein as of the respective dates and for the
respective periods to which they apply and have been prepared in
accordance with GAAP (except as disclosed therein) and the requirements
of Regulation S-X that would be applicable if the Offering Circular
were a prospectus included in a registration statement on Form S-1
filed under the Act.
The unaudited pro forma financial statements and
related notes set forth under the caption "Unaudited Pro Forma Combined
Financial Information" included in the Offering Circular (the "PRO
FORMA FINANCIAL STATEMENTS" and together with the Historical Financial
Statements, the "FINANCIAL STATEMENTS") (i) have been derived from the
Historical Financial Statements and comply with the rules and
guidelines of the Commission with respect to pro forma financial
statements and (ii) in the Issuer's reasonable opinion, the assumptions
used in the preparation thereof are reasonable and the adjustments used
therein are appropriate to give effect to the transactions specified
therein and the circumstances referred to therein. Except as adequately
disclosed in the Offering Circular, the summary and selected pro forma
financial data included in the Offering Circular have been derived from
the Pro Forma Financial Statements.
All other financial data included in the Offering
Circular are fairly and accurately presented in all material respects
and are derived from or prepared on a basis consistent with the
Historical Financial Statements and the books and records of the
Issuer, except as otherwise disclosed in the Offering Circular. Price
Waterhouse LLP are independent public accountants under Rule 101 of
AICPA's Code of Professional Conduct and its interpretations and
rulings.
(t) Subsequent to the respective dates as of which
information is given in the Offering Circular, except as adequately
disclosed in the Offering Circular, there has not been any material
adverse change in the properties, business, prospects, operations or
condition (financial or otherwise) of the Issuer and the Subsidiaries
taken as a whole (a "MATERIAL ADVERSE CHANGE"). To the knowledge of the
Issuer after due
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<PAGE> 18
inquiry, there is no event that is reasonably likely to occur, which if
it were to occur, could, singly or in the aggregate, reasonably be
expected to have a Material Adverse Effect, except such events that
have been adequately disclosed in the Offering Circular.
(u) Immediately following the Closing, after giving
effect to the Transactions (i) the present fair salable value of the
assets of the Issuer will exceed the amount that will be required to be
paid on or in respect of the then existing debts and other liabilities
(including contingent liabilities) of the Issuer as they become
absolute and matured and (ii) the Issuer will not have an unreasonably
small capital to carry on the businesses proposed to be conducted by
it. The Issuer does not intend to, and does not believe that it will,
incur debts beyond its ability to pay such debts as they mature.
(v) Except as contemplated by this Agreement, neither
the Issuer nor any of its affiliates has (i) taken, directly or
indirectly, any action designed to cause or to result in, or that has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of the
Issuer to facilitate the sale or resale of any of the Securities or
(ii) except as disclosed in the Offering Circular, (A) sold, bid for,
purchased, or paid anyone any compensation for soliciting purchases of,
any of the Securities or (B) paid or agreed to pay to any person any
compensation for soliciting another to purchase any other securities of
the Issuer.
(w) No registration under the Act, and no
qualification of the Indenture under the TIA, was or is required for
the sale of the Offered Securities to the Purchasers as contemplated
hereby or for the Exempt Resales, assuming (i) that the Eligible
Purchasers who buy the Offered Securities in the Exempt Resales are
QIBs or institutional Accredited Investors, (ii) the accuracy of the
Purchasers' representations contained herein regarding the absence of
general solicitation in connection with the sale of the Offered
Securities to the Purchasers and the Exempt Resales, and (iii) the
accuracy of the representations made by each Accredited Investor who
purchases the Offered Securities pursuant to an Exempt Resale as set
forth in the letters of representation in the form of Annex A to the
Offering Circular. No form of general solicitation or general
advertising was used by the Issuer or any of its affiliates or any of
their representatives in connection with the offer and sale of any of
the Offered Securities or in connection with Exempt Resales including,
but not limited to, the methods described in Rule 502(c) of Regulation
D under the Act. No securities of the same class as any of the Offered
Securities have been offered, issued or sold by the Issuer or any of
its affiliates within the six-month period immediately prior to the
date hereof.
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<PAGE> 19
(x) Neither the Issuer nor any of its "Affiliates" is
a "party in interest" or a "disqualified person" with respect to any
funded employee benefit plans. No condition exists or event or
transaction has occurred in connection with any employee benefit plan
that could result in the Issuer or any such "Affiliate" incurring any
liability, fine or penalty that could, singly or in the aggregate, have
a Material Adverse Effect. The terms "employee benefit plan" and "party
in interest" shall have the meanings assigned to such terms in Section
3 of the Employee Retirement Income Security Act of 1974, as amended,
or the rules and regulations promulgated thereunder ("ERISA"), the term
"Affiliate" shall have the meaning assigned to such term in Section
407(d)(7) of ERISA, and the term "disqualified person" shall have the
meaning assigned to such term in section 4975 of the Internal Revenue
Code of 1986, as amended, and the rules, regulations and published
interpretations promulgated thereunder (the "CODE").
(y) None of the Transactions will violate or result
in a violation of Section 7 of the Exchange Act (including, without
limitation, Regulation T (12 C.F.R. Part 220), Regulation U (12 C.F.R.
Part 221) or Regulation X (12 C.F.R. Part 224) of the Board of
Governors of the Federal Reserve System). Neither the Issuer nor any of
the Subsidiaries is, or after giving effect to the Offering and the
other Transactions contemplated by the Documents, will be (i) an
"investment company" or an entity "controlled" by an "investment
company," as such terms are defined in the Investment Company Act of
1940, as amended, and the rules and regulations and interpretations
promulgated thereunder or (ii) subject to any Federal or state statute
or regulation limiting its ability to incur or assume indebtedness for
borrowed money.
(z) The Issuer has not dealt with any broker, finder,
commission agent or other person (other than the Purchasers) in
connection with the Transactions and neither the Issuer nor any of the
Subsidiaries is under any obligation to pay any broker's fee or
commission in connection with such transactions (other than commissions
and fees to the Purchasers as set forth in the Offering Circular).
(aa) Except as adequately disclosed in the Offering
Circular, there is (i) no unfair labor practice complaint or other
proceeding pending or, to the knowledge of the Issuer after due
inquiry, threatened against the Issuer or any of the Subsidiaries
before the National Labor Relations Board or any state, local or
foreign labor relations board or any industrial tribunal, and no
grievance or arbitration proceeding arising out of or under any
collective bargaining agreement is so pending or threatened, (ii) no
strike, labor dispute, slowdown or stoppage pending or, to the
knowledge of the Issuer after due inquiry, threatened against the
Issuer or any of the Subsidiaries, and (iii) no
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union representation question existing with respect to the employees of
the Issuer or any of the Subsidiaries, and, to the Issuer's knowledge
after due inquiry, no union organizing activities are taking place,
that, in the case of each of such clauses (i), (ii) or (iii) could,
singly or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(bb) Except as adequately disclosed in the Offering
Circular or as otherwise could not reasonably be likely to, singly or
in the aggregate, have a Material Adverse Effect:
(1) no real property or facility to be
owned, used, operated, leased or managed by the Issuer or any
of the Subsidiaries upon consummation of the Closing (the
"REAL PROPERTY") is listed or proposed for listing on the
National Priorities List or the Comprehensive Environmental
Response, Compensation, and Liability Information System, both
promulgated under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"),
or on any other state or local list established pursuant to
any Environmental Law, and neither the Issuer nor any of the
Subsidiaries has received any notification of potential or
actual liability or request for information under CERCLA or
any comparable state or local law;
(2) no underground storage tank, or related
piping, is located on any of the Real Property;
(3) there have been no releases (i.e., any
past or present releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping,
leaching, disposing or dumping, on-site or, to the knowledge
of the Issuer after due inquiry, off-site) of Hazardous
Materials (as defined below) by the Issuer, any of the
Subsidiaries or to the knowledge of the Issuer after due
inquiry, any person or entity whose liability for any such
release of Hazardous Materials, the Issuer or any of the
Subsidiaries has retained or assumed either contractually or
by operation of law at, on, under, or migrating from or into
any of the Real Property;
(4) to the knowledge of the Issuer after due
inquiry, no person or entity whose liability the Issuer or any
of the Subsidiaries has retained or assumed either
contractually or by operation of law (a "THIRD PARTY"), has
any liability, absolute or contingent, under any Environmental
Law, which has been retained or assumed by the Issuer or any
of the Subsidiaries; there is no civil, criminal or
administrative Proceeding, hearing, notice of violation or
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<PAGE> 21
deficiency, notice or demand letter pending or threatened
against the Issuer or any of the Subsidiaries or, to the
knowledge of the Issuer after due inquiry, any Third Party
under any Environmental Law; and
(5) there are no events, activities, or
actions by the Issuer or any of the Subsidiaries or conditions
of any of the Real Property, that are reasonably likely to
prevent compliance by the Issuer or any of the Subsidiaries
with any Environmental Law, or that are reasonably likely to
give rise to any liability under any Environmental Laws.
"ENVIRONMENTAL LAWS" means all Applicable
Laws relating to pollution or protection of human health or
the environment, including, without limitation, laws relating
to (1) emissions, discharges, releases or threatened releases
of pollutants, contaminants, chemicals, or industrial, toxic
or hazardous constituents, substances or wastes, including,
without limitation, asbestos or asbestos-containing materials,
polychlorinated biphenyls, petroleum or any constituents
relating to or arising out of any oil production activities,
including crude oil or any fraction thereof, or any petroleum
product or other wastes, chemicals or substances regulated by
any Environmental Law (collectively referred to as "HAZARDOUS
MATERIALS"), into the environment (including, without
limitation, ambient air, surface water, ground water, land
surface or subsurface strata), (2) the manufacture,
processing, distribution, use, generation, treatment, storage,
disposal, transport or handling of Hazardous Materials, and
(3) underground storage tanks, and related piping, and
emissions, discharges, releases or threatened releases
therefrom.
(cc) No representation or warranty made by the
Issuer, or to the knowledge of the Issuer after due inquiry, any other
person in any of the Documents, was or will be, when made, inaccurate,
untrue or incorrect in any material respect.
7 REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. Each
Purchaser, severally and not jointly, represents and warrants with respect to
itself that:
(a) It is a QIB.
(b) It (i) is not acquiring the Offered Securities
with a view to any distribution thereof that would violate the Act or
the securities laws of any state of the United States or any other
applicable jurisdiction and (ii) will be soliciting offers for the
Offered Securities only from, and will be reoffering and reselling the
Offered Securities only to (A) persons in the United States whom it
reasonably believes to be
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<PAGE> 22
QIBs in reliance on the exemption from the registration requirements of
the Act provided by and in transactions meeting the requirements of
Rule 144A, and (B) a limited number of institutional Accredited
Investors that execute and deliver to the Issuer and the Purchasers a
letter containing certain representations and agreements in the form
attached as Annex A to the Offering Circular.
(c) No form of general solicitation or general
advertising in violation of the Securities Act has been or will be used
by such Purchaser or any of its representatives in connection with the
offer and sale of any of the Offered Securities.
(d) In connection with the Exempt Resales, it will
solicit offers to buy the Offered Securities only from, and will offer
and sell the Offered Securities only to, Eligible Purchasers who, in
purchasing such Offered Securities, will be deemed to have represented
and agreed to the matters set forth under the caption "Notice to
Investors" in the Offering Circular.
(e) It has all requisite power and authority to enter
into, deliver and perform its obligations under this Agreement and the
Registration Rights Agreements and each of this Agreement and the
Registration Rights Agreements has been duly and validly authorized by
it.
8 INDEMNIFICATION.
(a) The Issuer shall, without limitation as to time,
indemnify and hold harmless each Purchaser and each person, if any, who
controls (within the meaning of Section 15 of the Act or Section 20(a)
of the Exchange Act) either Purchaser (any of such persons being
hereinafter referred to as a "CONTROLLING PERSON"), and the respective
officers, directors, partners, employees, representatives and agents of
each Purchaser and any such controlling person, to the fullest extent
lawful, from and against any and all losses, claims, damages,
liabilities, costs (including, without limitation, costs of preparation
and reasonable attorneys' fees) and expenses (including, without
limitation, reasonable costs and expenses incurred in connection with
investigating, preparing, pursuing or defending against any of the
foregoing) (collectively, "LOSSES"), as incurred, directly or
indirectly caused by, related to, based upon, arising out of or in
connection with (i) any untrue statement or alleged untrue statement of
a material fact contained in the Offering Circular (or any amendment or
supplement thereto), or 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 light of the circumstances under
which they were made, not misleading except to the extent any such
untrue statement is based upon and made in conformity with information
furnished
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in writing by such Purchaser expressly for use in the Offering Circular
or (ii) the advice or services rendered to the Issuer pursuant to this
Agreement or in connection with the Transactions or any indemnified
person's actions or inactions in connection with any such advice or
services; provided, that the Issuer shall not be liable to any
indemnified party for any Losses that arise solely from the gross
negligence or willful misconduct of such indemnified party. The Issuer
shall notify the Purchasers promptly of the institution, threat or
assertion of any Proceeding of which the Issuer or any Subsidiary is
aware in connection with the matters addressed by this Agreement which
involves the Issuer, any of the Subsidiaries or any of the indemnified
parties; provided, that the failure to so notify the Purchasers shall
not be actionable hereunder except to the extent (but only to the
extent) that it shall be finally determined by a court of competent
jurisdiction (which determination is not subject to appeal) that either
Purchaser has been prejudiced materially by such failure. In no event
shall the indemnifying parties be liable for the fees and expenses of
more than one counsel (in addition to local counsel) for all
indemnified parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the
same set of allegations or circumstances. The counsel with respect to
which fees and expenses shall be so reimbursed shall be designated in
writing by Jefferies & Company, Inc. in the case of parties indemnified
pursuant to Section 8(a) and by the Issuer in the case of parties
indemnified pursuant to Section 8(c).
(b) If any Proceeding shall be brought or asserted
against any person entitled to indemnification hereunder (an
"INDEMNIFIED PARTY"), such Indemnified Party shall give prompt written
notice to the indemnifying party; provided, that the failure to so
notify the indemnifying party shall not relieve the indemnifying party
from any obligation or liability except to the extent (but only to the
extent) that it shall be finally determined by a court of competent
jurisdiction (which determination is not subject to appeal) that the
indemnifying party has been prejudiced materially by such failure. No
indemnifying party shall be liable for any settlement of any Proceeding
effected without its prior written consent, which consent shall not be
unreasonably withheld.
Without the consent of the Purchasers, which consent
shall not be unreasonably withheld, neither the Issuer nor any of its
Subsidiaries shall consent to entry of any judgment in or enter into
any settlement of any pending or threatened Proceeding in respect of
which indemnification or contribution may be sought hereunder (whether
or not any Indemnified Party is a party thereto) unless such judgment
or settlement includes as an unconditional term thereof the giving by
the claimant or plaintiff to each Indemnified Party of a release, in
form and substance
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<PAGE> 24
satisfactory to the Purchasers, from all Losses that may arise from
such Proceeding or the subject matter thereof.
(c) Each of the Purchasers agrees, severally and not
jointly, to indemnify and hold harmless the Issuer and each person, if
any, who controls (within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act) the Issuer (any of such persons
being hereinafter referred to as a "CONTROLLING PERSON"), and the
officers, directors, partners, employees, representatives and agents of
the Issuer and any such controlling person to the same extent as the
foregoing indemnity from the Issuer to each of the Indemnified Parties,
but only with respect to claims and actions based on information
relating to such Purchaser in the Offering Circular that is made in
reliance on and in conformity with information furnished in writing by
such Purchaser expressly for use in the Offering Circular.
The Issuer hereby acknowledges that the statements
relating to the Purchasers contained in the third and fourth paragraphs
under the "Plan of Distribution" section of the Offering Circular
constitute the only information furnished in writing by any of the
Purchasers to the Issuer for all purposes hereof.
(d) If the indemnification provided for in this
Section 8 is unavailable to an Indemnified Party or is insufficient to
hold such Indemnified Party harmless for any Losses in respect of which
this Section 8 would otherwise apply by its terms (other than by reason
of exceptions provided in this Section 8), 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 (i) in such proportion as is appropriate to reflect the
relative benefits received by the Issuer, on the one hand, and the
Purchasers, on the other hand, from the offering of the Offered
Securities 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 the Issuer, on the one hand, and
the Purchasers, on the other hand, in connection with the actions,
statements or omissions that resulted in such Losses, as well as any
other relevant equitable considerations. The relative benefits received
by the Issuer, on the one hand, and the Purchasers, on the other hand,
shall be deemed to be in the same proportion as the total net proceeds
from the offering (before deducting expenses) received by the Issuer,
and the total discounts and commissions received by the Purchasers,
bear to the total price of the Offered Securities in Exempt Resales in
each case as set forth in the table on the cover page of the Offering
Circular. The relative fault of the Issuer, on the one hand, and the
Purchasers, on the other hand, shall be determined by reference to,
among other things, whether any untrue or alleged untrue statement of a
material fact or omission or alleged
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<PAGE> 25
omission to state a material fact relates to information supplied by
the Issuer, on the one hand, or the Purchasers, on the other hand, and
the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The
amount paid or payable by an Indemnified Party as a result of any
Losses shall be deemed to include any legal or other fees or expenses
incurred by such party in connection with any Proceeding, to the extent
such party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section 8 was available to such
party.
Each party hereto agrees that it would not be just
and equitable if contribution pursuant to this Section 8(d) were
determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to
in the immediately preceding paragraph. Notwithstanding the provisions
of this Section 8(d), the Purchasers shall not be required to
contribute, in the aggregate, any amount in excess of the amount by
which the total discounts and commissions received by them with respect
to the Offered Securities exceeds the amount of any damages that the
Purchaser has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation.
(e) The indemnity and contribution agreements
contained in this Section 8 are in addition to any liability that any
party hereto may otherwise have to the Indemnified Parties.
9 CONDITIONS.
(a) The obligation of the Purchasers to purchase the
Offered Securities under this Agreement is subject to the satisfaction
or waiver of each of the following conditions:
(i) All the representations and warranties
of the Issuer in this Agreement shall be true and correct in
all material respects (other than representations and
warranties with a materiality qualifier, which shall be true
and correct as written) at and as of the Closing Date after
giving effect to the Transactions with the same force and
effect as if made on and as of such date. On or prior to the
Closing Date, the Issuer shall have performed or complied in
all material respects with all of the agreements and satisfied
in all material respects all conditions on its part
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<PAGE> 26
to be performed, complied with or satisfied pursuant to the
Documents; and nothing shall have come to the attention of the
Issuer to lead it to believe that any other party to the
Documents (other than the Purchasers) has not performed or
complied in all material respects with all of the agreements
and satisfied in all material respects all conditions on their
respective parts to be performed, complied with or satisfied
pursuant to the Documents.
(ii) The Offering Circular shall have been
printed and copies made available to the Purchasers not later
than 12:00 noon, New York City time, on the first business day
following the date of this Agreement or at such later date and
time as the Purchasers may approve.
(iii) No injunction, restraining order or
order of any nature by a Governmental Authority shall have
been issued as of the Closing Date that would prevent or
interfere with the consummation of any of the Transactions;
and no stop order suspending the qualification or exemption
from qualification of any of the Offered Securities in any
jurisdiction shall have been issued and no Proceeding for that
purpose shall have been commenced or be pending or
contemplated.
(iv) No action shall have been taken and no
Applicable Law shall have been enacted, adopted or issued that
would, as of the Closing Date, prevent the consummation of any
of the Transactions. No Proceeding shall be pending or
threatened other than Proceedings that (A) if adversely
determined could not, singly or in the aggregate, adversely
affect the issuance or marketability of the Offered Securities
and (B) could not reasonably be expected to have a Material
Adverse Effect.
(v) Since the date as of which information
is given in the Offering Circular, there shall not have been
any Material Adverse Change.
(vi) The Securities shall have (A) been
designated PORTAL securities in accordance with the rules and
regulations adopted by the NASD relating to trading in the
PORTAL market, and (B) received a rating of B+ and B1 from
Standard & Poor's Corporation and Moody's Investors Services,
Inc., respectively, which ratings shall not have been altered.
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(vii) The Purchasers shall have received on
the Closing Date (A) certificates dated the Closing Date,
signed by (1) the Chief Executive Officer and (2) the
principal financial or accounting officer of the Issuer, on
behalf of the Issuer, (x) confirming the matters set forth in
paragraphs (i) through (v) of this Section 9(a) and (y)
certifying as to such other matters as the Purchasers may
reasonably request, (B) a certificate, dated the Closing Date,
signed by the Secretary of the Issuer, certifying such matters
as the Purchasers may reasonably request, and (C) a
certificate, dated the Closing Date, signed by the principal
financial or accounting officer of the Issuer substantially in
the form previously approved by the Purchasers.
(viii) The Purchasers shall have received,
on the Closing Date, an opinion and a letter (each reasonably
satisfactory in form and substance to the Purchasers and
counsel to the Purchasers), dated the Closing Date, of Dechert
Price & Rhoads, special counsel to the Issuer, substantially
in the form of Exhibits A-1 and A-2 hereto.
(ix) The Purchasers shall have received on
the Closing Date an opinion, dated the Closing Date, of
Skadden, Arps, Slate, Meagher & Flom LLP, in form and
substance reasonably satisfactory to the Purchasers covering
such matters as are customarily covered in such opinions.
(x) The Purchasers and the Issuer shall have
received from Price Waterhouse LLP (i) a customary comfort
letter, dated the date of the Offering Circular, in form and
substance reasonably satisfactory to the Purchasers, with
respect to the financial statements and certain financial
information contained in the Offering Circular, and (ii) a
customary comfort letter, dated the Closing Date, in form and
substance reasonably satisfactory to the Purchasers, to the
effect that they reaffirm the statements made in the letter
furnished pursuant to clause (i), except that the specified
date referred to shall be a date not more than five days prior
to the Closing Date.
(xi) The Documents shall have been executed
and delivered by all parties thereto and the Purchasers shall
have received a fully executed original of each Document.
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(xii) On or prior to the Closing Date, the
Transactions shall have been duly consummated; provided, that
the Acquisition shall be deemed to have been consummated if
the only remaining step required for such consummation is the
payment of the purchase price therefor. The Purchasers shall
have received copies of all opinions, certificates, letters
and other documents delivered under or in connection with the
Transactions, including without limitation the Asset Purchase
Agreement, and letters to the effect that the Purchasers may
rely on such opinions, as if addressed to the Purchasers.
(xiii) Counsel to the Purchasers shall have
been furnished with such documents as they may reasonably
require for the purpose of enabling them to review or pass
upon the matters referred to in this Section 9 and in order to
evidence the accuracy, completeness or satisfaction in all
material respects of any of the representations, warranties or
conditions herein contained.
(b) The obligation of the Issuer to sell the Offered
Securities under this Agreement is subject to the satisfaction or
waiver of each of the following conditions:
(i) The Purchasers shall have delivered
payment to the Issuer for the Offered Securities pursuant to
Sections 2 and 4 of this Agreement.
(ii) All of the representations and
warranties of the Purchasers in this Agreement shall be true
and correct in all material respects at and as of the Closing
Date, with the same force and effect as if made on and as of
such date. On or prior to the Closing Date, the Purchasers
shall have performed or complied with all of the agreements
and satisfied all conditions on their part to be performed,
complied with or satisfied pursuant to this Agreement.
(iii) No injunction, restraining order or
order of any nature by a Governmental Authority shall have
been issued as of the Closing Date that would prevent or
interfere with the issuance and sale of the Offered
Securities; and no stop order suspending the qualification or
exemption from qualification of any of the Offered Securities
in any jurisdiction shall have been issued and no Proceeding
for that purpose shall have been commenced or be pending or
contemplated as of the Closing Date. No action shall have been
taken and no Applicable Law
28
<PAGE> 29
shall have been enacted, adopted or issued that would, as of
the Closing Date, prevent the issuance or sale of the Offered
Securities.
10 TERMINATION. The Purchasers may terminate this Agreement at
any time prior to the Closing Date by written notice to the Issuer if any of the
following has occurred:
(a) since the date as of which information is given
in the Offering Circular, any material adverse effect or development
involving a prospective adverse effect on the properties, business,
prospects, operations or condition (financial or otherwise), of the
Issuer or any Subsidiary, whether or not arising in the ordinary course
of business, that could, in the Purchasers' judgment, (i) make it
impracticable or inadvisable to proceed with the offering or delivery
of the Offered Securities on the terms and in the manner contemplated
in the Offering Circular or (ii) materially impair the investment
quality of any of the Securities;
(b) the failure of the Issuer to satisfy the
conditions contained in Section 9(a) hereof on or prior to the third
business day following the date of this Agreement;
(c) any outbreak or escalation of hostilities or
other national or international calamity or crisis or material adverse
change in economic conditions in or the financial markets of the United
States, if the effect of such outbreak, escalation, calamity, crisis or
material adverse change in the economic conditions in or in the
financial markets of the United States could make it, in the
Purchasers' judgment, impracticable or inadvisable to market or proceed
with the offering or delivery of the Offered Securities on the terms
and in the manner contemplated in the Offering Circular or to enforce
contracts for the sale of any of the Offered Securities;
(d) the suspension or limitation of trading generally
in securities on the New York Stock Exchange, the American Stock
Exchange or the NASDAQ National Market or any setting of limitations on
prices for securities on any such exchange or NASDAQ National Market;
(e) any securities of the Issuer shall have been
downgraded or placed on any "watch list" for possible downgrading by
any "nationally recognized statistical rating organization," as such
term is defined for purposes of Rule 431(g)(2) under the Act; or
(f) the declaration of a banking moratorium by any
Governmental Authority; or the taking of any action by any Governmental
Authority after the date
29
<PAGE> 30
hereof in respect of its monetary or fiscal affairs that in the
Purchasers' opinion could have a material adverse effect on the
financial markets in the United States.
If this Agreement shall be terminated by the Purchasers
pursuant to clause (b) of this Section 10 or because of the failure or refusal
on the part of the Issuer to comply with the terms or to fulfill any of the
conditions of this Agreement, the Issuer shall promptly reimburse the Purchasers
for all reasonable out-or-pocket expenses incurred by the Purchasers in
connection with this Agreement. Without limiting the foregoing, notwithstanding
any termination of this Agreement, the Issuer shall be liable for all expenses
that it has agreed to pay (i) pursuant to Section 5(f) hereof and (ii) pursuant
to Section 8 hereof.
11 DEFAULT BY PURCHASER. If any of the Purchasers shall fail
or refuse to purchase the Offered Securities that it has agreed to purchase
hereunder on the Closing Date and arrangements satisfactory to the other
Purchaser and the Issuer for the purchase of such Offered Securities are not
made within 36 hours after such default, this Agreement shall terminate without
liability on the part of the non-defaulting Purchaser or the Issuer, except as
otherwise provided in Section 10 hereof. Nothing herein shall relieve a
defaulting Purchaser from liability for its default.
12 MISCELLANEOUS.
(a) Notices given pursuant to any provision of this
Agreement shall be addressed as follows: (i) if to the Issuer, 172
Trade Street, Lexington, Kentucky 40511, Attention: Chief Executive
Officer, with a copy to Dechert Price & Rhoads, 4000 Bell Atlantic
Tower, 1717 Arch Street, Philadelphia, Pennsylvania 19103-2793,
Attention: Christopher G. Karras and (ii) if to the Purchasers, to
Jefferies & Company, Inc., 11100 Santa Monica Boulevard, 10th Floor,
Los Angeles, California 90025, Attention: Jerry M. Gluck, Esq., with a
copy to (a) Bear, Stearns & Co. Inc., 245 Park Avenue, New York, New
York 10167, Attention: Phil Berney, and (b) Skadden, Arps, Slate,
Meagher & Flom LLP, 300 S. Grand Avenue, Suite 3400, Los Angeles,
California 90071, Attention: Michael A. Woronoff (provided, that any
notice pursuant to Section 8 hereof will be mailed, delivered,
telegraphed or telecopied and confirmed to the party to be notified and
its counsel), or in any case to such other address as the person to be
notified may have requested in writing.
(b) This Agreement has been and is made solely for
the benefit of and shall be binding upon the Issuer, the Purchasers
and, to the extent provided in Section 8 hereof, the controlling
persons, officers, directors, partners, employees, representatives and
agents referred to in Section 8 and their respective heirs, executors,
administrators, successors and assigns, all as and to the extent
provided in this Agreement, and no other person shall acquire or have
any right under or by virtue of this Agreement. The
30
<PAGE> 31
term "SUCCESSORS AND ASSIGNS" shall not include a purchaser of any of
the Offered Securities from the Purchasers merely because of such
purchase. Notwithstanding the foregoing, it is expressly understood and
agreed that each purchaser who purchases Offered Securities from either
Purchaser is intended to be a beneficiary of the Issuer's covenants
contained in the Registration Rights Agreements to the same extent as
if the Securities were sold and those covenants were made directly to
such purchaser by the Issuer, and each such purchaser shall have the
right to take action against the Issuer to enforce, and obtain damages
for any breach of, those covenants.
(c) THIS AGREEMENT SHALL BE CONSTRUED, INTERPRETED
AND THE RIGHTS OF THE PARTIES DETERMINED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAW. THE ISSUER HEREBY IRREVOCABLY SUBMITS 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 IRREVOCABLY ACCEPTS
FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. THE ISSUER
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO
UNDER APPLICABLE LAW, TRIAL BY JURY, ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. THE ISSUER IRREVOCABLY CONSENTS, TO THE FULLEST
EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, TO THE SERVICE OF
PROCESS 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 ISSUER AT THE ADDRESS SET FORTH HEREIN,
SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. NOTHING
HEREIN SHALL AFFECT THE RIGHT OF ANY OF THE PURCHASERS TO SERVE PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS
OR OTHERWISE PROCEED AGAINST THE ISSUER IN ANY OTHER JURISDICTION.
(d) This Agreement may be signed in various
counterparts which together shall constitute one and the same
instrument.
31
<PAGE> 32
(e) The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect
the meaning hereof.
(f) 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 best 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.
(g) This Agreement may be amended, modified or
supplemented, and waivers or consents to departures from the provisions
hereof may be given; provided, that the same are in writing and signed
by each of the signatories hereto.
(h) The indemnities, contribution and expense
reimbursement provisions set forth in or made pursuant to this
Agreement shall remain operative and in full force and effect, and will
survive delivery and payment for the Offered Securities, regardless of
(i) any investigation, or statement as to the results thereof, made by
or on behalf of any party hereto, (ii) acceptance of the Offered
Securities, and payment for them hereunder, and (iii) any termination
of this Agreement.
32
<PAGE> 33
Please confirm that the foregoing correctly sets forth the
agreement between the Issuer and the Purchasers.
Very truly yours,
CLARK MATERIAL HANDLING COMPANY
By: /s/ Joseph F. Lingg
------------------------------------
Name: Joseph F. Lingg
Title: Vice President Finance
Accepted and Agreed to:
JEFFERIES & COMPANY, INC.
By: /s/ M. Brent Stevens
------------------------------------
Name: M. Brent Stevens
Title: Managing Director
BEAR, STEARNS & CO. INC.
By: /s/ James B. Nish
------------------------------------
Name: James B. Nish
Title: Senior Managing Director
<PAGE> 34
EXHIBIT A
[ATTACH DECHERT PRICE & RHOADS OPINION AS A-1 AND 10b-5
LETTER AS A-2]
A-1
<PAGE> 35
SCHEDULE A
<TABLE>
<CAPTION>
Principal Amount of Liquidation Preference of
Purchaser Notes Senior Preferred Stock
--------- ----- ----------------------
<S> <C> <C>
Jefferies & Company, Inc. $ 12,000,000 $ 12,000,000
Bear, Stearns & Co. Inc. 8,000,000 8,000,000
------------- ------------
Total $ 20,000,000 $ 20,000,000
</TABLE>
1
<PAGE> 1
EXHIBIT 12.1
CLARK Material Handling Company
Statement of Ratio of Earnings to Fixed Charges - SEC Method
(in thousands)
<TABLE>
<CAPTION>
Wholly Owned Subsidiaries
of the Predecessor's Parent The Company
----------------------------------------- --------------------------------------------
Eleven One
Months Month Year Six Months
Ended Ended Ended Ended
Year Ended December 31, November 26, December 31, December 31 June 30,
---------------------------- -----------------
1993 1994 1995 1996 1996 1997 1997 1998
------- ------- -------- ----------- ---------- --------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
EARNINGS |
Pre-tax income from continuing |
operations (before extraordinary |
items) $(44,761) $(24,469) $(17,271) $(2,095) | $ 535 $ 8,355 $1,526 $ 2.075
Fixed charges (as calculated below) 20,061 18,861 18,309 15,997 | 1,503 16,637 8,260 8,453
-------- -------- -------- ------- | ------ ------- ------ ------
Earnings $(24,700) $ (5,608) $ 1,038 $13,902 | $2,038 $24,992 $9,786 $10,528
======== ======== ======== ======= | ====== ======= ====== ======
|
FIXED CHARGES |
Interest expense, including debt |
discount amortization: |
Third Party $ 1,169 $ 2,221 $ 790 $ 370 | $1,393 $15,086 $7,528 $7,590
On allocated debt 16,756 14,361 16,145 14,656 | -- -- -- --
Amortization of debt issuance costs 1,004 822 530 349 | 47 625 296 339
Portion of rental expense |
representative of interest factor 1,132 1,457 844 622 | 63 926 436 524
-------- -------- -------- ------- | ------ ------- ------ ------
|
Total Fixed Charges $ 20,061 $ 18,861 $ 18,309 $15,997 | $1,503 $16,637 $8,260 $8,453
======== ======== ======== ======= | ====== ======= ====== ======
|
RATIO OF EARNINGS TO FIXED CHARGES (A) (A) (A) (A) | 1.36 1.50 1.18 1.25
======== ======== ======== ======= | ====== ======= ====== ======
|
AMOUNT OF EARNINGS DEFICIENCY |
FOR COVERAGE OF FIXED CHARGES $(44,761) $(24,469) $(17,271) $(2,095) | $ -- $ -- $ -- $ --
======== ======== ======== ======= | ====== ======= ====== ======
</TABLE>
(A) Earnings are inadequate to cover fixed charges.
(B) The pro forma ratio of earnings to fixed charges data for the year ended
December 31, 1997 and the last twelve months ended June 30, 1998 gives
effect to the acquisitions of Blue Giant USA Corporation and Blue Giant
Canada Limited as if such events had occurred at the beginning of each
respective period.
<TABLE>
<CAPTION>
The Company Pro Forma(B)
------------ --------------------------
Last Last
Twelve Twelve
Months Year Months
Ended Ended Ended
June 30, December 31, June 30,
1998 1997 1998
--------- ------------ ---------
<S> <C> <C> <C>
EARNINGS
Pre-tax income from continuing
operations (before extraordinary
items) $ 8,904 $ 8,945 $ 9,064
Fixed charges (as calculated below) 16,830 16,698 16,855
------- ------- -------
Earnings $25,734 $25,643 $25,919
======= ======= =======
FIXED CHARGES
Interest expense, including debt
discount amortization:
Third Party $15,148 $15,086 $15,148
On allocated debt -- -- --
Amortization of debt issuance costs 668 625 668
Portion of rental expense
representative of interest factor 1,014 987 1,039
------- ------- -------
Total Fixed Charges $16,830 $16,698 $16,855
======= ======= =======
RATIO OF EARNINGS TO FIXED CHARGES 1.53 1.54 1.54
======= ======= =======
AMOUNT OF EARNINGS DEFICIENCY
FOR COVERAGE OF FIXED CHARGES $ -- $ -- $ --
======= ======= =======
</TABLE>
<PAGE> 1
Exhibit 21.1
Subsidiaries
<TABLE>
<CAPTION>
Name Jurisdiction
---- ------------
<S> <C>
Blue Giant Corporation Delaware
Hydrolectric Lift Trucks, Inc. Ohio
Blue Giant Limited Canada
Clark Material Handling GmbH Germany
Clark Forklift Korea, Inc. South Korea
Clark Empilhaderas do Brasil Ltda. Brazil
Clark Material Handling Asia South Korea
- ----------------------------------
</TABLE>
<PAGE> 1
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-4 of CLARK Material Handling Company of our
report dated February 24, 1998 relating to the financial statements of CLARK
Material Handling Company, which appears in such Prospectus. We also consent to
the reference to us under the heading "Independent Accountants" in such
Prospectus.
PricewaterhouseCoopers LLP
Cincinnati, Ohio
September 1, 1998
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-4 of Clark Material Handling Company of our
report dated March 21, 1997 relating to the financial statements of Blue Giant
USA Corporation, which appears in such Prospectus. We also consent to the
reference to us under the heading "Independent Accountants" in such Prospectus.
/s/ RAUGHTON & COMPANY
--------------------------------------
Raughton & Company
Pell City, Alabama
September 2, 1998
<PAGE> 1
Exhibit 23.4
The Board of Directors
Blue Giant Canada Limited
We consent to the inclusion of our report dated February 20, 1997 except for
note 15 which is as of April 8, 1998, with respect to the balance sheet of Blue
Giant Canada Limited as of December 31, 1996 and the statements of earnings and
retained earnings and changes in financial position for the year then ended,
which report appears in the Form S-4 of Clark Material Handling Company.
KPMG
Chartered Accountants
Richmond Hill, Canada
September 2, 1998
<PAGE> 1
EXHIBIT 25
FORM T-1
==============================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------
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)
------------------
UNITED STATES TRUST COMPANY OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-3818954
(Jurisdiction of incorporation (I.R.S. employer
if not a U.S. national bank) identification No.)
114 West 47th Street 10036-1532
New York, NY (Zip Code)
(Address of principal
executive offices)
------------------
CLARK Material Handling Company
(Exact name of obligor as specified in its charter)
Delaware 61-1312827
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
172 Trade Street
Lexington, Kentucky 40511
(Address of principal executive offices) (Zip Code)
------------------
10 3/4% Senior Notes due 2006
(Title of the indenture securities)
==============================================
<PAGE> 2
- 2 -
GENERAL
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.
Federal Reserve Bank of New York (2nd District), New York, New York
(Board of Governors of the Federal Reserve System)
Federal Deposit Insurance Corporation, Washington, DC
New York State Banking Department, Albany, New York
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. AFFILIATIONS WITH THE OBLIGOR
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None
3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15:
The obligor currently is not in default under any of its outstanding
securities for which United States Trust Company of New York is Trustee.
Accordingly, responses to Items 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14
and 15 of Form T-1 are not required under General Instruction B.
16. LIST OF EXHIBITS
T-1.1 -- Organization Certificate, as amended, issued by the State of
New York Banking Department to transact business as a Trust
Company, is incorporated by reference to Exhibit T-1.1 to
Form T-1 filed on September 15, 1995 with the Commission
pursuant to the Trust Indenture Act of 1939, as amended by
the Trust Indenture Reform Act of 1990 (Registration No.
33-97056).
T-1.2 -- Included in Exhibit T-1.1.
T-1.3 -- Included in Exhibit T-1.1.
<PAGE> 3
- 3 -
16. LIST OF EXHIBITS
(cont'd)
T-1.4 -- The By-Laws of United States Trust Company of New York, as
amended, is incorporated by reference to Exhibit T-1.4 to
Form T-1 filed on September 15, 1995 with the Commission
pursuant to the Trust Indenture Act of 1939, as amended by
the Trust Indenture Reform Act of 1990 (Registration No.
33-97056).
T-1.6 -- The consent of the trustee required by Section 321(b) of the
Trust Indenture Act of 1939, as amended by the Trust
Indenture Reform Act of 1990.
T-1.7 -- A copy of the latest report of condition of the trustee
pursuant to law or the requirements of its supervising or
examining authority.
NOTE
As of August 5, 1998, the trustee had 2,999,020 shares of Common Stock
outstanding, all of which are owned by its parent company, U.S. Trust
Corporation. The term "trustee" in Item 2, refers to each of United States Trust
Company of New York and its parent company, U. S. Trust Corporation.
In answering Item 2 in this statement of eligibility as to matters peculiarly
within the knowledge of the obligor or its directors, the trustee has relied
upon information furnished to it by the obligor and will rely on information to
be furnished by the obligor and the trustee disclaims responsibility for the
accuracy or completeness of such information.
------------------
Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee,
United States Trust Company of New York, a corporation organized and existing
under the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York, and State of New York, on the 6th day
of August, 1998.
UNITED STATES TRUST COMPANY
OF NEW YORK, Trustee
By: /s/ John Guiliano
--------------------------
John Guiliano
Vice President
<PAGE> 4
EXHIBIT T-1.6
The consent of the trustee required by Section 321(b) of the Act.
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
January 7, 1997
Securities and Exchange Commission
450 5th Street, NW
Washington, DC 20549
Gentlemen:
Pursuant to the provisions of Section 321(b) of the Trust Indenture Act of 1939,
as amended by the Trust Indenture Reform Act of 1990, and subject to the
limitations set forth therein, United States Trust Company of New York ("U.S.
Trust") hereby consents that reports of examinations of U.S. Trust by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon request therefor.
Very truly yours,
UNITED STATES TRUST COMPANY
OF NEW YORK
/s/ Gerard F. Ganey
--------------------------
By: Gerard F. Ganey
Senior Vice President
<PAGE> 5
EXHIBIT T-1.7
UNITED STATES TRUST COMPANY OF NEW YORK
CONSOLIDATED STATEMENT OF CONDITION
MARCH 31, 1998
($ IN THOUSANDS)
<TABLE>
<S> <C>
ASSETS
Cash and Due from Banks $ 303,692
Short-Term Investments 325,044
Securities, Available for Sale 650,954
Loans 1,717,101
Less: Allowance for Credit Losses 16,546
----------
Net Loans 1,700,555
Premises and Equipment 58,868
Other Assets 120,865
----------
TOTAL ASSETS $3,159,978
==========
LIABILITIES
Deposits:
Non-Interest Bearing $ 602,769
Interest Bearing 1,955,571
----------
Total Deposits 2,558,340
Short-Term Credit Facilities 293,185
Accounts Payable and Accrued Liabilities 136,396
----------
TOTAL LIABILITIES $2,987,921
==========
STOCKHOLDER'S EQUITY
Common Stock 14,995
Capital Surplus 49,541
Retained Earnings 105,214
Unrealized Gains on Securities
Available for Sale (Net of Taxes) 2,307
----------
TOTAL STOCKHOLDER'S EQUITY 172,057
----------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $3,159,978
==========
</TABLE>
I, Richard E. Brinkmann, Senior Vice President & Comptroller of the named bank
do hereby declare that this Statement of Condition has been prepared in
conformance with the instructions issued by the appropriate regulatory authority
and is true to the best of my knowledge and belief.
Richard E. Brinkmann, SVP & Controller
May 6, 1998
<PAGE> 1
EXHIBIT 99.1
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 1998, UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS OF
EXISTING NOTES MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M. ON THE EXPIRATION
DATE.
CLARK MATERIAL HANDLING COMPANY
LETTER OF TRANSMITTAL
10 3/4% SENIOR NOTES DUE 2006
TO: UNITED STATES TRUST COMPANY OF NEW YORK,
THE EXCHANGE AGENT
<TABLE>
<S> <C>
By Registered or Certified Mail: By Overnight Courier or By Hand After 4:30 PM on the Expiration Date Only:
United States Trust Company of New York United States Trust Company of New York
P.O. Box 844 770 Broadway, 13th Floor
Cooper Station New York, New York 10003
New York, New York 10276-0844 Attn: Corporate Trust Services
Attn: Corporate Trust Services
By Hand Up to 4:30 PM: By Facsimile:
United States Trust Company of New York United States Trust Company of New York
111 Broadway, Lower Level (212) 420-6152
New York, New York 10003 Attn: Corporate Trust Services
Corporate Trust Services
Confirm by telephone:
(800) 548-6525
</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 EXISTING
NOTES PURSUANT TO THE EXCHANGE OFFER MUST VALIDLY TENDER (AND NOT WITHDRAW)
THEIR EXISTING NOTES TO THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE.
The undersigned acknowledges receipt of the Prospectus dated , 1998
(the "Prospectus") of CLARK MATERIAL HANDLING COMPANY (the "Company") and this
Letter of Transmittal (the "Letter of Transmittal"), which together constitute
the Company's Offer to Exchange (the "Exchange Offer") $1,000 principal amount
of its 10 3/4% Series D 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 10 3/4% Series C Senior Notes due
2006 (the "Existing Notes"), of which $20,000,000 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.
<PAGE> 2
For each Existing Note accepted for exchange, the holder of such Existing
Note will receive a New Note having a principal amount equal to that of the
surrendered Existing Note. Interest on the New Notes will accrue from the last
interest payment date on which interest was paid on the Existing Notes
surrendered in exchange therefor or, if no interest has been paid on the
Existing Notes, from the date of original issue of the Existing Notes. Holders
of Existing Notes accepted for exchange will be deemed to have waived the right
to receive any other payments or accrued interest on the Existing 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 Existing 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 Existing Notes are to be physically delivered to the Exchange Agent
herewith by Holders; (ii) tender of Existing 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 Existing Notes or (iii) tender of Existing Notes 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 Existing 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 Existing Notes are held of record by DTC who
desires to deliver such Existing 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.
<PAGE> 3
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 EXISTING NOTES MUST COMPLETE THIS
LETTER OF TRANSMITTAL IN ITS ENTIRETY.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE CHECKING ANY BOX BELOW
- --------------------------------------------------------------------------------
DESCRIPTION OF 10 3/4% SENIOR NOTES DUE 2006 (EXISTING NOTES)
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
AGGREGATE PRINCIPAL PRINCIPAL AMOUNT
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) CERTIFICATE AMOUNT REPRESENTED BY TENDERED (IF LESS THAN
(PLEASE FILL IN, IF BLANK) NUMBER(S)* CERTIFICATE(S) ALL)**
------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
</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 Existing 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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 4
------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 4, 5 AND 6)
To be completed ONLY if certificates for Existing Notes in a
principal amount not tendered or not accepted for exchange, or New Notes
issued in exchange for Existing Notes accepted for exchange, are to be
issued in the name of someone other than the undersigned, or if the
Existing Notes tendered by book-entry transfer that are not accepted for
exchange are to be credited to an account maintained by DTC.
Issue certificate(s) to:
Name:
---------------------------------------------------
Address:
-------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
(TAX IDENTIFICATION OR
SOCIAL SECURITY NO.)
------------------------------------------------------------
------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 4, 5 AND 6)
To be accepted ONLY if certificates for Existing Notes in a principal
amount not tendered or not accepted for exchange, are to be sent to
someone other than the undersigned, or to the undersigned at an address
other than that shown above.
Mail to:
Name:
---------------------------------------------------
Address:
-------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
(TAX IDENTIFICATION OR
SOCIAL SECURITY NO.)
------------------------------------------------------------
<PAGE> 5
[ ] CHECK HERE IF TENDERED EXISTING NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER TO THE EXCHANGE AGENT'S ACCOUNT AT DTC AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
-----------------------------------------------------------------------------
DTC Book-Entry Account No.:
-----------------------------------------------------------------------------
Transaction Code No.:
-----------------------------------------------------------------------------
[ ] CHECK HERE IF TENDERED EXISTING 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:
<TABLE>
<S> <C>
Account Number: --------------------------- Transaction Code Number: ---------------------------
</TABLE>
[ ] 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:
-----------------------------------------------------------------------------
<PAGE> 6
Ladies and Gentlemen:
Subject to the terms and conditions of the Exchange Offer, the undersigned
hereby tenders to the Company the principal amount of Existing Notes indicated
above. Subject to and effective upon the acceptance for exchange of the
principal amount of Existing 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 Existing 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 Existing Notes and New Notes) with respect to the tendered
Existing Notes with full power of substitution to (i) deliver certificates for
such Existing Notes to the Company, or transfer ownership of such Existing 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 Existing Notes for transfer on the books of the Company and receive all
benefits and otherwise exercise all rights of beneficial ownership of such
Existing 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 Existing 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 Existing 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 any
arrangement or understanding with any person to participate in the distribution
of such New Notes within the meaning of the Securities Act of 1993, as amended,
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 Existing
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, such holders are not engaging in
and do not intend to engage in a distribution of the New Securities 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 Existing 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 also acknowledges and agrees that
any person who is a broker-dealer registered under the Exchange Act or is
participating in the Exchange Offer for the purposes of distributing the New
Notes must comply with the registration and prospectus delivery requirements of
the Securities Act in connection with any secondary resale transaction of the
New Notes acquired by such person and cannot rely on the position of the staff
at the Commission set forth in certain no-action letters. The undersigned
understands that a secondary resale transaction described in the previous
sentence and any resale of New Notes obtained by such holder or other person in
exchange for Existing Notes acquired by such holder or other person directly
from the Company should be covered by an effective registration statement
containing the selling securityholder information required by Item 507 or Item
508, as applicable, of Regulation S-K of the Commission.
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 Existing
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 Offers -- Withdrawal
Rights" section of the Prospectus.
For purposes of the Exchange Offer, the Company shall be deemed to have
accepted validly tendered Existing Notes when, as and if the Company has given
oral or written notice thereof to the Exchange Agent.
<PAGE> 7
If any tendered Existing Notes are not accepted for exchange pursuant to
the Exchange Offer for any reason, certificates for any such unaccepted Existing
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 Existing Notes pursuant to the
procedures described under the caption "The Exchange Offers -- Procedures for
Tendering" 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
Existing Notes accepted for exchange and return any Existing Notes not tendered
or not exchanged in the name(s) of the undersigned (or in either such event in
the case of the Existing Notes tendered through 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 Existing Notes accepted for exchange and
any certificates for Existing 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 Existing Notes accepted
for exchange and return any Existing 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 Existing Notes from the name of the registered Holder(s) thereof if the
Company does not accept for exchange any of the Existing Notes so tendered.
Holders of Existing Notes who wish to tender their Existing Notes and (i)
whose Existing Notes are not immediately available or (ii) who cannot deliver
their Existing 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 Existing Notes
according to the guaranteed delivery procedures set forth in the Prospectus
under the caption "The Exchange Offers -- Guaranteed Delivery Procedures." See
Instruction 1 regarding the completion of the Letter of Transmittal printed
below.
<PAGE> 8
PLEASE SIGN HERE WHETHER OR NOT
EXISTING NOTES ARE BEING PHYSICALLY TENDERED HEREBY
<TABLE>
<S> <C>
X ___________________________________________________ Date _____________________________
X ___________________________________________________ Date _____________________________
Signature(s) of Registered Holder(s)
Or Authorized Signatory
Area Code and Telephone Number: ___________________________________________
</TABLE>
The above lines must be signed by the registered Holder(s) of Existing
Notes as their name(s) appear(s) on the Existing Notes or, if the Existing Notes
are tendered by a participant in DTC, as such participant's name appears on a
security position listing as the owner of Existing Notes, or by person(s)
authorized to become registered Holder(s) by a properly completed bond power
from the registered Holder(s), a copy of which must be transmitted with this
Letter of Transmittal. If Existing 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: ______________________________
<PAGE> 9
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS
OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER AND EXISTING 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
Offers--Book-Entry Transfer" section of the Prospectus. Certificates for all
physically tendered Existing 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. Existing Notes tendered hereby must be in
denominations of principal amount of maturity of $1,000 and any integral
multiple thereof.
Noteholders whose certificates for Existing 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 Existing Notes pursuant to the guaranteed delivery procedures set
forth in "The Exchange Offers--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 Existing Notes and the amount of Existing 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 Existing Notes, or a Book-Entry Confirmation, and any other
documents required by this Letter will be deposited by the Eligible Institution
with the Exchange Agent, and (iii) the certificates for all physically tendered
Existing 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 Existing 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 Existing 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 Offers" section in the Prospectus.
2. TENDER BY HOLDER. Only a holder of Existing Notes may tender such
Existing Notes in the Exchange Offer. Any beneficial holder of Existing 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
Existing Notes, either make appropriate arrangements to register ownership of
the Existing Notes in such holder's name or obtain a properly completed bond
power form the registered holder.
3. PARTIAL TENDERS. Tenders of Existing Notes will be accepted only in
integral multiples of $1,000. If less than the entire principal amount of any
Existing Notes is tendered, the tendering holder should fill in the principal
amount tendered in the fourth column of the box entitled "Description of 10 3/4%
Senior Notes due 2006 (Existing Notes)" above. The entire principal amount of
Existing Notes delivered to the Exchange Agent will be deemed to have been
tendered unless otherwise indicated. If the entire principal amount of all
Existing Notes is not tendered, then Existing Notes for the principal amount of
Existing Notes not tendered and a certificate or certificates representing New
Notes issued in exchange for any Existing 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 promptly after the Existing 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 Existing Notes tendered hereby, the signature must correspond exactly with
the name as written on the face of the certificates without any change
whatsoever.
<PAGE> 10
If any tendered Existing Notes are owned of record by two or more joint
owners, all such owners must sign this Letter.
If any tendered Existing 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
Existing 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 Existing 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 Existing 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 Existing Notes are tendered (i) by a registered holder of Existing
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 Existing 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 Existing 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 Existing 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
Existing Notes by book-entry transfer may request that Existing 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 Existing 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 Existing 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 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 Existing 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."
<PAGE> 11
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 Existing 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 Existing Notes pursuant to the Exchange Offer. If,
however, certificates representing New Notes or Existing 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 Existing Notes tendered hereby, or if tendered Existing Notes are
registered in the name of any person other than the person signing this Letter,
or if a transfer tax is imposed for any reason other than the exchange of
Existing 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 Existing Notes listed in this Letter.
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
Existing Notes tendered.
9. NO CONDITIONAL TRANSFERS. No alternative, conditional, irregular or
contingent tenders will be accepted. All tendering holders of Existing Notes, by
execution of this Letter, shall waive any right to receive notice of the
acceptance of their Existing 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
Existing Notes nor shall any of them incur any liability for failure to give any
such notice.
10. MUTILATED, LOST, STOLEN OR DESTROYED EXISTING NOTES. Any tendering
holder whose Existing 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 and the
Notice of Guaranteed Delivery may be directed to the Exchange Agent at the
address specified in the Prospectus.
(DO NOT WRITE IN THE SPACE BELOW)
<TABLE>
<CAPTION>
CERTIFICATE EXISTING NOTES EXISTING NOTES
SURRENDERED TENDERED ACCEPTED
- ------------------ ------------------ ------------------
<S> <C> <C>
- ------------------ ------------------ ------------------
- ------------------ ------------------ ------------------
- ------------------ ------------------ ------------------
</TABLE>
Delivery Prepared by
--------------- Checked By
--------------- Date
---------------
<PAGE> 12
<TABLE>
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------
PAYER'S NAME: CLARK MATERIAL HANDLING COMPANY
- ----------------------------------------------------------------------------------------------------------
Name (if joint names, list first and circle the name of the person or
SUBSTITUTE entity whose number you enter in Part 1 below. See instructions if your
FORM W-9 name has changed.)
DEPARTMENT OF THE TREASURY ---------------------------------------------------------------------------
INTERNAL REVENUE SERVICE Address
PAYER'S REQUEST FOR TIN ---------------------------------------------------------------------------
City, state and ZIP code
---------------------------------------------------------------------------
List account number(s) here (optional)
---------------------------------------------------------------------------
----------------------------------------------------------------------------
Part 1--PLEASE PROVIDE YOUR TAXPAYER Social security number
IDENTIFICATION NUMBER ("TIN") IN THE BOX AT or TIN
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.
CERTIFICATION--UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT THE
INFORMATION PROVIDED ON THIS FORM IS TRUE, CORRECT AND COMPLETE.
----------------------------------------------------------------------------
Signature _________________ Date PART 3--AWAITING TIN [ ]
- ----------------------------------------------------------------------------------------------------------
</TABLE>
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.
<PAGE> 13
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>
<C> <S> <C>
- ---------------------------------------------------------
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF--
- ---------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals The actual owner of
(joint account) the account or, if
combined funds, any
one of the
individuals(1)
3. Husband and wife The actual owner of
(joint account) the account or, if
joint funds, either
person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor The adult or, if
(joint account) the minor is the
only contributor,
the minor(1)
6. Account in the name of guardian The ward, minor, or
or committee for a designated incompetent
ward, minor, or incompetent person(3)
person
7. a. The usual revocable savings The grantor-
trust account (grantor is trustee(1)
also trustee)
b. So-called trust account that The actual owner(1)
is not a legal or valid
trust under State law
8. Sole proprietorship account The Owner(4)
- ---------------------------------------------------------
- ---------------------------------------------------------
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
- ---------------------------------------------------------
9. A valid trust, estate, or Legal entity (Do
pension trust not furnish the
identifying number
of the personal
representative or
trustee unless the
legal entity itself
is not designated
in the account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization
account
12. Partnership account held in the The partnership
name of the business
13. Association, club, or other The organization
tax-exempt organization
15. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a State
or local government, school
district, or prison) that
receives agricultural program
payments
- ---------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 14
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 withholding under section 1941.
- 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 n
money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals. Note: You may
be subject to backup withholding if this interest is $600 or more and in
paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) to non-resident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments other than interest, dividends and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give 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 IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 5% on any portion of an
under-payment attributable to that failure unless there is clear and convincing
evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
<PAGE> 15
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE> 1
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
FOR
10 3/4% SENIOR NOTES DUE 2006
CLARK MATERIAL HANDLING COMPANY
As set forth in the Prospectus dated , 1998 (the "Prospectus"), of
CLARK MATERIAL HANDLING COMPANY, (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
offer to exchange (the "Exchange Offer") all of its outstanding 10 3/4% Series C
Senior Notes due 2006 (the "Existing Notes") for its 10 3/4% Series D Senior
Notes due 2006, which have been registered under the Securities Act of 1933, as
amended, if certificates for the Existing Notes are not immediately available or
if the Existing 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
1998, UNLESS THE OFFER IS EXTENDED (THE "EXPIRATION DATE"). TENDERS
OF EXISTING NOTES MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M. ON THE
BUSINESS DAY PRIOR TO THE EXPIRATION DATE.
TO: UNITED STATES TRUST COMPANY OF NEW YORK, THE EXCHANGE AGENT
<TABLE>
<S> <C>
By Registered or Certified Mail: By Overnight Courier or By Hand After 4:30 PM
United States Trust Company of New York on the Expiration Date Only:
P.O. Box 844 United States Trust Company of New York
Cooper Station 770 Broadway
New York, New York 10276-0844 New York, New York 10003
By Hand Up to 4:30 PM: Attention: Corporate Trust Services
United States Trust Company of New York By Facsimile:
111 Broadway United States Trust Company of New York
Lower Level (212) 420-6152
Corporate Trust Services Attention: Corporate Trust Services
New York, New York 10006
Confirm by telephone:
(800) 548-6565
</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 Existing 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 CLARK MATERIAL HANDLING COMPANY, 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 Existing Notes) Existing Notes pursuant to
the guaranteed delivery procedures set forth in Instruction 1 of the Letter of
Transmittal.
The undersigned understands that tenders of Existing Notes will be accepted
only in principal amounts equal to $1,000 or integral multiples thereof. The
undersigned understand that tenders of Existing 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 Existing Notes (if
available) Name(s) of Record Holder(s)
- ------------------------------------------------- -------------------------------------------------
- ------------------------------------------------- -------------------------------------------------
PLEASE PRINT OR TYPE
Principal Amount of Existing Notes Address
-------------------------------------------------
- -------------------------------------------------
-------------------------------------------------
Area Code and
Tel. No.
-------------------------------------------------
Signature(s)
-------------------------------------------------
Dated:
-------------------------------------------------
If Existing 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 Existing Notes exactly as its (their) name(s) appear on
certificates for Existing Notes or on a security position listing as the owner
of Existing 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:
PLEASE PRINT NAME(S) AND ADDRESS(ES)
Name(s):
- --------------------------------------------------------------------------------
Capacity:
- --------------------------------------------------------------------------------
Address(es):
- --------------------------------------------------------------------------------
<PAGE> 3
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 Existing Notes tendered
hereby within the meaning of Rule 14e-4 under the Exchange Act, (b) represents
that such tender of Existing Notes complies with Rule 14e-4 under the Exchange
Act and (c) guarantees that delivery to the Exchange Agent of certificates for
the Existing Notes tendered hereby, in proper form for transfer (or confirmation
of the book-entry transfer of such Existing 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 he
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 EXISTING 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.
Name of Firm
- -------------------------------------------
--------------------------------------
Authorized Signature
Address
- -------------------------------------------------
Name
--------------------------------------
Please Print or Type
- ------------------------------------------------------------
Title
--------------------------------------
Zip Code
Area Code and Tel. No.
- ------------------------------- Date
--------------------------------------
Dated:
- ------------------, 1998
NOTE: DO NOT SEND EXISTING NOTES WITH THIS FORM; EXISTING 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.
<PAGE> 1
EXHIBIT 99.3
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 1998, UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS OF
EXISTING NOTES MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M. ON THE EXPIRATION
DATE.
CLARK MATERIAL HANDLING COMPANY
LETTER OF TRANSMITTAL
10 3/4% SENIOR NOTES DUE 2006
TO: UNITED STATES TRUST COMPANY OF NEW YORK,
THE EXCHANGE AGENT
<TABLE>
<S> <C>
By Registered or Certified Mail: By Overnight Courier or By Hand
United States Trust Company of New York After 4:30 P.M. on the Expiration Date Only:
P.O. Box 844 United States Trust Company of New York
Cooper Station 770 Broadway, 13th Floor
New York, New York 10276-0844 New York, New York 10003
Attn: Corporate Trust Services Attn: Corporate Trust Services
By Hand Up to 4:30 PM: By Facsimile:
United States Trust Company of New York United States Trust Company of New York
111 Broadway, Lower Level (212) 420-6152
Corporate Trust Services Attn: Corporate Trust Services
New York, New York 10003
Confirm by telephone:
(800) 548-6525
</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 EXISTING
NOTES PURSUANT TO THE EXCHANGE OFFER MUST VALIDLY TENDER (AND NOT WITHDRAW)
THEIR EXISTING NOTES TO THE EXCHANGE AGENT PRIOR TO THE EXPIRATION DATE.
The undersigned acknowledges receipt of the Prospectus dated
, 1998 (the "Prospectus") of CLARK MATERIAL HANDLING COMPANY (the
"Company") and this Letter of Transmittal (the "Letter of Transmittal"), which
together constitute the Company's Offer to Exchange (the "Exchange Offer")
$1,000 principal amount of its 10 3/4% Series D 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 10
3/4% Series B Senior Notes due 2006 (the "Existing Notes"), of which
$130,000,000 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.
<PAGE> 2
For each Existing Note accepted for exchange, the holder of such Existing
Note will receive a New Note having a principal amount equal to that of the
surrendered Existing Note. Interest on the New Notes will accrue from the last
interest payment date on which interest was paid on the Existing Notes
surrendered in exchange therefor or, if no interest has been paid on the
Existing Notes, from the date of original issue of the Existing Notes. Holders
of Existing Notes accepted for exchange will be deemed to have waived the right
to receive any other payments or accrued interest on the Existing 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 Existing 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 Existing Notes are to be physically delivered to the Exchange Agent
herewith by Holders; (ii) tender of Existing 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 Existing Notes or (iii) tender of Existing Notes 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 Existing 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 Existing Notes are held of record by DTC who
desires to deliver such Existing 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.
<PAGE> 3
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 EXISTING NOTES MUST COMPLETE THIS
LETTER OF TRANSMITTAL IN ITS ENTIRETY.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE CHECKING ANY BOX BELOW
- --------------------------------------------------------------------------------
DESCRIPTION OF 10 3/4% SENIOR NOTES DUE 2006 (EXISTING NOTES)
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
AGGREGATE PRINCIPAL PRINCIPAL AMOUNT
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) CERTIFICATE AMOUNT REPRESENTED BY TENDERED (IF LESS THAN
(PLEASE FILL IN, IF BLANK) NUMBER(S)* CERTIFICATE(S) ALL)**
------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
</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 Existing 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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 4
------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 4, 5 AND 6)
To be completed ONLY if certificates for Existing Notes in a
principal amount not tendered or not accepted for exchange, or New Notes
issued in exchange for Existing Notes accepted for exchange, are to be
issued in the name of someone other than the undersigned, or if the
Existing Notes tendered by book-entry transfer that are not accepted for
exchange are to be credited to an account maintained by DTC.
Issue certificate(s) to:
Name:
---------------------------------------------------
Address:
-------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
(TAX IDENTIFICATION OR
SOCIAL SECURITY NO.)
------------------------------------------------------------
------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 4, 5 AND 6)
To be accepted ONLY if certificates for Existing Notes in a principal
amount not tendered or not accepted for exchange, are to be sent to
someone other than the undersigned, or to the undersigned at an address
other than that shown above.
Mail to:
Name:
---------------------------------------------------
Address:
-------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
(TAX IDENTIFICATION OR
SOCIAL SECURITY NO.)
------------------------------------------------------------
<PAGE> 5
[ ] CHECK HERE IF TENDERED EXISTING NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER TO THE EXCHANGE AGENT'S ACCOUNT AT DTC AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
-----------------------------------------------------------------------------
DTC Book-Entry Account No.:
-----------------------------------------------------------------------------
Transaction Code No.:
-----------------------------------------------------------------------------
[ ] CHECK HERE IF TENDERED EXISTING 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:
<TABLE>
<S> <C>
Account Number: --------------------------- Transaction Code Number: ---------------------------
</TABLE>
[ ] 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:
-----------------------------------------------------------------------------
<PAGE> 6
Ladies and Gentlemen:
Subject to the terms and conditions of the Exchange Offer, the undersigned
hereby tenders to the Company the principal amount of Existing Notes indicated
above. Subject to and effective upon the acceptance for exchange of the
principal amount of Existing 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 Existing 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 Existing Notes and New Notes) with respect to the tendered
Existing Notes with full power of substitution to (i) deliver certificates for
such Existing Notes to the Company, or transfer ownership of such Existing 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 Existing Notes for transfer on the books of the Company and receive all
benefits and otherwise exercise all rights of beneficial ownership of such
Existing 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 Existing 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 Existing 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 any
arrangement or understanding with any person to participate in the distribution
of such New Notes within the meaning of the Securities Act of 1933, as amended,
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 Existing
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, such holders are not engaging in
and do not intend to engage in a distribution of the New Securities 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 Existing 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 also acknowledges and agrees that
any person who is a broker-dealer registered under the Exchange Act or is
participating in the Exchange Offer for the purposes of distributing the New
Securities must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any secondary resale
transaction of the New Securities acquired by such person and cannot rely on the
position of the staff of the Commission set forth in certain no-action letters.
The undersigned understands that a secondary resale transaction described in the
previous sentence and any resale of New Notes obtained by such holder or other
person in exchange for Existing Notes acquired by such holder or other person
directly from the Company should be covered by an effective registration
statement containing the selling securityholder information required by Item 507
or Item 508, as applicable, of Regulation S-K of the Commission.
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 Existing
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 Offers -- Withdrawal
Rights" section of the Prospectus.
For purposes of the Exchange Offer, the Company shall be deemed to have
accepted validly tendered Existing Notes when, as and if the Company has given
oral or written notice thereof to the Exchange Agent.
<PAGE> 7
If any tendered Existing Notes are not accepted for exchange pursuant to
the Exchange Offer for any reason, certificates for any such unaccepted Existing
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 Existing Notes pursuant to the
procedures described under the caption "The Exchange Offers -- Procedures for
Tendering" 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
Existing Notes accepted for exchange and return any Existing Notes not tendered
or not exchanged in the name(s) of the undersigned (or in either such event in
the case of the Existing Notes tendered through 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 Existing Notes accepted for exchange and
any certificates for Existing 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 Existing Notes accepted
for exchange and return any Existing 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 Existing Notes from the name of the registered Holder(s) thereof if the
Company does not accept for exchange any of the Existing Notes so tendered.
Holders of Existing Notes who wish to tender their Existing Notes and (i)
whose Existing Notes are not immediately available or (ii) who cannot deliver
their Existing 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 Existing Notes
according to the guaranteed delivery procedures set forth in the Prospectus
under the caption "The Exchange Offers -- Guaranteed Delivery Procedures." See
Instruction 1 regarding the completion of the Letter of Transmittal printed
below.
<PAGE> 8
PLEASE SIGN HERE WHETHER OR NOT
EXISTING NOTES ARE BEING PHYSICALLY TENDERED HEREBY
<TABLE>
<S> <C>
X ___________________________________________________ Date _____________________________
X ___________________________________________________ Date _____________________________
Signature(s) of Registered Holder(s)
Or Authorized Signatory
Area Code and Telephone Number: ___________________________________________
</TABLE>
The above lines must be signed by the registered Holder(s) of Existing
Notes as their name(s) appear(s) on the Existing Notes or, if the Existing Notes
are tendered by a participant in DTC, as such participant's name appears on a
security position listing as the owner of Existing Notes, or by person(s)
authorized to become registered Holder(s) by a properly completed bond power
from the registered Holder(s), a copy of which must be transmitted with this
Letter of Transmittal. If Existing 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: ______________________________
<PAGE> 9
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS
OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER AND EXISTING 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
Offers--Book-Entry Transfer" section of the Prospectus. Certificates for all
physically tendered Existing 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. Existing Notes tendered hereby must be in
denominations of principal amount of maturity of $1,000 and any integral
multiple thereof.
Noteholders whose certificates for Existing 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 Existing Notes pursuant to the guaranteed delivery procedures set
forth in "The Exchange Offers--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 Existing Notes and the amount of Existing 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 Existing Notes, or a Book-Entry Confirmation, and any other
documents required by this Letter will be deposited by the Eligible Institution
with the Exchange Agent, and (iii) the certificates for all physically tendered
Existing 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 Existing 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 Existing 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 Offers" section in the Prospectus.
2. TENDER BY HOLDER. Only a holder of Existing Notes may tender such
Existing Notes in the Exchange Offer. Any beneficial holder of Existing 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
Existing Notes, either make appropriate arrangements to register ownership of
the Existing Notes in such holder's name or obtain a properly completed bond
power form the registered holder.
3. PARTIAL TENDERS. Tenders of Existing Notes will be accepted only in
integral multiples of $1,000. If less than the entire principal amount of any
Existing Notes is tendered, the tendering holder should fill in the principal
amount tendered in the fourth column of the box entitled "Description of 10 3/4%
Senior Notes due 2006 (Existing Notes)" above. The entire principal amount of
Existing Notes delivered to the Exchange Agent will be deemed to have been
tendered unless otherwise indicated. If the entire principal amount of all
Existing Notes is not tendered, then Existing Notes for the principal amount of
Existing Notes not tendered and a certificate or certificates representing New
Notes issued in exchange for any Existing 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 promptly after the Existing 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 Existing Notes tendered hereby, the signature must correspond exactly with
the name as written on the face of the certificates without any change
whatsoever.
<PAGE> 10
If any tendered Existing Notes are owned of record by two or more joint
owners, all such owners must sign this Letter.
If any tendered Existing 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
Existing 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 Existing 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 Existing 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 Existing Notes are tendered (i) by a registered holder of Existing
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 Existing 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 Existing 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 Existing 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
Existing Notes by book-entry transfer may request that Existing 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 Existing 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 Existing 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 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 Existing 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."
<PAGE> 11
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 Existing 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 Existing Notes pursuant to the Exchange Offer. If,
however, certificates representing New Notes or Existing 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 Existing Notes tendered hereby, or if tendered Existing Notes are
registered in the name of any person other than the person signing this Letter,
or if a transfer tax is imposed for any reason other than the exchange of
Existing 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 Existing Notes listed in this Letter.
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
Existing Notes tendered.
9. NO CONDITIONAL TRANSFERS. No alternative, conditional, irregular or
contingent tenders will be accepted. All tendering holders of Existing Notes, by
execution of this Letter, shall waive any right to receive notice of the
acceptance of their Existing 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
Existing Notes nor shall any of them incur any liability for failure to give any
such notice.
10. MUTILATED, LOST, STOLEN OR DESTROYED EXISTING NOTES. Any tendering
holder whose Existing 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 and the
Notice of Guaranteed Delivery may be directed to the Exchange Agent at the
address specified in the Prospectus.
(DO NOT WRITE IN THE SPACE BELOW)
<TABLE>
<CAPTION>
CERTIFICATE EXISTING NOTES EXISTING NOTES
SURRENDERED TENDERED ACCEPTED
- ------------------ ------------------ ------------------
<S> <C> <C>
- ------------------ ------------------ ------------------
- ------------------ ------------------ ------------------
- ------------------ ------------------ ------------------
</TABLE>
Delivery Prepared by
--------------- Checked By
--------------- Date
---------------
<PAGE> 12
<TABLE>
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------
PAYER'S NAME: CLARK MATERIAL HANDLING COMPANY
- ----------------------------------------------------------------------------------------------------------
Name (if joint names, list first and circle the name of the person or
SUBSTITUTE entity whose number you enter in Part 1 below. See instructions if your
FORM W-9 name has changed.)
DEPARTMENT OF THE TREASURY ---------------------------------------------------------------------------
INTERNAL REVENUE SERVICE Address
PAYER'S REQUEST FOR TIN ---------------------------------------------------------------------------
City, state and ZIP code
---------------------------------------------------------------------------
List account number(s) here (optional)
---------------------------------------------------------------------------
----------------------------------------------------------------------------
Part 1--PLEASE PROVIDE YOUR TAXPAYER Social security number
IDENTIFICATION NUMBER ("TIN") IN THE BOX AT or TIN
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.
CERTIFICATION--UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT THE
INFORMATION PROVIDED ON THIS FORM IS TRUE, CORRECT AND COMPLETE.
----------------------------------------------------------------------------
Signature _________________ Date PART 3--AWAITING TIN [ ]
- ----------------------------------------------------------------------------------------------------------
</TABLE>
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.
<PAGE> 13
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>
<C> <S> <C>
- ---------------------------------------------------------
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF--
- ---------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals The actual owner of
(joint account) the account or, if
combined funds, any
one of the
individuals(1)
3. Husband and wife The actual owner of
(joint account) the account or, if
joint funds, either
person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor The adult or, if
(joint account) the minor is the
only contributor,
the minor(1)
6. Account in the name of guardian The ward, minor, or
or committee for a designated incompetent
ward, minor, or incompetent person(3)
person
7. a. The usual revocable savings The grantor-
trust account (grantor is trustee(1)
also trustee)
b. So-called trust account that The actual owner(1)
is not a legal or valid
trust under State law
8. Sole proprietorship account The Owner(4)
- ---------------------------------------------------------
- ---------------------------------------------------------
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
- ---------------------------------------------------------
9. A valid trust, estate, or Legal entity (Do
pension trust not furnish the
identifying number
of the personal
representative or
trustee unless the
legal entity itself
is not designated
in the account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization
account
12. Partnership account held in the The partnership
name of the business
13. Association, club, or other The organization
tax-exempt organization
15. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a State
or local government, school
district, or prison) that
receives agricultural program
payments
- ---------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 14
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 withholding under section 1941.
- 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 n
money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals. Note: You may
be subject to backup withholding if this interest is $600 or more and in
paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) to non-resident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments other than interest, dividends and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give 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 IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 5% on any portion of an
under-payment attributable to that failure unless there is clear and convincing
evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE> 1
EXHIBIT 99.4
NOTICE OF GUARANTEED DELIVERY
FOR
10 3/4% SENIOR NOTES DUE 2006
CLARK MATERIAL HANDLING COMPANY
As set forth in the Prospectus dated , 1998 (the "Prospectus"), of
CLARK MATERIAL HANDLING COMPANY, (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
offer to exchange (the "Exchange Offer") all of its outstanding 10 3/4% Series B
Senior Notes due 2006 (the "Existing Notes") for its 10 3/4% Series D Senior
Notes due 2006, which have been registered under the Securities Act of 1933, as
amended, if certificates for the Existing Notes are not immediately available or
if the Existing 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
1998, UNLESS THE OFFER IS EXTENDED (THE "EXPIRATION DATE"). TENDERS
OF EXISTING NOTES MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M. ON THE
BUSINESS DAY PRIOR TO THE EXPIRATION DATE.
TO: UNITED STATES TRUST COMPANY OF NEW YORK, THE EXCHANGE AGENT
<TABLE>
<S> <C>
By Registered or Certified Mail: By Overnight Courier or By Hand After 4:30 PM on the Expiration Date Only:
United States Trust Company of New York United States Trust Company of New York
P.O. Box 844 770 Broadway
Cooper Station New York, New York 10003
New York, New York 10276-0844 Attention: Corporate Trust Services
By Hand Up to 4:30 PM: By Facsimile:
United States Trust Company of New York United States Trust Company of New York
111 Broadway (212) 420-6152
Lower Level Attention: Corporate Trust Services
Corporate Trust Services
New York, New York 10006 Confirm by telephone:
(800) 548-6565
</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 Existing 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 CLARK MATERIAL HANDLING COMPANY, 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 Existing Notes) Existing Notes pursuant to
the guaranteed delivery procedures set forth in Instruction 1 of the Letter of
Transmittal.
The undersigned understands that tenders of Existing Notes will be accepted
only in principal amounts equal to $1,000 or integral multiples thereof. The
undersigned understand that tenders of Existing 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 Existing Notes (if
available) Name(s) of Record Holder(s)
- ------------------------------------------------- -------------------------------------------------
- ------------------------------------------------- -------------------------------------------------
PLEASE PRINT OR TYPE
Principal Amount of Existing Notes Address
-------------------------------------------------
- -------------------------------------------------
-------------------------------------------------
Area Code and
Tel. No.
-------------------------------------------------
Signature(s)
-------------------------------------------------
Dated:
-------------------------------------------------
If Existing 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 Existing Notes exactly as its (their) name(s) appear on
certificates for Existing Notes or on a security position listing as the owner
of Existing 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:
PLEASE PRINT NAME(S) AND ADDRESS(ES)
Name(s):
- --------------------------------------------------------------------------------
Capacity:
- --------------------------------------------------------------------------------
Address(es):
- --------------------------------------------------------------------------------
<PAGE> 3
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 Existing Notes tendered
hereby within the meaning of Rule 14e-4 under the Exchange Act, (b) represents
that such tender of Existing Notes complies with Rule 14e-4 under the Exchange
Act and (c) guarantees that delivery to the Exchange Agent of certificates for
the Existing Notes tendered hereby, in proper form for transfer (or confirmation
of the book-entry transfer of such Existing 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 he
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 EXISTING 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.
Name of Firm
- -------------------------------------------
--------------------------------------
Authorized Signature
Address
- -------------------------------------------------
Name
--------------------------------------
Please Print or Type
- ------------------------------------------------------------
Title
--------------------------------------
Zip Code
Area Code and Tel. No.
- ------------------------------- Date
--------------------------------------
Dated:
- ------------------, 1998
NOTE: DO NOT SEND EXISTING NOTES WITH THIS FORM; EXISTING 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.
<PAGE> 1
EXHIBIT 99.5
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 1998, UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS OF
EXISTING PREFERRED STOCK MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M. ON THE
EXPIRATION DATE.
CLARK MATERIAL HANDLING COMPANY
LETTER OF TRANSMITTAL
13% Senior Exchangeable Preferred Stock Due 2007
TO: UNITED STATES TRUST COMPANY OF NEW YORK,
THE EXCHANGE AGENT
<TABLE>
<S> <C>
By Registered or Certified Mail: By Overnight Courier or By Hand After 4:30 PM on the Expiration Date Only:
United States Trust Company of New York United States Trust Company of New York
P.O. Box 844 770 Broadway, 13th Floor
Cooper Station New York, New York 10003
New York, New York 10276-0844 Attn: Corporate Trust Services
Attn: Corporate Trust Services
By Hand Up to 4:30 PM: By Facsimile:
United States Trust Company of New York United States Trust Company of New York
111 Broadway, Lower Level (212) 420-6152
New York, New York 10003 Attn: Corporate Trust Services
Corporate Trust Services
Confirm by telephone:
(800) 548-6525
</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 PREFERRED STOCK FOR THEIR
EXISTING PREFERRED STOCK PURSUANT TO THE EXCHANGE OFFER MUST VALIDLY TENDER (AND
NOT WITHDRAW) THEIR EXISTING PREFERRED STOCK TO THE EXCHANGE AGENT PRIOR TO THE
EXPIRATION DATE.
The undersigned acknowledges receipt of the Prospectus dated , 1998
(the "Prospectus") of CLARK MATERIAL HANDLING COMPANY (the "Company") and this
Letter of Transmittal (the "Letter of Transmittal"), which together constitute
the Company's Offer to Exchange (the "Exchange Offer") $1,000 liquidation
preference amount of its 13% Senior Exchangeable Series B Preferred Stock due
2007 (the "New Preferred Stock"), 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
liquidation preference amount of its outstanding 13% Senior Exchangeable Series
A Preferred Stock due 2007 (the "Existing Preferred Stock"), of which
$20,000,000 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.
<PAGE> 2
For each Existing Preferred Stock certificate accepted for exchange, the
holder of such Existing Preferred Stock will receive a New Preferred Stock
certificate having a liquidation preference amount equal to that of the
surrendered Existing Preferred Stock certificate. Dividends on the New Preferred
Stock will accrue from the last dividend payment date on which dividends were
paid on the Existing Preferred Stock surrendered in exchange therefor or, if no
dividends have been paid on the Existing Preferred Stock, from the date of
original issue of the Existing Preferred Stock. Holders of Existing Preferred
Stock accepted for exchange will be deemed to have waived the right to receive
any other payments or accrued dividends on the Existing Preferred Stock. 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 Existing Preferred Stock 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 Existing Preferred Stock are to be physically delivered to the
Exchange Agent herewith by Holders; (ii) tender of Existing Preferred Stock 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 Existing Preferred Stock or (iii)
tender of Existing Preferred Stock 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 Existing Preferred Stock is 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 Existing Preferred Stock is held of record by
DTC who desires to deliver such Existing Preferred Stock 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.
<PAGE> 3
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 EXISTING PREFERRED STOCK MUST COMPLETE THIS
LETTER OF TRANSMITTAL IN ITS ENTIRETY.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE CHECKING ANY BOX BELOW
- --------------------------------------------------------------------------------
DESCRIPTION OF 13% SENIOR EXCHANGEABLE PREFERRED STOCK DUE 2007 (EXISTING
PREFERRED STOCK)
<TABLE>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
AGGREGATE LIQUIDATION PREFERENCE LIQUIDATION PREFERENCE AMOUNT
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) CERTIFICATE AMOUNT REPRESENTED BY TENDERED (IF LESS THAN
(PLEASE FILL IN, IF BLANK) NUMBER(S)* CERTIFICATE(S) ALL)**
- ------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
--------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by Holders tendering by book-entry transfer.
** Unless indicated in the column labeled "Liquidation Preference Amount
Tendered," any tendering Holder of Existing Preferred Stock will be deemed
to have tendered the entire aggregate Liquidation Preference amount
represented by the column labeled "Aggregate Liquidation Preference
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.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 4
------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 4, 5 AND 6)
To be completed ONLY if certificates for Existing Preferred Stock in a
liquidation preference amount not tendered or not accepted for exchange, or
New Preferred Stock issued in exchange for Existing Preferred Stock accepted
for exchange, are to be issued in the name of someone other than the
undersigned, or if the Existing Preferred Stock tendered by book-entry
transfer that are not accepted for exchange are to be credited to an account
maintained by DTC.
Issue certificate(s) to:
Name:
---------------------------------------------------
Address:
-------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
(TAX IDENTIFICATION OR
SOCIAL SECURITY NO.)
------------------------------------------------------------
------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 4, 5 AND 6)
To be accepted ONLY if certificates for Existing Preferred Stock in a
liquidation preference amount not tendered or not accepted for exchange, are
to be sent to someone other than the undersigned, or to the undersigned at an
address other than that shown above.
Mail to:
Name:
---------------------------------------------------
Address:
-------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
(TAX IDENTIFICATION OR
SOCIAL SECURITY NO.)
------------------------------------------------------------
<PAGE> 5
[ ] CHECK HERE IF TENDERED EXISTING PREFERRED STOCK ARE BEING DELIVERED BY
BOOK-ENTRY TRANSFER TO THE EXCHANGE AGENT'S ACCOUNT AT DTC AND COMPLETE THE
FOLLOWING:
Name of Tendering Institution:
-----------------------------------------------------------------------------
DTC Book-Entry Account No.:
-----------------------------------------------------------------------------
Transaction Code No.:
-----------------------------------------------------------------------------
[ ] CHECK HERE IF TENDERED EXISTING PREFERRED STOCK 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:
<TABLE>
<S> <C>
Account Number: --------------------------- Transaction Code Number: ---------------------------
</TABLE>
[ ] 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:
-----------------------------------------------------------------------------
<PAGE> 6
Ladies and Gentlemen:
Subject to the terms and conditions of the Exchange Offer, the undersigned
hereby tenders to the Company the liquidation preference amount of Existing
Preferred Stock indicated above. Subject to and effective upon the acceptance
for exchange of the liquidation preference amount of Existing Preferred Stock
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 Existing Preferred Stock 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 Registrar and Transfer Agent for the Existing
Preferred Stock and New Preferred Stock) with respect to the tendered Existing
Preferred Stock with full power of substitution to (i) deliver certificates for
such Existing Preferred Stock to the Company, or transfer ownership of such
Existing Preferred Stock 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 Existing Preferred Stock for transfer on the books
of the Company and receive all benefits and otherwise exercise all rights of
beneficial ownership of such Existing Preferred Stock, 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 Existing
Preferred Stock 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
Preferred Stock acquired in exchange for Existing Preferred Stock tendered
hereby will have been acquired in the ordinary course of business of the Holder
receiving such New Preferred Stock, whether or not such person is the Holder,
that neither the Holder nor any such other person has any arrangement or
understanding with any person to participate in the distribution of such New
Preferred Stock within the meaning of the Securities Act of 1993, as amended,
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 Preferred Stock issued in exchange for the
Existing Preferred Stock 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
Preferred Stock is acquired in the ordinary course of such holders' business,
such holders are not engaging in and do not intend to engage in a distribution
of the New Preferred Stock and such holders have no arrangements with any person
to participate in the distribution of such New Preferred Stock. 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 Preferred
Stock. If the undersigned is a broker-dealer that will receive New Preferred
Stock for its own account in exchange for Existing Preferred Stock 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 Preferred Stock; 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 also
acknowledges and agrees that any person who is a broker-dealer registered under
the Exchange Act or is participating in the Exchange Offer for the purposes of
distributing the New Preferred Stock must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any
secondary resale transaction of the New Preferred Stock acquired by such person
and cannot rely on the position of the staff of the Commission set forth in
certain no-action letters. The undersigned understands that a secondary resale
transaction described in the previous sentence and any resale of New Preferred
Stock obtained by such holder or other person in exchange for Existing Preferred
Stock acquired by such holder or other person directly from the Company should
be covered by an effective registration statement containing the selling
securityholder information required by Item 507 or Item 508, as applicable, of
Regulation S-K of the Commission.
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 Existing
Preferred Stock 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 Offers --
Withdrawal Rights" section of the Prospectus.
For purposes of the Exchange Offer, the Company shall be deemed to have
accepted validly tendered Existing Preferred Stock when, as and if the Company
has given oral or written notice thereof to the Exchange Agent.
<PAGE> 7
If any tendered Existing Preferred Stock are not accepted for exchange
pursuant to the Exchange Offer for any reason, certificates for any such
unaccepted Existing Preferred Stock 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 Existing Preferred Stock
pursuant to the procedures described under the caption "The Exchange Offers --
Procedures for Tendering" 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 Preferred Stock issued in exchange
for the Existing Preferred Stock accepted for exchange and return any Existing
Preferred Stock not tendered or not exchanged in the name(s) of the undersigned
(or in either such event in the case of the Existing Preferred Stock tendered
through 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 Preferred Stock issued in exchange for the
Existing Preferred Stock accepted for exchange and any certificates for Existing
Preferred Stock 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
Preferred Stock issued in exchange for the Existing Preferred Stock accepted for
exchange and return any Existing Preferred Stock 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 Existing Preferred Stock from the name of the registered Holder(s) thereof
if the Company does not accept for exchange any of the Existing Preferred Stock
so tendered.
Holders of Existing Preferred Stock who wish to tender their Existing
Preferred Stock and (i) whose Existing Preferred Stock is not immediately
available or (ii) who cannot deliver their Existing Preferred Stock, 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 Existing Preferred Stock according to the guaranteed
delivery procedures set forth in the Prospectus under the caption "The Exchange
Offers -- Guaranteed Delivery Procedures." See Instruction 1 regarding the
completion of the Letter of Transmittal printed below.
<PAGE> 8
PLEASE SIGN HERE WHETHER OR NOT
EXISTING PREFERRED STOCK ARE BEING PHYSICALLY TENDERED HEREBY
<TABLE>
<S> <C>
X ___________________________________________________ Date _____________________________
X ___________________________________________________ Date _____________________________
Signature(s) of Registered Holder(s)
Or Authorized Signatory
Area Code and Telephone Number: ___________________________________________
</TABLE>
The above lines must be signed by the registered Holder(s) of Existing
Preferred Stock as their name(s) appear(s) on the Existing Preferred Stock
Certificates or, if the Existing Preferred Stock is tendered by a participant in
DTC, as such participant's name appears on a security position listing as the
owner of Existing Preferred Stock, or by person(s) authorized to become
registered Holder(s) by a properly completed stock power from the registered
Holder(s), a copy of which must be transmitted with this Letter of Transmittal.
If Existing Preferred Stock 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: ______________________________
<PAGE> 9
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS
OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER AND EXISTING PREFERRED STOCK; GUARANTEED
DELIVERY PROCEDURES. This Letter is to be completed by stockholders, 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
Offers--Book-Entry Transfer" section of the Prospectus. Certificates for all
physically tendered Existing Preferred Stock, 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. Existing Preferred Stock
tendered hereby must be in denominations of principal amount of maturity of
$1,000 and any integral multiple thereof.
Stockholders whose certificates for Existing Preferred Stock 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 Existing Preferred Stock pursuant to the guaranteed delivery
procedures set forth in "The Exchange Offers--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 Existing Preferred Stock and the amount of
Existing Preferred Stock 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 Existing Preferred Stock, or a
Book-Entry Confirmation, and any other documents required by this Letter will be
deposited by the Eligible Institution with the Exchange Agent, and (iii) the
certificates for all physically tendered Existing Preferred Stock, 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 Existing Preferred Stock 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 Existing Preferred Stock is 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 Offers" section in the Prospectus.
2. TENDER BY HOLDER. Only a holder of Existing Preferred Stock may tender
such Existing Preferred Stock in the Exchange Offer. Any beneficial holder of
Existing Preferred Stock 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 Existing Preferred Stock, either make
appropriate arrangements to register ownership of the Existing Preferred Stock
in such holder's name or obtain a properly completed stock power form the
registered holder.
3. PARTIAL TENDERS. Tenders of Existing Preferred Stock will be accepted
only in integral multiples of $1,000. If less than the entire liquidation
preference amount of any Existing Preferred Stock Certificate is tendered, the
tendering holder should fill in the liquidation preference amount tendered in
the fourth column of the box entitled "Description of 13% Senior Exchangeable
Preferred Stock due 2007 (Existing Preferred Stock)" above. The entire
liquidation preference amount of Existing Preferred Stock delivered to the
Exchange Agent will be deemed to have been tendered unless otherwise indicated.
If the entire liquidation preference amount of all Existing Preferred Stock is
not tendered, then Existing Preferred Stock for the liquidation preference
amount of Existing Preferred Stock not tendered and a certificate or
certificates representing New Preferred Stock issued in exchange for any
Existing Preferred Stock 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 promptly after the Existing Preferred Stock 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 Existing Preferred Stock tendered hereby, the signature must correspond
exactly with the name as written on the face of the certificates without any
change whatsoever.
<PAGE> 10
If any tendered Existing Preferred Stock are owned of record by two or more
joint owners, all such owners must sign this Letter.
If any tendered Existing Preferred Stock 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 Existing
Preferred Stock specified herein and tendered hereby, no endorsements of
certificates or separate powers of attorney are required. If, however, the New
Preferred Stock is to be issued, or any untendered Existing Preferred Stock is
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 Existing Preferred Stock 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 Existing Preferred Stock is tendered (i) by a registered holder of
Existing Preferred Stock (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 Existing Preferred
Stock) 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
Preferred Stock or substitute Existing Preferred Stock for liquidation
preference 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 Existing Preferred Stock 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. Stockholders tendering Existing Preferred Stock by book-entry
transfer may request that Existing Preferred Stock not exchanged be credited to
such account maintained at the Book-Entry Transfer Facility as such stockholder
may designate hereon. If no such instructions are given, such Existing Preferred
Stock 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 Existing Preferred Stock is 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 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 Existing Preferred Stock 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."
<PAGE> 11
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 Existing Preferred Stock is 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 Existing Preferred Stock pursuant to the Exchange
Offer. If, however, certificates representing New Preferred Stock or Existing
Preferred Stock 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 Existing Preferred Stock tendered
hereby, or if tendered Existing Preferred Stock is registered in the name of any
person other than the person signing this Letter, or if a transfer tax is
imposed for any reason other than the exchange of Existing Preferred Stock
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 Existing Preferred Stock listed in this
Letter.
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
Existing Preferred Stock tendered.
9. NO CONDITIONAL TRANSFERS. No alternative, conditional, irregular or
contingent tenders will be accepted. All tendering holders of Existing Preferred
Stock, by execution of this Letter, shall waive any right to receive notice of
the acceptance of their Existing Preferred Stock 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
Existing Preferred Stock nor shall any of them incur any liability for failure
to give any such notice.
10. MUTILATED, LOST, STOLEN OR DESTROYED EXISTING NOTES. Any tendering
holder whose Existing Preferred Stock 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 and the
Notice of Guaranteed Delivery may be directed to the Exchange Agent at the
address specified in the Prospectus.
(DO NOT WRITE IN THE SPACE BELOW)
<TABLE>
<CAPTION>
EXISTING EXISTING
CERTIFICATE PREFERRED STOCK PREFERRED STOCK
SURRENDERED TENDERED ACCEPTED
- ------------------ ------------------ ------------------
<S> <C> <C>
- ------------------ ------------------ ------------------
- ------------------ ------------------ ------------------
- ------------------ ------------------ ------------------
</TABLE>
Delivery Prepared by
--------------- Checked By
--------------- Date
---------------
<PAGE> 12
<TABLE>
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------
PAYER'S NAME: CLARK MATERIAL HANDLING COMPANY
- ----------------------------------------------------------------------------------------------------------
Name (if joint names, list first and circle the name of the person or
SUBSTITUTE entity whose number you enter in Part 1 below. See instructions if your
FORM W-9 name has changed.)
DEPARTMENT OF THE TREASURY ---------------------------------------------------------------------------
INTERNAL REVENUE SERVICE Address
PAYER'S REQUEST FOR TIN ---------------------------------------------------------------------------
City, state and ZIP code
---------------------------------------------------------------------------
List account number(s) here (optional)
---------------------------------------------------------------------------
----------------------------------------------------------------------------
Part 1--PLEASE PROVIDE YOUR TAXPAYER Social security number
IDENTIFICATION NUMBER ("TIN") IN THE BOX AT or TIN
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.
CERTIFICATION--UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT THE
INFORMATION PROVIDED ON THIS FORM IS TRUE, CORRECT AND COMPLETE.
----------------------------------------------------------------------------
Signature _________________ Date PART 3--AWAITING TIN [ ]
- ----------------------------------------------------------------------------------------------------------
</TABLE>
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.
<PAGE> 13
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>
<C> <S> <C>
- ---------------------------------------------------------
GIVE THE
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
NUMBER OF--
- ---------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals The actual owner of
(joint account) the account or, if
combined funds, any
one of the
individuals(1)
3. Husband and wife The actual owner of
(joint account) the account or, if
joint funds, either
person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor The adult or, if
(joint account) the minor is the
only contributor,
the minor(1)
6. Account in the name of guardian The ward, minor, or
or committee for a designated incompetent
ward, minor, or incompetent person(3)
person
7. a. The usual revocable savings The grantor-
trust account (grantor is trustee(1)
also trustee)
b. So-called trust account that The actual owner(1)
is not a legal or valid
trust under State law
8. Sole proprietorship account The Owner(4)
- ---------------------------------------------------------
- ---------------------------------------------------------
GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
- ---------------------------------------------------------
9. A valid trust, estate, or Legal entity (Do
pension trust not furnish the
identifying number
of the personal
representative or
trustee unless the
legal entity itself
is not designated
in the account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization
account
12. Partnership account held in the The partnership
name of the business
13. Association, club, or other The organization
tax-exempt organization
15. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a State
or local government, school
district, or prison) that
receives agricultural program
payments
- ---------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 14
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 withholding under section 1941.
- 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 n
money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals. Note: You may
be subject to backup withholding if this interest is $600 or more and in
paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) to non-resident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments other than interest, dividends and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividend,
interest, or other payments to give 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 IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS.--If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 5% on any portion of an
under-payment attributable to that failure unless there is clear and convincing
evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
<PAGE> 15
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE> 1
EXHIBIT 99.6
NOTICE OF GUARANTEED DELIVERY
FOR
13% SENIOR EXCHANGEABLE PREFERRED STOCK DUE 2007
CLARK MATERIAL HANDLING COMPANY
As set forth in the Prospectus dated , 1998 (the "Prospectus"), of
CLARK MATERIAL HANDLING COMPANY, (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
offer to exchange (the "Exchange Offer") all of its outstanding 13% Senior
Exchangeable Series A Preferred Stock due 2007 (the "Existing Notes") for its
13% Senior Exchangeable Series B Preferred Stock due 2007, which have been
registered under the Securities Act of 1933, as amended, if certificates for the
Existing Preferred Stock are not immediately available or if the Existing
Preferred Stock, 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
1998, UNLESS THE OFFER IS EXTENDED (THE "EXPIRATION DATE"). TENDERS
OF EXISTING PREFERRED STOCK MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M. ON
THE BUSINESS DAY PRIOR TO THE EXPIRATION DATE.
TO: UNITED STATES TRUST COMPANY OF NEW YORK, THE EXCHANGE AGENT
<TABLE>
<S> <C>
By Registered or Certified Mail: By Overnight Courier or
United States Trust Company of New York By Hand After 4:30 PM on the Expiration Date:
P.O. Box 844 United States Trust Company of New York
Cooper Station 770 Broadway
New York, New York 10276-0844 New York, New York 10003
By Hand Up to 4:30 PM: Attention: Corporate Trust
United States Trust Company of New York By Facsimile:
111 Broadway United States Trust Company of New York
Lower Level (212) 420-6152
Corporate Trust Services Attention: Corporate Trust
New York, New York 10006
Confirm by telephone:
(800) 548-6565
</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 Existing Preferred Stock 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 CLARK MATERIAL HANDLING COMPANY, 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 shares of Existing Preferred Stock) shares of
Existing Preferred Stock pursuant to the guaranteed delivery procedures set
forth in Instruction 1 of the Letter of Transmittal.
The undersigned understands that tenders of Existing Preferred Stock will
be accepted only in liquidation preference amounts equal to $1,000 or integral
multiples thereof. The undersigned understand that tenders of Existing Preferred
Stock 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 Existing Preferred Stock
(if available) Name(s) of Record Holder(s)
- ------------------------------------------------- -------------------------------------------------
- ------------------------------------------------- -------------------------------------------------
PLEASE PRINT OR TYPE
Liquidation Preference Amount of Existing Address
Preferred Stock -------------------------------------------------
- -------------------------------------------------
-------------------------------------------------
Area Code and
Tel. No.
-------------------------------------------------
Signature(s)
-------------------------------------------------
Dated:
-------------------------------------------------
If Existing Preferred Stock 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 Existing Preferred Stock exactly as its (their) name(s) appear on
certificates for Existing Preferred Stock or on a security position listing as
the owner of Existing Preferred Stock, 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:
PLEASE PRINT NAME(S) AND ADDRESS(ES)
Name(s):
- --------------------------------------------------------------------------------
Capacity:
- --------------------------------------------------------------------------------
Address(es):
- --------------------------------------------------------------------------------
<PAGE> 3
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 Existing Preferred Stock
tendered hereby within the meaning of Rule 14e-4 under the Exchange Act, (b)
represents that such tender of Existing Preferred Stock complies with Rule 14e-4
under the Exchange Act and (c) guarantees that delivery to the Exchange Agent of
certificates for the Existing Preferred Stock tendered hereby, in proper form
for transfer (or confirmation of the book-entry transfer of such Existing
Preferred Stock 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 he 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 EXISTING PREFERRED STOCK 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.
Name of Firm
- -------------------------------------------
--------------------------------------
Authorized Signature
Address
- -------------------------------------------------
Name
--------------------------------------
Please Print or Type
- ------------------------------------------------------------
Title
--------------------------------------
Zip Code
Area Code and Tel. No.
- ------------------------------- Date
--------------------------------------
Dated:
- ------------------, 1998
NOTE: DO NOT SEND EXISTING PREFERRED STOCK WITH THIS FORM; EXISTING PREFERRED
STOCK SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL SO THAT IT IS RECEIVED BY
THE EXCHANGE AGENT WITHIN FIVE BUSINESS DAYS AFTER THE EXPIRATION DATE.
